Enerpac Tool Group Corp.

Ladies and gentlemen, thank you for standing by. Welcome to InterPAC Tool Group's fourth quarter earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterward, we will conduct a question and answer session. At that time, if you have a question, please press star followed by the number one on your telephone keypad. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, this conference is being recorded today, September 29th, 2021. It is now my pleasure to turn the conference over to Bobbie Belsner, Director of Investor Relations and Strategy. Please go ahead, Ms. Belsner.

Thank you, Operator. Good morning, and thank you for joining us for InterPAC Tool Group's fourth quarter fiscal 21 earnings conference call. On the call today to present the company's results are Randy Baker, President and Chief Executive Officer, Rick Dillon, Chief Financial Officer, and Jeff Schmeling, Chief Operating Officer. Also with us are Barb Bolins, Chief Strategy Officer, Fabrizetti, General Counsel, and Brian Johnson, Chief Accounting Officer. Our earnings release and slide presentation for today's call are available on our website at interpactoolgroup.com in the Investor section. We are also recording this call and will archive it on our website. During today's call, we will reference non-GAAP measures such as adjusted profit margins and adjusted earnings. You can find a reconciliation of non-GAAP to GAAP measures in the schedules to this morning's release. We also would like to remind you that we will be making statements in today's call and presentation that are not historical facts and are considered forward-looking statements. We are making those statements pursuant to the safe harbor provisions of federal securities law. Please see our SEC filings for the risks and other factors that may cause actual results to differ materially from forecasts anticipated results, or other forward-looking statements. Consistent with how we've conducted prior calls, we ask that you follow our one question, one follow-up practice in order to keep today's call to an hour and also allow us to address questions from as many participants as possible. Thank you in advance for your cooperation. Now I will turn the call over to Randy.

Good morning, everybody, and thanks, Bobbie. We're going to start today on slide three. But before we go through the details on the quarter, I have several key topics to cover. First, today I announced my retirement from Interpac Tool Group after five years as CEO. It's been a real honor being part of the Interpac team, and I'm very proud of the transformation we've accomplished during my tenure. I'm also very happy that Paul Sternlieb will be succeeding me as CEO as he brings great operational experience and a track record of growth. I'm going to be available to help Paul through his transition through the remainder of calendar 2021 to make sure we have a smooth process. Secondly, COVID remains a serious safety concern for Intertac globally. During the quarter, we were able to minimize potential infections and keep our employees safe, but we still have employees getting sick around the world, which remains a concern. Europe and North America have done a better job of navigating the impact while Mideast and Asia have a significant business disruption. Jeff covered the implications later on in the call, but it suffices to say that we have experienced more difficult growth conditions in these regions. Interpac's fourth quarter sales grew significantly, but as with most companies, supply chain and logistics constraint played a role in the quarter. Our operations team did an outstanding job managing these difficulties and ensuring our customers' on-time delivery was not compromised. Secondly, they focused on controlling cost and keeping our plants efficient as possible. When compared with 2019 results, margins expanded by 180 basis points, and the company delivered incremental margins at the high end or expected range. Given the inflationary factors, we are satisfied with the results in the quarter. Additionally, we are now well-positioned to actively pursue M&A growth opportunities and continue our internal investments in organic growth. As I mentioned last quarter, we have reinvigorated our M&A pipeline, and I have high expectations InterPAC will make progress towards our strategic objectives. Now let's turn over to slide four. As we discussed last quarter, sales grew nicely, and we're now nearing our historical peak demand. It's important to note that our sales growth has been predominantly in Europe and North America, while Mideast and Asia remain at a lower level. Secondly, product sales have grown at a much faster rate than service, which aided our incremental margins in both the third and the fourth quarter. New product orders in the quarter were up 42% reflected of the significant growth in North America and Europe. Jeff will cover the details of the region's regional performance, but I'm very pleased with the results and the dedication of our sales and marketing teams worldwide. Now let's move on to slide five. Fourth quarter sales were sequentially better than the third, which is not typical for the normal seasonality of Interpac. Quarter sales grew by 28% in the quarter, while product orders increased by 42%. Our sales growth in the quarter was muted by approximately $5 million, which was related to logistics and strengths. Incremental margins in the quarter met expectations, and we're at the high end of our stated range of 35% to 45%. Cash flow continues to improve, particularly when compared with the low levels generated in our prior year. For the full year, cash conversion was well over 100%, which reflects the efforts to control our inventory while supporting our sales growth. Interpac's net debt leverage reached a record low of 0.6 times, which positions us for future strategic growth. Regionally, North America and Europe have returned to near-normal operating levels, benefiting from a lower COVID impact and strong economic conditions. As earlier mentioned, Mideast and Asia Pacific are struggling to return to pre-COVID levels, and are growing at a slower rate as compared with the rest of the world. Overall, I am pleased with the results in the quarter, particularly in the light of the inflationary and logistics factors. Now, turning over to slide six, as I reflected in my tenure as CEO, I'm proud to have been part of the transformation from a small-cap diversified industrial to a focused pure play tool company. The journey has been difficult, but the Interpac team has been able to continuously improve and create a much better performing business. We have always been clear on our objectives to drive organic growth through a creative product development process and support our customers through commercial processes. To that end, we have made significant progress, which is illustrated in our sales growth and consistent delivery of new product contribution above our 10% goal. Our operations have improved significantly over the years and are now closer to achieving a true lean manufacturing objective in terms of quality, cost, delivery, and safety. There are many areas I'm proud of, but most importantly, having the opportunity to work with the Interpac team has been a very rewarding part of my career. We launched the Interpac tool group officially in 2020. We were making great progress prior to the impact of COVID in March of that year. Organic growth was accelerating, and we made our first acquisition as a new company. Now as we begin fiscal 2022, we're able to restart our strategic objectives and focus on the future of the Interpac tool group, which is why making the CEO transition now helps provide consistent leadership into the future, which will be focused on both organic and M&A growth. I have no doubt the management team will deliver great results, and make our company even better. I'm going to turn the call over to Rick and Jeff now to go over the details in the quarter, and then I'll come back with a market outlook and the 2022 guidance. Jeff, over to you.