NEW
YORK, Nov. 21, 2024 /PRNewswire/ -- Argus
Research, an independent investment research firm, has launched
Equity Research Report coverage on Enerpac Tool Group Corp.
(NYSE: EPAC).
Click Here to view the full Argus Equity Research
Report.
COMPANY HIGHLIGHTS: Excerpts (as conveyed by Argus
Analyst Steve Silver) include:
EPAC: A premier industrial tools, services, technology and
solutions company
- Diversified Global Business: Enerpac is a diversified
provider of industrial products and services, with a broad vertical
market focus and geographic operating footprint. The company
engages in the design, manufacture and distribution of branded
hydraulic and mechanical tools and leverages its expertise to
provide high margin services to industries including
refinery/petrochemical; industrial maintenance, repair and
operations (MRO), infrastructure, power generation, machining &
manufacturing and mining, among many others.
- Large Serviceable Market Opportunity: We see robust
growth opportunities for its target vertical markets. In focusing
on infrastructure, rail, wind and industrial MRO as its core target
markets, as well as a geographic focus on the Asia Pacific region, we see Enerpac
participating in markets that are expanding, in part, due to the
need for global investment to upgrade aging infrastructure and in
clean energy/climate control initiatives. Enerpac estimates a
serviceable market opportunity between $2
billion and $3 billion for
these target verticals, which currently comprise a modest portion
of the current revenue mix, and compares favorably to its current
annual revenue run rate over $600
million.
- ASCEND Program Driving Sustained Operating Efficiency:
In March 2022, Enerpac began
implementing its ASCEND transformation program, which was designed
to accelerate organic growth strategies, improve operational
excellence and production efficiency, and drive efficiency and
SG&A productivity throughout the organization. At its formal
completion at the end of fiscal 2024, the company invested
$75 million in the program, and
exceeded its increased targeted annual operating profit improvement
of $50-$60
million by the end of fiscal 2023, a full year ahead of
plan.
- Improving Margins: In achieving this operating profit
improvement, Enerpac's streamlining of its manufacturing
operations, supply chain rationalization and low-cost country
sourcing has improved gross margins, which expanded by nearly 180
basis points to 51.1% in fiscal 2024. The company also reported a
50 basis point improvement in adjusted SG&A expense in fiscal
2024, resulting in an adjusted EBITDA of margin of 25.0%, up nearly
1100 basis points since fiscal 2021. We anticipate more modest, but
continuing margin expansion over the coming years.
- Fiscal 2025 Guidance: In October
2024, Enerpac announced guidance for fiscal 2025, including
organic revenue growth of 0% to 2% at Enerpac. Net sales, including
the full year contribution from DTA (acquired September 2024) is forecast at $610 million to $625
million, which would represent growth of 5% at the midpoint.
Its fiscal 2025 adjusted EBITDA forecast of $150 million to $160
million, represents a margin of 25.1% at the midpoint, which
includes a 50 basis point improvement in the base business over
FY24, but is largely offset by dilutive, but still profitable DTA
margins.
- Healthy Balance Sheet: As of August 31, 2024, Enerpac had $167.1 million in cash and net debt of
$27 million, with a leverage rate of
0.2 times net debt to trailing adjusted EBITDA, well below its
target range of 1.5-2.5 times (0.5-times on a pro forma basis
including the DTA acquisition, which closed after fiscal year end).
We see robust free cash flow ($85
million-$95 million guided for
fiscal 2025), enabling continued capital investment in the
business, strategic M&A and returning capital to
shareholders.
INVESTMENT THESIS: Click Here to view full
Argus Equity Research Report and Investment Thesis.
Enerpac Tool Group Corp. (NYSE:
EPAC) www.enerpactoolgroup.com
Founded in 1910, Menomonee Falls,
Wisconsin-based Enerpac Tool Group Corp. is a premier
industrial tools, services, technology and solutions company
serving a broad and diverse set of customers and end markets for
mission critical applications in more than 100 countries. Enerpac's
businesses are global leaders of high pressure hydraulic tools,
controlled force products and service solutions that help customers
around the world safely, reliably and efficiently tackle some of
the most challenging, complex, and often hazardous jobs.
For more information please contact:
Travis
Williams
Senior Director, Investor Relations
travis.williams@enerpac.com
About Argus Research Corp.
Headquartered in NYC, Argus Research (www.argusresearch.com) is
a leading independent equity research firm (est. 1934) ̶
providing fundamental and quantitative research coverage on
more than 1,600 companies across all 11 sectors of the S&P 500,
as well as macroeconomic and equity market forecasts, thematic
research, model portfolios and IPO research. In addition, Argus has
recently committed to providing a company sponsored research
solution for small & mid-cap companies seeking coverage.
Argus's CSR Research Reports & earnings estimates (if
applicable) are available on major research / earnings estimate
aggregator platforms, including Bloomberg, Thomson Reuters, Factset
and S&P Global.
For more Information please contact:
Darrell Stone
646-747-5438
dstone@argusresearch.com
Argus Research Co. has received a flat fee from the company
discussed in this report as part of a Sponsored Research agreement
between Argus and the company. No part of Argus Research's
compensation is directly or indirectly related to the content of
this assessment or to other opinions expressed in this report.
Please refer to the full Argus report and the disclaimer for
complete disclosures.
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