Enerpac Tool Group (NYSE:EPAC) reported first-quarter fiscal 2026 results that management said were “essentially as expected,” while highlighting a pickup in orders and continued strength in several end markets, particularly infrastructure, defense, and power generation.
Quarterly results and mix shift
For the quarter, revenue totaled $144 million, down 1% year over year, according to Chief Financial Officer Darren Kozikowski. Within the Industrial Tools & Services (IT&S) segment, sales declined 3% organically, though management emphasized that product revenue increased 4% organically.
Offsetting product gains, service revenue fell 26% for the quarter, driven largely by weakness in EMEA—particularly the U.K. Kozikowski attributed the U.K. service decline to slowing conditions tied to “lower production and customer consolidation in the oil and gas industry,” where Enerpac predominantly provides service. The company said it continues to streamline service operations in EMEA while investing where it sees global opportunities.
Regional and end-market trends
By geography, Enerpac posted 5% growth in the Americas, led by an 8% increase in product revenue. Service revenue in the region declined slightly, which management attributed mainly to timing of specific projects. Kozikowski said the company is seeing strength from infrastructure and strong demand from power generation.
EMEA revenue declined 10%, which management previously described as a “wild card” for fiscal 2026. However, Kozikowski pointed out that EMEA product revenue grew 5% on continued strength from infrastructure and government spending, as well as solid performance in Southern Europe.
In APAC, revenue fell 8% due to a decline in the company’s “lumpy” HLT business, alongside headwinds from political uncertainty in Southeast Asia and a slowdown in China. Despite that, management cited strength in India, a recovery in Australia, and an “excellent HLT funnel,” and said it expects APAC to return to year-over-year growth in the second quarter and for the full fiscal year.
Margins, tariffs, and earnings
Gross margin was 50.7%, in line with recent quarters. Kozikowski said margins were affected by higher tariff-driven costs moving through cost of goods sold, but the company offset those costs “on a dollar basis through pricing and productivity actions.” Enerpac expects tariff-related margin pressure to ease in the second half of fiscal 2026.
Selling, general, and administrative expenses were “essentially flat” year over year, with cost controls offsetting compensation inflation and incremental spending on innovation. Adjusted EBITDA was $32.4 million, representing a 22.4% margin.
Adjusted earnings per share were $0.36, down from $0.40 in the year-ago period. Kozikowski said a higher effective tax rate reduced EPS by $0.02.
Cash flow, capital allocation, and inventory
Enerpac ended the quarter with net debt of $49 million, for a net debt-to-adjusted EBITDA ratio of 0.3. Total liquidity, including revolver availability and cash, was $539 million.
Cash flow from operations was $16 million, up from $9 million in the prior-year quarter. Free cash flow totaled $13 million, increasing $10 million year over year, which Kozikowski said reflected timing of receipts and payments and lower capital expenditures versus the prior-year period that included spending on the company’s new headquarters.
During the quarter, Enerpac repurchased $15 million of stock, while management said it continues to maintain capacity for strategic M&A.
In the Q&A, Kozikowski said inventory was up about 15%, explaining that the company built inventory to ensure product availability amid stronger order rates. Management said order growth outpaced revenue growth in the quarter.
Outlook, service strategy, and growth initiatives
Based on first-quarter performance and what management described as encouraging order trends, Enerpac maintained full-year fiscal 2026 guidance. The company continues to expect:
- Organic revenue growth of 1% to 4%
- Adjusted EBITDA growth of 6% at the midpoint
- Free cash flow of $100 million to $110 million
- Earnings per share of $1.85 to $2.00
On pricing, management said it took a “small, low single-digit” price increase in early December, with Kozikowski noting it applies to product (not the total portfolio) and is rolling through the channel due to notice periods. He said recent pricing actions were implemented in the Americas and Europe.
Chief Executive Officer Paul Sternlieb said the company is investing to support its growth strategy, including higher innovation spending and more new product introductions in fiscal 2026 than in fiscal 2025, when the company launched five new products. Sternlieb said Enerpac is also expanding sales capabilities and distribution in countries including India, Australia, and the Philippines, and is implementing a new e-commerce technology platform intended to improve user experience and provide enhanced marketing and analytics tools.
Management also discussed efforts to reshape services toward higher-value work. Sternlieb said the company passed on lower-margin service projects but has not yet fully backfilled that volume in the U.K. amid oil and gas consolidation and softer market conditions. He added that services are a mix of rental and manpower and are “margin-dilutive” overall to Enerpac, and said the company is consolidating its service footprint in Europe while selectively investing in higher-opportunity areas. He also described commercial shifts such as moving from an agent model to a direct model in certain markets to improve customer relationships and margin capture.
Beyond near-term operations, Sternlieb highlighted two end markets the company views as attractive: power generation—including nuclear—and infrastructure. He described Enerpac’s support for nuclear operations and maintenance, inspection, refueling, and decommissioning, including specialized Biach tensioners used for tightening reactor pressure vessel head studs. In infrastructure, Sternlieb cited a recent selection to design and build a bridge launching system for the Juneau Creek Bridge in Alaska using custom hydraulic cylinders and computer controls.
On M&A, Sternlieb said the pace and quantity of deal flow has “picked up” over the past quarter or two and that Enerpac is actively evaluating several opportunities, while emphasizing discipline and a focus on shareholder value.
Finally, Sternlieb noted an investor relations leadership change: Senior Director of Investor Relations Travis Williams is leaving the company, with Kozikowski serving as the primary investor contact until a replacement is hired.
About Enerpac Tool Group (NYSE:EPAC)
Enerpac Tool Group Corp. (NYSE: EPAC) is a global provider of high-pressure hydraulic tools, controlled force products and precision positioning equipment. The company’s products and solutions enable customers in manufacturing, energy, infrastructure, transportation and construction to lift, move, position and secure heavy loads with safety and accuracy. Enerpac’s core portfolio includes hydraulic pumps, cylinders, torque wrenches, torque multipliers, flange spreaders, tensioners and portable bolting tools, complemented by electric and pneumatic tools for a wide range of industrial applications.
In addition to its extensive product lines, Enerpac offers integrated systems and services such as engineered lifting solutions, custom skidding and spreader beam assemblies, mobile bolting units and digital monitoring platforms.
