Financial Data and Key Metrics Changes - EnPro reported second quarter sales of $288.1 million, a 6% increase year-over-year, with adjusted EBITDA of $71.1 million, down 3.9% from the previous year [12][19] - Adjusted diluted earnings per share decreased to $2.3 from $2.8 last year, primarily due to factors affecting adjusted EBITDA performance [13] Business Line Data and Key Metrics Changes - Sealing Technologies sales increased by 1.9% to $187.5 million, driven by strength in aerospace and food and pharma markets, while adjusted segment EBITDA margin was 33.8%, down from 35.5% last year [14] - Advanced Surface Technologies (AST) saw a 14.5% increase in sales to $100.9 million, with adjusted segment EBITDA margin at 19.6%, down from 21.7% last year [15][16] Market Data and Key Metrics Changes - The company experienced strong performance in aerospace and food and pharma markets, while commercial vehicle OEM demand remained weak [6][19] - The overall semiconductor capital equipment spending was described as choppy, but there was growth in leading-edge precision cleaning solutions and optical coatings [15] Company Strategy and Development Direction - EnPro is focused on capturing opportunities in key markets such as aerospace, sustainable power generation, food and pharma, and compositional analysis, aiming for long-term profitable growth [7][10] - The company is implementing a multi-year strategy called EnPro 3.0, which emphasizes personal and profitable growth for employees [10][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying demand for their products, particularly in aerospace and food and pharma markets, while acknowledging challenges in commercial vehicle OEM demand [19][40] - The company raised its full-year 2025 guidance, expecting sales growth between 5-7% and adjusted EBITDA in the range of $270 million to $280 million [19] Other Important Information - The balance sheet remains strong, with net debt of $364 million and a net leverage ratio of 1.4 times trailing twelve-month adjusted EBITDA [17] - Free cash flow for the first half of 2025 was $52.8 million, up from $35.5 million last year, driven by strong operating performance and working capital management [18] Q&A Session Summary Question: What was the impact of FX transaction headwinds in Sealing? - Management indicated that the impact was $1.9 million due to the weakening of the U.S. dollar, affecting expenses in non-functional currency denominations [30][31] Question: What is the outlook for AST's incremental margins in the second half? - Management expects that the FX headwinds experienced in Q2 will not continue at the same magnitude, and AST should leverage well going forward as revenue from growth investments materializes [36] Question: What is driving the improved growth rate in Sealing for the second half? - Management highlighted new programs and customer wins, particularly in the OEM commercial truck sector, and a strong backlog as factors contributing to the improved outlook [39][40] Question: How is the M&A market looking? - Management remains active in the M&A space, focusing on growth nodes in key markets and evaluating opportunities that meet their strategic and financial criteria [54][55]

Financial Data and Key Metrics Changes - EnPro reported second quarter sales of $288.1 million, a 6% increase year-over-year, with adjusted EBITDA of $71.1 million, down 3.9% from the previous year [11][12] - Adjusted diluted earnings per share decreased to $2.3 from $2.8 last year, primarily due to factors affecting adjusted EBITDA performance [12] - Total company adjusted EBITDA margin was 24.7%, reflecting increased operating expenses and transactional foreign exchange headwinds [12] Business Line Data and Key Metrics Changes - Sealing Technologies sales increased by 1.9% to $187.5 million, driven by strength in aerospace and food and pharma markets, while facing challenges in commercial vehicle OEM demand [13] - Advanced Surface Technologies (AST) saw a 14.5% increase in sales to $100.9 million, with growth in precision cleaning solutions and optical coatings [14] - Adjusted segment EBITDA margin for Sealing Technologies was 33.8%, down from 35.5% last year, while AST's margin was 19.6%, down from 21.7% [13][15] Market Data and Key Metrics Changes - The company expects mid single-digit growth in Sealing Technologies for the year, with strong performance anticipated in aerospace and food and biopharma markets [19] - AST is projected to achieve high single to low double-digit sales growth year-over-year, driven by improved demand for semiconductor tools and precision cleaning solutions [20] Company Strategy and Development Direction - EnPro is focused on its "EnPro 3.0" strategy, which emphasizes personal and profitable growth, empowering employees to pursue individual development plans [9][22] - The company is investing in capacity expansions and strategic marketing to enhance its market reach and drive long-term profitable growth [6][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business and the ability to navigate macroeconomic challenges, with a strong outlook for the second half of 2025 [4][19] - The company raised its full-year 2025 guidance, expecting sales growth between 5% to 7%, adjusted EBITDA in the range of $270 million to $280 million, and adjusted diluted earnings per share of $7.6 to $8.1 [19] Other Important Information - The balance sheet remains strong, with net debt of $364 million and a net leverage ratio of 1.4 times trailing twelve-month adjusted EBITDA [17] - Free cash flow for the first half of 2025 was $52.8 million, up from $35.5 million last year, driven by strong operating performance and working capital management [18] Q&A Session Summary Question: Impact of FX transaction headwind in Sealing and nuclear timing - Management indicated that the nuclear performance was affected by timing issues between quarters, with strong underlying demand [27][28] - Transactional FX impacts were noted, particularly in AST, with significant effects from local expenses in non-functional currencies [29][30] Question: Incremental margins in AST and FX headwinds - Management expects FX headwinds to be less significant moving forward, with AST positioned to leverage growth investments for improved margins [35][36] Question: Drivers of improved growth rate in Sealing - New programs and customer wins, particularly in the OEM commercial truck sector, are contributing to the improved growth outlook [37][39] Question: AST growth expectations for the second half - Management highlighted ongoing investments and a healthy business environment, with expectations for continued growth in AST [42][44] Question: Success of compositional analysis post-acquisition - The compositional analysis business has exceeded growth expectations, with strong leadership and plans for capacity expansion [47][48] Question: M&A activity outlook - The company remains active in pursuing M&A opportunities, focusing on growth nodes in key markets [51][52]