A hammer drill (10, 1010) comprising: a drive mechanism (14, 1014) including an electric motor and a transmission (26, 1026); a housing (30, 1030) enclosing at least a portion of the drive mechanism; a spindle (18, 1018) rotatable in response to receiving torque from the drive mechanism; a first ratchet (42, 1042) coupled for co-rotation with the spindle; a second ratchet (46, 1046) rotationally fixed to the housing; a hammer lockout mechanism (90, 90a, 1174) adjustable between a first mode and a second mode, the hammer lockout mechanism including a detent movable between a locking position and an unlocking position; a clutch (78, 1078) adjustable between a first state in which a torque output of the spindle is a predetermined maximum value, and a second state in which torque output of the spindle is limited to a value less than the predetermined maximum value; and a collar (74, 1074) rotatably coupled to the housing, characterised in that the collar (74, 1074) is movable between a first rotational position in which the hammer lockout mechanism is in the first mode and the clutch is in the first state, a second rotational position in which the hammer lockout mechanism is in the second mode and the clutch is in the first state, and a third rotational position in which the hammer lockout mechanism is in the second mode and the clutch is in the second state, wherein in the first mode the detent is moveable from the locking position to the unlocking position, such that the spindle is movable relative to the housing in response to contact with a workpiece, causing the first and second ratchets to engage, and wherein in the second mode the detent is prevented from moving from the locking position to the unlocking position, such that the spindle is blocked by the detent from moving relative to the housing in response to contact with a workpiece and a gap is maintained between the first and second ratchets. a drive mechanism (14, 1014) including an electric motor and a transmission (26, 1026); a housing (30, 1030) enclosing at least a portion of the drive mechanism; a spindle (18, 1018) rotatable in response to receiving torque from the drive mechanism; a first ratchet (42, 1042) coupled for co-rotation with the spindle; a second ratchet (46, 1046) rotationally fixed to the housing; a hammer lockout mechanism (90, 90a, 1174) adjustable between a first mode and a second mode, the hammer lockout mechanism including a detent movable between a locking position and an unlocking position; a clutch (78, 1078) adjustable between a first state in which a torque output of the spindle is a predetermined maximum value, and a second state in which torque output of the spindle is limited to a value less than the predetermined maximum value; and a collar (74, 1074) rotatably coupled to the housing, characterised in that the collar (74, 1074) is movable between a first rotational position in which the hammer lockout mechanism is in the first mode and the clutch is in the first state, a second rotational position in which the hammer lockout mechanism is in the second mode and the clutch is in the first state, and a third rotational position in which the hammer lockout mechanism is in the second mode and the clutch is in the second state, wherein in the first mode the detent is moveable from the locking position to the unlocking position, such that the spindle is movable relative to the housing in response to contact with a workpiece, causing the first and second ratchets to engage, and wherein in the second mode the detent is prevented from moving from the locking position to the unlocking position, such that the spindle is blocked by the detent from moving relative to the housing in response to contact with a workpiece and a gap is maintained between the first and second ratchets.