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ENERPAC TOOL GROUP CORP (EPAC)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY25 delivered solid top-line and margin performance: revenue $167.5M (+5.5% y/y), GAAP diluted EPS $0.52 (+21% y/y), and adjusted EBITDA $44.5M with a 26.5% margin (+220 bps y/y) . Versus S&P Global consensus, EPAC modestly beat on revenue ($167.5M vs $164.7M*) and EPS ($0.52 vs $0.51*) .
  • Mix/operations: Organic sales declined 1.8% as IT&S organic -2.2% (product -1.0%, service -7.4%) was offset by 10.4% growth at Cortland Biomedical; gross margin returned to normalized ~50.1% (from 48.8% in Q4 FY24) .
  • Capital allocation: Repurchased ~$40.1M of stock in Q4 (1.04M shares), largest quarterly return since 2022; new $200M buyback authorization approved 10/10/25 .
  • FY26 outlook introduced: sales $635–$655M (organic +1%–4%), adj. EBITDA $158–$168M, adj. EPS $1.85–$2.00, FCF $100–$110M, assuming stable tariff/regulatory environment . Call commentary flagged early-year tariff cost pressure and price-cost neutrality for FY26 .
  • Potential stock catalysts: consistent beats vs consensus in Q3–Q4, FY26 guide around consensus midpoints, visible buyback, and improving service margins/sequential mix normalization .

What Went Well and What Went Wrong

What Went Well

  • Margin expansion and mix normalization: Q4 adj. EBITDA margin expanded to 26.5% (+220 bps y/y) as gross margin returned to 50.1%, aided by mix and operational discipline .
  • DTA acquisition traction and cross-sell: “DTA’s robust year end performance... some 45% of DTA’s orders were new or crossover sale to existing Enerpac customers,” underscoring acquisition synergies .
  • Strong capital deployment and balance sheet: Q4 buyback of $40.1M; new $200M authorization; year-end net debt $38.1M (0.3x net debt/adj. EBITDA), supporting flexibility for M&A and repurchases .
  • Management quote: “We posted record revenue... maintained industry‑leading margins, generated strong cash flow, and returned $71 million to investors” .

What Went Wrong

  • Organic decline in Q4: Total organic sales -1.8% y/y; IT&S organic -2.2% (product -1.0%, service -7.4%), with services still a margin headwind .
  • EMEA softness and tough comps: Persistent macro weakness in Central/Southern Europe and a large prior-year service project created difficult regional comps; management called Europe a “wildcard” into FY26 .
  • Tariff cost pressure early in FY26: Management expects margin pressure in Q1 FY26 as higher tariff-impacted costs flow through COGS, aiming for price‑cost neutrality for the full year .

Financial Results

Headline Results (GAAP unless noted)

MetricQ4 2024Q3 2025Q4 2025
Revenue ($USD Millions)$158.7 $158.7 $167.5
Diluted EPS ($)$0.43 $0.41 $0.52
Adjusted EPS ($)$0.50 $0.51 $0.52
Adjusted EBITDA ($M)$38.6 $41.0 $44.5
Gross Margin (%)48.8 50.4 50.1
Adjusted Operating Margin (%)22.5 24.1 24.0
Adjusted EBITDA Margin (%)24.3 25.9 26.5

Notes: Q4 FY25 y/y revenue +5.5% and adj. EBITDA margin +220 bps, per company disclosures .

Q4 FY25 vs S&P Global Consensus

MetricActualConsensusSurprise
Revenue ($M)$167.5 $164.7*+$2.8M / +1.7%
Primary EPS ($)$0.52 $0.51*+$0.01
Adjusted EBITDA ($M)$44.5 $44.35*+$0.15M

Values with asterisks are from S&P Global consensus. Values retrieved from S&P Global.

Segment Sales

Segment ($M)Q4 2024Q3 2025Q4 2025
Industrial Tools & Services (IT&S)$153.360 $153.374 $161.602
Other (Cortland Biomedical)$5.354 $5.287 $5.913
Total$158.714 $158.661 $167.515

Organic detail (Q4 FY25): IT&S organic -2.2%; Cortland Biomedical +10.4% .

Product vs Service Mix

Net Sales ($M)Q4 2024Q3 2025Q4 2025
Product$130.395 $129.595 $140.640
Service$28.319 $29.066 $26.875
Total$158.714 $158.661 $167.515

Select KPIs and Balance Sheet

  • Net debt and leverage: Net debt $38.1M; net debt/adj. EBITDA 0.3x (Aug 31, 2025) .
  • Q4 share repurchases: 1,039,150 shares for $40.1M .
  • FY25 cash from operations: $111.3M; Free cash flow ~$92M (CFO remarks) .
  • Cash and debt balances (period-end): Cash $151.6M; Debt $189.7M (Aug 31, 2025) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesFY 2026n/a (new)$635–$655MNew
Organic GrowthFY 2026n/a (new)+1% to +4%New
Adjusted EBITDAFY 2026n/a (new)$158–$168MNew
Adjusted EPSFY 2026n/a (new)$1.85–$2.00New
Free Cash FlowFY 2026n/a (new)$100–$110MNew
D&A (modeling)FY 2026n/a (new)~$16–$18M (reconciling items)New

Call note: Management also verbally referenced FY26 FCF “$100M to $160M,” which differs from the press release ($100–$110M); the press release should be considered controlling .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 FY25 and Q3 FY25)Current Period (Q4 FY25)Trend
Tariffs/MacroCautious tone; tariffs a risk; reiterated FY25 guide at midpoint/low end .Expect early FY26 margin pressure from tariff costs; aim for price‑cost neutral in FY26 .Macro cautious; tariff headwinds near-term, mitigation underway.
Service marginsGross margin pressured by service mix; took actions; sequential improvement in Q3 .Gross margin normalized 50.1%; service still a drag but improving .Improving sequentially; still a focus.
DTA integrationAcquisition included in results; building cross-sell .Strong Q4 for DTA; 45% of orders cross‑sell to Enerpac base; backlog expanded .Positive acceleration and synergy realization.
Regional trendsAPAC strong; Americas steady; EMEA softer .EMEA remains weak; Europe “wildcard”; India double-digit growth; Australia mining improved .Similar pattern; APAC/Americas strength; EMEA soft.
PricingPrice increases and surcharges implemented in Q3 to offset cost inflation .Maintain price‑cost neutrality target FY26 .Pricing discipline sustained.
Digital/e‑commerceNot highlighted in Q2/Q3 PRs.E‑commerce grew 32% in FY25; global rollout continues; margin‑accretive .Structural positive contributor.
Product innovationContinued development (battery torque wrench launch late FY24) .Five new products launched in FY25; strong campaign on battery torque wrench .Pipeline/growth driver.
M&A and capital allocationReiterated focus; buybacks ongoing .New $200M buyback; M&A funnel strengthening; ample liquidity ($551M total) .Increased readiness for deals; ongoing repurchases.

Management Commentary

  • Strategy and execution: “We posted record revenue, maintained industry-leading margins, generated strong cash flow, and returned $71 million to investors... while preserving an extremely strong balance sheet” — Paul Sternlieb, CEO .
  • DTA synergy: “45% of DTA’s orders were new or crossover sale to existing Enerpac customers, demonstrating the power of commercial synergies” — Darren Kozik, CFO .
  • Regional outlook: “Europe... has been weak and persistently weak... service business... lapping a pretty significantly large project [in 2024]” — CEO .
  • FY26 cost dynamics: “We will see pressure [in Q1] as higher tariff impacted costs flow through COGS... expect to be price‑cost neutral for the full fiscal year” — CFO .
  • E‑commerce: “Our e‑commerce business continues to gain traction... posting 32% growth in fiscal 2025... margin accretive” — CEO .

Q&A Highlights

  • EMEA weakness and comps: Management emphasized macro softness in Central/Southern Europe and a tough service comp; expects improvement contingent on macro stabilization .
  • FY26 cadence and Q1 margins: Q1 margins to face tariff-related COGS headwinds; second-half weighted year with margin recovery as mitigation actions take hold; Q1 may “look a little bit more like Q4” in growth cadence .
  • Buyback vs M&A: Opportunistic on buybacks (Q4 largest quarterly repurchase since relaunch); expanding M&A funnel with added resources; balanced capital allocation .
  • Second brand strategy & APAC: Continued growth expected in FY26 with expanded SKUs and channel partners, particularly in Asia Pacific .
  • Service business model improvements: Shifting to direct model in certain countries (e.g., Algeria) and investing in higher‑margin service capabilities; new service center in Saudi Arabia .

Estimates Context

  • Q4 FY25 vs S&P Global: Revenue $167.5M vs $164.7M*; EPS $0.52 vs $0.51*; EBITDA $44.5M vs $44.35M* .
  • Q3 FY25 vs S&P Global: Revenue $158.7M vs $156.5M*; EPS $0.51 vs $0.47* .
  • Q2 FY25 vs S&P Global: Revenue $145.5M vs $141.5M*; EPS $0.39 vs $0.395* (roughly in-line) .
  • FY26 consensus context: Revenue ~$642M* and EPS ~$1.92* sit near EPAC’s FY26 midpoints ($645M revenue; ~$1.93 EPS midpoint), implying a guide roughly in line with the Street .

Values with asterisks are from S&P Global consensus. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat with expanding margins: Q4 exceeded consensus on revenue and EPS, with adj. EBITDA margin up to 26.5% on normalized gross margin and better mix/discipline .
  • Near-term margin caution, full-year mitigation: Expect Q1 FY26 margin pressure from tariffs, but management targets price‑cost neutrality for FY26 overall; watch early‑year gross margin and pricing execution .
  • DTA synergy strengthening growth algorithm: Cross‑sell is material (45% of orders from Enerpac base), with backlog momentum and margin leverage; supports medium‑term outperformance vs macro .
  • EMEA remains a swing factor: Europe still soft; stabilization would be an upside lever, while further weakness is a risk; Americas/APAC trends remain healthier .
  • Service margin and mix are improving: Sequential progress and business model changes (direct model, capability investments) should support margin trajectory through FY26 .
  • Capital deployment optionality: New $200M buyback plus sub‑0.5x leverage and ~$551M liquidity enable opportunistic repurchases and disciplined M&A; this is a supportive setup for TSR .
  • FY26 setup is balanced: Guide broadly in line with consensus, leaving room for upside if Europe stabilizes, service margin actions gain traction, and DTA continues to scale .
All company figures and commentary are sourced from Enerpac’s Q4 FY25 8‑K/press release and earnings call transcript: **[6955_0001171843-25-006456_exh_991.htm:0]** **[6955_23ac79b8ba314431861846e0f43688dc_0]** **[0000006955_2187893_0]**; Q3 and Q2 for trend context: **[6955_4452998b297244aab220839e3956abef_0]** **[6955_27ca29dc5c4e49eab72030005b1608d3_0]**.