Enerpac Tool Group (NYSE: EPAC) Q1 2026 earnings show solid profit and buybacks
Filing Impact
Filing Sentiment
Form Type
10-Q
Enerpac Tool Group Corp. reported modestly softer results for the quarter ended November 30, 2025. Net sales were $144.2 million, down 1% from $145.2 million a year ago, as product revenue grew but service activity declined. Net earnings were $19.1 million versus $21.7 million, and diluted earnings per share were $0.36 compared with $0.40.
Gross margin slipped to 50.7% from 51.4%, mainly due to weakness in the service business, particularly in the United Kingdom, and higher tariff‑driven costs. The IT&S segment generated $138 million of sales and a 25.9% operating margin. Enerpac produced $16 million of operating cash flow, ended the quarter with $139 million of cash and $188.8 million of term‑loan debt, and had no borrowings on its $400 million revolver.
The company continued returning cash to shareholders, repurchasing and retiring 376,814 shares for $14.9 million under a new $200 million authorization, leaving $185.3 million available.
Positive
- None.
Negative
- None.
Insights
Enerpac delivered solid profitability and cash flow despite a small revenue and EPS decline driven by weaker service activity.
Enerpac generated
Cash generation and the balance sheet look conservative. Operating cash flow improved to
Going forward, performance will depend on stabilizing the service business and managing tariff‑related cost pressures, while sustaining product growth and margin initiatives highlighted in the business model discussion. Foreign‑exchange movements and the mix between higher‑margin products and more volatile services, as described in segment commentary for the quarter ended
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended November 30, 2025
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
Commission File No. 1-11288
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(Exact name of registrant as specified in its charter)
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| (State of incorporation) | (I.R.S. Employer Id. No.) | |||||||
Mailing address: P. O. Box 3241, Milwaukee, Wisconsin 53201
(Address of principal executive offices)
(262 ) 293-1500
(Registrant’s telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Ticker Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated Filer | ☐ | ||||||||||||||||||
| Non-accelerated Filer | ☐ | Smaller reporting company | ||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ¨ No ☒
The number of shares outstanding of the registrant’s Class A Common Stock as of December 15, 2025 was 52,776,305 .
Table of Contents
TABLE OF CONTENTS
| Page No. | |||||
Forward-Looking Statements and Cautionary Factors | 1 | ||||
Part I—Financial Information | |||||
Item 1—Condensed Consolidated Financial Statements (Unaudited) | |||||
Condensed Consolidated Statements of Earnings | 3 | ||||
Condensed Consolidated Statements of Comprehensive Income | 4 | ||||
Condensed Consolidated Balance Sheets | 5 | ||||
Condensed Consolidated Statements of Cash Flows | 6 | ||||
Notes to the Condensed Consolidated Financial Statements | 7 | ||||
Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18 | ||||
Item 3—Quantitative and Qualitative Disclosures about Market Risk | 22 | ||||
Item 4—Controls and Procedures | 22 | ||||
Part II—Other Information | |||||
Item 2—Unregistered Sales of Equity Securities and Use of Proceeds | 23 | ||||
Item 5—Other Information | 23 | ||||
Item 6—Exhibits | 24 | ||||
FORWARD-LOOKING STATEMENTS AND CAUTIONARY FACTORS
This quarterly report on Form 10-Q contains certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. The terms “may,” “should,” “could,” “anticipate,” “believe,” “estimate,” “expect,” “objective,” “plan,” “project” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements include statements regarding expected financial results and other planned events, including, but not limited to, anticipated liquidity, anticipated restructuring costs and related savings, anticipated future charges and anticipated capital expenditures. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual future events or results may differ materially from these statements. We disclaim any obligation to publicly update or revise any forward-looking statements as a result of new information, future events or any other reason.
The following is a list of factors, among others, that could cause actual results to differ materially from the forward-looking statements:
•supply chain issues, including shortages of adequate component supply or that increase our costs or cause delays in our ability to fulfill orders;
•failure to estimate customer demand properly may result in or could have an adverse impact on our business and operating results and our relationship with customers;
•the deterioration of, or instability in, the domestic and international economy and challenging end-market conditions, including as a result of geopolitical activity, including but not limited to, the armed conflicts in the Middle East and potential impacts to shipping in that area, as well as the invasion of Ukraine by Russia and international sanctions imposed in response thereto;
•decreased demand from customers in the oil & gas industry, including as a result of significant volatility in oil prices resulting from disruptions in the oil markets, geopolitical activity impacting shipping and imposition of climate-related laws and regulations that disadvantage the oil & gas industry;
•uncertainty over global tariffs or the financial impact of tariffs;
•our ability to maintain operational improvements from our continuous improvement program and from prior restructuring actions;
1
•logistics challenges, such as global freight capacity shortages, significant increases in freight costs or other delays in our ability to fulfill orders, including as a result of attacks on commercial ships in the Red Sea and adverse weather conditions;
•failure to collect on accounts receivable, including in certain foreign jurisdictions where sales are concentrated to a limited number of distributors or agents;
•risks related to our reliance on independent agents and distributors for the distribution and service of products;
•a significant failure in our information technology (IT) infrastructure, such as unauthorized access to financial and other sensitive data or cybersecurity threats;
•a material disruption at a significant manufacturing facility;
•competition in the markets we serve;
•currency exchange rate fluctuations, export and import restrictions, transportation disruptions or shortages, and other risks inherent in our international operations;
•regulatory and legal developments, including litigation, such as product liability and warranty claims, and contractual exposure to liabilities;
•unfavorable tax law changes may adversely affect results;
•failure to develop new products and the extent of market acceptance of new products and price increases;
•our ability to execute on our growth strategy;
•our ability to successfully identify, consummate and integrate acquisitions and realize anticipated benefits/results from acquired companies as part of our portfolio management process;
•the effects of divestitures and/or discontinued operations, including retained liabilities from, or indemnification obligations with respect to, disposed businesses;
•if the operating performance of our businesses were to fall significantly below normalized levels, the potential for a non-cash impairment charge of goodwill and/or other intangible assets, as they represent a substantial amount of our total assets;
•a global economic recession;
•the impact of elevated interest rates and material, labor, or overhead cost increases;
•our ability to comply with the covenants in our debt agreements and fluctuations in interest rates;
•our ability to attract, develop, and retain qualified employees;
•inadequate intellectual property protection or infringement of the intellectual property of others;
•our ability to access capital markets; and
•other matters, including those of a political, economic, business, competitive and regulatory nature contained from time to time in our U.S. Securities and Exchange Commission ("SEC") filings, including, but not limited to, those factors listed in the "Risk Factors" section within Item 1A of Part I of our Form 10-K for the fiscal year ended August 31, 2025 filed with the SEC on October 17, 2025 (the “fiscal 2025 Annual Report on Form 10-K”) and in the "Risk Factors" section within Item 1A of this Quarterly Report on Form 10-Q.
When used herein, the terms “we,” “us,” “our” and the “Company” refer to Enerpac Tool Group Corp. and its subsidiaries. Reference to fiscal years, such as "fiscal 2026," are to the fiscal year ending on August 31 of the specified year. Enerpac Tool Group Corp. provides free-of-charge access to its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments thereto, through its website, www.enerpactoolgroup.com, as soon as reasonably practicable after such reports are electronically filed with the SEC.
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PART I—FINANCIAL INFORMATION
Item 1—Condensed Consolidated Financial Statements (Unaudited)
ENERPAC TOOL GROUP CORP.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended November 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Net sales | $ | $ | |||||||||||||||||||||
| Cost of products sold | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Operating profit | |||||||||||||||||||||||
| Financing costs, net | |||||||||||||||||||||||
| Other expense, net | |||||||||||||||||||||||
| Earnings before income tax expense | |||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net earnings | $ | $ | |||||||||||||||||||||
| Earnings per share | |||||||||||||||||||||||
| Basic | $ | $ | |||||||||||||||||||||
| Diluted | $ | $ | |||||||||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
ENERPAC TOOL GROUP CORP.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
| Three Months Ended November 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Net earnings | $ | $ | |||||||||||||||||||||
| Other comprehensive income (loss), net of tax | |||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | |||||||||||||||||||||
| Pension and other postretirement benefit plans | |||||||||||||||||||||||
| Cash flow hedges | ( | ||||||||||||||||||||||
| Total other comprehensive (loss), net of tax | ( | ( | |||||||||||||||||||||
| Comprehensive income | $ | $ | |||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
ENERPAC TOOL GROUP CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
| (Unaudited) | |||||||||||
| August 31, 2025 | |||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Inventories, net | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets, net | |||||||||||
| Other long-term assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Current maturities of long-term debt | $ | $ | |||||||||
| Trade accounts payable | |||||||||||
| Accrued compensation and benefits | |||||||||||
| Income taxes payable | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt, net | |||||||||||
| Deferred income taxes | |||||||||||
| Pension and postretirement benefit liabilities | |||||||||||
| Other long-term liabilities | |||||||||||
| Total liabilities | |||||||||||
| Shareholders’ equity | |||||||||||
Class A common stock, $0.20 par value per share, authorized 168,000,000 shares, issued 52,773,605 and 52,946,336 shares, respectively | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Stock held in trust | ( | ( | |||||||||
| Deferred compensation liability | |||||||||||
| Total shareholders' equity | |||||||||||
| Total liabilities and shareholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
ENERPAC TOOL GROUP CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three Months Ended November 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Operating Activities | |||||||||||
| Net earnings | $ | $ | |||||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Stock-based compensation expense | |||||||||||
| Provision for deferred income taxes | |||||||||||
| Amortization of debt issuance costs | |||||||||||
| Provision for bad debts | |||||||||||
| Other non-cash expenses | |||||||||||
| Changes in components of working capital and other, excluding acquisitions and divestitures: | |||||||||||
| Accounts receivable | |||||||||||
| Inventories | ( | ( | |||||||||
| Trade accounts payable | ( | ||||||||||
| Prepaid expenses and other assets | ( | ( | |||||||||
| Income tax accounts | |||||||||||
| Accrued compensation and benefits | ( | ( | |||||||||
| Other accrued liabilities | ( | ||||||||||
| Cash provided by operating activities | |||||||||||
| Investing Activities | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Cash paid for business acquisitions, net of cash acquired | ( | ||||||||||
| Deferred acquisition payments | ( | ||||||||||
| Cash used in investing activities | ( | ( | |||||||||
| Financing Activities | |||||||||||
| Borrowings on revolving credit facility | |||||||||||
| Principal repayments on revolving credit facility | ( | ||||||||||
| Principal repayments on term loan | ( | ( | |||||||||
| Purchase of treasury shares | ( | ( | |||||||||
| Stock options, taxes paid related to the net share settlement of equity awards and other | ( | ( | |||||||||
| Payment of cash dividend | ( | ( | |||||||||
| Cash used in financing activities | ( | ( | |||||||||
| Effect of exchange rate changes on cash | ( | ||||||||||
| Net decrease in cash and cash equivalents | ( | ( | |||||||||
| Cash and cash equivalents - beginning of period | |||||||||||
| Cash and cash equivalents - end of period | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
General
Enerpac Tool Group Corp. (the "Company") is a premier industrial tools, services, technology and solutions provider serving a broad and diverse set of customers and end markets for mission-critical applications in more than 100 countries. Enerpac Tool Group's businesses are global leaders in providing high pressure hydraulic tools, controlled force products and solutions for precise positioning of heavy loads that help customers safely and reliably tackle some of the most challenging jobs around the world. The Company was founded in 1910 and is headquartered in Milwaukee, Wisconsin. The Company has one reportable segment, the Industrial Tools & Service Segment ("IT&S"), and an Other operating segment, which does not meet the criteria to be considered a reportable segment. The IT&S segment is primarily engaged in the design, manufacture and distribution of branded hydraulic and mechanical tools and in providing services and tool rental to the refinery/petrochemical; general industrial; industrial maintenance, repair and operations, machining & manufacturing; power generation, infrastructure, mining and other markets.
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles ("GAAP") for interim financial reporting and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The condensed consolidated balance sheet data as of August 31, 2025 was derived from the Company’s audited financial statements but does not include all disclosures required by GAAP. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes in the Company’s fiscal 2025 Annual Report on Form 10-K.
In the opinion of management, all adjustments considered necessary for a fair statement of financial results have been made. Such adjustments consist of only those of a normal recurring nature. Operating results for the three months ended November 30, 2025 are not necessarily indicative of the results that may be expected for the entire fiscal year ending August 31, 2026.
Accumulated Other Comprehensive Loss
The following is a summary of the components included within the Company's accumulated other comprehensive loss (in thousands):
| August 31, 2025 | |||||||||||
| Foreign currency translation adjustments | $ | $ | |||||||||
| Pension and other postretirement benefit plans | |||||||||||
| Cash flow hedges | ( | ||||||||||
| Accumulated other comprehensive loss | $ | $ | |||||||||
Property Plant and Equipment
The following is a summary of the components included within the Company's property, plant and equipment (in thousands):
| August 31, 2025 | |||||||||||
| Land, buildings and improvements | $ | $ | |||||||||
| Machinery and equipment | |||||||||||
| Gross property, plant and equipment | |||||||||||
| Less: Accumulated depreciation | ( | ( | |||||||||
| Property, plant and equipment, net | $ | $ | |||||||||
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Product Warranty Costs
The Company generally offers its customers an assurance warranty on products sold, although warranty periods may vary by product type and application. The reserve for future warranty claims, which is recorded within the "Other current liabilities" line in the Condensed Consolidated Balance Sheets, is based on historical claim rates and current warranty cost experience. The following is a roll-forward of the changes in product warranty reserves for the three months ended November 30, 2025 and 2024, respectively (in thousands):
| Three Months Ended November 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Beginning balance | $ | $ | |||||||||
| Provision for warranties | |||||||||||
| Warranty payments and costs incurred | ( | ( | |||||||||
| Impact of changes in foreign currency rates | ( | ( | |||||||||
| Ending balance | $ | $ | |||||||||
Recently Issued Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2023-09 “Income Taxes (Topic 470): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which establishes new income tax disclosures to consistently categorize and provide greater disaggregation of information in the rate reconciliation, including dollar value and percentage impacts of each component of the reconciliation, as well as further disaggregates income taxes paid. This guidance is effective for fiscal years beginning after December 15, 2024, and interim periods thereafter. The Company is evaluating the impact of the adoption of ASU 2023-09 on the consolidated financial statements.
In November 2024, the FASB issued Accounting Standards Update 2024-03 “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which is intended to improve disclosures about a public business entity's expenses, primarily through additional disaggregation of income statement expenses. ASU 2024-3 is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. The Company is evaluating the impact of the adoption of ASU 2024-03 on the consolidated financial statements.
In September 2025, the FASB issued Accounting Standards Update 2025-06 “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software” (ASU 2025-06), which replaces the stage-based capitalization model for the treatment of development costs of internal-use software with a principles-based framework, reflecting modern software development practices. In addition, ASU 2025-06 requires companies to capitalize software costs once management authorizes and commits to funding with probable completion and use. This guidance will be effective for annual reporting periods beginning after December 15, 2027, and for interim periods within annual reporting periods within those annual reporting periods, and allows multiple transition methods, including retrospective, prospective, or modified prospective application, with early adoption permitted. The Company is evaluating the impact of the adoption of ASU 2025-06 on the consolidated financial statements.
Note 2. Revenue from Contracts with Customers
Nature of Goods and Services
The Company generates its revenue under two principal activities, which are discussed below:
Product Sales: Sales of tools, heavy-lifting solutions, and biomedical textiles are recorded when control is transferred to the customer (i.e., performance obligation has been satisfied). For the majority of the Company’s product sales, revenue is recognized at a point in time when control of the product is transferred to the customer, which generally occurs when the product is shipped from the Company to the customer. For certain other products that are highly customized and have a limited alternative use, and for which the Company has an enforceable right of reimbursement for performance completed to date, revenue is recognized over time. We consider the input measure (efforts-expended or cost-to-cost) or output measure as a fair measure of progress for the recognition of over-time revenue associated with these custom products. For a majority of the Company’s custom products, machine hours and labor hours (efforts-expended measurement) are used as a measure of progress.
Service & Rental Sales: Service contracts consist of providing highly trained technicians to perform bolting, technical services, machining and joint-integrity work for our customers. These revenues are recognized over time as our customers simultaneously receive and consume the benefits provided by the Company. We consider the input measure (efforts-expended or cost-to-cost) or output measure as a fair measure of progress for the recognition of over-time revenue associated with service contracts. For a majority of the Company’s service contracts, labor hours (efforts-expended measurement) is used as the measure of progress when it is
8
determined to be a better depiction of the transfer of control to the customer due to the timing and pattern of labor hours incurred. Revenue from rental contracts (less than a year and non-customized products) is generally recognized ratably over the contract term, depicting the customer’s consumption of the benefit related to the rental equipment.
Disaggregated Revenue and Performance Obligations
The Company disaggregates revenue from contracts with customers by reportable segment and product line and by the timing of when goods and services are transferred. See Note 11, "Segment Information" for information regarding our revenue disaggregation by reportable segment and product line.
The following table presents information regarding revenues disaggregated by the timing of when goods and services are transferred (in thousands):
| Three Months Ended November 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Revenues recognized at point in time | $ | $ | |||||||||||||||||||||
| Revenues recognized over time | |||||||||||||||||||||||
| Total | $ | $ | |||||||||||||||||||||
Contract Balances
The Company's contract assets and liabilities are as follows (in thousands):
| August 31, 2025 | |||||||||||
| Receivables, which are included in accounts receivable, net | $ | $ | |||||||||
| Contract assets, which are included in other current assets | |||||||||||
| Contract liabilities, which are included in other current liabilities | |||||||||||
Receivables: The Company performs its obligations under a contract with a customer by transferring goods or services in exchange for consideration from the customer. The Company typically invoices its customers as soon as control of an asset is transferred and a receivable for the Company is established. Accounts receivable, net is recorded at face amount of customer receivables less an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for expected losses as a result of customers’ inability to make required payments. Management evaluates the aging of customer receivable balances, the financial condition of its customers, historical trends and the time outstanding of specific balances to estimate the amount of receivables that may be collected in the future and records the appropriate provision. The allowance for doubtful accounts was $3.2 million and $3.8 million at November 30, 2025 and August 31, 2025, respectively.
Contract Assets: Contract assets relate to the Company’s rights to consideration for work completed but not billed as of the reporting date on contracts with customers. The contract assets are transferred to receivables when the rights become unconditional. The Company has contract assets on contracts that are generally long-term and have revenues that are recognized over time.
Contract Liabilities: As of November 30, 2025 , the Company had certain contracts where there were unsatisfied performance obligations and the Company had received cash consideration from customers before the performance obligations were satisfied. The majority of these contracts relate to long-term customer contracts (project durations of greater than three months) and are recognized over time. The Company estimates that substantially all of the $6.1 million of contract liabilities will be recognized in net sales from satisfying those performance obligations within the next twelve months.
Timing of Performance Obligations Satisfied at a Point in Time: The Company evaluates when the customer obtains control of the product based on shipping terms, as control will transfer, depending upon such terms, at different points between the Company's manufacturing facility or warehouse and the customer’s location. The Company considers control to have transferred upon shipment or delivery because (i) the Company has a present right to payment at that time; (ii) the legal title has been transferred to the customer; (iii) the Company has transferred physical possession of the product to the customer; and (iv) the customer has significant risks and rewards of ownership of the product.
Variable Consideration: The Company estimates whether it will be subject to variable consideration under the terms of the contract and includes its estimate of variable consideration in the transaction price based on the expected value method when it is deemed probable of being realized based on historical experience and trends. Types of variable consideration may include rebates, incentives and discounts, among others, which are recorded as a reduction to net sales at the time when control of a performance obligation is transferred to the customer.
Practical Expedients & Exemptions: The Company elected to expense the incremental cost to obtaining a contract when the amortization period for such contracts would be one year or less. The Company does not disclose the value of unperformed obligations
9
for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed.
Note 3. Restructuring Charges
The Company has undertaken or committed to various restructuring initiatives, including workforce reductions, leadership changes, plant consolidations to reduce manufacturing overhead, satellite office closures, the continued movement of production and product sourcing to low-cost alternatives and the centralization and standardization of certain administrative functions. Liabilities for severance are generally to be paid within twelve months, while future lease payments related to facilities vacated as a result of restructuring are to be paid over the underlying remaining lease terms.
During the third quarter of fiscal 2025, in light of soft market conditions and as to further increase efficiency of its selling, general and administrative spend, the Company incurred restructuring costs of $5.9 million, of which approximately three-quarters were related to personnel actions and the remainder were charges associated with the Company's former headquarters location.
The following summarizes restructuring reserve activity for the IT&S segment and Corporate for the three months ended November 30, 2025 (in thousands):
| Three Months Ended November 30, 2025 | |||||||||||
| IT&S | Corporate | ||||||||||
| Balance as of August 31, 2025 | $ | $ | |||||||||
| Cash payments | ( | ( | |||||||||
| Impact of changes in foreign currency rates | ( | ||||||||||
| Balance as of November 30, 2025 | $ | $ | |||||||||
Note 4. Acquisitions
On September 4, 2024, the Company acquired 100% of the stock of DTA The Smart Move, S.A. ("DTA"), a global leader in the industrial heavy loads transportation industry, designing and manufacturing mobile robotic solutions. The acquisition provides a complement to Enerpac's Heavy Lifting Technology product line and combines the Company's existing focus on vertical lift with DTA's specialization in horizontal movement enabling the Company to provide more comprehensive solutions for customers. The Company acquired all of the assets and assumed certain liabilities of DTA for an initial purchase price of $26.7 million plus potential earn-out of €12.0 million to be paid at the end of the third year following the acquisition that is tied to the achievement of certain financial objectives with a maximum total purchase price of €36.0 million. The acquisition was funded with both cash on hand and borrowings from our existing credit facility. The Company initially recorded a liability of €2.3 million related to the potential earn-out payment and recognized $15.0 million of intangible assets made up of amortizable assets including $1.7 million in tradenames amortizable over three years , $3.6 million in customer relationship amortizable over fourteen years and $9.8 million in developed technology amortizable over seven years 2.5 million at November 30, 2025 and August 31, 2025. The Company finalized the fair value of assets and liabilities acquired as of August 31, 2025. There were no material adjustments to the preliminary fair value allocation upon finalization.
The excess of the acquisition purchase price over the fair value assigned to the assets acquired and liabilities assumed was recorded to goodwill. The value of the assets acquired and liabilities assumed as of the acquisition date were as follows (in thousands):
| Current assets | $ | ||||
| Property, plant and equipment | |||||
| Intangible assets | |||||
| Goodwill | |||||
| Long term assets | |||||
| Total assets acquired | |||||
| Current liabilities | ( | ||||
| Long term liabilities | ( | ||||
| Net assets acquired | $ | ||||
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Note 5. Goodwill, Intangible Assets and Long-Lived Assets
Changes in the gross carrying value of goodwill and intangible assets result from changes in foreign currency exchange rates, business acquisitions, divestitures and impairment charges. The changes in the carrying amount of goodwill for the three months ended November 30, 2025 are as follows (in thousands):
| IT&S | Other | Total | |||||||||||||||
| Balance as of August 31, 2025 | $ | $ | $ | ||||||||||||||
| Impact of changes in foreign currency rates | ( | ( | |||||||||||||||
| Balance as of November 30, 2025 | $ | $ | $ | ||||||||||||||
The gross carrying value and accumulated amortization of the Company’s intangible assets are as follows (in thousands):
| August 31, 2025 | |||||||||||||||||||||||||||||||||||||||||
| Weighted Average Amortization Period (Years) | Gross Carrying Value | Accumulated Amortization | Net Book Value | Gross Carrying Value | Accumulated Amortization | Net Book Value | |||||||||||||||||||||||||||||||||||
| Amortizable intangible assets: | |||||||||||||||||||||||||||||||||||||||||
| Customer Relationships | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| Patents | |||||||||||||||||||||||||||||||||||||||||
| Developed Technology | |||||||||||||||||||||||||||||||||||||||||
| Trademarks and tradenames | |||||||||||||||||||||||||||||||||||||||||
| Indefinite lived intangible assets: | |||||||||||||||||||||||||||||||||||||||||
| Tradenames | N/A | ||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||
Note 6. Debt
The following is a summary of the Company’s long-term indebtedness (in thousands):
| August 31, 2025 | |||||||||||
| Senior Credit Facility | |||||||||||
| Revolver | $ | $ | |||||||||
| Term Loan | |||||||||||
| Total Senior Indebtedness | |||||||||||
| Less: Current maturities of long-term debt | ( | ( | |||||||||
| Debt issuance costs | ( | ( | |||||||||
| Total long-term debt, less current maturities | $ | $ | |||||||||
11
Senior Credit Facility
On September 9, 2022, the Company refinanced its previous senior credit facility with a new $600 million senior credit facility, comprised of a $400 million revolving line of credit and a $200 million term loan, which is scheduled to mature in September 2027. The Company has the option to request up to $300 million of additional revolving commitments and/or term loans under the new facility, subject to customary conditions, including the commitment of the participating lenders. This facility replaces LIBOR with adjusted term SOFR as the interest rate benchmark and provides for interest rate margins above adjusted term SOFR ranging from 1.125% to 1.875% per annum depending on the Company’s net leverage ratio. In addition, a non-use fee is payable quarterly on the average unused amount of the revolving line of credit ranging from 0.15 % to 0.3 % per annum, based on the Company's net leverage. Borrowings under the credit facility bear interest at adjusted term SOFR plus 1.125% per annum.
The facility contains financial covenants requiring the Company to not permit (i) the net leverage ratio, determined as of the end of each of its fiscal quarters, to exceed 3.75 to 1.00 (or, at the Company’s election and subject to certain conditions, 4.25 to 1.00 for the covenants period during which certain material acquisitions occur and the next succeeding four testing periods) or (ii) the interest coverage ratio, determined as of the end of each of its fiscal quarters, to be less than 3.00 to 1.00 . Borrowings under the facility are secured by substantially all personal property assets of the Company and its domestic subsidiary guarantors (other than certain specified excluded assets) and certain of the equity interests of certain subsidiaries of the Company. The Company was in compliance with all covenants under the credit facility at November 30, 2025 .
At November 30, 2025 , there were $188.8 million in borrowings outstanding under the term loans, no borrowings outstanding under the revolving line of credit and $399.5 million available for borrowing under the revolving line of credit facility after reduction for $0.5 million of outstanding letters of credit issued under the facility.
Note 7. Fair Value Measurements
The Company assesses the inputs used to measure the fair value of financial assets and liabilities using a three-tier hierarchy. Level 1 inputs include unadjusted quoted prices for identical instruments and are the most observable. Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves. Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing an asset or liability.
The fair value of the Company’s cash and cash equivalents, accounts receivable, accounts payable and variable rate long-term debt approximated book value at both November 30, 2025 and August 31, 2025 due to their short-term nature and the fact that the interest rates approximated market rates. Foreign currency exchange contracts and interest rate swaps are recorded at fair value. The fair value of the Company's foreign currency exchange contracts was a net liability of less than $0.1 million and a net asset of less than $0.1 million at November 30, 2025 and August 31, 2025, respectively.
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Note 8. Derivatives
All derivatives are recognized in the balance sheet at their estimated fair value. The Company does not enter into derivatives for speculative purposes. Changes in the fair value of derivatives (not designated as hedges) are recorded in earnings along with the gain or loss on the hedged asset or liability.
The Company is exposed to market risk for changes in foreign currency exchange rates due to the global nature of its operations. In order to manage this risk, the Company utilizes foreign currency exchange contracts to reduce the exchange rate risk associated with recognized non-functional currency balances. The effects of changes in exchange rates are reflected concurrently in earnings for both the fair value of the foreign currency exchange contracts and the related non-functional currency asset or liability. These derivative gains and losses offset foreign currency gains and losses from the related revaluation of non-functional currency assets and liabilities (amounts included in "Other expense, net" in the Condensed Consolidated Statements of Earnings). The U.S. dollar equivalent notional value of these short duration foreign currency exchange contracts was $9.7 million and $10.3 million at November 30, 2025 and August 31, 2025, respectively. The fair value of outstanding foreign currency exchange contracts was a net liability of less than $0.1 million and a net asset of $0.1 million at November 30, 2025 and August 31, 2025, respectively. Net foreign currency loss (gain) (included in "Other expense, net" in the Condensed Consolidated Statements of Earnings) related to these derivative instruments are as follows (in thousands):
| Three Months Ended November 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Foreign currency loss (gain) | $ | $ | ( | ||||||||||||||||||||
During December 2022, the Company entered into an interest rate swap, with a maturity date of November 30, 2025, for the notional amount of $60.0 million at a fixed interest rate of 4.022 % to hedge the floating interest rate of the Company's term loan. Upon the maturation of this swap, during November 2025, the Company entered into a new interest rate swap, with a maturity date of September 9, 2027, for the notional amount of $90.0 million at a fixed interest rate of 3.4565 %. The interest rate swap was designated and qualified as a cash flow hedge. The Company uses the interest rate swap for the management of interest rate risk exposure, as the interest rate swap effectively converts a portion of the Company's debt from a floating rate to a fixed rate.
The Company records the fair value of the interest rate swap as an asset or liability on its balance sheet. The change in the fair value of the interest rate swap, a net loss of $0.2 0.1 million for the three months ended November 30, 2025 and 2024, respectively, is recorded in other comprehensive income.
Note 9. Earnings per Share and Shareholders' Equity
The Company's Board of Directors has authorized the repurchase and immediate retirement of shares of the Company's common stock under publicly announced share repurchase and retirement programs. Since the inception of the initial share repurchase program in fiscal 2012, the Company has repurchased 32,158,195 shares of common stock for $922.5 million. In October 2025, the Company's Board of Directors approved a new share repurchase program authorizing the repurchase of a total of $200 million dollars of the Company's outstanding common stock. The Company repurchased and retired 376,814 shares for $14.9 million in the three months ended November 30, 2025 and 109,860 shares for $4.4 million in the three months ended November 30, 2024. At November 30, 2025 , the maximum value of shares that may yet be purchased under the program is $185.3 million.
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The reconciliation between basic and diluted earnings per share is as follows (in thousands, except per share amounts):
| Three Months Ended November 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net earnings | $ | $ | |||||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted average common shares outstanding - basic | |||||||||||||||||||||||
| Net effect of dilutive securities - stock based compensation plans | |||||||||||||||||||||||
| Weighted average common shares outstanding - diluted | |||||||||||||||||||||||
Earnings per share: | |||||||||||||||||||||||
| Basic | $ | $ | |||||||||||||||||||||
| Diluted | $ | $ | |||||||||||||||||||||
| Anti-dilutive securities from stock based compensation plans (excluded from earnings per share calculation) | |||||||||||||||||||||||
The following table illustrates the changes in the balances of each component of shareholders' equity for the three months ended November 30, 2025 (in thousands):
| Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Stock Held in Trust | Deferred Compensation Liability | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issued Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at August 31, 2025 | $ | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock contribution to employee benefit plans and other | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of equity awards | ( | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividend ($0.04 per share) | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock based compensation expense | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock option exercises | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax effect related to net share settlement of equity awards | — | — | ( | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Treasury stock repurchased and retired | ( | ( | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at November 30, 2025 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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The following table illustrates the changes in the balances of each component of shareholders' equity for the three months ended November 30, 2024 (in thousands):
| Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Stock Held in Trust | Deferred Compensation Liability | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issued Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at August 31, 2024 | $ | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock contribution to employee benefit plans and other | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of equity awards | ( | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividend ($0.04 per share) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock based compensation expense | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock option exercises | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax effect related to net share settlement of equity awards | — | — | ( | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock issued to, acquired for and distributed from rabbi trust | — | — | — | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Treasury stock repurchased and retired | ( | ( | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at November 30, 2024 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 10. Income Taxes
The Company's global operations, acquisition activity (as applicable) and specific tax attributes provide opportunities for continuous global tax planning initiatives to maximize tax credits and deductions. Comparative earnings before income taxes, income tax expense and effective income tax rates are as follows (dollars in thousands):
| Three Months Ended November 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Earnings before income tax expense | $ | $ | |||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Effective income tax rate | % | % | |||||||||||||||||||||
The Company’s earnings before income taxes include earnings from both U.S. and foreign jurisdictions. As several foreign tax rates are higher than the U.S. tax rate of 21 %, the annual effective tax rate is impacted by foreign rate differentials, withholding taxes, losses in jurisdictions where no benefit can be realized, and key international provisions enacted from recent tax legislation, such as the Global Intangible Low-Taxed Income and Foreign-Derived Intangible Income provisions.
15
Note 11. Segment Information
The Company is a global manufacturer of a broad range of industrial products and solutions. The IT&S reportable segment is primarily engaged in the design, manufacture and distribution of branded hydraulic and mechanical tools and in providing services and tool rental to the infrastructure; industrial maintenance; repair and operations; oil & gas; mining; alternative and renewable energy; civil construction and other markets. The Other segment is included for purposes of reconciliation of the respective balances below to the condensed consolidated financial statements.
The Company’s Chief Executive Officer is the Chief Operating Decision Maker (CODM). The CODM allocates resources
and makes operating decisions based on the financial information presented by the Company’s segments. The measures
regularly reviewed by our CODM include segment sales, segment operating profit and segment operating profit margin. Our
CODM uses these financial measures, to evaluate and allocate capital and company resources as critical determinants of
segment performance. In addition, these metrics are used to monitor forecasted to actual and budgeted results to benchmark to
our peers. The following table includes segment sales, significant expense items and segment operating profit as viewed by the
CODM for three months ended November 30, 2025 and 2024 (in thousands):
| Three Months Ended November 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Net Sales by Reportable Segment & Product Line | |||||||||||||||||||||||
| IT&S Segment | |||||||||||||||||||||||
| Product | $ | $ | |||||||||||||||||||||
| Service & Rental | |||||||||||||||||||||||
| Other Segment | |||||||||||||||||||||||
Consolidated Total | $ | $ | |||||||||||||||||||||
| Cost of Products Sold | |||||||||||||||||||||||
| IT&S Segment | $ | $ | |||||||||||||||||||||
| Other Segment | $ | $ | |||||||||||||||||||||
| Corporate | |||||||||||||||||||||||
| Consolidated Total | |||||||||||||||||||||||
| Gross Profit | |||||||||||||||||||||||
| IT&S Segment | $ | $ | |||||||||||||||||||||
| Other Segment | $ | $ | |||||||||||||||||||||
| Corporate | ( | ( | |||||||||||||||||||||
| Consolidated Total | |||||||||||||||||||||||
| Selling, General and Administrative Expenses | |||||||||||||||||||||||
| IT&S Segment | $ | $ | |||||||||||||||||||||
| Other Segment | $ | $ | |||||||||||||||||||||
| General Corporate | |||||||||||||||||||||||
| Consolidated Total | |||||||||||||||||||||||
| Amortization of Intangible Assets | |||||||||||||||||||||||
| IT&S Segment | $ | $ | |||||||||||||||||||||
| General Corporate | |||||||||||||||||||||||
| Consolidated Total | |||||||||||||||||||||||
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| Three Months Ended November 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Operating Profit (Loss) | |||||||||||||||||||||||
| IT&S Segment | $ | $ | |||||||||||||||||||||
| Other Segment | |||||||||||||||||||||||
| Corporate | ( | ( | |||||||||||||||||||||
| Consolidated Total | $ | $ | |||||||||||||||||||||
| Operating Profit % | |||||||||||||||||||||||
| IT&S Segment | |||||||||||||||||||||||
| Other Segment | |||||||||||||||||||||||
| Capital Expenditures: | |||||||||||||||||||||||
| IT&S Segment | $ | $ | |||||||||||||||||||||
| Other Segment | |||||||||||||||||||||||
| General Corporate | |||||||||||||||||||||||
| Consolidated Total | |||||||||||||||||||||||
| August 31, 2025 | |||||||||||
| Assets | |||||||||||
| IT&S Segment | $ | $ | |||||||||
| Other Segment | |||||||||||
| Corporate | |||||||||||
| Consolidated Total | $ | $ | |||||||||
In addition to the impact of changes in foreign currency exchange rates, the comparability of segment and product line information is impacted by acquisition/divestiture activities, impairment and divestiture charges, restructuring costs and related benefits. Corporate assets, which are not allocated, principally represent cash and cash equivalents, property, plant and equipment, Right of Use ("ROU") assets, capitalized debt issuance costs and deferred income taxes.
Note 12. Commitments and Contingencies
The Company had outstanding letters of credit of $6.6 million and surety bonds of $4.7 million at November 30, 2025 and $5.9 million of letters of credit and $4.8 million of surety bonds at August 31, 2025, the majority of which relate to commercial contracts and self-insured workers' compensation programs.
As part of the Company's global sourcing strategy, we have entered into agreements with certain suppliers that require the supplier to maintain minimum levels of inventory to support certain products for which we require a short lead time to fulfill customer orders. We have the ability to notify the supplier that they no longer need maintain the minimum level of inventory should we discontinue manufacturing of a product during the contract period; however, we must purchase the remaining minimum inventory levels the supplier was required to maintain within a defined period of time.
The Company is a party to various legal proceedings that have arisen in the normal course of business. These legal proceedings include regulatory matters, product liability, breaches of contract, employment, personal injury and other disputes. The Company has recorded reserves for loss contingencies based on the specific circumstances of each case. Such reserves are recorded when it is probable a loss has been incurred and can be reasonably estimated. The Company maintains a policy to exclude from such reserves an estimate of legal defense costs. In the opinion of management, resolution of these contingencies is not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.
Additionally, in fiscal 2019, the Company provided voluntary self-disclosures to both Dutch and U.S. authorities related to sales of products and services linked to the Crimea region of Ukraine, which sales potentially violated European Union and U.S. sanctions provisions. Although the U.S. investigation closed without further implication, the Dutch investigation continued. The Dutch Investigator concluded his investigation in March 2022 and provided the results to the Public Prosecutor's office for review. Specifically, the Investigator concluded that the sales transactions violated EU sanctions. The conclusion in the Investigator's report was consistent with the Company's understanding of what could be stated in the report and supported the Company to record an expense in the fiscal year-ended August 31, 2021, representing the low end of a reasonable range of financial penalties the Company
17
may incur as no other point within the range was deemed more probable. The matter remains subject to further legal proceedings in the Netherlands. The Company has not adjusted its estimate of financial penalties as a result of the status of legal proceedings in the three months ended November 30, 2025. While there can be no assurance of the ultimate outcome of the matter, the Company currently believes that there will be no material adverse effect on the Company's financial position, results of operations or cash flows from this matter.
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations
Enerpac Tool Group Corp. is a premier industrial tools, services, technology, and solutions provider serving a broad and diverse set of customers and end markets for mission-critical applications in more than 100 countries. Enerpac Tool Group's businesses are global leaders in providing high pressure hydraulic tools, controlled force products and solutions for precise positioning of heavy loads that help customers safely and reliably tackle some of the most challenging jobs around the world. The Company was founded in 1910 and is headquartered in Milwaukee, Wisconsin. The Company has one reportable segment, the Industrial Tools & Service Segment ("IT&S"), and an Other operating segment, which does not meet the criteria to be considered a reportable segment. The IT&S segment is primarily engaged in the design, manufacture and distribution of branded hydraulic and mechanical tools and in providing services and tool rental to the refinery/petrochemical; general industrial; industrial maintenance, repair and operations (“MRO”), machining & manufacturing; power generation, infrastructure, mining and other markets. Financial information related to the Company's reportable segment is included in Note 11, “Segment Information” in the notes to the condensed consolidated financial statements.
Our businesses provide an array of products and services across multiple markets and geographies, which results in significant diversification. The IT&S segment and the Company are well-positioned to drive shareholder value through a sustainable business strategy built on well-established brands, broad global distribution and end markets, clear focus on the core tools and services business and disciplined capital deployment.
Our Business Model
Our long-term goal is to create sustainable returns for our shareholders through above-market growth in our core business, expanding our margins, generating strong cash flow, and being disciplined in the deployment of our capital. We intend to grow through execution of our organic growth strategy, focused on key vertical markets that benefit from long-term macro trends, driving customer driven innovation, expansion of our digital ecosystem to acquire and engage customers, and an expansion in emerging markets such as Asia Pacific. In addition to organic growth, we also focus on margin expansion through operational efficiency techniques, including lean, continuous improvement and 80/20, to drive productivity and lower costs, as well as optimizing our selling, general and administrative expenses through consolidation and shared service implementation. We also apply these techniques and pricing actions to offset commodity increases and inflationary pricing. Finally, cash flow generation is critical to achieving our financial and long-term strategic objectives. We believe driving profitable growth and margin expansion will result in cash flow generation, which we seek to supplement through minimizing primary working capital. We intend to allocate the cash flow that results from the execution of our strategy in a disciplined way toward investment in our businesses, maintaining our strong balance sheet, disciplined M&A program and opportunistically returning capital to shareholders. We anticipate the compounding effect of reinvesting in our business will fuel further growth and profitable returns.
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Results of Operations
The following table sets forth our results of operations (dollars in millions, except per share amounts):
| Three Months Ended November 30, | |||||||||||||||||||||||||||||||||||||||||||||||
Results from Operations (1) | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 144 | 100 | % | $ | 145 | 100 | % | |||||||||||||||||||||||||||||||||||||||
| Cost of products sold | 71 | 49 | % | 71 | 49 | % | |||||||||||||||||||||||||||||||||||||||||
| Gross profit | 73 | 51 | % | 75 | 51 | % | |||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 43 | 30 | % | 42 | 29 | % | |||||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 2 | 1 | % | 1 | 1 | % | |||||||||||||||||||||||||||||||||||||||||
| Operating profit | 28 | 20 | % | 31 | 21 | % | |||||||||||||||||||||||||||||||||||||||||
| Financing costs, net | 2 | 2 | % | 3 | 2 | % | |||||||||||||||||||||||||||||||||||||||||
| Other expense, net | 1 | — | % | 0 | 0 | % | |||||||||||||||||||||||||||||||||||||||||
| Earnings before income tax expense | 26 | 18 | % | 28 | 19 | % | |||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 6 | 4 | % | 6 | 4 | % | |||||||||||||||||||||||||||||||||||||||||
| Net earnings | $ | 19 | 13 | % | $ | 22 | 15 | % | |||||||||||||||||||||||||||||||||||||||
| Diluted earnings per share | $ | 0.36 | $ | 0.40 | |||||||||||||||||||||||||||||||||||||||||||
(1) The summation of the individual components may not equal the total due to rounding. Period to period differences between line items included in the table may differ from the amount presented below due to rounding.
Consolidated net sales for the three months ended November 30, 2025 were $144 million, a decrease of $1 million, or 1%, compared to the prior-year comparable period. The effect of the weakening U.S. dollar on foreign currency rates compared to the prior-year period favorably impacted sales by $3 million, or 2%. This resulted in an organic sales decline of approximately 2% in the quarter. Management refers to sales adjusted to exclude the impact of foreign currency changes and recent acquisitions and divestitures as "organic sales". In the three months ended November 30, 2025, product sales grew $7 million, or 7%, while foreign currency favorably impacted sales by $2 million, or 2%, resulting in organic product sales growth of 5% over the prior-year quarter. Service sales were down $8 million, or 25%, year-over-year, with a favorable impact of foreign currency of $1 million, or 2%, resulting in an organic service sales decline of 26%. Gross profit as a percent of sales decreased to 50.7%, compared to 51.4% in the first quarter of fiscal 2025; the decrease in gross profit margin is due to continued pressure in our service business, primarily in the United Kingdom market, and higher tariff-driven costs flowing through cost of goods sold. Operating profit for the first quarter of fiscal year 2026 was $28 million, a decrease of $3 million compared to the first quarter of fiscal 2025. The decrease in operating profit was mainly driven by the declines in our service business, primarily in the United Kingdom market, and higher tariff-driven costs flowing through cost of goods sold.
Segment Results
IT&S Segment
The IT&S segment is a global supplier of branded hydraulic and mechanical tools and services to a broad array of end markets, including refinery/petrochemical; general industrial; industrial MRO; machining & manufacturing; power generation; infrastructure; mining; and other markets. Its primary products include branded tools, cylinders, pumps, hydraulic torque wrenches, highly engineered heavy lifting technology solutions and other tools (Product product line). The segment provides maintenance and manpower services to meet customer-specific needs and rental capabilities for certain of our products (Service & Rental product line). The following table sets forth the results of operations for the IT&S segment (dollars in millions):
| Three Months Ended November 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Net sales | $ | 138 | $ | 140 | |||||||||||||||||||
| Operating profit | 36 | 38 | |||||||||||||||||||||
| Operating profit % | 25.9% | 27.1% | |||||||||||||||||||||
IT&S segment net sales for the first quarter of fiscal 2026 decreased by $2 million, or 2%, compared to the first quarter of fiscal 2025. The weakening of the U.S. dollar on foreign currency rates compared to three months ended November 30, 2024 favorably impacted sales by $3 million, or 2%. This resulted in an organic sales decline of $5 million, or 3%, in the quarter. The organic sales decrease is driven by activity declines in our service business, partially offset by growth in our product business. Service sales were
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down $8 million, or 25%, year-over-year, with a favorable impact of foreign currency of $1 million, or 2%, resulting in an organic service sales decline of 26%. Product sales were up $6 million, or 6%, year-over-year, with a favorable impact of foreign currency of $2 million, or 2%, resulting in organic product sales growth of 4%. Operating profit for the three months ended November 30, 2025 was $36 million, compared to $38 million in the same period of the prior year. The decrease in operating profit was mainly driven by the declines in our service business, primarily in the United Kingdom market, and higher tariff-driven costs flowing through cost of goods sold.
Corporate
Corporate expenses were $9 million and $8 million for the three months ended November 30, 2025 and 2024, respectively. The increase in expense was driven by higher personnel charges and growth investments.
Financing Costs, net
Net financing costs were $2 million and $3 million in the three months ended November 30, 2025 and 2024, respectively. Financing costs decreased due to lower debt balances and interest rates.
Income Tax Expense
The Company's global operations, acquisition activity (as applicable) and specific tax attributes provide opportunities for continuous global tax planning initiatives to maximize tax credits and deductions. Comparative earnings before income taxes, income tax expense and effective income tax rates are as follows (dollars in millions):
| Three Months Ended November 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Earnings before income tax expense | $ | 26 | $ | 28 | |||||||||||||||||||
| Income tax expense | 6 | 6 | |||||||||||||||||||||
| Effective income tax rate | 25.1% | 22.1% | |||||||||||||||||||||
The Company’s earnings before income taxes include earnings from both U.S. and foreign jurisdictions. As several foreign tax rates are higher than the U.S. tax rate of 21%, the annual effective tax rate is impacted by foreign rate differentials, withholding taxes, losses in jurisdictions where no benefit can be realized, and key international provisions enacted from recent tax legislation, such as the Global Intangible Low-Taxed Income and Foreign-Derived Intangible Income provisions.
The effective tax rate for the three months ended November 30, 2025 was 25.1%, compared to 22.1% for the comparable prior-year period. The effective tax rate in each time period was impacted by year-to-date losses and deductions in jurisdictions where no tax benefit can be realized. The higher effective tax rate for the three months ended November 30, 2025 was primarily driven by the more favorable tax impact of stock compensation in the prior period as compared to the current period. Both the current and prior-year period effective income tax rates include the impact of non-recurring items.
Cash Flows and Liquidity
At November 30, 2025, we had $139 million of cash and cash equivalents, of which $100 million was held by our foreign subsidiaries and $39 million was held domestically. The following table summarizes our cash flows provided by operating, investing and financing activities (dollars in millions):
| Three Months Ended November 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash provided by operating activities | $ | 16 | $ | 9 | |||||||
| Cash used in investing activities | (4) | (33) | |||||||||
| Cash used in financing activities | (23) | (13) | |||||||||
| Effect of exchange rate changes on cash | (1) | 1 | |||||||||
| Net decrease in cash and cash equivalents | $ | (13) | $ | (36) | |||||||
Net cash provided by operating activities was $16 million and $9 million for the three months ended November 30, 2025 and 2024, respectively. The $7 million year-over-year variance is primarily driven by the timing of milestone payments on contracts where revenue is recognized over time.
Net cash used in investing activities was $4 million and $33 million for the three months ended November 30, 2025 and 2024, respectively. This decreased use of cash was primarily due to the $27 million payment made for the DTA acquisition in the first quarter of fiscal 2025.
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Net cash used in financing activities was $23 million and $13 million for the three months ended November 30, 2025 and 2024, respectively. The $10 million increase in net cash used in financing activities for the three months ended November 30, 2025 was driven by higher share repurchases in the current-year period.
On September 9, 2022, the Company refinanced its previous senior credit facility with a $600 million senior credit facility, comprised of a $400 million revolving line of credit and a $200 million term loan, which is scheduled to mature in September 2027. The Company has the option to request up to $300 million of additional revolving commitments and/or term loans under the new facility, subject to customary conditions, including the commitment of the participating lenders. The senior credit facility contains restrictive covenants and financial covenants. See Note 6, "Debt" in the notes to the condensed consolidated financial statements for further details regarding the senior credit facility.
At November 30, 2025, there were no borrowings and $400 million available under the revolving line of credit facility. The Company was in compliance with all covenants under the senior credit facility at November 30, 2025.
We believe that the revolving credit line, combined with our existing cash on hand and anticipated operating cash flows, will be adequate to meet operating, debt service, acquisition and capital expenditure funding requirements for the foreseeable future.
Primary Working Capital Management
We use primary working capital as a percentage of sales (PWC %) as a key metric of working capital management. We define this metric as the sum of net accounts receivable and net inventory less accounts payable, divided by the past three months sales annualized. The following table shows a comparison of primary working capital (dollars in millions):
| November 30, 2025 | PWC% | August 31, 2025 | PWC% | ||||||||||||||||||||
| Accounts receivable, net | $ | 98 | 17 | % | $ | 106 | 16 | % | |||||||||||||||
| Inventory, net | 90 | 16 | % | 79 | 12 | % | |||||||||||||||||
| Accounts payable | (42) | (7) | % | (43) | (6) | % | |||||||||||||||||
| Net primary working capital | $ | 147 | 25 | % | $ | 142 | 21 | % | |||||||||||||||
Commitments and Contingencies
Given our desire to allocate cash flow and revolver availability to fund growth initiatives, we have historically leased most of our facilities and some operating equipment. We lease certain facilities, computers, equipment and vehicles under various operating lease agreements, generally over periods ranging from one to twenty years. Under most arrangements, we pay the property taxes, insurance, maintenance and expenses related to the leased property. Many of our leases include provisions that enable us to renew the leases at contractually agreed rates or, less commonly, based upon market rental rates on the date of expiration of the initial leases.
We had outstanding letters of credit of $7 million and surety bonds of $5 million at November 30, 2025 and $6 million of letters of credit and $5 million of surety bonds at August 31, 2025, the majority of which relate to commercial contracts and self-insured workers' compensation programs.
We are also subject to certain contingencies with respect to legal proceedings and regulatory matters which are described in Note 12, "Commitments and Contingencies" in the notes to the condensed consolidated financial statements. While there can be no assurance of the ultimate outcome of these matters, the Company believes that there will be no material adverse effect on the Company's results of operations, financial position or cash flows.
Contractual Obligations
Our contractual obligations have not materially changed at November 30, 2025 from what was previously disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Contractual Obligations” in the fiscal 2025 Annual Report on Form 10-K.
Critical Accounting Estimates
Management has evaluated the accounting estimates used in the preparation of the Company's condensed consolidated financial statements and related notes and believe those estimates to be reasonable and appropriate. Certain of these accounting estimates are considered by management to be the most critical in understanding judgments involved in the preparation of our condensed consolidated financial statements and uncertainties that could impact our results of operations, financial position and cash flow. For information about more of the Company’s policies, methodology and assumptions related to critical accounting policies refer to the Critical Accounting Policies in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the fiscal 2025 Annual Report on Form 10-K.
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Item 3 – Quantitative and Qualitative Disclosures about Market Risk
The diverse nature of our business activities necessitates the management of various financial and market risks, including those related to changes in interest rates, foreign currency exchange rates and commodity costs.
Interest Rate Risk: As of November 30, 2025, long-term debt consisted of no borrowing under the revolving line of credit (variable rate debt) and $189 million of term loan debt bearing interest based on SOFR (variable rate). An interest-rate swap effectively converts the SOFR-based rate of $90 million of term borrowings under our credit facility to a fixed rate. A ten percent increase in the average costs of our variable rate debt would have resulted in less than $1 million of an increase in financing costs for the three months ended November 30, 2025.
Foreign Currency Risk: We maintain operations in the U.S. and various foreign countries. Our more significant non-U.S. operations are located in Australia, the Netherlands, the United Kingdom, United Arab Emirates and China, and we have foreign currency risk relating to receipts from customers, payments to suppliers and intercompany transactions denominated in foreign currencies. Under certain conditions, we enter into hedging transactions (primarily foreign currency exchange contracts) that enable us to mitigate the potential adverse impact of foreign currency exchange rate risk (see Note 8, “Derivatives” in the notes to the consolidated financial statements for further information). We do not engage in trading or other speculative activities with these transactions, as established policies require that these hedging transactions relate to specific currency exposures.
The strengthening of the U.S. dollar against most currencies can have an unfavorable impact on our results of operations and financial position as foreign denominated operating results are translated into U.S. dollars. To illustrate the potential impact of changes in foreign currency exchange rates on the translation of our results of operations, quarterly sales and operating profit were re-measured assuming a ten percent decrease in all foreign exchange rates compared with the U.S. dollar. Using this assumption, quarterly sales would have been lower by $7 million and operating profit would have been lower by less than $1 million for the three months ended November 30, 2025. This sensitivity analysis assumes that each exchange rate would change in the same direction relative to the U.S. dollar and excludes the potential effects that changes in foreign currency exchange rates may have on sales levels or local currency prices. Similarly, a ten percent decline in foreign currency exchange rates versus the U.S. dollar would result in a $37 million reduction to equity (accumulated other comprehensive loss) as of November 30, 2025, as a result of non-U.S. dollar denominated assets and liabilities being translated into U.S. dollars, our reporting currency.
Commodity Cost Risk: We source a wide variety of materials and components from a network of global suppliers. While such materials are typically available from numerous suppliers, commodity raw materials, such as steel and plastic resin, are subject to price fluctuations, which could have a negative impact on our results. We strive to pass along such commodity price increases to customers to avoid profit margin erosion.
Item 4 – Controls and Procedures
Evaluation of Disclosure Controls and Procedures.
Under the supervision and with the participation of our senior management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on this evaluation, our chief executive officer and chief financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to the Company, including consolidated subsidiaries, required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Company’s management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). There have been no changes in our internal control over financial reporting that occurred during the quarter ended November 30, 2025 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds
The Company's Board of Directors has authorized the repurchase and immediate retirement of shares of the Company's common stock under publicly announced share repurchase and retirement programs. Since the inception of the initial share repurchase program in fiscal 2012, the Company has repurchased 32,158,195 shares of common stock for $923 million. In October 2025, the Company's Board of Directors approved a new share repurchase program authorizing the repurchase of a total of $200 million dollars of the Company's outstanding common stock. The Company repurchased and retired 376,814 shares for $15 million in the three months ended November 30, 2025 and 109,860 shares for $4 million in the three months ended November 30, 2024. At November 30, 2025 the maximum value of shares that may yet be purchased under the program is $185 million.
| Period | Shares Repurchased | Average Price Paid per Share | Total Dollars used to Purchase shares as Part of Publicly Announced Programs (in thousands) | Maximum Number of Dollars That May Yet Be Purchased Under the Program (in millions) | |||||||||||||||||||
| September 1 to September 30, 2025 | — | $0.00 | $0 | $200 | |||||||||||||||||||
| October 1 to October 31, 2025 | 20,000 | $41.41 | $828 | $199 | |||||||||||||||||||
| November 1 to November 30, 2025 | 356,814 | $38.99 | $13,913 | $185 | |||||||||||||||||||
| 376,814 | $39.54 | $14,741 | |||||||||||||||||||||
Item 5 – Other Information
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Item 6 – Exhibits
| Exhibit | Description | Incorporated Herein By Reference To | Filed Herewith | Furnished Herewith | ||||||||||||||||||||||
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||||||||||||||||||||||
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||||||||||||||||||||||
32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | ||||||||||||||||||||||||
32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | ||||||||||||||||||||||||
101 | The following materials from the Enerpac Tool Group Corp. Form 10-Q for the three months ended November 30, 2025 and 2024 formatted in Inline Extensible Business Reporting Language (Inline XBRL): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows and (v) the Notes to the Condensed Consolidated Financial Statements. | X | ||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Interactive Data Files submitted as Exhibit 101) | |||||||||||||||||||||||||
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ENERPAC TOOL GROUP CORP. | |||||||||||
| (Registrant) | |||||||||||
| Date: December 22, 2025 | By: | /S/ DARREN M. KOZIK | |||||||||
| Darren M. Kozik | |||||||||||
| Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |||||||||||
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Enerpac Tool Group Corp
NYSE:EPAC
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[8-K] ENERPAC TOOL GROUP CORP Reports Material Event
EPAC Stock Data
1.97B
52.36M
0.95%
104.23%
1.87%
Specialty Industrial Machinery
Misc Industrial & Commercial Machinery & Equipment
United States
MILWAUKEE