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EI

Enpro Inc. (NPO)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was solid: revenue grew 6.1% to $273.2M with adjusted EBITDA up 16.1% to $67.8M and margin expanding 210 bps to 24.8%; adjusted EPS rose 21% to $1.90 . Versus S&P Global consensus, NPO beat on revenue ($273.2M vs $266.2M*), adjusted EBITDA ($~66.4M vs $62.0M*), and adjusted EPS ($1.90 vs $1.67*) .
  • Sealing Technologies delivered strong profitability (32.7% adj segment EBITDA margin) led by aerospace, general industrial, and food & pharma; AST grew 9.1% on precision cleaning and optical filters despite choppy wafer fab equipment demand .
  • Guidance maintained for FY25: revenue growth low–mid single digits, adj. EBITDA $262–$277M, adj. EPS $7.00–$7.70; tax rate assumption 25% (for adjusted EPS calc) .
  • Capital structure flexibility improved: post-quarter, revolver upsized to $800M and term loans repaid; as of May 1, corporate debt $580M with cash ≈$193M and net leverage ~1.5x TTM EBITDA .

What Went Well and What Went Wrong

  • What Went Well

    • Mix/operating leverage: Adjusted EBITDA margin expanded 210 bps YoY to 24.8% on volume, favorable mix, and cost controls .
    • Sealing Technologies execution: Adj. segment EBITDA up ~11% with margin at 32.7%; aerospace up just over 20% YoY; pricing ~2% annual run-rate; two-thirds aftermarket provides resilience .
    • Tariffs manageable: “Direct cost impact…minimal and manageable,” aided by regionalized production and diversified sourcing; bearings exposure can shift to Spain/India if needed .

  • What Went Wrong

    • AST profitability headwind: Despite 9.1% sales growth, AST margin at 21.9% was pressured by growth-investment opex; OEM WFE demand remained “choppy” .
    • FX/transactional exposures (context for upcoming Q2): Management flagged FX as a headwind in subsequent quarter; underscores ongoing currency sensitivity in AST operations .
    • Commercial vehicle OEM softness persisted: Continued drag on Sealing volumes in that end-market despite strength elsewhere .

Financial Results

Overall quarterly trend and comparisons

MetricQ3 2024Q4 2024Q1 2025
Revenue ($M)$260.9 $258.4 $273.2
Adjusted EBITDA ($M)$64.1 $58.2 $67.8
Adjusted EBITDA Margin (%)24.6% 22.5% 24.8%
GAAP Diluted EPS ($)$0.94 $0.66 $1.15
Adjusted Diluted EPS ($)$1.74 $1.57 $1.90

Q1 2025 vs S&P Global consensus (beat/miss)

MetricActualConsensus*
Revenue ($M)$273.2 $266.2*
Adjusted EBITDA ($M)~$66.4 (S&P actual) / $67.8 (company adj.) $62.0*
Adjusted EPS ($)$1.90 $1.67*

Values marked with * are from S&P Global (Capital IQ). Values retrieved from S&P Global.

Segment performance across quarters

Segment MetricQ3 2024Q4 2024Q1 2025
Sealing Sales ($M)$168.6 $163.0 $179.6
AST Sales ($M)$92.5 $95.6 $93.8
Sealing Adj. Seg. EBITDA ($M)$55.1 $50.6 $58.7
AST Adj. Seg. EBITDA ($M)$19.2 $21.1 $20.5
Sealing Adj. Seg. EBITDA Margin (%)32.7% 31.0% 32.7%
AST Adj. Seg. EBITDA Margin (%)20.8% 22.1% 21.9%

Balance sheet and cash flow snapshot

KPIQ4 2024Q1 2025
Cash & Equivalents ($M)$236.3 $240.3
Long-term Debt ($M)$624.1 $620.4
Current Maturities of LT Debt ($M)$16.0 $16.0
Total Debt ($M)—$636.4
Cash from Operations ($M)— (annual detail provided)$21.0
Free Cash Flow ($M)— (annual detail provided)$11.6

Guidance Changes

MetricPeriodPrevious Guidance (2/19/25)Current Guidance (5/6/25)Change
Revenue GrowthFY 2025Low–mid single-digit Low–mid single-digit Maintained
Adjusted EBITDA ($M)FY 2025$262–$277 $262–$277 Maintained
Adjusted Diluted EPS ($)FY 2025$7.00–$7.70 $7.00–$7.70 Maintained
Tax Rate (for adjusted EPS calc)FY 2025—25% (normalized) New disclosure/clarified
Sealing Segment MarginFY 2025—Toward high end of ~30% ±250 bps New disclosure
AST RevenueFY 2025—Mid to high single-digit growth New disclosure
AST Adj. Seg. EBITDA MarginFY 2025—>20% New disclosure
DividendQ2 2025—$0.31 declared 4/30 (payable 6/18) Announced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Tariffs/MacroGeneral risk factor acknowledgment “Direct cost impact…minimal and manageable” due to in-region manufacturing and diversified sourcing; watch macro second-order effects Improved clarity, benign direct impact
Supply ChainNot a focal issue previouslyRegionalized production; diversified raw materials secured for 2025 Stable/strengthened
Sealing end-marketsStrong aerospace; CV OEM weakness Aerospace up just over 20%; CV OEM still soft; general industrial & food/pharma strong Positive mix persists
AST trendsWFE demand soft; cleaning resilient Precision cleaning & optical filters strong; WFE “choppy”; margin >20% targeted Gradual improvement, investments ongoing
Arizona facility (AST)Facility plans previously referenced On track; in qualification, minimal 1Q revenue; production volumes toward year-end Ramping per plan
Strategy (Enpro 3.0)Introduced in 2025 framing Emphasis on agile execution and growth investments Continued execution focus

Management Commentary

  • CEO Eric Vaillancourt: “Order rates remain positive as we enter the second quarter…we believe the direct cost impact of the recently announced tariffs on Enpro will be minimal and manageable.”
  • CFO Joe Bruderek on guidance and segments: Sealing to remain toward high end of 30% ±250 bps in 2025; AST to grow mid- to high-single digits with margin above 20% .
  • CEO on AST: “Sales increased 9.1% year-over-year…operating leverage drove a nearly 19% improvement in adjusted segment EBITDA to a margin rate of around 22%.”

Q&A Highlights

  • Tariffs quantification: Minimal direct impact given in-region manufacturing and low China import exposure (bearings can be sourced from Spain/India); key watchpoint is macro second-order effects .
  • Margin drivers in Sealing: More mix than price; aerospace up just over 20% YoY; typical ~2% annual price increases; strong aftermarket mix .
  • AST outlook: Mid- to high single-digit 2025 growth; OEM WFE demand still “choppy”; precision cleaning very strong and penetrating leading-edge nodes; Arizona minimal in Q1, ramping after qualifications .
  • Capital allocation/M&A: Pipeline active but diligence elevated; balance sheet flexible post revolver extension; share repurchase authorization outstanding .

Estimates Context

  • Q1 2025 results beat S&P Global consensus on revenue ($273.2M vs $266.2M*), adjusted EBITDA (~$66.4–$67.8M vs $62.0M*), and adjusted EPS ($1.90 vs $1.67*) .
  • Prior quarter (Q4 2024) and subsequent quarter (Q2 2025) consensus context indicate investors expected modest growth and margin resilience; the Q1 beat and maintained FY guide likely support estimate stability to upward bias near term (particularly in Sealing) while AST margin assumptions should reflect continued investment spend .
    Values marked with * are from S&P Global (Capital IQ). Values retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat: Broad-based revenue strength and mix/discipline drove margin expansion; Sealing margins remain structurally high, supporting earnings durability through macro noise .
  • Guidance intact despite tariff headlines: Maintaining FY25 targets signals confidence in demand and cost control; tariff direct exposure minimal .
  • AST improving but paced by WFE cycle: Precision cleaning and optics underpin growth; margin >20% target credible, but investment opex and OEM “choppiness” temper rapid margin upside .
  • Capital structure de-risked: Upsized revolver and term loan repayment add flexibility for M&A and growth; net leverage ~1.5x post-actions is conservative for cyclical volatility .
  • Near-term catalysts: Continued aerospace strength, food/pharma momentum, sequential Sealing improvement into seasonally strong Q2; progress on Arizona qualifications later in year .
  • Watch items: Commercial vehicle OEM demand (still soft), FX volatility impacting AST, and the timing of WFE recovery .
  • Positioning: Tilt exposure toward NPO on resilience from Sealing + optionality from AST recovery; use weakness on macro headlines/FX to build positions as execution remains strong .