Enerpac Sets FY2027 Outlook After 10% Q4 Organic Growth

Enerpac Tool Group (NYSE: EPAC) ended fiscal 2026 with double-digit fourth-quarter organic sales growth, led by broad product strength in the Americas, while lower margins offset part of the revenue gain. The industrial tools company also issued fiscal 2027 guidance incorporating approximately 10 months of results from its newly acquired SFE Group business.

For fiscal 2027, Enerpac expects net sales of $825 million to $845 million, including organic growth of 4% to 6%. The company forecast adjusted EBITDA of $195 million to $205 million and adjusted diluted earnings per share of $2.00 to $2.15. The non-GAAP outlook assumes no substantial change in tariffs and exchange rates of $1.13 per euro and $1.33 per British pound.

Q4 growth led by Americas product demand

Fourth-quarter net sales increased 11% to $186 million from $168 million a year earlier, with organic sales up 10%. Industrial Tools & Services, or IT&S, generated $179 million in sales, an 11% reported increase and a 10% organic gain.

IT&S product revenue rose 11% to $149 million, matching its organic growth rate. Service revenue increased 11% to $30 million and was up 9% organically, an improvement from the weakness recorded across the full fiscal year.

The Americas was the principal regional growth driver, with IT&S organic sales advancing 24%. Enerpac cited strength across core distribution, national accounts and specialty distribution, as well as activity tied to data-center construction, power generation and defense.

EMEA organic sales declined 1% as growth in standard products and service was offset by a sharp decrease in Heavy Lifting Technology. The company said Heavy Lifting Technology remained solid but faced a difficult year-earlier comparison. APAC organic sales grew 2%, supported by new products in India, Korea and Australia and Heavy Lifting Technology wins, while its smaller service operation was affected by macroeconomic and geopolitical events.

Profitability weakened despite the higher quarterly revenue. Gross margin fell 310 basis points to 47.0%, while adjusted SG&A expense increased to 25.5% of sales from 24.9%. Adjusted EBITDA declined 5.4% to $42 million, and adjusted EBITDA margin contracted 390 basis points to 22.6%. Adjusted diluted EPS edged up 1.9% to $0.53 from $0.52.

Full-year cash flow rises as service revenue declines

Fiscal 2026 revenue increased 6% to $652 million, which Enerpac described as its highest annual revenue since its 2019 relaunch. Organic sales grew 4%.

IT&S product sales rose 9% to $520 million, including 6% organic growth. Service sales, however, declined 9% to $106 million and fell 12% organically. As a result, total IT&S revenue increased 5% to $626 million, with organic growth of 3%. Cortland Biomedical, reported under Other, increased revenue 23% to $26 million.

For the full year, IT&S organic sales increased 10% in the Americas but declined 3% in EMEA and 1% in APAC. Service recorded declines in all three regions, including double-digit decreases in EMEA and APAC.

Full-year gross margin narrowed 130 basis points to 49.2%, and adjusted EBITDA margin decreased 120 basis points to 23.7%. Adjusted EBITDA was approximately flat at $154 million, while adjusted diluted EPS increased 3.3% to $1.87. Free cash flow rose 30% to $120 million from $92 million.

At August 31, Enerpac had $175 million of cash and equivalents, $182 million of total debt and a net debt-to-adjusted EBITDA ratio of 0.1 times. The company subsequently entered a new five-year credit facility consisting of a $300 million term loan and a $550 million revolving facility, with an additional $425 million accordion option for potential acquisitions.

SFE acquisition reshapes fiscal 2027 outlook

Enerpac completed its acquisition of SFE Group on October 28 for approximately $472 million, comprising about $452 million in cash and $20 million of equity awards granted in place of transaction bonuses. The cash portion was funded through cash on hand, the new term loan and revolving-credit borrowings.

SFE generated approximately $170 million in fiscal 2026 sales and $44 million in adjusted EBITDA, according to the presentation. Enerpac expects the acquisition to be accretive to fiscal 2027 adjusted EPS after excluding transaction, integration and non-cash acquisition-related costs.

The company estimates transaction costs of about $8 million and integration costs of $10 million to $14 million. It targets $4 million to $6 million of synergies by the third year. Preliminary net leverage at closing was estimated at about 2.3 times, within Enerpac’s target range of 1.5 to 2.5 times.

Enerpac’s fiscal 2027 assumptions also include depreciation and amortization of $26 million to $30 million, excluding SFE purchase-accounting effects, interest expense of $30 million to $34 million, an adjusted tax rate of 22% to 26%, and capital spending equal to 2% to 3% of sales.

Management plans to focus its PROPEL strategy on growth in attractive end markets, product-led innovation, service expansion, inventory management and operational improvements. The company launched 11 products in fiscal 2026 and increased research and development spending to $15 million from $14 million in fiscal 2025.

The outlook remains subject to economic and geopolitical uncertainty, tariffs and other trade restrictions, foreign-exchange and interest-rate movements, supply-chain disruption, industrial-market conditions and the ability to integrate SFE while retaining key employees and commercial relationships. Enerpac also identified pricing pressure, higher material and labor costs, and execution risks surrounding acquisitions and operational initiatives as potential constraints.