Ladies and gentlemen, thank you for standing by. Welcome to the Enerpac Tool Group's Fourth Quarter Earnings Conference Call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, September 29, 2022. It's now my pleasure to turn the conference over to Bobbi Belstner, Senior Director of Investor Relations and Strategy. Please go ahead Ms. Belstner.

Thank you, Operator. Good morning and thank you for joining us for Enerpac Tool Group's fourth quarter of fiscal '22 earnings conference call. On the call today to present the company's results are Paul Sternlieb, President and Chief Executive Officer; and Tony Colucci, Chief Financial Officer. Also with us is Barb Bolens, Chief Strategy Officer and Bryan Johnson, VP of Finance and Chief Accounting Officer. Our earnings release and slide presentation for today's call are available on our website at enerpactoolgroup.com in the Investors 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 laws. 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. Now I will turn it over to Paul.

Thanks, Bobbi and good morning, everyone. Thank you for joining our Q4 earnings call. I am glad to have the opportunity to discuss our fiscal 2022 fourth quarter results with you and provide an update on the progress of our ASCEND transformation program. Before we get started, I want to first welcome Markus Limberger to Enerpac Tool Group. Markus joined us as Executive Vice President of Operations on September 01 and we're very excited to have him as a member of our leadership team. His background includes a strong focus on operational excellence and proven success in developing and executing operation strategies to achieve sustained improvements and performance with extensive experience in lean and continuous improvement. Markus will be instrumental as we execute on our global operational excellence initiatives here at Enerpac. Now to touch on the quarter as we wrapped up the fiscal year, we experienced nice momentum heading into the last several weeks of the quarter. I'm very pleased with our results, which were driven by continued solid demand in both our product and service businesses in two regions, and we achieved a quarterly adjusted EBITDA margin of 21.1%, which is a record high following the EC&S divestiture in 2019. Tony will provide additional commentary on the fourth quarter financial results in a moment, but before I move on, I want to thank our global team for the solid execution throughout the fiscal year and their dedication to serving our customers. Overall, with the exception of the additional receivable reserve in the third quarter, it was a strong fiscal year, which we'll continue to build on here in fiscal 2023. Now moving on to Slide 3; as we announced on our Q2 earnings call, we launched our ASCEND transformation program focused on driving organic growth, operational excellence improvement…

Thanks Paul and good morning, everyone. Now turning to Slide 9, let's review the adjusted fourth quarter results. Net sales were $152 million, which is a 10% increase in core sales when compared to the fourth quarter of fiscal 2021. Tool product core sales were up 12%. Service core sales were up 3% and Cortland core sales were up 14%. Adjusted EBITDA margin was 21% in the quarter, representing a post EC&S divestiture high and reflected currency-neutral incremental profitability of 67%, well above our previously communicated range of 35% to 45%. The tax rate for the quarter was 17% compared to 36% in the prior year. This resulted in an adjusted EPS of $0.37 up from $0.19 in the prior year. Turning to Slide 10 for details on our sales performance#; reported year-over-year net sales were up 4% including the FX headwind of $7.5 million, driven by the strengthening of the US dollar primarily related to the Euro and GBP. Product core sales increased 12% with approximately 90% of the increase from our tools products and the remainder to Cortland. All regions experienced year-over-year double-digit product core sales growth except APAC, which was in the high single digits, which reflects continued strong demand for our products. Service growth continued in the Americas and MENAC with MENAC driven by strong oil and gas opportunities, but was partially offset by the clients at APAC in Europe where the latter is largely due to the non-repeat of a significant North Sea service project in the prior year. Lastly, pricing actions contributed roughly $9 million to the top line. While we do expect our ASCEND transformation program to contribute to our sales growth, given that we are still in the early stages of implementation, there was minimal impact to the top line in the…

Thanks, Tony. In the first four weeks of the fiscal first quarter, demand remained strong and we have not seen a change in order trends from the fourth quarter. However, we are cautiously optimistic as it relates to fiscal 2023. Due to the uncertain macroeconomic environment and particularly the impact of the stronger US dollar, we are setting our full year fiscal 2023 net sales range of $565 million to $585 million, which based on current foreign exchange rates, is approximately a 3.5% headwind from fiscal 2022 and assumes that there is not a global recession. The guidance range represents organic growth of approximately 3% to 6%, and while we continue to have potential tailwinds that could help support growth, we remain cautious. We anticipate our normal seasonality trends where our second half is stronger than the first half of our fiscal year. We expect an adjusted EBITDA range of $113 million to $123 million, which includes an ASCEND EBITDA benefit of between $12 million to $18 million with improvement in our typical adjusted EBITDA incremental margins as ASCEND progresses. Before we open the line for questions, I want to share that while we are cautious as we enter fiscal 2023, I am extremely proud of the work that we have accomplished as an organization over the past 12 months. We are well on our way to transforming the business, and we look forward to sharing more details regarding our strategic plan, ASCEND and capital allocation strategy with you at our Investor Day in November. Our strong balance sheet and the work we have done with ASCEND thus far has us well positioned to unlock the full potential of this business. As always, I would like to thank our Enerpac Tool Group employees around the world for their hard work and dedication to serving our customers and for their efforts in driving ASCEND transformation

Operator, that concludes today's prepared remarks. Please open the line for questions.

Certainly. We'll now be conducting a question-and-answer session. [Operator instructions] Our first question today is coming from Jeff Hammond from KeyBank Capital Markets. Your line is now live.

So just down to 3% to 6% organic growth, can you just, I guess one, talk about the price component within that carryover additional actions and then two, just any drag anticipated from any 80/20 actions, product line simplification, etcetera?

Yeah, I'll let Tony address first on the kind of thinking behind the framework and then we can talk a little bit on H1 as well.

Yeah, the 3% to 6% is going to be more heavily weighted towards pricing than growth as we're -- than volume that as we're being cautious here with the low one here in particular, but it is a mix is what I would say.

Yeah, and I would add to that. There certainly is a fair amount of pricing carryover that we kind of built into that top line guidance, Jeff, and we do have some additional pricing actions that we're anticipating in the fiscal and of course we'll react as necessary further for inflation. But we also talked about some of the strategic pricing actions that we took towards the tail end of fiscal 2022, which will have certainly carry-over effect in fiscal '23. I think with regards to the 80/20 work, which is progressing well, we don't anticipate any significant drag on revenue from that, just in the sense that we do have a fairly extensive product catalog. So we believe that we have ample substitute products available, that we can point customers to if not the exact one that they would be requesting, but I think the top line does reflect just a bit of cautious outlook and particularly with regards to the European region where obviously the macro environment is more challenging.

Okay, great. And then just on I guess the $10 million of spend this quarter, kind of where are the big buckets and then just on the savings, what kind of -- what are the big factors that swing kind of towards the lower, the higher end of that 12% to 18% range?

Yeah, on the spend here in the quarter, again a mix of restructuring and mainly service fees that went into the program here as well, that's the primary amount that we see here in the quarter and then sorry, the second question?

Just the band is pretty big, $12 million to $18 million, just what kind of pushes you to the higher, the lower end and maybe just speak to some of the bigger opportunities. I know you mentioned strategic pricing, but within kind of the early stage, some of the big buckets.

Yeah, I would say some of that is volume dependent and within the range share as well, but the $12 million to $18 million really does cover all three categories of our ASCEND program that we have. Again, I would say lower and on the low end, taking down some of the volume on the low end, but it really does cover all three of the categories that we have and looking to gain traction on all three.

Yeah, and I would just echo that and say, if you remember on our three serve ASCEND pillars, there are organic growth elements that are more near term. There are operational efficiency improvements we're making. We referenced some of those in warehousing, for example, and the third bucket around SG&A. I think we feel very confident around particularly cost related actions and our ability to execute those and the fiscal. As Tony said on the first bucket, there are some that are the growth related pieces that are somewhat volume dependent. So we're just being a bit cautious on that.

Okay, great. I'll get back with you. Thanks.

[Operator instructions] We've reached the end of our question-and-answer session. I'd like to turn the floor back over for any further and closing comments.

Okay. Well, thank you all for joining our Q4 earnings call. Have a great day, and we look forward to seeing you at our Investor Day in New York City on November 16. Thank you.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.