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EI

Enpro Inc. (NPO)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered solid growth with revenue up 9.9% to $286.6M and adjusted diluted EPS up 14.4% to $1.99; both Revenue and EPS were modest beats versus S&P Global consensus estimates, driven by double‑digit AST sales and continued strength in Sealing Technologies . Revenue: $286.6M vs $276.6M consensus (+$10.0M); Adjusted EPS: $1.99 vs $1.96 .
  • Guidance raised: FY25 revenue growth increased to 7%–8% (from 5%–7%), adjusted EBITDA to $275–$280M (unchanged high end), and adjusted diluted EPS to $7.75–$8.05 (from $7.60–$8.10), reflecting partial contributions from two acquisitions announced in October .
  • Segment mix: AST sales +17.3% with margin at 20.1% on increased growth investments and mix; Sealing sales +5.7% with a robust 32.2% margin, supported by aerospace and food/pharma demand .
  • Near‑term setup: Management flagged choppy semiconductor capital equipment demand and qualification work ahead of revenue in AST, but cited strengthening leading‑edge drivers (AI/HBM) into 2H 2026; net leverage at 1.2x, expected ~2x post AlbHa/Overlook, maintaining balance sheet flexibility .

What Went Well and What Went Wrong

What Went Well

  • “Enpro delivered another strong quarter with sales growth of almost 10% and solid profitability,” highlighted by AST double‑digit growth and Sealing’s strong margin performance .
  • AST strength driven by leading‑edge precision cleaning solutions and improved demand for certain semiconductor tools and assemblies; adjusted segment EBITDA up 13.5% YoY .
  • Free cash flow YTD reached $104.9M; net leverage at 1.2x TTM adjusted EBITDA, supporting organic investments and accretive M&A (Overlook closed; AlpHa expected in Q4) .

What Went Wrong

  • AST margin compression to 20.1% (from 20.8% YoY) on increased growth investments and unfavorable product mix tied to certain semiconductor tools/assemblies .
  • Sealing Technologies faced continued softness in commercial vehicle OEM demand and nuclear delivery timing; industrial demand in Europe/Asia was tepid in the quarter .
  • Corporate expense remained elevated YoY in prior quarters and flat QoQ in Q3 ($10.2M), with broader macro factors (tariffs, FX) cited in filings as ongoing risks .

Financial Results

Quarterly Performance (actuals)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$273.2 $288.1 $286.6
Adjusted EBITDA ($USD Millions)$67.8 $71.1 $69.3
Adjusted EBITDA Margin (%)24.8% 24.7% 24.2%
GAAP Diluted EPS ($)$1.15 $1.25 $1.01
Adjusted Diluted EPS ($)$1.90 $2.03 $1.99

Q3 2025 vs Prior Periods and S&P Global Estimates

MetricQ3 2025 ActualQ2 2025 ActualQ3 2024 ActualQ3 2025 Consensus*
Revenue ($USD Millions)$286.6 $288.1 $260.9 $276.6*
Adjusted Diluted EPS ($)$1.99 $2.03 $1.74 $1.96*

Values with asterisks retrieved from S&P Global.

Segment Breakdown

SegmentQ1 2025 Sales ($M)Q1 2025 Adj EBITDA ($M)Q1 2025 MarginQ2 2025 Sales ($M)Q2 2025 Adj EBITDA ($M)Q2 2025 MarginQ3 2025 Sales ($M)Q3 2025 Adj EBITDA ($M)Q3 2025 Margin
Sealing Technologies$179.6 $58.7 32.7% $187.5 $63.3 33.8% $178.2 $57.4 32.2%
Advanced Surface Technologies (AST)$93.8 $20.5 21.9% $100.9 $19.8 19.6% $108.5 $21.8 20.1%

KPIs

KPIQ3 2025
Corporate expense ($M)$10.2
Total Debt ($M)$445.2
Cash & Equivalents ($M)$132.9
Net Leverage (TTM Adj EBITDA)1.2x
Free Cash Flow (9M) ($M)$104.9
Dividend per share (declared)$0.31

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue GrowthFY 20255%–7% 7%–8% Raised
Adjusted EBITDA ($M)FY 2025$270–$280 $275–$280 Raised (mid‑point)
Adjusted Diluted EPS ($)FY 2025$7.60–$8.10 $7.75–$8.05 Raised (low end), narrowed

Management noted Q4 partial contributions from Overlook and AlpHa included in the ranges, with ~<$10M revenue and ~$3M EBITDA anticipated in Q4 depending on AlpHa closing timing .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
AI/Leading-edge semiconductorAST grew 9% in Q1; optical coatings strength; AST +14.5% in Q2 with leading-edge cleaning Leading-edge precision cleaning tied to AI/HBM; accelerating qualifications ahead of revenue Strengthening leading-edge exposure
Supply chain/regionalizationFirm nuclear demand in Q1; improved in-chamber tools in Q2 Legacy product lines shifting to Southeast Asia; capacity expanded regionally over two years Ongoing regionalization
Tariffs/macroDirect tariff cost impact “minimal and manageable” in Q1 Dynamic backdrop (tariffs, export restrictions) affecting AST mix/timing Monitoring; timing variability
Product mix/marginsSealing margin expansion in Q1; Q2 margins impacted by FX AST margin 20.1% on mix and investments; Sealing >32% despite CV OEM weakness Mixed headwinds vs investments
Regional demandQ2: firm general industrial; Q1: strong aerospace/food & pharma Europe/Asia industrial demand tepid; nuclear timing affected by France politics Soft EMEA/Asia near term
Capex/investmentsElevated CapEx and growth initiatives in Q1/Q2 CapEx at ~3.5%–4.5% of sales expected over “couple of years” amid growth pipeline Sustained investment cycle

Management Commentary

  • CEO: “Sales performance was highlighted by double‑digit growth in AST driven by strong demand in leading‑edge precision cleaning solutions and certain semiconductor tools and assemblies… Although our operating margin in AST was impacted by increased investments in key initiatives and product mix, the opportunities ahead for the segment are exciting.”
  • CEO on M&A: “We welcomed Overlook Industries… and look forward to completing the acquisition of AlpHa Measurement Solution… extend our critical capabilities in biopharmaceutical manufacturing technologies and compositional analysis markets.”
  • CFO: FY25 guidance raised to revenue growth 7%–8%, adjusted EBITDA $275–$280M, adjusted diluted EPS $7.75–$8.05; net leverage expected ~2x post acquisitions .
  • Segment leadership (Sealing): Overlook addresses fill‑finish processing problems in liquid biologics; both acquisitions feature recurring revenue and strong customer intimacy .

Q&A Highlights

  • Acquisitions outlook: Combined ~$60M 2026 revenue and $17–$18M adjusted EBITDA; margins comparable to Sealing segment; focus on growth over synergies .
  • Q4 contribution from M&A: Just under $10M revenue and ~$3M EBITDA in Q4 depending on AlpHa closing .
  • AST investments/mix: ~$3M growth investments impacted Q3 ahead of revenue; $12M of legacy equipment produced/sold YTD to support regional transitions (pull‑forward not expected to recur in 2026) .
  • CapEx cadence: Expect ~3.5%–4.5% of sales for a couple years to fund growth platforms (Singapore, Taiwan, U.S., Arizona phases) .
  • Compositional analysis expansion: Adding eight liquid parameters (AlpHa) to four gas analytes (AMI) to accelerate Industry 4.0 and improve containment solution design .

Estimates Context

  • Q3 2025 results vs S&P Global consensus: Revenue $286.6M vs $276.6M*; Adjusted diluted EPS $1.99 vs $1.96* — both modest beats .
  • Sequential context: Q2 actual revenue $288.1M vs $282.6M*; Adjusted diluted EPS $2.03 vs $2.10*; Q1 actual revenue $273.2M vs $266.2M*; Adjusted diluted EPS $1.90 vs $1.67* .

Quarterly actuals vs consensus (S&P Global):

MetricQ4 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions) Actual vs Consensus*$258.4 vs $250.1* $273.2 vs $266.2* $288.1 vs $282.6* $286.6 vs $276.6*
Primary/Adjusted EPS ($) Actual vs Consensus*$1.57 vs $1.47* $1.90 vs $1.67* $2.03 vs $2.10* $1.99 vs $1.96*

Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Q3 was a clean beat on Revenue and adjusted EPS; strength in AST leading‑edge cleaning and Sealing fundamentals offset macro softness and AST mix headwinds — constructive for sentiment into Q4 and FY25 prints .
  • Guidance raised on revenue and EPS with M&A contributions; the narrowed EPS range signals confidence while acknowledging near‑term semiconductor choppiness — expect modest estimate upward revisions .
  • AST margin pressure is investment‑driven and mix‑related; management reiterated path to high‑20s/low‑30s margins as qualifications convert and WFE normalizes — medium‑term margin recovery opportunity .
  • Balance sheet capacity and consistent FCF support continued programmatic M&A (Overlook closed; AlpHa pending), expanding Sealing into biopharma and compositional analysis — portfolio quality upgrading .
  • Near‑term watch items: nuclear order timing (France), Asia/Europe industrial demand, tariff/export dynamics; these drive quarterly variability but not strategy trajectory .
  • Tactical: Into Q4, expect lower AST sequential sales growth from qualification timing; Sealing remains a ballast with strong margins — positioning favors defensiveness with optionality on 2H 2026 semiconductor upswing .
  • Strategic: Compositional analysis stack (AMI + AlpHa) enhances data/containment value proposition and opens further M&A paths — supports multiple expansion arguments over time .