Enerpac Tool Group Corp (NYSE: EPAC) stock lost over 5.9% on September 30th, 2020 (Source: Google finance) post Fiscal 2020 fourth quarter lower performance. Even though product sales rose 9% on a sequential basis, it fell 23% against the prior year. Tools products fell 20% while Cortland sales fell 39% yoy. Service was lost 45% in both quarters. North America fell 20%, while Asia and Mideast sales lost over 30%. Management says they are cautiously optimistic about the continued recovery over the coming quarters, given the resurgence of the virus requiring regional lockdown.
The group launched six new product families while finished 18 new projects, adding 22 new product families and over 370 new products. Going forward, they have multiple new projects coming in 2021, including advanced lifting systems, hydraulic pumps and bolting products. They are also releasing a fully integrated HTL and Enerpac bolting product line, finishing their three-tier strategy and opening full competitive landscape. The firm also protected their coverage strategy to ensure both distributors and customers do not experience a decline in Enerpac support. NPD was greater than 10% of the group’s product sales for the fourth consecutive quarter as they continued to drive innovation during the crisis. The firm had $2 million positive impact from HTL consistent with the third quarter.
On the brighter side, the rate of decline for IT&S product sales improved during the quarter and Europe continues to show recovery. Momentum is seen within their key verticals, with positive activity seen within power generation, especially in wind and nuclear, as well as general construction, rail and non-commercial aero.
The adjusted EBITDA margin during the quarter was 9%.The firm generated over $10 million in cash during the quarter while temporary cost cuts due to COVID-19 enabled them to generated $9 million in savings for the quarter. Leverage remains remained at 1.8 times trailing 12-month EBITDA while rose slightly from the 1.7 times at the end of the fourth quarter of fiscal 2019.