Enerpac Tool Group Corp Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tom Hayes - C.L. King & Associates - Analyst : Hey, good morning, Paul. I appreciate the time this morning. Just a couple of questions. First on DTA. It's a nice acquisition. Just maybe if you could maybe call out what you see is maybe some of the most prominent opportunities for you in DTA in this upcoming fiscal year.

Question: Tom Hayes - C.L. King & Associates - Analyst : No, that was great. Would you say that -- if you look at your customers are using your HLT technology, they have the need for the more side to side moving solutions that DTA brings or is -- are they going elsewhere for those solutions now? And just kind of how does that fit into the competitive picture?

Question: Tom Hayes - C.L. King & Associates - Analyst : Okay. Maybe just one last one on DTA. Do they have a service or recurring revenue component that would be complementary to your service business?

Question: Tom Hayes - C.L. King & Associates - Analyst : Okay. Just maybe shifting gears a little bit to your '25 outlook. I was just wondering if you could provide a little bit more color as how you see your key target verticals performing in '25 vis-a-vis your guidance. I mean you mentioned wind a little bit but maybe some commentary on the rail, the MRO, and the infrastructure market. More specifically on the infrastructure market, as we seem to be getting some market signals that maybe projects aren't moving as fast as people had originally anticipated, but maybe that'll pick up in the back half of the year. So any color you can provide on that would be great. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2024 / 12:30PM, EPAC.N - Q4 2024 Enerpac Tool Group Corp Earnings Call

Question: Tom Hayes - C.L. King & Associates - Analyst : Maybe just one follow up. Then I'll go back to the queue. On the infrastructure, I'll call it slowness, is there some kind of mixed drivers for that? I was just wondering your thoughts on kind of what's maybe slowing down the project. Was it regulatory issues, is it setting, is it just -- I'm assuming it's not financing. Just your thought on that.

Question: Tom Hayes - C.L. King & Associates - Analyst : Okay, appreciate the color. Thanks, Paul.

Question: Ross Sparenblek - William Blair & Company - Analyst : Hey, good morning, gentlemen. Maybe just starting with the 2025 guidance on the organic front. Can you maybe help us frame just your assumptions as we think about market growth across the three geographies. I believe you called out APAC is improving, but also annual price and market share expectations for the new products. I mean I always get the sense that the expectation here is that it's going to be more second half loaded on the guidance on the organic front.

Question: Ross Sparenblek - William Blair & Company - Analyst : Okay. So when we think about kind of the margin guidance, then it's somewhat of a broad range, maybe flat volume with some productivity initiatives that get you towards the higher end with some price, and then maybe the lower end is just baking in maybe not as great share gains, offsetting the lowest single digit market decline. Maybe -- (multiple speakers) REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2024 / 12:30PM, EPAC.N - Q4 2024 Enerpac Tool Group Corp Earnings Call Could you also layer in also what the [division] is from the DTA on the margin front, if you didn't say that already?

Question: Ross Sparenblek - William Blair & Company - Analyst : Got it. Okay. That's helpful. And then thinking about free cash flow conversion targets for 2026. With ASCEND stepping down, I know distributors and SKU rationalization has been part of the working capital narrative. But can you just maybe remind us of any other levers that are at your disposal to help get that free cash flow conversion up?

Question: Ross Sparenblek - William Blair & Company - Analyst : Perfect. Thank you, guys. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2024 / 12:30PM, EPAC.N - Q4 2024 Enerpac Tool Group Corp Earnings Call

Question: Steve Silver - Argus Research - Analyst : Thanks, operator, and thanks for taking the questions and congratulations on a productive year.

Question: Steve Silver - Argus Research - Analyst : The first question, as the leverage in the company continues to be below the target range with the continued strong free cash flow and the cash position even after the DTA deal, that combined with the robust share repurchase activity, just wondering if there are any updated thoughts or color around the -- thinking around the capital allocation strategy.

Question: Steve Silver - Argus Research - Analyst : That's helpful. Great. And one more, if I may. Given the fact that the tool industry and the industrial industry at large remains really fragmented, are you seeing any signs of wider consolidation in the industry given the macroeconomic challenges that you cited earlier and just really the still elevated interest rate environment? Is there any signal of increased consolidation across the industry?

Question: Steve Silver - Argus Research - Analyst : Great. Thanks for the color and best of luck in the upcoming year.

Question: Steve Silver - Argus Research - Analyst : Thank you.