MILWAUKEE — Enerpac Tool Group Corp. on Wednesday announced results for its fiscal second quarter ended Feb. 28, 2022.
“We are pleased to have achieved year-over-year core growth in all regions and encouraged by the sequential growth over the first quarter, despite the ongoing supply chain and logistic challenges,” said Paul Sternlieb, Enerpac Tool Group’s president and CEO. “We continue to see improvements in demand across several of our end markets but remain cautious as we head into the back half of our fiscal year given the continuing supply chain challenges and the very dynamic macroeconomic environment.”
Consolidated net sales for the second quarter of fiscal 2022 were $136.6 million compared to $120.7 million in the prior year second quarter. Core sales improved 16% year over year, with product sales up 16% and service revenues up 13%. The impact from foreign currency exchange rates decreased net sales by 2% in the quarter.
Fiscal 2022 second quarter net income and diluted earnings per share were $2.1 million and $0.03, respectively, compared to net income and diluted EPS of $3.6 million and $0.06, respectively, in the second quarter of fiscal 2021. Fiscal 2022 second quarter net income included:
- A restructuring charge of $1.8 million ($1.7 million, or $0.03 per share, after tax) attributable to further actions to flatten and simplify the organizational structure;
- Impairment & divestiture charges of $1.1 million ($0.8 million, or $0.01 per share, after tax) related to intangible assets from historical acquisitions;
- Business review charges of $2.5 million ($2.3 million, or $0.04 per share, after tax) related to external support for the deep dive business review;
- Senior leadership transition charges of $1.7 million ($1.6 million, or $0.03 per share, after tax); and
- Tax expense of $0.2 million ($0.00 per share) related to equity compensation deferred tax adjustments.
Fiscal 2021 second quarter net income included an impairment & divestiture charge of $0.4 million ($0.3 million, or $0.01 per share, after tax), restructuring charges of $0.6 million ($0.6 million, or $0.01 per share, after tax); and tax benefits of $0.6 million ($0.01 per share) related to equity compensation deferred tax adjustments. Excluding the items detailed above, adjusted diluted EPS was $0.14 for the second quarter of fiscal 2022 compared to $0.06 in the comparable prior year period.
Consolidated net sales for the six months ended February 28, 2022 were $267.5 million, compared to $240.1 million in the comparable prior year period. Core sales increased 13% year over year, while the net impact of foreign currency decreased net sales 1%. Fiscal 2022’s first half net income and diluted EPS were $5.3 million and $0.09, respectively, compared to net income and diluted EPS of $8.4 million and $0.14, respectively, in the comparable prior year period.
“As we move into the back half of our fiscal year, our focus is on successfully executing on our new ASCEND transformation program and accelerating shareholder value creation," Sternlieb said. "Despite the strong quarter, the turmoil of global events in the last month and the resulting macroeconomic challenges have created second half headwinds and uncertainty in our markets, and as such we are adjusting our full year guidance for fiscal 2022.
“Factors such as the stronger U.S. dollar, which accounts for roughly half of the impact to our new net sales guidance, continued inflationary pressures, continued supply chain disruptions as well as greater supply chain difficulties resulting from the Russia-Ukraine conflict and, to a lesser extent product sold directly into Russia which has been suspended to comply with sanctions, have caused us to revise our full year sales guidance, to a new range of $560 to $580 million. While we have some potential tailwinds that could help support growth, we remain cautious. We continue to expect incremental EBITDA margins of 35% to 45% excluding the impact of foreign currency.”