Second Quarter 2023 Highlights (All results reflect
comparisons to prior-year period, from continuing operations,
unless otherwise noted) (*Non-GAAP measure. See the attached
schedules for adjustments and reconciliations of historical
measures to GAAP numbers)
- Sales of $276.9 million essentially flat; organic sales up
0.4%
- Strong sales and earnings performance in Sealing Technologies
roughly offset weakness expected in Advanced Surface
Technologies
- GAAP loss from continuing operations attributable to EnPro
Industries, Inc. of $18.6 million compared to $26.1 million of
income last year, reflecting a pre-tax goodwill impairment charge
of $60.8 million related to Alluxa
- Adjusted EBITDA* down 11.9% to $64.9 million; adjusted EBITDA
margin* down 320 bps to 23.4%; higher share-price-related incentive
compensation expense and a currency-related benefit on foreign cash
last year combined for a $9 million negative impact
year-over-year
- GAAP diluted loss per share from continuing operations
attributable to EnPro Industries, Inc. of $0.89, compared to
diluted earnings per share of $1.25 last year
- Adjusted diluted earnings per share* from continuing operations
attributable to EnPro Industries, Inc. down 10.7% to $1.83 versus
$2.05 last year; higher share-price-driven incentive compensation
expense and last year's currency-related benefit combined for a
pre-tax $9 million negative impact year-over-year
- Full-year revenue expected to be relatively flat
year-over-year; adjusted EBITDA* expected to be in the range of
$248 million to $256 million, reflecting share-price-driven
incentive compensation expense recognized in the second
quarter
- Increase adjusted diluted earnings per share* guidance to $6.70
to $7.10, reflecting lower net interest expense versus prior
guidance
EnPro Industries, Inc. (NYSE: NPO) today announced its financial
results for the three and six months ended June 30, 2023.
“Our Sealing Technologies segment achieved another quarter of
record performance while our AST segment declined, as expected, due
to weakness in the semiconductor market. The year-over-year
increase in Sealing roughly offset the decline in the AST segment,
demonstrating the balance inherent in our best-in-class portfolio
of businesses,” said Eric Vaillancourt, President and Chief
Executive Officer. “Our positioning, investments and strong
execution capabilities across the company support the many
attractive opportunities we see for long-term growth and value
creation."
Mr. Vaillancourt continued, “Strong cash generation enabled us
to further reduce our net leverage to 1.5x. Our balance sheet
provides us with the flexibility to invest in compelling organic
growth and productivity opportunities, while prudently considering
acquisitions that meet our strategic and financial criteria. As a
result of our recent reshaping, we are more resilient, and
well-positioned to outperform through economic cycles."
Financial Highlights (Dollars in millions except per
share data)
Quarters Ended
June 30,
2023
2022
Change
Net Sales
$
276.9
$
277.1
(0.1
)%
Income (Loss) from Continuing Operations
Attributable to EnPro Industries, Inc.
$
(18.6
)
$
26.1
nm
Diluted Earnings (Loss) Per Share from
Continuing Operations Attributable to EnPro Industries, Inc.
$
(0.89
)
$
1.25
nm
Adjusted Net Income from Continuing
Operations Attributable to EnPro Industries, Inc.*
$
38.2
$
42.7
(10.5
)%
Adjusted Diluted Earnings Per Share from
Continuing Operations*
$
1.83
$
2.05
(10.7
)%
Adjusted EBITDA*
$
64.9
$
73.7
(11.9
)%
Adjusted EBITDA Margin*
23.4
%
26.6
%
*Non-GAAP measure. See the attached
schedules for adjustments and reconciliations to GAAP numbers.
Second Quarter 2023 Consolidated Results
Sales of $276.9 million decreased 0.1% compared to the second
quarter of 2022. Excluding the impacts of divested businesses and
foreign exchange translation, sales grew 0.4% year-over-year.
Organic revenue grew as a result of volume increases in the
aerospace, nuclear energy, and commercial vehicle markets, as well
as the contribution from pricing actions, offset the slowdown in
semiconductor markets.
Corporate expenses of $15.0 million in the second quarter of
2023 increased from $9.4 million in the second quarter of 2022 due
to an increase of $7 million in incentive compensation expense
related to cash-based plans tied to share price performance. In the
second quarter of 2023, the Enpro share price increased by 28.5%,
compared to a decline of 16.2% in the second quarter of 2022.
Loss from continuing operations attributable to EnPro
Industries, Inc. was $18.6 million, compared to earnings of $26.1
million in the prior-year period. Diluted loss per share
attributable to EnPro Industries, Inc. was $0.89, compared to
income of $1.25 in the prior-year period. The year-over-year change
was driven primarily by a pre-tax goodwill impairment charge of
$60.8 million described below, the pre-tax $7 million
year-over-year difference in incentive compensation expense
resulting from share price changes and a pre-tax $2 million
currency-related benefit in the prior year related to foreign
cash.
Adjusted net income from continuing operations attributable to
EnPro Industries, Inc. of $38.2 million decreased 10.5% compared to
the second quarter of 2022 and adjusted diluted earnings per share
from continuing operations decreased 10.7% to $1.83, compared to
$2.05 in the prior-year period. Higher share-price-related
incentive compensation expense and last year’s currency-related
benefit combined for a pre-tax $9 million negative impact
year-over-year, or $0.32 per share after-tax.
Adjusted EBITDA* of $64.9 million decreased 11.9% compared to
the prior-year period driven primarily by the year-over-year impact
of share-price-driven incentive compensation expense and the
prior-year currency benefit related to foreign cash balances.
Strong year-over-year earnings growth in the Sealing Technologies
segment was offset by weakness in the Advanced Surface Technologies
(or “AST”) segment.
Second Quarter 2023 Segment Highlights (All results
reflect comparisons to prior-year period unless otherwise
noted)
Sealing Technologies -
Safeguarding environments with critical applications in diverse end
markets Garlock, STEMCO, and Technetics Group
Quarters Ended
June 30,
(Dollars in millions)
2023
2022
Change
Sales
$
176.7
$
155.9
13.3
%
Adjusted Segment EBITDA
$
56.2
$
44.1
27.4
%
Adjusted Segment EBITDA Margin
31.8
%
28.3
%
- Sales increased 13.3% versus the prior-year period driven by
strong demand in the aerospace, nuclear and commercial vehicle
markets, along with the positive impact of pricing initiatives.
Excluding results of the business divested in the fourth quarter of
2022 and foreign exchange translation, sales increased 13.9% versus
the prior-year period.
- Adjusted segment EBITDA of $56.2 million was up 27.4%
year-over-year, with adjusted EBITDA margins expanding
approximately 350 basis points, as strong volume and price
increases offset higher operating costs. Excluding the impacts of
the divestiture and foreign exchange translation, adjusted segment
EBITDA increased 28.7% compared to the prior-year period.
Advanced Surface
Technologies - Leading edge precision manufacturing,
coatings, cleaning and refurbishment solutions and innovative
optical filter products — NxEdge, Technetics Semi, LeanTeq, and
Alluxa
Quarters Ended
June 30,
(Dollars in millions)
2023
2022
Change
Sales
$
100.3
$
121.5
(17.4
)%
Adjusted Segment EBITDA
$
24.1
$
37.8
(36.2
)%
Adjusted Segment EBITDA Margin
24.0
%
31.1
%
- Sales decreased 17.4% versus the prior-year period driven
primarily by the current slowdown in semiconductor capital
equipment spending and to a lesser degree by weaker optical filter
sales. Excluding foreign exchange translation, sales decreased
17.0% year-over-year.
- Adjusted segment EBITDA decreased 36.2% versus the prior-year
period and segment EBITDA margins declined 710 basis points, driven
primarily by the decline in volume, unfavorable mix, investments in
long-term growth opportunities, and higher labor costs. Excluding
the impact of foreign exchange translation, adjusted segment EBITDA
decreased 35.7% compared to the prior-year period.
Balance Sheet, Cash Flow and Capital Allocation
The company generated $78.5 million of cash flow from operating
activities of continuing operations during the six months ended
June 30, 2023 and $66.6 million of free cash flow, net of $11.9
million in capital expenditures. This compares to $63.0 million of
cash flow from operating activities of continuing operations, or
$56.1 million of free cash flow, net of $6.9 million in capital
expenditures. During the second quarter, the company paid a regular
quarterly dividend of $0.29 per share, with dividend payments
totaling $12.2 million for the six months ended June 30, 2023.
Enpro ended the second quarter with total debt of $783.2 million
and cash of $374.9 million and $35.8 million of short-term liquid
investments. Outstanding letters of credit totaled $10.0 million.
On July 26, 2023, Enpro repaid its $133.7 million Term Loan A-1,
including accrued interest, with available cash.
Goodwill Impairment Analysis
At the end of the second quarter, Enpro determined the book
value of the Alluxa reporting unit, which is included in the
Advanced Surface Technologies segment, exceeded its fair-value as
of June 30, 2023 and, as a result, the $60.8 million of goodwill
allocated to Alluxa since December 31, 2022 was impaired. After
this full non-cash impairment charge, the Consolidated Balance
Sheet as of June 30, 2023 reflects no goodwill related to
Alluxa.
Quarterly Dividend
Enpro declared a regular quarterly dividend of $0.29 per share
on August 2, 2023. The dividend is payable September 13, 2023 to
shareholders of record as of the close of business on August 30,
2023.
2023 Guidance
Enpro now expects 2023 revenue to be flat compared to 2022,
versus the previous forecast of flat to low-single digit growth.
Adjusted EBITDA is now expected in the range of $248 million to
$256 million, from $248 million to $260 million previously,
reflecting the share-price-driven incentive compensation expense
recognized in the second quarter.
Adjusted diluted earnings per share guidance is increased and
expected to be in the range of $6.70 to $7.10 per share, versus
$6.45 to $7.05 previously, primarily reflecting lower net interest
expense resulting from debt repayment and higher interest income on
cash balances.
Conference Call, Webcast Information, and
Presentations
Enpro will hold a conference call today, August 8, at 8:30 a.m.
Eastern Time to discuss second quarter 2023 financial results.
Investors who wish to participate in the call should dial
1-877-407-0832 approximately 10 minutes before the call begins and
provide conference access code 13725738. A live audio webcast of
the call and accompanying slide presentation will be accessible
from the company’s website, https://www.enproindustries.com. To access the
earnings presentation, log on to the webcast by clicking the link
on the company’s home page.
Primary Segment Operating Performance Measure
The primary metric used by management to allocate resources and
assess segment performance is adjusted segment EBITDA, which is
segment revenue reduced by operating expenses and other costs
identifiable with the segment, excluding acquisition and
divestiture expenses, restructuring costs, impairment charges,
non-controlling interest compensation, amortization of the fair
value adjustment to acquisition date inventory, and depreciation
and amortization. Expenses not directly attributable to the
segments, corporate expenses, net interest expense, gains/losses
related to the sale of assets, and income taxes are not included in
the computation of adjusted segment EBITDA. Under U.S. generally
accepted accounting principles (“GAAP”), the primary metric used by
management to allocate resources and assess segment performance is
required to be disclosed in financial statement footnotes, and
accordingly such metric as presented for each segment is not deemed
to be a non-GAAP measure under applicable regulations of the
Securities and Exchange Commission.
Non-GAAP Financial Information
This press release contains financial measures that have not
been prepared in conformity with GAAP. They include adjusted net
income attributable to EnPro Industries, Inc., adjusted diluted
earnings per share attributable to EnPro Industries, Inc., adjusted
EBITDA, adjusted EBITDA margin, total adjusted segment EBITDA and
free cash flow. Tables showing the reconciliation of these
historical non-GAAP financial measures to the comparable GAAP
measures are attached to the release. Adjusted EBITDA and adjusted
diluted earnings per share anticipated for full year 2023 are
calculated in a manner consistent with the historical presentation
of these measures in the attached tables. Because of the
forward-looking nature of these estimates, it is impractical to
present quantitative reconciliations of such measures to comparable
GAAP measures, and accordingly no such GAAP measures are being
presented.
Management believes these non-GAAP metrics are commonly used
financial measures for investors to evaluate the company’s
operating performance and, when read in conjunction with the
company’s consolidated financial statements, present a useful tool
to evaluate the company’s ongoing operations and performance from
period to period. In addition, these are some of the factors the
company uses in internal evaluations of the overall performance of
its businesses. Management acknowledges that there are many items
that impact a company’s reported results and the adjustments
reflected in these non-GAAP measures are not intended to present
all items that may have impacted these results. In addition, these
non-GAAP measures are not necessarily comparable to similarly
titled measures used by other companies.
Forward-Looking Statements and Guidance
Statements in this press release that express a belief,
expectation or intention, including the 2023 guidance and other
statements that are not historical fact, are forward-looking
statements under the Private Securities Litigation Reform Act of
1995. They involve a number of risks and uncertainties that may
cause actual events and results to differ materially from such
forward-looking statements. These risks and uncertainties include,
but are not limited to: economic conditions in the markets served
by our businesses and the businesses of our customers, some of
which are cyclical and experience periodic downturns; the impact of
geopolitical activity on those markets, including instabilities
associated with the armed conflict in Ukraine and any conflict or
threat of conflict that may affect Taiwan; uncertainties with
respect to the imposition of government embargoes, tariffs and
trade protection measures, such as “anti-dumping” duties applicable
to classes of products, and import or export licensing
requirements, as well as the imposition of trade sanctions against
a class of products imported from or sold and exported to, or the
loss of “normal trade relations” status with, countries in which we
conduct business, could significantly increase our cost of products
or otherwise reduce our sales and harm our business; uncertainties
with respect to prices and availability of raw materials, including
as a result of instabilities from geopolitical conflicts;
uncertainties with respect to our ability to achieve anticipated
growth within the semiconductor, life sciences, and other
technology-enabled markets, including uncertainties with respect to
receipt of CHIPS Act support; the impact of fluctuations in
relevant foreign currency exchange rates or unanticipated increases
in applicable interest rates; unanticipated delays or problems in
introducing new products; the impact of any labor disputes;
announcements by competitors of new products, services or
technological innovations; changes in our pricing policies or the
pricing policies of our competitors; risks related to the reliance
of our Advanced Surface Technologies segment on a small number of
significant customers; uncertainties with respect to our ability to
identify and complete business acquisitions consistent with our
strategy and to successfully integrate any businesses that we
acquire; and uncertainties with respect to the amount of any
payments required to satisfy contingent liabilities, including
those related to discontinued operations, other divested businesses
and discontinued operations of our predecessors, including
liabilities for certain products, environmental matters, employee
benefit and statutory severance obligations and other matters.
Enpro’s filings with the Securities and Exchange Commission,
including its most recent Form 10-K and Form 10-Q reports, describe
these and other risks and uncertainties in more detail. Enpro does
not undertake to update any forward-looking statements made in this
press release to reflect any change in management's expectations or
any change in the assumptions or circumstances on which such
statements are based.
Full-year guidance is subject to the risks and uncertainties
discussed above and specifically excludes changes in the number of
shares outstanding, impacts from future and pending acquisitions,
dispositions and related transaction costs, restructuring costs,
incremental impacts of tariffs and trade tensions on market demand
and costs subsequent to June 30, 2023, and the impact of foreign
exchange rate changes subsequent to that date.
About Enpro
Enpro is a leading industrial technology company focused on
critical applications across many end-markets, including
semiconductor, photonics, industrial process, aerospace, food and
pharma and life sciences. Enpro is listed on the New York Stock
Exchange under the symbol “NPO”. For more information about Enpro,
visit the company’s website at http://www.enproindustries.com.
APPENDICES
Consolidated Financial Information and
Reconciliations
EnPro Industries, Inc.
Consolidated Statements of Operations
(Unaudited)
For the Quarters and Six Months Ended June
30, 2023 and 2022
(In Millions, Except Per Share Data)
Quarters Ended
Six Months Ended
June 30,
June 30,
June 30,
June 30,
2023
2022
2023
2022
Net sales
$
276.9
$
277.1
$
559.5
$
547.2
Cost of sales
162.1
164.8
328.6
340.2
Gross profit
114.8
112.3
230.9
207.0
Operating expenses:
Selling, general and administrative
73.2
67.6
144.7
139.3
Goodwill impairment
60.8
—
60.8
—
Other
0.2
0.9
1.0
2.2
Total operating expenses
134.2
68.5
206.5
141.5
Operating income (loss)
(19.4
)
43.8
24.4
65.5
Interest expense
(12.4
)
(7.7
)
(24.1
)
(14.8
)
Interest income
3.8
—
7.6
0.2
Other expense
(0.6
)
(2.6
)
(2.4
)
(2.0
)
Income (loss) from continuing operations
before income taxes
(28.6
)
33.5
5.5
48.9
Income tax benefit (expense)
5.8
(7.5
)
(2.3
)
(10.7
)
Income (loss) from continuing
operations
(22.8
)
26.0
3.2
38.2
Income from discontinued operations,
including gain on sale, net of tax
—
8.3
11.4
13.2
Net income (loss)
(22.8
)
34.3
14.6
51.4
Less: net income (loss) attributable to
redeemable non-controlling interest
(4.2
)
(0.1
)
(4.2
)
0.2
Net income (loss) attributable to EnPro
Industries, Inc.
$
(18.6
)
$
34.4
$
18.8
$
51.2
Income (loss) attributable to EnPro
Industries, Inc. common shareholders:
Income (loss) from continuing operations,
net of tax
$
(18.6
)
$
26.1
$
7.4
$
38.0
Income from discontinued operations,
including gain on sale, net of tax
—
8.3
11.4
13.2
Net income (loss) attributable to EnPro
Industries, Inc.
$
(18.6
)
$
34.4
$
18.8
$
51.2
Basic earnings (loss) per share
attributable to EnPro Industries, Inc.:
Continuing operations
$
(0.89
)
$
1.27
$
0.35
$
1.83
Discontinued operations
—
0.40
0.55
0.63
Basic earnings (loss) per share
$
(0.89
)
$
1.67
$
0.90
$
2.46
Average common shares outstanding
20.9
20.8
20.9
20.8
Diluted earnings (loss) per share
attributable to EnPro Industries, Inc.:
Continuing Operations
$
(0.89
)
$
1.25
$
0.35
$
1.82
Discontinued operations
—
0.40
0.55
0.63
Diluted earnings (loss) per share
$
(0.89
)
$
1.65
$
0.90
$
2.45
Average common shares outstanding
20.9
20.8
20.9
20.9
EnPro Industries, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months Ended June 30, 2023 and
2022
(In Millions)
2023
2022
Operating activities of continuing
operations
Net income
$
14.6
$
51.4
Adjustments to reconcile net income to net
cash provided by operating activities of continuing operations:
Income from discontinued operations, net
of taxes
(11.4
)
(13.2
)
Taxes related to sale of discontinued
operations
(3.3
)
—
Depreciation
12.3
13.1
Amortization
35.1
39.1
Goodwill impairment
60.8
—
Deferred income taxes
(0.9
)
(0.8
)
Stock-based compensation
5.4
3.1
Other non-cash adjustments
2.2
6.9
Change in assets and liabilities, net of
effects of divestitures of businesses:
Accounts receivable, net
0.9
(8.4
)
Inventories
(0.1
)
(11.2
)
Accounts payable
(10.9
)
8.0
Other current assets and liabilities
(24.8
)
(30.2
)
Other non-current assets and
liabilities
(1.4
)
5.2
Net cash provided by operating activities
of continuing operations
78.5
63.0
Investing activities of continuing
operations
Purchases of property, plant and
equipment
(11.9
)
(6.9
)
Proceeds from sale of businesses
25.7
0.4
Acquisitions
—
2.9
Purchase of short-term investments
(35.8
)
—
Other
0.4
—
Net cash used in investing activities of
continuing operations
(21.6
)
(3.6
)
Financing activities of continuing
operations
Proceeds from debt
—
26.6
Repayments of debt
(7.9
)
(162.5
)
Dividends paid
(12.2
)
(11.7
)
Other
(1.8
)
(6.8
)
Net cash used in financing activities of
continuing operations
(21.9
)
(154.4
)
Cash flows of discontinued operations
Operating cash flows
(0.6
)
4.0
Investing cash flows
—
(1.8
)
Net cash provided by (used in)
discontinued operations
(0.6
)
2.2
Effect of exchange rate changes on cash
and cash equivalents
6.1
(23.2
)
Net increase (decrease) in cash and cash
equivalents
40.5
(116.0
)
Cash and cash equivalents at beginning of
period
334.4
338.1
Cash and cash equivalents at end of
period
$
374.9
$
222.1
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest, net
$
23.3
$
13.4
Income taxes, net
$
13.6
$
26.1
EnPro Industries, Inc.
Consolidated Balance Sheets
(Unaudited)
As of June 30, 2023 and December 31,
2022
(In Millions)
June 30,
December 31,
2023
2022
Current assets
Cash and cash equivalents
$
374.9
$
334.4
Short-term investments
35.8
—
Accounts receivable, net
136.9
137.1
Inventories
152.7
151.9
Prepaid expenses and other current
assets
54.4
44.9
Current assets held for sale
—
15.9
Total current assets
754.7
684.2
Property, plant and equipment, net
185.6
185.2
Goodwill
807.9
863.8
Other intangible assets
767.9
799.8
Other assets
117.0
114.8
Total assets
$
2,633.1
$
2,647.8
Current liabilities
Current maturities of long-term debt
$
15.6
$
15.6
Accounts payable
63.3
73.4
Accrued expenses
108.2
120.2
Current liabilities held for sale
—
2.3
Total current liabilities
187.1
211.5
Long-term debt
767.6
775.1
Deferred taxes and non-current income
taxes payable
135.8
136.5
Other liabilities
110.3
111.7
Total liabilities
1,200.8
1,234.8
Redeemable non-controlling interests
17.9
17.9
Shareholders’ equity
Common stock
0.2
0.2
Additional paid-in capital
299.7
299.2
Retained earnings
1,136.8
1,130.2
Accumulated other comprehensive loss
(21.1
)
(33.3
)
Common stock held in treasury, at cost
(1.2
)
(1.2
)
Total shareholders’ equity
1,414.4
1,395.1
Total liabilities and equity
$
2,633.1
$
2,647.8
EnPro Industries, Inc.
Segment Information (Unaudited)
For the Quarters and Six Months Ended June
30, 2023 and 2022
(Dollars in Millions)
Sales
Quarters Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Sealing Technologies
$
176.7
$
155.9
$
350.0
$
309.5
Advanced Surface Technologies
100.3
121.5
209.7
238.2
277.0
277.4
559.7
547.7
Less: intersegment sales
(0.1
)
(0.3
)
(0.2
)
(0.5
)
$
276.9
$
277.1
$
559.5
$
547.2
Income (loss) from continuing
operations attributable to EnPro Industries, Inc.
$
(18.6
)
$
26.1
$
7.4
$
38.0
Earnings before interest, income taxes,
depreciation, amortization and other selected items (Adjusted
Segment EBITDA)
Quarters Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Sealing Technologies
$
56.2
$
44.1
$
105.9
$
78.4
Advanced Surface Technologies
24.1
37.8
53.6
72.7
$
80.3
$
81.9
$
159.5
$
151.1
Adjusted Segment EBITDA Margin
Quarters Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Sealing Technologies
31.8
%
28.3
%
30.3
%
25.3
%
Advanced Surface Technologies
24.0
%
31.1
%
25.6
%
30.5
%
29.0
%
29.6
%
28.5
%
27.6
%
Reconciliation of Adjusted Segment
EBITDA to Income (Loss) from Continuing Operations Attributable to
EnPro Industries, Inc.
Quarters Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Income (loss) from continuing operations
attributable to EnPro Industries, Inc.
$
(18.6
)
$
26.1
$
7.4
$
38.0
Plus: net income (loss) attributable to
redeemable non-controlling interests
(4.2
)
(0.1
)
(4.2
)
0.2
Income (loss) from continuing
operations
(22.8
)
26.0
3.2
38.2
Income tax benefit (expense)
5.8
(7.5
)
(2.3
)
(10.7
)
Income (loss) from continuing operations
before income taxes
(28.6
)
33.5
5.5
48.9
Acquisition and divestiture expenses
—
0.3
—
0.4
Non-controlling interest compensation
allocation1
(0.7
)
1.4
(0.3
)
0.5
Amortization of the fair value adjustment
to acquisition date inventory
—
1.0
—
11.3
Restructuring and impairment expense
0.3
0.8
0.7
1.1
Depreciation and amortization expense
23.8
26.1
47.3
52.1
Corporate expenses
15.0
9.4
25.7
22.3
Interest expense, net
8.6
7.7
16.5
14.6
Goodwill impairment
60.8
—
60.8
—
Other expense (income), net
1.1
1.7
3.3
(0.1
)
Adjusted Segment EBITDA
$
80.3
$
81.9
$
159.5
$
151.1
Adjusted Segment EBITDA is total segment
revenue reduced by operating expenses and other costs identifiable
with the segment, excluding acquisition and divestiture expenses,
restructuring and impairment expense, non-controlling interest
compensation, amortization of the fair value adjustment to
acquisition date inventory, and depreciation and amortization.
Corporate expenses include general
corporate administrative costs. Expenses not directly
attributable to the segments, corporate expenses, net interest
expense, gains/losses related to the sale of assets, and income
taxes are not included in the computation of Adjusted Segment
EBITDA. The accounting policies of the reportable segments
are the same as those for the Company.
1 Non-controlling interest compensation
allocation represents compensation expense adjustment associated
with a portion of the rollover equity from the acquisitions of
LeanTeq and Alluxa that is subject to reduction for certain types
of employment terminations of the LeanTeq and Alluxa sellers and is
directly related to the terms of the respective acquisitions.
This expense will continue to be recognized as compensation expense
over the term of the put and call options associated with the
acquisitions unless certain employment terminations have occurred.
The LeanTeq non-controlling interests were acquired by Enpro in
December 2022.
EnPro Industries, Inc.
Adjusted Segment EBITDA Reconciling
Items by Segment (Unaudited)
For the Quarters and Six Months Ended June
30, 2023 and 2022
(In Millions)
Quarter Ended June 30, 2023
Sealing
Technologies
Advanced
Surface
Technologies
Total
Segments
Non-controlling interest compensation
allocation1
$
—
$
(0.7
)
$
(0.7
)
Restructuring and impairment expense
$
0.1
$
0.2
$
0.3
Depreciation and amortization expense
$
6.3
$
17.5
$
23.8
Quarter Ended June 30, 2022
Sealing
Technologies
Advanced
Surface
Technologies
Total
Segments
Acquisition and divestiture expenses
$
0.1
$
0.2
$
0.3
Non-controlling interest compensation
allocation1
$
—
$
1.4
$
1.4
Amortization of the fair value adjustment
to acquisition date inventory
$
—
$
1.0
$
1.0
Restructuring and impairment expense
$
0.2
$
0.6
$
0.8
Depreciation and amortization expense
$
6.7
$
19.4
$
26.1
Six Months Ended June 30,
2023
Sealing
Technologies
Advanced
Surface
Technologies
Total
Segments
Non-controlling interest compensation
allocation1
$
—
$
(0.3
)
$
(0.3
)
Restructuring and impairment expense
$
0.2
$
0.5
$
0.7
Depreciation and amortization expense
$
12.6
$
34.7
$
47.3
Six Months Ended June 30,
2022
Sealing
Technologies
Advanced
Surface
Technologies
Total
Segments
Acquisition and divestiture expenses
$
—
$
0.4
$
0.4
Non-controlling interest compensation
allocation1
$
—
$
0.5
$
0.5
Amortization of the fair value adjustment
to acquisition date inventory
$
—
$
11.3
$
11.3
Restructuring and impairment expense
$
0.5
$
0.6
$
1.1
Depreciation and amortization expense
$
13.6
$
38.5
$
52.1
1 Non-controlling interest compensation
allocation represents compensation expense associated with a
portion of the rollover equity from the acquisitions of LeanTeq and
Alluxa that is subject to reduction for certain types of employment
terminations of the LeanTeq and Alluxa sellers and is directly
related to the terms of the respective acquisitions. This expense
will continue to be recognized as compensation expense over the
term of the put and call options associated with the acquisitions
unless certain employment terminations have occurred. The LeanTeq
non-controlling interests were acquired by Enpro in December
2022.
EnPro Industries, Inc.
Reconciliation of Income (Loss) from
Continuing Operations Before Income Taxes to Adjusted Income from
Continuing Operations Attributable to EnPro Industries, Inc. and
Adjusted Diluted Earnings Per Share (Unaudited)
For the Quarters and Six Months Ended June
30, 2023 and 2022
(In Millions, Except Per Share Data)
Quarters Ended June 30,
2023
2022
$
Average
common
shares
outstanding,
diluted
Per
Share
$
Average
common
shares
outstanding,
diluted
Per
Share
Income (loss) from continuing operations
attributable to EnPro Industries, Inc.
$
(18.6
)
20.9
$
(0.89
)
$
26.1
20.8
$
1.25
Net loss attributable to redeemable
non-controlling interests
(4.2
)
(0.1
)
Income tax expense (benefit)
(5.8
)
7.5
Income (loss) from continuing operations
before income taxes
(28.6
)
33.5
Adjustments from selling, general, and
administrative:
Acquisition and divestiture expenses
—
0.5
Non-controlling interest compensation
allocations1
(0.7
)
1.3
Amortization of acquisition-related
intangible assets
17.2
18.7
Adjustments from other operating expense
and cost of sales:
Restructuring and impairment expense
0.2
0.7
Amortization of the fair value adjustment
to acquisition date inventory
—
0.9
Adjustments from other non-operating
expense:
Asbestos receivable adjustment
—
2.8
Costs associated with previously disposed
businesses
0.2
0.5
Pension expense (income) (non-service
cost)
0.4
(0.6
)
Goodwill impairment
56.6
—
Foreign exchange losses related to the
divestiture of a discontinued operation2
0.3
—
Other adjustments:
Other
(0.2
)
—
Adjusted income from continuing operations
before income taxes
45.4
58.3
Adjusted income tax expense
(11.4
)
(15.7
)
Net loss attributable to redeemable
non-controlling interests
4.2
0.1
Adjusted income from continuing operations
attributable to EnPro Industries, Inc.
$
38.2
20.9
$
1.83
3
$
42.7
20.8
$
2.05
3
Six Months Ended June 30,
2023
2022
$
Average
common
shares
outstanding,
diluted
Per
Share
$
Average
common
shares
outstanding,
diluted
Per
Share
Income from continuing operations
attributable to EnPro Industries, Inc.
$
7.4
20.9
$
0.35
$
38.0
20.9
$
1.82
Net income (loss) attributable to
redeemable non-controlling interests
(4.2
)
0.2
Income tax expense
2.3
10.7
Income from continuing operations before
income taxes
5.5
48.9
Adjustments from selling, general, and
administrative:
Acquisition and divestiture expenses
—
1.1
Non-controlling interest compensation
allocations1
(0.3
)
0.4
Amortization of acquisition-related
intangible assets
34.4
37.6
Adjustments from other operating expense
and cost of sales:
Restructuring and impairment expense
1.0
2.0
Amortization of the fair value adjustment
to acquisition date inventory
—
11.1
Adjustments from other non-operating
expense:
Asbestos receivable adjustment
—
2.8
Environmental reserve adjustments
0.1
(0.3
)
Costs associated with previously disposed
businesses
0.5
0.7
Pension expense (income) (non-service
cost)
0.7
(1.4
)
Goodwill impairment
56.6
—
Foreign exchange losses related to the
divestiture of a discontinued operation2
0.9
—
Other adjustments:
Other
0.3
0.2
Adjusted income from continuing operations
before income taxes
99.7
103.1
Adjusted income tax expense
(24.9
)
(27.8
)
Net loss (income) attributable to
redeemable non-controlling interests
4.2
(0.2
)
Adjusted income from continuing operations
attributable to EnPro Industries, Inc.
$
79.0
20.9
$
3.77
3
$
75.1
20.9
$
3.60
3
Management of the Company believes that it
would be helpful to the readers of the financial statements to
understand the impact of certain selected items on the Company's
reported net income attributable to EnPro Industries, Inc. and
diluted earnings per share attributable to EnPro Industries, Inc.,
including items that may recur from time to time. The items
adjusted for in this schedule are those that are excluded by
management in budgeting or projecting for performance in future
periods, as they typically relate to events specific to the period
in which they occur. This presentation enables readers to
better compare EnPro Industries, Inc. to other diversified
industrial manufacturing companies that do not incur the sporadic
impact of restructuring activities, costs associated with
previously disposed of businesses, acquisitions and divestitures,
or other selected items. The adjustments in the table above relate
solely to expenses attributable to EnPro Industries, Inc. and have
been adjusted to remove any amounts attributable to non-controlling
interests.
Management acknowledges that there are
many items that impact a company's reported results and this list
is not intended to present all items that may have impacted these
results.
Other adjustments are included in selling,
general, and administrative, cost of sales, and other operating
expenses on the consolidated statements of operations.
The adjusted income tax expense presented
above is calculated using a normalized company-wide effective tax
rate excluding discrete items of 25.0% and 27.0% for 2023 and 2022,
respectively. Per share amounts were calculated by dividing
by the weighted-average shares of diluted common stock outstanding
during the periods.
1 Non-controlling interest compensation
allocation represents compensation expense adjustment associated
with a portion of the rollover equity from the acquisitions of
LeanTeq and Alluxa that is subject to reduction for certain types
of employment terminations of the LeanTeq and Alluxa sellers and is
directly related to the terms of the respective acquisitions.
This expense will continue to be recognized as compensation expense
over the term of the put and call options associated with the
acquisitions unless certain employment terminations have
occurred. The LeanTeq non-controlling interests were acquired
by Enpro in December 2022.
2 In connection with the sale of GGB,
accounted for as a discontinued operation, in the fourth quarter of
2022, we issued an intercompany note between a domestic and
foreign entity that was denominated in a foreign currency. As a
result of this note, we recorded a loss due to the change in
exchange rate in 2023. In January 2023, we hedged the outstanding
notes in order to mitigate related gains or losses.
3 Adjusted diluted earnings per share.
EnPro Industries, Inc.
Reconciliation of Income (Loss) from
Continuing Operations Attributable to EnPro Industries, Inc. to
Adjusted EBITDA (Unaudited)
For the Quarters and Six Months Ended June
30, 2023 and 2022
(In Millions)
Quarters Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Income (loss) from continuing operations
attributable to EnPro Industries, Inc.
$
(18.6
)
$
26.1
$
7.4
$
38.0
Net income (loss) attributable to
redeemable non-controlling interests
(4.2
)
(0.1
)
(4.2
)
0.2
Income (loss) from continuing
operations
(22.8
)
26.0
3.2
38.2
Adjustments to arrive at earnings before
interest, income taxes, depreciation, amortization, and other
selected items (Adjusted EBITDA):
Interest expense, net
8.6
7.7
16.5
14.6
Income tax expense (benefit)
(5.8
)
7.5
2.3
10.7
Depreciation and amortization expense
23.9
26.2
47.4
52.2
Restructuring and impairment expense
0.2
0.7
1.0
2.0
Environmental reserve adjustments
—
—
0.1
(0.3
)
Costs associated with previously disposed
businesses
0.2
0.5
0.5
0.7
Acquisition and divestiture expenses
—
0.5
—
1.1
Pension expense (income) (non-service
cost)
0.4
(0.6
)
0.7
(1.4
)
Non-controlling interest compensation
allocation1
(0.7
)
1.4
(0.3
)
0.5
Asbestos receivable adjustment
—
2.8
—
2.8
Amortization of the fair value adjustment
to acquisition date inventory
—
1.0
—
11.3
Foreign exchange losses related to the
divestiture of a discontinued operation2
0.3
—
0.9
—
Goodwill impairment
60.8
—
60.8
—
Other
(0.2
)
—
0.3
0.2
Adjusted EBITDA
$
64.9
$
73.7
$
133.4
$
132.6
1 Non-controlling interest compensation
allocation represents compensation expense associated with a
portion of the rollover equity from the acquisitions of LeanTeq and
Alluxa that is subject to reduction for certain types of employment
terminations of the LeanTeq and Alluxa sellers and is directly
related to the terms of the respective acquisitions. This expense
will continue to be recognized as compensation expense over the
term of the put and call options associated with the acquisitions
unless certain employment terminations have occurred. The LeanTeq
non-controlling interests were acquired by Enpro in December
2022.
2 In connection with the sale of GGB,
accounted for as a discontinued operation, in the fourth quarter of
2022, we issued an intercompany note between a domestic and foreign
entity that was denominated in a foreign currency. As a result of
this note, we recorded a loss due to the change in exchange rate in
2023. In January 2023, we hedged the outstanding notes in order to
mitigate related gains or losses.
Supplemental disclosure: Adjusted EBITDA
as presented also represents the amount defined as "EBITDA" under
the indenture governing the Company's 5.75% Senior Notes due 2026.
For the six months ended June 30, 2023 approximately 46% of the
adjusted EBITDA as presented above was attributable to Enpro's
subsidiaries that do not guarantee the Company's 5.75% Senior Notes
due 2026.
EnPro Industries, Inc.
Reconciliation of Free Cash Flow
(Unaudited)
(In Millions)
Free Cash Flow - Six Months Ended June 30,
2023
Net cash provided by operating activities
of continuing operations
$
78.5
Purchases of property, plant, and
equipment
(11.9
)
Free cash flow
$
66.6
Free Cash Flow - Six Months Ended June 30,
2022
Net cash provided by operating activities
of continuing operations
$
63.0
Purchases of property, plant, and
equipment
(6.9
)
Free cash flow
$
56.1
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808985427/en/
Investor Contacts:
Milt Childress Executive Vice President and Chief Financial
Officer
James Gentile Vice President, Investor Relations
704-731-1527 investor.relations@enproindustries.com
Enpro (NYSE:NPO)
Gráfico Histórico do Ativo
De Abr 2024 até Mai 2024
Enpro (NYSE:NPO)
Gráfico Histórico do Ativo
De Mai 2023 até Mai 2024