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Why Is Enerpac (EPAC) Up 38.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for Enerpac (EPAC - Free Report) . Shares have added about 38.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Enerpac due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Enerpac Q4 Earnings and Revenues Surpass Estimates
Enerpac reported better-than-expected fourth-quarter fiscal 2022 (ended Aug 31, 2022) results. Earnings and revenues beat estimates by 42.3% and 2.9%, respectively.
EPAC’s adjusted earnings per share were 37 cents, beating the Zacks Consensus Estimate of 26 cents. The bottom line increased 94.7% from 19 cents per share in the year-ago quarter.
Revenue Details
In the reported quarter, Enerpac Tool’s revenues were $151.8 million, reflecting a 4.4% increase from the year-ago quarter’s figure. The top line gained from a healthy performance at the Industrial Tools & Services and Other segments.
The top line surpassed the Zacks Consensus Estimate of $148 million.
Organic sales in the quarter under review were up 10% year over year, driven by 12% growth in product sales. Service revenues increased 3%. Movements in foreign currency had an adverse impact of 6% on the quarter’s revenues.
The segmental information is briefly discussed below.
Industrial Tools & Services (92% of fourth-quarter fiscal 2022 net sales): Revenues in the reported quarter totaled $139.7 million, reflecting a 4% increase from the year-ago figure. Year-over-year revenue growth was driven by market recovery from the pandemic worldwide and the impacts of pricing actions taken by EPAC.
Other (8% of net sales in third-quarter fiscal 2022): Revenues in the segment totaled $12.1 million, up 14% from the year-ago quarter’s number.
Margin Profile
In the reported quarter, Enerpac Tool’s cost of sales decreased 1.4% year over year to $78.1 million. It represented 51.4% of the quarter’s net sales compared with 54.5% in the year-ago quarter. The gross profit increased 11.2% to $73.7 million. The gross margin jumped 300 basis points to 48.6%.
The gross profit results in the quarter benefited from higher sales, partially offset by impacts of inflationary and supply-chain issues.
Selling, administrative and engineering expenses increased 20.8% year over year to $54.6 million. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were $32.1 million, up 75.4%. The adjusted EBITDA margin was 21.1% compared with 16.6% in the year-ago quarter.
Adjusted operating income was $27.2 million in the reported quarter, reflecting an increase from $19.3 million in the year-ago quarter. The adjusted operating margin was 17.9% compared with 13.2% in the year-ago quarter. Net financing costs increased 88.9% to $1.7 million.
Balance Sheet and Cash Flow
While exiting fiscal 2022, Enerpac Tool’s cash and cash equivalents totaled $120.7 million, down 14% from $140.4 million at the end of fiscal 2021. Long-term debt increased 14.3% sequentially to $200 million.
In the reported quarter, EPAC’s borrowing from the revolving credit facility was $40 million, and repayment on the same source was nil. Its net debt-to-adjusted EBITDA was 0.9X at the end of the fiscal fourth quarter compared with 1.1X at the end of the fiscal third quarter.
Enerpac Tool generated net cash of $44.5 million for its operating activities in the fourth quarter of fiscal 2022. EPAC generated net operating cash of $29.3 million in the year-ago quarter. Capital spending totaled $1.4 million, down 44% from $2.5 million reported in the year-ago quarter. Free cash inflow in the quarter was $43.1 million compared with a cash inflow of $27 million in the year-ago quarter.
In the quarter, EPAC did not pay out any cash dividend.
Outlook
Enerpac Tool anticipates its focus on growth and the ASCEND initiatives to be beneficial for fiscal 2023 (ending August 2023). Headwinds related to the global macroeconomic environment and unfavorable movements in foreign currency remain a concern.
For fiscal 2023, Enerpac Tool currently anticipates sales to be $565-$585 million. Adjusted EBITDA is expected to be $113-$123 million, including an ASCEND EBITDA benefit of $12-$18 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
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Why Is Enerpac (EPAC) Up 38.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Enerpac (EPAC - Free Report) . Shares have added about 38.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Enerpac due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Enerpac Q4 Earnings and Revenues Surpass Estimates
Enerpac reported better-than-expected fourth-quarter fiscal 2022 (ended Aug 31, 2022) results. Earnings and revenues beat estimates by 42.3% and 2.9%, respectively.
EPAC’s adjusted earnings per share were 37 cents, beating the Zacks Consensus Estimate of 26 cents. The bottom line increased 94.7% from 19 cents per share in the year-ago quarter.
Revenue Details
In the reported quarter, Enerpac Tool’s revenues were $151.8 million, reflecting a 4.4% increase from the year-ago quarter’s figure. The top line gained from a healthy performance at the Industrial Tools & Services and Other segments.
The top line surpassed the Zacks Consensus Estimate of $148 million.
Organic sales in the quarter under review were up 10% year over year, driven by 12% growth in product sales. Service revenues increased 3%. Movements in foreign currency had an adverse impact of 6% on the quarter’s revenues.
The segmental information is briefly discussed below.
Industrial Tools & Services (92% of fourth-quarter fiscal 2022 net sales): Revenues in the reported quarter totaled $139.7 million, reflecting a 4% increase from the year-ago figure. Year-over-year revenue growth was driven by market recovery from the pandemic worldwide and the impacts of pricing actions taken by EPAC.
Other (8% of net sales in third-quarter fiscal 2022): Revenues in the segment totaled $12.1 million, up 14% from the year-ago quarter’s number.
Margin Profile
In the reported quarter, Enerpac Tool’s cost of sales decreased 1.4% year over year to $78.1 million. It represented 51.4% of the quarter’s net sales compared with 54.5% in the year-ago quarter. The gross profit increased 11.2% to $73.7 million. The gross margin jumped 300 basis points to 48.6%.
The gross profit results in the quarter benefited from higher sales, partially offset by impacts of inflationary and supply-chain issues.
Selling, administrative and engineering expenses increased 20.8% year over year to $54.6 million. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were $32.1 million, up 75.4%. The adjusted EBITDA margin was 21.1% compared with 16.6% in the year-ago quarter.
Adjusted operating income was $27.2 million in the reported quarter, reflecting an increase from $19.3 million in the year-ago quarter. The adjusted operating margin was 17.9% compared with 13.2% in the year-ago quarter. Net financing costs increased 88.9% to $1.7 million.
Balance Sheet and Cash Flow
While exiting fiscal 2022, Enerpac Tool’s cash and cash equivalents totaled $120.7 million, down 14% from $140.4 million at the end of fiscal 2021. Long-term debt increased 14.3% sequentially to $200 million.
In the reported quarter, EPAC’s borrowing from the revolving credit facility was $40 million, and repayment on the same source was nil. Its net debt-to-adjusted EBITDA was 0.9X at the end of the fiscal fourth quarter compared with 1.1X at the end of the fiscal third quarter.
Enerpac Tool generated net cash of $44.5 million for its operating activities in the fourth quarter of fiscal 2022. EPAC generated net operating cash of $29.3 million in the year-ago quarter. Capital spending totaled $1.4 million, down 44% from $2.5 million reported in the year-ago quarter. Free cash inflow in the quarter was $43.1 million compared with a cash inflow of $27 million in the year-ago quarter.
In the quarter, EPAC did not pay out any cash dividend.
Outlook
Enerpac Tool anticipates its focus on growth and the ASCEND initiatives to be beneficial for fiscal 2023 (ending August 2023). Headwinds related to the global macroeconomic environment and unfavorable movements in foreign currency remain a concern.
For fiscal 2023, Enerpac Tool currently anticipates sales to be $565-$585 million. Adjusted EBITDA is expected to be $113-$123 million, including an ASCEND EBITDA benefit of $12-$18 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.