Why Enerpac Tool Group Shares Are Trading Higher Today

Enerpac Tool Group Corp EPAC shares are trading higher by around 12% after the company reported Q4 FY23 results and issued FY24 guidance.

The company reported revenue from continuing operations of $160.6 million, up 6% Y/Y. Core sales grew 9%, with product sales up 14% Y/Y and service revenues down 12% Y/Y.

Adjusted EBITDA from continuing operations rose 31% Y/Y to $40.1 million, with a margin expansion of 480 basis points Y/Y to 24.9%.

Adjusted EPS from continuing operations of $0.42 came above the year-ago figure of $0.35.

As of August 31, 2023, cash and cash equivalents stood at $154.4 million. 

Repurchase: The company purchased about 1.4 million shares of its common stock in Q4 FY23 for around $37 million under its share repurchase program announced in March 2022.

Paul Sternlieb, President & CEO, said, "We generated revenue and free cash flow at the high end of our guidance range, while adjusted EBITDA well outpaced our expectations. We were equally pleased with the benefit of our ASCEND transformation program. In fiscal 2023, the first full year of the program, we achieved our targeted adjusted EBITDA benefits a year ahead of plan and remain on track to attain our 25% adjusted EBITDA margin target by fiscal 2025."

Outlook: For FY24, EPAC expects net sales of $590 million-$605 million, with core growth of about 2%-4%, adjusted EBITDA within $142 million-$152 million, and FCF of $60 million-$70 million. 

"Our guidance for fiscal 2024 reflects a fair degree of caution, given the continued uncertainty in the macro environment. However, we are confident in Enerpac's ability to outperform the industry and gain share based on the success of our four-pillar growth strategy, and we remain committed to our multi-year financial framework of 6% to 7% compound annual growth of organic revenue through fiscal 2026," said Paul Sternlieb.

Price Action: EPAC shares are up 12.7% at $29.31 on the last check Tuesday.