ENERPAC TOOL GROUP CORP 10-K

Item 8. Financial Statements and Supplementary Data Page INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Reports of Independent Registered Public Accounting Firm (Ernst & Young LLP: PCAOB ID 42 ) 29 Consolidated Statements of Earnings for the years ended August 31, 2025, 2024 and 2023 32 Consolidated Statements of Comprehensive Income for the years ended August 31, 2025, 2024 and 2023 33 Consolidated Balance Sheets as of August 31, 2025 and 2024 34 Consolidated Statements of Cash Flows for the years ended August 31, 2025, 2024 and 2023 35 Consolidated Statements of Shareholders’ Equity for the years ended August 31, 2025, 2024 and 2023 37 Notes to Consolidated Financial Statements 38 INDEX TO FINANCIAL STATEMENT SCHEDULE Schedule II—Valuation and Qualifying Accounts for the years ended August 31, 2025, 2024 and 2023 61 All other schedules are omitted because they are not applicable, not required or because the required information is included in the consolidated financial statements or notes thereto. 28 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Enerpac Tool Group Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Enerpac Tool Group Corp. (the Company) as of August 31, 2025 and 2024, the related consolidated statements of earnings, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended August 31, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at August 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended August 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of August 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated October 17, 2025 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 29 Valuation of the potential earn-out and acquired intangible assets Description of the Matter As described in Note 5 to the consolidated financial statements, during the year ended August 31, 2025, the Company completed the acquisition of DTA The Smart Move, S.A. (“DTA”) for an initial purchase price of $26.7 million plus a potential earn-out of 12 million euro. The potential earn-out is to be paid at the end of the third year following the acquisition and is tied to the achievement of certain financial objectives. The Company’s accounting for this acquisition included determining the fair value of the potential earn-out payment and intangible assets acquired, which primarily included developed technology. Auditing the Company's accounting for its acquisition of DTA was complex due to the significant estimation uncertainty in the Company’s determination of the fair value of the potential earn-out of 2.3 million euro and intangible assets of $15.0 million, which principally consisted of developed technology. The significant estimation uncertainty of the potential earn-out and developed technology intangible were primarily due to the sensitivity of the respective fair values to underlying assumptions about the acquired business’s projected achievement of certain financial objectives. The Company used the Black-Scholes model to determine the fair value of the potential earn-out payment. The significant assumptions used to estimate the value of the potential earn-out included the forecasted gross profit and the discount rate. The Company used the relief from royalty rate method to value the developed technology intangible. The significant assumptions used to estimate the value of the developed technology intangible included the survivor curve for attrition of existing technology, revenue growth, royalty charges and the discount rate. These significant assumptions are forward looking and could be affected by future economic and market conditions. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s accounting for acquisitions. For example, our tests included controls over the estimation process supporting the recognition and measurement of the potential earn-out and developed technology intangible. We also tested management’s review of the valuation models and significant assumptions used in the valuations. To test the estimated fair value of the potential earn-out and developed technology intangible, we performed audit procedures that included, among others, evaluating the Company's selection of the valuation methodology, evaluating the methods and significant assumptions used by management, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. We involved our valuation professionals with specialized skills and knowledge to assist with our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimates and we evaluated the reasonableness of management’s forecasts of future cash flows by comparing the projections to historical results and certain peer companies. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2020. Milwaukee, Wisconsin October 17, 2025 30 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Enerpac Tool Group Corp. Opinion on Internal Control Over Financial Reporting We have audited Enerpac Tool Group Corp.’s internal control over financial reporting as of August 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Enerpac Tool Group Corp. (the Company) maintained, in all material respects, effective internal control over financial reporting as of August 31, 2025, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of August 31, 2025 and 2024, the related consolidated statements of earnings, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended August 31, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated October 17, 2025 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Milwaukee, Wisconsin October 17, 2025 31 ENERPAC TOOL GROUP CORP. CONSOLIDATED STATEMENTS OF EARNINGS (in thousands, except per share amounts) Year Ended August 31, 2025 2024 2023 Net sales Product $ 500,075 $ 474,004 $ 490,629 Service & rental 116,824 115,506 107,575 Total net sales 616,899 589,510 598,204 Cost of products sold Product 227,633 212,847 235,403 Service & rental 77,437 75,652 67,762 Total cost of products sold 305,070 288,499 303,165 Gross profit 311,829 301,011 295,039 Selling, general and administrative expenses 166,920 168,565 205,064 Amortization of intangible assets 5,576 3,312 5,112 Restructuring charges 5,862 7,400 7,096 Impairment & divestiture charges (benefit) — 147 ( 6,155 ) Operating profit 133,471 121,587 83,922 Financing costs, net 9,911 13,524 12,389 Other expense, net 2,831 2,544 2,635 Earnings before income tax expense 120,729 105,519 68,898 Income tax expense 27,980 23,312 15,249 Net earnings from continuing operations 92,749 82,207 53,649 Earnings (loss) from discontinued operations, net of income taxes — 3,542 ( 7,088 ) Net earnings $ 92,749 $ 85,749 $ 46,561 Earnings per share from continuing operations Basic $ 1.72 $ 1.51 $ 0.95 Diluted $ 1.70 $ 1.50 $ 0.94 Earnings (loss) per share from discontinued operations Basic $ — $ 0.07 $ ( 0.13 ) Diluted $ — $ 0.06 $ ( 0.12 ) Earnings per share Basic $ 1.72 $ 1.58 $ 0.82 Diluted $ 1.70 $ 1.56 $ 0.82 Weighted average common shares outstanding Basic 54,049 54,336 56,680 Diluted 54,485 54,862 57,117 The accompanying notes are an integral part of these consolidated financial statements. 32 ENERPAC TOOL GROUP CORP. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Year Ended August 31, 2025 2024 2023 Net earnings $ 92,749 $ 85,749 $ 46,561 Other comprehensive income, net of tax Foreign currency translation adjustments 10,154 3,053 12,887 Pension and other postretirement benefit plans 2,096 1,207 1,239 Cash flow hedges 14 552 ( 375 ) Total other comprehensive income, net of tax 12,264 4,812 13,751 Comprehensive income $ 105,013 $ 90,561 $ 60,312 The accompanying notes are an integral part of these consolidated financial statements. 33 ENERPAC TOOL GROUP CORP. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) August 31, 2025 2024 A S S E T S Current assets Cash and cash equivalents $ 151,558 $ 167,094 Accounts receivable, net 106,085 104,335 Inventories, net 78,774 72,887 Other current assets 39,701 27,942 Total current assets 376,118 372,258 Property, plant and equipment, net 53,275 40,285 Goodwill 289,787 269,597 Other intangible assets, net 46,942 36,058 Other long-term assets 61,745 59,130 Total assets $ 827,867 $ 777,328 L I A B I L I T I E S A N D S H A R E H O L D E R S’ E Q U I T Y Current liabilities Current maturities of long-term debt $ 7,500 $ 5,000 Trade accounts payable 42,944 43,368 Accrued compensation and benefits 28,108 25,856 Income taxes payable 5,425 5,321 Other current liabilities 53,125 49,848 Total current liabilities 137,102 129,393 Long-term debt, net 182,168 189,503 Deferred income taxes 6,192 3,696 Pension and postretirement benefit liabilities 7,147 10,073 Other long-term liabilities 61,564 52,684 Total liabilities 394,173 385,349 Shareholders’ equity Class A common stock, $0.20 par value per share, authorized 168,000,000 shares, issued 52,946,336 and 54,234,660 shares, respectively 10,589 10,847 Additional paid-in capital 243,137 235,660 Retained earnings 284,102 261,870 Accumulated other comprehensive loss ( 104,134 ) ( 116,398 ) Stock held in trust ( 3,542 ) ( 3,777 ) Deferred compensation liability 3,542 3,777 Total shareholders' equity 433,694 391,979 Total liabilities and shareholders' equity $ 827,867 $ 777,328 The accompanying notes are an integral part of these consolidated financial statements. 34 ENERPAC TOOL GROUP CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended August 31, 2025 2024 2023 Operating Activities Net earnings $ 92,749 $ 85,749 $ 46,561 Less: Earnings from discontinued operations, net of income taxes — 3,542 ( 7,088 ) Net earnings from continuing operations 92,749 82,207 53,649 Adjustments to reconcile net earnings from continuing operations to net cash provided by operating activities - continuing operations: Impairment & divestiture charges — 147 ( 6,155 ) Depreciation and amortization 15,674 13,275 16,313 Stock-based compensation expense 13,016 10,931 8,574 Deferred income taxes ( 186 ) 435 460 Amortization of debt issuance costs 586 586 902 Provision for bad debts 949 327 803 Other non-cash expenses 1,111 108 1,569 Changes in components of working capital and other, excluding acquisitions and divestitures: Accounts receivable 3,432 ( 6,479 ) 5,169 Inventories ( 3,207 ) 3,577 4,539 Trade accounts payable ( 4,222 ) ( 7,445 ) ( 21,867 ) Prepaid expenses and other assets ( 15,583 ) 2,183 ( 3,764 ) Income tax accounts 1,730 4,548 9,933 Accrued compensation and benefits 1,539 ( 7,198 ) 11,288 Other accrued liabilities 3,696 ( 13,186 ) ( 2,840 ) Cash provided by operating activities - continuing operations 111,284 84,016 78,573 Cash used in operating activities - discontinued operations — ( 2,697 ) ( 970 ) Cash provided by operating activities 111,284 81,319 77,603 Investing Activities Capital expenditures ( 19,340 ) ( 11,411 ) ( 9,400 ) Cash paid for business acquisitions, net of cash acquired ( 26,661 ) — — Proceeds from sale of property, plant and equipment — — 685 Working capital adjustment from sale of business assets — ( 1,133 ) — Purchase of business assets — ( 1,402 ) — Proceeds from sale of business, net of transaction costs — — 20,057 Cash (used in) investing activities ( 46,001 ) ( 13,946 ) 11,342 Financing Activities Borrowings on revolving credit facility 14,421 62,743 69,000 Principal repayments on revolving credit facility ( 14,421 ) ( 78,743 ) ( 53,000 ) Principal repayments on term loan ( 5,000 ) ( 3,750 ) ( 1,250 ) Proceeds from issuance of term loan — — 200,000 Payment for redemption of revolver — — ( 200,000 ) Swingline (repayments), net — — ( 4,000 ) Payment of debt issuance costs — — ( 2,486 ) Purchase of treasury shares ( 68,742 ) ( 38,354 ) ( 57,662 ) Stock options, taxes paid related to the net share settlement of equity awards and other ( 5,548 ) 4,016 ( 1,458 ) Payment of cash dividend ( 2,167 ) ( 2,178 ) ( 2,274 ) Cash used in financing activities ( 81,457 ) ( 56,266 ) ( 53,130 ) Effect of exchange rate changes on cash 638 1,572 ( 2,099 ) Net (decrease) increase from cash and cash equivalents ( 15,536 ) 12,679 33,716 Cash and cash equivalents - beginning of period 167,094 154,415 120,699 Cash and cash equivalents - end of period $ 151,558 $ 167,094 $ 154,415 35 The accompanying notes are an integral part of these consolidated financial statements. 36 ENERPAC TOOL GROUP CORP. CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (in thousands) Common Stock Additional Paid-in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Loss Stock Held In Trust Deferred Compensation Liability Total Shareholders’ Equity Issued Shares Amount Balance at August 31, 2022 83,397 $ 16,679 $ 212,986 $ ( 742,844 ) $ 966,751 $ ( 134,961 ) $ ( 3,209 ) $ 3,209 $ 318,611 Net earnings — — — — 46,561 — — — 46,561 Other comprehensive loss, net of tax — — — — — 13,751 — — 13,751 Stock contribution to employee benefit plans and other 9 2 191 — — — — — 193 Vesting of equity awards 273 54 ( 54 ) — — — — — — Cash dividend ($0.04 per share) — — — — ( 2,200 ) — — — ( 2,200 ) Stock based compensation expense — — 8,699 — — — — — 8,699 Stock option exercises 43 8 965 — — — — — 973 Tax effect related to net share settlement of equity awards — — ( 2,624 ) — — — — — ( 2,624 ) Stock issued to, acquired for and distributed from rabbi trust 39 9 309 — — — ( 275 ) 275 318 Treasury stock repurchased — — — ( 57,662 ) — — — — ( 57,662 ) Balance at August 31, 2023 83,761 16,752 220,472 ( 800,506 ) 1,011,112 ( 121,210 ) ( 3,484 ) 3,484 326,620 Net earnings — — — — 85,749 — — — 85,749 Other comprehensive loss, net of tax — — — — — 4,812 — — 4,812 Stock contribution to employee benefit plans and other 7 2 227 — — — — — 229 Vesting of equity awards 238 47 ( 47 ) — — — — — — Cash dividend ($0.04 per share) — — — ( 2,148 ) — — — ( 2,148 ) Stock based compensation expense — — 10,931 — — — — — 10,931 Stock option exercises 281 56 6,851 — — — — — 6,907 Tax effect related to net share settlement of equity awards — — ( 3,122 ) — — — — — ( 3,122 ) Stock issued to, acquired for and distributed from rabbi trust 30 7 348 — — — ( 293 ) 293 355 Treasury stock repurchased — — — ( 38,354 ) — — — — ( 38,354 ) Treasury stock retired ( 30,082 ) ( 6,017 ) — 838,860 ( 832,843 ) — — — — Balance at August 31, 2024 54,235 10,847 235,660 — 261,870 ( 116,398 ) ( 3,777 ) 3,777 391,979 Net earnings — — — — 92,749 — — — 92,749 Other comprehensive loss, net of tax — — — — — 12,264 — — 12,264 Stock contribution to employee benefit plans and other 10 2 606 — — — — — 608 Vesting of equity awards 277 56 ( 56 ) — — — — — — Cash dividend ($0.04 per share) — — — — ( 2,115 ) ( 2,115 ) Stock based compensation expense — — 13,016 — — — — — 13,016 Stock option exercises 106 21 1,713 — — — — — 1,734 Tax effect related to net share settlement of equity awards — — ( 7,889 ) — — — — — ( 7,889 ) Stock issued to, acquired for and distributed from rabbi trust 17 3 87 — — — 235 ( 235 ) 90 Treasury stock repurchased and retired ( 1,699 ) ( 340 ) — — ( 68,402 ) — — — ( 68,742 ) Balance at August 31, 2025 52,946 $ 10,589 $ 243,137 $ — $ 284,102 $ ( 104,134 ) $ ( 3,542 ) $ 3,542 $ 433,694 The accompanying notes are an integral part of these consolidated financial statements. 37 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Summary of Significant Accounting Policies Nature of Operations: Enerpac Tool Group Corp. (the “Company”) is a premier industrial tools, services, technology and solutions company serving a broad and diverse set of customers in more than 100 countries. The Company has one reportable segment, Industrial Tools & Services ("IT&S"), and an Other operating segment, which does not meet the criteria to be considered a reportable segment. The IT&S segment is primarily engaged in the design, manufacture and distribution of branded hydraulic and mechanical tools and in providing services and tool rental to the refinery/petrochemical; general industrial; industrial MRO; machining & manufacturing; power generation; infrastructure; mining and other markets. Consolidation and Presentation: T he consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. The results of companies acquired or disposed of during the year are included in the consolidated financial statements from the effective date of acquisition or until the date of divestiture. All intercompany balances, transactions and profits have been eliminated in consolidation. The terms the "Company," "we," and "our" refer to Enerpac Tool Group Corp. and its subsidiaries, unless the context requires that such terms refer only to Enerpac Tool Group Corp. Reference to fiscal years, such as "fiscal 2025," are to the fiscal year ending on August 31 of the specified year. Cash Equivalents: The Company considers all highly liquid investments with orig inal maturities of 90 days or less to be cash equivalents. Inventories: Inventories are comprised of material, direct labor and manufacturing overhead. A portion of inventory is recorded on the first-in, first-out or average cost method and is stated at the lower of cost or net realizable value. A portion of U.S. owned inventory is determined using the last-in, first-out (“LIFO”) method ( 47.3 % and 48.7 % of total inventories as of August 31, 2025 and 2024, respectively). If the LIFO method were not used, inventory balances would be higher than reported amounts in the consolidated balance sheets by $ 18.1 million and $ 17.8 million at August 31, 2025 and 2024, respectively. During the fiscal year ended August 31, 2025, the Company experienced a liquidation of LIFO inventory layers, which resulted in a decrease in cost of goods sold and a corresponding increase in pre-tax income of approximately $ 3.7 million. This increase in income is attributable to the liquidation of inventory carried at lower historical costs. The nature of the Company’s products is such that they generally have a very short production cycle. Consequently, the amount of work-in-process at any point in time is minimal. In addition, many parts or components are ultimately either sold individually or assembled with other parts making a distinction between raw materials and finished goods impractical to determine. Certain locations maintain and manage their inventories using a job cost system where the distinction of categories of inventory by state of completion is also not available. As a result of these factors, it is neither practical nor cost effective to segregate the amounts of raw materials, work-in-process or finished goods inventories at the respective balance sheet dates, as segregation would only be possible as the result of physical inventories which are taken at dates different from the balance sheet dates. Property, Plant and Equipment: Property, plant and equipment are stated at cost. Plant and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets, ranging from ten to forty years for buildings and improvements and two to fifteen years for machinery and equipment. Equipment includes assets which are rented to customers of the IT&S segment. Leasehold improvements are amortized over the shorter of the life of the related asset or the term of the lease. Depreciation expense was $ 10.1 million, $ 10.0 million and $ 11.2 million for the years ended August 31, 2025, 2024 and 2023, respectively. The following is a summary of the Company's components of property, plant and equipment (in thousands): August 31, 2025 2024 Land, buildings and improvements $ 27,272 $ 14,670 Machinery and equipment 152,138 145,604 Gross property, plant and equipment 179,410 160,274 Less: Accumulated depreciation ( 126,135 ) ( 119,989 ) Property, plant and equipment, net $ 53,275 $ 40,285 Leases: We determine if an arrangement contains a lease in whole or in part at the inception of the contract and identify classification of the lease as financing or operating. We account for the underlying operating lease asset at the individual lease level. Operating leases are recorded as operating lease right-of-use (“ROU”) assets in “Other long-term assets” and operating lease liabilities in “Other current liabilities” and “Other long-term liabilities” on the Consolidated Balance Sheets. All leases greater than 12 months result in recognition of a ROU asset and a liability at the lease commencement date and are recorded at the present value of the future minimum lease payments over the lease term. The lease term is equal to the initial term at commencement plus any renewal or extension options that the Company is reasonably certain will be exercised. ROU assets at the date of commencement are equal to the amount of the initial lease liability, the initial direct costs incurred by the Company and any prepaid lease payments less any incentives received. Lease expense for operating leases is recognized on a 38 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) straight-line basis over the lease term or remaining useful life. As most of our leases do not provide the information required to determine the implicit rate, we utilize a consolidated group incremental borrowing rate for all leases as the Company has centralized treasury operations. The incremental borrowing rate is derived through a combination of inputs such as the Company's credit rating, impact of collaborated borrowing capabilities and lease term. Leases with the duration of less than one-year are not recognized on the balance sheet and are expensed on a straight-line basis over the lease term. In addition, we do not separate lease components from non-lease components for all asset classes. Goodwill and Other Intangible Assets: G oodwill and other intangible assets with indefinite lives are not subject to amortization, but are subject to annual impairment testing. Other intangible assets with definite lives, consisting primarily of purchased customer relationships, patents, trademarks and tradenames, are amortized over periods from one to twenty-five years. The Company’s goodwill is tested for impairment annually during the fourth quarter, or more frequently if events or changes in circumstances indicate that goodwill might be impaired. In conducting the annual impairment test for goodwill, the Company first assesses qualitative factors to determine whether it is more likely than not (greater than 50% likelihood) the fair value of any reporting unit is less than its carrying amount. If a qualitative assessment determines an impairment is more likely than not, we are required to perform a quantitative impairment test. Otherwise, no further analysis is required. Alternatively, we may elect to proceed directly to the quantitative impairment test. When a quantitative test is deemed necessary, the Company estimates fair value for its reporting units using a fair value method based on management’s judgments and assumptions. In estimating the fair value, the Company utilizes a discounted cash flow model, which is dependent on a number of assumptions, most significantly forecasted revenues and operating profit margins, and the weighted average cost of capital, or a market value approach if appropriate information is available as of the goodwill impairment assessment date. The estimated fair value of the reporting unit is compared to the carrying amount of the reporting unit, including goodwill. If the carrying value of the reporting unit exceeds its fair value, an impairment loss is recorded and should not exceed the total amount of goodwill allocated to the reporting unit. Indefinite-lived intangible assets are also subject to an annual impairment test. On an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired, the fair value of the indefinite-lived intangible assets are evaluated by the Company to determine if an impairment charge is required. A considerable amount of management judgment is required in performing impairment tests, principally in determining the fair value of each reporting unit and the indefinite-lived intangible assets Product Warranty Costs : The Company generally offers its customers an assurance warranty on products sold, although warranty periods may vary by pr oduct type and application. The reserve for future warranty claims, which is recorded within the "Other current liabilities" line on the Consolidated Balance Sheets, is based on historical claim rates and current warranty cost experience. The following is a roll-forward of the changes in product warranty reserves for fiscal 2025 and 2024 (in thousands): August 31, 2025 2024 Beginning balance $ 534 $ 856 Provision for warranties 1,173 371 Warranty payments and costs incurred ( 1,056 ) ( 699 ) Warranty activity for acquired businesses 381 — Impact of changes in foreign currency rates 58 6 Ending balance $ 1,090 $ 534 Revenue from Contracts with Customers: The Company recognizes revenue when it satisfies a performance obligation in a contract by transferring control of a distinct good or service to a customer. Under normal circumstances, the Company invoices the customer once transfer of control has occurred and has a right to payment. The typical payment terms vary based on the customer and the types of goods and services in the contract. The period of time between invoicing and when payment is due is not significant, as our standard payment terms are less than one year. Amounts billed and due from customers are classified as receivables on the Consolidated Balance Sheets. Customer sales are recorded net of allowances for returns and discounts, which are recognized as a deduction from sales at the time of sale. The Company commits to one-time or on-going trade discounts and promotions with customers that require the Company to estimate and accrue the ultimate costs of such programs. The Company generally does not require collateral or other security for receivables and provides for an allowance for credit losses based on historical experience and a review of its existing receivables. Accounts receivable are stated net of an allowance for credit losses of $ 3.8 million and $ 15.9 million at August 31, 2025 and 2024, respectively. During fiscal 2025 the Company wrote off approximately$ 12.9 million in credit loss allowances related to charges that were incurred prior to fiscal 2023. 39 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Taxes Collected: Taxes collected by the Company from a customer concurrent with revenue-producing activities are excluded from "Net sales" within the Consolidated Statements of Earnings. Shipping and Handling Costs: The Company records costs associated with shipping its products after control over a product has transferred to a customer and are accounted for as fulfillment costs. These costs are reported in the Consolidated Statements of Earnings in "Cost of products sold." Research and Development Costs: Research and development costs consist primarily of engineering and development resources and are expensed as incurred. Such costs incurred in the development of new products or significant improvements to existing products were $ 14.5 million, $ 12.4 million and $ 9.0 million in fiscal 2025, 2024 and 2023, respectively. The Company also incurs significant costs in connection with fulfilling custom orders an d developing solutions for unique customer needs which are not included in these research and development expense totals. Other Income/Expense: Other income and expense primarily consists of net foreign currency exchange transaction losses of $ 1.6 million, $ 2.1 million and $ 2.1 million in fiscal 2025, 2024 and 2023, respectively. Financing Costs: Financing costs represent interest expense, financing fees and amortization of debt issuance costs, net of interest income. Interest income wa s $ 2.3 million, $ 2.5 million and $ 2.6 million for fiscal 2025, 2024 and 2023, respectively. Income Taxes: T he provision for income taxes includes federal, state, local and non-U.S. taxes on income. Tax credits, primarily for non-U.S. earnings, are recognized as a reduction of the provision for income taxes in the year in which they are available for U.S. tax purposes. Deferred taxes are provided on temporary differences between assets and liabilities for financial and tax reporting purposes as measured by enacted tax rates expected to apply when temporary differences are settled or realized. Future tax benefits are recognized to the extent that realization of those benefits is considered to be more likely than not. A valuation allowance is established for deferred tax assets for which realization is not more likely than not of being realized. The Company's general policy is for non-U.S. subsidiary earnings to be indefinitely reinvested to the extent the remittance results in an incremental U.S. tax liability. However, the Company routinely analyzes the factors surrounding global cash needs and future cash utilization to determine if exceptions exist and establishes deferred tax liabilities for associated future tax costs. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense and treats any taxes due on future U.S. inclusions in taxable income under the Global Intangible Low-Taxed Income ("GILTI") provision as a current period tax expense. Foreign Currency Translation: The financial statements of the Company’s foreign operations are translated into U.S. dollars using the exchange rate at each balance sheet date for assets and liabilities and an appropriate weighted average exchange rate for each applicable period within the Consolidated Statements of Earnings. Translation adjustments are reflected in the Consolidated Balance Sheets and Consolidated Statements of Shareholders' Equity caption “Accumulated other comprehensive loss.” Accumulated Other Comprehensive Loss: The following is a summary of the components included within accumulated other comprehensive loss (in thousands): August 31, 2025 2024 Foreign currency translation adjustments $ 89,061 $ 99,215 Pension and other postretirement benefit plans 15,091 17,187 Cash flow hedges ( 18 ) ( 4 ) Accumulated other comprehensive loss $ 104,134 $ 116,398 Use of Estimates: Th e preparation of financial statements in conformity with generally accepted accounting principles in the United States ("US GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The Company regularly evaluates the estimates and assumptions related to the allowance for credit losses, inventory valuation, warranty reserves, goodwill, intangible and long-lived asset valuations, employee benefit plan liabilities, over-time revenue recognition, income tax liabilities, deferred tax assets and related valuation allowances, uncertain tax positions, restructuring reserves, and litigation and other loss contingencies. The Company manages the profitability of its product and service & rental categories on a combined basis given the complexity of the business model. This model includes providing integrated product and service solutions resulting in facilities that generate revenues from both product and service & rental categories, which also have indirect and facility overhead costs included in cost of sales. As such, judgment and estimates are required to disaggregate product and service & rental cost of sales including allocating indirect and facility overhead costs between cost of product sales and the cost of service & rental sales. Changes in these judgments and estimates could materially change the allocation of the indirect and facility overhead 40 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) costs to the different sales categories and the resulting ratio of cost of sales to net sales by category. Because the sales mix heavily favors the product category, a change in the mix of cost of sales between the sales categories would have a more significant impact on the ratio of cost of sales to net sales for the service & rental category. Recently Issued Accounting Pronouncements In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2023-09 “Income Taxes (Topic 470): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which establishes new income tax disclosures to consistently categorize and provide greater disaggregation of information in the rate reconciliation, including dollar value and percentage impacts of each component of the reconciliation, as well as further disaggregates income taxes paid. This guidance is effective for fiscal years beginning after December 15, 2024. The Company is evaluating the impact of the adoption of ASU 2023-09 on the consolidated financial statements. In November 2024, the FASB issued Accounting Standards Update 2024-03 “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which is intended to improve disclosures about a public business entity's expenses, primarily through additional disaggregation of income statement expenses. ASU 2024-3 is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. The Company is evaluating the impact of the adoption of ASU 2024-03 on the consolidated financial statements. Note 2. Revenue from Contracts with Customers Nature of Goods and Services The Company generates its revenue under two principal activities, which are discussed below: Product Sales: Sales of tools, heavy-lifting solutions, and rope solutions are recorded when control is transferred to the customer (i.e., performance obligation has been satisfied). For the majority of the Company’s product sales, revenue is recognized at a point in time when control of the product is transferred to the customer, which generally occurs when the product is shipped from the Company to the customer. For certain other products that are highly customized and have a limited alternative use, and for which the Company has an enforceable right of reimbursement for performance completed to date, revenue is recognized over time. We consider the input measure (efforts-expended or cost-to-cost) or output measure as a fair measure of progress for the recognition of over-time revenue associated with these custom products. For a majority of these customized products, machine hours and labor hours (efforts-expended measurement) are used as a measure of progress. Service & Rental Sales : Service contracts consist of providing highly trained technicians to perform bolting, technical services, machining and joint-integrity work for our customers. These revenues are recognized over time as our customers simultaneously receive and consume the benefits provided by the Company. We consider the input measure (efforts-expended or cost-to-cost) or output measure as a fair measure of progress for the recognition of over-time revenue associated with service contracts. For a majority of the Company’s service contracts, labor hours (efforts-expended measurement) is used as the measure of progress when it is determined to be a better depiction of the transfer of control to the customer due to the timing and pattern of labor hours incurred. Revenue from rental contracts (less than one year and non-customized products) is generally recognized ratably over the contract term, depicting the customer’s consumption of the benefit related to the rental equipment. Disaggregated Revenue and Performance Obligations The Company disaggregates revenue from contracts with customers by reportable segment and product line and by the timing of when goods and services are transferred. See Note 16, "Business Segment, Geographic and Customer Information" for information regarding our revenue disaggregation by reportable segment and product line. The following table presents information regarding revenues disaggregated by the timing of when goods and services are transferred (in thousands): Year-Ended August 31, 2025 2024 2023 Revenues recognized at point in time $ 472,710 $ 456,890 $ 482,506 Revenues recognized over time 144,189 132,620 115,698 Total $ 616,899 $ 589,510 $ 598,204 41 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Contract Balances The Company's contract assets and liabilities are as follows (in thousands): August 31, 2025 2024 Receivables, which are included in accounts receivable, net 106,085 104,335 Contract assets, which are included in other current assets 11,759 4,531 Contract liabilities, which are included in other current liabilities 3,422 2,329 Receivables: The Company performs its obligations under a contract with a customer by transferring goods or services in exchange for consideration from the customer. The Company typically invoices its customers as soon as control of an asset is transferred and a receivable for the Company is established. Accounts receivable, net is recorded at face amount of customer receiva bles less an allowance for credit losses. The Company maintains an allowance for credit losses for expected losses as a result of customers’ inability to make required payments. Management evaluates the aging of customer receivable balances, the financial condition of its customers, historical trends and the time outstanding of specific balances to estimate the amount of receivables that will not be collected in the future and records the appropriate provision. The allowance for credit losses was $ 3.8 million and $ 15.9 million at August 31, 2025 and 2024, respectively. Contract Assets: Contract assets relate to the Company’s rights to consideration for work completed but not billed as of the reporting date on contracts with customers. The contract assets are transferred to receivables when the rights become unconditional. The Company has contract assets on contracts that are generally long-term and have revenues that are recognized over time. Contract Liabilities: As of August 31, 2025, the Company had certain contracts where there were unsatisfied performance obligations and the Company had received cash consideration from customers before the performance obligations were satisfied . The majority of these contracts relate to long-term customer contracts (project durations of greater than three months) and are recognized over time. The Company estimates that $ 3.4 million will be recognized in net sales from satisfying those performance obligations within the next twelve months. Timing of Performance Obligations Satisfied at a Point in Time: The Company evaluates when the customer obtains control of the product based on shipping terms, as control will transfer, depending upon such terms, at different points between the Company's manufacturing facility or warehouse and the customer’s location. The Company considers control to have transferred upon shipment or delivery because (i) the Company has a present right to payment at that time; (ii) the legal title has been transferred to the customer; (iii) the Company has transferred physical possession of the product to the customer; and (iv) the customer has significant risks and rewards of ownership of the product. Variable Consideration: The Company estimates whether it will be subject to variable consideration under the terms of the contract and includes its estimate of variable consideration in the transaction price based on the expected value method when it is deemed probable of being realized based on historical experience and trends. Types of variable consideration may include rebates, incentives and discounts, among others, which are recorded as a reduction to net sales at the time when control of a performance obligation is transferred to the customer. Practical Expedients & Exemptions: The Company elected to expense the incremental cost to obtaining a contract when the amortization period for such contracts would be one year or less. The Company does not disclose the value of unperformed obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed. 42 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Note 3. ASCEND Transformation Program In March 2022, the Company announced the start of its ASCEND transformation program. ASCEND’s key initiatives included accelerating organic growth strategies, improving operational excellence and production efficiency by utilizing a Lean approach, and driving greater efficiency and productivity in selling, general and administrative ("SG&A") expense by better leveraging resources to create a more efficient and agile organization. The following summarizes ASCEND transformation charges (in thousands): 2024 2023 Program to Completion ASCEND Expense recorded in Cost of products sold $ 1,018 $ 924 $ 1,948 ASCEND Expense recorded in SG&A expenses 6,029 34,495 54,134 Total ASCEND Expense 7,047 35,419 56,082 Recorded with Restructuring charges 7,843 7,719 18,612 Total ASCEND Transformation Charges $ 14,890 $ 43,138 $ 74,694 The ASCEND program was completed as of August 31, 2024, with total program costs of $ 74.7 million, of which $ 18.6 million was restructuring charges. The restructuring charges incurred were predominately severance and other employee-related costs (see Note 4, "Restructuring Charges" ). Note 4. Restructuring Charges The Company has undertaken or committed to various restructuring initiatives, including workforce reductions, leadership changes, plant consolidations to reduce manufacturing overhead, satellite office closures, the continued movement of production and product sourcing to low-cost alternatives and the centralization and standardization of certain administrative functions. Liabilities for severance are generally to be paid within twelve months, while future lease payments related to facilities vacated as a result of restructuring are to be paid over the underlying remaining lease terms. On June 27, 2022, the Company approved a restructuring plan in connection with the initiatives identified as part of the ASCEND transformation program (see Note 3, “ASCEND Transformation Program” ) to drive greater efficiency and productivity in global selling, general and administrative resources. The costs of this plan were predominately severance and other employee-related costs incurred as cash expenditures and impacting both IT&S and Corporate. For the years ended August 31, 2024 and 2023, the Company recorded $ 7.8 million and $ 7.7 million, respectively, of restructuring charges associated with the ASCEND transformation program, inclusive of the Other Segment. No restructuring charges associated with the ASCEND transformation program were recorded for the year ended August 31, 2025 as the ASCEND program ended at August 31, 2024, with a total restructuring charge of $ 18.6 million. The following summarizes ASCEND restructuring reserve activity for the IT&S segment and Corporate (in thousands): Year Ended August 31, 2025 IT&S Corporate Balance as of August 31, 2024 $ 3,527 $ 197 Cash payments ( 3,510 ) ( 197 ) Impact of changes in foreign currency rates ( 17 ) — Balance as of August 31, 2025 $ — $ — Year Ended August 31, 2024 IT&S Corporate Balance as of August 31, 2023 $ 2,238 $ 74 Restructuring charges 7,244 552 Cash payments ( 5,352 ) ( 429 ) Other non-cash uses of reserve ( 635 ) — Impact of changes in foreign currency rates 32 — Balance as of August 31, 2024 $ 3,527 $ 197 43 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) During the third quarter of fiscal 2025, in light of the soft market conditions and in an effort to continue increasing the efficiency of its selling, general and administrative spend, the Company incurred restructuring costs of $ 5.9 million , of which approximately three-quarters was related to personnel actions and the remainder were charges associated with the Company's former headquarters location. Liabilities for severance are generally to be paid within twelve months. The following summarizes Fiscal 2025 Restructuring Plan restructuring reserve activity for the IT&S segment and Corporate (in thousands): Year Ended August 31, 2025 IT&S Corporate Balance as of August 31, 2024 $ — $ — Restructuring charges 2,493 3,369 Cash payments ( 810 ) ( 25 ) Other non-cash uses of reserve — ( 1,970 ) Impact of changes in foreign currency rates 23 5 Balance as of August 31, 2025 $ 1,706 $ 1,379 Note 5. Acquisitions On September 4, 2024, the Company acquired 100% of the stock of DTA The Smart Move, S.A. ("DTA"), a global leader in the industrial heavy loads transportation industry, designing and manufacturing mobile robotic solutions. The acquisition provides a complement to Enerpac's Heavy Lifting Technology product line and combines the Company's existing focus on vertical lift with DTA's specialization in horizontal movement enabling the Company to provide more comprehensive solutions for customers. The Company acquired all of the assets and assumed certain liabilities of DTA for an initial purchase price of $ 26.7 million plus potential earn-out of € 12.0 million to be paid at the end of the third year following the acquisition that is contingent upon the achievement of certain financial objectives with a maximum total purchase price of € 36.0 million. The acquisition was funded with both cash on hand and borrowings from our existing credit facility . T he Company recorded a liability of € 2.3 million related to the potential earn-out payment and recognized $ 15.0 million of intangible assets made up of amortizable assets including $ 1.7 million in tradenames amortizable over three years , $ 3.6 million in customer relationship amortizable over fourteen years and $ 9.8 million in developed technology over seven years . Management has estimated the fair value of the earn-out liability to be € 2.5 million as of August 31, 2025. The Company has finalized the fair value of assets and liabilities acquired as of August 31, 2025. There were no material adjustments to the preliminary fair value allocation upon finalization. The excess of the acquisition purchase price over the fair value assigned to the assets acquired and liabilities assumed was recorded to goodwill. The value of the assets acquired and liabilities assumed as of the acquisition date were as follows (in thousands): Current assets $ 6,299 Property, plant and equipment 2,841 Intangible assets 14,977 Goodwill 14,684 Long-term assets 400 Total assets acquired 39,201 Current liabilities ( 6,977 ) Long-term liabilities ( 5,563 ) Net assets acquired $ 26,661 Note 6. Discontinued Operations and Other Divestiture Activities Discontinued Operations On October 31, 2019 , as part of our overall strategy to become a pure-play industrial tools and services company, the Company completed the sale of the businesses comprising its former EC&S segment. This divestiture was considered part of our strategic shift to become a pure-play industrial tools and services company, and therefore, the results of operations are recorded as a component of "Earnings (loss) from discontinued operations, net of income taxes" in the Condensed Consolidated 44 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Statements of Earnings for all periods presented. All discontinued operations activity included within the Condensed Consolidated Statements of Earnings and the Condensed Consolidated Statements of Cash Flows for the periods presented relate to impacts from certain retained liabilities. The following represents the detail of "Earnings (loss) from discontinued operations, net of income taxes" within the Consolidated Statements of Earnings (in thousands): Year Ended August 31, 2024 2023 Selling, general and administrative (benefit) expenses $ ( 6,054 ) $ 10,069 Impairment & divestiture charges — ( 1,530 ) Operating income (loss) 6,054 ( 8,539 ) Other income, net — 372 Earnings (loss) before income tax expense 6,054 ( 8,911 ) Income tax expense (benefit) 2,512 ( 1,823 ) Earnings (loss) from discontinued operations, net of income taxes 3,542 ( 7,088 ) Other Divestiture Activities On July 11, 2023 , the Company completed the sale of the Cortland Industrial business, which had been included in the Other operating segment, for net cash proceeds of $ 20.1 million. In connection with the completion of the sale, the Company recorded a net gain of $ 6.0 million, inclusive of $ 0.1 million of purchase price from the customary finalization of working capital negotiations in the first quarter of fiscal 2024. The historical results of the Cortland Industrial business (which had net sales of $ 22.7 million for the year ended August 31, 2023 ) are not material to the consolidated financial results. Note 7. Goodwill, Intangible Assets and Long-Lived Assets Changes in the gross carrying value of goodwill and intangible assets result from changes in foreign currency exchange rates, business acquisitions, divestitures and impairment charges. The changes in the carrying amount of goodwill for the years ended August 31, 2025 and 2024 by operating segment are as follows (in thousands): IT&S Other Total Balance as of August 31, 2023 $ 255,285 $ 11,209 $ 266,494 Impact of changes in foreign currency rates 3,103 — 3,103 Balance as of August 31, 2024 258,388 11,209 269,597 DTA Acquisition 14,684 — 14,684 Impact of changes in foreign currency rates 5,506 — 5,506 Balance as of August 31, 2025 $ 278,578 $ 11,209 $ 289,787 The gross carrying value and accumulated amortization of the Company’s intangible assets are as follows (in thousands): Weighted Average Amortization Period (Year) August 31, 2025 August 31, 2024 Gross Accumulated Amortization Net Book Value Gross Accumulated Amortization Net Book Value Amortizable intangible assets: Customer relationships 14 $ 115,055 $ 104,083 $ 10,972 $ 109,582 $ 99,530 $ 10,052 Patents 12 11,193 9,796 1,397 9,916 9,408 508 Developed Technology 7 10,283 1,469 8,814 — — — Trademarks and tradenames 7 7,291 3,100 4,191 2,764 2,308 456 Indefinite lived intangible assets: Tradenames N/A 21,568 — 21,568 25,042 — 25,042 $ 165,390 $ 118,448 $ 46,942 $ 147,304 $ 111,246 $ 36,058 The Company estimates amortization expense for future years to be: $ 5.8 million in fiscal 2026, $ 5.7 million in fiscal 2027, $ 3.6 million in fiscal 2028, $ 3.5 million in fiscal 2029, $ 2.6 million in fiscal 2030, $2.0 million in fiscal 2031 and $ 2.3 million in aggregate thereafter. T he future amortization expense amounts represent estimates and may be impacted by future acquisitions, divestitures or changes in foreign currency exchange rates, among other causes. 45 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) In conjunction with our annual goodwill impairment assessment , the Company did not record any charges in fiscal 2025 or 2024. Note 8. Debt The following is a summary of the Company’s indebtedness (in thousands): August 31, 2025 2024 Senior Credit Facility Revolver — — Term Loan 190,000 195,000 Total Senior Indebtedness 190,000 195,000 Less: Current maturities of long-term debt ( 7,500 ) ( 5,000 ) Debt issuance costs ( 332 ) ( 497 ) Total long-term debt, less current maturities $ 182,168 $ 189,503 Senior Credit Facility On September 9, 2022, the Company refinanced its previous senior credit facility with a new $ 600 million senior credit facility, comprised of a $ 400 million revolving line of credit and a $ 200 million term loan, which is scheduled to mature in September 2027. The Company has the option to request up to $ 300 million of additional revolving commitments and/or term loans under the credit facility, subject to customary conditions, including the commitment of the participating lenders. This facility replaces LIBOR with adjusted term SOFR as the interest rate benchmark and provides for interest rate margins above adjusted term SOFR ranging from 1.125 % to 1.875 % per annum depending on the Company’s net leverage ratio. In addition, a non-use fee is pa yable quarterly on the average unused amount of the revolving line of credit ranging from 0.15 % to 0.3 % pe r annum, based on the Company's net leverage. Borrowings under the credit facility bear interest at adjusted term SOFR plus 1.125 % per annum. The facility contains financial covenants requiring the Company to not permit (i) the net leverage ratio, determined as of the end of each of its fiscal quarters, to exceed 3.75 to 1.00 (or, at the Company’s election and subject to certain conditions, 4.25 to 1.00 for the covenants period during which certain material acquisitions occur and the next succeeding four testing periods) or (ii) the interest coverage ratio, determined as of the end of each of its fiscal quarters, to be less than 3.00 to 1.00 . Borrowings under the facility are secured by substantially all personal property assets of the Company and its domestic subsidiary guarantors (other than certain specified excluded assets) and certain of the equity interests of certain subsidiaries of the Company. The Company was in compliance with all covenants under the facility at August 31, 2025. At August 31, 2025, there were $ 190.0 million in borrowings outstanding under the term l oans, no borrowings outstanding under the revolving line of credit and $ 399.2 million available for borrowing under the revolving line of credi t facility after reduction for $ 0.8 million of outstanding letters of credit issued under the facility. Cash Paid for Interest The Company made cash net interest payments of $ 8.8 million , $ 12.4 million and $ 10.6 million in fiscal 2025, 2024 and 2023, respectively. Note 9. Fair Value Measurements The Company assesses the inputs used to measure the fair value of financial assets and liabilities using a three-tier hierarchy. Level 1 inputs include unadjusted quoted prices for identical instruments and are the most observable. Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves. Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing an asset or liability. The fair value of the Company’s cash and cash equivalents, accounts receivable, accounts payable and variable rate long-term debt approximated book value at both August 31, 2025 and 2024 due to their short-term nature and the fact that the interest rates approximated market rates. Foreign currency exchange contracts and interest rate swaps are recorded at fair value. The fair value of the Company's foreign currency exchange contracts was a net asset of less than $ 0.1 million and a net liability of $ 0.3 million at August 31, 2025 and 2024, respectively . The fair value of the Company's interest rate swap and net investment hedge was an asset of less than $ 0.1 million and a liability of $ 4.7 million at August 31, 2025 and an asset of $ 0.1 million and a liability of $ 1.6 million at August 31, 2024 (see 46 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Note 10, “Derivatives” for further information on the Company's interest rate swap and net investment hedge.) The fair value of all derivative contracts were based on quoted inactive market prices and therefore classified as Level 2 within the valuation hierarchy. Note 10. Derivatives All derivatives are recognized in the balance sheet at their estimated fair value. The Company does not enter into derivatives for speculative purposes. Changes in the fair value of derivatives (not designated as hedges) are recorded in earnings along with the gain or loss on the hedged asset or liability. The Company is exposed to market risk for changes in foreign currency exchange rates due to the global nature of its operations. In order to manage this risk, the Company utilizes foreign currency exchange contracts to reduce the exchange rate risk associated with recognized non-functional currency balances. The effects of changes in exchange rates are reflected concurrently in earnings for both the fair value of the foreign currency exchange contracts and the related non-functional currency asset or liability. These derivative gains and losses offset foreign currency gains and losses from the related revaluation of non-functional currency assets and liabilities (amounts incl uded in "Other expense, net" in the Consolidated Statements of Earnings). The U.S. dollar equivalent notional value of these short duration foreign currenc y exchange contracts was $ 10.3 million and $ 15.6 million at August 31, 2025 and 2024, respectively. The fair value of outstanding foreign currency exchange contracts was a net asset of less than $ 0.1 million and net liability of $ 0.3 million at August 31, 2025 and 2024, respectively . Net foreign currency loss (gain) (included in "Other expense, net" in the Consolidated Statements of Earnings) related to these derivative instruments are as follows (in thousands): Year Ended August 31, 2025 2024 2023 Foreign currency (gain) loss $ ( 45 ) $ 863 $ 945 During December 2022, the Company entered into an interest rate swap, with a maturity date of November 30, 2025, for the notional amount of $ 60.0 million at a fixed interest rate of 4.022 % to hedge the floating interest rate of the Company's term loan. The interest rate swap was designated and qualified as a cash flow hedge. The Company uses the interest rate swap for the management of interest rate risk exposure, as an interest rate swap effectively converts a portion of the Company's debt from a floating rate to a fixed rate. The Company records the fair value of the interest rate swap as an asset or liability on its balance sheet. The change in the fair value of the interest rate swap, a net gain of less than $ 0.1 million and net loss of $ 0.5 million for the years ended August 31, 2025 and 2024, respectively , is recorded in other comprehensive income (loss). The Company also uses interest-rate derivatives to hedge portions of our net investments in non-U.S. subsidiaries (net investment hedge) against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. For derivatives that are designated and qualify as a net investment hedge in a foreign operation, the net gains or losses attributable to the hedge changes are recorded in other comprehensive income (loss) where they offset gains and losses recorded on our net investments where the entity has non-U.S. dollar functional currency. During December 2022, the Company entered into a cross-currency swap designated as a net investment hedge with a notional amount of $ 30.5 million. On October 28, 2024, the Company entered into an incremental cross-currency swap designated as a net investment hedge with a notional amount of $ 14.1 million. The change in the fair value of the net investment hedges, a net loss of $ 3.6 million and $ 0.3 million for the years ended August 31, 2025 and 2024, respectively , is recorded in other comprehensive income (loss). Note 11. Leases As of August 31, 2025, the Company ha d operating leases for real estate, vehicles, manufacturing equipment, IT equipment and office equipment. The Company did not have significant finance leases during the year ended August 31, 2025 . Our leases typically range in term from 3 to 15 years and may contain renewal options for periods up to 5 years at our discretion. Our leases generally contain payments that are primarily fixed; however, certain lease arrangements contain variable payments, which are expensed as incurred and not included in the measurement of ROU assets and lease liabilities. These amounts include payments affected by changes in the Consumer Price Index and executory costs (such as real estate taxes, utilities and common-area maintenance), which are based on usage or performance. In addition, our leases generally do not include material residual value guarantees or material restrictive covenants. 47 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The components of lease costs for the year ended August 31, 2025, 2024 and 2023 were as follows (in thousands): Year Ended August 31, 2025 2024 2023 Operating lease cost $ 12,299 $ 12,610 $ 13,155 Short-term lease cost 1,668 2,042 2,318 Variable lease cost 2,956 2,850 4,411 Supplemental cash flow and other information related to leases for the year ended August 31, 2025, 2024 and 2023 were as follows (in thousands): Year Ended August 31, 2025 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 12,546 $ 12,119 $ 13,153 Right-of-use assets obtained in exchange for new lease liabilities: Operating leases 6,183 3,075 1,654 Supplemental balance sheet information related to leases at August 31, 2025 and 2024 were as follows (in thousands): August 31, 2025 2024 Operating leases: Other long-term assets $ 35,426 $ 32,961 Other current liabilities $ 9,864 $ 9,464 Other long-term liabilities $ 28,215 $ 25,154 Total operating lease liabilities $ 38,079 $ 34,618 Weighted Average Remaining Lease Term: Operating leases 6.6 years 7.0 years Weighted Average Discount Rate: Operating leases 5.7 % 5.5 % A summary of the future minimum lease payments due under operating leases with terms of more than one year at August 31, 2025 is as follows (in thousands): 2026 $ 10,924 2027 7,999 2028 6,809 2029 5,140 2030 4,117 Thereafter 12,166 Total minimum lease payments 47,155 Less imputed interest ( 9,076 ) Present value of net minimum lease payments $ 38,079 48 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Note 12. Employee Benefit Plans U.S. Defined Benefit Pension Plans All of the U.S. defined benefit pension plans are frozen, and as a result, plan participants no longer earn additional benefits. The following table provides detail of changes in the projected benefit obligations, the fair value of plan assets and the funded status of the Company’s U.S. defined benefit pension plans as of the respective August 31 measurement date (in thousands): August 31, 2025 2024 Reconciliation of benefit obligations Benefit obligation at beginning of year $ 32,856 $ 33,204 Interest cost 1,565 1,716 Actuarial (loss) gain ( 872 ) 1,273 Benefits paid ( 3,368 ) ( 3,337 ) Benefit obligation at end of year $ 30,181 $ 32,856 Reconciliation of plan assets Fair value of plan assets at beginning of year $ 28,454 $ 28,530 Actual return on plan assets 1,626 2,839 Company contributions 1,241 421 Benefits paid from plan assets ( 3,368 ) ( 3,336 ) Fair value of plan assets at end of year 27,953 28,454 Funded status of the plans (underfunded) $ ( 2,228 ) $ ( 4,402 ) The following table provides detail on the Company’s domestic net periodic benefit expense (in thousands): Year ended August 31, 2025 2024 2023 Interest cost $ 1,565 $ 1,716 $ 1,694 Expected return on assets ( 1,694 ) ( 1,743 ) ( 1,984 ) Amortization of actuarial loss 1,349 928 878 Net periodic benefit expense $ 1,220 $ 901 $ 588 As of August 31, 2025 and 2024, $ 14.7 million and $ 16.3 million, respectively, of pension plan actuarial losses, which have not yet been recognized in net periodic benefit cost, were included in accumulated other comprehensive loss, net of income taxes. During fiscal 2026, $ 1.2 million of these actuarial losses are expected to be recognized in net periodic benefit cost. Weighted-average assumptions used to determine U.S. pension plan obligations as of August 31 and weighted-average assumptions used to determine net periodic benefit cost for the years ended August 31 are as follows: Year ended August 31, 2025 2024 2023 Assumptions for benefit obligations: Discount rate 5.20 % 5.00 % 5.40 % Assumptions for net periodic benefit cost: Discount rate 5.00 % 5.40 % 4.75 % Expected return on plan assets 6.20 % 5.70 % 5.70 % The Company's objective for its pension plan is to achieve an asset and liability duration match so that interim fluctuations in funded status should be limited by increasing the correlation between assets and liabilities. As such, the plan assets are invested to maintain funded ratios over the long term, while managing the risk that funded ratios fall meaningfully below 100%. In fiscal 2025 and fiscal 2024, the plan assets were invested in a mix of 50 % duration-matched fixed income securities and 50 % equity securities. Cash balances are maintained at levels adequate to meet near-term plan expenses and benefit payments. Investment risk is measured and monitored on an ongoing basis. At August 31, 2025, the Company’s overall expected long- 49 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) term rate of return for assets in U.S. pension plans was 6.35 %. The expected long-term rate of return is based on the portfolio as a whole and not on the sum of the returns on individual asset categories. The target return is based on historical returns adjusted to reflect the current view of the long-term investment market and our 50% investment mix between fixed income and equity securities. The U.S. pension plan investment allocations by asset category were as follows (dollars in thousands): August 31, 2025 % 2024 % Cash and cash equivalents $ — — % $ — — % Income receivable — — 46 0.2 Fixed income securities: U.S. Treasury Securities 2,471 8.8 3,320 11.7 Corporate Bonds — — — — Mutual funds 12,120 43.4 12,095 42.5 14,591 52.2 15,415 54.2 Equity securities: Mutual funds 13,362 47.8 12,993 45.6 Total plan assets $ 27,953 100 % $ 28,454 100 % The fair value of mutual funds are based on unadjusted quoted market prices and therefore are classified as Level 1 within the fair value hierarchy under US GAAP. U.S. Treasury Securities and Corporate Bonds are valued using Level 2 inputs, as defined in Note 8, “Fair Value Measurements.” Projected benefit payments from plan assets to participants in the Company’s U.S. pension plans are $ 3.0 million for fiscal 2026, $ 3.1 million for fiscal 2027 , $ 3.0 million for fiscal 2028 , $ 2.9 million for fiscal 2029, $ 2.8 million for fiscal 2030 and $ 12.1 million in aggregate for the following five years. The Company plans to make a contribution of $ 0.8 million to the U.S. pension plans in September of fiscal 2026. The Company did not make a contribution to the plan in fiscal 2025 or fiscal 2024. Foreign Defined Benefit Pension Plans The Company has seven significant foreign defined benefit pension plans which cover certain existing and former employees of businesses outside the U.S. Most of the participants in the foreign defined benefit pension plans are inactive and no longer earning additional benefits. The following table provides detail of changes in the projected benefit obligations, the fair value of plan assets and the funded status of the Company’s significant foreign defined benefit pension plans as of the respective August 31 measurement date (in thousands): August 31, 2025 2024 Reconciliation of benefit obligations: Benefit obligation at beginning of year $ 8,510 $ 8,085 Employer service costs 71 144 Interest cost 352 344 Actuarial gain ( 873 ) ( 1 ) Benefits paid ( 294 ) ( 261 ) Currency impact 400 199 Benefit obligation at end of year $ 8,166 $ 8,510 Reconciliation of plan assets: Fair value of plan assets at beginning of year $ 6,495 $ 6,196 Actual return on plan assets ( 90 ) 323 Company contributions 58 69 Benefits paid from plan assets ( 294 ) ( 261 ) Currency impact 280 168 Fair value of plan assets at end of year 6,449 6,495 Funded status of the plans (underfunded) $ ( 1,717 ) $ ( 2,014 ) 50 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The following table provides detail on the Company’s foreign net periodic benefit expense (in thousands): Year ended August 31, 2025 2024 2023 Employer service costs $ 71 $ 144 $ 60 Interest cost 352 344 306 Expected return on assets (275) (252) (245) Amortization of net prior service credit 4 4 3 Amortization of net loss 24 21 10 Settlement — — 37 Net periodic benefit expense $ 176 $ 261 $ 171 The weighted average discount rate utilized for determining the benefit obligation at August 31, 2025 and 2024 was 4.7 % and 4.1 %, respectively. The plan assets of these foreign pension plans consist primarily of participating units in fixed income and equity securities and insurance contracts. The Company’s overall expected long-term rate of return on these investments is 4.2 %. During fiscal 2026, the Company does not anticipate contributing to these pension plans. Projected benefit payments to participants in these f oreign plans are $ 0.3 million for each of fiscal 2026 and fiscal 2027; and $ 0.4 million for each of fiscal 2028, fiscal 2029 and fiscal 2030 and $ 2.6 million in aggregate for the five years thereafter. Other Postretirement Health Benefit Plans The Company provides other postretirement health benefits (“OPEB”) to certain existing and former employees of domestic businesses it acquired, who were entitled to such benefits prior to acquisition. These unfunded plans had a benefit o bligation of $ 1.5 million and $ 1.6 million at August 31, 2025 and 2024, respectively. These obligations are determined utilizing assumptions consistent with those used for our U.S. pension plans and a health care cost trend rate of 6.5 %, trending downward to 5.0 % by fiscal 2026, and remaining level thereafter. Net periodic benefit costs for other postretirement benefits was income of less than $ 0.1 million for each of the years ended August 31, 2025, 2024 and 2023. Benefit payments from the plan are funded through participant contributions and Company contributions. Benefit payments are projected to be $ 0.2 million in fiscal 2026. Defined Contribution Benefit Plans The Company maintains a 40 1(k) plan for substantially all full time U.S. employees (the “401(k) Plan”). Under plan provisions, the Company can fund either cash or issue new shares of Class A common stock for its contributions. Amounts are allocated to accounts set aside for each employee’s retirement. Employees generally may contribute up to 50 % of their compensation to individual accounts within the 401(k) Plan. While contributions vary, the Company's match contribution is $ 0.50 for every $ 1 contributed by employees, up to 8 % of the employees' eligible pay. These match contributions are made on every payroll run, meaning the contribution is immediately 100% vested. In addition, the Company may make an annual, discretionary contribution of up to 3 % of employees' eligible pay to employees employed as of the end of the plan year. The discretionary contribution has a three -year vesting period. The Company elected not to provide a discretionary contribution for the year ended August 31, 2025. Expense recognized related to the 401(k) plan totaled $ 2.0 million for each of fiscal 2025 and 2024, and $ 2.1 million for the fiscal 2023 . In addition to the 401(k) plan, the Company sponsors a non-qualified supplemental executive retirement plan (“the SERP Plan”). The SERP Plan is an unfunded defined contribution plan that covers certain current and former executive employees and has an annual contribution formula based on age and years of service (with Company contributions ranging from 3 % to 6 % of eligible wages). This unfunded plan had a $ 0.7 million and $ 0.9 million obli gation at August 31, 2025 and 2024, respectively . Expense recognized for the SERP Plan was $ 0.2 million in fiscal 2025, and $ 0.2 million in each of fiscal 2024 and fiscal 2023. Deferred Compensation Plan The Company maintains a deferred compensation plan to allow eligible U.S. employees to defer receipt of current cash compensation and restricted stock units vesting in order to provide future savings benefits. Eligibility is limited to employees who earn compensation that exceeds certain pre-defined levels. Participants have the option to invest their deferrals in a fixed income investment, a defined set of mutual funds, and/or, with respect to deferrals of restricted stock units, in Company common stock. The fixed income and mutual fund portion of the plan is unfunded, and therefore all compensation deferred under the plan is held by the Company and commingled with its general assets. Liabilities of $ 6.6 million and $ 9.3 million are included in the Consolidated Balance Sheets at August 31, 2025 and 2024, respectively, to reflect the unfunded portion of the deferred compensation liability. The Company recorded expense in "Financing costs, net" of $ 0.6 million, $ 0.9 million and $ 0.9 51 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) million for fiscal 2025, fiscal 2024 and fiscal 2023, respectively, for the non-funded return on participant deferrals. Company common stock contributions to fund the plan are held in a rabbi trust, accounted for in a man ner similar to treasury stock and are recorded at cost in “Stock held in trust” within shareholders’ equity on the Consolidated Balance Sheets with the corresponding deferred compensation liability also recorded within shareholders’ equity on the Consolidated Balance Sheets. Because no investment diversification is permitted within the trust, changes in fair value of the Company's common stock are not recognized. Note 13. Income Taxes Earnings before income taxes from continuing operations, are summarized as follows (in thousands): Year Ended August 31, 2025 2024 2023 Domestic $ 70,722 $ 59,688 $ 26,442 Foreign 50,007 45,831 42,456 $ 120,729 $ 105,519 $ 68,898 Both domestic and foreign pre-tax earnings from continuing operations are impacted by changes in operating earnings, acquisition and divestiture activities, restructuring charges and the related benefits, growth investments, debt levels and the impact of changes in foreign currency exchange rates. In fiscal 2025, domestic earnings did not include impairment and other divestiture charges. In fiscal 2024, domestic earnings included $ 0.1 million o f non-cash impairment and other divestiture charges, and fiscal 2023 results included $ 6.2 million of impairment and divestiture benefits. Substantially all of the non-cash impairment and other divestiture charges (benefits) did not result in a tax expense (benefit). Income tax expense from continuing operations is summarized as follows (in thousands): Year ended August 31, 2025 2024 2023 Currently payable: Federal $ 14,993 $ 10,106 $ 5,181 Foreign 12,341 11,599 9,240 State 832 1,172 319 28,166 22,877 14,740 Deferred: Federal 16 ( 1,086 ) ( 2,935 ) Foreign ( 634 ) 2,630 3,806 State 432 ( 1,109 ) ( 362 ) ( 186 ) 435 509 Income tax expense $ 27,980 $ 23,312 $ 15,249 52 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Income tax expense from continuing operations recognized in the accompanying consolidated statements of earnings differs from the amounts computed by applying the federal income tax rate to earnings from continuing operations before income tax expense. A reconciliation of income taxes at the federal statutory rate to the effective tax rate is summarized in the following table: Year ended August 31, 2025 2024 2023 Federal statutory rate 21.0 % 21.0 % 21.0 % State income taxes, net of Federal effect 0.2 1.3 0.7 Tax on foreign earnings (1) 3.3 4.2 6.0 Foreign derived intangible income deduction ( 1.9 ) ( 2.3 ) ( 3.1 ) Compensation adjustment 0.7 2.0 1.5 Valuation allowance additions and releases — ( 4.1 ) ( 0.8 ) Changes in liability for unrecognized tax benefits 0.2 ( 1.3 ) ( 0.1 ) Repatriation of foreign earnings ( 0.7 ) 1.6 — Taxable liquidation of subsidiaries — — 0.1 Foreign non-deductible expenses — 0.3 1.7 Changes in tax rates — — ( 2.0 ) Audits and adjustments (2) 0.3 0.4 ( 2.9 ) Research and development tax credit ( 0.4 ) ( 0.6 ) ( 0.7 ) Other items 0.5 ( 0.4 ) 0.7 Effective income tax rate 23.2 % 22.1 % 22.1 % (1) Th e Company generated $ 3.0 million, $ 3.4 million and $ 2.6 million of withholding tax and U.S. tax on non-U.S. earnings, net of foreign tax credits for fiscal 2025, 2024 and 2023, respectively. (2) During both fiscal 2025 and fiscal 2024, the Company generated a $ 0.4 million tax expense related to audits and adjustments as compared to a tax benefit of $ 2.0 million for fiscal 2023. Temporary differences and carryforwards that gave rise to deferred tax assets and liabilities include the following items (in thousands): August 31, 2025 2024 Deferred income tax assets: Operating loss and tax credit carryforwards $ 37,504 $ 73,406 Compensation related liabilities 4,855 4,440 Postretirement benefits 3,204 4,628 Inventory 768 977 Lease liabilities 9,451 8,063 Research and development capitalization 10,563 8,683 Book reserves and other items 6,785 5,096 Total deferred income tax assets 73,130 105,293 Valuation allowance ( 27,734 ) ( 57,743 ) Net deferred income tax assets 45,396 47,550 Deferred income tax liabilities: Depreciation and amortization ( 26,847 ) ( 25,920 ) Lease assets ( 9,021 ) ( 7,918 ) Other items ( 2,065 ) ( 2,716 ) Deferred income tax liabilities ( 37,933 ) ( 36,554 ) Net deferred income tax asset (1) $ 7,463 $ 10,996 (1) The net deferred income tax asset is reflected on the balance sheet in two categories: an ass et of $ 13.7 million and $ 14.7 million for fiscal 2025 and 2024, respectively, is included in "Other long-term assets" and a liability of $ 6.2 million and $ 3.7 million for fiscal 2025 and 2024, respectively, is included in "Deferred income taxes". 53 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The Company has $ 54.3 million and $ 2.5 million of gross state net operating loss and credit carryforwards, respectively, which are available to reduce future state tax liabilities. These state net operating loss carryforwards expire at various times through 2045. The Company also has $ 108.8 million and $ 7.8 million of foreign loss and credit carryforwards, respectively, and $ 1.4 million of U.S. credit carryforwards, which are available to reduce certain future foreign and U.S. tax liabilities. The majority of the foreign loss carryforwards are not subject to any expiration dates, while the other balances expire at various times through 2035. The U.S. credit carryforwards expire at various times through 2035. The valuation allowance represents a reserve for deferred tax assets, including loss carryforwards and foreign tax credits, for which utilization is uncertain. In general, the Company’s practice is to reinvest the earnings of its non-U.S. subsidiaries within those operations. Routinely, the Company analyzes the factors surrounding global cash needs and future cash utilization and determines if there are any exceptions. As of August 31, 2025, certain jurisdictions met this exception. On the undistributed foreign earnings of $ 6.5 million that are no longer permanently reinvested outside of the United States, the Company recorded a deferred tax liability of $ 0.9 million. If all remaining undistributed earnings were remitted, an additional income tax provision of $ 0.6 million would have been necessary as of August 31, 2025. Changes in the Company’s gross liability for unrecognized tax benefits, excluding interest and penalties, are as follows (in thousands): 2025 2024 2023 Beginning balance $ 13,713 $ 14,754 $ 15,380 Increases based on tax positions related to the current year 621 1,771 279 Increase for tax positions taken in a prior period 748 201 — Decrease for tax positions taken in a prior period ( 1,060 ) — ( 56 ) Decrease due to lapse of statute of limitations ( 620 ) ( 3,054 ) ( 951 ) Decrease due to settlements ( 69 ) — — Changes in foreign currency exchange rates 107 41 102 Ending balance $ 13,440 $ 13,713 $ 14,754 Substantially all of these unreco gnized tax benefits, if recognized, would impact the effective income tax rate. As of August 31, 2025, 2024 and 2023, the Company recognized $ 5.7 million, $ 5.0 million and $ 5.2 million, respectively, for interest and penalties related to unrecognized tax benefits. The Company recognizes interest and penalties related to underpayment of income taxes as a component of income tax expense. With few exceptions, the Company is no longer subject to U.S. federal, state and foreign income tax examinations by tax authorities in major tax jurisdictions for years prior to fiscal 2013. The Company believes it is reasonably possible that the total amount of unrecognized tax benefits could decrease by up to $ 2.2 million throughout fiscal 2026. Cash paid for income taxes, net of refunds, totaled $ 26.6 million, $ 23.8 million and $ 2.7 million during the years ended August 31, 2025, 2024 and 2023, respectively. Note 14. Capital Stock and Share Repurchases The authorized common stock of the Company as of August 31, 2025 consisted of 168,000,000 shares of Class A common stock, $ 0.20 par value, of which 52,946,336 shares were issued and outstanding; 1,500,000 shares of Class B common stock, $ 0.20 par value, none of which are outstanding; and 160,000 shares of cumulative preferred stock, $ 1.00 par value (“preferred stock”), none of which have been issued. Holders of both classes of the Company’s common stock are entitled to dividends, as the Company’s Board of Directors may declare out of funds legally available, subject to any contractual restrictions on the payment of dividends or other distributions on the common stock. If the Company were to issue any of its preferred stock, no dividends could be paid or set apart on shares of common stock, unless paid in common stock, until dividends on all of the issued and outstanding shares of preferred stock had been paid or set apart for payment and provision had been made for any mandatory sinking fund payments. The Company's Board of Directors has authorized the repurchase of shares of the Company's common stock under publicly announced share repurchase programs. Since the inception of the initial share repurchase program in fiscal 2012, the Company has repurchased 31,781,381 shares of common stock for $ 907.6 million. In March 2022, the Company's Board of Directors approved a new share repurchase program authorizing the repurchase of a total of 10,000,000 shares of the Company's outstanding common stock. In December 2023, the Company's Board of Directors authorized the retirement of the Company's repurchased shares. The Company repurchased 1,309,466 shares for $ 38.4 million in the year ended August 31, 2024 and 1,699,200 shares for $ 68.7 million in the year ended August 31, 2025. All shares repurchased have been retired. At August 31, 2025, the maximum number of shares that may yet be purchased under the program is 1,017,849 shares. 54 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) On October 10, 2025, the Company's Board of Directors authorized the repurchase of the Company's common stock for up to an aggregate amount of $ 200 million, expiring on October 31, 2029 or earlier as may be determined by the Company's Board of Directors or an authorized committee. The new share repurchase authorization replaces the prior authorization except to the extent of purchases under the Company's Rule 10b5-1 plan then in place. Earnings Per Share The reconciliation between basic and diluted earnings per share is as follows (in thousands, except per share amounts): Year Ended August 31, 2025 2024 2023 Numerator: Net earnings from continuing operations $ 92,749 $ 82,207 $ 53,649 Earnings from discontinued operations, net of income taxes — 3,542 ( 7,088 ) Net earnings $ 92,749 $ 85,749 $ 46,561 Denominator: Weighted average common shares outstanding - basic 54,049 54,336 56,680 Net effect of dilutive securities - stock based compensation plans 436 526 437 Weighted average common shares outstanding - diluted 54,485 54,862 57,117 Earnings per share from continuing operations Basic $ 1.72 $ 1.51 $ 0.95 Diluted $ 1.70 $ 1.50 $ 0.94 Earnings (loss) per share from discontinued operations Basic $ — $ 0.07 $ ( 0.13 ) Diluted $ — $ 0.06 $ ( 0.12 ) Earnings per share: Basic $ 1.72 $ 1.58 $ 0.82 Diluted $ 1.70 $ 1.56 $ 0.82 Anti-dilutive securities- stock based compensation plans (excluded from earnings per share calculation) 130 96 891 Note 15. Stock Plans Share based awards may be granted to key employees and directors under the Enerpac Tool Group Corp. 2017 Omnibus Incentive Plan (as amended and restated November 9, 2020) (the “Plan”). A total of 7,825,000 shares of Class A common stock have been authorized for issuance under the Plan plus shares, if any, that become issuable, pursuant to the terms of the Plan, upon the expiration, cancellation or forfeiture of awards under our previously registered stock plans outstanding at the time the Plan was first approved by the Company's shareholders. At August 31, 2025, 2,577,263 shares were available for future award grants. The Plan permits the Company to grant share-based awards, including stock options, restricted stock units and performance shares to employees and directors. Under the Plan, options may have a maximum term of ten years and an exercise price per share no less than 100 % of the fair market value of the Company’s common stock at the date of grant. No Options have been granted under Plan. The Company’s restricted stock grants generally vest, subject to continued employment, in equal annual installments over a three -year period. The awards of performance shares generally include a three -year performance period and vest at the end of the period, subject to continued employment. The awards of performance shares granted in fiscal 2025, fiscal 2024 and fiscal 2023 generally provide for payout based 33.34 % on the relative total shareholder return metric, 33.33 % on the Company's adjusted earnings per share and 33.33 % on the Company's three-year average return on invested capital. The p rovisions of share-based awards may vary by individual grant with respect to vesting period, dividend and voting rights, performance conditions and forfeitures. 55 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) A summary of restricted stock units and performance shares activity during fiscal 2025 is as follows: Number of Shares Weighted-Average Fair Value at Grant Date (Per Share) Outstanding on August 31, 2024 879,865 $ 25.50 Granted 328,038 41.33 Forfeited ( 43,472 ) 32.21 Vested ( 506,708 ) 23.28 Outstanding on August 31, 2025 657,723 $ 34.66 A summary of stock option activity during fiscal 2025 is as follows: Shares Weighted-Average Exercise Price (Per Share) Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding on September 1, 2024 225,849 $ 25.81 Granted — — Exercised ( 74,816 ) 23.09 Forfeited ( 24,862 ) 30.85 Expired — — Outstanding on August 31, 2025 126,171 $ 26.42 1.3 $ 2,008,202 Exercisable on August 31, 2025 126,171 $ 26.42 1.3 $ 2,008,202 Intrinsic value is the difference between the market value of the stock at August 31, 2025 and the exercise price which is aggregated for all options outstanding and exercisable. A summary of the total intrinsic value of options exercised and cash receipts from options exercised is summarized below (in thousands, except per share amounts) : Year Ended August 31, 2025 2024 2023 Intrinsic value of options exercised $ 1,707 $ 2,946 $ 169 Cash receipts from exercise of options 1,734 6,902 973 The Company generally records compensation expense over the vesting period for restricted stock unit awards based on the market value of the Company's Class A common stock on the grant dat e and utilized an expected forfeiture rate of 12 % for the years ended August 31, 2025, 2024 and 2023. The fair value of Performance Shares with market vesting conditions utilize a Monte Carlo simulation model while those with performance vesting conditions have a fair value based on market price on the date of grant with updates made periodically to the amount of expense recognized based on our assessment of the performance condition being met with a range of attainment between 0 % and 200 %. As of August 31, 2025, there was $ 9.9 million of total unrecognized compensation cost related to share-based awards, including stock options, restricted stock units and Performance Shares, which will be recognized over a weighted average period of 1.7 years. The total fai r value of share-based awards that vested during the fiscal years ended August 31, 2025 and 2024 was $ 11.8 million and $ 8.3 million, respectively. 56 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Note 16. Business Segment, Geographic and Customer Information The Company is a global manufacturer of a broad range of industrial products and solutions. The IT&S reportable segment is primarily engaged in the design, manufacture and distribution of branded hydraulic and mechanical tools and in providing services and tool rental to the infrastructure, industrial MRO, oil & gas, mining, alternative and renewable energy, civil construction and other markets. The Other operating segment is included for purposes of reconciliation of the respective balances below to the consolidated financial statements. The Company’s Chief Executive Officer is the Chief Operating Decision Maker (CODM). The CODM allocates resources and makes operating decisions based on the financial information presented by the Company’s segments. The measures regularly reviewed by our CODM include segment sales, segment operating profit and segment operating profit margin. Our CODM uses these financial measures, to evaluate and allocate capital and company resources as critical determinants of segment performance. In addition, these metrics are used to monitor forecasted to actual and budgeted results to benchmark to our peers. The following table includes segment sales, significant expense items and segment operating profit as viewed by the CODM for the years ended August 31, 2025, 2024, and 2023 . Year Ended August 31, 2025 2024 2023 Net Sales by Reportable Segment & Product Line IT&S Segment Product $ 479,001 $ 455,647 $ 447,603 Service & Rental 116,824 115,506 107,575 IT&S Segment 595,825 571,153 555,178 Other Segment 21,074 18,357 43,026 $ 616,899 $ 589,510 $ 598,204 Cost of Products Sold IT&S Segment $ 295,335 $ 278,602 $ 274,783 Other Segment 9,661 8,950 26,546 Corporate 74 947 1,836 305,070 288,499 303,165 Gross Profit IT&S Segment 300,490 292,551 280,395 Other Segment 11,413 9,407 16,480 Corporate ( 74 ) ( 947 ) ( 1,836 ) 311,829 301,011 295,039 Selling, General and Administrative Expenses IT&S Segment 128,724 129,365 135,797 Other Segment 5,350 4,964 9,962 General Corporate 32,846 34,236 59,305 166,920 168,565 205,064 Amortization of Intangible Assets IT&S Segment 5,404 3,280 3,297 Other Segment — — 1,719 General Corporate 172 32 96 5,576 3,312 5,112 57 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Year Ended August 31, 2025 2024 2023 Restructuring Charges IT&S Segment 2,493 6,801 5,418 Other Segment — 47 — General Corporate 3,369 552 1,678 5,862 7,400 7,096 Impairment & Divestiture Charges Other Segment — 147 ( 6,155 ) — 147 ( 6,155 ) Operating Profit (Loss) IT&S Segment 163,869 153,105 135,883 Other Segment 6,063 4,249 10,954 Corporate ( 36,461 ) ( 35,767 ) ( 62,915 ) 133,471 121,587 83,922 Operating Profit % IT&S Segment 27.5 % 26.8 % 24.5 % Other Segment 28.8 % 23.1 % 25.5 % Capital Expenditures: IT&S Segment 8,906 6,079 7,779 Other Segment 434 561 599 Corporate 10,000 4,771 1,022 $ 19,340 $ 11,411 $ 9,400 August 31, 2025 2024 Assets: IT&S Segment $ 672,123 $ 613,797 Other Segment 25,294 26,533 Corporate 130,450 136,998 $ 827,867 $ 777,328 In addition to the impact of changes in foreign currency exchange rates, the comparability of segment and product line information is impacted by acquisition/divestiture activities, impairment and divestiture charges, restructuring costs and related benefits. Corporate assets, which are not allocated, principally represent cash and cash equivalents, property, plant, and equipment, ROU assets, capitalized debt issuance costs and deferred income taxes. 58 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The following tables summarize net sales and property, plant and equipment by geographic region (in thousands): Year Ended August 31, 2025 2024 2023 Net Sales: United States of America $ 229,026 $ 220,689 $ 231,093 United Kingdom 36,933 36,290 34,085 Germany 29,532 34,700 29,926 Saudi Arabia 26,699 23,113 25,762 Brazil 25,170 22,769 20,523 Canada 25,010 19,248 29,643 Australia 23,382 22,165 28,607 China 17,658 16,258 14,081 Netherlands 17,525 15,737 11,044 All Other 185,964 178,541 173,440 $ 616,899 $ 589,510 $ 598,204 August 31, 2025 2024 Property, Plant and Equipment, net: United States of America $ 26,075 $ 18,150 United Kingdom 8,749 7,599 Spain 5,042 1,560 UAE 3,285 3,130 Brazil 2,971 2,870 Netherlands 2,924 2,547 All other 4,229 4,429 $ 53,275 $ 40,285 The Company’s largest customer accounted for approximately 3 % of sales in each of the last three fiscal years. Export sales from domestic operations were 7.3 %, 7.9 % and 9.9 % of total net sales from continuing operations in fiscal 2025, 2024 and 2023, respectively. Note 17. Commitments and Contingencies The Company had outstanding commercial letters of credit of $ 5.9 million and surety bonds of $ 4.8 million at August 31, 2025, and $ 4.4 million of letters of credit and $ 3.8 million of outstanding letters of credit of surety bonds at August 31, 2024 , the majority of which relate to commercial contracts and self-insured workers' compensation programs. As part of the Company's global sourcing strategy, we have entered into agreements with certain sup pliers that require the supplier to maintain minimum levels of inventory to support certain products for which we require a short lead time to fulfill customer orders. We have the ability to notify the supplier that they no longer need to maintain the minimum level of inventory should we discontinue manufacturing of a product during the contract period; however, we must purchase the remaining minimum inventory levels the supplier was required to maintain within a defined period of time. The Company is a party to various legal proceedings that have arisen in the normal course of business. These legal proceedings include regulatory matters, product liability, breaches of contract, employment, personal injury and other disputes. The Company has recorded reserves for loss contingencies based on the specific circumstances of each case. Such reserves are recorded when it is probable a loss has been incurred and can be reasonably estimated. The Company maintains a policy to exclude from such reserves an estimate of legal defense costs. In the opinion of management, resolution of these contingencies is not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows. Additionally, in fiscal 2019, the Company provided voluntary self-disclosures to both Dutch and U.S. authorities related to sales of products and services linked to the Crimea region of Ukraine, which sales potentially violated European Union and U.S. sanctions provisions. Although the U.S. investigation closed without further implication, the Dutch investigation continued. The Dutch Investigator concluded his investigation in March 2022 and provided the results to the Public Prosecutor's 59 ENERPAC TOOL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) office for review. Specifically, the Investigator concluded that the sales transactions violated EU sanctions. The conclusion in the Investigator's report was consistent with the Company's understanding of what could be stated in the report and supported the Company to record an expense in the fiscal year-ended August 31, 2021, representing the low end of a reasonable range of financial penalties the Company may incur as no other point within the range was deemed more probable. The matter remains subject to further legal proceedings in the Netherlands. The Company has not adjusted its estimate of financial penalties as a result of the status of legal proceedings in the year ended August 31, 2025. While there can be no assurance of the ultimate outcome of the matter, the Company currently believes that there will be no material adverse effect on the Company's financial position, results of operations or cash flows from this matter. 60 ENERPAC TOOL GROUP CORP. SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS (in thousands) Additions Deductions Balance at Beginning of Period Charged to Costs and Expenses (Income) Acquisition/ (Divestiture) Accounts Written Off Less Recoveries Other Balance at End of Period Allowance for losses—Trade accounts receivable August 31, 2025 $ 15,912 $ 949 $ 742 $ ( 13,861 ) $ 28 $ 3,770 August 31, 2024 16,781 641 — ( 1,473 ) ( 37 ) 15,912 August 31, 2023 17,504 1,177 ( 32 ) ( 2,230 ) 362 16,781 Valuation allowance—Income taxes August 31, 2025 $ 57,743 $ 4,822 $ — $ ( 34,830 ) $ ( 1 ) $ 27,734 August 31, 2024 61,432 1,821 — ( 5,511 ) 1 57,743 August 31, 2023 61,630 3,305 — ( 3,503 ) — 61,432 61 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.