Earnings call transcript: Enerpac Tool Group beats Q4 2025 estimates, shares surge

Enerpac Tool Group Corp (EPAC) reported its fourth-quarter 2025 earnings, surpassing Wall Street expectations with an EPS of $0.52 compared to the forecasted $0.51. Revenue also exceeded predictions, reaching $167.5 million against a forecast of $163.65 million. Following the announcement, Enerpac’s stock surged by 10.74%, closing at $44.64. According to InvestingPro analysis, the company maintains a "GREAT" financial health score of 3.03, though current trading prices suggest the stock is slightly overvalued relative to its Fair Value.

Key Takeaways

• Enerpac outperformed both EPS and revenue forecasts for Q4 2025.
• The company’s stock rose significantly post-earnings, reflecting strong investor confidence.
• Fiscal 2025 saw a 5% year-over-year revenue increase to $617 million.
• Enerpac launched five new products and expanded its e-commerce business by 32%.
• The company anticipates continued growth, projecting fiscal 2026 revenue between $635 million and $655 million.

Company Performance

Enerpac Tool Group demonstrated solid performance in fiscal 2025, achieving a 5% increase in revenue to $617 million. The company’s strategic initiatives, including product innovation and e-commerce expansion, contributed to its growth. Despite challenges in the EMEA market, Enerpac maintained positive momentum across other regions, with notable growth in APAC and the Americas.

Financial Highlights

• Revenue: $617 million (+5% YoY)
• Adjusted EPS: $1.81 (+5% YoY)
• Cash flow from operations: $111 million (+37% YoY)
• Free cash flow: $92 million (+32% YoY)
• Adjusted EBITDA: $154 million (24.9% margin)

Earnings vs. Forecast

Enerpac’s Q4 2025 EPS of $0.52 surpassed the forecast of $0.51, marking a 1.96% surprise. Revenue also beat expectations, with a 2.35% surprise over the forecasted $163.65 million. This performance continues a trend of exceeding analyst projections, bolstering investor confidence.

Market Reaction

Following the earnings release, Enerpac’s stock experienced a significant jump, increasing by 10.74% to $44.64. This rise positions the stock closer to its 52-week high of $51.91, indicating strong market approval of the company’s results and outlook. The stock currently trades at a P/E ratio of 25.19x, suggesting premium valuation relative to near-term earnings growth. InvestingPro subscribers have access to 8 additional key insights about EPAC’s valuation and growth prospects.

Outlook & Guidance

For fiscal 2026, Enerpac projects revenue between $635 million and $655 million, with organic growth expected to range from 1% to 4%. The company remains optimistic about its prospects, particularly in infrastructure and service opportunities, despite potential macroeconomic headwinds. Dive deeper into EPAC’s growth potential with InvestingPro’s comprehensive research report, which provides detailed analysis of the company’s competitive position and growth drivers among 1,400+ top stocks.

Executive Commentary

CEO Paul Sternleaf expressed cautious optimism, stating, "We are cautiously optimistic." CFO Darren Kozik noted, "Our guidance assumes no substantial change to the current tariff or regulatory environment." These comments highlight the company’s strategic focus and awareness of external factors.

Risks and Challenges

• Market weakness in the EMEA region could affect future growth.
• The industrial sector remains challenging, impacting demand.
• Potential tariff impacts could influence cost structures.
• Macroeconomic pressures may affect global operations.
• Supply chain disruptions could pose operational risks.

Q&A

During the earnings call, analysts inquired about the EMEA market’s weakness and the success of the DTA integration. Discussions also covered potential M&A opportunities and the impact of tariffs, reflecting investor interest in the company’s strategic direction and risk management.

Full transcript - Enerpac Tool Group Corp (EPAC) Q4 2025:

Conference Operator: Ladies and gentlemen, thank you for standing by. Welcome to Interpac Tool Group’s Fourth Quarter Fiscal twenty twenty five Earnings Conference Call. As a reminder, this conference is being recorded, 10/16/2025. It is now my pleasure to turn the conference over to Travis Williams, Senior Director of Investor Relations. Please go ahead, Mr.

Williams.

Travis Williams, Senior Director of Investor Relations, Enerpac Tool Group: Thank you, operator. Good morning, and thank you for joining us for Enerpac Tool Group’s fourth quarter and year end fiscal twenty twenty five earnings call. On the call today to present the company’s results are Paul Sternleaf, President and Chief Executive Officer and Darren Kozik, Chief Financial Officer. The slides referenced on today’s call are available on the Investor Relations section of the company’s website, which you can download and follow along. A recording of today’s call will also be made available on our website.

Today’s call will reference non GAAP measures. You can find a reconciliation of GAAP to non GAAP measures in the press release issued yesterday. Our comments will also include forward looking statements that are subject to business risks that could cause actual results to be materially different. Those risks include matters noted in our latest SEC filings. With that, I will turn

Darren Kozik, Chief Financial Officer, Enerpac Tool Group: the call over to Paul.

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: Thanks, Travis. Good morning, and thank you for joining us for our year end fiscal twenty twenty five earnings call. As I look back at the year just ended, I am extremely proud of our team, our many achievements and the fundamentals that truly differentiate Enerpac. Obviously, we’re operating in a very challenging and dynamic environment marked by ongoing weakness in the industrial sector and widespread economic uncertainty. That said, Enerpac posted record revenue in fiscal twenty twenty five.

We also delivered a robust adjusted EBITDA margin of nearly 25% with opportunity for further improvement in the coming years. On the innovation front, we launched five new products with more to come in fiscal twenty twenty six. Notably, these products continue to ramp commercially. We successfully integrated the acquired DTA business, which, as Darren will elaborate, ended the year on a very strong note. And our e commerce business continues to gain traction with customers posting 32% growth in fiscal twenty twenty five.

We’ve also continued the rollout of our disciplined commercial process Enerpac Commercial Excellence or ECX. As of year end fiscal twenty twenty five, we began introduction into our third and final region APAC. And in the fourth quarter, we repurchased a record $40,000,000 in Enerpac stock, bringing the total for fiscal twenty twenty five to $69,000,000 As we look to fiscal twenty twenty six, we are cautiously optimistic. While Europe remains a wildcard, the prospect of lower interest rates and greater certainty around tariff policy along with healthy activity in the infrastructure sector are encouraging. Let me turn the call over to Darren, who will walk you through the highlights of fiscal twenty twenty five.

He’ll also provide our initial guidance for fiscal twenty twenty six. Then I’ll come back to share some more color on key initiatives and several exciting project wins. Darren?

Darren Kozik, Chief Financial Officer, Enerpac Tool Group: Thanks, Paul. As seen on Slide four, Enerpac’s fiscal twenty twenty five revenue of $617,000,000 increased 5%. On an organic basis, adjusting for foreign exchange and the acquisition of DTA, we grew 1%. That put us near the midpoint of our previously provided guidance range as we benefited from multiple initiatives, continued strong performance at Cortland, growth in heavy lifting technology or HLT, and an excellent fourth quarter at DTA. At our IT and S business, revenue increased 1% organically for the year.

Including DTA, IT and S revenue increased 4%, with a 5% growth in product sales and a 1% growth in service. As I mentioned, DTA’s robust year end performance brought it to full year revenue of $20,000,000 Enerpac’s operational discipline and supply chain expertise is improving throughput at DTA’s facility. At the same time, we are successfully cross selling DTA’s horizontal movement technology to Enerpac’s existing distributor and customer base. In fact, some 45% of DTA’s orders were new or crossover sale to existing Enerpac customers, demonstrating the power of commercial synergies that underscore the strategic value of the acquisition. Turning to Slide five, which shows our performance by geography.

We delivered growth in two of our three regions in fiscal twenty twenty five, with low single digit growth in The Americas and strong high single digit growth in APAC. Across Enerpac as a whole, we believe this is another year of share gains for the company. In APAC, our growth in 2025 was comprised of solid performance in Standard Products and even better growth in HLT. Geographically, we’ve benefited from enhanced sales coverage in India, driving double digit growth and have high expectations in fiscal twenty twenty six and beyond. We also saw improvement in the mining industry in Australia, a sector that had been a soft spot.

Overall, our investment in commercial leadership and sales coverage in APAC is paying dividends to recapture share in the region. In The Americas, while standard product revenue was flat in fiscal twenty twenty five, we posted double digit gains in HLT and service revenue. We enjoyed good demand for the infrastructure, petrochemical and power generation markets, the latter of which includes some wins from the nuclear sector. On the other side, wind and general construction were weaker end markets in the region. Geographically, Latin America has been softer due to macroeconomic issues and tariff related policies.

Offsetting growth in The Americas and APAC was a mid single digit decline in the EMEA region. For fiscal twenty twenty five, revenue from Standard Products was about flat. However, our HLT business, while posting a relatively good year, was down compared with a very strong fiscal twenty twenty four. As a reminder, HLT is a capital equipment business and tends to be lumpy. In the EMEA region, there are several cross currents going into fiscal twenty twenty six, including ongoing economic weakness in Central And Southern Europe.

Nonetheless, we expect to benefit from good traction on the new product front and on a pickup in HLT, which will include DTA. We also expect to make further progress on our other key growth initiatives, including our continued focus on the infrastructure market, our ongoing digital transformation and additional enhancements to our ECX program to name a few. Turning to Slide six. For fiscal twenty twenty five, gross profit margin came in at 50.5%. The slight year over year decline was largely as expected, primarily driven by the inclusion of DTA and the mix in our service business.

On the selling, general and administrative expense line, adjusting for the restructuring charge in M and A expenses, SG and A improved by 80 basis points to 26.8% of revenue as compared to 27.6% in fiscal twenty twenty four. The company continues to optimize SG and A efficiency, including standardizing and automating processes and leveraging our lower cost centers of excellence. Altogether, our team managed through a complex and dynamic environment to deliver full year adjusted EBITDA growth of 4% to $154,000,000 That represented a margin of 24.9%, near the midpoint of our guidance. And for the full year, adjusted earnings per share of $1.81 compared with $1.72 in fiscal twenty twenty four increased 5%. For the 2025, revenue was up 6% with organic revenue decline of approximately 2% as gains in The Americas and APAC were offset by the performance of the EMEA region.

Product revenue declined 1% year over year on an organic basis, while service revenue declined 7%. Portland continued to generate healthy growth. And as mentioned, DTA revenue expanded significantly to $9,000,000 Adjusted EBITDA increased 15 year over year and margins were strong at 26.5% for the fourth quarter, benefiting from the geographic mix and volume leverage at DTA. Adjusted EPS grew 4% to $0.52 Effective tax rate for adjusted EPS was 24.9% as compared to 15.7% in fiscal twenty twenty four. Share count was down about 2% year over year in the quarter.

Turning to Slide eight. Given our extremely strong balance sheet and excellent cash flow, we continue to focus on opportunities to deploy capital. With early signs of a healthier and more robust M and A environment, coupled with incremental M and A resources, we expect to expand the funnel and increase deal flow. We will also continue to opportunistically return capital to shareholders. Speaking of which, since the authorization was approved by our Board in 2022, the company has returned approximately $240,000,000 to shareholders through the repurchase of 9,000,000 shares at an average cost of just below $27 per share.

Today, we are pleased to announce that the Board has approved a new share repurchase authorization for $200,000,000 which we believe speaks to the confidence in our ability to continue to create meaningful shareholder value. On the balance sheet, net debt was $38,000,000 at year end, resulting in a net debt to adjusted EBITDA ratio of 0.3 times. Total liquidity, including availability under our revolver and cash on hand, was $551,000,000 As you can see, we have ample financial flexibility to continue our balanced capital allocation strategy and are maintaining significant dry powder for our disciplined strategic M and A process. For fiscal twenty twenty five, cash flow from operations was $111,000,000 compared with $81,000,000 in fiscal twenty twenty four. Free cash flow at $92,000,000 increased by $22,000,000 or 32%, even with $8,000,000 in incremental capital spending, primarily associated with the headquarters relocation as well as continued investments in our automated manufacturing capabilities and IT enhancements to improve efficiency and productivity.

For our practice, at year end, we provide initial guidance for the year ahead, which is shown on Slide nine. Starting with the top line, we anticipate revenue of $635,000,000 to $655,000,000 with underlying organic growth of 1% to 4% with an assumption of the U. S. Dollar to euro exchange rate at $1.16 We believe our organic growth forecast represents Enerpac’s continued outperformance relative to the industrial markets. The low end assumes little to no improvement in the macro environment, while the upper end of the range assumes a modest improvement.

Our forecast for adjusted EBITDA is $158,000,000 to $168,000,000 At the midpoint, that translates to year over year growth of 6% and an adjusted EBITDA margin of 25.3%. We are projecting free cash flow of 100,000,000 to $160,000,000 with CapEx of $10,000,000 to $15,000,000 Also this year, we are introducing annual EPS guidance. For adjusted EPS, we are guiding to the range of $1.85 to $2 As you can see from this slide, we have included our modeling assumptions, including interest expense, depreciation and amortization, along with the adjusted tax rate. Our guidance also assumes no substantial change to the current tariff or regulatory environment. As for the 2026, we expect some pressure on margins as higher tariff impacted costs flow through the cost to goods sold.

As we progress through the year, that should subside based on the actions we have taken to offset higher input costs. As we discussed in our third quarter earnings call, we expect to be price cost neutral for the full fiscal year. With that, let me

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: turn it back to Paul. Thanks, Darren. While conditions remain volatile in the industrial marketplace, we are excited about the specific actions Enerpac is taking to continue to gain market share. We have continued to invest across the organization under the Powering Enerpac Performance Program known as PEP to drive continuous improvement as we simplify and automate the business, improve operational capabilities and support growth. On the service side, we have been taking actions to capture more differentiated and value added service opportunities, including investing in equipment to support higher margin service lines.

We are also changing our business model in certain countries to improve service business margins. For example, in Algeria, we have transitioned from an agent based to a direct model, which we expect to support long term growth and profitability. And in fiscal twenty twenty five, we opened a new service center in Saudi Arabia, as you can see on Slide 10. Given expanding opportunities in the country and the broader Middle East region, we expect this to be a meaningful growth engine. We have also added new commercial capabilities and stronger leadership underpinned by ECX to continue to gain share.

These teams are supported by our global marketing organization, which continues to drive awareness, brand recognition and lead generation. For example, in the fourth quarter, we executed a global campaign around our battery powered torque wrench, a product line we launched in late fiscal twenty twenty four. With a full range of sizes, our lineup not only offers meticulous calibration, but a significant differentiator in terms of the tool’s ease of use. With the campaign, which has included nearly 1,000 customer demos across the globe, we have significantly improved the size and quality of our sales funnel as the market continues to respond well to this innovative technology. Moreover, this direct end user interaction has helped drive valuable insights for our innovation roadmap.

At the same time, we are employing eightytwenty to further optimize our distribution channel. As shown on Slide 11, in fiscal twenty twenty five, we reduced the number of distributors globally by 13% to fewer than 800. By focusing on the most productive distributors, we can improve the efficiency of our channel relationships, commit resources to the highest return outcomes and win with the winners. And of course, during the year, we relocated to our new global headquarters in Downtown Milwaukee. The move, which includes a substantially expanded innovation lab with significantly greater in house capabilities, also supports collaboration and our ability to attract top talent.

Reflecting on our mission, it’s always nice to showcase a few relevant examples of where we are helping our customers and where Enerpac plays an important role in high profile projects. In fiscal twenty twenty four, we announced Enerpac’s involvement in the massive Theremin Belt tunnel infrastructure project connecting Denmark to the rest of Europe, which will be the longest immersed tunnel in the world when completed. We were pleased to receive significant follow on orders associated with the project in the fourth quarter, demonstrating Enerpac’s continued value for this important customer. Separately, we have been part of another major infrastructure project in Denmark, a bridge connecting Copenhagen to Fermin. As shown in Slide 12, using Enerpac’s JS250 jackup system, the 32 meter long and eight meter wide bridge element weighing more than 100 tons was successfully positioned with millimeter precision.

And in Saudi Arabia, Enerpac’s HLT systems will support the building of a new football stadium in preparation for the two thousand and thirty four World Cup. Finally, Enerpac was proud to be part of the relocation of a 160 year old Swedish church. Workers utilized Enerpac’s EVO Synchronous Lifting System and 19 high tonnage cylinders to carefully raise the nearly 700 ton structure onto a relocation rig. The two day move of the historic wooden church to a new location was a major event in the country, drawing international media attention and even the King of Sweden. Our role in these projects highlights how we live our mission every day and how Enerpac’s technology makes complex, often hazardous jobs possible safely and efficiently for our customers.

Speaking of HLT, we will be exhibiting at CONEXPO in Las Vegas, the largest construction show in North America in March 2026. We believe our presence at large well attended industry shows like this is a critical part of advancing the Enerpac brand and this year’s exhibit will be complemented by the inclusion of DTA’s horizontal moving technology. As you heard in our remarks, we are proud of the actions we have taken this past year to advance competitive position and we remain excited about the future. Thank you to our team members worldwide for your ongoing commitment to our customers and partners and for making Enerpac a premier industrial tools and solutions provider. With that, we’d be happy to take questions.

Conference Operator: Your first question comes from the line of Tom Hayes with ROTH Capital Partners. Your line is now open. Please go ahead.

Tom Hayes, Analyst, ROTH Capital Partners: Good morning, guys. Congrats on the strong finish to the year.

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: Good morning, Tom. Thanks.

Darren Kozik, Chief Financial Officer, Enerpac Tool Group: Thank you.

Tom Hayes, Analyst, ROTH Capital Partners: Paul, I was wondering, could we dig into the EMEA market a little bit? It seemed like it got a little bit weaker as the year progressed. Is that primarily Europe? Maybe just kind of flesh that out a little bit? Because I know you don’t give guidance by region, but maybe just your thoughts on the market conditions as the year starts.

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: Yes, sure, Tom. Yes, I think it is primarily Europe. That’s the bulk of our EMEA region. And I think we did see softening from a macro standpoint, I would say, in Central And Southern Europe, has been weak and persistently weak. So I think that’s been a challenge, just the macro.

I would also say in addition, our service business in the region was lapping a pretty significantly large project that we had in 2024. So that was just another challenge on the year over year comp.

Tom Hayes, Analyst, ROTH Capital Partners: Okay. So you should have relatively easier comps this year, I would assume.

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: Yes. I think it’s assuming the macro doesn’t worsen or get better, yes.

Tom Hayes, Analyst, ROTH Capital Partners: All right. Maybe shifting gears a little bit. Congratulations on the strong e commerce performance. I know we’ve talked about it before and it seems like it’s taking off. Is that if you remind me, is that primarily U.

S. Or is that have you rolled that out globally now?

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: Sure. Yes. It’s actually global. So we if you recall a few years ago when we really started this effort, of course, we started in The US and and that’s, you know, really well in place now. We’ve been investing behind that.

And then about a year or so into it, did roll it out across most markets in Europe. I think we’re in something like 18 or 20 countries in that region including The UK and then we rolled it out in Australia about a year ago as well. So we’ll still evaluate whether it makes sense to roll out in additional markets. Those will obviously be smaller. But at the same time, we’re continuing to invest in the technology, the marketing, the analytics just to continue to drive strong growth on our e commerce business, which is margin accretive for us as well.

Darren Kozik, Chief Financial Officer, Enerpac Tool Group: Okay.

Tom Hayes, Analyst, ROTH Capital Partners: Maybe just lastly on the DTA integration, looks like it really kind of picked up steam in the fourth quarter. Where are you seeing really good traction that maybe is either geographically or end markets that you think you saw further opportunities there? Because like you said, you’ve got about 45% of your revenue came from cross sells. My guess is there’s probably more opportunity out there. Your general thoughts on DTA kind of going into year two?

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: Yes. No, we were really pleased with the progress that our team made on DTA in both the integration and obviously the commercial synergies. They had an excellent quarter. I’d say orders have been robust. Our backlog has expanded as we’ve implemented our strategy to cross sell their solutions to the existing, I’ll call it, Enerpac base of customers and also expand their sales beyond their traditional stronghold, which of course was Europe.

So a lot of the growth opportunities that we’ve seen have been in The U. S. Market. And that’s where I think we see a lot of the lead activity and a lot of the the upcoming order activity as well. You know, so they posted a pretty strong Q4.

Obviously, that’s ramped throughout the year. And I think that’s just a testament to the strong work that our team has led in conjunction with DTA on driving more efficient manufacturing process improvements and bringing our supply chain expertise to bear to DTA. So we’re really pleased. I think the investment thesis is truly playing out as we expected, especially from a commercial synergies perspective.

Tom Hayes, Analyst, ROTH Capital Partners: Okay. I appreciate it. I’ll leave it there. I’ll jump back in the queue.

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: Okay. Thanks, Tom.

Conference Operator: Your next question comes from the line of Daniel Moore with CJS Securities. Please go ahead.

Daniel Moore, Analyst, CJS Securities: Thank you. Paul, Darren, good morning. Thanks for taking the questions.

Darren Kozik, Chief Financial Officer, Enerpac Tool Group: Good morning, Dan. Hey, Dan.

Daniel Moore, Analyst, CJS Securities: You gave good color and so maybe it’s a little redundant. And I know you don’t disclose backlogs per se, but just entering fiscal twenty twenty six, obviously, Europe a little weaker, just described that. Overall, pipeline of opportunities, how would you kind of describe it relative to maybe how we entered the year a year ago in fiscal twenty twenty five? And any other color by geography would be great.

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: Yeah. I can start. Darren can also add some color, I think. But, Dan, I think our view is probably similar spot, frankly, to where we started the prior year just from a macro standpoint. Mean, obviously, still a lot of uncertainty While we have now seen the impact or at least the implementation of tariffs, of course, there’s still a lot of uncertainty about where those will end up.

I’d say most notably, obviously, with China in the current situation. So I think, you know, just given the uncertainty from a macro standpoint, we’re probably in a similar spot. Why, you know, our guidance is is a bit wider range this year at 1% to 4%, just depending on the macro and how that plays out over the next twelve months. But I think at the same time, maybe we have some reasons to be optimistic clearly if the tariff policies do kind of get solidified. If interest rates continue to come down, those will help.

And I think we’re still pretty bullish and optimistic around the infrastructure market. We’ve seen really good progress there. A lot of projects coming online that our team has been supporting, some that we highlighted on our prepared remarks. So I think on balance, yeah, reasons to be cautious, but maybe cautiously optimistic just as the macro situation plays out.

Darren Kozik, Chief Financial Officer, Enerpac Tool Group: No, I think you’re right, Paul. It’s definitely the infrastructure vertical, Dan, where we see really the build from an infrastructure perspective that’s both in The U. S. If there are bright spots in Europe, it’s in intra and some of that defense spending, while the rest of that economy is a little bit slower. So that’s where we’re obviously dedicating resources and keeping our eyes on and looking for growth there.

Daniel Moore, Analyst, CJS Securities: Absolutely. Good color on DTA and obviously good progress there. Maybe just the cadence for your fiscal twenty twenty six outlook. Darren, appreciate the color on margins for Q1. When we think about growth overall fiscal twenty twenty five up 1% organically, Q4 down 1% to 2%.

So do we think of fiscal Q1 kind of starting off similar to Q4 or closer to the low end of your full range? Just want to get a better sense for how you see things playing out for

Darren Kozik, Chief Financial Officer, Enerpac Tool Group: the first quarter or two? Yes. No, good question. And I think just a reminder for everyone, from a business perspective, whether it be margins or free cash flow, a significant amount of that comes through in the second half of the year. You saw that this year.

We’ll see that next year. Margins in Q1, we’ll see those tariff costs come through, Dan, as we talked about. So we will see pressure there. I think from a growth perspective, as Paul talked about earlier, a large part of the first half of the year will depend on Europe. We need to see some of that momentum come back.

I do think we’re positive on The Americas. So you saw a good performance in The Americas and APAC. We expect that to continue. And Europe’s a wildcard, as we talked about. So, that’s how we see it play out.

But I do think when you look at the comparables, we had a strong Q2 last year. So that will be a little bit tougher to lap. But I expect Q1 to maybe look a little bit more like Q4.

Daniel Moore, Analyst, CJS Securities: That’s helpful. And then maybe sneak in one more. Just obviously, really good progress continues on SG and A. Just talk a little color around the assumptions for gross margin as well as SG and A embedded in the ’26 guide? And I’ll circle back for any follow ups.

Thanks again.

Darren Kozik, Chief Financial Officer, Enerpac Tool Group: Yeah. We don’t specifically guide for line item, Dan. How I think about it is our gross margins, kind of the last couple of quarters, is where we’re sitting. I think we’re comfortable at that level. We do continue to work on the service business.

That’s a key piece of this. As that continues to improve, there could be some upside there in the second half of the year from a gross margin perspective. And really on SG and A, we are laser focused on that. You saw the benefits of that in Q4. I mean our SG and A as a percent of revenue was under 25%.

A lot of that is driven by volume leverage. So as we think about the first half of next year, that will ride up a little bit, but that’ll come back down in

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: the second half as volume plays out. I think that’s

Darren Kozik, Chief Financial Officer, Enerpac Tool Group: a little bit of a guide when we start to think about both lines in the P and L.

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: Yeah. And I I would add to that comment, and I think, you know, you’ll recall in q three, we announced a smaller restructuring program. We really didn’t see any impact nor do we expect to see that in q four benefit yet, but we’ll see that play out through the course of fiscal twenty six. So that will be some benefit for us on SG and A as well. And then I think Darren’s right on gross margin, but I would say over the midterm, we still have ample opportunities through PAC Power and Air PAC Performance to drive continued improvement in terms of conversion costs, in terms of sourcing and material costs.

Frankly, even footprint, continue to look at opportunities there. Obviously, there’s some longer, you know, pull in the 10 items that take time to execute, but I think we still feel very good about, the funnel of initiatives that we’ve got, based on COGS, and and obviously impacting gross margin in the midterm.

Darren Kozik, Chief Financial Officer, Enerpac Tool Group: And just to circle back, Dan, we think of the 1% to 4% organic growth as another year of beating the market and share gain, and that’s the premise. We have been doing that, and we believe we can continue to do that with the products we have.

Daniel Moore, Analyst, CJS Securities: Perfect. I’ll circle back. Thank you again.

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: Okay. Thank you.

Conference Operator: Your next question comes from the line of Steve Silver with Argus Research. Please go ahead.

Steve Silver, Analyst, Argus Research: Thanks, operator, and my congratulations on a productive year as well. In the prepared remarks, it sounded like the outlook for M and A maybe sounded a little bit more bullish compared to some recent quarters. And in the past, I know you guys have talked about the philosophy of acquiring high quality and performing businesses not really looking at distressed or turnaround situations. So I was hoping you could provide a little color in terms of what the thinking is for the more constructive outlook on M and A, whether it’s just more the strength of Enerpac’s balance sheet or any other competitive landscape changes that you’re seeing?

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: Yes. Sure, Steve. Thanks. Good morning. Yeah.

I think, you know, we remain pretty busy on the m and a front. We’re spending a lot of time and energy and resource there. Certainly, from a balance sheet perspective, obviously, very healthy with a lot of capacity and financial flexibility. And and as we remarked, you know, we’re retaining effectively a lot of dry powder to do things inorganically and and and sort of strike when the iron is hot. If I reflect on the past few years, I mean, we’ve looked at certainly a lot of interesting opportunities, but I think fundamentally on majority valuation has been an issue.

And we’ve always said that we will not overpay, and certainly we’ll walk away from things that don’t that don’t create value for Interpact and our shareholders.

Darren Kozik, Chief Financial Officer, Enerpac Tool Group: That said,

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: I think looking forward, I’m pretty encouraged by our funnel of opportunities. I would say that that has picked up pace. It continues to grow nicely. We’ve also augmented our resources from an m and a standpoint to expand the number of targets in our funnel as we head here into fiscal twenty six. And I think, you know, just the pace and the quality of deal flow overall has picked up, I would say, considerably in the in the past couple of quarters, and we continue to have very robust dialogue with any number of opportunities.

So it’s, you know, at the forefront of our work and thinking, but certainly, we remain extremely disciplined in our process with not only strategic, but obviously a financial and returns lens as well for our shareholders.

Steve Silver, Analyst, Argus Research: Great. Thanks for the color. And one more if I may. So APAC was really a key growth driver in fiscal twenty twenty five with the high single digit growth. Curious as to what proportion of that growth was seen from the second brand strategy and really as you’re entering fiscal twenty twenty six the outlook for continued growth in that second brand strategy?

Darren Kozik, Chief Financial Officer, Enerpac Tool Group: I think from a couple of pieces to talk about. I’ll talk to the geography and then turn it to Paul to talk about kind of the branding and second brand. I think what you heard in our prepared remarks is we had a fantastic year in India. That continues to be a double digit growth geography for us. We continue to invest there, more sales coverage, and we’re seeing great returns out of India.

But to the second piece is we did see that return in Australia, specifically in the mining sector. Mhmm. Know? So there was bullish growth coming out of both those geos, which really helped that we see a bright future both of

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: them in f y twenty six and beyond. Yeah. And, Steve, I would just comment on second brand specifically. Obviously, that’s an issue, you know, that’s we launched now a couple years ago. It’s it’s certainly we view as a long term initiative.

Year over year, we continue to see growth and good progress, but I’ll just remind folks, I mean, it is a limited number of SKUs. We’re talking, you know, in the mid 2 hundreds range versus, obviously, tens of thousands of SKUs for Enerpac. That said, we did see growth. We expect to see continued growth in the second brand, particularly in Asia Pac here in fiscal twenty, 2026. And part of that will be as we expand, distributors and and channel partners for the second brand.

We continue to do that, in second half fiscal twenty five and going into ’26 here. And then also, we are adding some additional product lines in fiscal twenty six or or skews or, you know, a different product, categories to that second brand. So we expect that to help us drive growth. But, you know, part of it is also a long term investment in marketing appropriately for that brand, the large brand, so that becomes, you know, more well known in the region. But, we’re pleased with the progress that we’ve made so far.

Steve Silver, Analyst, Argus Research: Great. Thanks for the additional color and best of luck in the New Year.

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: Okay. Thank you.

Conference Operator: Your next question comes from the line of Daniel Moore with CJS Securities. Please go ahead.

Daniel Moore, Analyst, CJS Securities: Thank you again. Appreciate the comments on the M and A outlook. Obviously, balance sheet extremely strong and cash flow is only going to tick higher. Just talk about with the stock pulling back here, you’re maybe if not cadence willingness to be a little bit more aggressive in terms of redeploying the $200,000,000 repurchase authorization, and how you’re thinking about balancing M and A versus buybacks here in the near term?

Darren Kozik, Chief Financial Officer, Enerpac Tool Group: I think as we’ve talked about, really from a buyback perspective, we’re opportunistic. And Q4 is a perfect example of that. We saw a window. We were able to invest back in ourselves, and that was the largest repurchase we’ve since the relaunch of Enerpac. But we will take advantage of those opportunities, Dan, when they’re out there.

In the absence of that, we continue to really push hard on M and A. DTA is now behind us. It’s integrated. You’ve seen the success we can drive with that. I mean, there’s nothing better proof positive than what we did in q four with DPA.

So, we will balance them equally. But if there’s opportunities from a repurchase perspective, we’ll take them when we

Steve Silver, Analyst, Argus Research: see them. Yeah. And I

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: would just I’d echo Darren’s comments. I mean, obviously, as we said, it’s always balanced capital allocation approach. You know, first priority is investment in the business. We feel we’ve done that and are continuing to do that. We referenced in the prepared remarks, you know, a number of cases where we’ve made capital investments in manufacturing and IT to drive further productivity, efficiency, support, stronger growth engine for the business.

And then certainly, you know, a heavy focus lens on m and a, but with a very disciplined approach. But at the same time, we are pleased that our board authorized the new $200,000,000 share repurchase authorization. So that that does give us obviously the the go ahead to, as Darren said, be opportunistic when we see that the stock is, know, in our view undervalued in the marketplace and we’ll continue to to do that throughout the year where it makes sense.

Daniel Moore, Analyst, CJS Securities: Really helpful. And and just on the m and a front, you gave a lot of color, but are you seeing potential sellers now willing to come back and have dialogues at rational multiples? I guess, obviously, early days of the tariffs, a lot of uncertainty kind of put things on pause. Are you seeing, you know, that that those discussions open back up a little bit?

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: Yeah. I I don’t know it so much that, Dan. I think it’s a mix. I I think we’re seeing a lot of, newer opportunities come into the funnel that are really interesting to evaluate. Again, obviously, they have to pass muster in terms of strategic and financial returns criteria.

You know? But we continue to have dialogue with folks that we have in the past as well, and situations may change there. So I think it’s really a mix. But I I would say, you know, broadly, our team has done a really nice job. It’s sort of priming the funnel with a lot of newer interesting opportunities that we’ve been evaluating.

Darren Kozik, Chief Financial Officer, Enerpac Tool Group: Great. Last

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: The only thing I would

Darren Kozik, Chief Financial Officer, Enerpac Tool Group: add is obviously Yep. Yep. No. I was gonna say, Dan, you know, we’re obviously investing more resources from an m and a perspective. We talked a little bit about that.

We do see opportunities opening, and we wanna be ready when they’re there. So we are making that investment back to find the right deals for the company.

Daniel Moore, Analyst, CJS Securities: Perfect. Cortlandt Bio, again mid teens this year, 10% Q4. Just talk about the outlook and whether double digit growth again is kind of reasonable embedded in your guide. Thank you.

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: Yeah. I think, you know, we remain very bullish on Portland. Obviously, it’s it’s in our other segment. It is our other segment. It’s certainly not related to our core tools business, but we definitely like the business a lot.

You know, in our view, you know, really strong growth engine, margin accretive effectively for us. We continue to invest appropriately in the business that has exposure to, you know, high growth end markets. We’ve got really, you know, blue chip customers in that business. We continue to drive a strong commercial funnel, you know, bring new products to market and ramp those commercially in partnership with our customers. So the business continues to perform well and our outlook continues to be very positive on that business from a growth and margin perspective.

Darren Kozik, Chief Financial Officer, Enerpac Tool Group: Thank you. Thank you.

Conference Operator: That concludes our Q and A session. I will now turn the call back over to Paul Sternleeb, President and Chief Executive Officer, for closing remarks.

Paul Sternleaf, President and Chief Executive Officer, Enerpac Tool Group: Okay. Thank you for joining us this morning. And for anyone at CONEXPO or planning to in March, please reach out to Travis so we can show you show off our HLT and DTA technology at the show. We will also be participating at the Baird Industrial Conference in Chicago on November 12 excuse me, November 12. And as a proud Milwaukee based company, I’d be remiss if I didn’t add, let’s go brewers.

Thank you, and have a good day.

Conference Operator: That concludes today’s conference call. Thank you all for joining. You may now disconnect. Everyone, have a great day.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.