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Enerpac Tool Group Corp (EPAC) Q4 2024 Earnings Call Highlights: Strong Profitability Amid ...

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In This Article:

  • Organic Revenue Growth: 2.2% in fiscal 2024, with 2.7% growth in the Industrial Tools & Services (IT&S) business.

  • Adjusted EBITDA Growth: 8%, with a margin of 25% for fiscal 2024.

  • Gross Margin: Expanded 180 basis points to 51.1% in fiscal 2024.

  • Adjusted SG&A Expense: Declined 4% year over year, improving 60 basis points to 27.6% of sales.

  • Adjusted EPS: Increased 19% from $1.45 to $1.72 in fiscal 2024.

  • Free Cash Flow: $70 million in fiscal 2024, representing an 82% conversion rate of net earnings.

  • Net Debt: $27 million, with a net debt leverage ratio of 0.2 times adjusted EBITDA at year-end fiscal 2024.

  • Total Liquidity: $565 million at year-end fiscal 2024.

  • Fourth Quarter Organic Growth: 0.9%, with IT&S growth of 0.8%.

  • Fiscal 2025 Guidance: Forecasted net sales of $610 million to $625 million, with adjusted EBITDA of $150 million to $160 million.

Release Date: October 16, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Enerpac Tool Group Corp (NYSE:EPAC) achieved an adjusted EBITDA growth of 8% with a margin of 25% for fiscal 2024, indicating strong profitability.

  • The company successfully completed its ASCEND transformation program, doubling adjusted EBITDA from $75 million in fiscal 2021 to $147 million in fiscal 2024.

  • Enerpac Tool Group Corp (NYSE:EPAC) reported a strong balance sheet with a net debt leverage ratio of 0.2 times adjusted EBITDA and total liquidity of $565 million.

  • The acquisition of DTA is expected to provide meaningful revenue synergies and expand sales beyond Europe, enhancing Enerpac's heavy lifting technology offerings.

  • The company introduced several new products, including battery-operated tools and hydraulic systems, aligning with customer needs and driving innovation in key vertical markets.

Negative Points

  • Enerpac Tool Group Corp (NYSE:EPAC) experienced a 1.5% decline in total net sales for the year due to the sale of Cortland Industrial in late fiscal 2023.

  • Organic revenue growth was modest at 2.2% for fiscal 2024, with a notable 9.5% decline in Cortland Biomedical impacting overall performance.

  • The company's geographic performance was mixed, with revenue in the Asia Pacific region declining in the mid-single digits due to softness in the mining sector.

  • Gross margins were negatively impacted in the fourth quarter by project mix and a higher percentage of service revenue compared to standard products.

  • The acquisition of DTA, while strategically beneficial, is expected to be margin dilutive in its first year, affecting overall profitability.

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