EPAC - Earnings call transcript Q4 2020 | Enerpac Tool Group Corp.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Enerpac Tool Group's fourth quarter earnings conference call.

During the presentation, all participants will be in a listen only mode. Afterward, we will conduct the question and answer session [Operator Instructions].

As a reminder, this conference is being recorded, September 30th, 2020. pleasure of the Investor my Bobbi over now Director Belstner, Relations is to conference turn to It and Strategy. you. Thank ahead. go Please

Bobbi Belstner

Thank fourth and for morning, you for operator. us joining thank Enerpac earnings XXXX you Group’s conference call. Tool Good

Counsel; the Chief to President Executive with Bryan Bolens, are Operating and Dillon, Officer. call Rick are Officer; Financial Chief Chief results Fab Barb present Also the Accounting Randy company's Strategy Rasetti, Chief On and Officer. Officer; Chief today Baker, and Jeff General Officer; Johnson, Schmaling, us

Our call earnings investor Web enerpactoolgroup.com for release section. and slide the are site presentation today's in our available on at

We are on it also archive recording call we'll Web and our site. this

we During as non-GAAP profit will such measures, reference today's margins call, adjusted earnings. and adjusted

reconciliation schedules non-GAAP in of GAAP release. a to morning's to the measures can You this find

that considered like also statements facts today's call would We not statements. presentation remind forward-looking and in to historical will making are that and are be we you

advance that you making as many follow-up participants laws. with Safe we We have risks prior factors are to actual Consistent today’s of that your to questions from results for materially our forecasts, hour or may statements. us see results for and anticipated SEC Please federal address forward-looking in other calls, the co-operation. we in other and one from as cause the filings question provisions an Harbor differ our to conducted Thank one order to how follow those ask practice call keep statements pursuant to also you allow securities possible.

over call the will Now, I Randy. turn to

Randy Baker

everybody. good and Bobbi Thanks, morning,

Enerpac of Enerpac prior spend global future the firstly, quarter maintaining how today minutes in crisis; Tool the for company focus focus bright want a with start all earnings, had employer on worldwide the where company. have very my to on as three stressful feel I'd and part sure sincere for the thanks very with to calls we making before an express future. I our accepted has Group These review finally, to navigate respond continued phase entire of to been and remotely, Enerpac has fourth strategy; has our safety and we everyone to our drop is and times sales has the impact our declined going company. health strategy. XX% on secondly, a a few while reviewing return-to-work Currently, on execution we employees’ like pandemic the Slide of as continuing employees to entered their commitment X. of we team which our about priorities; We’re the our working second Consistent dramatic employees

assessment our operation in plants additional full temperature protective including safety and All remain checks, measures, of with risk equipment.

measures. provided with had less XXX safety sales few Our very visit moderate dealer All worldwide have teams a with marketing and coupled environment and than work to COVID-XX serious these and increased actions safe have symptoms. customer resumed date, we've cases

drop drive response and expenses on margins in sales our cash focused the is to positive to controlling Our generation. decremental

cost measures permanent the as of ECS provided total and announced divestiture temporary savings date. a of $X million million quarter in of in Our part actions to yielded savings the $XX

be rationalization is will year and the our this fiscal completed Additionally, during XXXX. earlier footprint proceeding announced

the economy positioned company, best and the our of Maintaining the communication while our to protecting growth we we to provide global to important successful, us very have of strategy as our our returns team efforts been Enerpac costs and grow normal. believe in possible is to All control our to ability well ensuring execute Enerpac. of is morale

discussion groups of bi-weekly of and dedicated the six weekly past conducted the meetings to Enerpac. months, we've focused Over culture briefings the safety and

employee guidelines and safety. phase are carefully of As maintaining monitoring next strategy, return-to-work clear our we the government of look forward local we objective to the

X. over sales been past volatile. flipping very month to Now The Slide have six

The fourth quarter. a moderate by decline in the third followed quarter improvement the experienced highest

a for churn dollars sequential sequentially visible the and trend improved provides in both order weekly year-over-year order starting June. Our orders comparison. have The

comparison record relative year-over-year orders which volatility sales demand begin higher a of sales, reflects of restocking all XXXX. large willing demand stock, Inbound are to August the due the retail and more Dealers becoming in comprised to dealer fourth the and project the are Although, in improved are retail of normally positive quarter. process. to

Oil the advancing resulting both civil quarter. for large gas improved energy alternative service has revenue and sales Additionally, demand. during and stability prices’ in construction are demand tool projects order also and

in of achieve maintain direct of sales contain quarter weeks This and detrimental sales was year-over-year of improving the our in the standpoint, a a X. free result results. X.X times. able costs margin region declined and globally. contributed comprised Core of XX% to to while The and XX%. XX%, from in on XX% down the a sales to is in of which And by to a sales moving quarter in declining to with are flow stated fourth leverage continue inconsistent below to debt moderately XX% were Asia and the All of down decline the effort XX%. experienced North rate The our continuing XX% Mideast a From third was generate these recovery well quarter improved service. in of sales of sequentially we struggle range quarter products to operations mid-teens. fourth the XXXX. dynamics in performing despite moderate been was in European the America over quarter XX%, down has dramatic positive few and factors best improvement first cash Slide

over to cautiously about regional experienced requiring not worlds resurgence recovery the coming of on optimistic virus quarters, did the a the And are X. provided lockdown. moving continued We that Slide

is I company. protection a As the strategy top for the priority Enerpac mentioned, of the

engineering, which sales our during results for quarter manufacturing our to tool maintain exceeded of the by XXXX. marketing, new business. required sales top proud balanced and cost product achieved a teams, for the reductions have We very objective with need investment fiscal performing and I'm the have

the six new product target. During we quarter, fourth solidly and were above XX% launched families our

families XX projects, to XX maintaining adding XXX and This completed fundamental advantage. product new products the year, to our is and new growth new competitive Enerpac organic our catalog. For continued our over

Looking multiple systems, XXXX, including pumps advanced and new in coming forward, projects bolting lifting we have hydraulic products.

both Additionally, our decline we customers and protected line, releasing competitive HTL distributors and Enerpac do strategy landscape. tier completes the three We've not to are which a experience strategy fully full in support. and bolting integrated our also product Enerpac ensure a our coverage opens

dealers through Now us customers more and digital e-commerce training, need virtual ever, and our marketing. than

will business products acquire normal, can Group. global efforts we Enerpac pandemic technology, to returns Tool to restart our our As we emerge from the and which the and enhance

either committed are Enerpac. to Our work identify markets and to expand remain develop valid tools and acquire or vertical types we to

our We a continue first for focused bright on internally some quarter. future Rick investing to to over call to to our the I'm performance very remarks. you. closing back and turn to Jeff, some capital be during come Then now strategy on ensure Jeff insights over the additional of going priority allocation our company. provide with and to I'll

Jeff Schmaling

quarter. few to key verticals, observations some last Thanks, trends, the general and a about performance regional during Randy. make distribution about also give quarter, our operational comments I'll Similar

month earlier mentioned, rate were on for business continues of that steeper Europe And we lift versus and lead clear business back saw improvement product on to recovery. solid were and quarter, we far off get saw on From got QX. the full year-over-year for nice way the month XX% Europe order a the countries decline did we XX% benefits sales regional the our more much to IT&S improved, decline we and in It's for see sales see teams perspective, over some face the to added out Starting our really Cortland. during distributors. as sequential many improvements our move some then our able as as tools more the did at from Slide I'll as of First reopened heavy quarter. engagement. of in service face Randy to We’ve wins X, value and road,

may inquiries and on in experiencing we're encouraged to other to areas orders UK, that seem but keep We watch rates, a really continue the that spikes close and Spain be be the infection U.S. September. many be but cautious distributors still the about as a positively to continue and reopening. improvement customers here bit saw and over also lag we QX in sequential Canada, trending In

Our and thus we're far. pace normal hopeful the July sales we in ramp can order we're trending road more Again, up customer to rates back on team our began get that positively seeing September QX. at a here calls in

A COVID distributors different remain eased countries Turning then restrictions. rates the forth in and due Pacific. again during our closed restrictions of region in number as entirely retightened Changes to to government back of created a bit Asia and key the quarter. a

driven and upcoming exception rate are the travel that and at in or there. I year The shutdowns country assuming trends one which reoccur. we're spot near very one significant bright levels We no and China, prior expect improving are a region the performing eased faster improve as continue is to COVID guess restrictions at we months in

Within little as power you continue challenged this lots distributors and in channel, especially stay COVID tell a continued distributors that Within and tools talked and selling to are general, end in to with western And larger drive the we as bit we teams quarter, to their promote demand as gas, to verticals, and in to last to to really our In to PPE and primarily of marketing can quarter. drive and activity regional being positive I Our construction, driven and nuclear, traditional smaller employed. is ore. a distributors national did flow throughout with distributors. and online digital and the South especially keep Enerpac slightly infrastructure of copper Enerpac distribution our non-commercial and but about can through strength well U.S., as and I our at generation, seeing rail other aero. general faster iron within products seeing by continue markets. work be related single and we're of staffs recover hard wind imagine, shifted as wholesale many use connected creativity retail Australia some key and and both helped cash many than campaigns train mining, products pace customers our you our see to the America Oil

are that quarter up things worth the trends, few mentioning. at looked we popped As a for

versus the First, rates we higher with dropship levels. continue associated see last the inventory year lower in distributor to quarter,

top see ordering in normally is or addition, to other that program either year August looking distributors bonus marketing driven numbers thresholds. we In by not did volume stock up reach their full significant to

and absent this take to the year. where our pricing occur from distribution to actions that those decided pricing September normal Additionally, not we get orders prior typical we actions

eye on have our in As and trend of quarter concerns And September their here stock we’ll have to some continuing the seen ongoing we COVID calls many keep in mentioned, spending. close QX. election have in relative from that this we're the upcoming major -- and them them in distributors hearing Randy many we to caution hearing fall some a we're and obviously finally, exercise this with uptick over of over

the delayed. a but Turning and softer us contributed to borders parts quarter some major to part to was challenging as of in Slide world, MENAC service. result. in countries quarter Summer in many weaker our a projects remaining drives region It normally heat to continue closed shifting and of lockdown, this region saw a be in for remain X we partial many the also

online. off a service May. that and On Americas, believe COVID project significantly we as the business prior the now oil Looking halted seen is East to We of sites and delays, we're about have last impact ends. Europe turn expect year Middle emergent especially restarted, status spend more the of in major and at jobs do limitations the saw our still to before QX world quick talked companies their we're amount encouraging, and We positive in we these those back the is scopes on and up customer their some year. have fair our access budgets driven as service pandemic our to around or were that a popping started the improvement at the the softness of price sequential primarily revenue the Even the versus work In look now spread in and back Caspian project overall capturing shock to despite come note, full April and that here in meaningful would sites. several then by results. was

to to customers’ less Just these gas they service the get susceptible as the and is reminder, done primarily assets outright viability a not to world. generally are oil and around to our business these to tied projects of maintenance as our have cancellation CapEx major and requirements ensure

sites moving like this that spend majority decremental our apply performance. Tool these rates, logistic and ability talking rates, Group’s this sales flexing of lean to controlling our the remains and significant really vast about and year a a of a pandemic of social contributed ways, a the world-class. From harm, operational SQDC to spend, our cost margin and it accomplishment In year on obviously us solid priority managed and Before the we around labor proactively the our effort. minutes order so has variable results talk efficiency safety, which top ended our for teams principles calls. our few terms and which this with at perspective, Cortland, in many through I'd world the results often performance is global volatile by result about quarter. to volatile volumes were zero challenges and tested lower team Enerpac Starting to The tremendous

terms pleased achieve set change all to demands, a really the the our I'm at see In on metrics. our step flawlessly quality to at of improvement to year quality to most quality, of customers’ beginning and deliver in of we the and our of facilities out

Lastly, quarter reduction detail started with we're we more lower and in by comments, in this Rick his some the inventory the seeing. targets aggressive will demand driven cover

industry time on Our time significantly customer teams a our levels, strong metrics this job fantastic expectations. same challenge the meeting inventory cash manage helping and our leading retaining us meeting delivery and at did delivery reducing by

did, team during and Randy quarter the want as really a all their again, to So I work. thank entire tough for hard

and ropes medical with industrial Now depressed a from on resulting delays. market. XX%. combined ropes impact was decline demand lower marine industrial activity key soft being Low to driven, continues business the trade experienced quarter in project COVID the the caused levels Both several primarily markets and The business Cortland. the heavily port down by the

over saw On started and medical we to resource our issues going financial bed to uptick Rick to our to QX, business which With the come inventories. an medical customers expect for and business new due side, deliveries halt low not I'll into call the year see improve the in do up to We fiscal availability and QX grow into some as commentary. industrial well. have in and drove to our that, recently COVID, continued turn

Rick Dillon

and good Jeff morning, everyone. Thanks

sales So fourth products but Slide go our year. let's from more recap into little prior XXXX and quarter. XX% quarters. on Fiscal were the quarter from detail XX% X. down versus adjusted on was XX% the third down both sales sequentially X% product quarter results. improvement down XX% in essentially reported fourth down and increased XX% down in third the I'm and were quarter, XX% Tools Cortland in were service down

innovation than greater adjusted for was X%. to The million NPD with the as adjusted drive the had XX%, positive of the impact lower was consistent quarter during margin in for consecutive noted year continue The The Randy XX%. fourth we XX% We taxes was the adjusted HTL $X earnings. with for from EBITDA was product our rate As sales for tax the quarter. rate third full quarter exaggerated rate quarter the by crisis.

on taxes, cash, appendix and tax Just assumptions. we We've a what modeling all included baseline fiscal CapEx, from in today. depreciation, rate, 'XX note Those expense interest, the include here. quick know amortization, based

by we illustrates the to components what we decline. are if just sales on XX, of So sales the move Slide Jeff waterfall region. seeing covered the

showed in in on we’re indicator QX quarter, just $XX million Last basis. million improvements of sales consolidated quarter. showing quarter, product showed we're we $XX we sales million. of down a year-on-year $XX down and down the here our service here So million the product year-on-year Last another some give to the fourth versus sequential $XX showing

service maintenance primarily Our the attributed impacted be continues deferrals by to to pandemic.

remobilize some start to jobs continue. our were As the positive a if end this did have XXXX and of see half towards saw to impact Jeff relative should second also quarter the quarter, emerging things first we work to on we noted, and of

to EBIT on on moving adjusted So Slide XX. the waterfall

and third And quarter, with reported XX% expected we As range volume significant on the impact our of quarter. in heavily the in improvement helped our Consistent decremental much certainly sales while the improve third sales better quarter XX%. as the stated, the absorption Randy the decremental. to a weighted of was as sequential adjusted our margin XX%, EBIT, XX% as from for improvement that's noted, the well product than

million our improved stabilize sharp quarter. volumes As managing absorption our push quarter. Obviously, spent variable service Jeff to of not we to the $X QX. utilization at about these at mobilization decline after The full our third as due to volume million optimistic but Jeff outs aligning manufacturing we're impact were quarter able cautiously as the sequentially as service mentioned, constraints in labor enter Again, variances if facilities approximately and $X closely operations the volumes current impact were we was we level. maintenance in IT&S last noted, negative earlier are versus the and

our temporary included cost the bonus, expected This generated travel match in for suspension employee As quarter. COVID-XX savings actions restrictions. million furloughs, XXXk and $X

received we locations. international quarter stimulus from than million government funds addition, less our this of $X In

from quarter, look see we first expect $X in approximately our forward As these we savings to to actions. million

the expenses fiscal commercial However, of increase. likely We'll 'XX. see half in to QX activity continues increased to relative back travel

of based the at conditions. for we not evaluate temporary need and market While we continue time, have actions timing actions any this on planned any to additional future

getting $X quarter. of in the restructuring balance $X in quarter. the savings beginning year incremental Our anticipate essentially the for in announced We on a at third the announced full of the resulted run restructuring million actions of rate actions and million 'XX savings to previously approximately that's fiscal year-over-year

turn you XX. if during on generated to now $XX million approximately in quarter. cash So Slide We the liquidity

the interest from were million million Although, it $X our significant working during capital we high our tax the in third flat on approximately including essentially quarter management. expense, last the payroll international quarter, that million with More offsetting net payments yield deferred $X our in progress than semiannual retired which locations of payment we made the on bonds, and was is items $X of quarter. our these third interest

XX on turn let's capital. look to progression primary Slide So a at working for quick the

reduced task we slide and surgical for by took quarter, at quarter. orders needed capital that shows the positioning catch up of in production This our inventory of cash. preserving the levels, we the working as and $XX while execute Primary our impact million. end The the demand. purchase last discussed ourselves actions down our As quarter the to we capital recovery managing is of the of slowed replacement suspending with adjusting our third to allowing our efforts

global quarter. no During of we bad inventory with managing we the result down million quarter $XX saw growth. remain should during the our of million quarter Despite declined This as on in our in well. and in in that's COVID-XX, quarter. deterioration planning. stock we safety look receivable or $XX from function time, procurement operation million receivable diligent the significant return aging evaluating collections to movement this our a the impact $XX Accounts the statistics. in third we debt accounts by our like in as We what levels our as inventory and ended normalized also are our leverage focus We sales levels and reset

retired million of our back pay XX, quarter. the is $XXX cash, end $XX debt go we million We from we Slide if ended quarter. quarter yield during $XX which in million using the our to revolver bonds So third high down down the and in the with

change the at the slightly leverage EBITDA no remains from quarter XX-month at and times fourth trailing X.X XXXX. X.X and third from of the end fiscal that's quarter the Our up times of

With strongest and balance we to and before, we forward. the and remain proactively crisis call Randy. during cash one our allocating view As and that, have sheet you said have diligent managing of turn the we liquidity capital I as the we our going will assets back

Randy Baker

Rick. Thanks,

answer of quarters, to guidance global recovery. the institutional the today economic and vertical Slide surrounds serve. a with economists becoming to fiscal growth the question over the view more the are Perhaps continuing of a market future our is reports analyze of we pending returning pointing monitor Now we market and markets XX. our most we formulate timing a difficult half various let's have stability XXXX and growth to continually consistent Consistent second in We predictability. turn economic to suspend prior clear mode. The of towards view to financial

focus typical to first versus our half maintaining and Our cost an our second structure include on margin. half deliver key our optimal assumptions decremental seasonal strength

we liquidity our of event slower XX, And and growth. Enterpac. organic Page our supplemental our last the Our elements balance our lastly, strategy maintain to ability have between sheet. maintaining changed. to the recovery plan top the in priority strongest we will a continue remains slide on for while to our than execute And moving the for capital closely not protect priorities optimum to on allocation manage the we expected, will cost cost And possible measures balance is

of our and We to serving dedication thank capable for all worldwide. company achieving all like drive our our I'd remains the of objectives. continued of employees and to their is healthy will our long-term In ensure Enerpac conclusion, to strategy continue aspects to customers

everyone priority please tool keeping top remarks, is business. Operator, with creating and a questions. so it while top open safe performing we're completed our Our healthy, for up

Operator

Instructions]. [Operator you Thank

Fargo. Our comes Allison from with Wells first Poliniak question

Allison Poliniak

to talked on has if mentioned actions heading at so severe, guys light some you’d anything point? had with needed. pursue that -- You maybe potential into But incremental could year, are the side volume short-term the cost looking this you come to structural take to that you next decline

Randy Baker

cover to more over little provide it flip clarity. Rick I'll Allison, a to I'll then

-- structural taken are have We that have that and analyzed we improved going costs have have been a structural lot our of things nature. things in to

headed $XX mean, divestiture achieve and offs we've million able that my Some as of improved it have been rightsizing ECS the was I where we expense. in the the to significantly of And of to a were overall comments, I on SAE in our mentioned follow terms cost company.

associated manufacturing on. footprint Secondly, the with that structural had the already we started cost is something

we completed yield we that some in And saving. As commenced are the fourth and and the third consolidation have UK completed in also operations significant mentioned, Cortland going -- the also on largely quarter. consolidations will the

to if gaps you some in want Rick, there. fill So

Rick Dillon

No, you I think covered it.

we at we efficiencies, any will kind opportunity footprint said evaluate, As last last we do call, structural that will to looking the And optimization. cost there mentioned additional drive Randy and call additional we of if are that. we're which continue said we have to efficiencies

Allison Poliniak

just then that QX. you around overestimate of aren't comment was And the guidance. sequential improvement guys sort one heading But of service around any you significant I the I fiscal I terms follow-up help if a of don't we and us that parameters improvement business, on the to know give comments Can us in giving into think guess there?

Rick Dillon

mobility we in Well, of we're Jeff let chime is and out here. some we on, as there saying the we to want What things really came good I'll cautious QX. be one saw of

continue year-over-year. to if you a might to But in we some want obviously, improvement. mobilize. what are that we're are that emergent continue Now, stand the that We at lot saw terms I picking some that end improved are to We what don't the saw add. -- up like, August. there end you QX starting toward and sequential that here, predicting see We looks jobs but that decline like has like on. like that activity we we know of nobody's there's as Jeff, should of in the work jobs we of

Jeff Schmaling

is did inquiry No, I throughout soft due us to a for pick -- we levels up. quarter again, think which see QX, normally it the

delayed major up that's projects a commented, project I level predict harder emergent been it little versus know and to inquiry coming but I pop the glad the is you nonetheless. but Unfortunately, a guess see we’re major through. that to As still are work

as we're see So up as during as to keeps some improvement. you the expecting said, long that quarter,

Operator

your Please Stanley from question comes question. next Stifel. with state Our Elliott

Stanley Elliot

talk of is you Enerpac where trade the between a within curious the if mix been or you're some Can that of the marketplace see and really velocity branded about the velocity Just down kind seeing tools others? to there's the right now? of

Randy Baker

the there's large between don't the I product think branded Enerpac some acquired of brands. and any variations

launched as saw is distribution it a a seeing think, the the is HTL dealers line start company thousands that a Enerpac going of rate we be product branded around only Certainly very there benefit fully small Enerpac. I as the channel world. traditionally through to acceleration and that of

competitive that with I comments, to the completed of bolting sell our in HTL terms mentioned sell the our the As then now has line And launch landscape, gives line opens strategy. which three in been us my new of tier product products competitive and as came the products product a well. fully area

helpful. I So think that's going to be

bending puts product I their machine of think the them with associated if and in have normal been you and lines, the just think about some and of volumes there some of our the terms cutting very of other by lifting, think have through peripheral a lifting But the terms fourth seasonality. products takes similar and and dynamics sales does quarter. and lot brand third pump Enerpac I products, through bolting a range products seen of dynamics our that heavy think pull I the in traditional products,

Stanley Elliot

the would of $X then million how guess incremental temporary And come back, just much of likely coming the may is think we conditions curious So XX% be ’XX, about? assuming margins takes balance as some doing I we back that with about If what better this to, tough, know costs should think when right? in but to some better trying travel services and recover. XX%, decremental, incremental as the down than is part sort And of the being kind that. things with the you obviously puts of and into we're you're

Rick Dillon

margin, When you the down. one mentioned, EBITDA our As when it assumptions, those look know things, you as know, we is a I on some look nice comes product at, EBITDA. you yes, services impact of have of back, at does

is look on a the in $X.XX product and you essentially, the know at impact sales margins, service product dollar you down impact if So margin. in

talk Service And that driver so a mix but product the the return is sequential contributor of improvement, be we look product. will biggest sales. certainly you and to going mover at always be biggest the if about is

other leverage we've Randy that is to to The gets start as taken little comes absorption those a the costs. that of better. million mentioned aspect get $XX manufacturing that leverage, volume the the out, we back volume start leverage, We the on under

we And once We that now stated EBITDA when leverage is able to think in about on to we should actions that before, sitting of be to XX drive in terms returned whereas cost the like I of will when at market. and good to be our growth, of the we XX, we'll our on depends we talked product will of said we're margin. it We’ve to feel the the high that returns so we're And those But all the end volume incrementals kick-in, improvement offset out. now definitely slide done getting and appendix. flow decrementals. as XX% definitely level the through, in

Operator

W. your Mig question comes from with Dobre Our question. Please state Baird. Robert next

Mig Dobre

million going 'XX? Thank you. versus in 'XX keep or to now overall? wondering from As structural savings temporary you we anything where cost savings us if a carries based what you that that know I on give towards is worth these a we're are understand I'm need looking savings can are today. into standpoint else on fiscal fiscal basis through for the mean, over mind? $X 'XX I 'XX, you right How flow to a of there year-over-year sense And

Rick Dillon

XXXX. savings, Last with implemented savings 'XX of quarter And and that's we in starting think third of we that the fiscal fourth year, $XX I total incremental about million. for restructuring actions the had fiscal was

roughly million $X fiscal on 'XX, $XX to spend. the see million, that to million plus we you the So, plus $X leverage in carryover the expect you $X that start to start take million, that

And -- pretty we've gets realization. about so million to that terms you $XX talking been pretty the much close of in

the in temporary Now, actions. of terms

actions Our the those expectation, $X got carry and QX. are we've all carry million actions forward forward

before, was being other as expectation, than Our I actions. additional have right we diligent, don't now mentioning is

continue we to temporary see we then to we If we sequential that get continue the continue how sit that we see our to as expect, then for products hopefully, will improvement. on drive to wane. reconsider We here, sequential the we If improvement, to have actions continue and decrementals. don't we need

we costs, $X of than $X in the temporary. terms million talked million are So incremental restructuring other of an about savings

at looking first lapping we’re full quarters leveraging already run three savings You million coming savings, through. the the with gets we've the announced year the should the in kind $X that be of us of to rate

Mig Dobre

for this clarify myself. to Just

probably 'XX in So million incremental QX, a benefit you're structural savings versus saying that temporary there's would from correct? 'XX savings million in $X is the from occur $X also and

Rick Dillon

Yes.

Mig Dobre

service. $XX And then of had to I'm discussion revenue And you goes second million of the prior revenues. had question here, the we what my looking worth the that on quarter back dollars at total service actually

travel we into to of it for the dollars? this on were business This was quarter $XX And to I to that. slowed I'm it in in plus quarter sense that was those million the some curious quarter sequential third due as call business million, here you to under your Is total comparisons Can parse had sequentially. So Because How in And versus there on color is much the starting early happening just tough Because so we're and revenue? that are in fourth you place of else 'XX about think I out. improvement. of think already look $XX thank do restrictions? understand this my slowdown $XX something back but million? pretty seasonality market. sequential this get in terms

Rick Dillon

you I'll lot would through of quarter, started that then, start third of the to of say I third bit Jeff, go chime The little if in quarter, front and to half the our kick in and really the the quarter. half back a back mobilization, here. a in fourth

So of the all There were third not the a is quarter. here. constraints them in cyclical impact quarter, certainly labor you saw fourth all

is usually strongest The third our in quarter service. quarter

a you'd a traditionally step step so whole. a huge And quarter the on down but see fourth down not you'd traditionally in see

the if sequential down to QX versus normal a items market add? QX mobilization service. for contribute delta in including the think rather those you than issues, you meaningful see Jeff, to as step really want I So well, whether the shift the to two

Jeff Schmaling

and coming some still some QX. it. that delivering captured you of the was We work have beginning at ongoing think revenue I through

seasonality. the underestimate can't You

significant you more maybe it think I than realize.

much quarter-over-quarter soft normally think pretty explains with Our there. QX lockdowns, is I a the decline quarter the and that coupled

Mig Dobre

for dollar terms help or understand however in us magnitude sequential you the maybe But improvement. wise the of it? opportunity you Can frame that, to want

Jeff Schmaling

on the I I in Obviously, backlog we already we're to that already and backlog. what's looking and hesitate the inquiries the going as the back multiple we at into Yeah, amount that it. sites. talked amount say from of put I about perspective of that of some that optimism for have well a work quarter quarter dollar just around in terms emergent would at look But

Rick Dillon

XXXX in projects the QX on basis we meaningful really that similar of just I think cyclical normal saw soft MENAC described in that see of the lows produce first can where add, a we mobilized an we're And be and in. fourth stuck little that the is starting meaningful earlier on that region. we quarter to delayed what bit the then what kick in quarter region is, had a bit regionally, Regionally, to is follows I growth now to But for QX. holidays that though, Still And regions, quarter. And the QX. where quarter Jeff large and a what in overall outlier because pattern of it's that's to was little can cyclical region. start going

mix that And seeing think I so aspect well. as you're

Operator

with Deane next Markets. RBC Our question Dray Capital from comes

Deane Dray

a sense distributors mean restocking potential in get a how was you see hoping the us better in versus But happen if demand, larger here levels I where inventory think just smaller much color seeing the we give trying the some commented that timing? a some on you might are through, to of of better ones. channel. terms are may maybe I start you the you of sense restocking and doing coming

Jeff Schmaling

quarter. many capture and that looking did stock. indicators I’ve would we some stocking can. certainly indicators prime we of from were up we rates August, what don't is a we we see every month that through at significantly the indicator orders tried as exactly their quarter But pulling not which lot I not in the look -- were a August, leading the putting of science. we also that in in see year-over-year, We through not almost retail have fourth distributor shelf. see telling the us as that dealers in to the as in my on if always mentioned of own get comments, As orders It's dropship normally of perfect they we not at a look

And especially clear what in order And the the some of it's did as But So start bit what because of they're the fall as I some and outside see quarter election, until our to weighing distribution. on with a distributor Canada this Western rates talk on of daily had when we across U.S. order a the Randy on few a pause and order calls heavy we our pops, weekly largest is look rest was our they quite of early basis. of happened mentioned, balance and major distributors. September, stock were kind conference management little and of team they to see in easy distributors, the distributors, even it in to I at a a would our and the that saw many normal

up we or not for some think the headroom there's I is encouraging. So that Whether to do the continues stocking. that's in distributors, but channel guess

Randy Baker

refer that and you first we weeks the our rate, you watching daily which into is dynamic back reviewed the if Deane, quarter the in demand chart sequentially. and closely visibility I gave the September, of to we've first that demand really couple what was some been call, And of order

we're go which And money. in XX% high product we in that in seen that and new where QX QX the the which running now XX% down sales, stayed stages make number of somewhere where obviously we've it’s to is teens early for so QX, from is

it we On markets is something that of is volatile demand orders but closely. stable QX, job Is upside normal. for. more are it's we sequential the in the start actually that cautiously the we're and to side But that pretty have and on encouragement sites improve enough revenue enough the that service it and what is as are exactly can watching all and can we continued get are to were those some we be movement stable looking said, has optimistic,

Deane Dray

decision But September response actions, no on competitive became not surprised. should pricing given the And maybe then just decision? the just led the part the there to making? typical color some decision any Was you what your to backdrop, one that of be take

Randy Baker

that all Yeah, with has together got there, competitive and customer add challenging to our decision. increase. not I fall response base with grappled out dynamics really thought and year complexity we a we to our some kind simply and guess distribution pretty the decided quite price of not the

Deane Dray

those better that that… new not pricing So launch new Does the embedded. as products Is you typically include have products?

Randy Baker

into Sure, mean launch and pricing with the to I market a them. a plan strategy those

we that had price the at We for that's out sure. going they're yeah, So, cut planned. certainly didn't prices

Operator

from question question. state Please with Ann Duignan JPMorgan. comes Our next your

Ann Duignan

of I seasonality to the the last talk of revenues. the question, on wanted back Just about

two recovery know half with said market You normal you slow seasonality. half one,

pull Is of year. forward that the be, because into last However, see didn't didn't being that QX given dealers about than Usually services than weaker be a mean that different forward above demand of QX, QX just pull else seasonally given pricing everything does a to demand talked revenue QX normal? is into and should fact from equal QX. your going all we QX? QX on But perspective, you that

Randy Baker

topic, company. you good think as the a which on is stream very I revenue sequential a touched Ann, of

weakest QX again. back come the within to state look have strongest year. in the you year. waves should better. look steam and if was profile, our our that is calendar third turned at not be that our quarter be weakest the pressure dealers out quarter complete recovery year second quarter the by would of we it And is incrementally the flow weaker and QX, typical in one And going is And company is fact obviously typically a quarter full and That the to dynamic QX then of year this probably our followed way which until the so historically ones XX to

as which but believe year, fact sequentially versus us alignment high QX the in mentioned now I lead in look was. that at the so that sequential we And better rates should to order versus prior the QX where that be with teens QX decremental our we're

half and want So it all point this anything goes is to a see week volatility guide dark demand is it a so for But do markets of the couple couple dramatically. normal takes order first of few not the we that to fiscal And that I sequential key problem. for at and lockdown follow here the we seen until we don't change much to we've back on week our because there's quarters a XXXX on going see believe of year-to-year creates weeks, from seasonality which to normal revenue.

Ann Duignan

similar then for And a question clarification. just

still it -- margins You deliver looking fiscal comparable range expect to at comparable Was margins. decremental should be decremental QX, target in around to we 'XX? range? that to the the XX% Or so somewhere was comparable

Rick Dillon

feel QX that. million managed we've temporary say be the carryover of of low hopefully, we've volume Randy delivery to more touching on that think It's was the we of would manage going of like, we the done And is, say, follow all we of I sequential totally sit more can given see be because end the able all the dependent about like to did rather, are the the to actions $X meaningful. to follow resurgence still. pattern, any and don't range end we able should on here we'd we of, like or kind as are is the going cyclical upon pattern. that's our we to cost low -- we is again, But today, actions, to we in But we it's Based when what to decremental. normal the question just on the done, dependent

Ann Duignan

you. one about talk little that and payables working capital just recover, should start build And Just you capital that what the Should in out? we rise, should will and Thank all inventory and volumes of demands to push as on final, half? capital? think bit working we to sales as then receivables particularly how the negative of a working just do at follow-up capital growing back working look about there’s and

Rick Dillon

we we as working will anticipate to our I capital. that, continue mentioned, So manage

at ended in seeing we less Page of the charts with than today, look if with XXXX. XX, you QX started on We are levels we

granted expecting. than Now felt be all than on we still was like a And bit levels saying we we I little a progressed our of XXXX, we needed XXXX higher higher with to but tracking ended like felt XXXX. inventory soft that were was through fourth inventory and quarter

the a We done think that think the work I we've still brings lower level. much opportunity to down there's working there. capital

growth at And can if of how get now in to chain looks getting the we peaks that so it new normal back going us on what differently. in focused and supply we'll just a be going forward. sales planning this look we believe looking and to focused you working are to while don't we're on of still because We're just back some on do chart, I saw at significant part 'XX, certainly I that like. capital but the to this working half, back have foresee see

half progress of So a levels like as here. call setting new won’t here through and normal I like what to we year through decrementals mentioned, we’re those front as what look continued early will ‘XX. look be Too the could the

Ann Duignan

of have So do example? a a capital as you normal for new sales percent working target

Rick Dillon

of And of we working here. capital not fond not I'm particularly a no, yet. don't target as the No, sales percent have but

Operator

with Bergner question. your G. Justin state from comes Research. Please question next Our

Justin Bergner

discuss quantify just To you lack today? might have or us think how inventories. willing you Were you increase? the internally fourth much with And to of been impacted ahead or on estimate so, if that question the a quarter internally are by start, pre-buy price of sales to able share

Rick Dillon

That's difficult call. one another to

talked and is And tough don't and activity. we we there would Whether know not pre-buy, is a have know increase. What or about are what that increase. going we the whether the done our was they to going signaled do to increase purchased a more normal I it's had implemented there had we that's last price So for normally we as would the year, today, on be price as we everything sit been doing. given we was have dealers magnitude if, given here had business, there pre-buy said but had say the a would price pre-buy of say we

Randy Baker

last tariff recall midst you we had if been of pricing. year, the So in

price year. levels throughout actions So there whole had been of multiple the

getting becoming were pretty on And they dealers us. an of was pricing, anytime pricing. there were our cautious announced So ahead

record has the that doubt sales on that impact no some saw 'XX in August we there's of that. So

was last revenue year. September fairly also Now strong

but always put pricing. does impacts shoppers always and human exact difficult nature. how it we that an much That's around think smart people So is buying being to of typically there is happen. That is, free that ring

the If at you'll you that include quarter price action, in revenue. look see a ends upswing

Justin Bergner

second a part two question was My question.

of EBITDA second level, next the years? input part of the change be sort the the Given environment margin suggest the reaching it supported year. environment that weak at side over the cost well that that the or of lack sales question is then and which the goal willing of pretty a cost Enerpac on lack increase is couple the sales the reach this to goal price it Does like? trajectory would XX% looking thinks And XX% price by increase the towards can

Randy Baker

company cost for been it out structural is, beauty actions, laid have of have completed. the to we that So the is changes

the would it if two would we on back was fiscal Rick you getting is above this last that no right have As how have but the that revenue? of I been for and the COVID-XX decades first was recall Had I stated, exited in $XXX for going our quarter it ago absent it And been recall what top ring number. of margin was zip full target. the exit million seems of and have EBITDA XXXX. our if we XX% on impact, code guided in XXXX we year that like QX our I around guided point $XXX of million doubt year

changed. dynamics those not have So

under terms due a of think been lot it's magnitude we companies that the margin impact felt. our is fixed volume fixed for in hasn't process absorbed now of the luckily have Enerpac educational Now we of do it points of costs costs, several that which have and I see to an but businesses the lost been know thing and

structurally, So XXX were to for that level range. the our set XXX of costs and aligned

And so the to business we that range, strategy because volume in execution. steps always and get terms our plan impact stage back that game do we're back in of to once is

Justin Bergner

And and any non-pricing comment that on part that the in second terms trajectory? the of action does affect

Rick Dillon

pricing selective about or it Pricing normally reads actions. through and at less X% is

revenue And do our pricing fact you the so didn't actions, we leverage one debt our by September will we've next originally XXXX. in early a we're implement pricing And September to definitely cost do we returns if $XXX perspective that Randy's of to speaking to, get and so on pricing again, of pricing, of to million on top what million on we ability given not it's $XX meaningful in what point get the have were to impact we far, given get once we of doing is we -- a course take would to will where take have a be volume of opportunity before And we that region. September. point different need done

the pricing year, in is product a it during our -- So is one the probably largest of it's only one terms that's but point. it actions of

Operator

you. Thank

Markets. Jeff Capital Please question. Our Hammond state KeyBanc comes your with next question from

Jeff Hammond

high Is for for Randy to said September I want teens. on, what Just the were that clarify you think down product? that order rates

Randy Baker

week And number. see exited I has you we that yesterday, decremental can if on to sequential we chart September, into as high tell as way. can that you we at week of that Yeah, tracked to the provided prior August you teams as it tracking look coming And versus chart, are year.

progression having very is that March of If or saw shutdown that be or for been exactly fiscal deflects of there's within that is changed may to looking change due The our on to hit markets of European resurgence all Mideast. activity the that us U.S., month question week. to sequential it the takes why in it's be dramatically. March all the and case we whether in to And from that that could cautious or always improvement is, disaster start want rates XXXX. is April Asia the us order an a we have that is when in So a whatever

all going. cautiously we're But So -- about and the think for where looking companies I optimistic I'm that line something the that it's for. definitely looking are it's trend

Rick Dillon

caution. while far. It’s is continues. it we're The of we'd September through put It fact And seen through, not reflects as calling but here to so and continue, hopefully love the it good it yesterday. what Randy we've couple a that it a trend weeks just

Jeff Hammond

is declines is And service in running are than that? September, better that

Rick Dillon

Yes, they are.

Jeff Hammond

costs then the million expectation And away guess give of go I so half that just on you and should And or Rick, of cadence, saving you you you generally $XX taken the know into year, quarter is what in we the incremental quarter? the this out of in assume XQ? can temp second savings the know ’XX. fiscal million just had the that $X then costs, to the us

Rick Dillon

numbers. front the to of into back the some half. million, as sorry, fair -- of $X at we half the loaded our it's looking officially actions I'm just anniversary to get I'm It's it’s terms front probably in start So we because loaded,

that half back two temporary from is those now $X $XX other of carry it of call And half, of million to million said, half. I there the fiscal the no I know, the plan forward. as the in right actions, you ‘XX, back So then front terms

savings we and so that $X we've in the just taken now we’ll we continuing see the at QX. actions right already have You'll here is $X million that's new what all and looking we're generate million said, QX nothing

expectations So QX for no real QX. through

that hopefully sequential we can We’re to continue won't that. take and know, and is actions a that hopeful are monitor we service of lever product pull. can but see that in that additional continue we we we the either mix margin see good look going probably you if improvement see to work, that some still to at to And and and have

Operator

are back remarks. There turn this management further closing you. for I'll at time. no questions it to Thank

Randy Baker

and Well, seeing end stays thank much everybody healthy this very today's we for at safe forward hope And next quarter. quarter. joining And we the everybody look call. the you over you that to of

you very much. thank So

Operator

conference. Thank This you. today's concludes may good All Have parties disconnect. a day.

Bobbi Belstner	Director of Investor Relations and Strategy
Randy Baker	President and Chief Executive Officer
Rick Dillon	Chief Financial Officer
Jeff Schmaling	Chief Operating Officer
Barb Bolens	Chief Strategy, Officer
Fab Rasetti	General Counsel
Bryan Johnson	Chief Accounting Officer
Allison Poliniak	Wells Fargo
Stanley Elliott	Stifel
Mig Dobre	Robert W. Baird
Deane Dray	RBC Capital Markets
Ann Duignan	JPMorgan
Justin Bergner	G. Research
Jeff Hammond	KeyBanc Capital Markets

Enerpac Tool (EPAC) 30 Sep 202020 Q4 Earnings call transcript