Good morning, and welcome to Enerpac Tool Group's Investor Day. My name is Bobbi Belstner, and I am the Senior Director of Investor Relations. We are excited to have our full management team in attendance today, and on behalf of the entire team, we thank you for joining us. With safety being our number one value, we start out each meeting with a safety brief. While we are not anticipating any emergencies today, if one were to occur, please use the exits at the back of the room and then follow the exit signs out to the nearest external exit. Now, before we get started this morning, I do have a few other housekeeping items to cover. Today, we will be making forward-looking statements pursuant to the safe harbor provisions of federal securities law. Also, we will be referencing non-GAAP measures. I'm sorry.
A reconciliation of these GAAP to non-GAAP measures can be found in the appendix to today's presentation, available on our website. Also, please see our SEC filings for risks and other factors that may cause actual results to differ materially from forecasts, anticipated results, and other forward-looking statements. Moving on to the agenda. Paul Sternlieb, President and CEO, will start off with an overview of our business. Scott Vuchetich, EVP, Marketing, and President of the Americas, will cover our focused growth verticals and our digital transformation. Art Donaldson, VP of Engineering, will provide an update on innovation. After a short break, James Gaskell, President of APAC, will provide an overview of the growth strategy for that region. Paul will then give an update on our ASCEND transformation program and introduce Markus Limberger, our new EVP of Operations.
Tony Colucci, CFO, will wrap up the presentation with our financial framework, capital allocation, and our new financial targets that were announced this morning in our press release. We'll then open it up for Q&A. We do ask that all questions today be submitted using the QR code on each of the tables that will take you to the webcast portal. As an alternative, I did include a link in the meeting invite for today's event. Lastly, for those in person, we will be providing a lunch following the program, that we hope you're able to join us for a bite to eat, and also check out our product display out in the lobby. With that, we will start with a short video. Thank you.
Enerpac Tool Group makes complex, often hazardous jobs possible safely and efficiently. We make the bridges you drive on every day safer, and our solutions enable renewable energy that makes for a more sustainable world. We help industrial customers solve challenging problems to improve their manufacturing processes, and we are enabling the build-out of the world's infrastructure. We do things that are hard to do. As a company, we're targeting market leadership to achieve and sustain a number one or number two position in each of our key markets and verticals. We operate with simplicity and standardized processes, and we make it easy for our customers to do business with us. We do all of this by living our new values today and tomorrow: safety, integrity, ownership, teamwork, and agility.
Enerpac Tool Group is creating the foundation for new growth and a sustainable business model. We're simplifying our work, focusing on serving our customers, and making it easier to do business with us. Investments in digital and IoT and acquisitions that advance our purpose can help us provide comprehensive solutions to our customers. We're simplifying our business and investing to become more efficient. We have a great future ahead of us. As we progress on our journey, we're aiming for an Enerpac Tool Group that's a solutions and technology company. We're highly focused with clear priorities, and we've developed a long-term strategy to drive growth and profitability with a focus on selected vertical markets. We're raising the bar.
Okay. Well, great. Good morning, everybody. Thank you for joining us. Just really excited to be with you today to share our strategy, our long-term financial targets, and give you an opportunity to hear from and meet our management team. We actually have the full composition of our team here with us today, and delighted to have them all join us. So let me get started. We've got a lot to cover, and as you can see from the agenda that Bobbi laid out, we've got a number of interesting topics. I wanna start today with five key takeaways that we'd like to cover through our presentation. The first is that we're much more than an industrial tools business.
We view ourselves, Enerpac Tool Group, as a premier industrial solutions provider, and you'll see that we serve a very broad set of customers in varied markets around the world. We've now built, and we'll share a lot more detail today, around our defined organic growth strategy with a focus on maximizing shareholder value and capitalizing on key global macro trends. We've got a transformation plan in ASCEND, which we launched in March, that's now well underway, and that's helping us elevate performance in the company. It's also enabling us to create significantly more resiliency and help us manage through cycles. Importantly, ASCEND is already yielding results in our business, and we'll talk a lot more about that. We benefit from an extremely strong balance sheet, and we've got a very disciplined capital allocation approach.
Finally, we've got an exceptional management team that we've built over the last year, all of whom are with us today, who are committed to an incredibly well position to help us achieve our new long-term targets for Enerpac Tool Group. Let me just start a little bit around who we are as a company. As I mentioned, we are a premier industrial solutions provider, and our purpose, as you can see, is we make complex and often hazardous jobs possible safely and efficiently for our customers. In our most recent fiscal year, which ended at the end of August, we achieved revenue of $571 million, and we delivered an adjusted EBITDA of $83 million. We've been in business for well over a century, and we serve customers all throughout the globe, selling into over 100 countries.
We've got about 2,200 employees or team members around the world dedicated to serving our customers, and we go to market primarily through a channel of about 1,000 distributors or channel partners, which have been built up with relationships that have been established now over decades in many cases. We've got a market cap of about $1.4 billion, and we're traded on the New York Stock Exchange. In fact, this year, we're celebrating our 30th year as a listing on New York Stock Exchange. Today, we will celebrate that by ringing the closing bell this afternoon. Like a lot of companies, of course, we had our fair share of challenges through COVID. We were not immune to that, and you can see the impact on our financials during that period.
Most importantly, you see the rebound that we were able to deliver in fiscal 2021 and importantly in fiscal 2022, not only on driving growth at the top line, but also continuing to work on our margins. Our already strong gross margins, which continued to improve significantly over the last several years, our operating margins and our adjusted EBITDA margins. We finished fiscal 2022 full year adjusted EBITDA margin of 14.5%. That did include 230 basis points for a single one-off receivable reserve that we had to take for a very isolated incident. If you add that back, we were actually at 16.8% for the year. Really strong performance from a margin and top-line perspective.
Today, we wanna talk a lot about a new team that we've got in place, and you'll meet them all here, with a new mission, driving against a new plan that we've built that we're extremely excited about and highly confident in, and with the target focus of delivering on our new goals and our new long-term financial commitments as a company. Here's the team, and this team is really a great composition. We've got folks on the team who've been with the company and/or in the industry for a significant period of time, who bring incredible wealth and depth of experience. Then we've got newer team members that we brought in over the course of the last 12 months that also bring amazing perspective, skills, and insights to bear.
It's just an incredible leadership team that we've been able to establish over the last year, all with the primary focus of maximizing shareholder value. We've spent the better part of the last year not only executing, but building the strategy and the plan that we're gonna share with you today. Our new mission really reflects our core capabilities. As I said at the start, our mission is that we make complex and often hazardous jobs possible safely and efficiently. We do that by living our core values today and every day, and those are safety, teamwork, integrity, agility, and ownership. I do wanna touch on that last one of ownership because it's really important here at Enerpac. In fact, we reestablished our values as an executive leadership team and rolled these out across the organization over the past year.
Ownership is a really critical one for us because it's basically about doing what you said you're gonna do in the time you said you're gonna do it. It's about commitment, follow-through, and accountability. We see that now starting to take, you know, significant shape in the company. The level of commitment that we see from our teammates across the world is increasing every day. I think you see that play out in the results, particularly in the second half of fiscal 2022. Then we built what we call three strategic pillars, and these are the lenses by which we make any key decisions or investment decisions in our company. We look through the lens of these strategic pillars, and the first is, it has to be hard to do. We're not in a me-too commodity business.
We do things that are hard to do. We enable our customers to do things that are really hard to do. Our technology, our products, our services are highly differentiated. So anything that we do has to be something that's hard to do, that can't be easily replicated. The second is we're driving for target market leadership in key verticals in which we're focused, and Scott will talk a lot more about that here shortly. The third is, as the video said, we're simplifying Enerpac, right? We're taking a lot of complexity in what we do. We're standardizing our processes, our operations, and we're making it easy to do business with. We're making it easier for our customers to interact with us, make it easier for us to serve our customers in everything we do in our business.
At Enerpac, everything we do is underpinned by a really strong commitment to ESG. Sustainability is absolutely at the core. We build products with technology that tries to minimize waste wherever possible and make sure that we're trying to do things that ultimately are good for the planet. We've got a great governance structure, committed to do the right things for all stakeholders, and we've got a board composition that's relatively refreshed, independent, tenured, and diverse board members. I'm really proud of what we've accomplished on the social side of ESG. As Bobbi alluded to when she talked at the start here, safety is absolutely our number one priority.
I think anybody who walks into an Enerpac facility or observes any of our processes would come to appreciate that very quickly, how critical safety is in everything we do at the real heart of our values, but also our focus on building community. I'm really proud of our Enerpac Lifts Up program. It's our way of connecting with the communities in which we live and work by giving back. We do that through volunteer hours and service in those communities and through monetary contributions that support the teams that are working to help those communities. We're absolutely committed to a mission of diversity, equity, inclusion in everything we do in terms of talent that we bring in and in terms of developing our talent throughout our organization.
Today, I'm really excited to share with you our growth strategy, which is centered around four key pillars. The first is we're targeting expansion in four key vertical markets. Again, Scott will touch on a lot more detail around that, really around focus, right? The second is we've got an incredibly exciting digital transformation program already underway, and that's digital in two aspects. One is digital from a marketing perspective, focused on lead qualification and demand generation, creating brand preference and bringing them to Enerpac, whether directly or through the channel, with a preference to purchase our products over competition. Also importantly, digital in terms of connectivity, product connectivity, IoT, and Art will also talk a bit about that as well.
We've got, with Art, a focus on our customer-driven innovation program, where we've significantly changed how we think about R&D and new product development over the last year, really focused on what's important for the customer, the customer's pain points and unmet needs, and gathering that deep VOC or voice of customer. Finally, James is gonna touch in great detail on our expansion plans in our Asia-Pacific region, where we think we have really outsized opportunities for growth, relatively smaller part of our business today, but with huge potential for Enerpac Tool Group. Let me briefly talk about ASCEND, and we'll get into quite a bit more detail later in the morning. ASCEND is our transformation program, which is really powering future growth for Enerpac. It's a program that we launched in March and is now well underway.
We're beyond design phase, we're into implementation, and it's already yielding results in our business. It's enabling our growth strategy, it's helping optimize performance across the company, and it's really focused on three kind of key pillars here. The first is we've got a number of initiatives around driving near-term organic growth, and we'll talk in more detail about what those are. The second is a focus on improving operational excellence and efficiency in our production and distribution across the company. The third is around greater efficiency and productivity in our back office, our SG&A functions, trying to leverage our scale across the globe to get better at how we utilize that investment in SG&A more effectively.
Really proud of what we've accomplished as a company and a team over the last 12 months, and frankly, in the face of a lot of challenges, you know. Not unique to us, I'll admit, but nonetheless, managing through continued COVID challenges, supply chain disruptions, logistics issues, of course, the conflict in Ukraine, and the inflationary challenges that we've seen over the past 12 months. In the midst of all of that, we've integrated a new management team. We've flattened the organizational structure to get a lot closer to our global operations, and we've added a ton of new talent throughout the organization at multiple levels. We also have defined, as I talked about earlier, our new mission. We'll talk, of course, about our new strategy and our refreshed financial targets for the next several fiscal years.
As I mentioned, when I joined, we launched really a holistic, deep dive review of the business. We took about three months to do that, and that ultimately culminated in the launch of our ASCEND transformation program. Finally, our board, really, speaking to the confidence they have in our strategy and in the management team, approved a new share repurchase authorization program, and we got after that in a pretty significant way in fiscal 2022. In fact, we actually repurchased $75 million of shares in the fiscal year, about 3.8 million out of the 10 million shares, so we still have plenty of runway in that authorization.
I think we've really met the key commitments that we set out, when I joined about 12 months ago, which was the deep dive review of the business, implementing and getting started on our journey on the ASCEND transformation program, flattening the organization, and improving performance and delivering results and doing that consistently. You can see we've really had some nice, strong performance, not just on the top line, but from a margin perspective. You'll note in Q4 fiscal 2022, we achieved a record adjusted EBITDA margin of over 20% as a company. A little bit about the history of Enerpac Tool Group. Enerpac is actually formerly known as Actuant, which was a spinoff itself of Applied Power. Enerpac was really the crown jewel of the organization during that period of time.
In 2016, a new management team came on board, and I'd say the primary focus was really around portfolio optimization. Throughout that process, that ultimately led to some divestitures of the portfolio, and most notably the EC&S divestiture, which was completed in 2019. Which then led to the new launch or rebranding of the company in 2019 as Enerpac Tool Group. I joined, as I said, just about 12 months ago, October of last year, with the goals that you see listed here. The company is well over 100 years old. We're really excited about the heritage and the history and what we can do to take this company forward for the next 100+ years. Enerpac is a globally recognized leader in industrial tools and services.
We have an incredibly deep and broad set of product and service offerings, some of which you see listed here. We've built a very extensive global distribution network that we feel is a competitive advantage for us, and we've got a very diversified customer base. We go to market primarily with the Enerpac brand. We're also incredibly well known for Hydratight, particularly in our service business, and we also have our Cortland business in both the biomedical space and industrial ropes. In fiscal 2022, our revenue was split roughly 80% on product and 20% on our service business. We have a number of key competitive advantages, and I think first and foremost is the strength of our brand. Enerpac is just incredibly well known and regarded by our customers for quality, durability, reliability, and safety.
When you need to get complex, hard-to-do jobs done, you go to Enerpac to do that. We've got, as I mentioned, really strong breadth and depth in our product portfolio, our channel partner network, the global coverage that we enjoy. We've got amazing customer relationships that we've built now over decades. Probably, you know, the unsung hero in a way is just the incredible talent that we've got on our team, particularly the technical and applications expertise that customers have come to really rely on to get jobs done, to know what the right equipment is, what the right way is to get this application complete to the objectives that they have. We're operating in a very large and growing market. When we look at the broad industrial tools market, that total addressable market or TAM, we've sized at well over $100 billion.
If you look at just the double-click on high-pressure hydraulics, we believe that's a $20 billion market. Today, our served addressable market or SAM, where we operate with the current products and services we provide, is north of $4 billion and growing. We expect that market to continue to expand for us as we continue to expand our product and service offerings. With a revenue last year just short of $600 million, you can see we've got plenty of room to grow and to continue to drive market share gains. As I mentioned, we serve a really broad array of vertical markets, 10 that we've focused on here, and it's a large and fragmented set.
We're not overly reliant on any single end market for us to be successful as a company, and it presents opportunities for great organic and/or inorganic growth and certainly diversification. Enerpac, we offer a wide array of very durable and reliable products. We've listed just a few of them here. We're probably most well known for our hydraulic pumps and cylinders, but also our bolting equipment, our pullers and spreaders, and some of our specialty equipment, our cutters, presses, work holding equipment. We also have more of a capital equipment business in our heavy lift or HLT and machining business, which are based in the Netherlands and the U.K., but sell globally. Those are more capital equipment businesses. Again, really focus all these on helping customers perform complex, hard-to-do jobs. For those of you who are here in person, we've got a small display set up outside.
You're welcome to look at some of those products during the break and the lunch hour. At Enerpac, we also have a great service business, and it's highly complementary to what we do with the products that we offer. Our service business is primarily focused on repair and maintenance activity for our customers, and we think there are really outsized opportunities to continue to profitably grow that business by focusing on specialty, high-margin services. When you hear what Scott has to say around our focus on four key vertical markets, we think there's really unique opportunities to provide a full solution offering for our customers in those spaces through not only product but service as well. Our service business is roughly split equally about half on rental of our equipment and about half on manpower.
Recall that service for us is about 20% of our overall revenue. Rental, about 10% of overall revenue. Manpower, about 10%. We've built a really exciting synergistic services strategy here at Enerpac with three key building blocks. The first is that we'll continue to invest to improve what we do and how we do it in terms of our business processes and our systems. The second is we're gonna be focused on scaling selected high-margin organic opportunities in the service space and optimizing our regional portfolio, where we also have some interesting high-margin service opportunities, some of which just a few or a selection that you can see listed here. We've got great opportunities to continue to expand and grow our service offerings in wind, in the industrial MRO market, in rail, and in power gen.
Enerpac enjoys a very extensive global footprint, as I referenced. In fact, in our most recent fiscal year, just 40% of our revenue came from the U.S. market. It was up slightly from 36% the prior year, I'd say primarily driven actually by FX. We're actually quite global, and we're really operating in all major markets. You can see we do have an extensive footprint, whether it's plants, manufacturing, or distribution centers, but also sales and service offices. That really allows us to operate close to our customer and help them get the job done quickly, effectively, efficiently, and safely, of course.
Today, we're gonna talk a lot about some of the macro trends that really enter the calculus as we thought about our growth strategy, and there are three that I wanna highlight: aging infrastructure, renewable energy and sustainability, and the shift to digital, which we feel are really favorable long-term trends that will impact Enerpac in a very positive way. Aging infrastructure, I think we're all very well aware and familiar. If you drive the roads or take railways or involved in any way, shape, or form with infrastructure, I think we've all experienced that, not just in the U.S., but frankly, around the world. Now what we see is governments, in particular, are getting serious, not just in the U.S. with the infrastructure bill, but elsewhere in committing to very significant investment, very sizable investments to improve this aging infrastructure.
We are already actively present in these markets, serving customers and really well-positioned to help them get these complex and difficult jobs done safely and efficiently. In the renewable energy space, with increasing focus on ESG, increasing demands for energy around the world and clean energy, we're incredibly well-positioned to help customers. Again, a space where we're very active today and where we see outsized opportunities for growth, and I would say particularly in the wind sector around power gen. Of course, as we all know in our daily lives, the increasing shift to digital presents really great opportunities that support our growth strategy, not only around product connectivity and IoT, but around more automation, which ultimately will help our customers get the job done more quickly, but also more safely, and Art will talk quite a bit about that.
We are fortunate to be in a very secure financial position as a company with a strong balance sheet, which Tony will talk more about, which presents opportunities for us in terms of flexibility and gives us access to capital to do really the things that we need to do, whether it's internal investments or inorganic investments for our shareholders. We've got a balanced capital allocation approach, and we have a very disciplined, and we think, highly complementary M&A strategy and program underway. If I talk briefly on our capital allocation strategy, really our priorities have not changed. Our first and primary focus is continuing to invest in ourselves.
We think those are projects that have the greatest returns with the lowest risk, and we see continuing opportunities to invest in ourselves, particularly over the next several years, as we identify a lot of opportunities through our ASCEND transformation program, whether it be automation or investments to improve labor productivity or improvements to our IT systems to make us more effective and efficient in what we do and ultimately serving our customers. We've also got a disciplined M&A program. I'll talk briefly about that, and Tony will dive into more detail. Our target is to maintain our strong balance sheet with a target leverage of 1.5x-2.5 x.
We'll continue to look at where it makes sense to opportunistically return capital to our shareholders, whether it be through our annual dividend program or like we've done more recently, substantial share repurchase. Where we believe there are opportunities to do that, and if we believe and have conviction that we're undervalued in the market versus our intrinsic value, we'll always look through the lens of the shareholder as we make those decisions. I wanna touch briefly on our disciplined M&A program. We will continue our pure play strategy around tools. We're not trying to be a diversified industrial, but we are gonna look beyond just classic tools. We're looking for products and services that will help us be a true partner and solution provider to our customers, and particularly in these target verticals.
We've got a very healthy pipeline that we continue to build with a focus on those four key verticals, and our M&A activity is really focused on three key priorities. The first would be filling product gaps where we don't offer something, but it would be highly complementary, and again, help us close gaps on what we can offer our customers. It would help in terms of market or vertical expansion, whether it's geographic or expanding our capability in a particular application or vertical market. We'll evaluate M&A opportunities from a technology perspective where we can take that technology and apply it to existing Enerpac products and services. We've got a very disciplined approach with specific financial and operational criteria that we'll cover here later. We believe Enerpac offers a really strong investment potential. As I mentioned, we're a leading solutions provider in the space.
Today, we already deliver exceptionally high gross margins, and we believe there's a pathway to continue to improve our gross margins and our EBITDA margins. We'll talk about that when we get to our financial targets. We've got a new enhanced organic growth strategy that we're really excited to share with you today, focused on these target verticals, our digital transformation program, our customer-led innovation program, customer driven, and our expansion in Asia-Pacific, and all driving to updated financial goals that our executive team and our broader Enerpac team is absolutely committed to deliver. Let me touch on those long-term goals, and again, Tony will go into more detail. We're now in fiscal 2023 first quarter, and through fiscal 2026, we've set three targets from a financial perspective. The first is achieving an organic revenue CAGR of 6%-7%.
Achieving an adjusted EBITDA margin of 25% as we exit fiscal 2024, so for full year fiscal 2025, and then greater than 25% for fiscal 2026. We believe we have a path to continue to add 50 basis points or better in subsequent years on our EBITDA margin, adjusted EBITDA margin. Achieving a greater than 100% free cash flow conversion, particularly toward the end of the outlook. We do expect that to be a bit lower in the earlier years, particularly in fiscal 2023 and fiscal 2024, as we invest behind the ASCEND program. We are very well-positioned to manage through uncertain times. We're serving a diverse set of end markets. We're not overly reliant on any single market to be successful or any single customer.
We have this very strong balance sheet at our disposal, and we're highly focused on free cash flow generation. If we did enter a downturn up to a sort of 15% revenue drop, we would be targeting decrementals of roughly 20%-25% in that sort of scenario, and we were able to achieve that through the COVID downturn. Probably most importantly, we're already well underway on our implementation of our ASCEND transformation program, which I really view as a portfolio of self-help initiatives at the ready. We're already getting after them, we're in implementation mode, we've moved beyond design, and we've got an incredible funnel of hundreds of initiatives that if we need to, we can continue to accelerate the pace of. At Enerpac, we are raising the bar. I'd like to leave you with just these final messages.
With our new team, our new mission, our new plan, and our new long-term goals, we're raising the bar. We're a premier industrial solutions provider. We've got a great organic growth strategy we're gonna share with you today. We're well underway in our transformation program. With the strength of our balance sheet and a committed leadership team, we're absolutely confident in achieving our long-term financial targets. With that, I will hand it over to Scott. Thank you.
Great. Thank you, Paul. Well, excellent. Well, I'm Scott Vuchetich. I'm President of the Americas and the Global Lead of Marketing for Enerpac, and I'm excited to talk to you today about how we're raising the bar in our commercial growth efforts by focusing on four key vertical markets. I will also be talking about our digital transformation and how that goes together with that, as well as how that digital transformation is influencing our new product development. Let's start with the vertical markets. Now, as you can imagine, and Paul already shared, we serve several, many, many different end use vertical markets. We wanted to take a very careful look and decision around where should we focus our incremental energy, where should we focus those incremental resources to differentially capture growth? We looked at it across three dimensions. Well, naturally, size and growth, very critical, pretty obvious.
We also looked for diversity. Diversity to me is not just the geography. We wanted to be sure that it had a global reach, it was being used globally. Diversity is a number and a great deal of variety to the end use customers that we could go serve, so not too much concentration. Finally, diversity in the range of products they use. As you saw in the video, you see a little bit here in the hallway, if you look at our catalog, we have a very broad range of products. We wanted spaces where all of those could be brought to bear. Where I get excited about it is where we saw opportunities to do new product development that we thought would be rewarded. Market dynamics.
Of course, we're looking at the secular trends, but what I'm also looking for is what I call the strategic inflection points, something that's gonna create an opening for Enerpac to step in and differentially win. A good example of that is wind power. Wind power used to be hundreds of wind towers in the Mojave Desert, for example. Increasingly, they're moving offshore. They're getting bigger. One megawatt's not enough. It now has to be 10. 100 meters is not big enough. It now is going approaching 300 meters. That's an inflection point in terms of how you construct those, how you service and maintain those. Lastly, we're looking for Enerpac fit. As again, as you saw in the video, we do things that are hard to do.
We're looking for things that are heavy, they're dangerous, and we feel we can help serve those safely and efficiency. These are the factors that drove our decision around the vertical markets. Now, just to step back for a moment in terms of those macro trends that Paul spoke to. No small part of our decision was looking at the over $200 billion that's been committed in the U.S. alone, as well as other parts of the world around things such as infrastructure, rail, and wind. This played a very large portion of our decision to focus on infrastructure, wind, rail, and industrial MRO. MRO being maintenance, repair, and operations, those maintenance shops in the manufacturing facilities, both in a plant or out in the field around the world. Now infrastructure, I would characterize really as any public works.
You'll hear me talk more about bridge, but really it could be any public works. It is predominantly bridge building, bridge maintenance, et cetera. Very large addressable market, and we see growth in this space of mid-single digits to high single digits. What we like about it is not only is the investment there, but there is an aging infrastructure where something needs to be done to fix that, and we have a whole range of tools to serve it. Wind. The world is looking for renewable energy, but also I would underscore the world is looking for energy security, and wind is a way to bring that into your own borders. We're seeing major investment there, both from public funds as well as private investment to drive wind. Rail, a global network, moving people and goods around the world.
A highly efficient way to move people and goods, but it's intense usage. It needs a lot of maintenance, and we see an opportunity there to support it with our tools, and we see sustainability there because it is fundamentally a greener way of moving goods and people. Then lastly, industrial MRO. Once again, maintenance, repair, and operation. This is every maintenance shop inside of a plant, the range of tools that they use, the products they use to keep those plants running, the stuff that's inside those four walls. It really is the legacy of Enerpac. We have a very strong brand there, but we see a couple of things going on.
One is we see a very strong brand name in Enerpac, a lot of trust, but we see a real change in the profile of the buyer in that space, and I'll talk about that in a moment. Let me talk about bridge or infrastructure. In this case, looking across the whole life cycle of that bridge, from its original construction to maintenance to the decommissioning of that product. There is opportunities for Enerpac, and we have products today that can serve that. Just as an example, I'll talk about bridge construction. Now, here's a trend that affects both bridge, but really a lot of these vertical markets. That trend is people want things done faster, naturally. We don't want the interruption.
We no longer have the patience for them to carefully build that pier, bring out that bridge piece by piece, and put it together while we have to do a detour for the next six months. In fact, it's faster and really cheaper to build sections of that bridge off-site or near-site and bring them into place. Well, when you do that, now you have a very, very heavy object that you have to move into place, and we have a solution for that. We have something called a strand jack, actually a product that you saw in the video that Enerpac has pioneered. Now, a strand jack is taking two hydraulic cylinders called hollow cylinders, so the product goes through it. Piece by piece, it's pulling up a strand, kind of like a wire cable, 70 tons.
We make one up to 1,000 tons for that strand jack. It's used for lifting. What you can also do is take that same strand jack, turn it horizontal, and do something we call bridge launching. The horizontal strand jack attaches to that bridge section, pulls it into place from the abutment to the pier, allows you to secure it and go back and grab the next piece, significantly removing or reducing the amount of time it takes to build that bridge. Maintenance. Maintenance is a tremendous part of the bridge industry because it's obviously getting heavy use. Every bridge you see or most every bridge you see is gonna have something called a bridge bearing.
If you look online and see a picture, I see them as I drive along the highway, you can't help but go, "Oh, there's another one." A bridge bearing is, for you know, lack of a better description, kind of a rubber disc that sits under each portion of that bridge. Helps offset vibration and then allows for the expansion and contraction due to the weather. Over time, that naturally breaks down. You need to lift it up and move it. You need to lift it up very carefully. You don't want to crack that bridge. For that, we have something called a high-tonnage cylinder. High tonnage to us is something that lifts over 100 tons. We can put that on our EVO pump. Our EVO pump is a synchronous pump with a great deal of precision that can lift very carefully.
It almost doesn't lift it just releases the load on the bridge. It's a, we call it a pancake cylinder, flat cylinder, just barely lifting that. Allows you to take out that bridge bearing, put in the new one, and put it down again synchronously with this EVO pump. Why do we like it? Well, we get, again, we see the growth here, we see the aging infrastructure, but mostly what I like about it is there's just intensive demands for this, and that's where our products and our engineering support play very well. How are we gonna win? What are we doing differently? We wanna be in the conversation at the beginning of the process. These are long, large projects.
We wanna be there from the very beginning with the engineers, talking about our solutions, helping share how we can help them do that safely and efficiently. In order to do that, we're going to be substantially expanding our internal team with industry experts to be there with the engineering firm, to be there with the construction firm. That's not enough. We're also gonna be backing it up with that engineering support. As Paul mentioned, we have application specialists, engineers that help you use our products to solve a problem. You may remember a number of years ago, the Bay Bridge in San Francisco was not rebuilt. It was actually a brand-new bridge built next to the old one. Took several years for those of you who had to do the detour around that.
When it was done, you had to take down the old one, but this was quite a challenge. It's more than 100 feet over the water. It has to be brought down very, very carefully so as not to disturb. You can't just blow it up. You can't you know, disturb the water life or necessarily the bridge next to it. An engineering firm came to us and said, "Can you help us figure this out?" Well, we have something called a Jack-Up System, and it's kind of in that last picture on there. A Jack-Up System is a hydraulic system that lifts a box at a time, lifts it up just high enough. You put another box underneath it, locks it in place, lift it up again. Our 750-ton Jack-Up System can go up 100 feet.
That's pretty high to hold a bridge section on it. We work with this engineering firm to not only put that on a barge that's floating on the water, but to raise it up, and our engineering specialists help them figure out how to secure that load to manage the side load, to manage the sway, so they could go up, grab a 280-foot section of that bridge, lower it back down very carefully, and admittedly, quite slowly, and then take it apart off-site, disassemble it, and go back and get the next section and help decommission that bridge. Those two things, the engineering support to solve that problem, but also, again, being part of that conversation at the beginning. Let me talk about wind. Wind is not so much a life cycle.
What I consider is, it's the value chain. Wind is about that OEM design, building it in the first place, the construction installation, and then the ongoing maintenance that's required, if not specified by regulatory agencies when you have a wind tower. Now, with OEM, once again, if we can be with them early on with the engineers, we can help identify how we can do this faster, simpler, cheaper. Construction and installation is a key area of focus for us. When you talk about construction, installation, it's really about the lift, the level, and the fixation. When they're out in the field, they need to lift it. We have a product called a Molly Yoke.
A Molly Yoke will hang under the chain, hangs from a crane, and can lift up all the different components with just one tool, lift up all the different components that have to go at the top of that tower. That's the nose cone, that's the gearbox, that's the turbine, that's the blades that have to go on there, all with one tool. They don't have to switch them out. Makes it go a lot faster. When they have to level, as you're building those tower sections, you're obviously putting a lot of weight, and you have to do it very carefully, keep it straight up and down. Well, the cylinders, the small cylinders in front of you, the cylinders you see in the hallway, our cylinders go up to 1,000 tons if necessary, and they, again, can be used to synchronously lift and keep that tower level.
Then lastly, the part that I find really the most fascinating is the fixation, tying this all together. An average wind tower has 3,000 bolts in a wind tower, 40 different sizes, approximately, probably 18 critical junctures that you would focus on. These are not bolts that you're gonna do at home with your Craftsman ratchet set. These are bolts that have to be tightened to approximately 20,000 foot-pounds of pressure. When I talk about things moving to offshore, when you go offshore, they get bigger, and that means the bolt gets bigger, approaching 2 inches in diameter. It means the nut gets bigger. The only way you're gonna tighten that down is with hydraulics, and we have something that can solve that. What we like about this, of course, is that growth, that move towards sustainable energy.
What I really like is this is truly a white space. It may seem like wind tower, and certainly it's been around for a long time, but the modern wind power today is constantly changing, and we see an opportunity to be there with them and help develop new solutions. How are we gonna go after that? Once again, we need to get in there early, be working with those OEMs, define for them how our bolting tools can solve their problems. But the other area that we're really putting a lot of focus on is new product development. Let me go to that maintenance part to give you an idea of what we're trying to do. Every wind tower out there needs to be maintained once a year. That's the typical spec. It varies by where you are in the world.
Once a year, somebody needs to go out and check those bolts, make sure it's all working because it's been under a lot of force, obviously a lot of rotation, vibration. They do something called a 10 and 10. They test 10% of the bolts to 10% of its spec. If it's good within the 10%, you write it down, all good. If it's not, then you kind of go to the next stage of maintenance, et cetera. Well, why is that relevant? Well, this is a service provider. It's not the OEM. It's not even the person who built it. It's usually a third-party company. They're out there. They're 100 meters in the air, up in the tower, testing these. They're writing down on paper, pen and paper, bolt number two to this particular tension.
They go on, and they go do another 50 of these towers. In a year or two, that person may no longer be with that service company. Those pieces of paper, Lord knows where they ended up. That service company itself may have lost the contract as it got changed over to somebody else. Our smart bolting system that Art will talk about a little bit is a way that we can not only help test it to the proper tension but also record it and put that data in the cloud and use it for both ongoing maintenance, identifying possible upcoming maintenance needs or problems, but also feedback the data to the OEM so they can improve their design. The NPD is a key part of how we see ourselves winning. Rail. Significant opportunity to expand in rail.
The way I think about rail is serving the full breadth of rail. In a little bit, Paul's gonna talk about one of the things that we're doing is as a company even, we are global, but we find we do pockets of solutions. I would say in the U.S., our team here has been mostly focused on the railroad track, and we have great solutions there. Whereas in Europe, my colleagues do a tremendous job with the rolling stock, the locomotives and cars. Even internally, we're getting better at spreading our knowledge there. We can focus on the rail cars, the locomotives, and the track. What I like about this space is it gets a lot of use. These tracks have a lot of heavy equipment going over them.
It's fundamentally a lower carbon footprint, about one-twentieth of an overland diesel truck, but it needs maintenance. A good example of a solution that we have is called a level crossing or a diamond crossing system. A diamond crossing is where two tracks or two or more might come together. By definition, it's getting a lot of traffic, so that's beating down that ballast, that rock you see underneath the ties. It's pretty critical it stays level because as tracks cross, of course, there's openings, and that gives you a high risk for derailment. It has to be regularly maintained. The traditional way you would do this is you do something called a curfew.
You'd shut down that rail line for a day or two, get out there with some hand pumps and literally the hand pumps we have out here and cylinders and kind of lift up that track, remove the old ballast, put new stuff in, maybe fix a few ties that are rotted out and lower it down. There goes two days. Well, you all know the name of the game in rail is asset utilization. Absolutely critical. Now our product goes into a solution called a diamond lifting system. Now in this case, anywhere from four to eight 50-ton cylinders are used, put underneath the rail, tied again into a synchronous pump, a split flow pump, so it can be operated just by one pump, can be operated by just one person and lift that rail for that maintenance.
Now why is that interesting or relevant? Well, the track doesn't weigh 50 tons. It's heavy, but it doesn't weigh 50 tons. But you know what does? The locomotive and the rail cars that can continue to go over that track while they're doing the maintenance. Without interruption, this diamond lifting systems allows you to repair that track in the course of a day with minimal to no interruption to the flow of traffic. How are we gonna serve this? I call it bespoke solutions, 'cause I didn't wanna say custom, 'cause you think then custom is for each individual person, their own thing. Bespoke to me means solutions that are designed around the rail industry, because their needs are rather particular. First off, they want products that can be used in the field. They don't wanna bring everything back. They can't bring the track back.
They want products like our rail puller, which you saw in the video, which is pulling two tracks together, so they can be welded to repair it. They want battery-powered pumps or gas-powered pumps, so they can do it out in the field and not bring product back. We see significant opportunity here for new product development to serve our customer. What we also see with our commercial team is a chance to work more broadly with a range of distributors and service providers, more than we have in the past to grow our share. MRO, maintenance, repair, and operations. Again, really legacy of Enerpac. Our brand is well known in this space. It's such an enormous space worldwide. There's a real opportunity here to help people find our products.
Maintenance, repair, and operations for us is kinda having the tagline is the right tool for the right job, but the way you should think about it is push, pull, or lift. That's what our products do push, pull, or lift. This product that you guys would see and out here is this little guy here, this guy can lift 5 tons. My colleague insists I tell you that's five elephants. This little thing can lift 5 tons, and we go up to, well, in our MRO space, we would characterize this going up to about 30 tons. We have the hand pumps that can do it. They're very easy to use. But what's happening? There's been a real change in the buyer and the user in this space.
20 years ago, you would've walked into a maintenance facility and the team in that maintenance shop would've been, well, probably 15 or 20 folks, and the average tenure probably would've been around 20 years. They knew the product inside and out. They knew how that old boiler over there worked. Then you would've wandered over to the procurement office, and it would've been a team of 20 people in the procurement office, each one of them with a very narrow set of commodities they're responsible for buying. That's not how it is anymore. It might be five people in the maintenance shop, and the average tenure is probably closer to five years. It's not 20 buyers, it's probably two. So what have you lost? You've lost a little bit of that knowledge set.
You know you need to fix something, but you don't know exactly what product it is. I'll be honest, our catalog's about 1 inch thick, with SKU rationalization, we're gonna go a little bit thinner. Nevertheless, we have a lot of products. Not just ours, everybody that's out there. We're focusing on, in this particular space, we're focusing on streamlining the buying journey, making it easier to find and select our product. We're gonna do that through digital, which gives you some search tools, allows us to meet the customer where they wanna be met, so they can quickly go in and say, "I need... You know, the boss said, 'Go get me a bearing puller, and of this size.' And he said, 'Enerpac.' I can go find it and see what the different sizes are.
I can see the videos that'll show me how to use it." What we're also looking at in this space and where we feel we can win is by bundling our solutions, almost back to that previous picture where it's not just the pump and the cylinder, it's the gauges, the hoses. We see an opportunity to focus on micro verticals where we can package together our solutions and design them around the specific need. Once again, making it easier for that maintenance person who doesn't have the years of experience they used to have or that buyer make their buying decision.
In total, to summarize, the way we see ourselves raising the bar in our overall commercial growth and by focusing on these key verticals is by focusing on product development, new product solutions, the go-to-market investments, so we're getting right to the people that need this product and we can support them. Marketing strategy, largely digital, but get the word out about where our product is. Then of course, as always, operational effectiveness to make it easier to use our products or to order from us. Let me take it a step further and move into the next part of this, and it kind of piggybacks off that MRO. I wanna be clear, though, in MRO, where I talked about digital, which is crucial, I wanna talk about a much broader digital transformation. Today, we have enerpac.com. We have a number of different sites.
We sell online. We do e-commerce with our existing site and are looking at others. To me, the way I think about e-commerce really is that digital ecosystem. It's meeting the customer where they want to be met. It's being with them early in their buying journey. We want to acquire them. We want to be sure that they know where we are and what we have. We want to engage them. Some of these products are simple. It's a hand pump and a cylinder. Some of them are not simple. They're very complex because they do very, very intensive things, and we have a way to engage them, provide the support they need. Then lastly, it's sustaining that customer relationship. Our brand, our reputation didn't happen overnight. It came through a lot of work to be around for 100 years.
We plan to be around for another 100 years, so it's the sustaining of that. What can we do on an ongoing basis to provide value? Now, customer acquisition in this place starts with having the right platforms, and we kinda had the reverse challenge of some companies. I had too many, probably about 20, from all the different years of different maybe companies that made this up. It's focusing our digital efforts across three platforms. First and foremost is enerpac.com, where you can find not only the product, you can buy the product, but also more importantly, you can find the information you need and the support you need for that.
It's hydratight.com, which is our services business, services and rental, and bringing that online for our customers so they can see what inventory we have if they want to place a rental or they can explore the services that we provide. Then lastly, Enerpac Warehouse. As Paul highlighted, we're backed up by a really strong team of distributors that hold our product, and we wanna be sure that we are a low cost of transaction partner to them. Our Enerpac Warehouse is a very active site for us. It's not just your own sites anymore. It's also the social media. YouTube is a very big part of it. We get a lot of traffic on our YouTube channel for the training videos around our product, and we continue to invest in that, and we'll do a lot more in the future. It's LinkedIn.
LinkedIn is a fantastic way to show projects that are out there. Our customers put out their own stories on LinkedIn and tag us, and it's a great way to show here's what we can do for you. Starting with the right platforms, though, you have to do targeted outreach. Organic search is not enough. You wanna be ready for organic search. You wanna have your site scored very highly by Google, so they might bring you people, but really, you have to pay, and you have to bring eyeballs to your site. We're doing a lot more with targeted outreach. It's not just buying a banner ad and hope people see it. It's about buying the right keywords at the right hour of the day in the right zip code. It's about cross-marketing across various different digital platforms.
It's about having account-based marketing, where I could say, "I wanna go after this particular engineering firm or construction firm. I want the people there to see what I have so that my content is relevant." You partner that with advanced analytics. You can go do that. You can hire a firm to do it, but you also have to constantly be looking at this 'cause it's gotten a lot more expensive. We use the analytics to look at, are we getting the ROI? We do the A/B testing to see where the response is. We do the segmentation to be sure our message is designed around the user 'cause the truth is, the person who's buying a 5-ton 1-inch cylinder is very different from the person who's buying a rail puller. I've gotta be able to match my message to those different personas.
Then the last piece, and this is really the important underscore when I talk about digital. Digital does not replace our field sales force. It enhances our field sales force. Enerpac globally has a field sales force of territory managers, application specialists, engineers to support those end users with their needs. We wanna tie the digital portion of that customer acquisition, with that field sales force, and we tie in our data with our CRM so that we can get, once again, serve the customer where they wanna be served, meet them where they wanna be met. They wanna buy online, they buy online. They wanna buy through us, through our distribution, we can support that. An example of that is a campaign we did just over a year ago in Europe. This campaign, we call it pipeline maintenance.
We really call it a turnaround, is the term we use. A turnaround is at a refinery or a chemical plant, but mostly refinery, it's a seasonal shutdown. Depending on how big of a scope it is, it could be a week or a couple weeks, but it is intense 'cause every minute that is shut down is money lost for that plant, and everything has to be fixed, maintained. This is your opportunity. We knew that this was a chance to really show the full breadth of the Enerpac product, and so we designed a print and digital campaign that aggressively got the word out there of our range of solutions and products.
You can see, sort of in the small picture there, all the different spots where our tools play a role, from the bolting tools to the machining tools for cutting the pipe, for the lifting the pumps, et cetera. Pushed as heavily as print and digital, very big push and spend on web, email campaigns to a very targeted set of customers, both already in our database, but paid search there, organic social and targeted social to get the eyeballs on it. Supported by a field sales force, this generated such high-quality leads. We saw over 500% return on investment. We see this as a great example of how digital can enhance your existing team. We plan to do a great deal more of this. Let me go to the very last piece here. Not the last piece, pardon me.
Middle piece, the engage. Once again, they come to your site, but we all know, we're guilty of it, but we'll blame our children. We always like to say, "Well, my kid has a little, you know, sort of a short attention span." The truth is, all of us do, right? If it doesn't satisfy us right away, we click off of there. We wanna go see something else. We've got to keep investing so that when they come to our site and they see us, they see what they need to see. They see the maintenance manuals. Those are good. But it's even more than that. It's the safety products. It's the product selection. It's the training videos. It's the CAD drawings so that this can be designed into a solution. So we invest heavily in that portion of our website.
To be clear, it's not just a simple product selection guide, for example, where you might choose the size of that or and color of that refrigerator you want. It's a pretty tough engineering solution. Example is our bolting selector. This is used by field technicians trying to determine what torque they need to put on that bolt or what tension they need to put on it. It's being used by engineers to design that flange system for piping. Through the tool that we offer here, they're able to put in the size, the pressure rating, which code, what type of metal, how big the bolts are, and they can use it to determine the most safe but also efficient flange and bolting solution. They can use it for future reference or put that into the spec.
Just one example of where we're able to provide engineering support because we feel then that we're gonna be bookmarked, we're gonna be in their mind as a company to go back to for this support, and that's part of that engagement. Lastly, now I can say lastly, it's to sustain that customer relationship. This is gonna be a jumping off point to hand off to Art because I wanna stress this goes hand in hand. It's not just our webpage, but it's also the products that need to be digitally enabled. We started by looking at the market challenges. None of these will be a surprise to you. It's hard to find labor. The turnover is high, so the training requirements are pretty substantial. Margin pressures, supply chain challenges, and in our space, there's a lot of regulatory issues.
These are not simple things you just go fix on your own. A lot of regulatory factors driving that. We looked at it and said, "Well, what are the needs that we feel we can serve with our digital platform?" Well, productivity improvement, we can do that through the training that we have. We can do that through a way of showing them how to smart connect or, and Art will talk about how you can adjust the tool, help them avoid downtime. Quality information and tracking. You heard what I said about those wind towers. If you're the OEM, wouldn't you want to know which ones of your wind towers had passed the test repeatedly and make sure that that's the design that you're going to go sell when you wanna go talk to that next buyer of your wind tower?
Fleet management, you may have a range of tools. We can help you track the tools you have in your inventory to manage your assets better. The digital record keeping. You can track when you did the maintenance. We see a range of opportunities for Enerpac to serve that by expanding the products we may sell in there, opportunities for data monetization, some value-added services around calibration or programming upgrades to the pump. In total, that paints the story for you, and I'm gonna hand it off to Art here, who I think is gonna share with you how that then feeds into our product roadmap. That is how we're raising the bar with our digital transformation.
Thank you, Scott. Is this good? Okay. Thank you, everybody. As Scott mentioned, we are definitely raising the bar through a number of different areas. I'm Art Donaldson, VP of Engineering. I've had the pleasure of being with Enerpac for a little over six years now. In fact, it's my third investor conference, and it's great to be here again to talk about innovation and NPD. It's really great to see that, you know, we've actually put innovation as one of our four strategic pillars for growth, you know. It really is central to what we're gonna do going forward, and it's really great to listen to everybody else talk.
You know, when Scott talked about designing product for our new strategy for our new verticals, that's not nearly as simple as you think it is, and we're gonna talk about just, you know, how we do that today. For starters, we're always reinventing ourselves at Enerpac, especially in engineering. I'd like to say that, you know, we never really sit still. We're always evolving. We spent the last 18 months or so completely revamping the innovation process, and it kind of all started about, well, right after Paul got there, where we sat down with the fiscal year 2022 product plan, and we just went through it and said, "Is this an iteration, or is this an innovation? How impactful is this gonna be?"
We killed about half of the products day one, just sitting with Paul, because they were just iterations of line extensions and things like that. While they're meaningful, they're not as impactful as we wanted to do going forward. We wanted fewer, bigger launches that meant more and they were more impactful. Well, that sounds simple, but it's really almost a reinventing again, right? We had to reduce the time. Innovation is an important part of NPD, but NPD cycle's already long, so we had to do everything we could to accelerate that. I'm gonna talk about some new teams we put together and how we focus on the front end extensively. We did that by reducing the number of projects we were working on, so we could reallocate those resources.
Instead of going out and hiring a bunch of new people, we hired new people, but we refocused those heads. Safety and efficiency, we talk about that a lot, is key to everything we do, right? It's key to all our product and our solutions, but we are shifting more to a solutions instead of a product focus. If we look at these new verticals, we don't just wanna design new pumps or new cylinders. We wanna design new solutions that solve our customer's problem. As we mentioned, digital. You know, Scott mentioned digital. Paul mentioned digital. Digital is becoming more and more integral to everything we do. To that end, we've actually formed a digital products team, which I'll talk about even more in a minute. I always like to start with a little history.
You know, it's not that we can just all of a sudden do all this new stuff. For six years, we have been building the foundation to get to this point. We revamped the NPD process completely. We introduced project management to make sure that we're doing what we're supposed to do when we're supposed to do it. They are now fully integrated into everything we do. If you go back four or five years ago, we actually created the COEs, the Centers of Excellence, COEs, that were product-centric. We have pump COE, a lifting COE, and so forth and so on. Then we engaged early with supply chain and product and operations to assure that everybody was involved, right? As much collaboration as we could get.
As we evolve now with this new strategy, we don't believe we should really think about products in the same way. We should think about solutions, right? We're shifting to a vertical focus versus a product focus. We're actually changing the COE structure that we had before to a vertical focus structure and a functional structure where we're actually looking at complete solutions for these different industries we're going after. We'll still make pumps, we'll still make cylinders, we'll still make tools, but they won't be independent any longer. They'll be tools and solutions that work together to solve actual problems. The way we're doing that is that we're focusing more and more on the front end of the business, as Paul mentioned earlier. We've actually created what we consider to be a best-in-class discovery and VOC process and team, right?
We actually went out and hired people that specialize in knowing how people use equipment, right? They watch, they learn, they talk, they listen, and this is all done up front. Together with product management, our new discovery team goes out and really discovers what the customers need. We don't ask them what they want because that's different than what they really need. We actually go up in towers. We actually spend time on job sites. This discovery team then comes back and meets with another new team we have called our concept engineering team. This concept engineering team can literally create a mocked-up solution in a couple weeks, a working unit, and they take that working unit back out to the customer with the discovery team. Does this do what we want it to do?
Usually, it's almost, but not quite. They come back, and then another two weeks, they go out with another one. We do it as many times as we need to figure out, does this new solution actually do what the customer needs? Once we know that, our new advanced development team takes over, and they start to work on the technology we need. Because those concept units we took out in two weeks, we can't take those to market. They're just concept units. They just let the customer hold something, but it's real. It's a real tool. It's been 3D-printed, and it looks like it's real, but inside we've used existing components. Now the ATD team looks at everything we need to do to actually take that to production.
The great part here is that, at least from my perspective, is that this all happens pre-NPD activation. We haven't started a project yet because we don't know if we have a project. In fact, one of the best things that happens during this process is we actually kill ideas because they're not on mark, right? We've killed them in a three-month period instead of an 18-month NPD period, right? We're killing stuff early, and we're zeroing in on what people really need. Well, we've always had good collaboration between product management and engineering, but as we tie these new teams together, we've actually brought customers into this process. Customers are participating, and they're very happy to do it. In fact, they ask us back, "This is a great idea. Would you come back and tell us your next good idea?"
They're happy to see them come to market. Some examples of some of the stuff that we've already discovered from this process, and I think that Scott mentioned it earlier, is they want automated functions now. When they record, when they do torques and tensions and different things, they want them stored up into the cloud, automatically getting the operator out of the way. You'll see the picture there where the operator is no longer right next to the flange. He or she is away from the flange, pushing a button. The torque happens. It gets recorded automatically. That's our smart torque system under development right now. Ultra-lightweight. They tell us over and over again they don't want our big, heavy tools anymore. They want tools that are lighter and easier to use.
They want battery-powered tools. No surprise for any of us that go to Home Depot. We want battery-powered tools. Our customers and users are no different. They're climbing up on top of windmills. They're doing stuff with these tools that they don't want 80-pound tools anymore. Self-contained. We talked about safety. One of the ways we make things safer is we do away with the hoses. We make things self-contained and on purpose to make them safer. You know, as you look at all this, you know, how do we really accomplish some of these things? Now, I put these out at the product table, you know, during the break, but this is a traditional manifold. Goes in one of our pumps today, right? So there's nothing special about it. We've been making these forever.
It's a solid steel manifold, 700 bar, 10,000 PSI, and it goes in a pump. Well, they're heavy, and you'll see that when you pass them around. This is a new 3D-printed metal equivalent. This new valve manifold is 75% lighter, 50% cheaper, uses 31 fewer parts, and has about 32% or 35% less leak points than our old system had. When you pick this up out there, and this is one component, right? In one of our tools. Picture this in different, you know, more than one in a tool, and you can see how we can quickly make the tool lighter. Not only lighter, but cheaper. Another thing is this, our stuff tends to leak. Well, hydraulics leak. Ours not so much, but you know, hydraulics leak.
Every time you take a leak point out of the process, you make a more dependable tool. A 32% reduction in leak points is huge. Through this, we found a number of benefits, safety, reduced weight, better ergonomics, and a lower cost of ownership. I mentioned speed a little while ago. We have to do things faster than we've ever done them. If you go back again to the history lesson of before, when the product pump team would start developing a pump, they would take the marketing's requirements, and they would develop a pump specifically for those requirements. Which is what we wanna do because that's what our customers need. They would design everything, the pump elements, the motors, the drivers. They would design from the ground up.
We stopped that about three years ago, and we started to design components of suites of components that they use over and over again. Now when we go design a pump, we don't worry about the pump element. We don't worry about the motor or the drivers. All that stuff is used from what we've already pre-vetted and pre-approved and pre-certified. Now, the engineers get to focus on the solution. What does the customer need the pump to do, not how are we gonna pump the oil, right? We get that done much quicker. More importantly, we get economies of scale because at Enerpac, we don't make a lot of anything, right? We've got to figure out how we get the components to be a higher volume. By specifying certain key components, supply chain gets to focus on those solutions.
We quickly learned that our customers want the same thing. You know? Whenever you buy a pump today, it comes with a pendant. This is basically a pendant. But it's got a wire on it, and it tells the pump to go or stop and do things. But again, marketing would say, "We want that pendants to do this and this." We would design a pendant every time. At one time, we had 127 pendants in our portfolio. We were designing a new pump, and that new pump wanted nine new pendants. I said, "Okay, enough. Enough with the pendants," right? 'Cause we were hitting we had to go to 140 SKUs just for pendants. We developed a new program.
There's now five pendants for our entire product family, and they design the pump around the pendant. What's really nice about that, now we have less pendants, but if a customer damages a pendant, something runs over it or something, he or she can unplug it from another pump, plug it into this pump, and it's gonna work, right? They get the same thing. They get the economies of scale on their product. We do that with pendants. We do it with wireless ascender accessories. We do with parts, valves, different things. We're trying to make them interchangeable. This allows our customers to be much more flexible in the field. Digital products. Paul talked about digital. Scott talked about digital. You know, digital is where we are today.
I mean, we all know how important digital is to everything we do. I mean, people have digital stoves now that your phone tells you when it's been preheated. You know, there's so many things you can look at now. Your garage door is not closed. Oh, I forgot to close that, I can close it from here. Our customers want that same thing with digital products. About three years ago, we started this initiative, and everything in Internet of Things, or IoT, starts with a unique identification number. You have to have a unique identification number on everything. You've got cards in front of you that talk about our Enerpac Connect program. It all started with a QR code. We actually call it Data Matrix code.
Now everything we sell has a unique identification number on it. The giveaways you have a tag on it. You can download the app with this card if you'd like and actually scan it. You know, what this really brings to our customers is information at the touch of a button, right? Every time we ship something today, we ship a manual with it. That manual, where does it go? Does it stay with the product? No. It ends up in some trash can somewhere or in some job shop. It's not with the product. Now, a user can scan the smart tag and instantly get the catalog information, get the user information, the manual, safety warning, setup instructions.
In fact, if they need another one, they can buy one on their phone by scanning the code. There's a lot of interaction there. More importantly, this connected product strategy goes beyond just information, and we can actually make tools work differently together. Go back to the smart torque example, right? When you have a smart torque wrench and you scan that QR code, and then you scan the pump, you can say you're now a system. That works a certain way together. We have connected tools that will work together in certain ways. Safety is critical to everything we do. Now I'm gonna talk about safety more in a minute, but we're really bringing safety into this whole digital realm. Data acquisition, Scott was talking about that. Being able to store information in the cloud.
We do that today, you know, with our iDMS system. On a torque site, everything is stored, it can be accessed again. Now we're automating that through the smart torque system to where there isn't even physical interaction that it's automatically gonna be upgraded to the cloud. Enerpac Connect, we launched it in 2021 with the UIN. That's, you know, as you look at your giveaways, you can see the code on there, and it has its dedicated serial number. That was no minor task. You know, get all our different manufacturing locations, getting everybody to tag one of these things. It's not just tags, it's gotta be commissioned, right? You have to commission it so we know when and where it was made. If you scan these, you'll see when your cylinder was made and where it was made.
More importantly, once we do that, we know a lot of information about that product. We can actually track it cradle to grave as the system goes forward. We've introduced a couple new releases since we released it. The big new release coming out right now is coming out with two new pumps that we're releasing in a couple of months. They're both smart pumps, and they'll have intelligence on board, and we're releasing over-the-air updates with these two pumps. Why is that important? Today, if you have an electronic pump and you wanna change the firmware, you have to take it apart, you have to plug in a computer, and you download the new firmware. Nobody ever does it. You know, our service shops might do it, but nobody else ever does.
Now, you'll be able to scan that code quickly with your phone, double-check the firmware. You know, is it the most up to date? If it is, fine. If it isn't, you can update it over your phone down to the device and get the latest firmware. That's the first thing. The most important thing is if we came up with a new feature on that pump, we can also offer that feature for sale through the app and say, "Look, now this pump has a new smart feature. Would you like to buy it?" If they say yes, we can give them that feature, and they can download that new feature over the phone as well. We've got, you know, a recurring revenue possibility with this technology as well. Soon to come, things like digital service maintenance records.
When our service teams do change seals or do something, then we'll automatically track that, publish reports about torques and things like that. Over the, you know, onboard diagnostics, and then special apps for things like smart bolting. I mentioned safety. Safety has to be a key element in innovation, and it is at Enerpac Tool Group. We're working on a future system now. It's not available today, but it's in the works. Everything you see on this slide is coming, but it's not here today. Misuse of products is the number one incident we have in the field. It's not products not working right or quality of the products. It's just they just don't use them right. They didn't inspect them right. They didn't maintain them right.
We're working on a system that will offer a lot more features here. Safety inspection criteria, you scan that tag. Now, the phone will tell you, "Did you look at the relief valve? Did you make sure it's ready to go? Did you plumb it up right? Here's the plumbing instructions. If you're using this pump and this cylinder, here's the right way to hook it up." We're trying to help the users do things right. EnerSafe is a program that we'll be offering in the not too distant future that ties that all together, maybe even with their Enerpac Academy records. Is this person trained to operate this equipment? A foreman on a job site will have more information available to him or her.
In addition to that, we'll have new wireless solutions that will reduce risk, making sure that they're out of harm's way. Smart devices that monitor themselves. Is there too much side load on this cylinder? If there's too much side load on a cylinder, that's a problem. They didn't set it up right. They need to make sure that they look at that. The devices will be able to tell them that, and then self-contained autonomous tools. The entire safety, it's just kind of picturing a safer work site as we go forward. That's one of our key goals with this. We believe that we're raising the bar through innovation in many different ways.
It's just having this team up front that actually understands how the customers use our tools, how to make them better, and is involving that customer early and actually getting their information. Advanced technology development, we talked a little bit about that, but I didn't really mention that we don't develop technology as much anymore just for one solution. It used to be we developed technology for this tool or that tool. Now that ATD is a global function, ATD develops technology that we can use over again. Again, getting back to that speed element. We don't want to reinvent the wheel every time. We want to develop solutions and families of solutions. Safety. Enerpac Connect provides all kinds of future opportunities for us as we go forward. Keeping safety and efficiency key to everything we do.
A little bit different from what we talked about last. A couple of years ago, we were looking more at the product-centric solution. As we move now to this new holistic way to look at the new verticals, it really allows us to focus on a lot of different things that I think really do raise the bar. With that, we're taking a 10-minute break. You can grab some coffee. The products are out front in the very far lobby if you want to look at it. They'll also be available there all day. Thank you very much.
Okay, go ahead.
Hello? Hello?
Yeah, that's fine. Just, you know, speakers normally should be good.
Eins, zwei, drei. Eins, zwei, drei. Ja, a bit German.
Check one, two. Hey, hey. One, two. Check. Check one, two.
Well, good morning, everybody. Welcome back from the break. My name is James Gaskell. I'm the president of the Asia- Pacific region, based out of Singapore. I've been with Enerpac Tool Group since 2013, so a little over nine years now. It's great to be here today to talk to you about our expansion strategy and our plans to create shareholder value in APAC. I'd like to just start by providing a brief overview of the region. In FY 2022, the APAC region accounted for about 14% of revenues for the Enerpac Tool Group worldwide. We serve markets from China in the north all the way down to Australia and New Zealand in the southern part of the region.
If you look at where we have our locations in China, we have a manufacturing plant in Taicang, which is just a couple of hours outside of Shanghai. We also have our China commercial team based in Taicang. We have a sourcing office in Shanghai that supports our Taicang facility, but also our manufacturing locations in other parts of the world. We have product operation, distribution operations, and commercial teams based at locations in Japan, Korea, Singapore, serving the Southeast Asia region, and then also in Perth, Australia, serving Australia, Papua New Guinea and New Zealand. The largest part of the region in terms of the commercial focus and the market opportunity is Singapore and Australia.
We have about 250 employees across the region, including in the factory, supporting about 200 channel partners, with about 1,300 outlets. The way we go to market in APAC is predominantly through that channel as Enerpac. We also sell products as Enerpac direct to end users, specifically our heavy lifting technology products and our machining products. In Australia, we sell services and products direct to end users as Hydratight. We have a diverse customer base, and that really is reflective of the markets that we serve in the countries that we operate. APAC represents a strong opportunity for growth for Enerpac in APAC. We have had a shift in thinking from how we manage the region.
The region used to be managed on a country-by-country basis, which was a little bit more siloed, reporting at different times into different parts of the group. We now operate as a single team managing the region as one. That gives us the ability to leverage the resources we have in the region more effectively. It also gives us the ability to access resources more easily in other parts of the group. We serve a broad range of markets. These are the key vertical markets that we are focused on. They are power infrastructure, oil and gas, mining, industrial MRO, and rail. Outside of this, we sell products into marine and steel, for example, but these are the key markets that we're focused on to drive growth in APAC.
The fundamentals of these markets all support an agenda for growth in the region. How are we going to access that growth? The strategy in APAC that we've developed falls into four main areas. The first is to focus on vertical markets in a more targeted way where we're currently underserved. The second is to improve our commercial effectiveness across the region. This is both internally with our sales teams, but also how we work with our distributors and channel partners across the region. The third is around business simplification, and then finally, developing our second brand offering in a more purposeful way. What's common to all of these aspects of our strategy is raising the bar on execution and managing to our commitments.
If we start with the first of these elements of the vertical market growth, today we are a market leader in mining and in oil and gas, in particular in the region, but we are well established in the other markets that you see out here on the screen. However, we have room to grow more in these markets, and we will drive growth in these markets through improving our coverage commercially and how we focus on these vertical markets through using market intelligence and business information in a more purposeful way to direct that commercial resource onto specific opportunities. We're bringing new talent into the region in terms of industry specialists, and we've been redefining our offering as part of our global focus on vertical market strategy.
The markets that we are most excited about in terms of growing in APAC are infrastructure, wind as part of power, rail, and industrial MRO. I'll talk about industrial MRO as well in relation to our second brand. The second area of our strategy is improved commercial effectiveness. You've heard Paul talk about our ASCEND program, and Paul will be talking about that again later this morning. Our improved commercial effectiveness is really one of the cornerstones of the ASCEND program in APAC. This is really looking at how we get more out of our commercial operation today. It starts with improving our commercial footprint and coverage. We have been selectively adding new commercial talent in and upgrading some existing commercial roles.
We've in parts of the region redefined how our commercial teams are organized so that they line up more effectively with the customers that we serve, particularly in the areas of our how we manage our key accounts, our national distributors, and also the OEMs that we support in the region. The third element of our commercial effectiveness improvement strategy is around the continuous evolution of our distributor program, which is relatively new to the APAC region, and working more closely with our channel partners to help them develop and grow their businesses, using Enerpac resources, for example, the Enerpac Academy. We spent quite a lot of time over the last 12 months developing our go-to-market strategy for our HLT and our machining product lines.
We've developed network of specialist sales managers across the region, and we've made some selected investments in inventory to support our sales with these products in the region. Finally, in Australia, we are adding high-value niche services to our existing service business. This will enable us to get more revenue out of the existing projects that we operate on, and also will support diversification for our service business away from the core oil and gas market where we've been strong historically. The third element of our strategy in APAC is business simplification, and this really is the other half of our ASCEND transformation program in the APAC region. My colleague Markus Limberger or mein kollegen, Markus, if I got that right.
We'll talk in a few minutes about simplification and standardization across our business. This really is getting more efficiency out of our operations. It's enabling us to better manage our inventory, shorten our lead times, but ultimately improve our on-time delivery for products to our customers. As with all elements of our strategy, we have developed specific initiatives that we're executing on to drive this business simplification. Some of the aspects of this which are relevant to APAC include simplification and improved functionality from our Oracle ERP system. We are working on developing and standardizing more our sales and operational planning function across the region. Inventory management is a big part of this.
When we order inventory, where we store and locate inventory across the region, centralizing some lower volume but higher margin and significant product lines that we offer. Finally, looking within the four walls of our factory and our warehouses, and improving our warehouse management processes, standardizing those from receiving to shipping, and simplifying the product routings that we rely upon. The final element of our strategy relates to the development of our second brand capability within the region. Now, within the premium segment of the industrial tool markets, Enerpac is a clear market leader. Beneath this, there is a customer group that has a different requirement, you know, a different need.
They don't necessarily need or value the enhanced value proposition that Enerpac represents. They're more transactional in nature. They need products with fewer features, perhaps less design life. They don't need the technical support that they get from Enerpac. They don't need the after-sales support. We have an established base in this part of the market today. The market we estimate to be over $100 million of market size annually and growing, and we have a very small market share today. Our plan to grow market share in this customer segment is to develop a product range that lines up with what the customer requires. It will be narrower in scope. They will have fewer features with less support.
Reducing the cost for us to sell those products to the customers will enable us to maintain attractive margins on the sales into this mid-tier segment. We will develop a parallel channel for these products so that we reduce any risk of cannibalization to our core Enerpac sales. I'd like to just talk briefly about a project from fiscal 2022. This demonstrates our APAC strategy in action. West Gate project was a project that we were successful on in this most recent financial year just gone. This is a bridge construction in the city center or close to the city center of Melbourne, Australia. We identified this opportunity through our focus on the infrastructure market, and we were able to deploy some commercial resources to develop this opportunity.
Ultimately, we were successful because of the mix of product that we were able to offer into the project, meeting the customer's needs, both a blend of premium featured products and then mid-tier featured products. We were able to bring in from across the region and across the world our technical expertise and track record to establish credibility and grow that. Ultimately, this led us to our products being designed into each lifting point on the bridge. When it came to the commercials, we were ultimately successful. We made attractive margins from the product range that we sold into this despite being the highest bidder. This is a flagship project for us in APAC and track record that we look forward to building on in the years to come.
To summarize, we'll be raising the bar in the Asia Pacific region. We'll be successful by deploying that regional wide focus that I spoke about earlier. We'll be executing on our multifaceted growth strategy and capitalizing on the attractive industry trends that we see before us. Thank you for your time, and I'll hand back to Paul.
Great. Thank you, James. Really exciting stuff going on in the Asia Pac region. Enthralled to have James leading that for us. I wanna talk a little bit about ASCEND. When I joined Enerpac a little over a year ago, I knew there was substantial opportunity, just huge potential in this organization. As I mentioned, we spent about the first three months doing what I kinda call a deep dive, holistic review of the business. Following that, we identified so much opportunity that, you know, we structured it into a program and launched it formally as our ASCEND transformation program. I'm really excited where we are today with ASCEND. We're well on track. We've moved beyond design and well into implementation phase, and we're already starting to see the benefits and the results that it's yielding for us at Enerpac.
It is a transformative plan to help us power performance in this company, and there are three key elements. The first is accelerating organic growth with key go-to-market strategies that we can execute importantly here in the near term. We're already getting after those. The second is continuing to work on improving our operational excellence and our production efficiency. My colleague, Markus, is gonna talk in just a short minute here around some specific things we're doing in that area, but it's great to have Markus on the team leading that function for us globally. Also driving greater efficiency and productivity in our back office in SG&A, which still presents a huge opportunity for Enerpac. When I joined Enerpac in fiscal 2021, I knew that our SG&A levels were higher than we needed for the size company we are.
We made progress in getting after that in fiscal 2022, but we still have more opportunities ahead of us. ASCEND is much more than sort of a typical restructuring program. Why do I say that? For a number of reasons. First of all, there's an incredibly rigorous process that we're utilizing to run this program, right? We've got literally hundreds of initiatives now at our disposal built into our funnel across all functions and all regions of this company. We continue to frequently refresh that funnel and add new ideas, right? We are employing a full-time program management office approach to how we coordinate the program globally. We run weekly steering committee meetings with involvement from myself and other members of the senior leadership team who actively own these initiatives and are driving and focused on driving the results and making them sustainable.
These initiatives across the company are led by about 100 work stream leads and initiative owners, and importantly, they have meaningful incentives, real skin in the game, not just to do the right thing in their job and drive the improvement for Enerpac, but meaningful incentives for them to deliver the results and enjoy the rewards from that. We're utilizing a formal stage gate process. We start with ideas and we've got literally hundreds, if not thousands of those from the bottom up across the company. We've solicited and received ideas from folks on the shop floor all the way up, which is really exciting and energizing to see. We vet those ideas and we turn them into a business case, partnering with our colleagues in the finance organization. Once they're vetted, we build detailed plans.
We say, "Okay, this is an approved initiative," but it's only approved once we know how we're gonna make it happen. Who's gonna do it? Who's gonna be responsible? How will we know when we've achieved success? What are the milestones? What are the KPIs that we'll measure? Once we have that, we move into the implementation phase, and after that, we measure the impact and the sustainment of that impact. We're tracking all of this through a central repository, a single source of truth in the company, where we capture literally everything about the status of these initiatives, milestones, owners, dates, et cetera. Right? There's a really, really rigorous governance process about this, and we're making sure that when we say we did this action and we generated this impact, we know that to be true.
Now, at the heart of it, 80/20 is really central to our approach in ASCEND, and it's underpinning the journey here. 80/20 as a sort of principle and framework is actually relatively new for Enerpac, but Enerpac is just so well suited. Because of the complexity of our product line up, our channel, our supply chain, it's just an incredible opportunity for us to simplify the business, simplify what we do and how we do it, make it easier for us to serve our customers, for our customers to do business with us. Like any 80/20 journey, we started with the initial phases on data collection and analysis. We've now moved on to some of the process-related simplification segmentation, and we're actively embedding these ideas and principles in the business so that ultimately, it's a long-term way of operating the company and simplifying what we do.
I'm really excited about some of the benefits we're starting to see from this and how we think differently about how we run the business. Let me talk about each of the three key pillars. The first, organic growth go-to-market strategies. Just to give you a little bit more context or color around what we're doing. One of the areas we're focusing on is commercial effectiveness. How do we enhance our sales in terms of identifying leads and opportunities and converting them with better commercial effectiveness programs and utilizing our CRM systems? Where do we have opportunities to drive increased territory management or coverage where there may be gaps? James talked about that in Asia Pacific. We're getting after that in every region across the company. We're also utilizing 80/20 principles and frameworks about how we think about optimizing our channel.
Frankly, when I joined, we had a larger channel. It's smaller today, and that's purposeful because like anything, there's an 80 and there's a 20. There's always a tail. As we think about it, we have what we call 80 channel partners. These are the folks that are really helping us drive growth and really dedicated and committed to being a partner with Enerpac. But we're actively working on, where it makes sense, serving differently or potentially reducing what we call 20 distributors who aren't necessarily positioned to help us grow, right? We're applying 80/20 principles in our strategic pricing as well, right? When I joined, we did a bunch of analysis. We started looking at how do our product margins line up for our 20 products sold to our 20 customers. These are products infrequently sold to relatively smaller customers.
In a normal world, you would expect that those margins should be accretive, right? If they want that product and they don't buy it very frequently, they should be willing to pay for it. That was not the case here. We've taken strategic pricing actions to make sure that is the case. Importantly, it's not a one-hit wonder. We've built that into our pricing discipline and our processes going forward. We're also looking at selective innovation, and one example of that is what James talked about in second brand and serving the mid-tier segment of the market, where we have, we believe, really interesting opportunities, particularly in developing regions like Asia-Pacific. Second big area for us is lean and our approach to operational excellence. Really focused around simplifying the business, but also getting after strategic sourcing.
You know, like most of our competitors and peers, as much as I would like to think that our supply chain colleagues have been working on strategic sourcing initiatives over the last couple of years, the reality is they've been chasing parts. That's just the situation of where we are in the world and some of the challenges that we face in terms of supply chain and logistics. That also presents a huge opportunity for us to get after strategic sourcing. Today, when we look back on fiscal 2022, we literally buy multiple tens of thousands of components from multiple thousands of suppliers. It's huge complexity in our business, but it presents a massive opportunity for us to consolidate, drive more negotiation, partner with key suppliers, create more volume opportunities for them, and obviously drive simplification in our business. Markus and his team are driving that.
We're also looking, and Scott referenced this, at, you know, where it makes sense, SKU rationalization. We're fortunate we have the breadth and depth of the product catalog we do, but it is extensive. It's tens of thousands of SKUs when you think about all the different features and customization you can do, and it's too complex. Our customers don't need all that, right? We are actively working on rationalizing that. Now, importantly, we do not believe here in the near term that creates or would create any revenue drag because we still have ample opportunities for substitutes to meet customers' needs with other products and other configurations. Finally, we're actively looking at our overall footprint. I talked about that earlier. To some degree, it's a source of strength, but it's definitely underutilized. We know that.
We're not utilizing fully all the capacity we have in all of our facilities around the world, and we're doing the analysis now to say, where are there opportunities to consolidate? We're actively looking at that as part of ASCEND. Finally, optimizing SG&A. I said when I joined it was too high for where we are, and we did make progress. We actually, on an adjusted basis, we achieved close to 300 basis points improvement on our SG&A spend from fiscal 2021- 2022, but we have more opportunities. This isn't about necessarily stopping things, but it is about doing things differently and in a more standardized fashion, and utilizing tools and processes and automation and systems to help us.
You know, we are actively looking at how do we move more sort of traditional transactional processes to shared service centers, often in lower cost regions where we can get the job done effectively and even better than we do it in a more standardized fashion than today. We're looking at where we can improve our sales force efficiency. We've done a lot of work on what we call spans and layers analysis, activity analysis to understand how can we create more time for our sales team to be in front of the customer and not behind their desk doing administrative work, right? That's where they create value for the customer and for Enerpac and our shareholders. We're actively working on reducing our legal entities.
You know, Enerpac has been built over the years, partly through a lot of acquisitions, which has been great, but it creates a lot of complexity. We have literally dozens of legal entities around the world, well over 100 actually, and it's just a massive opportunity for us to simplify, and we're getting after that. Like any program, there'll be more near-term benefits, mid and long term. Some of what we're doing in ASCEND, we're starting to see benefits already. Things like sales force effectiveness, our SKU rationalization, our strategic pricing program, and our commercial effectiveness. We expect we'll see benefits here in the first half of fiscal 2023. Other things will be longer term towards the end of the program, fiscal 2024, et cetera.
That would be things like legal entity rationalization and footprint rationalization, things that just take more time to implement, and we need to be, you know, extremely thoughtful about how we do that. ASCEND overall, we believe, will have a really powerful impact on our performance. When we launched the program, we said this number, and we still believe it to be true. We are on track to deliver an incremental $40 million-$50 million of adjusted EBITDA as we exit fiscal 2024 and built into our fiscal 2025 plan. That's a meaningful number considering that we finished fiscal 2022 with adjusted EBITDA of $83 million. We expect of that $40 million-$50 million, we'll deliver $12 million-$18 million as we laid out in our fiscal 2023 guidance for this year, and an additional $15 million-$25 million in fiscal 2024.
Now importantly, ASCEND is not just a cost-cutting program. When I started my remarks about this, I said it's a lot more than a restructuring program, and it is, right? Yes, we have cost-focused initiatives. We have areas where we're driving efficiency and productivity improvements. In fact, that's about 50%-60% of the program. Importantly, 40%-50% is tied towards sales growth. The vast majority of that are things that we have in our control. Yes, to some degree, they'll be partly dependent on market conditions, but they're things where we're actively working to drive share gains. The program has some costs associated with it. We think it's still a great return for our shareholders.
When we launched the program, and as we sit here today, we still believe that number to be between $60 million-$65 million of one-time cost to implement ASCEND. Of that, we expect $10 million-$15 million to be used for restructuring costs, and we said that in our Q4 earnings call. We saw about $3 million of that already expensed in fiscal 2022, and the remainder of the distribution you see here. Beyond restructuring, the remainder of the investments are things like capital equipment, IT improvements, helping us support our footprint rationalization, whether it's lease terminations, or moves, or engineering support to make this happen. We do have third-party support fees as part of the overall program, helping us implement it.
As I mentioned, we do have a small incentive program, but meaningful for folks who are actively involved in leading and driving these initiatives. We do expect the majority of these costs to be actual cash, not just expense. You can see the timeline for how we expect that to lay out roughly. I'd like to turn it over to Markus. Markus Limberger is the newest member of our executive leadership team. Markus joined our company in September of this year as EVP of Operations. He joins us from Danaher, really coming with an exceptional background in lean and operations and productivity improvement. Markus is responsible for leading all of Enerpac's manufacturing, distribution, and procurement globally. Of course, he will be playing a key role as we move forward on implementing many aspects of the ASCEND program. Markus.
By the way, Photoshop is a great tool. I love it. We discussed to test your sense of humor, having my presentation in German. But finally, we decided to do it in English, but with a strong German dialect. Apologies in advance. As you can see, obviously, I'm really thrilled and happy to be here and to be part of the Enerpac leadership team as a new role as a global operations leader, as this gives me opportunity to detect and develop all the local and regional things we have developed over the recent years and turn it into a more global approach and roll it out over all Enerpac facilities and factories.
This is both for manufacturing as well as for supply chain management, which is now under one roof in the new organization. Over the past couple of months during my immersion, I have met really a lot of very skilled, highly passionate and committed associates all over Enerpac. I've also seen a lot of, I would say, opportunities to improve our overall lean footprint and increase our overall operations efficiency. What are we doing? Based on a SWOT analysis, we have developed, I would say, a very simple global operation strategy based on three major pillars. It's a vertical lean dimension, and I will come back to all the three of these pillars. Horizontal lean effort we will spend and of course, complexity reduction coming with process simplification. Vertical lean literally starts on the shop floor.
As an example, recently we have introduced a performance measurement tool, a digital performance measurement tool, not only in CNC manufacturing, this is very common, but also in assembly and in our warehouses to really have a better opportunity to allocate resources and increase and improve our overall efficiency in operations. What's next? We will start having inventory management or to be more precise, inventory turn management right on the shop floor. We make inventory visible to see what is needed and what is maybe not needed, and how we can improve that. Paint it red, make it ugly. That's what we will do on the shop floor in the factories to really get our inventory turn improved. Horizontal lean efforts simply starts with sharing best practices all over Enerpac, and there is a lot of these.
For example, the recent investments we have made in automation in our manufacturing sites. In one site, we will roll that out to all the other Enerpac factories all over the world to overall increase the utilization of our machining stuff, right? I would say the major and the big topic in this horizontal development is that the team together is now building a global operations footprint that better leverage the internal competencies and what we have, where are we good in our key technologies, with external capabilities and external opportunities and cost benefits and cost advantages, obviously, to really support the make or buy decisions better than we are doing right at the moment. Last but not least, complexity reduction.
Paul already mentioned it starts with the SKU rationalization. That's very obvious. It continues with an enhanced vertical integration of our suppliers. We ask our suppliers to do more, to do a higher integrated sub-assembly, to provide our factories that can then focus on the final assembly part. This needs a lot of effort, so we spend a lot of time and energy in doing that. We invite our suppliers to be part and always along our vertical strategies we have heard before from Scott and my other colleagues. Finally, I'm about to say we are raising the bar internally in our factories as well as externally for our supply chain partners all over the world. I'm pretty sure our CFO is happy to hear that. Tony, right?
Yes.
Thank you, Markus. Hi, everyone. I'm Tony Colucci. I'm the CFO here at Enerpac, and I'm glad to be here to present the financial section. Just a bit of background on me before we get started. I've been at Enerpac since late May, and before then, I spent four years at private equity-sponsored portfolio companies as their CFO, industrial manufacturing. Before that, I spent 12 years at Honeywell International, various CFO roles, various businesses and business models. Happy to be here. I joined Enerpac to be part of this new leadership team and really contribute to the growth and value creation journey that we're on.
You know, I can say that in the last five months that I've been here, I've seen significant change and improvement and really look forward to working with our overall team to continue that trend. With that, let me start with recapping our fiscal 2022 key financial results. You know, as you can see, we really did have strong performance across the board. Core sales growth of 11%, driven by pricing and product volume growth. We improved adjusted EBITDA margins to 14.5%, all leading to solid cash flow generation of $44 million. As we previously mentioned, we have a low net debt leverage ratio of 0.9x and strong liquidity. We were also able to repurchase 3.8 million shares against our share repurchase program.
You know, as we exited fiscal year 2022, strong performance and I also think great momentum. This is really a solid foundation for further growth and financial optimization. We do have a durable business model. You can see here the financial trends that we have. As Paul previously mentioned, coming out strong out of the COVID downturn, where we managed decrementals during that period. Since then, we're able to improve our gross margins by 180 basis points. We also improved our operating profit margin and our adjusted EBITDA margin in the last two years as well, including a record high 20% adjusted EBITDA margin in our Q4 fiscal 2022.
You know, I would say this is solid recent financial improvement, and we're confident that that'll continue as we further implement our ASCEND transformation program and our strategic initiatives here as well, which we'll discuss further in the following slides. From a fiscal year 2023 perspective, we are confirming our full year outlook, including core sales growth of 3%-6%, adjusted EBITDA of $113 million-$123 million, including $12 million-$18 million of ASCEND benefits, which would be in the range of 20%-21% adjusted EBITDA as well. Generating free cash flow of $50 million-$65 million, which does include cash costs to achieve our ASCEND initiatives within the year.
Just to reiterate, this assumes no broad-based global recession and assumes foreign currency rates, as stated in our September guidance as well. Just to touch upon our Q1, we are seeing solid demand here in Q1, and from a Q1 quarter to date perspective is on track with our internal projections with our seasonal volumes. Again, just as a reminder, our first half tends to be seasonally lower than our second half. Okay, from a path to profitable growth. These long-term financial targets are really the results of all of the initiatives and game plans that you heard Paul, Scott, Art, and James previously discuss.
You know, that includes robust 6%-7% organic revenue CAGR over the next four years, achieving greater than 25% adjusted EBITDA in FY 2026, including achieving 25% adjusted EBITDA in our fiscal 2025, all leading to solid cash generation and free cash flow conversion greater than 100% towards the tail end of our outlook as we will have some incremental cash outlays in our fiscal 2023 and 2024. You know, in addition to our organic growth, we also have opportunity for further growth with our strong pipeline from M&A, which we'll discuss further in a moment. You know, we believe these are strong financial targets, and we really are confident in our ability to execute against our game plans to achieve these results.
I'll discuss and reiterate what our game plans actually are to achieve these results here in just a moment. Leading into margin expansion levers, and you can see the trajectory that we're expecting in achieving greater than 1,000 basis point improvement from our FY 2022 baseline. Here again, this is driven by the initiatives and game plans that were previously mentioned. Just to reiterate and really starting with our ASCEND growth initiatives, including strategic pricing, robust commercial excellence, and channel optimization, just to name a few. Not only will that drive above-market sales growth, but will also be a significant contributor to our margin expansion story. From an ASCEND EBITDA initiative perspective, including operations, supply chain, and SG&A. Here again, that will be a key driver for margin expansion as well.
Some examples there include implementing automation within our manufacturing facilities, engaging in strategic partnerships with some of our key vendors, and implementing centers of excellence within our back office and SG&A. From a strategic initiative perspective and again we've talked about these before, but just to really reiterate these as well, really focusing in on our four market verticals of rail, wind, industrial infrastructure and industrial MRO. Not only do we believe that those key verticals will have an outsized market growth, but we also believe we have the right to win, to play and win in those key verticals, especially based on the new approaches that we're taking that Scott previously discussed. Digital transformation, our multipronged approach of attracting and retaining new customers as well, that Scott also mentioned.
Innovation, as Art was discussing, you know, really revamping our new product development cycle and engaging in more voice of the customer along with our IoT and Enerpac Connect strategies as well that we're really excited about. APAC expansion, as James talked about with some examples that he had with our second brand strategy and really simplifying that business to drive growth within that region. We are now on this journey of in executing against these initiatives, and again, we're confident in our ability to do so. From a cash generation perspective and capital allocation, we've had strong historical free cash flow generation and associated free cash flow conversion.
We've been able to achieve positive free cash flow and free cash flow conversion greater than 100% here coming out of the COVID downturn. From a historical capital deployment perspective, we did have a debt repayment coming out of our EC&S divestiture. You know, we're fortunate to be able to use that excess cash to pay down our debt entering the COVID downturn, so that was fortunate. We also deployed our capital in M&A, dividends, and share repurchases. We also deployed our capital directly back into the business. We will continue to look to have this balanced capital allocation approach going forward as well.
Moving to leverage and liquidity, and you know, as we've previously discussed, we do have a historical low net debt leverage ratio, including the 0.9x that we exited FY 2022. We continue to target 1.5x-2.5x leverage ratio, excluding acquisitions. We also recently entered into a new credit facility that provided us $600 million worth of liquidity. This includes a $200 million term loan and $400 million revolver. In addition, that facility allows for, with lender approval, an additional $300 million acquisition accordion as well for further leverage and liquidity, should we need it.
All of this plus the cash on hand really provides us with with strong liquidity and ample capital to redeploy, which we'll discuss further in a moment. From a value creation journey, again, just to reiterate, you know, strong 6%-7% revenue CAGR driven by both our ASCEND initiatives and our strategic initiatives. Significant margin expansion driven by that sales growth, but also by our ASCEND EBITDA initiatives. All that then leading to solid cash generation and free cash flow conversion, which is also driven by working capital optimization. These compounding levers really provide for that ample capital for us to deploy, which we'll discuss next. You know, as we've been mentioning, we really do strive for a balanced capital approach.
You know, our priority is to reinvest back into the business where we believe we have the highest rate of return. This includes organic growth. It includes operational efficiencies and overall financial optimization. We also do have the capability and capacity for M&A opportunities, which we'll discuss further in just a moment. Finally, you know, we also have and will continue to evaluate dividends and share repurchases for further shareholder return options as well. The key message here is that we have and we will continue to grow and deploy our capital in a balanced fashion for further growth of the company. Moving to M&A. You know, we do have a disciplined framework that we adhere to, whereby we screen, complete due diligence, acquire, and integrate in a very robust and consistent fashion.
We also use consistent financial criteria, and we target companies that have a proven growth track record and strong growth margins. Specifically, we look to acquire companies that are accretive to growth, have accretive EBITDA margin within two years. In year three, cash ROIC above WACC. From an M&A criteria perspective, you know, here again, we really do focus on implementing the elements that we've discussed here today. That includes, again, you know, being really focused in on our key vertical markets, but also being influenced by our mission of making complex and often hazardous jobs possible safely and efficiently. Then also implementing our strategic pillars of hard-to-do, targeting market leadership, and simplified processes.
Just to provide some examples of, you know, acquisition focus that we would have, could be product tuck-ins where, you know, we would close any portfolio or technology gaps. We would focus in on companies that help us enhance our vertical markets or any underserved geographies. Yet we would also evaluate opportunities and really expand our aperture to focus in on becoming a, more of a, an overall solutions provider as well. You know, here again, we believe that we have the capability, capacity, and the financial resources to complete successful acquisitions. In closing this section, you know, we do have a robust recurring cash generation model, one that's driven by our strong sales and our solid game plan to achieve margin expansion.
All of that then creates capital, ample capital for us to deploy in a very balanced fashion. We are confident in our ability to raise the bar in achieving our FY 2026 targets of greater than 25% adjusted EBITDA margins, 6%-7% organic revenue CAGR, and greater than 100% free cash flow conversion. We're confident in our ability to do that because of our bottoms-up initiatives, because of our robust execution game plan, and because of our overall focused approach. With that, I will turn it back over to Paul for closing remarks.
Okay, great. Thanks, Tony. Really exciting where we're headed on this journey and the results that we expect to deliver. In closing, as you can hopefully tell from the conversation we've had today, we've got a new team with really new, fresh perspectives and who are absolutely committed to our mission, our values, and the long-term targets that we're setting here today. We're broadening our aperture as a company, right? We're thinking beyond just the traditional tool lens and thinking about how we can become a better solution provider to our customers. With the benefits of our ASCEND transformation program, coupled with the results that we expect to achieve through our focused growth strategy, we at Enerpac are raising the bar. I just wanna leave you with this final slide. We've got a new team. We've got a new mission.
We've got a new plan. We've got new goals we're absolutely committed to. In summary and in closing, to bring it all together, we're a premier industrial solutions provider. We've got a defined, organic, focused growth strategy that we've taken you through today. We're actively underway on our ASCEND transformation program, which is already yielding results and which has many other initiatives that we can bring to the fore. We enjoy a very strong balance sheet with a disciplined approach that we're taking to capital allocation. We've got this incredible new leadership team that we've built, that you've met, many of which you've met today, who are absolutely committed to achieving our long-term targets. With that, we'll take a short five-minute break, and then we'll move forward with Q&A. Thank you very much.
You're going. All right. Should we get going?
All right, our first question. As it relates to the strategy that you laid out today, how is it different than in the past or specifically from the strategy presented in November of 2019?
Sure. Well, thanks for the question. I think in one word, focus. You know, I think for us, as you could tell today, we've got, you know, we got a lot of things we could go do, and I think we've really been purposeful around picking the ones that we think we would be the most impactful for the company and we have the best chance of achieving. You know, we've picked these four key buckets of growth that we talked about, right? We've got our ASCEND transformation underway. In each of the areas, we've got focus overall, and in each of these areas, we've made active choices around focus. Importantly, as a leadership team, we've decided not only what we will do, but what we won't do. I think that's probably a key differentiator.
Number one is focus. I'd say number two is it's a really bottoms-up plan, right? I mean, we've been building this for the better part of a year while we're running the train and executing on our plans and trying to grow the business and improve our margins. Behind this is just an incredible amount of detail. You know, you're seeing a top-line view today, but I think what I'm really most proud and excited about is the level of detail that we have behind this, because each one of these initiatives, again, we've got owners, milestones, KPIs, dates behind it. We're tracking them just like we track our business on a daily, weekly, monthly basis.
I think the level of focus and the level of bottoms-up detail and the rigor is really substantial, and that's why it gives me and the rest of the leadership team high confidence in our ability to be successful in executing and delivering the results of our program here.
Thank you, Paul. Second one coming in. With the focus on the four verticals that you called out today compared to the 10 that you serve, what does that mean for the others?
I'm gonna hand that to Scott.
Thanks, Bobbi. Yeah. I think the operative word there is the verticals that we're gonna focus on is where we're gonna put the differential investment, drive additional team members and marketing funds toward it. Nothing in there said that we're backing away or de-emphasizing any particular verticals. We're rather fond of all of them. They just have different needs. This is really about where do you put that incremental focus and energy and where do you then just support and maintain with some of the other verticals that we have.
Thank you, Scott. Could you quantify how much of each of the growth pillars drives the 6%-7% long-term growth?
Yeah, maybe I'll start, and then I'll hand it over to Tony. I mean, we've not broken it out. Now, I mean, internally, of course, we've got detailed plans and targets. We've not shared that today externally. I think suffice it to say, they're all meaningful elements of the 6%-7%. You know, and of course, there are volume pieces in there. There's pricing in there as well. I would say from a pricing perspective, by the way, just make a comment about that. I mean, we did really get after pricing in fiscal 2022, and I think we had a lot of latent opportunities. In the second half, you know, we managed to achieve price-cost benefit between Q3 and Q4, north of $8 million.
Some of that was strategic pricing, other tactical pricing, inflationary pricing that we took, and we'll continue to evaluate that. Part of that's built into the go-forward plan. I would say all the pieces that you've seen today on our growth strategy, they're meaningful contributors to that overall 6%-7% top line. Tony, I don't know if you would wanna add any more.
I think you covered it, but just to, you know, lay it out. I mean, you've got the ASCEND growth initiatives from a commercial perspective, and then the strategic pricing initiatives that are in there as well, in addition to our strategic initiatives that we have. You've got market growth as a component of that. I mean, I think it's between the ASCEND and strategic initiatives. It's the majority of where that growth is coming from, is what I would say.
Thank you both, Paul and Tony. Next question is, I understand there are a number of factors to increase EBITDA margin from 15%-25%, but which ones do you see as the most important?
I think I'll start and then maybe Markus can weigh in on some of the operational perspective that he sees. Look, I think there's meaningful opportunities actually across the board. I mean, certainly there's a volume component Tony laid out and getting real volume leverage, and that clearly drives some benefit. You know, importantly for us, and perhaps differentiating from what we would have said in prior, you know, strategies.
Are baked already into the design. This is where our engineers are working much closer together to get from the very beginning. The design we need to fulfill the customer's or to even exceed the customer's expectation, but not having, let's say, the golden Eiffel Tower in terms of design.
Yeah. The only other thing I would add to that is I think still relatively land of opportunity on what we call value, VA/VE or essentially value engineering. I mean, if you look at a lot of our products, they've been around many of them for quite a while. They're still, you know, very rugged and do the job, but we haven't taken a fresh lens at, you know, what is the customer willing to pay for and what do they really need in terms of features, functionality, and performance. As we apply a value engineering or VA/VE lens to it, there's significant opportunities to continue to offer the same, if not better, feature functionality performance at a lower overall product cost.
It's a huge opportunity for these two to partner together, and we see that in meaningful ways in our portfolio of initiatives.
Thank you. This one relates to the APAC region. Is Enerpac product too premium for the APAC region?
No, it's absolutely not. I mean, we have a diverse customer base in APAC, as I was talking about earlier. Many of those customers value the premium offering that Enerpac brings to the market. You know, our customers are global operators, global service companies, international mining companies, and they value the premium product quality and product safety that's designed into our products.
Thank you. Moving on to ASCEND. Could you give some color on the buckets for the cost savings within the ASCEND strategy driving the long-term margin improvement?
Sure. If you recall on that slide, we said that, you know, roughly 50%-60% of the EBITDA benefit in ASCEND we expect to come from the cost side of things. I think we laid that out on the slide as well. We do think that's about roughly half related to COGS improvement and half related to overhead. We see meaningful opportunities from a cost standpoint, both in terms of operations and in back office. Again, we're getting after those. Now, some of those will be in the nearer term where we can make more immediate impact. Some will be more towards the end of the program. I think the nice part about having the funnel that we do in ASCEND and refreshing it is it's really broad-based, right?
The fact that we have literally hundreds of initiatives means that we're not dependent on any single initiative or a handful of initiatives that have to deliver for us to really hit our commitments there. We fully expect that some may fall short. We won't be able to execute them for a variety of reasons on time or to the ability that we or to the level that we thought we would for whatever reason. The benefit is that we have other initiatives we can then pull forward. We're really trying to mitigate and manage risk.
By the way, I would reference that because I didn't mention it specifically in that slide, but as we go through that stage gate process on evaluating ASCEND initiatives and turning them from ideas to vetted business cases to plans, we actually use a very rigorous process for evaluating overall risk profile of these initiatives as we go through it. Anyway, I think the point is we've got such a portfolio of rich initiatives. There's a lot to draw on, and it's pretty broad-based between different aspects of growth and the different buckets of cost in our company.
Okay. Also related to ASCEND, can you break out the 50%-60% of the $40 million-$50 million EBITDA improvement associated with 80/20 lean and plant consolidation and shared services as a percentage or dollar?
Right. Wow, okay. That's a mouthful. Say that three times fast. Look, I think it's. It's not that straightforward. I mean, the reality is that a lot of our initiatives are multifaceted. You know, there are aspects of any given initiative that rely not just on 80/20 as an example, but 80/20 is an enabler, right? You know, it's hard to ascribe a value and say, "These are the 20 initiatives," or, "These are the other aspects." The beauty of this program is we've built it cross-functionally, and we've built it based on these kind of levers that underpin it. You know, again, we're not reliant on we have to be experts at 80/20 immediately for us to be successful. It's one key enabler, but not the only one.
I, again, I think that I would highlight that we're it's muscle we're building, right? 80/20 or other aspects or a lot of what Markus has talked about in our operational excellence journey, we're early in the journey. We have plenty of upside, but we're building the capability and the muscle, and we're kind of fixing the plane while we fly, and that's the nice part of this journey.
Thank you. Maybe we'll try to give Paul a bit of a break. A question. How does Enerpac Connect improve your ability to integrate large acquisitions?
You wanna talk about that?
That's kind of a strange one. Well, as we look at large acquisitions, I mean, it depends on how large, right? I mean, if it's a very large acquisition, they'll probably already have a connected strategy. I mean, I think overall, the framework for what, you know, the ecosystem, the framework we're putting in place for Enerpac Connect would carry over to any product we integrate. We've commissioned over 369,000 unique identification components already. So every one of our manufacturing facilities is online. When we commission a component, I mean, that's a unique commissioning. So adding more as we buy new companies can be relatively easy now that we've incorporated it into our process.
It will also give us instant field data on, you know, where those parts are going and how they're being used. You know, we don't always get that right away with acquisitions. We bring the product into the portfolio
We run it through our channel, but we don't always have as much information on where it's going. Enerpac Connect will allow us to know more about how the new product's being used.
Thank you, Art. With the level of internal resources and management bandwidth needed to enact ASCEND, can you execute and integrate significant M&A within the next 6-12 months, or should we assume that continued cadence of share repurchase during that timeframe?
Yeah, sure. It's a great question. Look, I think if we were sitting here six or 12 months ago, I probably would have had a different answer. I think as we sit here today, you know, I have confidence not only in our plan, but particularly in this management team. You know, we're well underway. There's a flywheel effect that's happening here. You know, frankly, we've created more capacity on this team by bringing in new members and creating new roles like Markus has, for example, but also deeper in the organization with new capability and new skill sets.
You know, I have high degree of confidence if and when we find those right opportunities, and we're actively working that through our M&A funnels, as Tony and I talked about in great detail, the reality is, I think we can certainly execute on our plan and do meaningful acquisitions. I think most importantly, we will remain absolutely disciplined in our M&A approach, and we have to have strong conviction that not only does it have great strategic fit for Enerpac, but also that it enables us to be a more full solution provider for our customers to meet that mission of making complex, often hazardous jobs possible safely and efficiently, and that we can generate a great return for our shareholders in the process.
Thank you. Can you rank each of the four key markets you are focusing on by revenue and margin?
I don't know that we have that level of granularity to share today. Now, from a size perspective, if you recall and go back to those slides, we did size the overall market for them, right? Some of them are very large, like industrial MRO, right? Slightly lower growth, more GDP-oriented, but still present a huge opportunity for us, as Scott talked about. Some of them are smaller and more focused, but we're already actively participating. We have so much upside potential, like Scott talked about. So, I mean, the reality is, as we add up, you know, the initiatives from a revenue and a margin standpoint, again, I think it's generally relatively balanced is what I'd say. You know, there's meaningful opportunities in all of these. By the way, some of them will involve more direct and key account customer relationships.
Not that we don't wanna partner with our channel partners, but some of these customers, especially OEM customers, need more deep interaction with our folks on a daily basis for the technical expertise and the specification work. There is that aspect to it as well. I'd say, you know, all four of those vertical markets are pretty meaningful in terms of our growth strategy.
Thank you. Can you provide a concrete example of what an ASCEND initiative looks like?
Wow. Yeah. I mean, where do I start? I mean, there are so many. Look, I'll give you a great example on operations. We were together as an executive group at EPAC. It's our manufacturing and distribution center in Wisconsin just a month or two ago, and we were looking at a lot of the ASCEND initiatives that are underway there. One of them is things that we're doing to drive efficiency and productivity in our warehouse function. It's our largest single warehouse facility globally. Frankly, it's outdated, right? I mean, it's pretty manual processes when you look at it. It's clean and, you know, it looks functional, but it doesn't have the benefits of a lot of kind of modern-day aspects that you would expect to find.
We're actively investing to drive more automation, more IT-driven intelligence for pick and place, so that we don't have people who have to stop and think, "Where do I get that pallet? Where do I put this pallet?" That creates efficiencies in our warehouse operation. There's some capital investment to go do it, which we're happy to write the check for because we see a great return for that. By the way, these are ideas that came from our folks in the Columbus team on the shop floor who said, "I need access to be able to do this. Can I get the support?" We said, "Absolutely." Those, that's an example of a very practical initiative. It's a relatively, you know, small investment for us that has a good return. Again, that's one of several hundred that we're actively working on.
The owner for that is somebody who that is their job, is driving that activity every day in that warehouse. For that individual, it's just an incredible opportunity to help improve what they do, help make it better and easier for them and their team to do their job and serve our customer.
Thank you, Paul. The next one, how does Enerpac Connect help with inventory turns and manufacturing planning?
Markus?
Well, basically, inventory turns or let's say the inventory levels we define in our Kanban sizes and our Oracle system are basically on historical demands or historical consumptions. What I would say these new digital dimension means for us, we are more or less online. We immediately know where how many of our products are consumed, and we can immediately react and adjust our inventory levels as well as, I would say, our purchasing volumes and our manufacturing volumes. We have not gone through that, to be honest. We are at the beginning of this journey, but the more transparent we get and the more data we have, I'm deeply convinced the much better we can adjust our systems to avoid inventory.
The best inventory is the inventory I do not even have, right? This is where this initiative or this digital new dimension will help us to work on.
Thank you, Markus.
I think the only thing I would add is, you know, it's Enerpac Connect. It's evolving, right? I mean, picture if we can get it to the future state where we're actually tracking each component all the way through the life cycle. We know when it goes into our inventory, we scan it out of our inventory, we ask our distributors to scan it in. You know, if we can get this all the way through, not only do we know what we have, we know what our distributors have and where they have it.
What's more important, we know when they sell it, so that we can start the warranty cycle when they actually sell it, instead of having a cushioned warranty cycle where we say, "Okay, we're gonna warranty it for three years after it leaves the factory 'cause it's gonna sit on somebody else's shelf." That goes away once we know actually when they ship it. There's a lot of benefits to it that will evolve and emerge over time.
Thank you, Art.
Mm-hmm.
Where does Enerpac currently sit in its development of battery-powered hydraulic tools?
We're getting started. When you look at battery-powered tools, it's obviously our future. Our customers are telling that. I mean, our competitors are telling us that. We have two new battery-powered pumps that'll be released here shortly, a medium-sized pump and a small pump. We released a battery-powered cutter not too long ago. You'll see one of our older battery-powered pumps out on the floor, you know, here in the demonstration area. The ones that's coming out is the XC2 will replace that pump. There was, you know, a long start of people accepting battery-powered pumps. It's the exact opposite now. We released a large battery-powered pump, gosh, I think two years ago, and it instantly shot up to be one of our best sellers. A lot of energy is going into that.
We have our new battery now. We went with an Enerpac proprietary battery for a certain size because we couldn't get large enough batteries that other people were using. We'll have probably a combination as we go forward between Enerpac batteries and batteries that we get from other manufacturers, depending on what we need. Battery-powered tools basically make up probably 30%-40% of our roadmap right now as we go forward, and I see that growing and becoming even larger because it's the power density, right? It's how they're using our tools. Gasoline-powered pumps are a thing of the past. I mean, nobody wants gasoline-powered pumps anymore because of the pollution and the noise and everything else that goes with them. I mean, I think I answered that pretty much. It's growing fast.
Yeah. I think it's absolutely right. The other point I was gonna make, interestingly, I was with some of Art's team at some customer site visits a few months ago and gathering VOC, and interestingly, on the battery side of things, since we've now launched our Enerpac proprietary battery, it's kind of a win-win. It's a win for us 'cause we obviously, it's proprietary, we make nice margins. But actually, the customers prefer, interestingly, and this is where the power of, you know, VOC and customer insight comes in, 'cause a lot of competition does use industry standard batteries from other manufacturers, and you literally just go buy manufacturer X and you can go into a distributor. There's the convenience of buying that battery, but the problem is that battery is also the same battery that's used on somebody's home drill or other power tools at home.
What happens is often those batteries walk. It's nice to have the access to the battery, but they don't always stay on your site. Having a proprietary battery that doesn't necessarily connect to somebody's home power tool is actually a preferred outcome for most of our customers. It really was a win-win solution.
Thank you, Paul. Can you talk about your price-cost outlook? On a different note, can you give us some color on your oil and gas outlook?
Yeah, I think, I mean, on the price cost side, as I mentioned, you know, in the second half of fiscal 2022 or our last fiscal year, you know, we did see nice benefit, right? I think it was about $8.5 million, if I recall correctly. You know, what we said is we'll continue to take appropriate pricing actions as we need to to at least cover our inflationary costs going forward. You know, that action continues. Again, we've got strategic pricing actions that we continue to explore as part of ASCEND and our strategic growth plans. I think what was part two, Bobbi, of the question?
Your oil and gas outlook.
Right. Oil and gas is a meaningful part of what we do. I think in any given year, it can be 25%-30%.
You know, as we sit here today, we continue to see relatively, you know, strong levels of demand profile from that market, certainly with oil prices where they are, but also I think in light of increasing energy demand and requirements and particularly what's going on in Europe, we do see, you know, a lot of customers trying to either bring online additional capacity, or from a service perspective, what we saw and we referenced on our Q3 and Q4 call was we saw some delays in service activity that we expected would come back here because you can only defer that maintenance so long to run those assets, and at some point, you need to take them offline for a period and do that maintenance work.
Because of that, I think we generally do have a pretty favorable outlook here on the oil and gas sector.
All right. We are about up on time here, but we'll take a few more from the line. In regards to growth in APAC, will this primarily be through organic or NPD initiatives or through inorganic opportunities?
You take it off.
I think the answer is it will be, you know, all of the above. We've got a clearly defined strategy to grow organically. I do expect and hope to make progress with inorganic growth initiatives as well. You know, we have businesses that we've identified in some cases at an early-stage dialogue with which may or, you know, may not mature into M&A opportunities. One thing I would say is that we will be looking at, you know, all of those opportunities through the laser focus lens of our new mission and our strategic pillars. They would need to align fully with our growth strategy. Otherwise, you know, we'll move on relatively quickly.
Yeah, certainly hope to make progress building the funnel on inorganic opportunities in the region.
Thank you, James. You mentioned dividends. Are you considering a recurring dividend or more of a discretionary special dividend cadence?
Yeah, I mean, as I mentioned, we're gonna continue to evaluate our capital deployment. I mean, right now, you know, we'll do that through the lens of the shareholder with any of the decisions that we make. You know, we have historically issued a small recurring dividend, is what I would say.
Yes. I think that's right. I mean, it's a relatively small annual dividend, and at this point in time, I don't think we see any reason to change that.
Thank you. As a wrap-up question for the day, Paul, if there's one takeaway that we should get from today, what should it be?
Wow. We've covered a lot. Look, I think if there's one takeaway, what I'd ask you to consider is just the fact we've got obviously a new team in place here who is absolutely 200% committed to our mission, our plan, and the targets, and with really strong conviction about our ability to be successful. I think for me, that would be the big takeaway. You know, if I could point to a second, I would just say we've got a really balanced portfolio of initiatives, right? We've got ASCEND underway. We've got our strategic growth initiatives. We're being highly focused and disciplined in what we do. We've got a great team to execute on it.
I remain really excited about what we got going on, about the future at Enerpac Tool Group, and I know with this team we're gonna be successful.
Thank you. For those questions that we didn't get to today, I will follow up separately. Thank you, everyone.
Well, thank you all for joining us. For those here in person, we'd welcome you for lunch and further conversation. Please have a look at some of the product display on hand. For those that joined virtually, thank you again for your interest in Enerpac Tool Group. Take care.