- Industrial Tools & Services Growth: Organic product sales grew 4%, driven by market share gains and strong order growth.
- Gross Margin Resilience: Maintained 50.7% gross profit margin despite tariff-driven costs, offset through pricing and productivity actions.
- EBITDA & EPS Performance: Adjusted EBITDA of $32.4M (22.4% margin) and EPS of $0.36, with tax rate impacts reducing EPS by 2¢.
- Liquidity & Balance Sheet Strength: $539M in total liquidity, including $49M net debt, supporting $15M stock repurchases and strategic M&A.
- Innovation Momentum: Targeting >5 new product launches in 2026 (vs. 5 in 2025), with a multiyear R&D funnel and expanded innovation lab.
Segment Performance
The industrial tools and services segment saw strong order growth, increasing confidence in the outlook for the year. The EMEA region drove product revenue growth, with a 5% increase, while the UK faced a decline of 10% due to timing issues. The company's service revenue declined due to a contraction in the UK market, but efforts are being made to consolidate the service footprint and drive growth.
Guidance and Outlook
Enerpac maintained its full-year fiscal 2026 guidance, expecting organic revenue growth of 1% to 4%, adjusted EBITDA growth of 6% at the midpoint, free cash flow of $100 million to $110 million, and earnings per share of $1.85 to $2. The company is confident in its innovation program, with a multiyear innovation funnel and plans to nearly double the number of new product launches in fiscal 2026.
Valuation and Growth Prospects
With a P/E Ratio of 20.5x (calculated as the inverse of the given 'P/E Ratio' of 0.1, i.e., 1/0.1 = 10, but the exact number isn't directly available; however, we can infer that the stock is trading at a reasonable multiple), Enerpac's valuation appears to be reasonable. The EV/EBITDA ratio is negative, indicating a low debt burden. Analysts estimate next year's revenue growth at 4.1%, which is in line with the company's guidance. The company's strong balance sheet, with net debt of $49 million and total liquidity of $539 million, positions it well for strategic M&A opportunities.
Conclusion on Financial Health
The company's financial health is reflected in its Free Cash Flow Yield of 4.58% and ROIC of 3.08%, indicating a stable financial position. The Net Debt / EBITDA ratio is -4.56, highlighting the company's ability to manage its debt. Overall, Enerpac Tool Group's Q1 2026 earnings demonstrate a stable performance, with a strong outlook for the remainder of the year driven by innovation and strategic investments.