epac-20230531

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-11288

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ENERPAC TOOL GROUP CORP.

(Exact name of registrant as specified in its charter)

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Wisconsin						39-0168610
(State of incorporation)						(I.R.S. Employer Id. No.)

N86 W12500 WESTBROOK CROSSING

MENOMONEE FALLS, WISCONSIN 53051

Mailing address: P. O. Box 3241, Milwaukee, Wisconsin 53201

(Address of principal executive offices)

(262) 293-1500

(Registrant’s telephone number, including area code)

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Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Ticker Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.20 par value per share	EPAC	NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

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Accelerated Filer

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Non-accelerated Filer

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Smaller reporting company

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Emerging growth company

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ¨ No ☒

The number of shares outstanding of the registrant’s Class A Common Stock as of June 16, 2023 was 56,103,724.

Table of Contents

TABLE OF CONTENTS


			Page No.

Forward-Looking Statements and Cautionary Factors			1

Part I—Financial Information

Item 1—Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Statements of Earnings			3

Condensed Consolidated Statements of Comprehensive Income (Loss)			4

Condensed Consolidated Balance Sheets			5

Condensed Consolidated Statements of Cash Flows			6

Notes to the Condensed Consolidated Financial Statements			7

Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations			19

Item 3—Quantitative and Qualitative Disclosures about Market Risk			24

Item 4—Controls and Procedures			24

Part II—Other Information

Item 2—Unregistered Sales of Equity Securities and Use of Proceeds			26

Item 6—Exhibits			26

FORWARD-LOOKING STATEMENTS AND CAUTIONARY FACTORS

This quarterly report on Form 10-Q contains certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Such forward-looking statements include statements regarding expected financial results and other planned events, including, but not limited to, anticipated liquidity, anticipated restructuring costs and related savings, anticipated future charges and anticipated capital expenditures. The terms “may,” “should,” “could,” “anticipate,” “believe,” “estimate,” “expect,” “objective,” “plan,” “project” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual future events or results may differ materially from these statements. We disclaim any obligation to publicly update or revise any forward-looking statements as a result of new information, future events or any other reason.

The following is a list of factors, among others, that could cause actual results to differ materially from the forward-looking statements:

•supply chain issues, including shortages of adequate component supply that increase our costs or cause delays in our ability to fulfill orders;

•failure to estimate customer demand properly may result or could have an adverse impact on our business and operating results and our relationship with customers;

•the deterioration of, or instability in, the domestic and international economy and/or in our various end markets, including as a result of geopolitical activity;

•decreases in sales and/or increases in costs or reduced availability of commodities or components used in the production of our products due to sanctions and export controls targeting Russia in connection with the Russia-Ukraine conflict;

•decreased demand from customers in the oil & gas industry, including as a result of significant volatility in oil prices resulting from disruptions in the oil markets;

•uncertainty over global tariffs or the financial impact of tariffs;

•our ability to execute on restructuring actions and on the objectives related to the ASCEND transformation program in order to achieve anticipated incremental operating profit;

•logistics challenges, including global freight capacity shortages, significant increases in freight costs or other delays in our ability to fulfill orders;

•failure to collect on accounts receivable, including in certain foreign jurisdictions where sales are concentrated to a limited number of distributors or agents;

•a significant failure in our information technology (IT) infrastructure, such as unauthorized access to financial and other sensitive data or cybersecurity threats;

•a material disruption at a significant manufacturing facility;

•competition in the markets we serve;

•currency exchange rate fluctuations, export and import restrictions, transportation disruptions or shortages, and other risks inherent in our international operations;

•regulatory and legal developments, including litigation, such as product liability and warranty claims;

•any further impact from the COVID-19 pandemic;

•failure to develop new products and the extent of market acceptance of new products;

•our ability to execute on our growth strategy;

•our ability to successfully identify, consummate and integrate acquisitions and realize anticipated benefits/results from acquired companies as part of our portfolio management process;

•the effects of divestitures and/or discontinued operations, including retained liabilities from, or indemnification obligations with respect to, disposed businesses;

•if the operating performance of our businesses were to fall significantly below normalized levels, the potential for a non-cash impairment charge of goodwill and/or other intangible assets, as they represent a substantial amount of our total assets;

•a global economic recession;

•the impact of rapidly rising interest rates;

•our ability to comply with the covenants in our debt agreements and fluctuations in interest rates;

•our ability to attract, develop, and retain qualified employees;

•inadequate intellectual property protection or infringement of the intellectual property of others; and

•other matters, including those of a political, economic, business, competitive and regulatory nature contained from time to time in our U.S. Securities and Exchange Commission ("SEC") filings, including, but not limited to, those factors listed in the "Risk Factors" section within Item 1A of Part I of our Form 10-K filed with the SEC on October 25, 2022.

When used herein, the terms “we,” “us,” “our” and the “Company” refer to Enerpac Tool Group Corp. and its subsidiaries. Reference to fiscal years, such as "fiscal 2023," are to the fiscal year ending on August 31 of the specified year. Enerpac Tool Group Corp. provides free-of-charge access to its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments thereto, through its website, www.enerpactoolgroup.com, as soon as reasonably practicable after such reports are electronically filed with the SEC.

PART I—FINANCIAL INFORMATION

Item 1—Financial Statements

ENERPAC TOOL GROUP CORP.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended May 31,				Nine Months Ended May 31,
	2023		2022		2023		2022
Net sales	$	156,253	$	151,894	$	437,595	$	419,395
Cost of products sold	78,395		79,847		221,464		227,741
Gross profit	77,858		72,047		216,131		191,654

Selling, general and administrative expenses	48,810		63,095		154,116		162,240
Amortization of intangible assets	1,357		1,792		4,075		5,678
Restructuring charges	2,252		517		6,220		5,086
Impairment & divestiture charges	—		—		—		1,116
Operating profit	25,439		6,643		51,720		17,534
Financing costs, net	3,250		951		9,170		2,668
Other expense, net	525		254		1,948		1,004
Earnings before income tax expense	21,664		5,438		40,602		13,862
Income tax expense	4,688		1,377		10,058		4,495
Net earnings from continuing operations	16,976		4,061		30,544		9,367
Loss from discontinued operations, net of income taxes	(4,596)		(2,418)		(6,214)		(3,715)
Net earnings	$	12,380	$	1,643	$	24,330	$	5,652

Earnings per share from continuing operations
Basic	$	0.30	$	0.07	$	0.54	$	0.16
Diluted	$	0.30	$	0.07	$	0.53	$	0.15

Loss per share from discontinued operations
Basic	$	(0.08)	$	(0.04)	$	(0.11)	$	(0.06)
Diluted	$	(0.08)	$	(0.04)	$	(0.11)	$	(0.06)

Earnings per share*
Basic	$	0.22	$	0.03	$	0.43	$	0.09
Diluted	$	0.22	$	0.03	$	0.42	$	0.09

Weighted average common shares outstanding
Basic	57,052		60,227		56,993		60,292
Diluted	57,432		60,610		57,417		60,640

*The total of Earnings per share from continuing operations and Loss per share from discontinued operations may not equal Earnings per share due to rounding.

The accompanying notes are an integral part of these condensed consolidated financial statements.

ENERPAC TOOL GROUP CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)


	Three Months Ended May 31,				Nine Months Ended May 31,
	2023		2022		2023		2022
Net earnings	$	12,380	$	1,643	$	24,330	$	5,652
Other comprehensive income (loss), net of tax

SEC Form 10-Q filed by Enerpac Tool Group Corp.