Enerpac Tool Group Powers Through Uncertainty with 6% Revenue Growth
Despite the increasing level of economic and geopolitical uncertainty, Enerpac Tool Group has managed to post a 6% revenue growth in its third quarter fiscal 2025 earnings. The company's President and Chief Executive Officer, Paul Sternlieb, reported on the recent conference call that two of their three geographic regions, along with the Cortland Biomedical business, posted strong growth, including the acquired DTA business.
The total revenue for the quarter reached $159 million, an increase from last year. On an organic basis, adjusting for foreign exchange and the acquisition of DTA, Enerpac's revenue grew 2%. The company's IT&S business saw a 1.5% growth in organically year-over-year revenue, while both their product and service businesses experienced growth, with product sales growing by 1% and services by 3%.
Enerpac is implementing its Enerpac Commercial Excellence (ECX) across its portfolio, which the company believes will add rigor and discipline to their sales process and funnel management. This move is expected to contribute to their above-market growth. The Cortland Biomedical segment reported a 19% growth in revenue, driven by good performance from existing products and market reception to new product launches.
In terms of geography, the Americas delivered another strong quarter with high single-digit organic growth, driven by demand for Enerpac's standard products and services. There was a bit of softness in rail and general industrial manufacturing sectors, but the company saw particular strength in aerospace, infrastructure, and service for the nuclear industry.
The APAC region continued to generate solid performance with mid-single-digit growth in the third quarter. The company is benefiting from major rail projects and maintenance needs in Thailand, Japan, and the Philippines, as well as growth opportunities in solar farms in Vietnam and wind projects in Japan. However, there are some more challenged end markets, including steel industry in South Korea and refining and petrochemicals in China.
In the EMEA region, Enerpac posted a high single-digit decline organically, driven by a decline in their HLT business, which had a strong performance in the year-ago period. The company is seeing strength from the infrastructure market and benefiting from higher defense budgets, spending in oil and gas sector, and ongoing wind projects.
Despite these growths, Enerpac's gross profit margin declined 140 basis points year-over-year to 50%. This decline may pose a challenge for the company as it navigates through uncertain economic times. Nonetheless, with its strong performance and innovative strategy in place, Enerpac is poised to continue outperforming its industrial peers in this soft sector.
