Enerpac shares tumble 9% on Q3 revenue miss

MILWAUKEE – Enerpac Tool Group Corp. (NYSE: NYSE:) reported third-quarter earnings per share (EPS) of $0.47, aligning with analyst expectations.

However, revenue fell short, coming in at $150.39 million against the consensus estimate of $155 million, marking a 4% decline year-over-year (YoY). The stock responded with a significant 9% drop.

In the third quarter of fiscal 2024, Enerpac saw a decrease in net sales due to the disposition of Cortland Industrial, although organic sales increased by 1.2% YoY. Gross margin expanded to 51.8%, a notable improvement from the previous year, driven by pricing actions, a favorable sales mix, and strategic dispositions. Operating margin stood at 22.2%, with an adjusted operating margin reaching 24.6%.

Enerpac’s President & CEO, Paul Sternlieb, commented on the quarter’s performance, highlighting the company’s focus on margin expansion through operational efficiency and productivity. Despite slower growth, Sternlieb expressed confidence in outpacing the soft general industrial marketplace and making strides toward long-term financial and strategic goals.

The company’s adjusted EBITDA increased by 6% YoY to $40 million, with an adjusted EBITDA margin of 26.4%, up from 24.0% in the same quarter of the previous year. Enerpac also narrowed its full-year organic revenue growth forecast to 2% to 3% and raised the midpoint of its adjusted EBITDA guidance, reflecting better-than-expected margin performance.

The company’s balance sheet remained strong, with net debt to adjusted EBITDA at a low 0.5x. Enerpac continues to execute its shareholder value creation strategy, underpinned by the ASCEND program, its growth strategy, and a robust balance sheet.

Looking ahead, Enerpac has refined its fiscal 2024 guidance, projecting organic sales growth of approximately 2% to 3%. This translates to a net sales range of $585 million to $590 million, considering a $5 million headwind from new foreign exchange rate assumptions. The company also increased the midpoint of its adjusted EBITDA guidance, now expecting a range of $147 million to $150 million. Free cash flow guidance remains unchanged at $60 million to $70 million.

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