Enerpac Tool Group Corp. has announced that its Board of Directors and management team are taking actions intended to enhance shareholder returns, including the launch of ASCEND, a new transformation program focused on driving accelerated earnings growth and efficiency across the business. 

Paul Sternlieb, Enerpac Tool Group’s President and CEO, said, “This is an important and exciting time for Enerpac Tool Group. Our second quarter financial results announced today demonstrate the underlying strength of our focused industrial tools and services portfolio. While we are still operating in a challenging macroenvironment, we are now taking decisive actions to position the business for its next phase of growth and shareholder value creation.”

Executing ASCEND Transformation Program to Drive Growth and Efficiency

“Over the last several months, we have conducted a deep dive holistic review of our business that confirmed we have many exciting opportunities to accelerate our organic growth and margin expansion by improving how we go to market, innovate, buy materials, manufacture product, and serve our customers. Through ASCEND, we will focus on simplifying our business utilizing 80/20 processes and Lean methodologies to become even closer to our end customers, optimize our manufacturing footprint, and establish a more efficient organizational structure,” continued Mr. Sternlieb.

As part of ASCEND, the Company will focus on the following key initiatives:

  • Accelerating organic growth go-to-market strategies including improved commercial effectiveness, vertical market-specific commercial and product strategies, channel optimization through its 80/20 approach, strategic pricing optimization, and selective innovation to meet broader and emerging market demands.
  • Improving operational excellence and production efficiency by utilizing a Lean approach. The Company will also continue to simplify its business by further optimizing its footprint, accelerating global strategic sourcing and indirect spend optimization, and rationalizing SKUs in line with its 80/20 approach.
  • Driving greater efficiency and productivity in SG&A by better leveraging resources to create a more efficient and agile organization. The Company intends to optimize G&A through consolidation and additional shared services implementation. In addition, the Company intends to strengthen its salesforce effectiveness by enhancing sales and channel coverage, while flattening its structure to move closer to customers. Moreover, the Company will also look to further simplify and rationalize its legal entity structure.

With elements of the program intended to drive both organic growth and margin improvement, the initial phase of ASCEND will focus more on driving greater efficiencies and reducing operating costs. The Company expects that it will deliver an incremental $40-$50 million of annual adjusted EBITDA from the execution of ASCEND, with the full run rate of adjusted EBITDA expected to be reflected in its results as it exits fiscal 2024 and fully incorporated into its fiscal 2025 projections. Enerpac anticipates investing approximately $60-$65 million over the next 30 months to support the ASCEND initiatives.

In addition to the ASCEND program, Enerpac will continue to focus on several key organic growth initiatives including enhanced new product development; digital and IOT enablement in its products, services, and go-to-market strategy; and stronger regional growth strategies in developing markets. The Company also expects to pursue a disciplined M&A strategy while continuing its focus on the pure-play industrial tools and services market.

“We expect to align incentives to achieve our targeted results, with the goals of driving increased performance, including higher growth and ROIC, and achieving greater than our previous 25% EBITDA margin target, all of which we expect will deliver improved shareholder returns. As we embark on this journey, we will be taking bold and necessary steps to deliver consistent top and bottom-line results in line with other best-in-class industrial companies,” said Mr. Sternlieb.