Enerpac Tool Group Corp. · NYSE:EPAC
Enerpac Tool — Q3 FY2019 Earnings Presentation
21 slides from Enerpac Tool's earnings presentation, Jun 26, 2019
Slide 1: Fiscal 2019 Third Quarter Earnings
INDUSTRIAL ENGINEERED TOOLS & SERVICES COMPONENTS & SYSTEMS Fiscal 2019 Third Quarter Earnings June 26, 2019
Slide 2: Safe Harbor
Safe Harbor Statements in this presentation that are not historical are considered “forward-looking statements” and are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations. Those factors are contained in Actuant’s Secur
Slide 3: Q3 Fiscal 2019 – Progress on our Strategic Objectives
Q3 Fiscal 2019 – Progress on our Strategic Objectives Core Growth Above Market • Growth in Industrial Tools & Service (“IT&S”) at 8% resulted from strong service results and solid product sales in North America resulting from investments in commercial and new product development processes Driving Wo
Slide 4: Strong Q3 driven by solid execution and core IT&S growth
Strong Q3 driven by solid execution and core IT&S growth Adjusted Adjusted Adjusted Net Sales Operating Profit %* EBITDA %* EPS* $0.45 13.5% 15.9% +15% $317 14.0% 10.7% $0.39 $295 +18% +6% Core Sales +3% 2018 2019 2018 2019 2018 2019 2018 2019 Solid results within expectations • Core sales growth of
Slide 5: Third Quarter New Products / Platforms
Third Quarter New Products / Platforms Industrial Tools & Service Engineered Components & Systems E-Pulse Hydraulic Pump This revolutionary pump is design for all applications from lifting to bolting to power our specialty tools 7’’ display product for TOYOTA Material Handling SCJ-50 Cube Jack 50 to
Slide 6: Capital Allocation Framework
Capital Allocation Framework Capital Allocation Priorities Invest in Ourselves • to achieve organic growth, we invest in new product development, sales force effectiveness, etc. Maintain a strong balance sheet • prudent debt reduction as required and/or drives value Invest in strategic tools acquisi
Slide 7: Third Quarter 2019 GAAP vs Non-GAAP Reconciliation
Third Quarter 2019 GAAP vs Non-GAAP Reconciliation Impairment, Divestiture & Tax Reform & GAAP Other Charges Other Costs Adjusted Sales $295.3 $295.3 Operating Profit $47.4 $8.9 ($1.4) $39.9 Income Taxes $7.3 ($1.0) $3.5 $4.8 Net Income $32.4 $9.9 ($5.1) $27.6 Effective tax rate 18.4% Diluted EPS $0
Slide 8: Third Quarter 2019 Comparable Results
Third Quarter 2019 Comparable Results (US$ in millions except Diluted EPS) F' 2018 F' 2019 Change Sales $317 $295 -7% Adjusted Operating Profit (1) $34 $40 18% 10.7% 13.5% +280 b ps Adjusted Diluted EPS(1) $0.39 $0.45 15% (1) Excluding restructuring, impairment and other specified charges. See the a
Slide 9: Core Sales Trend
Core Sales Trend Net Sales Year-over-Year (US$ in millions) Core Sales $350 10% $317 $301 $300 $295 $293 $289 10% $276 6% $275 $272 4% 7% 5% 3% $250 3% 3% 0% $200 0% Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Sustained core growth driven by strong 8% contribution from IT&S 9
Slide 10: Net Sales Waterfall
Net Sales Waterfall 3% core sales growth $330 $9 $325 $7 $7 $9 $320 $11 $315 $317 $310 $305 $20 $300 $295 $295 $290 $285 $280 Q3 '18 Net Sales Volume - ITS Volume - ECS Pricing FX Translation Acquisitions/ Q3 '19 Net Sales Divestitures, net Positive impact from commercially driven volume and pricing
Slide 11: Adjusted Operating Profit and EBITDA Waterfalls
Adjusted Operating Profit and EBITDA Waterfalls* Adjusted Operating Profit 280bps margin $45 US$ millions improvement $40 $3 $40 $2 $1 $35 $2 $9 $34 $30 $3 $25 18% Operating $20 Profit increase $15 Q3 '18 Operating Fx Other Mfg/HLT Volume & Pricing Tariffs Depreciation & SAE Q3 '19 Operating Profit
Slide 12: Industrial Tools & Services
Industrial Tools & Services Third Quarter FY’18 vs FY’19 Net Sales Adjusted Adjusted EBITDA %* Operating Profit %* $167 +110 +12% 21.6% bps Core 24.0% 20.3% 22.9% Sales +8% $159 2018 2019 2018 2019 2018 2019 New product launches in the quarter will continue to drive product vitality • Solid product
Slide 13: IT&S Restructuring and Q4 Expectations
IT&S Restructuring and Q4 Expectations • IT&S Restructuring expected to result in $12-$15 million of annual savings at a one-time cost of $15-$20 million • Began to implement plan in Q3 with most actions expected in Q4 and FY’20 – Restructuring charges of $1 million in Q3; remainder in Q4 and FY’20
Slide 14: Engineered Components & Systems
Engineered Components & Systems Third quarter FY’18 vs FY’19 Net Sales Adjusted Adjusted EBITDA%* Operating Profit %* + 30 9.8% bps $158 $129 +10% 8.3% 9.5% 6.1% 2018 2019 2018 2019 2018 2019 • Net sales decline in the quarter resulted $170 from low single digit decline in core sales, EC&S Net Sales
Slide 15: Free Cash Flow - Leverage Continues to Improve
Free Cash Flow - Leverage Continues to Improve $55 $2 $2 $52 $5 $50 $15 $4 $45 $14 $44 $40 $35 Q3 '18 FCF EBITDA Capex Cash Taxes Working Capital Compensation & Other Q3 '19 FCF Benefits Net Debt Reconciliation Financial Leverage (May 31) Net Debt – February 28, 2019 $315 2.6 FX/Other 3 1.8 Free Cas
Slide 16: Macro Industry Dynamics
Macro Industry Dynamics GDP Growth Rate • General economic factors – tempered USA growth rates, with inflationary concerns – Global GDP: US growth / Euro Area decline – Commodity prices stabilized • Industrial Tools & Services – Positive activity continues in tool sales, Euro Area distributor optimi
Slide 17: Fiscal 2019 Core Sales Expectations
Fiscal 2019 Core Sales Expectations 2019 Q1 2019 Q2 2019 Q3 Core Growth FY 2019 Actual Actual Actual 2019 Q4 Industrial Tools & 6% to 7% +4% +12% +8% +1 to +4% Services (IT&S) Engineered -2% to -3% +2% Flat -2% -7 to -11% Components & Systems (EC&S) Consolidated 2 to 3% +3% +7% +3% -1 to -3% • Indus
Slide 18: Fiscal 2019 Guidance Summary
Fiscal 2019 Guidance Summary (US$ in millions except EPS) Assumptions • Key FX rates – approximately $1.15/1€ and Full Year $1.30/1£ 2018 2019E Full Year Guidance Net Sales $1,183 $1,125-$1,135 • Full year core sales +2% to +3% Adj. EBITDA* $145 $151-$155 • EPS of $1.15 – 1.21 Adj. Diluted EPS* $1.0
Slide 19: Q&A
Q&A
Slide 20: Appendix
Appendix
Slide 21: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (US$ in millions) Adjusted EBITDA Free Cash Flow Q3 Q3 Q3 Q3 2019 2018 2019 2018 Net Earnings $32 $29 Net Financing Costs $7 $8 Cash From Operations $53 $58 Income Taxes $7 ($2) Capital Expenditures ($8) ($6) Depreciation & Amortization $10 $10 Sale of PP&E $1 $0