Key Takeaways:
- Enerpac reported adjusted EPS of $0.60, beating the $0.49 consensus estimate.
- Revenue rose 6% to $167.6 million, with organic growth of 3%.
- Gross margin expanded 260 basis points to 53%, helped by tariff refunds.
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Enerpac beats Q3 estimates by 22% as margins expand 260 bps
Enerpac Tool Group reported fiscal Q3 adjusted EPS of $0.60, beating the $0.49 consensus by 22 percent.
"We were pleased with the performance of our business and the solid growth we delivered in the third quarter," Paul Sternlieb, Enerpac's president and chief executive officer, said.
Revenue reached $167.6 million in the period ended May 31, up 6 percent from $158.7 million a year earlier and above the $164.5 million consensus estimate. Gross profit margin widened 260 basis points to 53 percent, including a $5.7 million net benefit from an expected refund of IEEPA tariffs. Adjusted EBITDA rose to $46.9 million from $41 million, with margin expanding 210 basis points to 28 percent.
The company narrowed its full-year guidance, projecting revenue of $635 million to $645 million and adjusted EBITDA of $151 million to $156 million, down from a prior range of $158 million to $163 million. Enerpac also announced an agreement to acquire Specialized Fabrication Equipment Group LLC, a provider of fabrication and welding equipment, to expand its presence in higher-growth end markets.
Within the Industrial Tool & Service segment, product sales increased 5 percent organically year over year, while service revenue declined 8 percent organically. Service revenue improved 17 percent sequentially, showing progress in the company's turnaround efforts. Cortland Biomedical, the company's smaller medical-device business, posted 25 percent organic sales growth.
Net earnings for the quarter were $29.8 million, or $0.58 per diluted share, compared with $22 million, or $0.41, a year earlier. The company repurchased about 420,000 shares for $15 million during the quarter, leaving about $120 million remaining under its $200 million buyback authorization.
Enerpac ended the quarter with $115.7 million in cash and $184.8 million in debt, resulting in a net debt-to-adjusted-EBITDA ratio of 0.5 times. Cash from operations through nine months totaled $69 million, up from $56 million in the prior-year period.
The guidance revision reflects near-term pressure from the service business and geopolitical uncertainty, CFO Darren Kozik said on the earnings call. The company now expects adjusted diluted EPS of $1.84 to $1.89, compared with its prior forecast of $1.85 to $1.92.
Enerpac shares have fallen about 7.9 percent year to date, underperforming the S&P 500's 10.1 percent gain. The earnings beat signals stronger-than-expected operational performance, though the lowered EBITDA guidance tempers the outlook. Investors will watch the company's fiscal fourth-quarter earnings call for updates on the SFE Group acquisition and service segment recovery.
This article is for informational purposes only and does not constitute investment advice.
