Enerpac outlines $635M-$655M revenue target for 2026 with new $200M buyback plan as DTA integration and E-commerce drive optimism

Earnings Call Insights: Enerpac Tool Group Corp. (EPAC) Q4 2025

MANAGEMENT VIEW

* CEO Paul Sternlieb highlighted that Enerpac posted record revenue for fiscal 2025, achieved a robust adjusted EBITDA margin of nearly 25%, and noted "opportunity for further improvement in the coming years." Sternlieb indicated that five new products were launched and the DTA business was successfully integrated, ending the year strongly.
* Sternlieb emphasized E-commerce traction, stating "our E-commerce business continues to gain traction with customers, posting 32% growth in fiscal 2025." The ECX commercial process rollout reached the APAC region by year-end. Sternlieb also announced a record $40 million in stock repurchases during Q4, totaling $69 million for the year.
* CFO Darren Kozik reported, "Enerpac's fiscal 2025 revenue of $617 million increased 5%. On an organic basis, adjusting for foreign exchange and the acquisition of DTA, we grew 1%." Kozik noted strong Cortland and Heavy Lifting Technology (HLT) performance, with DTA delivering $20 million in revenue for the year and 45% of DTA orders coming from cross-sell opportunities.
* Kozik attributed high single-digit APAC growth to expanded sales coverage in India and improvement in Australia’s mining industry, while EMEA experienced a mid-single-digit decline. He stated, "We have ample financial flexibility to continue our balanced capital allocation strategy and are maintaining significant dry powder for our disciplined strategic M&A process."
* Sternlieb added, "We have continued to invest across the organization under the Powering Enerpac Performance program, known as PEP, to drive continuous improvement as we simplify and automate the business, improve operational capabilities and support growth."

OUTLOOK

* Kozik outlined fiscal 2026 guidance with revenue projected at $635 million to $655 million, organic growth of 1% to 4%, adjusted EBITDA of $158 million to $168 million, free cash flow of $100 million to $110 million, and adjusted EPS guidance in the range of $1.85 to $2. Kozik stated, "Our guidance also assumes no substantial change to the current tariff or regulatory environment."
* Management expects margin pressure in Q1 2026 due to higher tariff-impacted costs, with improvement anticipated as the year progresses. Kozik commented, "We expect to be price/cost neutral for the full fiscal year."

FINANCIAL RESULTS

* Fiscal 2025 revenue reached $617 million, up 5%. Organic growth was 1%. Adjusted EBITDA rose 4% to $154 million, with a margin of 24.9%. Adjusted EPS increased to $1.81 compared with $1.72 in fiscal 2024.
* Q4 revenue was up 6%, though organic revenue declined about 2%. Adjusted EBITDA for the quarter increased 15%, with margins of 26.5%. Adjusted EPS was $0.52. Free cash flow for the year was $92 million, up $22 million, even with higher capital spending. Kozik noted, "Net debt was $38 million at year-end. Total liquidity, including availability under our revolver and cash on hand, was $551 million."
* The Board authorized a new $200 million share repurchase program, following $240 million in buybacks since 2022.

Q&A

* Thomas Hayes, ROTH Capital Partners, asked about EMEA market weakness. Sternlieb responded, "I think it is primarily Europe...particularly in Central and Southern Europe, which has been weak and persistently weak."
* Hayes inquired about E-commerce expansion. Sternlieb explained, "it's actually global...we rolled it out across most markets in Europe...and then we rolled it out in Australia about 1 year ago as well."
* Hayes questioned DTA integration. Sternlieb described strong progress, stating "orders have been robust. Our backlog has expanded as we've implemented our strategy to cross-sell their solutions to the existing...Enerpac-base of customers and also expand their sales beyond their traditional stronghold...a lot of the growth opportunities...have been in the U.S. market."
* Dan Moore, CJS Securities, asked about backlog and pipeline. Sternlieb said, "our view is probably similar spot, frankly, where we started the prior year just from a macro standpoint...reasons to be cautious, but maybe cautiously optimistic just as the macro situation plays out."
* Moore probed on fiscal '26 cadence. Kozik replied, "Margins in Q1, we'll see those tariff costs come through...I expect Q1 to maybe look a little bit more like Q4."
* Steven Silver, Argus Research, asked about M&A. Sternlieb responded, "I'm pretty encouraged by our funnel of opportunities. I would say that, that has picked up pace...We've also augmented our resources from an M&A standpoint."

SENTIMENT ANALYSIS

* Analysts’ tone was largely neutral, seeking clarity on regional performance, DTA integration, and the cadence of fiscal 2026 guidance, while showing interest in capital allocation and M&A prospects.
* Management maintained a confident and slightly optimistic tone in both prepared remarks and Q&A, referencing "opportunity for further improvement" and "ample financial flexibility," but repeatedly highlighted macro uncertainty and a cautious approach.
* Compared to the previous quarter, management’s tone shifted from cautious to cautiously optimistic, with greater emphasis on new product launches, E-commerce growth, and DTA integration success.

QUARTER-OVER-QUARTER COMPARISON

* Fiscal 2026 revenue guidance increased from the prior year’s $610 million-$625 million range to $635 million-$655 million, reflecting a more optimistic stance despite macro uncertainty.
* Adjusted EPS guidance was provided for the first time, targeting $1.85 to $2. Strategic focus shifted from headquarters relocation and initial DTA ramp in Q3 to commercial synergies and expanded E-commerce in Q4.
* Analysts maintained a focus on regional market conditions, DTA integration, and M&A opportunities, but pressed less on restructuring and more on operational leverage and capital deployment.
* Management’s confidence level increased, supported by successful DTA integration and commercial initiatives, compared to a more defensive posture in Q3 amid tariff concerns.

RISKS AND CONCERNS

* Ongoing macroeconomic weakness in Europe, particularly Central and Southern regions, was highlighted as a challenge.
* Tariff policy and regulatory uncertainty remain risks, with management assuming "no substantial change to the current tariff or regulatory environment" in guidance.
* Management cited end-market volatility and specific softness in wind and general construction in the Americas, and a mid-single-digit revenue decline in EMEA.
* Mitigation strategies include pricing actions, supply chain optimization, and ongoing focus on infrastructure and high-growth geographies such as India and APAC.

FINAL TAKEAWAY

Enerpac Tool Group concluded fiscal 2025 with record revenue, robust margin performance, and strong cash flow, underpinned by commercial progress in E-commerce and DTA integration. Management outlined a cautiously optimistic outlook for 2026, projecting revenue growth, higher adjusted EBITDA, and significant capital allocation flexibility, including a new $200 million buyback program. Strategic priorities center on innovation, infrastructure, operational efficiency, and disciplined M&A, while ongoing macro and tariff uncertainties remain key watch items for the year ahead.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/epac/earnings/transcripts]

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