Enerpac Tool Group (EPAC) Q4 2024 earnings summary

Executive summary

• Fiscal 2024 delivered 2.2% organic revenue growth and 8% adjusted EBITDA growth, with margin expanding 220 basis points to 25.0%, outpacing a soft industrial market.

• Adjusted EPS increased 19% to $1.72, and free cash flow reached $70 million, reflecting strong operational efficiencies and SG&A productivity.

• The Ascend transformation program concluded, doubling adjusted EBITDA since 2021 and reducing related expenses.

• The DTA acquisition expands capabilities into horizontal movement solutions, broadening product offerings and geographic reach.

• New executive leadership appointments, including a new CFO and EVP of Operations, were announced.

Financial highlights

• Fiscal 2024 net sales were $590 million, down 1.5% year-over-year, but organic sales rose 2.2%; IT&S segment net sales grew 2.9% to $571 million.

• Gross margin expanded 180 basis points to 51.1%, and adjusted EBITDA margin improved to 25.0% from 22.8% in fiscal 2023.

• Adjusted SG&A expense declined 4% year-over-year, improving as a percent of sales by 60 basis points to 27.6%.

• Adjusted operating profit was $137 million, up 11% year-over-year; operating margin improved to 20.6%.

• Free cash flow reached $70 million, an 82% conversion of net earnings, with $81 million in cash from operations.

Outlook and guidance

• Fiscal 2025 net sales guidance is $610–$625 million, with organic growth of 0–2% and total growth (including DTA) of 3–6%.

• Adjusted EBITDA guidance is $150–$160 million, with a margin of 25.1% at midpoint; free cash flow projected at $85–$99 million.

• Guidance assumes no broad-based global recession and targets market share gains despite a declining industrial market.

• CapEx for 2025 is elevated due to headquarters build-out.

• Targeting at least 100% free cash flow conversion by fiscal 2026.