Enerpac Tool Group Announces Initiatives to Improve Shareholder Value

MILWAUKEE–(BUSINESS WIRE)–Enerpac Tool Group Corp. (NYSE: EPAC) (“Enerpac” or the “Company”) today announced that its Board of Directors and management team are taking steps to improve shareholder returns, including the launch of ASCEND, a new transformation program focused on accelerating profit growth and efficiency across the business. In addition to the transformation, the Company also announced today the authorization of a 10 million share buyback program.

Paul Sternlieb, President and CEO of Enerpac Tool Group, said, “This is an important and exciting time for Enerpac Tool Group. Our second quarter financial results announced today demonstrate the underlying strength of our portfolio of targeted industrial tools and services. While we are still operating in a challenging macro environment, we are now taking decisive action to position the business for its next phase of growth and shareholder value creation.

Executing the ASCEND transformation program to drive growth and efficiency

“Over the past several months, we have conducted an in-depth holistic review of our business which has confirmed that we have many exciting opportunities to accelerate our organic growth and expand our margins by improving how we go to market, innovate, source materials, manufacture products and serve our customers. Through ASCEND, we will focus on simplifying our business using 80/20 processes and Lean methodologies to get even closer to our end customers, optimize our manufacturing footprint and establish a more efficient organizational structure,” continued Mr. Sternlieb.

Under ASCEND, the Company will focus on the following key initiatives:

  • Accelerate organic growth go-to-market strategies including improved business efficiency, vertical market-specific business and product strategies, channel optimization through its 80/20 approach, strategic pricing optimization and selective innovation to meet broader and emerging demands of the market.
  • Improve operational excellence and production efficiency using a Lean approach. The company will also continue to simplify its business by further optimizing its footprint, accelerating global strategic sourcing and indirect spend optimization, and streamlining SKUs in line with its 80/20 approach.
  • Increase the efficiency and productivity of sales, sales and administrative costs by better leveraging resources to create a more efficient and agile organization. The Company intends to optimize G&A through the consolidation and implementation of additional shared services. In addition, the Company intends to strengthen its the effectiveness of the sales force by improving sales and channel coverage, while flattening its structure to be closer to customers. In addition, the Company will also seek to further simplify and streamline its legal entity structure.

With elements of the program intended to drive both organic growth and improved margins, the initial phase of ASCEND will focus more on improving efficiency and reducing operating costs. The company expects to generate an additional $40-50 million in annual adjusted EBITDA from the run of ASCEND, with the full run rate of adjusted EBITDA expected to be reflected in its results at the end of the year. financial year 2024 and be fully integrated into its financial year 2025. projections. Enerpac plans to invest approximately $60-65 million over the next 30 months to support ASCEND initiatives.

In addition to the ASCEND program, Enerpac will continue to focus on several key organic growth initiatives, including enhanced new product development; digital and IOT enablement in its products, services and go-to-market strategy; and stronger regional growth strategies in developing markets. The Company also plans to pursue a disciplined M&A strategy while continuing to focus on the industrial tools and services market.

“We plan to align incentives to achieve our targeted results, with the objectives of generating enhanced performance, including higher growth and return on investment, and achieving an EBITDA margin above our previous target of 25%, which we believe will generate better returns for shareholders. As we embark on this journey, we will take the bold and necessary steps to deliver consistent top and bottom results, in line with other leading industrial companies. order,” Mr. Sternlieb said.

Return of capital to shareholders

The Company also announced that its Board of Directors has authorized a new share buyback program, under which it will repurchase up to 10 million common shares. The shares may be purchased through open market transactions from time to time, privately negotiated transactions and through 10b5-1 trading plans and will be subject to customary internal approval. The Company had suspended its previous redemption authorization in May 2020 due to the uncertainty surrounding the COVID-19 pandemic.

Mr. Sternlieb continued, “The Board’s decision to authorize a new share buyback program and our intention to repurchase shares remain an important aspect of our balanced capital allocation strategy. This program reflects the confidence of our Board of Directors in the strong financial position of Enerpac Tool Group and the strong underlying cash-generating capabilities of our business as we execute the ASCEND transformation program. We anticipate that our available liquidity, existing credit facilities and access to capital markets will also support a disciplined M&A strategy as we continue to identify complementary additions to Enerpac Tool Group’s portfolio.

The timing, volume and nature of share repurchases will depend on market conditions, applicable securities laws and other factors. There can be no assurance that any particular amount of Common Shares will be redeemed. Any or all redemptions may be implemented under a Rule 10b5-1 trading plan, which would permit redemptions under predefined terms at times when the Company might otherwise be prevented from doing so under insider trading laws or due to self-imposed blackout periods. The Company’s buyback program may be extended, shortened or canceled at any time by the Board of Directors.

Fiscal Second Quarter Earnings Report

Enerpac Tool Group also issued a separate press release announcing its results for the second quarter ended February 28, 2022, which can be viewed on its Investor Relations page at https://ir.enerpactoolgroup.com/.

Safe Harbor Statement

Some of the comments above represent forward-looking statements made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. Management cautions that such statements are based on current estimates of future performance and are highly dependent on various factors, which could cause difference between actual results and these estimates. Among other risks and uncertainties, the results of Enerpac Tool Group are subject to risks and uncertainties arising from general economic conditions, supply chain risk, increased material and labor costs. work, the COVID-19 pandemic, including the impact of the pandemic or related government responses on the Company’s business, the business of the Company’s customers and suppliers, and the mobility of employees, and whether the site-specific health and safety issues related to COVID-19 may necessitate the shutdown of operations for a period of time, volatility in oil prices, variation in customer demand, impact of geopolitical activity on economy, including Russia’s invasion of Ukraine and international sanctions imposed in response, continued market acceptance of the Company’s new product launches, successful integration of acquired situations, the impact of restructurings, the ability of the Company to achieve its plans or objectives related to the ASCEND program, including assumptions underlying its calculation of the expected additional EBITDA, the operating margin risk due to the competitive pricing and operational efficiency, changes in tax laws, foreign currency fluctuations and interest rate risk. See the company’s Form 10-K for the fiscal year ended August 31, 2021 filed with the Securities and Exchange Commission for more information on risk factors. Enerpac Tool Group undertakes no obligation to publicly update or revise any forward-looking statements as a result of new information, future events or for any other reason.

About the Enerpac Tool Group

Enerpac Tool Group is a leading industrial tools and services company serving a wide range of customers in more than 100 countries. The company’s businesses are world leaders in high-pressure hydraulic tools, force-controlled products and solutions for precise positioning of heavy loads that help customers safely and reliably tackle some of the toughest jobs in the world. The company was founded in 1910 and is based in Menomonee Falls, Wisconsin. Common stock of Enerpac Tool Group trades on the NYSE under the symbol EPAC. For more information about Enerpac Tool Group and its business, visit the company’s website at www.enerpactoolgroup.com.

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