EnPro (NPO) FY Conference Summary Company Overview - EnPro is a company with a focus on industrial solutions, particularly in sealing technologies and advanced surface technologies, with a workforce of approximately 3,400 employees [4][5] - The company has undergone significant transformation, particularly through its mPro initiatives, aimed at value creation and margin expansion [5][6] Key Initiatives and Growth Strategies - **mPro 3.0 Introduction**: EnPro has launched mPro 3.0, focusing on accelerating profitable growth for both employees and the company [5][7] - **Historical Performance**: The previous phase, mPro 2.0, resulted in a margin expansion of about 1,000 basis points and a market cap increase of approximately 2.5 times [6][7] - **Portfolio Optimization**: The company divested lower growth and lower margin businesses to invest in higher growth sectors, particularly in the semiconductor industry [6][8] Business Segments Sealing Technologies - Sealing technologies account for about two-thirds of EnPro's revenue, with a focus on critical safety functions across various industries [7][9] - The company expects mid-single-digit organic growth in this segment, driven by strong positions in aerospace, food and pharma, and commercial vehicles [9][10] - Key brands include Garlock, Stemco, and Technetix, which have established market positions and strong cash flow profiles [8][9] Advanced Surface Technologies (AST) - AST, primarily focused on the semiconductor industry, is expected to grow at high single digits to low double digits [9][10] - EnPro has developed a vertically integrated portfolio in AST, providing critical in-chamber tools and aftermarket services [8][21] - The company is positioned to capitalize on the shift towards onshoring semiconductor manufacturing in the U.S. [21][34] Market Exposure and Economic Resilience - EnPro has minimal direct exposure to tariffs, with about 70% of its supply chain based in North America [13][14] - The company has a strong aftermarket component, with two-thirds of its sealing business and one-third of AST being aftermarket, which tends to perform well during economic downturns [15][16] Capital Allocation and M&A Strategy - EnPro has approximately $1.5 billion available for strategic acquisitions, maintaining a conservative leverage ratio of around 2 to 2.5 times [10][53] - Recent acquisitions include Advanced Micro Instruments (AMI) to enter the test and measurement space, aligning with the company's strategic themes [50][51] - The company has a disciplined approach to capital allocation, focusing on both organic growth and M&A opportunities [52][54] Growth Drivers and Market Trends - EnPro is well-positioned in sustainable power generation, particularly in the nuclear sector, which constitutes about 7% of its overall portfolio [44][45] - The commercial aerospace segment has seen a 20% year-over-year growth, driven by strong demand for seals in fuel injection systems and temperature control [46][48] - The company is actively participating in the space exploration market, with content on every satellite launch in the U.S. [48] Conclusion - EnPro is focused on delivering strong returns through its mPro initiatives, maintaining a robust balance sheet, and capitalizing on growth opportunities in both sealing technologies and advanced surface technologies [57][58] - The company emphasizes the development of agile leaders to navigate various market conditions and ensure continued success [56][57]

Financial Performance - Net sales for the first three months of 2025 were $273.2 million, a 6.1% increase from $257.5 million in the same period of 2024[123]. - Net income for Q1 2025 was $24.5 million, compared to $12.5 million in Q1 2024, representing a 96% increase[123]. - Adjusted diluted earnings per share rose to $1.90 in Q1 2025 from $1.57 in Q1 2024, an increase of 21%[123]. - Adjusted EBITDA for Q1 2025 was $67.8 million, up from $58.4 million in Q1 2024, reflecting a 16% growth[179]. - For the three months ended March 31, 2025, net sales for Enpro Inc. and its Guarantor Subsidiaries were $190.4 million, with a gross profit of $71.9 million and a net income of $3.2 million[166]. - For the year ended December 31, 2024, net sales were $738.2 million, with a gross profit of $270.5 million and a net loss of $8.9 million[167]. Segment Performance - Sealing Technologies segment sales increased by 4.7% to $179.6 million in Q1 2025, driven by demand in aerospace and food and pharmaceuticals[128]. - Advanced Surface Technologies segment sales grew by 9.1% to $93.8 million in Q1 2025, supported by increased demand for optical coatings and aerospace applications[130]. - Adjusted Segment EBITDA for Sealing Technologies was $58.7 million in Q1 2025, a 10.8% increase from $53.0 million in Q1 2024[129]. - Adjusted Segment EBITDA for Advanced Surface Technologies increased by 18.5% to $20.5 million in Q1 2025, with a margin expansion to 21.9%[131]. Cash Flow and Investments - Operating activities generated $21.0 million in cash in Q1 2025, up from $6.3 million in Q1 2024, driven by increased revenue and improved profit margins[139]. - Investing activities used $9.4 million in cash in Q1 2025, significantly lower than $217.0 million in Q1 2024, primarily due to the prior year's acquisition of AMI[139]. - Financing activities used $13.3 million in cash in Q1 2025, including $6.6 million for dividends and $4.0 million for debt repayments[140]. Balance Sheet - As of March 31, 2025, total assets amounted to $1,854.8 million, with current assets of $307.5 million and non-current assets of $1,547.3 million[166]. - Total liabilities as of March 31, 2025, were $926.0 million, with current liabilities of $127.9 million and non-current liabilities of $798.1 million[166]. - Shareholders' equity at March 31, 2025, was $928.8 million, reflecting a significant increase from $757.6 million at December 31, 2024[168]. Tax and Foreign Operations - The effective tax rate for Q1 2025 was 24.3%, up from 12.6% in Q1 2024, primarily due to higher tax rates in foreign jurisdictions[134]. - The company repatriated $60.0 million during the first three months of 2025 from foreign subsidiaries[138]. Corporate Developments - Enpro acquired Advanced Micro Instruments, Inc. on January 29, 2024, enhancing its capabilities in application-specific analyzers and sensing technologies[122]. - A new share repurchase authorization of up to $50.0 million was approved in October 2024, replacing the previous authorization that had expired[159]. Risk Management - The company entered into cross-currency swap agreements with an aggregate notional amount of $100.0 million to manage foreign currency risk[183]. - The company has a weighted average interest rate of 3.5% on Euro-denominated debt related to the cross-currency swap agreements[183]. - The company does not hedge commodity risk with any market risk sensitive instruments[185]. - The company aims to pass along commodity price increases to customers to avoid profit margin erosion[185].

Financial Data and Key Metrics Changes - In Q1 2025, total sales reached $273.2 million, reflecting a 6% increase year-over-year, driven by strong performance in Sealing Technologies and Advanced Surface Technologies (AST) [11] - Adjusted EBITDA for the first quarter was $67.8 million, up over 16% compared to the prior year, with an adjusted EBITDA margin of 24.8%, expanding by 210 basis points year-over-year [12][19] - Adjusted diluted earnings per share increased by 21% to $1.9, supported by the factors driving adjusted EBITDA growth [13] Business Line Data and Key Metrics Changes - Sealing Technologies segment sales increased by 4.7% to $179.6 million, with adjusted segment EBITDA rising nearly 11% and a margin of 32.7% [13][14] - Advanced Surface Technologies saw a 9.1% increase in sales to nearly $94 million, with adjusted segment EBITDA up 18.5% and a margin of 21.9% [15][16] Market Data and Key Metrics Changes - The aerospace, general industrial, and food and pharma markets contributed to the growth in Sealing Technologies, while commercial vehicle OEM demand remained weak [6][14] - In the AST segment, double-digit growth was noted in Precision Cleaning Solutions and Optical Coatings and Filters, despite ongoing volatility in semiconductor capital equipment spending [8][15] Company Strategy and Development Direction - The company is focused on organic growth opportunities and capability expansions through acquisitions that meet strategic and financial criteria [7] - EnPro is positioned to leverage technological innovation and applied engineering expertise to gain market share, particularly in aerospace markets [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate economic uncertainties and emphasized the importance of agility and leadership development [5][10] - The guidance for 2025 remains unchanged, with expectations for sales growth in the low to mid-single-digit range and adjusted EBITDA between $262 million to $277 million [19][20] Other Important Information - The company amended its credit agreement to provide a revolving credit facility of up to $800 million, enhancing financial flexibility for strategic growth initiatives [17] - Free cash flow for Q1 was $11.6 million, with capital expenditures expected to be around $50 million for the year [18] Q&A Session Summary Question: Can you provide numbers regarding the minimal and manageable impact of tariffs? - Management indicated that most products are produced regionally, with minimal exposure to tariffs, particularly from imports [28][30] Question: Are there any end markets that are performing better or worse compared to 90 days ago? - Management feels equally positive about all markets, with commercial vehicle demand as expected and strong performance in aerospace and food and pharma [32][33] Question: What is the outlook for margin expansion in Sealing Technologies? - Margin expansion was primarily driven by favorable mix and strategic pricing initiatives, with strong demand in aftermarket and aerospace markets [56][58] Question: Any updates on the Arizona facility? - The facility is on track, with early revenue from testing and qualification expected to ramp up throughout the year [44][45] Question: Is M&A activity slowing down due to the current environment? - While M&A activity has slowed, the company remains focused on high-quality assets and is patient in its approach to acquisitions [50][51]

Core Viewpoint - Enpro (NPO) reported quarterly earnings of $1.90 per share, exceeding the Zacks Consensus Estimate of $1.57 per share, marking a 21.02% earnings surprise [1]. Financial Performance - The company achieved revenues of $273.2 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 5.16% and showing an increase from $257.5 million year-over-year [2]. - Over the last four quarters, Enpro has exceeded consensus EPS estimates three times and has topped consensus revenue estimates three times as well [2]. Stock Performance and Outlook - Enpro shares have declined approximately 9.7% since the beginning of the year, compared to a 3.9% decline in the S&P 500 [3]. - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates at $2.18 for the coming quarter and $7.38 for the current fiscal year [7]. Industry Context - The Technology Services industry, to which Enpro belongs, is currently ranked in the top 24% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8].

Financial Data and Key Metrics Changes - In Q1 2025, total sales reached $273.2 million, reflecting a 6% year-over-year increase driven by strong performance in Sealing Technologies and a 9.1% increase in Advanced Surface Technologies (AST) [10][11] - Adjusted EBITDA for the first quarter was $67.8 million, up over 16% compared to the prior year, with an adjusted EBITDA margin of 24.8%, expanding by 210 basis points year-over-year [10][11] - Adjusted diluted earnings per share increased by 21% to $1.9, supported by the factors driving adjusted EBITDA growth [11] Business Line Data and Key Metrics Changes - Sealing Technologies segment sales increased by 4.7% to $179.6 million, with adjusted segment EBITDA rising nearly 11% and a margin of 32.7% [11][13] - Advanced Surface Technologies saw sales increase by over 9% to nearly $94 million, with adjusted segment EBITDA up 18.5% and a margin of 21.9% [14][15] Market Data and Key Metrics Changes - The aerospace, general industrial, and food and pharma markets contributed to the growth in Sealing Technologies, while commercial vehicle OEM demand remained weak [5][11] - In the AST segment, double-digit growth was noted in Precision Cleaning Solutions and Optical Coatings and Filters, despite ongoing volatility in semiconductor capital equipment spending [14][15] Company Strategy and Development Direction - The company is focused on organic growth opportunities where it has technological differentiation and is pursuing acquisitions that meet its strategic and financial criteria [6][8] - The "EnPro 3.0" strategy aims to accelerate profitable growth and enhance market share, particularly in aerospace and adjacent markets [4][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate economic uncertainties and maintain strong performance, emphasizing agility and operational excellence [4][8] - The guidance for 2025 remains unchanged, with expectations for low to mid-single-digit sales growth and adjusted EBITDA between $262 million to $277 million [18][19] Other Important Information - The company amended its credit agreement to provide a revolving credit facility of up to $800 million, enhancing financial flexibility for growth initiatives [16][17] - Free cash flow for Q1 was $11.6 million, with capital expenditures expected to be around $50 million for the year [17] Q&A Session Summary Question: Can you provide numbers regarding the minimal impact of tariffs? - Management indicated that most products are produced regionally, with minimal exposure to tariffs, particularly in North America, where Canada and Mexico are exempt [25][27] Question: Are there any end markets showing significant changes compared to 90 days ago? - Management feels equally positive about all markets, with commercial vehicle demand as expected and strong performance in aerospace, food, and pharma [29][31] Question: Any updates on the Arizona facility? - The facility is on track, with early revenue from testing and qualification expected to ramp up throughout the year [41][42] Question: Is there any indication of distributor destocking? - Management has not observed any significant inventory build or destocking, maintaining a balanced supply chain [40] Question: What is the outlook for margin expansion in Sealing Technologies? - Margin expansion is primarily driven by favorable mix and strategic pricing initiatives, with strong demand in aftermarket and aerospace markets [51][53]

Financial Performance - Sales increased by 6.1%[11], gross profit increased by 11.3%[11]. - Adjusted EBITDA increased by 16.1% to $67.8 million[11]. - Adjusted diluted earnings per share increased by 21.0% to $1.90[11]. Segment Performance - Sealing Technologies sales increased by 4.7%[15], with adjusted segment EBITDA increasing by 10.8% to $58.7 million[15,18]. - Advanced Surface Technologies sales increased by 9.1%[20], with adjusted segment EBITDA increasing by 18.5%[20]. Debt and Cash Flow - Net debt decreased from $398 million to $388 million[23]. - Free cash flow for the quarter ended March 31, 2025, was $11.6 million, up from $(2.0) million last year[25]. 2025 Guidance - The company expects revenue growth in the low to mid-single digits[26]. - Adjusted EBITDA is projected to be between $262 million and $277 million[26]. - Adjusted diluted EPS is expected to be between $7.00 and $7.70[26].

Financial Performance - Sales for Q1 2025 were $273.2 million, an increase of 6.1% year-over-year, with organic sales growth of 6.0%[3] - GAAP net income rose to $24.5 million, a 96.0% increase from $12.5 million in the prior year, with diluted earnings per share at $1.15 compared to $0.59[4] - Adjusted EBITDA increased by 16.1% to $67.8 million, with an adjusted EBITDA margin of 24.8%, up 210 basis points from the previous year[3] - Adjusted net income for Q1 2025 was $40.3 million, a 21.8% increase year-over-year, with adjusted diluted earnings per share at $1.90, up 21.0%[7] - Net sales for Q1 2025 increased to $273.2 million, up 6.6% from $257.5 million in Q1 2024[26] - Gross profit rose to $118.2 million, representing a 11.9% increase compared to $106.2 million in the previous year[26] - Operating income improved significantly to $41.8 million, up 49.3% from $28.0 million in Q1 2024[26] - Basic earnings per share increased to $1.16, compared to $0.60 in the same quarter last year[26] - Adjusted EBITDA for Q1 2025 reached $67.8 million, up from $58.4 million in Q1 2024, indicating a 16.8% growth[38] - The company reported an adjusted diluted earnings per share of $1.90 for Q1 2025, compared to $1.57 in Q1 2024, marking a 20.9% increase[34] Segment Performance - The Sealing Technologies segment reported sales of $179.6 million, a 4.7% increase, while the Advanced Surface Technologies segment saw sales rise by 9.1% to $93.8 million[8][9] - Adjusted Segment EBITDA for Sealing Technologies was $58.7 million, up from $53.0 million, with a margin of 32.7%[30] - Advanced Surface Technologies reported Adjusted Segment EBITDA of $20.5 million, an increase from $17.3 million, with a margin of 21.9%[30] Cash Flow and Debt - Free cash flow for Q1 2025 was $11.6 million, a significant improvement from $(2.0) million in the prior year, driven by strong operating results[10] - Total debt at the end of Q1 2025 was $636.4 million, with cash and cash equivalents of $240.3 million[11] - Cash and cash equivalents at the end of Q1 2025 were $240.3 million, up from $236.3 million at the end of Q4 2024[28] - The company reported a net cash provided by operating activities of $21.0 million, significantly higher than $6.3 million in Q1 2024[27] Guidance and Future Outlook - The company maintains its full-year 2025 guidance, projecting revenue growth in the low to mid-single-digit range and adjusted EBITDA between $262 million and $277 million[14] - Order rates remain positive entering Q2 2025, with minimal expected impact from recently announced tariffs[2] Other Financial Metrics - The effective tax rate used for adjusted income tax expense was normalized at 25.0%[35] - Acquisition expenses decreased to $0.2 million in Q1 2025 from $3.3 million in Q1 2024[38] - Restructuring expenses were $0.6 million in Q1 2025, slightly down from $0.8 million in Q1 2024[38] - The company recorded foreign exchange losses of $0.4 million related to a divestiture in Q1 2025, compared to $0.5 million in Q1 2024[38] - Approximately 47% of the adjusted EBITDA in Q1 2025 was attributable to subsidiaries that do not guarantee the company's 5.75% Senior Notes due 2026[38]

Sales and Revenue - Total third-party sales for the year ended December 31, 2024, were $1,048.7 million, with the semiconductor market contributing 31.0% of total sales at $324.7 million[30]. - The Sealing Technologies segment generated approximately two-thirds of its total revenue from aftermarket or recurring revenue[33]. - The order backlog as of December 31, 2024, was valued at $240.6 million, an increase from $225.4 million at December 31, 2023, with $122.7 million related to Sealing Technologies and $117.9 million to Advanced Surface Technologies[54]. - Approximately 42% of Sealing Technologies segment sales in 2024 were delivered to customers outside the United States[41]. - Advanced Surface Technologies segment sales included approximately 45% delivered to customers outside the United States in 2024[49]. - The Sealing Technologies segment serves a variety of markets, including aerospace, oil and gas, and food and pharmaceutical, with general industrial being the largest at 18.7% of total sales[30]. - The Advanced Surface Technologies segment includes four operating businesses focused on high-growth markets, such as semiconductor manufacturing and life sciences[44]. Quality and Certification - As of December 31, 2024, 26 manufacturing and service facilities were ISO 9001 certified, ensuring high-quality standards[57]. - The company achieved third-party certification for three major manufacturing locations under ISO 45001, promoting continuous improvement in health and safety management[63]. Employee and Culture - The company employs approximately 3,500 employees, with 65% located in North America[60]. - In 2024, the company enhanced performance management processes, focusing on manager engagement and employee ownership, with training sessions conducted enterprise-wide[62]. - The company maintains a company-wide minimum wage of $17 per hour and offers a comprehensive benefits program, including a 401k plan with above-market company match[65]. - Employee retention rates are at or above market level, attributed to the company’s culture and focus on employee well-being[68]. Research and Development - Research and development efforts are focused on creating breakthrough products and solutions for demanding environments, particularly in semiconductor manufacturing[52]. Financial Obligations and Risk Management - As of December 31, 2024, the company had $291.4 million outstanding on the Amended Credit Agreement with a variable interest rate, affecting interest expense and cash flows[252]. - The company entered into a forward contract to hedge a €95 million exposure related to intercompany loans, expected to be resolved in 2025[253]. - The company’s fixed-rate debt obligations totaled $350.9 million as of December 31, 2024, with an average interest rate of 5.8%[251]. - The notional amount of foreign exchange contracts hedging foreign currency transactions was $103.7 million as of December 31, 2024[253]. Community Engagement - The company has contributed $2.25 million to the Enpro Foundation since 2020, with $1.1 million in donations to charitable organizations nominated by employees[69]. Health and Safety Initiatives - The company plans to apply an AI tool in 2025 to analyze work tasks and reduce ergonomic injuries, which are a top risk[64].

Investor Overview February-March 2025 February-March 2025 Investor Presentation 2 Enpro Inc. (NYSE: NPO) | Attractive Portfolio of High-Margin Businesses Company Overview Headquarters Charlotte, NC Principal Manufacturing Facilities 15 Global Employees ~3,500 Financial Overview Market-Cap1 $4.0B LTM Revenue3 $1.0B LTM Adj. EBITDA (Margin)2,3 $255M (24.3%) 2024 YTD Aftermarket Rev. % 54% Dividend Yield1 0.6% 2024 Revenue Contribution Sales by Segment Sales by Channel Sales by Geography Sales by Market Highly ...

Financial Data and Key Metrics Changes - EnPro Industries, Inc. reported approximately $255 million in adjusted EBITDA for 2024, up 7% year over year, with adjusted EBITDA margins of 24.3%, an increase of 180 basis points from the prior year [15][32] - Fourth-quarter sales reached $258.4 million, a 3.7% increase, with organic sales rising 1.2% [23] - Adjusted diluted earnings per share increased 32% to $1.57 compared to the prior year period [25] Business Line Data and Key Metrics Changes - Sealing Technologies segment sales were $163 million in Q4, an 11% increase from the prior year, with adjusted segment EBITDA margin expanding almost 500 basis points to 31% [25][26] - Advanced Surface Technologies (AST) sales decreased 6.4% year over year to $95.6 million, with adjusted segment EBITDA margin of 22.1%, flat year over year [27][28] Market Data and Key Metrics Changes - AST revenue ended the year down roughly 10% due to weakness in semiconductor capital equipment spending, although there was strength in solutions for leading-edge applications [14] - The company expects continued weakness in semiconductor capital equipment spending throughout 2025, impacting overall market growth [38] Company Strategy and Development Direction - EnPro 3.0% is the next phase of the company's value creation journey, focusing on profitable growth and operational improvements [16][19] - The company aims for mid to high single-digit top-line growth over the long term, with specific targets of mid-single-digit growth in sealing and high single-digit growth in AST [20][36] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating environment remains challenging, particularly in semiconductor capital equipment, but expressed confidence in the company's ability to navigate these challenges [10][48] - The company anticipates a choppy market in 2025 but expects to achieve growth through strategic investments and operational improvements [38][86] Other Important Information - The company generated $130 million in free cash flow in 2024 and maintained a strong balance sheet with a net leverage ratio of 1.6 times [32][34] - EnPro Industries, Inc. has committed to returning capital to shareholders, increasing the quarterly dividend to $0.31 per share [34] Q&A Session Summary Question: Semiconductor growth expectations - Management indicated that growth in AST is primarily driven by outgrowth and leading-edge applications, with expectations for a choppy market in 2025 [48][50] Question: AST sequential performance - Management expects some choppiness in the first half of 2025 but anticipates a stronger second half for AST [52][54] Question: Tariff risks and pricing actions - Management stated that most sourcing is done regionally, with minimal exposure to tariffs, and plans to implement pricing actions to mitigate any impacts [56][58] Question: AST margins and certification process - Management noted that despite higher costs associated with certification, favorable mix and strong volume contributed to improved margins in AST [66][70] Question: CapEx expectations - Management confirmed that higher CapEx in 2025 is due to projects being pushed from 2024, with confidence in executing these investments [73][76]