First Quarter 2022 Highlights

(All results reflect comparisons to prior-year period unless otherwise noted)

• Sales of $328.7 million increased 17.7%; organic sales increased 13.5%
• Net income attributable to EnPro Industries, Inc. was $16.2 million compared to $18.0 million last year
• Adjusted EBITDA* increased 30.6% to $67.9 million; adjusted EBITDA margin* increased 210 bps to 20.7%
• Diluted earnings per share attributable to EnPro Industries, Inc. was $0.77, compared to a diluted earnings per share of $0.87 last year
• Adjusted diluted earnings per share* increased 33.6% to $1.83 versus $1.37 last year
• Maintain revenue growth guidance of low double-digits and adjusted EBITDA guidance of $263-$275 million for 2022

EnPro Industries, Inc. (NYSE: NPO) today announced its financial results for the three months ended March 31, 2022.

"Agile execution throughout Enpro produced solid results and allowed us to continue successfully navigating inflationary and supply chain headwinds in the first quarter," said Eric Vaillancourt, President and Chief Executive Officer. "Enpro delivered adjusted EBITDA margins above 20% for the first time in our twenty-year history, driven by continued solid performance in our Sealing Technologies and Advanced Surface Technologies segments and sustained benefits from our transformative portfolio reshaping actions. Our first quarter results reflect our resilient operating model and our team's focus on delivering for our customers as demand increased year over year in most of our major end markets."

Mr. Vaillancourt continued, "Demand remains strong into the second quarter despite the current macroeconomic and geopolitical uncertainty. Our team is energized and collaborating closely throughout the organization, and we are thrilled with the opportunities arising from the NxEdge acquisition. Looking ahead, we remain focused on executing on our commercial and strategic imperatives and leveraging the strength of our reshaped portfolio of industrial technology businesses to build on our momentum and drive sustainable growth and enhanced value for our stakeholders."

First Quarter 2022 Consolidated Results

Sales of $328.7 million increased 17.7% compared to the first quarter of 2021. Positive momentum in the semiconductor, general industrial, heavy-duty truck, aerospace, food & pharma, oil & gas, and petrochemical markets, as well as the contribution from NxEdge, drove the increase in sales, partially offset by the impact of last year's divestitures as well as supply chain-related delays in the automotive market. Excluding the impact of acquired and divested businesses and foreign exchange translation, sales grew 13.5% year over year.

Corporate expenses of $13.4 million in the first quarter of 2022 increased from $11.6 million in the first quarter of 2021, driven primarily by acquisition and divestiture costs, as well as corporate restructuring charges, partially offset by lower incentive compensation accruals.

Net income attributable to EnPro Industries, Inc. was $16.2 million, compared to $18.0 million in the prior-year period. Diluted earnings per share attributable to EnPro Industries, Inc. was $0.77, compared to $0.87 in the prior-year period. Both net income and diluted earnings per share attributable to EnPro Industries, Inc. were adversely impacted by non-cash amortization of acquisition-related intangibles and, for the first quarter of 2022, by incremental amortization from the purchase accounting fair value inventory write-up resulting from the NxEdge acquisition.

Adjusted net income attributable to EnPro Industries, Inc. of $38.3 million increased 35.3% compared to the first quarter of 2021 and adjusted diluted earnings per share was $1.83, compared to $1.37 in the prior-year period, an increase of 33.6%.

Adjusted EBITDA of $67.9 million increased 30.6% compared to the prior-year period driven primarily by the addition of NxEdge, operating leverage on organic sales growth and pricing initiatives, partially offset by inflationary raw material costs, rising labor expenses and the impact of divestitures completed in 2021. Adjusted EBITDA margin of 20.7% increased 210 basis points compared to the prior-year period.

First Quarter 2022 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

• Sales increased 4.8% versus the prior-year period driven by strong demand in heavy-duty truck, food & pharma, aerospace, and general industrial markets, partially offset by the impact of divestiture of the polymer components business completed in 2021. Excluding the impact of the divested business and foreign exchange translation, sales increased 14.1% versus the prior-year period.
• Adjusted segment EBITDA of $33.5 million was essentially flat year-over-year. Price increases and operating leverage from strong volume were offset by the effect of the polymer components divestiture and increased inflationary pressures on raw material and labor costs, particularly in the heavy-duty truck market. Excluding the impact of the divestiture and foreign exchange translation, adjusted segment EBITDA increased 6.2% compared to the prior-year period.

Advanced Surface Technologies - Leading edge precision manufacturing, coatings, innovative optical solutions and cleaning and refurbishment services - NxEdge, Technetics Semi, LeanTeq, and Alluxa

• Sales increased 113.3% versus the prior-year period driven by the acquisition of NxEdge and continued strong demand in the semiconductor market. Excluding the impact of the NxEdge acquisition and foreign exchange translation, sales increased 19.6% year-over-year.
• Adjusted segment EBITDA increased 101.7% versus the prior-year period, driven primarily by the NxEdge acquisition and strong organic sales growth. Excluding the impact of the NxEdge acquisition and foreign exchange translation, adjusted segment EBITDA decreased 3.5% compared to the prior-year period due to increased operating expenses supporting the development of advanced optical filter applications and growth investments in semiconductor supporting capacity expansion in both the United States and Taiwan. In addition, results were impacted by product mix and wage increases ahead of price adjustments.

Engineered Materials - High performance polymer applications and critical pipeline products - GGB and GPT

• Sales decreased 26.6% versus the prior-year period driven primarily by the CPI divestiture completed in December 2021 and a lag in the automotive market, as supply chain-related customer delays continued, partially offset by strong demand in general industrial, aerospace and oil & gas markets. Excluding the divestiture and foreign exchange translation, sales increased 6.5% compared to the prior-year period.
• Adjusted segment EBITDA decreased 27.0% versus the prior-year period, driven primarily by the CPI divestiture. Excluding the CPI divestiture and foreign exchange translation, adjusted segment EBITDA decreased 4.0% compared to the prior-year period, reflecting raw material, labor and freight cost headwinds in excess of pricing initiatives, particularly in the automotive market.

Balance Sheet, Cash Flow and Capital Allocation

The company generated $30.7 million of cash flow from operations during the three months ended March 31, 2022 and $26.9 million of free cash flow, net of $3.8 million in capital expenditures. This compares to $20.3 million of cash flow from operations, or $14.1 million of free cash flow, net of $6.2 million in capital expenditures, in the prior-year period. The year-over-year change was driven primarily by higher operating profits, improvement in working capital management and lower capital expenditures. During the first quarter, the company paid a regular quarterly dividend of $0.28 per share, with dividend payments totaling $5.9 million for the first three months of 2022.

Enpro ended the first quarter with total debt of $1.078 billion and cash of $293.4 million. Outstanding letters of credit totaled $11.4 million.

Quarterly Dividend

EnPro Industries, Inc. declared a regular quarterly dividend of $0.28 per share on April 29, 2022. The dividend is payable June 15, 2022 to shareholders of record as of the close of business on June 1, 2022.

2022 Guidance

The company continues to expect 2022 revenue growth to be in the low double-digit range and adjusted EBITDA to be in the range of $263 million to $275 million. With the anticipated acceleration of interest rates for the balance of 2022, the company currently expects adjusted diluted earnings per share to be in the range of $6.60 to $7.15, reflecting an additional $3 million of interest expense compared to prior estimates.

Conference Call, Webcast Information, and Presentations

Enpro will hold a conference call today, May 2, at 8:30 a.m. Eastern Time to discuss first quarter 2022 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 13714141. 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 2022 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, as well as those 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: impacts from the COVID-19 pandemic and governmental responses to limit the further spread of COVID-19, including impacts on the company’s operations, and the operations and businesses of its customers and vendors, including whether the company’s operations and those of its customers and vendors will continue to be treated as “essential” operations under government orders restricting business activities or, even if so treated, whether site-specific health and safety concerns might otherwise require certain operations to be halted or otherwise curtailed for some period of time; uncertainty with respect to the duration and severity of these impacts from the COVID-19 pandemic, including impacts on the general economy and the markets served by the company’s customers, as well as supply chain disruptions and materials cost increases that are not passed along to our customers; the extent to which the impacts from the COVID-19 pandemic could result in a reduction in demand for the company’s products and services, which could also result in asset impairment charges, including for goodwill; other economic conditions in the markets served by Enpro’s businesses and those of its customers, some of which are cyclical and experience periodic downturns and disruptions, such as disruptions in the pricing of oil and gas; the impact of geopolitical activity on those markets, including the outbreak, threat of outbreak or continuation of armed hostilities and the imposition of governmental sanctions in response thereto, prices and availability of its raw materials; uncertainties with respect to the company’s ability to achieve anticipated growth within the semiconductor, life sciences, and other technology-enabled markets; 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 pricing policies or the pricing policies of competitors; and the amount of any payments required to satisfy contingent liabilities, including those related to discontinued operations, other divested businesses and the discontinued operations of its 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 , 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 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 the end of the first quarter, the impact of foreign exchange rate changes subsequent to the end of the first quarter, impacts from further spread of COVID-19, and environmental and litigation charges.

About Enpro

Enpro is an industrial technology company focused on niche applications across many end-markets, including semiconductor, photonics, industrial process, aerospace, food and pharma and life sciences. For more information about Enpro, visit the company’s website at http://www.enproindustries.com.

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APPENDICES

Consolidated Financial Information and Reconciliations

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