(All results reflect comparisons to the respective prior-year
period unless otherwise noted)
- Sales of $249.1 million decreased 8.4% and organic sales
decreased 9.0%
- GAAP loss from continuing operations attributable to Enpro Inc.
improved to $4.9 million, compared to a GAAP loss of $57.5 million
last year
- Adjusted EBITDA* decreased 12.2% to $46.9 million
- Diluted loss per share from continuing operations attributable
to Enpro Inc. improved to $0.23, compared to a diluted loss per
share of $2.76
- Adjusted diluted earnings per share* decreased 8.5% to $1.19
versus $1.30 last year
Full Year 2023 Results
- Sales of $1.06 billion decreased 3.6% and organic sales
decreased 3.3%
- GAAP income from continuing operations attributable to Enpro
Inc. increased $10.8 million, compared to income of $6.7 million
last year
- Adjusted EBITDA* decreased 7.5% to $238.0 million
- Diluted earnings per share from continuing operations
attributable to Enpro Inc. increased to $0.51, compared to diluted
earnings per share of $0.32 last year
- Adjusted diluted earnings per share* decreased 3.7% to $6.54
versus $6.79 last year
2024 Guidance and Update
- Introducing guidance for 2024: revenue growth in the low to
mid-single-digit range, adjusted EBITDA* in the range of $260
million to $280 million and adjusted diluted earnings per share* of
$7.00 to $7.80
- Subsequent to quarter end, in late January Enpro completed the
previously announced acquisition of Advanced Micro Instruments,
Inc. ("AMI") for $210 million
- Entering 2024 with a net leverage ratio of 2.0x, inclusive of
the recently completed AMI transaction
- Strong balance sheet and robust free cash flow provide
significant financial flexibility to further organic growth
initiatives and strategic acquisitions
Enpro Inc. (NYSE: NPO) today announced its financial results for
the three months and year ended December 31, 2023.
"We are pleased with Enpro’s strong performance and execution in
2023. Sealing Technologies delivered record profitability that
largely offset softness in Advanced Surface Technologies due to
continued weakness in the global semiconductor industry.” said Eric
Vaillancourt, President and Chief Executive Officer. “Enpro
delivered full year adjusted EBITDA* margin of 22.5% while
generating outstanding operating cash flow. Despite significant
semiconductor headwinds, AST segment margin approached 24% in 2023,
demonstrating the segment’s value-added capabilities. Sealing
Technologies 2023 segment margin exceeded 29%, despite a slowdown
in the fourth quarter.”
Mr. Vaillancourt continued, “We are well positioned to build on
the progress achieved in 2023 by continuing to execute on our
strategic growth initiatives in both Sealing Technologies and AST.
While the timing of a broader semiconductor capital equipment
recovery remains uncertain, the industry is showing early signs of
an uptick, and we remain focused on driving growth and value in our
semiconductor business over a multi-year period. Our ability to
navigate through any market environment with our solid execution
and disciplined cost mitigation efforts underscores the resiliency
of our business. We have a strong balance sheet to drive our
strategy and deliver top and bottom-line growth, while continuing
to provide a safe and vibrant working environment for our
colleagues.”
Financial Highlights
(Amounts in millions except per share data
and percentages)
Quarters Ended December
31,
Years Ended December
31,
2023
2022
Change
2023
2022
Change
Net Sales
$
249.1
$
271.9
(8.4
)%
$
1,059.3
$
1,099.2
(3.6
)%
Income (Loss) from Continuing Operations
Attributable to Enpro Inc.
$
(4.9
)
$
(57.5
)
nm
$
10.8
$
6.7
61.2
%
Diluted Earnings (Loss) Per Share
Attributable to Enpro Inc. Continuing Operations
$
(0.23
)
$
(2.76
)
nm
$
0.51
$
0.32
59.4
%
Adjusted Income from Continuing Operations
Attributable to Enpro Inc.*
$
25.0
$
27.1
(7.7
)%
$
137.0
$
141.8
(3.4
)%
Adjusted Diluted Earnings Per Share*
$
1.19
$
1.30
(8.5
)%
$
6.54
$
6.79
(3.7
)%
Adjusted EBITDA*
$
46.9
$
53.4
(12.2
)%
$
238.0
$
257.4
(7.5
)%
Adjusted EBITDA Margin*
18.8
%
19.6
%
22.5
%
23.4
%
*Non-GAAP measure. See the attached
schedules for adjustments and reconciliations of historical
non-GAAP measures to GAAP measures. No reconciliation is presented
for the 2024 guidance range of adjusted EBITDA and adjusted diluted
earnings per share from continuing operations. Because of the
forward-looking nature of these estimates, it is impractical to
present quantitative reconciliations of such measures to comparable
GAAP measures.
Fourth Quarter 2023 Consolidated Results of Continuing
Operations
Sales of $249.1 million decreased 8.4% in the fourth quarter of
2023. Continued softness in the global semiconductor market, a
sharp decline in demand in commercial vehicle OEM, and tepid
general industrial, commercial aerospace and pharma demand during
the quarter were partially offset by strategic pricing actions
across markets and continued strength in nuclear energy. Excluding
the impact of a divested business and foreign currency exchange
translation, organic sales for the quarter declined 9.0% compared
to last year.
Corporate expenses of $14.4 million in the fourth quarter of
2023 were down from $15.6 million a year ago primarily due to lower
total compensation expense.
Loss from continuing operations attributable to Enpro Inc. was
$4.9 million, compared to a loss of $57.5 million, impacted by a
goodwill impairment charge. Adjusted income from continuing
operations attributable to Enpro Inc. of $25.0 million decreased
7.7% compared to the fourth quarter of 2022. Diluted loss per share
attributable to Enpro Inc. continuing operations was $0.23,
compared to a diluted loss per share of $2.76 in the prior-year
period, and adjusted diluted earnings per share* of $1.19 decreased
8.5%.
Adjusted EBITDA* of $46.9 million decreased 12.2% from $53.4
million last year. During the fourth quarter of 2023, strong share
price performance increased long-term incentive compensation
expense by $6.4 million, compared to an increase of $4.8 million
last year.
The incremental $6.4 million in long-term compensation expense
during the fourth quarter of 2023 was not considered when providing
prior 2023 guidance commentary. Enpro does not contemplate
compensation expenses related to share price changes when
determining guidance. Modifications made during 2023 to the
long-term incentive compensation program will lessen this impact in
2024 and eliminate the impact in years thereafter.
Fourth Quarter 2023 Segment Highlights of Continuing
Operations
Sealing Technologies -
Safeguarding environments with critical applications in diverse end
markets Garlock, STEMCO, and Technetics Group
Quarters Ended December
31,
Years Ended December
31,
(Amounts in millions except
percentages)
2023
2022
Change
2023
2022
Change
Sales
$
147.0
$
156.9
(6.3
)%
$
658.4
$
624.3
5.5
%
Adjusted Segment EBITDA
$
38.4
$
41.0
(6.3
)%
$
192.3
$
159.1
20.9
%
Adjusted Segment EBITDA Margin
26.1
%
26.1
%
29.2
%
25.5
%
- Sales decreased 6.3% versus the prior-year period. Excluding
the impact of foreign exchange translation and a divested business,
sales decreased 7.5%, driven by a sharp decline in commercial
vehicle OEM and softness in general industrial, commercial
aerospace, pharma and commercial vehicle aftermarket, partially
offset by strategic pricing initiatives and continued strength in
nuclear energy.
- Adjusted segment EBITDA decreased 6.3% versus the prior-year
period. A decline in volume was the main driver of the decrease,
offset in part by strategic pricing initiatives and cost mitigation
activities. Excluding the impact of foreign exchange translation
the divestiture, adjusted segment EBITDA decreased 7.9% compared to
the prior-year period.
Advanced Surface
Technologies - Leading edge precision manufacturing,
coatings, innovative optical solutions and cleaning and
refurbishment solutions - NxEdge, Technetics Semi, LeanTeq, and
Alluxa
Quarters Ended December
31,
Years Ended December
31,
(Amounts in millions except
percentages)
2023
2022
Change
2023
2022
Change
Sales
$
102.1
$
115.4
(11.5
)%
$
401.2
$
476.1
(15.7
)%
Adjusted Segment EBITDA
$
22.9
$
28.9
(20.8
)%
$
95.5
$
141.5
(32.5
)%
Adjusted Segment EBITDA Margin
22.4
%
25.0
%
23.8
%
29.7
%
- Sales decreased 11.5% versus the prior-year period driven
primarily by continued weakness in semiconductor capital equipment
spending. Excluding the impact of foreign exchange translation,
sales decreased 11.3% versus the prior-year period.
- Adjusted segment EBITDA decreased 20.8% versus the prior-year
period. Excluding the impact of foreign exchange translation,
adjusted segment EBITDA decreased 20.4%, driven primarily by the
volume decline, mix, material cost increases and operating costs
related to growth investments, offset in part by cost mitigation
activities and pricing actions.
Full Year 2023 Consolidated Results
Sales of $1.06 billion decreased 3.6% compared to 2022. On an
organic basis, sales declined 3.3% year-over-year driven primarily
by the continued slowdown in the global semiconductor market,
mostly offset by the contribution from strategic pricing actions
and strength in the nuclear energy and aerospace markets.
Corporate expenses for 2023 of $49.5 million increased $2.5
million compared to 2022 due to an increase in total compensation
expense.
Income from continuing operations attributable to Enpro Inc.
increased to $10.8 million, compared to $6.7 million in the prior
year. Adjusted income from continuing operations attributable to
Enpro Inc. of $137.0 million decreased 3.4% compared to 2022.
Diluted earnings per share attributable to Enpro Inc. continuing
operations increased to $0.51, compared to diluted earnings per
share of $0.32 in the prior year. Adjusted diluted earnings per
share* decreased to $6.54, compared to $6.79 in the prior year.
Adjusted EBITDA* of $238.0 million decreased 7.5% compared to
2022. Adjusted EBITDA margin* of 22.5% decreased 90 basis points
compared to last year driven primarily by the impact of the overall
volume decline and a share-price-related increase in long-term
incentive compensation expense, offset in part by the impact of
strategic pricing actions and cost mitigation activities. Share
price performance during 2023 resulted in a $7.1 million increase
in long-term incentive compensation expense compared to an increase
of $2.2 million last year.
Balance Sheet, Cash Flow and Capital Allocation
The company generated $208.4 million of cash flow from
continuing operations during the year ended December 31, 2023 and
$174.5 million of free cash flow, net of $33.9 million in capital
expenditures. This compares to $106.1 million of cash flow from
continuing operations and $76.7 million of free cash flow, net of
$29.4 million in capital expenditures in 2022. During the fourth
quarter, the company paid a regular quarterly dividend of $0.29 per
share, with dividends totaling $24.3 million for the year ended
December 31, 2023.
Enpro ended the fourth quarter with cash of $369.8 million and
full availability under its revolving credit facility. The company
exited 2023 with a net leverage ratio of 1.3x.
On January 29, 2024, Enpro completed the acquisition of AMI, a
leading provider of highly engineered, application-specific
analyzers and sensing technologies that monitor critical parameters
to maintain infrastructure integrity, enable process efficiency,
enhance safety, and facilitate the clean energy transition, for
$210 million. Giving effect to the use of cash to fund this
acquisition, the company’s net leverage ratio at year-end would
have been approximately 2.0x.
Quarterly Dividend
On February 15, 2024, Enpro Inc. increased its quarterly
dividend by 3.4% to $0.30 per share, from $0.29 per share
previously. The dividend is payable on March 20, 2024, to
shareholders of record as of the close of business on March 6,
2024. The company has increased its quarterly dividend for nine
consecutive years since initiating a dividend in 2015.
2024 Guidance
The company expects 2024 revenue growth to be in the low to
mid-single digit range, adjusted EBITDA* to be in the range of $260
million to $280 million and adjusted diluted earnings per share*
from continuing operations to be in the range of $7.00 to
$7.80.
Conference Call, Webcast Information, and
Presentations
Enpro will hold a conference call today, February 20, 2024, at
8:30 a.m. Eastern Time to discuss fourth quarter and full year 2023
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 ID number 13735649. A live audio webcast of the
call and accompanying slide presentation will be accessible from
the company’s website, https://www.enpro.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 income
from continuing operations attributable to Enpro Inc., adjusted
diluted earnings per share attributable to Enpro 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 2024 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 the company’s businesses and the businesses of its customers,
some of which are cyclical and experience periodic downturns; the
impact of geopolitical activity on those markets, including
instabilities associated with the armed conflicts in Ukraine and
between Israel and Hamas 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 the company conducts
business, could significantly increase the company’s cost of
products or otherwise reduce its sales and harm its business;
uncertainties with respect to prices and availability of raw
materials, including as a result of instabilities from geopolitical
conflicts; uncertainties with respect to the company’s 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 and the timing of
completion of the new Arizona facility; 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 the company’s pricing
policies or the pricing policies of its competitors; risks related
to the reliance of the AST segment on a small number of significant
customers; uncertainties with respect to the company’s ability to
identify and complete business acquisitions consistent with its
strategy and to successfully integrate any businesses that it
acquires; 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 the company’s 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, changes in long-term compensation expense due
to changes in the company’s common stock price, 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 December
31, 2023, and the impact of changes in foreign exchange rates
subsequent to that date.
About Enpro
Enpro is a leading industrial technology company focused on
critical applications across many end-markets, including
semiconductor, industrial process, commercial vehicle, sustainable
power generation, aerospace, food and pharma, photonics and life
sciences. Headquartered in Charlotte, North Carolina, Enpro is
listed on the New York Stock Exchange under the symbol "NPO". For
more information about Enpro Inc., visit the company’s website at
http://www.enpro.com.
APPENDICES
Consolidated Financial Information and
Reconciliations
Enpro Inc.
Consolidated Statements of Operations
(Unaudited)
For the Quarters and Years Ended December
31, 2023 and 2022
(In Millions, Except Per Share Data)
Quarters Ended
Years Ended
December 31,
December 31,
December 31,
December 31,
2023
2022
2023
2022
Net sales
$
249.1
$
271.9
$
1,059.3
$
1,099.2
Cost of sales
152.8
166.4
632.5
675.9
Gross profit
96.3
105.5
426.8
423.3
Operating expenses:
Selling, general and administrative
73.9
77.7
284.2
282.8
Goodwill impairment
—
65.2
60.8
65.2
Other
1.9
0.8
5.0
3.1
Total operating expenses
75.8
143.7
350.0
351.1
Operating income (loss)
20.5
(38.2
)
76.8
72.2
Interest expense
(10.1
)
(11.4
)
(45.0
)
(35.6
)
Interest income
3.6
1.4
14.9
1.7
Other expense
(4.7
)
(8.3
)
(9.0
)
(10.0
)
Income (loss) from continuing operations
before income taxes
9.3
(56.5
)
37.7
28.3
Income tax expense
(13.8
)
(4.6
)
(30.8
)
(24.4
)
Income (loss) from continuing
operations
(4.5
)
(61.1
)
6.9
3.9
Income from discontinued operations,
including gain on sale, net of taxes
—
184.5
11.4
198.4
Net income (loss)
(4.5
)
123.4
18.3
202.3
Less: net income (loss) attributable to
redeemable non-controlling interests
0.4
(3.6
)
(3.9
)
(2.8
)
Net income (loss) attributable to Enpro
Inc.
$
(4.9
)
$
127.0
$
22.2
$
205.1
Income (loss) attributable to Enpro Inc.
common shareholders:
Income (loss) from continuing operations,
net of tax
$
(4.9
)
$
(57.5
)
$
10.8
$
6.7
Income from discontinued operations, net
of tax
—
184.5
11.4
198.4
Net income (loss) attributable to Enpro
Inc.
$
(4.9
)
$
127.0
$
22.2
$
205.1
Basic earnings (loss) per share
attributable to Enpro Inc.:
Continuing operations
$
(0.23
)
$
(2.76
)
$
0.52
$
0.32
Discontinued operations
—
8.87
0.54
9.54
Basic earnings (loss) per share
$
(0.23
)
$
6.11
$
1.06
$
9.86
Average common shares outstanding
20.9
20.8
20.9
20.8
Diluted earnings (loss) per share
attributable to Enpro Inc.:
Continuing operations
$
(0.23
)
$
(2.76
)
$
0.51
$
0.32
Discontinued operations
—
8.87
0.54
9.51
Diluted earnings (loss) per share
$
(0.23
)
$
6.11
$
1.05
$
9.83
Average common shares outstanding
21.0
20.9
21.0
20.9
Enpro Inc.
Consolidated Statements of Cash Flows
(Unaudited)
For the Years Ended December 31, 2023 and
2022
(In Millions)
2023
2022
Operating activities of continuing
operations
Net income
$
18.3
$
202.3
Adjustments to reconcile net income to net
cash provided by operating activities of continuing operations:
Income from discontinued operations, net
of taxes
(11.4
)
(198.4
)
Taxes paid related to sale of discontinued
operations
(3.3
)
(25.8
)
Depreciation
24.5
25.5
Amortization
70.0
77.6
Goodwill impairment
60.8
65.2
Loss (gain) on sale of businesses
(0.1
)
0.6
Deferred income taxes
(7.7
)
(14.0
)
Stock-based compensation
9.8
6.5
Other non-cash adjustments
4.7
6.2
Change in assets and liabilities, net of
effects of acquisitions and divestitures of businesses:
Accounts receivable, net
21.6
(0.1
)
Inventories
10.3
(18.0
)
Accounts payable
(5.2
)
1.5
Other current assets and liabilities
18.4
(37.1
)
Other non-current assets and
liabilities
(2.3
)
14.1
Net cash provided by operating activities
of continuing operations
208.4
106.1
Investing activities of continuing
operations
Purchases of property, plant and
equipment
(33.9
)
(29.4
)
Proceeds from sale of businesses, net of
cash sold
25.9
301.9
Acquisitions, net of cash acquired
—
(31.2
)
Receipts from settlements of derivative
contracts
—
27.4
Purchase of short-term investments
(35.8
)
—
Redemption of short-term investments
35.8
—
Other
0.6
(0.1
)
Net cash provided by (used in) investing
activities of continuing operations
(7.4
)
268.6
Financing activities of continuing
operations
Proceeds from debt
—
61.0
Repayments of debt
(145.1
)
(398.0
)
Dividends paid
(24.3
)
(23.4
)
Other
(1.5
)
(7.6
)
Net cash used in financing activities of
continuing operations
(170.9
)
(368.0
)
Cash flows of discontinued operations
Operating cash flows
(0.6
)
21.3
Financing cash flows
—
(5.1
)
Net cash provided by (used in)
discontinued operations
(0.6
)
16.2
Effect of exchange rate changes on cash
and cash equivalents
5.9
(26.6
)
Net increase in cash and cash
equivalents
35.4
(3.7
)
Cash and cash equivalents at beginning of
period
334.4
338.1
Cash and cash equivalents at end of
period
$
369.8
$
334.4
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest, net
$
43.3
$
31.5
Income taxes, net
$
17.2
$
80.8
Enpro Inc.
Consolidated Balance Sheets
(Unaudited)
As of December 31, 2023 and 2022
(In Millions)
2023
2022
Current assets
Cash and cash equivalents
$
369.8
$
334.4
Accounts receivable, net
116.7
137.1
Inventories
142.6
151.9
Other current assets
21.2
44.9
Current assets of discontinued
operations
—
15.9
Total current assets
650.3
684.2
Property, plant and equipment, net
193.8
185.2
Goodwill
808.4
863.8
Other intangible assets
733.5
799.8
Other assets
113.5
114.8
Total assets
$
2,499.5
$
2,647.8
Current liabilities
Current maturities of long-term debt
$
8.1
$
15.6
Accounts payable
68.7
73.4
Accrued expenses
119.6
120.2
Current liabilities of discontinued
operations
—
2.3
Total current liabilities
196.4
211.5
Long-term debt
638.7
775.1
Deferred taxes and non-current income
taxes payable
120.7
136.5
Other liabilities
116.1
111.7
Total liabilities
1,071.9
1,234.8
Redeemable non-controlling interests
17.9
17.9
Shareholders’ equity
Common stock
0.2
0.2
Additional paid-in capital
304.9
299.2
Retained earnings
1,128.0
1,130.2
Accumulated other comprehensive income
(loss)
(22.2
)
(33.3
)
Common stock held in treasury, at cost
(1.2
)
(1.2
)
Total shareholders’ equity
1,409.7
1,395.1
Total liabilities and equity
$
2,499.5
$
2,647.8
Enpro Inc.
Segment Information (Unaudited)
For the Quarters and Years Ended December
31, 2023 and 2022
(Dollars in Millions)
Sales
Quarters Ended
Years Ended
December 31,
December 31,
2023
2022
2023
2022
Sealing Technologies
$
147.0
$
156.9
$
658.4
$
624.3
Advanced Surface Technologies
102.1
115.4
401.2
476.1
249.1
272.3
1,059.6
1,100.4
Less: intersegment sales
—
(0.4
)
(0.3
)
(1.2
)
$
249.1
$
271.9
$
1,059.3
$
1,099.2
Income (loss) from continuing
operations attributable to Enpro Inc.
$
(4.9
)
$
(57.5
)
$
10.8
$
6.7
Earnings before interest, income taxes,
depreciation,
amortization and other selected items
(Adjusted Segment EBITDA)
Quarters Ended
Years Ended
December 31,
December 31,
2023
2022
2023
2022
Sealing Technologies
$
38.4
$
41.0
$
192.3
$
159.1
Advanced Surface Technologies
22.9
28.9
95.5
141.5
$
61.3
$
69.9
$
287.8
$
300.6
Adjusted Segment EBITDA Margin
Quarters Ended
Years Ended
December 31,
December 31,
2023
2022
2023
2022
Sealing Technologies
26.1
%
26.1
%
29.2
%
25.5
%
Advanced Surface Technologies
22.4
%
25.0
%
23.8
%
29.7
%
24.6
%
25.7
%
27.2
%
27.3
%
Reconciliation of Adjusted Segment
EBITDA to Income (Loss) from Continuing Operations Attributable to
Enpro Inc.
Quarters Ended
Years Ended
December 31,
December 31,
2023
2022
2023
2022
Income (loss) from continuing operations
attributable to Enpro Inc.
$
(4.9
)
$
(57.5
)
$
10.8
$
6.7
Plus: net income (loss) attributable to
redeemable non-controlling interests
0.4
(3.6
)
(3.9
)
(2.8
)
Income (loss) from continuing
operations
(4.5
)
(61.1
)
6.9
3.9
Income tax expense
(13.8
)
(4.6
)
(30.8
)
(24.4
)
Income (loss) from continuing operations
before income taxes
9.3
(56.5
)
37.7
28.3
Acquisition and divestiture expenses
1.1
0.1
1.1
0.5
Non-controlling interest compensation
allocation1
—
(0.5
)
(0.3
)
(0.6
)
Amortization of the fair value adjustment
to acquisition date inventory
—
1.0
—
13.3
Restructuring and impairment expense
1.4
0.7
4.0
1.9
Depreciation and amortization expense
23.4
25.1
94.3
102.8
Corporate expenses
14.4
15.6
49.5
47.0
Interest expense, net
6.5
10.0
30.1
33.9
Goodwill impairment
—
65.2
60.8
65.2
Other expense, net
5.2
9.2
10.6
8.3
Adjusted Segment EBITDA
$
61.3
$
69.9
$
287.8
$
300.6
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.
1Non-controlling interest compensation
allocation represents compensation expense associated with a
portion of the rollover equity from the acquisitions of LeanTeq and
Alluxa that was and 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 Inc.
Adjusted Segment EBITDA Reconciling
Items by Segment (Unaudited)
For the Quarters and Years Ended December
31, 2023 and 2022
(In Millions)
Quarter Ended December 31,
2023
Sealing Technologies
Advanced Surface Technologies
Total Segments
Acquisition and divestiture expenses
$
1.1
$
—
$
1.1
Restructuring and impairment expense
$
1.4
$
—
$
1.4
Depreciation and amortization expense
$
6.2
$
17.2
$
23.4
Quarter Ended December 31,
2022
Sealing Technologies
Advanced Surface Technologies
Total Segments
Acquisition and divestiture expenses
$
—
$
0.1
$
0.1
Non-controlling interest compensation
allocation1
$
—
$
(0.5
)
$
(0.5
)
Amortization of the fair value adjustment
to acquisition date inventory
$
—
$
1.0
$
1.0
Restructuring and impairment expense
$
0.1
$
0.6
$
0.7
Depreciation and amortization expense
$
6.3
$
18.8
$
25.1
Year Ended December 31, 2023
Sealing Technologies
Advanced Surface Technologies
Total Segments
Acquisition and divestiture expenses
$
1.1
$
—
$
1.1
Non-controlling interest compensation
allocation1
$
—
$
(0.3
)
$
(0.3
)
Restructuring and impairment expense
$
3.0
$
1.0
$
4.0
Depreciation and amortization expense
$
25.1
$
69.2
$
94.3
Year Ended December 31, 2022
Sealing Technologies
Advanced Surface Technologies
Total Segments
Acquisition and divestiture expenses
$
—
$
0.5
$
0.5
Non-controlling interest compensation
allocation1
$
—
$
(0.6
)
$
(0.6
)
Amortization of the fair value adjustment
to acquisition date inventory
$
—
$
13.3
$
13.3
Restructuring and impairment expense
$
0.6
$
1.3
$
1.9
Depreciation and amortization expense
$
26.2
$
76.6
$
102.8
1Non-controlling interest compensation
allocation represents compensation expense associated with a
portion of the rollover equity from the acquisitions of LeanTeq and
Alluxa that was and 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 Inc.
Reconciliation of Income (Loss) from
Continuing Operations Attributable to Enpro Inc. to Adjusted Income
from Continuing Operations Attributable to Enpro Inc. and Adjusted
Diluted Earnings Per Share (Unaudited)
For the Quarters and Years Ended December
31, 2023 and 2022
(In Millions, Except Per Share Data)
Quarters Ended December 31,
2023
2022
$
Average common shares
outstanding, diluted
Per Share
$
Average common shares
outstanding, diluted
Per Share
Income (loss) from continuing operations
attributable to Enpro Inc.
$
(4.9
)
21.0
$
(0.23
)
$
(57.5
)
20.9
$
(2.76
)
Net income (loss) from redeemable
non-controlling interests
0.4
(3.6
)
Income tax expense
13.8
4.6
Income (loss) from continuing operations
before income taxes
9.3
(56.5
)
Adjustments from selling, general, and
administrative:
Acquisition and divestiture expenses
1.1
0.1
Non-controlling interest compensation
allocations1
—
(0.5
)
Amortization of acquisition-related
intangible assets
16.8
18.5
Adjustments from other operating expense
and cost of sales:
Restructuring and impairment expense
1.9
0.7
Amortization of the fair value adjustment
to acquisition date inventory
—
1.0
Adjustments from other non-operating
expense:
Environmental reserve adjustment
2.5
5.3
Costs associated with previously disposed
businesses
0.9
(0.6
)
Net loss on sale of businesses
—
0.4
Pension expense (income) (non-service
cost)
0.4
(1.5
)
Tax indemnification asset 2
—
0.9
Alluxa goodwill impairment
—
60.6
Foreign exchange losses related to the
divestiture of a discontinued operation3
0.7
3.8
Other adjustments:
Other
0.2
—
Adjusted income from continuing operations
before income taxes
33.8
32.2
Adjusted income tax expense
(8.4
)
(8.7
)
Net loss (income) from redeemable
non-controlling interests
(0.4
)
3.6
Adjusted income from continuing operations
attributable to Enpro Inc.
$
25.0
21.0
$
1.194
$
27.1
20.9
$
1.304
Years Ended December 31,
2023
2022
$
Average common shares
outstanding, diluted
Per Share
$
Average common shares
outstanding, diluted
Per Share
Income from continuing operations
attributable to Enpro Inc.
$
10.8
21.0
$
0.51
$
6.7
20.9
$
0.32
Net loss from redeemable non-controlling
interests
(3.9
)
(2.8
)
Income tax expense
30.8
24.4
Income from continuing operations before
income taxes
37.7
28.3
Adjustments from selling, general, and
administrative:
Acquisition and divestiture expenses
1.1
1.2
Non-controlling interest compensation
allocations1
(0.3
)
(0.7
)
Amortization of acquisition-related
intangible assets
68.4
74.8
Adjustments from other operating expense
and cost of sales:
Restructuring and impairment expense
5.0
2.9
Amortization of the fair value adjustment
to acquisition date inventory
—
13.1
Adjustments from other non-operating
expense:
Asbestos receivable adjustment
—
2.8
Environmental reserve adjustment
2.9
5.1
Costs associated with previously disposed
businesses
1.7
0.3
Net loss on sale of businesses
—
0.6
Pension expense (income) (non-service
cost)
1.5
(3.6
)
Tax indemnification asset 2
—
0.9
Goodwill impairment
56.5
60.6
Foreign exchange losses related to the
divestiture of a discontinued operation3
2.2
3.8
Other adjustments:
Other
0.8
0.2
Adjusted income from continuing operations
before income taxes
177.5
190.3
Adjusted income tax expense
(44.4
)
(51.3
)
Net loss from redeemable non-controlling
interests
3.9
2.8
Adjusted income from continuing operations
attributable to Enpro Inc.
$
137.0
21.0
$
6.544
$
141.8
20.9
$
6.794
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 income from continuing operations attributable to Enpro
Inc. and diluted earnings per share attributable to Enpro Inc.,
including items that may infrequently 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 Inc. to other diversified industrial technology
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.
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 associated with a
portion of the rollover equity from the acquisitions of LeanTeq and
Alluxa that was and 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 acquisition of
Aseptic in 2019, we recognized a liability for uncertain tax
positions and a related indemnification asset for the portion of
that liability recoverable from the seller. We determined the
statute of limitations expired on some of the uncertain tax
positions in 2022 and 2021 and, accordingly, removed a portion of
the liability and receivable. The release of the related liability
was recorded as part of our tax expense for the years ended
December 31, 2022 and 2021 and the reversal of the related
receivable was recorded as an expense in other non-operating income
(expense) on our consolidated statement of operations.
3 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
during December 2022. In January 2023, we hedged the outstanding
notes and expect future gains or losses to be minimal.
4 Adjusted diluted earnings per share.
Enpro Inc.
Reconciliation of Income (Loss) from
Continuing Operations Attributable to Enpro Inc. to Adjusted EBITDA
(Unaudited)
For the Quarters and Years Ended December
31, 2023 and 2022
(In Millions)
Quarters Ended
Years Ended
December 31,
December 31,
2023
2022
2023
2022
Income (loss) from continuing operations
attributable to Enpro Inc.
$
(4.9
)
$
(57.5
)
$
10.8
$
6.7
Net income (loss) attributable to
redeemable non-controlling interests
0.4
(3.6
)
(3.9
)
(2.8
)
Income (loss) from continuing
operations
(4.5
)
(61.1
)
6.9
3.9
Adjustments to arrive at earnings from
continuing operations before interest, income taxes, depreciation,
amortization, and other selected items (Adjusted EBITDA):
Interest expense, net
6.5
10.0
30.1
33.9
Income tax expense
13.8
4.6
30.8
24.4
Depreciation and amortization expense
23.4
25.1
94.5
103.1
Restructuring and impairment expense
1.9
0.7
5.0
2.9
Environmental reserve adjustments
2.5
5.3
2.9
5.1
Costs (income) associated with previously
disposed businesses
0.9
(0.6
)
1.7
0.3
Net loss on sale of businesses
—
0.4
—
0.6
Acquisition and divestiture expenses
1.1
0.1
1.1
1.2
Pension expense (income) (non-service
cost)
0.4
(1.5
)
1.5
(3.6
)
Non-controlling interest compensation
allocation1
—
(0.5
)
(0.3
)
(0.6
)
Asbestos receivable adjustment
—
—
—
2.8
Amortization of the fair value adjustment
to acquisition date inventory
—
1.0
—
13.3
Tax indemnification asset 2
—
0.9
—
0.9
Goodwill impairment
—
65.2
60.8
65.2
Foreign exchange losses related to the
divestiture of GGB3
0.7
3.8
2.2
3.8
Other
0.2
—
0.8
0.2
Adjusted EBITDA
$
46.9
$
53.4
$
238.0
$
257.4
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 was and 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 acquisition of
Aseptic in 2019, we recognized a liability for uncertain tax
positions and a related indemnification asset for the portion of
that liability recoverable from the seller. We determined the
statute of limitations expired on some of the uncertain tax
positions in 2021 and, accordingly, removed a portion of the
liability and receivable. The release of the related liability was
recorded as part of our tax expense for the year ended December 31,
2021 and the reversal of the related receivable was recorded as an
expense in other non-operating income (expense) on our consolidated
statement of operations.
3 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
during December 2022. In January 2023, we hedged the outstanding
notes and expect future gains or losses to be minimal.
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 year ended December 31, 2023 approximately 51% 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 Inc.
Reconciliation of Free Cash Flow
(Unaudited)
(In Millions)
Free Cash Flow - Year Ended December 31,
2023
Net cash provided by operating activities
of continuing operations
$
208.4
Purchases of property, plant, and
equipment
(33.9
)
Free cash flow
$
174.5
Free Cash Flow - Year Ended December 31,
2022
Net cash provided by operating activities
of continuing operations
$
106.1
Purchases of property, plant, and
equipment
(29.4
)
Free cash flow
$
76.7
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240220859597/en/
Investor Contacts: Milt Childress Executive
Vice President and Chief Financial Officer
James Gentile Vice President, Investor
Relations
704-731-1527 investor.relations@enpro.com
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