Enerpac Tool Group enters its fourth fiscal quarter carrying a third quarter that beat on margin and earnings despite a service book still shrinking, and a definitive agreement signed in July 2026 to acquire Specialized Fabrication Equipment Group for about $451 million in cash. The deal is roughly a quarter of the current market value of the company, and it reorders the entire equity story. The quarter printed $167.6 million in net sales, up 6 percent year over year. Diluted earnings per share reached $0.58 against $0.41 a year earlier. Gross margin reached 53.0 percent, a gain driven in part by expected tariff refunds, and the cash operating earnings measure the company reports landed at 28.0 percent of sales.
The earnings strength is real but flattered by two one-time items: the expected refunds of tariffs imposed under the International Emergency Economic Powers Act, invalidated by the U.S. Supreme Court in February 2026, and the absence of the prior year's restructuring charge. Strip those out and the operating improvement is narrower, with organic sales up 3 percent and the service business still down 8 percent organically in the quarter. Service revenue improved 17 percent sequentially, which is the early signal that the company's service improvement plan is beginning to work. The company cut full-year guidance at the print, trimming the cash earnings target to between $151 million and $156 million.
The SFE deal is the event that reorders the valuation. At the agreed price, net debt at the close would move from 0.5 times cash earnings to roughly 1.6 times. The company funded the step by raising its revolving credit line to $625 million on the same day the agreement was signed. The equity question is whether SFE's premium brands in pipe fabrication, welding, and portable machining add a durable growth stream at a price the balance sheet can carry through the Middle East conflict dragging on the existing service book. The data that resolves the question arrives with the fourth quarter print and the first quarter fiscal 2027 close announcement.