UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _________________________________________
FORM 10-Q
 _________________________________________
(Mark One)
ý☒
QUARTERLYREPORTPURSUANTTO SECTION 13 OR 15(d) OFTHESECURITIESEXCHANGEACTOF 1934
For the quarterly period ended September 30, 2017
March 31, 2024
¨☐
TRANSITIONREPORTPURSUANTTOSECTION 13 OR 15(d) OFTHESECURITIESEXCHANGEACTOF 1934
Commission File Number 001-31225
 _________________________________________
ENPRO INDUSTRIES, INC.
(Exact name of registrant, as specified in its charter)
_____________________________________ 
North Carolina01-0573945
North Carolina01-0573945
(State or other jurisdiction
of incorporation)
(I.R.S. Employer
Identification No.)
5605 Carnegie Boulevard
Suite 500
Charlotte
North Carolina28209
(Address of principal executive offices)(Zip Code)
(704) 731-1500
(Registrant’s telephone number, including area code)
 __________________________________________Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.01 par valueNPONew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ýNo¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerý☒Accelerated filer¨☐
Non-accelerated filer
¨  (Do not check if a smaller reporting company)
☐		Smaller reporting company¨☐
Emerging growth company¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B)13(a) of the SecuritiesExchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨☐No ý
As of October 30, 2017, thereApril 29, 2024, there were 21,325,71620,952,146 shares of common stock of the registrant outstanding, which does not include 191,838 177,588 shares of common stock held by a subsidiary of the registrant and accordingly are not entitled to be voted. There is only one class of common stock.





PART I
FINANCIAL INFORMATION
Item 1.    Financial Statements
Item 1.
Financial Statements
ENPRO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Quarters and NineThree Months Ended September 30, 2017March 31, 2024 and 20162023
(in millions, except per share amounts)


20242023
Net sales$257.5 $282.6 
Cost of sales151.3 166.5 
Gross profit106.2 116.1 
Operating expenses:
Selling, general and administrative77.4 71.5 
Other0.8 0.8 
Total operating expenses78.2 72.3 
Operating income28.0 43.8 
Interest expense(10.3)(11.7)
Interest income2.1 3.8 
Other expense(5.5)(1.8)
Income from continuing operations before income taxes14.3 34.1 
Income tax expense(1.8)(8.1)
Income from continuing operations12.5 26.0 
Income from discontinued operations, including gain on sale, net of tax— 11.4 
Net income12.5 37.4 
Comprehensive income$9.0 $44.5 
Basic earnings per share:
Continuing operations$0.60 $1.25 
Discontinued operations— 0.55 
Net income per share$0.60 $1.80 
Diluted earnings per share:
Continuing operations$0.59 $1.24 
Discontinued operations— 0.55 
Net income per share$0.59 $1.79 
 Quarters Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Net sales$343.7
 $292.7
 $947.1
 $900.8
Cost of sales228.5
 194.1
 625.8
 596.7
Gross profit115.2
 98.6
 321.3
 304.1
Operating expenses:       
Selling, general and administrative85.7
 70.9
 232.7
 231.7
Asbestos settlement—
 —
 —
 80.0
Other11.0
 2.4
 15.4
 10.4
Total operating expenses96.7
 73.3
 248.1
 322.1
Operating income (loss)18.5
 25.3
 73.2
 (18.0)
Interest expense(11.2) (14.3) (42.2) (41.7)
Interest income0.9
 0.3
 1.0
 0.7
Gain on reconsolidation of GST and OldCo534.4
 —
 534.4
 —
Other expense(1.9) (1.3) (5.1) (5.4)
Income (loss) before income taxes540.7
 10.0
 561.3
 (64.4)
Income tax benefit (expense)(50.5) (4.0) (55.7) 27.2
Net income (loss)$490.2
 $6.0
 $505.6
 $(37.2)
Comprehensive income (loss)$494.9
 $6.6
 $525.7
 $(38.6)
        
Basic earnings (loss) per share$22.98
 $0.28
 $23.68
 $(1.71)
Diluted earnings (loss) per share$22.49
 $0.28
 $23.32
 $(1.71)
Cash dividends per share$0.22
 $0.21
 $0.66
 $0.63
























See notes to consolidated financial statements (unaudited).

1


ENPRO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NineThree Months Ended September 30, 2017March 31, 2024 and 20162023
(in millions)
2017 2016
OPERATING ACTIVITIES   
Net income (loss)$505.6
 $(37.2)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:   
202420242023
OPERATING ACTIVITIES OF CONTINUING OPERATIONS
Net income
Net income
Net income
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
Income from discontinued operations, net of taxes
Income from discontinued operations, net of taxes
Income from discontinued operations, net of taxes
Taxes related to sale of discontinued operations
Depreciation23.5
 22.8
Amortization21.8
 19.9
Intangible asset impairment10.1
 —
Gain on reconsolidation of GST and OldCo(534.4) —
Asbestos settlement—
 80.0
Promissory note reserve
Promissory note reserve
Promissory note reserve
Deferred income taxes42.6
 (38.7)
Stock-based compensation5.2
 4.8
Other non-cash adjustments3.3
 0.8
Change in assets and liabilities, net of effects of acquisition, deconsolidation and reconsolidation of businesses:   
Asbestos liabilities(16.7) —
Asbestos insurance receivables26.6
 —
Change in assets and liabilities, net of effects of acquisition and sale of businesses:
Accounts receivable, net
Accounts receivable, net
Accounts receivable, net(22.8) (8.3)
Inventories0.6
 2.0
Accounts payable5.1
 (17.4)
Other current assets and liabilities
Other current assets and liabilities
Other current assets and liabilities0.5
 (4.7)
Other non-current assets and liabilities(6.6) (16.1)
Net cash provided by operating activities64.4
 7.9
INVESTING ACTIVITIES   
Net cash provided by operating activities of continuing operations
INVESTING ACTIVITIES OF CONTINUING OPERATIONS
Purchases of property, plant and equipment(23.6) (24.6)
Payments for capitalized internal-use software(2.6) (3.1)
Payments for acquisitions(39.5) (28.5)
Reconsolidation of GST and OldCo41.1
 —
Deconsolidation of OldCo(4.8) —
Capital contribution to OldCo(45.2) —
Purchases of property, plant and equipment
Purchases of property, plant and equipment
Proceeds from sale of businesses, net
Proceeds from sale of businesses, net
Proceeds from sale of businesses, net
Purchase of short-term investments
Acquisition
Acquisition
Acquisition
Other0.4
 3.7
Net cash used in investing activities(74.2) (52.5)
FINANCING ACTIVITIES   
Other
Other
Net cash used in investing activities of continuing operations
FINANCING ACTIVITIES OF CONTINUING OPERATIONS
Proceeds from debt
Proceeds from debt
Proceeds from debt503.0
 303.3
Repayments of debt(409.3) (192.7)
Repurchase of common stock(11.5) (26.2)
Purchase of non-controlling interest
Dividends paid
Dividends paid
Dividends paid(14.3) (13.6)
Other(2.5) (3.1)
Net cash provided by financing activities65.4
 67.7
Net cash provided by (used in) financing activities of continuing operations
CASH FLOWS OF DISCONTINUED OPERATIONS
Operating cash flows
Operating cash flows
Operating cash flows
Net cash used in discontinued operations
Net cash used in discontinued operations
Net cash used in discontinued operations
Effect of exchange rate changes on cash and cash equivalents9.0
 (11.7)
Net increase in cash and cash equivalents64.6
 11.4
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period111.5
 103.4
Cash and cash equivalents at end of period$176.1
 $114.8
Supplemental disclosures of cash flow information:   
Cash paid during the period for:   
Supplemental disclosures of cash flow information:
Supplemental disclosures of cash flow information:
Cash paid (received) during the period for:
Cash paid (received) during the period for:
Cash paid (received) during the period for:
Interest$44.8
 $39.7
Income taxes, net$8.9
 $26.8
Interest
Interest
Income taxes, net of refunds
Non-cash investing and financing activities:   
Non-cash acquisitions of property, plant, and equipment$4.9
 $4.8
Non-cash acquisitions of property, plant, and equipment
Non-cash acquisitions of property, plant, and equipment
See notes to consolidated financial statements (unaudited).

2


ENPRO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions, except share amounts)
March 31,
2024		December 31,
2023
ASSETS
Current assets
Cash and cash equivalents$163.9 $369.8 
Accounts receivable, net134.0 116.7 
Inventories146.4 142.6 
Prepaid expenses and other current assets19.9 21.2 
Total current assets464.2 650.3 
Property, plant and equipment, net194.7 193.8 
Goodwill903.4 808.4 
Other intangible assets, net853.1 733.5 
Other assets112.4 113.5 
Total assets$2,527.8 $2,499.5 
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt$10.1 $8.1 
Accounts payable60.4 68.7 
Accrued expenses108.7 119.6 
Total current liabilities179.2 196.4 
Long-term debt670.0 638.7 
Deferred taxes and non-current income taxes payable152.7 120.7 
Other liabilities112.0 116.1 
Total liabilities1,113.9 1,071.9 
Commitments and contingencies
Redeemable non-controlling interests— 17.9 
Shareholders’ equity
Common stock – $.01 par value; 100,000,000 shares authorized; issued, 21,129,575 shares in 2024 and 21,086,678 shares in 20230.2 0.2 
Additional paid-in capital306.4 304.9 
Retained earnings1,134.2 1,128.0 
Accumulated other comprehensive loss(25.7)(22.2)
Common stock held in treasury, at cost – 177,943 shares in 2024 and 178,151 shares in 2023(1.2)(1.2)
Total shareholders’ equity1,413.9 1,409.7 
Total liabilities and equity$2,527.8 $2,499.5 
 September 30,
2017		 December 31,
2016
ASSETS   
Current assets   
Cash and cash equivalents$176.1
 $111.5
Accounts receivable, net247.7
 208.1
Inventories210.8
 175.4
Prepaid expenses and other current assets71.4
 29.9
Total current assets706.0
 524.9
Property, plant and equipment, net284.2
 215.4
Goodwill344.7
 201.5
Other intangible assets, net353.3
 176.9
Investment in GST—
 236.9
Deferred income taxes and income tax receivable88.8
 152.6
Other assets65.4
 38.2
Total assets$1,842.4
 $1,546.4
LIABILITIES AND EQUITY   
Current liabilities   
Short-term borrowings from GST$—
 $26.2
Notes payable to GST—
 12.7
Current maturities of long-term debt0.2
 0.2
Accounts payable111.8
 102.9
Asbestos liability80.0
 30.0
Accrued expenses119.7
 131.0
Total current liabilities311.7
 303.0
Long-term debt560.4
 424.8
Notes payable to GST—
 283.2
Asbestos liability—
 80.0
Other liabilities103.8
 96.9
Total liabilities975.9
 1,187.9
Commitments and contingencies
 
Shareholders’ equity   
Common stock – $.01 par value; 100,000,000 shares authorized; issued, 21,517,554 shares in 2017 and 21,558,145 shares in 20160.2
 0.2
Additional paid-in capital343.4
 346.5
Retained earnings575.0
 84.0
Accumulated other comprehensive loss(50.8) (70.9)
Common stock held in treasury, at cost – 192,418 shares in 2017 and 194,073 shares in 2016(1.3) (1.3)
Total shareholders’ equity866.5
 358.5
Total liabilities and equity$1,842.4
 $1,546.4







See notes to consolidated financial statements (unaudited).

3


ENPRO INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1.Overview, Basis of Presentation and Recently Issued Authoritative Accounting Guidance
1.    Overview and Basis of Presentation
Overview
EnPro Industries,Enpro Inc. (“we,” “us,” “our,” “EnPro”“Enpro,” or the “Company”) is a leading-edge industrial technology company focused on critical applications across a diverse group of growing end markets such as semiconductor, industrial process, aerospace, food, photonics, biopharmaceuticals and life sciences. Enpro is a leader in applied engineering and designs, develops, manufactures, and markets proprietary, value-added products and solutions that safeguard a variety of critical environments.
Over the design, development, manufacturepast several years, we have executed several strategic initiatives to create a portfolio of businesses that offer proprietary, industrial technology-related products and marketing of proprietary engineered industrial products that primarily include: sealing products; heavy-duty truck wheel-end component systems; self-lubricating non-rolling bearing products; precision engineered componentssolutions with high barriers to entry, compelling margins, strong cash flow, and lubrication systems for reciprocating compressors; and heavy-duty, medium-speed diesel, natural gas and dual fuel reciprocating engines, including parts and services.recurring aftermarket revenue in markets with favorable secular tailwinds.
Basis of Presentation
The accompanying interim consolidated financial statements are unaudited, and certain related information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted in accordance with Rule 10-01 of Regulation S-X. They were prepared following the same policies and procedures used in the preparation of our annual financial statements. The accompanying interim consolidated financial statements except as disclosed below and reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of results for the periods presented. The Consolidated Balance Sheet as of December 31, 20162023 was derived from the audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2016.2023. The results of operations for the interim periods are not necessarily indicative of the results for the fiscal year. These consolidated financial statements should be read in conjunction with our annual consolidated financial statements for the year ended December 31, 20162023 included within our annual report on Form 10-K.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amount of assets and liabilities and the disclosures regarding contingent assets and liabilities at period end and the reported amounts of revenue and expenses during the reporting period. Actual results maycould differ from thesethose estimates.
All intercompany accounts and transactions between our consolidated operations have been eliminated.
In the first quarter of 2017, we adopted a standard that was issued to modify and simplify several aspects of accounting for share-based payment transactions. Changes to the previous guidance primarily pertain to the income tax consequences of share-based payment transactions. Under the standard, all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) are recognized as income tax expense or benefit in the income statement beginning in 2017. This adoption is made prospectively. Excess tax benefits/deficiencies recorded in income tax expense for the quarter and nine months ended September 30, 2017 were insignificant.
We historically accounted for excess tax benefits on the Consolidated Statement of Cash Flows as a financing activity. Upon adoption of this standard, excess tax benefits are classified along with other income tax cash flows as an operating activity. We elected to adopt this portion of the standard on a prospective basis.
Additionally, with respect to forfeitures of awards, we made the accounting policy election under the standard to account for forfeitures when they occur as opposed to estimating the number of awards that are expected to vest as of the grant date. This election was adopted under a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of 2017. As a result of this transition, a $0.3 million reduction was recorded to the 2017 opening retained earnings for this effect.
Recently Issued Authoritative Accounting Guidance

In March 2017, a standardNovember 2023, an accounting standards update was issued that requires an employer to report the service cost component of pension and other postretirement benefits expense in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. The amendments in this standard also allow only the service cost component to be eligible for capitalization when applicable (for example, as a cost of internally manufactured inventory or a self-constructed asset). The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those annual periods, and is to be applied retrospectively for the classification of pension costs on the income statement and prospectively for the criteria on capitalization of certain costs. For the year ended December 31, 2016, the application of this guidance would have resulted in an increase in operating income of approximately $1.6 million with a corresponding increase in non-operatingimproves reportable segment disclosures surrounding significant segment expenses. For the nine months ended


September 30, 2017, the application of this guidance would have resulted in an increase in operating income of approximately $0.4 million with a corresponding increase in non-operating expenses.
In January 2017, a standard was issued to simplify annual and interim goodwill impairment testing for public business entities. Under the standard, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The standard is effective for any interim goodwill impairment tests in fiscal years beginning after December 15, 2019, and is to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The standard is not currently expected to have a significant impact on our consolidated financial statements or disclosures.
In January 2017, a standard was issued to clarify the definition of a business in determining whether a purchase of an asset or group of assets is to be accounted for as a purchase of a business and thus subject to authoritative guidance on business combinations. The standard narrows the current definition of a business, stating that to be considered a business, an asset or group of assets must include an input and a substantive process that create outputs. An input is an economic resource, such as intellectual property or employees, used to create the goods or services that are considered outputs. The guidance is effective for fiscal years that begin after December 15, 2017 and is to be applied prospectively. This standard is not expected to have a significant impact on our consolidated financial statements or disclosures.

In August 2016, a standard was issued to eliminate diversity in practice in the classification of certain cash receipts and cash payments within the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein. Early adoption is permitted, including adoption in an interim period. The guidance requires application through a retrospective transition method. This standard is not expected to have a significant impact on our consolidated financial statements or disclosures.

In June 2016, a standard was issued that significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income, including trade receivables. The standard requires an entity to estimate its lifetime “expected credit loss” for such assets at inception, and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The standard is effective for annual periods beginning after December 15, 2019, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. We are currently evaluating the new guidance to determine the impact it will have on our consolidated financial statements.
In February 2016, a standard was issued to establish principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. The standard will require lessees to recognize the lease assets and lease liabilities that arise from all leases in the statement of financial position and to disclose qualitative and quantitative information about lease transactions, such as information about variable lease payments and options to renew and terminate leases. The standard retains a distinction between finance leases and operating leases. As a result, the effect of leases in the statement of operations and the statement of cash flows is largely unchanged. Additionally, the guidance provides clarification on the definition of a lease, including alignment of the concept of control of an asset with principles in other authoritative guidance around revenue recognition and consolidation. The amendments in this guidance are effective for financial statements issued for interim and annual periods beginning after December 15, 2018,2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently evaluating thethis new guidance to determine the impact it will have on our consolidated financial statements. While we do not currently expect that adoption of the standard will have a material impact to our Consolidated Statements of Operations, Comprehensive Income, or Cash Flows, the addition of lease assets and liabilities to our Consolidated Balance Sheets for leases currently accounted for as operating leases will increase both total assets and liabilities. At December 31, 2016, future minimum lease payments under non-cancelable operating leases were $45.5 million. The amount of increase will depend on the magnitude of our population of operating lease commitments at the time of adoption, which could change significantly from our current commitments due to factors including future lease versus buy decisions, acquisitions, and dispositions. At December 31, 2016, lease commitments of GST and OldCo, which were reconsolidated in the current quarter, were $3.9 million.

guidance.
In January 2016, a standardDecember 2023, an accounting standards update was issued that amends existing guidance around classification and measurement of certain financial assets and liabilities. Changes to the current GAAP model primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. Under the new guidance, all equity investmentswill require changes in unconsolidated entities (other than those accounted for using


the equity method of accounting) will generally be measured at fair value through earnings. For equity investments without readily determinable fair values, the cost method is also eliminated. However, most entities will be able to elect to record equity investments without readily determinable fair values at cost, less impairment, and plus or minus subsequent adjustments for observable price changes.income tax disclosures. The standard also requires that financial assets and liabilities be disclosed separately in the notes to the financial statements based on measurement principle and form of financial asset. The amendments in this guidance areis effective for financial statements issued for interim and annual periods beginning after December 15, 2017. This2024, with early adoption permitted. The standard is not expected to have a significant impact on our consolidated financial statements or disclosures.
In May 2014, a comprehensive new revenue recognition standard was issued that will supersede nearly all existing revenue recognition guidance. The new guidance introduces a five-step model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The new standard will become effective for us beginningprospective adoption with the first quarter 2018.recognition that there will be a lack of comparability between reporting periods upon adopting this new standard. Alternatively, retrospective adoption is also permitted. We are currently evaluating thethis new guidance.
The guidance has the potential to affect certain aspects
2.    Acquisitions
Acquisition of our current practice of accounting for engine contracts in our Power Systems segment. We expect that our long-term contracts will continue to recognize revenue and earnings over time as the work progresses becausebusiness
On January 29, 2024, Enpro acquired all of the continuous transferequity securities of controlAdvanced Micro Instruments, Inc. ("AMI"), a privately held company, for $208.9 million, net of cash acquired, subject to the customer, generally using an input measure (e.g., costs incurred) to reflect progress. Our current practicestandard purchase price adjustments. We anticipate making a payment of accounting for such contracts as single profit centers under existing guidance could change in instances where such contracts are determined to have multiple performance obligations that are distinct within the context of the contract under the new standard. Identifying multiple performance obligations inapproximately a contract currently accounted for as a single profit center could make the rate at which we recognize revenue and margins under that contract faster or slower, depending on the contract. Additionally, we have certain service contracts where revenue is currently recognized using a milestone method. Under the new guidance, revenue on such contracts will likely be recognized more frequently throughout the contract using an input measure.
We plan to adopt the guidance using the modified retrospective transition alternative provided$0.6 million in the standard, meaning that contracts open during the transition period that will continue beyond the effective date are evaluated for impact in transition to the new guidance. Based upon reviewsecond quarter of our current contract portfolio, we do not expect the transition impact of adopting the new guidance will be material to EnPro. Many of the affected service contracts mentioned above are over relatively short periods of time and not for large amounts of consideration, and we currently have only a single engine contract that we have determined to have multiple performance obligations that are distinct within the context of the contract. However, to the extent we enter new contracts that fit the above criteria in the future, the standard's impact on the timing of our revenue recognition could be more significant.
2.Garlock Sealing Technologies LLC, Garrison Litigation Management Group, Ltd., and OldCo, LLC
The historical business operations of Garlock Sealing Technologies LLC (“GST LLC”) and The Anchor Packing Company (“Anchor”) resulted in a substantial volume of asbestos litigation in which plaintiffs alleged personal injury or death as a result of exposure to asbestos fibers. Those subsidiaries manufactured and/or sold industrial sealing products, predominately gaskets and packing, that contained encapsulated asbestos fibers. Anchor was an inactive and insolvent indirect subsidiary of EnPro's then-direct subsidiary, Coltec Industries Inc ("Coltec"). Our subsidiaries’ exposure to asbestos litigation and their relationships with insurance carriers had been managed through another subsidiary, Garrison Litigation Management Group, Ltd. (“Garrison”). GST LLC, Anchor and Garrison are collectively referred to as “GST.”
On June 5, 2010 (the "GST Petition Date"), GST LLC, Anchor and Garrison filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code (the "GST Chapter 11 Case") in the U.S. Bankruptcy Court for the Western District of North Carolina (the "Bankruptcy Court"). The filings were the initial step in a claims resolution process for an efficient and permanent resolution of all pending and future asbestos claims through court approval of a plan of reorganization to establish a facility to resolve and pay all GST asbestos claims. On March 17, 2016, we announced that we had reached a comprehensive consensual settlement to resolve current and future asbestos claims which contemplated the joint plan of reorganization (the "Joint Plan") which was filed with the Bankruptcy Court. This settlement contemplated that Coltec would, subject to the receipt of necessary consents, undergo a corporate restructuring (the “Coltec Restructuring”) in which all of its significant operating assets and subsidiaries, which included each of the Company’s major business units, would be distributed to a new direct subsidiary of the Company, which would also assume all of Coltec’s non-asbestos liabilities. The Coltec Restructuring was completed on December 31, 2016, and included the merger of Coltec with and into OldCo, LLC (“OldCo”), an indirect subsidiary of EnPro. As further contemplated by the settlement, on January 30, 2017 (the "OldCo Petition Date"), OldCo filed a Chapter 11 bankruptcy petition with the Bankruptcy Court (the "OldCo Chapter 11 Case"). On


February 3, 2017, the Bankruptcy Court issued an order for the joint administration of the OldCo Chapter 11 Case with the GST Chapter 11 Case. The Joint Plan was consummated on July 31, 2017. For more detail on the terms of the Joint Plan, see Note 17 - "Commitments and Contingencies - Asbestos - Joint Plan of Reorganization."
During the pendency of the GST Chapter 11 Case and the related OldCo Chapter 11 Case, which are described further in Note 17 – "Commitments and Contingencies – Asbestos," certain actions proposed to be taken by GST or OldCo not in the ordinary course of business were subject to approval by the Bankruptcy Court. As a result, during the pendency of the GST Chapter 11 Case and the OldCo Chapter 11 Case, we did not have exclusive control over these companies. Accordingly, as required by GAAP, GST was deconsolidated beginning on the GST Petition Date and OldCo was deconsolidated beginning on the OldCo Petition Date.
Reconsolidation
GST and OldCo were reconsolidated upon the effective date of the consummation of the Joint Plan, which effective date was 12:01 a.m. on July 31, 2017. The reconsolidation of GST and OldCo was treated as a business acquisition in accordance with applicable accounting rules. The primary businesses comprising GST will be managed as part of the Garlock division within our Sealing Products segment. Smaller businesses also reconsolidated with GST will be managed by the Technetics and Stemco divisions within this segment, by the Compressor Products International ("CPI") division within our Engineered Products segment, and by the Fairbanks Morse division, which comprises our Power Systems segment.

The following table presents the preliminary fair value of the net assets of GST and OldCo acquired. These estimates are subject to the final completion of the valuation process for GST and OldCo:

 (in millions)
Accounts receivable$22.9
Inventories29.2
Property, plant and equipment63.2
Goodwill132.6
Other intangible assets180.8
Other assets167.0
Liabilities assumed(110.5)
Total purchase price$485.2
In accordance with GAAP,2024 when the purchase price foradjustment is scheduled to be finalized. In connection with the acquisition was equal toof AMI, there were $3.3 million of acquisition-related costs incurred during the fair value of our investmentquarter ending March 31, 2024 which were expensed during the quarter and included in GSTselling, general, and OldCo on the reconsolidation date. In the reconsolidation, the investment in GST and OldCo is deemed to be exchanged for our exclusive control of these businesses. No cash is transferredadministrative expense in the reconsolidation transaction, other thanaccompanying Consolidated Statements of Operations.
4

AMI is 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 reconsolidationclean energy transition. AMI is included within the Sealing Technologies segment.
Based in Costa Mesa, California, AMI serves customers in the midstream natural gas, biogas, industrial processing, cryogenics, food processing, laboratory wastewater and aerospace markets. The company offers a portfolio of GST'soxygen, hydrogen, sulfide and OldCo's cashmoisture analyzers and cash equivalents atproprietary sensing capabilities that date. detect contaminants in a variety of processes, including natural gas and biogas streams, which enable operators to avoid flaring and, thereby, reduce CO2 emissions.
The purchase price of AMI was allocated to the assets acquired and liabilities reconsolidated with these businessesassumed based on their estimated fair values.values as of the acquisition date. The excess of the purchase price over the estimated fair value of the identifiable assets acquired less the liabilities assumed wasis reflected as goodwill.goodwill, which is attributable primarily to the value of the workforce and the ongoing operations of the business. Goodwill recorded as part of the purchase price allocation was $132.6$95.6 million, none of which is expected to be tax deductible given the nature of the transaction. See Note 8 - "Goodwill and Other Intangible Assets" for information on goodwill by reportable segment from this transaction. The goodwill recognized in this transaction is primarily attributable to intangible assets that do not qualify for separate recognition.
deductible. Identifiable intangible assets acquired as part of the acquisition totaled $138.1 million, consisting of indefinite and definite-lived intangible assets. Indefinite lived intangible assets relates solely to future products that were $180.8 million, including $40.4 millionin development as of indefinite-livedthe acquisition date. We will begin amortizing this asset over its estimated life once these products in development become commercially available. Definite-lived intangible assets include proprietary technology, customer relationships, trade names, and $140.4non-competition agreements. Inventory acquired included an adjustment to fair value of $1.7 million, all of definite-lived intangible assets. Definite-livedwhich was amortized to cost of goods sold in the first quarter of 2024.
Identifiable intangible assets included customer relationshipsacquired are as follows:
Weighted-average amortization period
Definite-lived intangible assets acquired:(in millions)(years)
Customer relationships$12.0 15.0
Existing technology106.0 15.0
Trademarks5.0 10.0
Other1.1 3.3
Total definite-lived intangible assets124.1 14.7
Indefinite-lived intangible assets acquired:
In-process research and development14.0 
Identifiable intangible assets acquired$138.1 







5

We will continue to evaluate the purchase price allocation of $85.4 million, proprietary technologythis acquisition, including the value of $50.8intangible assets and income tax assets and liabilities and adjust this allocation as appropriate. The allocation of purchase price may be revised during the one-year measurement period as our initial estimates below are finalized. The following table represents the preliminary allocation of purchase price:
(in millions)
Accounts receivable$3.3 
Inventories5.2 
Property, plant, and equipment0.2 
Goodwill95.6 
Other intangible assets138.1 
Other assets0.6 
Deferred income taxes(31.9)
Liabilities assumed(1.6)
$209.5 
Sales of $7.3 million and a favorable supply agreement valued at $4.2 million. The definite-lived intangible assets have an initial weighted average amortization periodpre-tax income of 15 years$0.8 million for each class.

Post-reconsolidation sales of $35.5 million and income before taxes of $3.3 million attributable to GST and OldCoAMI are included in our Consolidated StatementStatements of Operations for the quarter and nine months ended September 30, 2017.period from acquisition through March 31, 2024. The following unaudited supplemental pro forma condensed consolidated financial results of operations for the Company for the quarters and ninethree months ended September 30, 2017March 31, 2024 and 2016,2023 are presented as if the reconsolidationacquisition had been completed on January 1, 2016:2023:

Three Months Ended March 31,
20242023
(in millions)
Pro forma net sales$260.3 $291.7 
Pro forma income from continuing operations$14.7 $24.3 

 Quarters Ended   
 September 30,		 Nine Months Ended September 30,
 2017 2016 2017 2016
 (in millions)
Pro forma net sales$355.0
 $331.1
 $1,039.9
 $1,018.1
Pro forma net income$9.0
 $14.5
 $43.4
 $515.2
Pro forma earnings per share - basic$0.42
 $0.67
 $2.03
 $23.74
Pro forma earnings per share - diluted$0.41
 $0.67
 $2.00
 $23.52

The 2017 supplemental pro forma net income was adjustedThese amounts have been calculated after applying our accounting policies and adjusting the results of AMI to exclude $3.8 million of pre-tax nonrecurring expenses related toreflect the additional depreciation and amortization that would have been charged assuming the fair value adjustmentadjustments to acquisition date inventory. The 2016 supplemental pro forma net income was adjusted to include these charges. Pro forma net income for the nine months ended September 30, 2016 also includes the gain on reconsolidation discussed further below,intangible assets had been applied as well as the tax impact of the reconsolidation discussed in Note 4 - "Income Taxes."

January 1, 2023. The supplemental pro forma net income for the quarters and ninethree months ended September 30, 2017 and 2016March 31, 2024 was also adjusted to exclude a combined $1.3 million, $7.1 million, $(16.8) million and $145.9 million, respectively, of non-recurring expenses (credits) associated with the aforementioned asbestos claims resolution process recorded at EnPro and at GST and OldCo, as the process is assumed to have concluded in order for the reconsolidation to occur. The amount adjusted for the nine months ended September 30, 2017 is inclusive of $24.7$3.3 million of credits for insurance reimbursements that became realizable for GST and OldCo in the current year.pre-tax acquisition-related costs related to AMI. The amount adjusted for the nine months ended September 30, 2016 is inclusive of charges of $80.0 million and $49.5 million recorded by EnPro and GST, respectively, in that year in association with the Joint Plan to resolve current and future asbestos claims and the agreement with the Canadian provincial workers’ compensation boards (the “Provincial Boards”) resolving remedies the Provincial Boards may possess against Garlock of Canada Ltd, GST, Coltec or any of their affiliates. The remaining amount adjusted for each year consists of charges for Chapter 11 case-related fees and expenses including attorneys' and experts' fees and fees associated with the administration of Garrison. Please see Note 17 – "Commitments and Contingencies – Asbestos – Joint Plan of Reorganization" for further information on these settlements and insurance reimbursements.

These unaudited supplemental pro forma financial results have been prepared for comparative purposes only.only and do not reflect the effect of any potential synergies as a result of the integration of AMI. The pro forma information does not purport to be indicative of the results of operations that actually would have resulted had the combinationacquisition of AMI occurred on January 1, 2016,2023, or of future results of Enpro Inc.
Acquisition of non-controlling interest
In connection with our acquisition of Alluxa in October 2020, three Alluxa executives (the "Alluxa Executives") received rollover equity interests in the consolidated entities.
Associatedform of approximately 7% of the total equity interest of an entity we formed for the purpose of acquiring Alluxa (the "Alluxa Acquisition Subsidiary"). Pursuant to the limited liability operating agreement (the "Alluxa LLC Agreement") that was entered into with the reconsolidation of GST and OldCo, we recorded a pretax gain of $534.4 million. The amounts comprising the gain include:
  (in millions)
Gain on revaluation of investment in GST and OldCo $248.3
Elimination of net amounts payable to GST and OldCo at reconsolidation date 286.1
Total $534.4
The gain on revaluation of our investment in GST and OldCo is the difference between the above-noted fair valuecompletion of the investmenttransaction, each Alluxa Executive had the right to sell to us, and its book value of $236.9 million aswe had the right to purchase from each Alluxa Executive (collectively, the "Put and Call Rights"), one-third of the dateAlluxa Executive equity interests in the Alluxa Acquisition Subsidiary during each of reconsolidation. Although EnPro's investmentthree exercise periods in OldCo was negative at the time that it was deconsolidated from the EnPro results, EnPro Holdings, Inc. ("EnPro Holdings"),2024, 2025 and 2026, with any amount not sold or purchased in a subsidiary of EnPro, had entered into a keep well agreement with OldCo under which it unconditionally agreed to make equity contributions to OldCo sufficient to maintain OldCo's ability to pay and discharge its liabilities as they become due and payable. As a result of this agreement, we recorded a liability on our Consolidated Balance sheet that represented this obligation related to our investment in OldCo. The liability balance of $15.6 million at the reconsolidation date was reduced from its balance at June 30, 2017 due to equity funding provided by us to OldCo in order for it to fund its initial $50 million payment in July 2017prior exercise period being carried forward to the trust established undersubsequent exercise periods. In January 2024, we agreed with the Joint Plan.
The portion of the gain attributableAlluxa Executives to elimination of net amounts payable to GST and OldCo is based upon the balances in EnPro's amounts due to and from GST and OldCo as of that date, including the notes payable to GST and related accrued interest, income tax receivable from GST, and other payables to and receivables from GST that arose in the normal course of business.


Financial Results
As the GST Chapter 11 Case and OldCo Chapter 11 Case were being administered jointly and the Joint Plan is applicable in both such cases, the financial information below combines the results of operations and cash flows of OldCo with GST LLC and Garrison for periods after the OldCo Petition Date.
Condensed combined financial information for GST and OldCo is set forth below, presented on a historical cost basis. For 2017, the Condensed Combined Statements of Operations and Condensed Combined Statement of Cash Flows reflect the results of operations and cash flows for GST and OldCo for the period time where they were not consolidated in our reported results (from January 1, 2017 through July 31, 2017 for GST and, for OldCo, after the OldCo Petition Date through July 31, 2017). Likewise, as GST and OldCo were included in our reported balance sheet as of September 30, 2017, no Condensed Combined Balance Sheet is provided as of this date.
Note that because the OldCo Chapter 11 Case had not commenced as of December 31, 2016, OldCo's assets and liabilities are excluded as of December 31, 2016. Its results of operations and cash flows are excluded from the Condensed Combined Statements of Operations for the quarter and nine months ended September 30, 2016, and the Condensed Combined Statement of Cash Flows for the nine months ended September 30, 2016.
GST and OldCo
(Debtors-in-Possession)
Condensed Combined Statements of Operations (Unaudited)
(in millions)
 Quarters Ended September 30, Nine Months Ended 
 September 30,
 2017 2016 2017 2016
Net sales$15.3
 $49.2
 $125.9
 $150.9
Cost of sales9.6
 31.3
 77.9
 95.3
Gross profit5.7
 17.9
 48.0
 55.6
Operating expenses:       
Selling, general and administrative3.7
 10.0
 24.5
 31.3
Asbestos-related(0.4) 0.1
 (24.0) 50.1
Other—
 0.1
 0.1
 0.4
Total operating expenses3.3
 10.2
 0.6
 81.8
Operating income (loss)2.4
 7.7
 47.4
 (26.2)
Interest income, net3.1
 8.4
 21.5
 25.3
Income (loss) before reorganization expenses and income taxes5.5
 16.1
 68.9
 (0.9)
Reorganization expenses(1.1) (6.8) (5.6) (14.8)
Income (loss) before income taxes4.4
 9.3
 63.3
 (15.7)
Income tax benefit (expense)(3.0) (3.7) (24.3) 5.9
Net income (loss)$1.4
 $5.6
 $39.0
 $(9.8)
Comprehensive income (loss)$4.4
 $5.0
 $49.1
 $(9.0)



GST and OldCo
(Debtors-in-Possession)
Condensed Combined Statements of Cash Flows (Unaudited)
Nine Months EndedSeptember 30, 2017 and 2016
(in millions)
 2017 2016
Net cash provided by (used in) operating activities$(363.3) $32.9
Investing activities   
Purchases of property, plant and equipment(1.8) (5.1)
Proceeds from (payments on) loans to affiliates43.6
 (5.2)
Proceeds from (purchases of) held-to-maturity securities250.3
 (50.5)
Opening cash from OldCo4.8
 —
Other0.1
 (0.2)
Net cash provided by (used in) investing activities297.0
 (61.0)
Financing activities   
Capital contribution from parent45.2
 —
Net cash provided by financing activities45.2
 —
Effect of exchange rate changes on cash and cash equivalents2.4
 1.4
Net decrease in cash and cash equivalents(18.7) (26.7)
Cash and cash equivalents at beginning of period59.5
 71.9
Cash and cash equivalents at end of period$40.8
 $45.2

GST
(Debtor-in-Possession)
Condensed Combined Balance Sheet (Unaudited)
(in millions)
  December 31,
2016
Assets:
  
Notes receivable from affiliate - current $12.7
Other current assets 425.9
Asbestos insurance receivable 49.0
Deferred income taxes 126.0
Notes receivable from affiliate 283.2
Other assets 67.0
Total assets $963.8
Liabilities and Shareholder’s Equity:
  
Current liabilities $40.3
Other liabilities 126.0
Liabilities subject to compromise (A) 388.6
Total liabilities 554.9
Shareholder’s equity 408.9
Total liabilities and shareholder’s equity $963.8



(A) Liabilities subject to compromise include pre-petition unsecured claims which may be resolved at amounts different from those recorded in the condensed combined balance sheet. Liabilities subject to compromise consist principally of asbestos-related claims. Perchange the terms of the comprehensive settlement agreement with the appointed committee representing current asbestos claimantsPut and the court-appointed representativeCall Rights so that all outstanding equity interests could be acquired in 2024. In February of future claimants2024, we acquired all outstanding equity interests in the GST asbestos claims resolution process pending beforeAlluxa Acquisition Subsidiary for $17.9 million, which was the Bankruptcy Court, GST had accrued $387 million as of December 31, 2016 for asbestos-related claims. The accrual included (a) $370 million to be contributed tominimum fixed price set in the trust for present and future asbestos claims against GST plus litigation and administrative expenses, and (b) $17 millionAlluxa LLC Agreement. As this transaction was for the resolutionacquisition of all currentremaining shares of a consolidated subsidiary with no change in control, it was recorded within shareholder's equity and future Canadian asbestos claims alleging disease resultingas a financing cash flow in whole or in part from exposure to GST asbestos-containing products. See Note 17, “Commitments and Contingencies — Asbestos — Joint Planthe Consolidated Statement of Reorganization."Cash Flows. Enpro is now the sole owner of Alluxa.
3.Acquisitions
In June 2017, we acquired certain assets and assumed certain liabilities of Qualiseal Technology (“Qualiseal”), a
privately-held company offering custom-engineered mechanical face and circumferential seals for demanding aerospace and industrial applications with annual revenues of approximately $11 million. Qualiseal is managed as part of our Technetics division within the Sealing Products segment.
The following table presents the purchase price allocation of the Qualiseal acquisition:


6

 (in millions)
Accounts receivable$1.6
Inventories3.3
Property, plant and equipment1.4
Goodwill9.7
Other intangible assets24.0
Liabilities assumed(0.5)
Total purchase price$39.5
3.    Income Taxes
In April 2016, we acquired certain assets and assumed certain liabilities of Rubber Fab Gasket & Molding, Inc. ("Rubber Fab"), a privately-held company offering a full range of high performance sanitary gaskets, hoses and fittings for the hygienic process industries with annual revenues of approximately $17 million. Rubber Fab is managed as part of our Garlock division within the Sealing Products segment.
On October 12, 2017, we acquired 100% of the stock of Commercial Vehicle Components Co., Ltd. ("CVC"), a manufacturer of air disc brake and medium duty hydraulic disc brake pads for the heavy duty and light commercial vehicle aftermarket. CVC will be managed as part of our Stemco division within the Sealing Products segment. Due to the recency of the transaction, the initial accounting for this acquisition is incomplete.

Because the assets, liabilities and results of operations for these acquisitions are not significant to our consolidated financial position or results of operations, pro forma financial information and additional disclosures are not presented.
4.Income Taxes


Our income tax expense and resulting effective tax rate are based upon the estimated annual effective tax rates applicable for the respective periods adjusted for the effect of items required to be treated as discrete in the interim period items, including the reconsolidation of the GST and OldCo entities and losses generated in countries where we are projectingperiods. This estimated annual losses for which a deferred tax asset is not anticipated to be recognized. This effective tax rate is generally lower than U.S. statutoryaffected by the relative proportions of revenue and income before taxes in the jurisdictions in which we operate. Based on the geographical mix of earnings, our annual effective tax rates primarily due to the earnings in lower rate foreign jurisdictions where a significant portion of our income is taxed, and fluctuates based on the portion of our profits earned in each jurisdiction. In addition, the rate can be magnified by pre-tax losses in high tax jurisdictions offset somewhat by pre-tax profits in low tax jurisdictions.
During the third quarter of 2017, our
The effective tax rate was 9.3% as we recorded income tax expense of $50.5 million on pre-tax income of $540.7 million. The reduction in the effective tax rate is primarily due to the significant discrete items recorded in the current quarter including the $534.4 million non-taxable gain on the reconsolidation of the GST and OldCo entities and the $21.2 million benefit of the reversal of the deferred tax liability initially recorded on our investment in GST


when GST was deconsolidated in June 2010. This reduction is partially offset by the $72.7 million tax charge associated with the step up of GST and OldCo's net assets to fair value upon the reconsolidation.
During the third quarter of 2016, our effective tax rate was 39.6% as we recorded an income tax expense of $4.0 million on pre-tax income of $10.0 million. The volatility in the quarterly tax rate is the result of using annual tax rates derived from a geographic mix of pre-tax losses and income, as applied to a year-to-date ordinary loss in the prior-year quarter that exceeds the anticipated ordinary loss for the full year. The combination of mix, overall loss limitations,three months ended March 31, 2024 and small denominators resulted in an unusually high effective quarterly rate.
During the first nine months of 2017, our effective tax rate was 9.9% as we recorded income tax expense of $55.7 million on pre-tax income of $561.3 million.2023 were 12.6% and 23.7%, respectively. The lower effective tax rate for the three months ended March 31, 2024 is primarily duedriven by favorable state amended return filings and additional tax benefit related to the significant discrete items recordedshare-based payment awards partially offset by higher tax rates in the third quarter of 2017 as discussed above.
During the first nine months of 2016, ourmost foreign jurisdictions. The effective tax rate for the three months ended March 31, 2023 is primarily the result of higher tax rates in most foreign jurisdictions partially offset by the release of a valuation allowance on certain foreign net operating losses and a tax benefit related to share-based payment awards.

The Organization for Economic Co-operation and Development (the “OECD”) has introduced a framework to implement a global minimum corporate tax of 15%, referred to as Pillar Two that was 42.3% aseffective for tax years beginning in 2024. While it is uncertain whether the United States will enact legislation to adopt Pillar Two, certain countries in which we recorded anoperate have adopted legislation to enact Pillar Two. The adoption of Pillar Two has had no impact on our income tax benefit of $27.2 million on pre-tax loss of $64.4 million. The volatility during this nine-month period is a result of our geographical mix of pre-tax losses inexpense for the U.S., a higher tax jurisdiction, and pre-tax profits in lower tax jurisdictions.
In June 2017, the U.S. Internal Revenue Service (“IRS”) began an examination of one of our U.S. federal income tax returns. Although this examination is part of a routine and recurring cycle, we cannot predict the final outcome or expected conclusion date of the audit.  Various foreign and state tax returns are also currently under examination and some of these exams may conclude within the next twelve months.  The final outcomes of these audits are not yet determinable; however, management believes assessments that may arise will not have a material effect on our financial results.
.
5.Earnings (Loss) Per Share
 Quarters Ended   
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
 (in millions, except per share amounts)
Numerator (basic and diluted):       
Net income (loss)$490.2
 $6.0
 $505.6
 $(37.2)
Denominator:       
Weighted-average shares – basic21.3
 21.5
 21.4
 21.7
Share-based awards0.5
 0.2
 0.3
 —
Weighted-average shares – diluted21.8
 21.7
 21.7
 21.7
Earnings (loss) per share:       
Basic$22.98
 $0.28
 $23.68
 $(1.71)
Diluted$22.49
 $0.28
 $23.32
 $(1.71)
In the ninethree months ended September 30, 2016,March 31, 2024 and we expect there was a loss attributable to common shares. There were 0.2 million potentially dilutive shares excluded for the nine months ended September 30, 2016 since they were antidilutive.be minimal impact in subsequent quarters.

4.    Earnings Per Share

 Three Months Ended March 31,
 20242023
 (in millions, except per share amounts)
Numerator (basic and diluted):
Income from continuing operations$12.5 $26.0 
Income from discontinued operations, net of tax— 11.4 
Net income$12.5 $37.4 
Denominator:
Weighted-average shares – basic20.9 20.8 
Share-based awards0.2 0.1 
Weighted-average shares – diluted21.1 20.9 
Basic earnings per share:
Continuing operations$0.60 $1.25 
Discontinued operations— 0.55 
Basic earnings per share$0.60 $1.80 
Diluted earnings per share:
Continuing operations$0.59 $1.24 
Discontinued operations— 0.55 
Diluted earnings per share$0.59 $1.79 



























6.Inventories
7

 September 30,
2017		 December 31,
2016
 (in millions)
Finished products$122.9
 $108.1
Work in process36.2
 23.7
Raw materials and supplies57.5
 49.3
 216.6
 181.1
Reserve to reduce certain inventories to LIFO basis(9.8) (12.1)
Manufacturing inventories206.8
 169.0
Incurred costs relating to long-term contracts8.3
 13.6
Progress payments related to long-term contracts(4.3) (7.2)
Net balance associated with completed-contract inventories4.0
 6.4
Total inventories$210.8
 $175.4
5.    Inventories
Incurred costs related to long-term contracts in the table above represent inventoried work in process
March 31,
2024		December 31,
2023
 (in millions)
Finished products$52.6 $53.6 
Work in process29.3 28.4 
Raw materials64.5 60.6 
Total inventories$146.4 $142.6 


6.    Goodwill and finished products related to an engine contract accounted for under the completed-contract method, where costs incurred exceed customer billings.Other Intangible Assets
Refer to Note 7, “Long-Term Contracts” for additional information about incurred costs and progress payments related to long-term contracts.
We use the last-in, first-out (“LIFO”) method of valuing certain of our inventories. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs, which are subject to change until the final year-end LIFO inventory valuation.
7.Long-Term Contracts
Additional information regarding engine contracts accounted for under the percentage-of-completion (“POC”) method is as follows:
 September 30,
2017		 December 31,
2016
 (in millions)
Cumulative revenues recognized on uncompleted POC contracts$321.4
 $260.7
Cumulative billings on uncompleted POC contracts280.1
 231.6
 $41.3
 $29.1
These amounts were included in the accompanying Consolidated Balance Sheets under the following captions:
 September 30,
2017		 December 31,
2016
 (in millions)
Accounts receivable, net (POC revenue recognized in excess of billings)$45.3
 $31.4
Accrued expenses (billings in excess of POC revenue recognized)(4.0) (2.3)
 $41.3
 $29.1
Additional information regarding an engine contract accounted for under the completed-contract method is as follows:
 September 30,
2017		 December 31,
2016
 (in millions)
Incurred costs relating to long-term contract$0.3
 $0.1
Progress payments related to long-term contract(0.9) (1.0)
Net balance associated with completed-contract inventories$(0.6) $(0.9)


Incurred costs related to long-term contract in the table above represent inventoried work in process and finished products related to an engine contract accounted for under the completed-contract method, where customer billings exceed costs incurred.
Progress payments related to the long term contract in the table above are either advanced billings or milestone billings to the customer on a contract accounted for under the completed-contract method. Upon shipment of the completed engine, revenue associated with the engine will be recognized, and the incurred inventoried costs and progress payments will be relieved.
At September 30, 2017 and December 31, 2016, progress payments related to long-term contract shown above were in excess of incurred costs resulting in net liability balances. As such, the net liability balances are reflected in accrued expenses on the accompanying Consolidated Balance Sheets. Refer to Note 6, “Inventories” for additional information about incurred costs and progress payments related to long-term contracts for which the incurred costs exceeded the progress payments.
In addition to inventoried costs, we also make deposits and progress payments to certain vendors for long lead time manufactured components associated with engine projects. At September 30, 2017 and December 31, 2016, deposits and progress payments for long lead time components totaled $2.7 million and $0.8 million, respectively. These deposits and progress payments are classified in prepaid expenses and other current assets in the accompanying Consolidated Balance Sheets.
8.Goodwill and Other Intangible Assets
The changes in the net carrying value of goodwill by reportable segment for the ninethree months ended September 30, 2017,March 31, 2024, are as follows:
Sealing
Technologies		Advanced Surface TechnologiesTotal
 (in millions)
Goodwill as of December 31, 2023$276.2 $532.2 $808.4 
Acquisition of business95.6 — 95.6 
Foreign currency translation(0.6)— (0.6)
Goodwill as of March 31, 2024$371.2 $532.2 $903.4 
 
Sealing
Products
 
Engineered
Products
 Power Systems Total
 (in millions)
Goodwill as of December 31, 2016$185.3
 $9.1
 $7.1
 $201.5
Change due to acquisition9.7
 —
 —
 9.7
Reconsolidation of GST and OldCo125.9
 1.8
 4.9
 132.6
Change due to foreign currency translation0.9
 —
 —
 0.9
Goodwill as of September 30, 2017$321.8
 $10.9
 $12.0
 $344.7


The goodwill balances reflected above at March 31, 2024, are net of accumulated impairment losses of $27.8 million for the Sealing ProductsTechnologies segment and $154.8$126.0 million for the Engineered Products segment as of September 30, 2017 and December 31, 2016.Advanced Surface Technologies segment.
Identifiable intangible assets are as follows:
 March 31, 2024December 31, 2023
 Gross
Carrying
Amount		Accumulated
Amortization		Gross
Carrying
Amount		Accumulated
Amortization
 (in millions)
Amortized:
Customer relationships$498.5 $191.6 $486.6 $184.8 
Existing technology571.3 115.9 465.2 106.1 
Trademarks69.8 30.8 64.9 29.6 
Other28.4 21.4 27.4 20.9 
1,168.0 359.7 1,044.1 341.4 
Indefinite-Lived:
In-process research and development14.0 — — — 
Trademarks30.8 — 30.8 — 
Total$1,212.8 $359.7 $1,074.9 $341.4 
Amortization for the three months ended March 31, 2024 and 2023 was $18.6 million, and $17.4 million, respectively.




8

  As of September 30, 2017  As of December 31, 2016
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 (in millions)
Amortized:       
Customer relationships$314.0
 $134.7
 $216.2
 $122.0
Existing technology110.5
 35.5
 63.0
 31.0
Trademarks35.7
 21.6
 35.4
 19.6
Other28.5
 22.9
 23.2
 22.1
 488.7
 214.7
 337.8
 194.7
Indefinite-Lived:       
Trademarks79.3
 —
 33.8
 —
Total$568.0
 $214.7
 $371.6
 $194.7
AmortizationThe estimated amortization expense for definite-lived (amortized) intangible assets for the quarters endednext five years is as follows (in millions):
2024$77.1 
2025$76.8 
2026$73.1 
2027$72.5 
2028$71.8 
7.    Accrued Expenses
March 31,
2024		December 31,
2023
 (in millions)
Salaries, wages and employee benefits$40.1 $56.0 
Interest9.4 4.2 
Environmental8.2 8.2 
Income taxes9.8 10.0 
Taxes other than income taxes7.4 5.1 
Operating lease liabilities10.2 10.0 
Other23.6 26.1 
$108.7 $119.6 

8.     Long-Term Debt
Senior Secured Credit Facilities
On December 17, 2021, we entered into a Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”) among the Company and our subsidiary, EnPro Holdings, Inc. ("EnPro Holdings"), as borrowers, certain foreign subsidiaries of the Company from time to time party thereto, as designated borrowers, the guarantors party thereto, the lenders party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.
The Amended Credit Agreement provides for credit facilities in the initial aggregate principal amount of $1,007.5 million, consisting of a five-year, senior secured revolving credit facility of $400.0 million (the “Revolving Credit Facility”), a $142.5 million senior secured term loan facility in replacement of our existing senior secured term loan facility, maturing September 30, 201725, 2024 (the “Term Loan A-1 Facility”), a five-year, senior secured term loan facility of $315.0 million (the “Term Loan A-2 Facility”) and 2016 was $6.9a 364-day, senior secured term loan facility of $150.0 million (the “364-Day Facility” and together with the Revolving Credit Facility, the Term Loan A-1 Facility and the Term Loan A-2 Facility, the “Facilities”). The Amended Credit Agreement also provides that we may seek incremental term loans and/or additional revolving credit commitments in an amount equal to the greater of $275.0 million and $5.3 million, respectively. Amortization expense100% of consolidated EBITDA for the nine monthsmost recently ended September 30, 2017four-quarter period for which we have reported financial results, plus additional amounts based on a consolidated senior secured leverage ratio. The Amended Credit Agreement became effective on December 17, 2021.

Borrowings under the 364-Day Facility bore interest at an annual rate of LIBOR plus 1.50% or base rate plus 0.50%. Initially, borrowings under the Facilities (other than the 364-Day Facility) bore interest at an annual rate of LIBOR plus 1.75% or base rate plus 0.75%, although these interest rates were subject to incremental increase or decrease based on a consolidated total net leverage ratio. On November 8, 2022, we entered into a First Amendment to the Amended Credit Agreement, which replaced the LIBOR-based interest rate option with an option based on Term SOFR ("Secured Overnight Financing Rate") plus (i) a credit spread adjustment of 0.10% and 2016 was $17.1 million and $15.8 million(ii) 1.75%, respectively.



9.Accrued Expenses
 September 30,
2017		 December 31,
2016
 (in millions)
Salaries, wages and employee benefits$53.8
 $40.0
Interest1.6
 38.1
Customer advances8.6
 5.3
Income and other taxes16.8
 11.2
Other38.9
 36.4
 $119.7
 $131.0
10.Related Party Transactions
Onagain subject to incremental increase or decrease based on a consolidated total net leverage ratio. In addition, a commitment fee accrues with respect to the GST Petition Date, GST commenced an asbestos claims resolution process under Chapter 11unused amount of the United States Bankruptcy Code. Revolving Credit Facility at an annual rate of 0.225%, which rate is also subject to incremental increase or decrease based on a consolidated total net leverage ratio.

The resulting deconsolidation of GST from our financial results, discussed more fullyTerm Loan A-1 Facility amortized on a quarterly basis in Note 2, "Garlock Sealing Technologies LLC, Garrison Litigation Management Group, Ltd., and OldCo, LLC", required certain intercompany indebtedness described belowan annual amount equal to be reflected on our Consolidated Balance Sheets.
As of December 31, 2016, Coltec Finance Company Ltd., a wholly-owned subsidiary of EnPro Holdings, had aggregate, short-term borrowings of $26.2 million from GST’s subsidiaries in Mexico and Australia. These unsecured obligations were denominated in the currency2.50% of the lending party,original principal amount of the Term Loan A-1 Facility ($150.0 million) in year one after the closing, 5.00% of such original principal amount in
9

year two and bore interest based1.25% of such original principal amount in each of the first three quarters of year three, with the remaining outstanding principal amount payable at maturity. The Term Loan A-2 Facility amortizes on a quarterly basis in an annual amount equal to 2.5% of the applicable one-month interbank offered rate fororiginal principal amount of the Term Loan A-2 Facility in each foreign currency involved. Withof years one through three, 5.0% of such original principal amount in year four and 1.25% of such original principal amount in each of the reconsolidationfirst three quarters of GSTyear five, with the remaining outstanding principal amount payable at maturity. The 364-Day Facility did not amortize and was repaid in full in the third quarter theseof 2022. On July 26, 2023, we voluntarily prepaid all outstanding borrowings and accrued and unpaid interest under the Term Loan A-1 Facility (a remaining principal balance of $133.1 million and accrued interest of $0.6 million). The Facilities are now intercompany and are therefore not reflected on our Consolidated Balance Sheet as of September 30, 2017.
Effective as of January 1, 2010, Coltec Industries Inc ("Coltec") entered into an original issue amount $73.4 million Amended and Restated Promissory Note due January 1, 2017 (the “Coltec Note”) in favor of GST LLC, and our subsidiary Stemco LP entered into an original issue amount $153.8 million Amended and Restated Promissory Note due January 1, 2017, in favor of GST LLC (the “Stemco Note”, and togethersubject to prepayment with the Coltec Note,net cash proceeds of certain asset sales, casualty or condemnation events and non-permitted debt issuances.

The Company and EnPro Holdings are the “Notes Payablepermitted borrowers under the Facilities. The Company may also from time to GST”). The Notes Payabletime designate any of its wholly owned foreign subsidiaries as a borrower under the Revolving Credit Facility. Each of the Company’s domestic subsidiaries (other than any subsidiaries that may be designated as “unrestricted” by the Company from time to GST amendedtime, and replaced promissory notes in the same principal amounts which were initially issued in March 2005, and which matured on January 1, 2010. In connection with the Coltec Restructuring described in Note 17, "Commitments and Contingencies — Asbestos — Joint Plan of Reorganization",inactive subsidiaries) is required to guarantee the obligations of OldCo, as the successor by merger to Coltec,borrowers under the Notes Payable to GST were assumed by EnPro HoldingsFacilities, and OldCo was released from those obligations. In addition, the Coltec Note and the Stemco Note were amended to extend their maturity date to January 1, 2018.
The Notes Payable to GST bear interest at 11% per annum, of which 6.5% is payable in cash and 4.5% is added to the principal amounteach of the Notes PayableCompany’s existing domestic subsidiaries (other than inactive subsidiaries) has entered into the Amended Credit Agreement to GST as payment-in-kind (“PIK”) interest, with interest due on January 31 of each year. In conjunction with the interest payments in 2017 and 2016, $19.3 million and $18.4 million, respectively, was paid in cash and PIK interest of $13.4 million and $12.7 million, respectively, was added to the principal balance of the Notes Payable to GST. If GST LLC is unable to pay ordinary course operating expenses, under certain conditions, it can require EnPro Holdings and Stemco to pay in cash the accrued PIK interest necessary to meetprovide such ordinary course operating expenses, subject to certain caps. The interest duea guarantee.
Borrowings under the Notes Payable to GST may be satisfied through offsets of amounts due under intercompany services agreements pursuant to which we provide certain corporate services, make available access to group insurance coverage to GST, make advances to third party providers related to payroll and certain benefit plans sponsored by GST, and permit employees of GST to participate in certain of our benefit plans.
The Coltec Note isFacilities are secured by EnPro Holdings'a first-priority pledge of certain of its equity ownership in specified U.S. subsidiaries.assets. The Stemco Note is guaranteed by EnPro HoldingsAmended Credit Agreement contains certain financial covenants and secured by EnPro Holdings' pledge of itsrequired financial ratios including a maximum consolidated total net leverage and a minimum consolidated interest in Stemco. With the reconsolidation of GSTcoverage as defined in the third quarter, these borrowings are now intercompany and are therefore not reflected on our Consolidated Balance SheetAmended Credit Agreement. We were in compliance with all covenants of the Amended Credit Agreement as of September 30, 2017.March 31, 2024.
We regularly transacted business with GST throughThe borrowing availability under our Revolving Credit Facility at March 31, 2024 was $355.0 million after giving consideration to $10.0 million of outstanding letters of credit and $35.0 million of outstanding borrowings. The balance of borrowings outstanding under the purchase and sale of products while itTerm Loan A-2 Facility at March 31, 2024 was not consolidated in EnPro's financial statements. We also provided services for GST including information technology, supply chain, treasury, accounting and tax administration, legal, and human resources under a support services agreement. GST is included in our consolidated U.S. federal income tax return and certain state combined income tax returns. As the parent of these consolidated tax groups, we are liable for, and pay, income taxes owed by the entire group. We have agreed with GST to allocate group taxes to GST based on the U.S. consolidated tax return regulations and current income tax accounting guidance. This method generally allocates taxes to GST as if it were a separate taxpayer. As a result, at December 31, 2016 we carried an income tax$297.3 million.


receivable from GST related to this allocation. We did not carry a receivable at September 30, 2017 on our consolidated balance sheet as a result of the reconsolidation of GST.
As discussed further in Note 17, "Commitments and Contingencies - Asbestos - Joint Plan of Reorganization," on January 30, 2017, OldCo filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code. We provided similar services to OldCo to those mentioned above for GST during the period from the OldCo Petition Date through the consummation of the Joint Plan, when it was reconsolidated into EnPro, but on a much less extensive basis due to OldCo's limited operations.
Amounts included in our consolidated financial statements arising from transactions with GST and OldCo during the periods which they were not consolidated in our results include the following:
  Consolidated Statements of Operations Caption Quarters Ended   
 September 30,		 Nine Months Ended 
 September 30,
Description 2017 2016 2017 2016
    (in millions)
Sales to GST Net sales $2.5
 $6.8
 $20.8
 $20.4
Purchases from GST Cost of sales $1.4
 $4.0
 $12.2
 $13.2
Interest expense to GST Interest expense $3.0
 $8.4
 $20.6
 $25.0
Description Consolidated Balance Sheets Caption December 31,
2016
    (in millions)
Due from GST Accounts receivable, net $21.4
Income tax receivable from GST Deferred income taxes and income tax receivable $119.0
Due from GST Other assets $1.4
Due to GST Accounts payable $6.3
Accrued interest to GST Accrued expenses $32.6
11.Long-Term Debt
Senior Notes
In September 2014,On October 17, 2018, we completed anthe offering of $300$350.0 million aggregate principal amount of our 5.875%5.75% Senior Notes due 20222026 (the “Senior Notes”"Senior Notes"). WeThe Senior Notes were issued to investors at 100% of the notes net of an original issue discount of $2.4 million.
principal amount thereof. The Senior Notes are unsecured, unsubordinated obligations of EnProEnpro and mature on SeptemberOctober 15, 2022.2026. Interest on the Senior Notes accrues at a rate of 5.875%5.75% per annum and is payable semi-annually in cash in arrears on MarchApril 15 and SeptemberOctober 15 of each year. The debt discount is being amortized through interest expense until the maturity date resulting in an effective interest rate of 6.00%. The Senior Notes are required to be guaranteed on a senior unsecured basis by each of EnPro’sEnpro’s existing and future direct and indirect domestic subsidiaries that is a borrower under, or guarantees, our indebtedness under the Revolving Credit Facility or guarantees any other Capital Markets Indebtedness (as defined in the indenture governing the Senior Notes) of EnProEnpro or any of the guarantors.
On or after September 15, 2017, we We may, on any one or more occasions, redeem all or a part of the Senior Notes at specified redemption prices plus accrued and unpaid interest.
Each holder of the Senior Notes may require us to repurchase some or all of the Senior Notes for cash upon the occurrence of a defined “change of control” event. Our ability to redeem the Senior Notes prior to maturity is subject to certain conditions, including in certain cases the payment of make-whole amounts.
The indenture governing the Senior Notes includes covenants that restrict our ability to engage in certain activities, including incurring additional indebtedness, and paying dividends and repurchasing shares of our common stock, subject in each case to specified exceptions and qualifications set forth in the indenture.
In March 2017, we completed an add-on offering of $150.0 million of our 5.875% The indenture further requires us to offer to repurchase the Senior Notes due 2022 (the “Additional Notes"). We issued the notes inclusive of an original issue premium of $1.5 million. The offer was made in the


United Statesat a price equal to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act.

The indenture for the Additional Notes contains the same interest payment, redemption, change of control, covenant, and guarantee provisions as for the Senior Notes. The debt premium is being amortized through interest expense until the maturity date resulting in an effective interest rate of 5.66%.

The proceeds from the offering100.0% of the Additional Notes wereprincipal amount thereof plus accrued and unpaid interest, in the event that the net cash proceeds of certain asset sales are not reinvested in acquisitions, capital expenditures, or used primarily to repay outstanding borrowings under the Revolving Credit Facility (described below) in order to increase availability to fund future capital requirements, including those funding requirements associated with the Joint Plan of OldCo and GST, which are described in Note 17, "Commitments and Contingencies — Asbestos — Joint Plan of Reorganization."
Revolving Credit Facility
We haveor otherwise reduce specified indebtedness within a $300 million senior secured revolving credit facility (the “Revolving Credit Facility”). Borrowings under the Revolving Credit Facility bear interest at an annual rate of LIBOR plus 2.00% or base rate plus 1.00%, although the interest rates under the Revolving Credit Facility are subject to incremental increases or decreases based on a consolidated total leverage ratio. In addition, a commitment fee accrues with respectspecified period, to the unused amount ofextent the Revolving Credit Facility. The Revolving Credit Facility expires in August 2019.remaining net proceeds exceed a specified amount.
Borrowings under the Revolving Credit Facility are secured by a first priority pledge of certain of our assets. The Revolving Credit Facility contains financial covenants and required financial ratios, including a maximum consolidated total net leverage and a minimum consolidated interest coverage as defined in the agreement. It also contains affirmative and negative covenants which are subject to customary exceptions and qualifications. We were in compliance with all suchof the covenants under the indenture governing the Senior Notes as of September 30, 2017.March 31, 2024
The borrowing availability under our Revolving Credit Facility at September 30, 2017 was $169.7 million after giving consideration to $14.5 million of outstanding letters of credit and $115.8 million of outstanding revolver borrowings.
In October 2016, the Revolving Credit Facility was amended to permit various transactions as part of the contemplated corporate restructuring of Coltec, which is discussed further in Note 17, "Commitments and Contingencies — Asbestos — Joint Plan of Reorganization." Permitted borrowers under the Revolving Credit Facility now include EnPro Holdings in addition to EnPro. Each of our domestic consolidated subsidiaries is required to guarantee the obligations of the borrowers under the Revolving Credit Facility, and each of our existing domestic, consolidated subsidiaries has provided such a guarantee.

12.Pensions and Postretirement Benefits












10

9.    Pension
The components of net periodic benefit cost for our U.S. and foreign defined benefit pension and other postretirement plans for the quarters and ninethree months ended September 30, 2017March 31, 2024 and 2016,2023, are as follows:
 Three Months Ended March 31,
 20242023
 (in millions)
Service cost$0.1 $0.1 
Interest cost3.2 3.3 
Expected return on plan assets(3.6)(3.4)
Amortization of net loss0.4 0.4 
Net periodic benefit cost$0.1 $0.4 
 Quarters Ended September 30, Nine Months Ended September 30,
 Pension Benefits Other Benefits Pension Benefits Other Benefits
 2017 2016 2017 2016 2017 2016 2017 2016
 (in millions)
Service cost$1.2
 $1.0
 $—
 $0.1
 $3.3
 $3.2
 $0.1
 $0.3
Interest cost3.3
 3.2
 —
 —
 9.3
 9.5
 0.1
 0.2
Expected return on plan assets(5.2) (4.3) —
 —
 (14.3) (12.7) —
 —
Amortization of prior service cost0.1
 —
 0.1
 —
 0.1
 —
 0.1
 —
Amortization of net loss1.8
 1.7
 —
 —
 5.4
 5.1
 —
 —
Deconsolidation of GST—
 (0.2) —
 —
 (0.3) (0.7) —
 —
Net periodic benefit cost$1.2
 $1.4
 $0.1
 $0.1
 $3.5
 $4.4
 $0.3
 $0.5

For the nine months ended September 30, 2017, we contributed $8.8 million to our U.S. defined benefit pension plans. Contributions of $14.8 million were made in the corresponding prior year period. Based upon available information, which is subject to change, weWe do not expect to make furtheranticipate making any contributions to our U.S. defined benefit pension planplans in calendar year 2024.
10.    Shareholders' Equity
The quarterly changes in shareholders' equity during the fourth quarter of 2017.

three months ended March 31, 2024 are as follows:

Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Shareholders' EquityRedeemable Non-controlling Interests
(in millions, except per share data)SharesAmount
Balance, December 31, 202321.0 $0.2 $304.9 $1,128.0 $(22.2)$(1.2)$1,409.7 $17.9 
Net income— — — 12.5 — — 12.5 — 
Other comprehensive income— — — — (3.5)— (3.5)— 
Dividends ($0.30 per share)— — — (6.3)— — (6.3)— 
Incentive plan activity— — 1.5 — — — 1.5 — 
Acquisition of Alluxa minority ownership— — — — — — — (17.9)
Balance, March 31, 202421.0 $0.2 $306.4 $1,134.2 $(25.7)$(1.2)$1,413.9 $— 
13.Shareholders' Equity

The quarterly changes in shareholders' equity during the three months ended March 31, 2023 are as follows:
Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Shareholders' EquityRedeemable Non-controlling Interests
(in millions, except per share data)SharesAmount
Balance, December 31, 202220.8 $0.2 $299.2 $1,130.2 $(33.3)$(1.2)$1,395.1 $17.9 
Net income— — — 37.4 — — 37.4 — 
Other comprehensive loss— — — — 7.1 — 7.1 — 
Dividends ($0.29 per share)— — — (6.1)— — (6.1)— 
Incentive plan activity0.1 — 1.6 — — — 1.6 — 
Balance, March 31, 202320.9 $0.2 $300.8 $1,161.5 $(26.2)$(1.2)$1,435.1 $17.9 

11

We have adopted a policy under which we intend to declare regular quarterly cash dividends on our common stock, as determined by our board of directors, after taking into account our current and projected cash flows, earnings, financial position, debt covenants and other relevant matters.factors. In accordance with this policy,the board of directors' declaration, total dividend payments of $14.3$6.4 million were made during the ninethree months ended September 30, 2017.March 31, 2024.
In October 2017,May 2024, our board of directors authorizeddeclared a dividend of $0.22$0.30 per share, payable on DecemberJune 20, 20172024, to all shareholders of record as of December 6, 2017.June 5, 2024.
In October 2015,2022, our board of directors authorized the repurchaseexpenditure of up to $50.0 million for the repurchase of our outstanding common shares. Duringshares through October 2024. We have not made any repurchases under this authorization.

In 2023, we changed our performance share awards so that awards granted under our equity compensation plan to executives and other key employees are to be paid in shares of our common stock at the nine months ended September 30, 2017,end of the three-year vesting period. Awards issued in 2022 will be payable in cash at the end of the vesting period based upon the performance of Enpro’s share price relative to an industry peer group. Compensation expense related to performance shares granted in 2023 and 2024 is computed using the fair value of the awards on the grant date, which is expensed on a straight-line basis over the three-year vesting period. Compensation expense for awards granted in 2022 is computed based upon the current estimate of total projected cash to be paid at vesting and the portion of the vesting period that has elapsed.
In February 2024, we repurchased 0.2 millionissued stock options to certain key executives for approximately 50 thousand common shares with an exercise price of $156.20 per share. The options vest pro-rata on the first, second and third anniversaries of the grant date, subject to continued employment. No options have a term greater than 10 years.
We determine the fair value of stock options using the Black-Scholes option pricing formula as of the grant date. Key inputs into this formula include expected term, expected volatility, expected dividend yield, and the risk-free interest rate. This fair value is amortized on a straight-line basis over the vesting period and recorded in selling, general and administrative costs on our Consolidated Income Statement.
The expected term represents the period that our stock options are expected to be outstanding and is determined based on historical experience of similar awards, given the contractual terms of the awards, vesting schedules, and expectations of future employee behavior. The fair value of stock options reflects a volatility factor calculated using historical market data for $11.5 million, all of which settled duringEnpro's common stock. The time frame used was approximated as a six-year period from the period. The remaining amount of authorized purchases in the program at September 30, 2017 was $2.8 million. The program authorization expired in October 2017, with no further purchases made after September 30, 2017.
Also in October 2017, our board of directors authorized a new programgrant date for the repurchaseawards. The dividend assumption is based on our expectations as of upthe grant date. We base the risk-free interest rate on the yield to $50.0 millionmaturity at the time of our outstanding common shares. This program authorization will expirethe stock option grant on zero-coupon U.S. government bonds having a remaining life equal to the option's expected life.
The option awards issued in October 2020.February 2024 had a fair value of $66.84 per share at their grant date. The following assumptions were used to estimate the fair value of the 2024 option awards:
Average expected term6 years
14.Expected volatilityBusiness Segment Information40.61 %
Risk-free interest rate4.33 %
Expected dividend yield0.77 %

11.    Business Segment Information

We aggregate our operating businesses into threetwo reportable segments. The factorssegments, Sealing Technologies and Advanced Surface Technologies. Factors considered in determining our reportable segments areinclude the economic similarity of the businesses, the nature of products sold, or servicessolutions provided, the production processes and the types of customers and distribution methods. Our reportable segments are managed separately based on these differences.

Our Sealing ProductsTechnologies segment designs,engineers and manufactures value-added products and sells sealing products,solutions that safeguard a variety of critical environments, including: metallic, non-metallic and composite material gaskets,gaskets; dynamic seals; compression packing; elastomeric components; custom-engineered mechanical seals compression packing, resilient metal seals, elastomeric seals,used in diverse applications; hydraulic components, expansion joints, flange sealingcomponents; test, measurement and isolation products, pipeline casing spacers/isolators, casing end seals, modular sealing systems for sealing pipeline penetrations,sensing applications; sanitary gaskets,gaskets; hoses and fittings for the hygienic process industries; fluid transfer products for the pharmaceutical and biopharmaceutical industries; and commercial vehicle solutions used in wheel-end and suspension components that customers rely upon to ensure safety on our roadways.
These products are used in a variety of markets, including chemical and petrochemical processing, nuclear energy, hydrogen, natural gas, food and biopharmaceutical processing, primary metal manufacturing, mining, water and waste treatment, commercial vehicle, aerospace (including commercial space), medical, filtration and semiconductor fabrication. In
12

all these industries, hole formingthe performance and durability of our proprietary products manhole infiltration sealing systems, bellows and bellowssolutions are vital for the safety and environmental protection of our customers’ processes. Many of our products and solutions are used in highly demanding applications, often in harsh environments, where the cost of failure is extremely high relative to the cost of our offerings to our customers. These environments include those where extreme temperatures, extreme pressures, corrosive agents, strict tolerances, or worn equipment create challenges for product performance. Sealing Technologies offers customers widely recognized applied engineering, innovation, process know-how and enduring reliability, driving a lasting aftermarket for many of our products and solutions.
Our Advanced Surface Technologies (AST) segment applies proprietary technologies, processes, and capabilities to deliver a highly differentiated suite of products and solutions for challenging applications in high-growth markets. The segment’s products and solutions are used in demanding environments requiring performance, precision and repeatability, with a low tolerance for failure. AST’s products and solutions include: (i) cleaning, coating, testing, refurbishment and verification for critical components and assemblies pedestals forused in semiconductor manufacturing custom-engineered mechanical sealsequipment, with meaningful exposures to state-of-the-art advanced node chip applications; (ii) designing, manufacturing and selling specialized optical filters and proprietary thin-film coatings for the most challenging applications in the aerospaceindustrial technology, life sciences, and semiconductor markets; (iii) engineering and manufacturing complex front-end wafer processing sub-systems and new and refurbished electrostatic chuck pedestals for the semiconductor equipment industry; and (iv) engineering and manufacturing edge-welded metal bellows for the semiconductor equipment industry and other markets, PTFEcritical applications in the space, aerospace and defense markets. In many instances, AST capabilities drive products and heavy-duty commercial vehicle parts used insolutions that enable the wheel-end, braking, suspension,performance of our customers’ high-value processes through an entire life cycle.
We measure operating performance based on segment earnings before interest, income taxes, depreciation, amortization, and tire and mileage optimization systems.

Our Engineered Products segment includes operations that design, manufacture and sell self-lubricating, non-rolling metal-polymer, solid polymer and filament wound bearing products, aluminum blocks for hydraulic applications, and precision engineered components and lubrication systems for reciprocating compressors.
Our Power Systems segment designs, manufactures, sells and services heavy-duty, medium-speed diesel, natural gas and dual fuel reciprocating engines.

other selected items ("Adjusted Segment profitEBITDA"), which is total segment revenue reduced by operating expenses restructuring and other costs identifiable with the segment.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. Adjusted Segment EBITDA is not defined under GAAP and may not be comparable to similarly-titled measures used by other companies. Corporate expenses include general corporate administrative costs. Expenses not directly attributable to the segments,Segments non-operating expenses and income, corporate expenses, net interest expense, asset impairments, gains and losses related to the sale of assets, and income taxes are not included in the computation of segment profit.Adjusted Segment EBITDA. The accounting policies of the reportable segments are the same as those for EnPro.Enpro.

In the first quarter of 2024, we refined our definition of Adjusted Segment EBITDA and corporate expenses to include certain other income or expenses previously reported in other expense, net. These items were primarily comprised of bank fees and certain foreign exchange transaction gains and losses. As a result of this change, for the quarter ended March 31, 2023, we recast our results to decrease Advanced Surface Technologies adjusted segment EBITDA by $0.1 million and increased corporate expenses by $0.3 million.

Non-controlling interest compensation allocation represents compensation expense associated with a portion of the rollover equity from the acquisition of Alluxa. This expense was recorded in selling, general, and administrative expenses in our Consolidated Statements of Operations and is directly related to the terms of the acquisition. In February 2024, Enpro acquired all of the Alluxa non-controlling interests and became the sole owner of Alluxa.
13

Segment operating results and other financial data for the quarters and ninethree months ended September 30, 2017March 31, 2024 and 20162023 were as follows:
Three Months Ended March 31,
20242023
 (in millions)
Sales
Sealing Technologies$171.6 $173.3 
Advanced Surface Technologies86.0 109.4 
257.6 282.7 
Intersegment sales(0.1)(0.1)
Total sales$257.5 $282.6 
Adjusted Segment EBITDA
Sealing Technologies$53.0 $49.7 
Advanced Surface Technologies17.3 29.4 
$70.3 $79.1 
Reconciliation of Income from Continuing Operations Before Income Taxes to Adjusted Segment EBITDA
Income from continuing operations before income taxes$14.3 $34.1 
Acquisition expenses3.3 — 
Non-controlling interest compensation allocation— 0.4 
Amortization of fair value adjustment to acquisition date inventory1.7 — 
Restructuring expense0.5 0.4 
Depreciation and amortization expense24.6 23.5 
Corporate expenses12.2 11.0 
Interest expense, net8.2 7.9 
Other expense, net5.5 1.8 
Adjusted Segment EBITDA$70.3 $79.1 
 Quarters Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
 (in millions)
Sales       
Sealing Products$213.7
 $175.3
 $584.3
 $532.6
Engineered Products75.5
 65.7
 226.3
 213.5
Power Systems55.4
 52.5
 139.4
 157.2
 344.6
 293.5
 950.0
 903.3
Intersegment sales(0.9) (0.8) (2.9) (2.5)
Net sales$343.7
 $292.7
 $947.1
 $900.8
Segment Profit       
Sealing Products$23.5
 $23.1
 $65.0
 $62.4
Engineered Products7.7
 2.9
 25.4
 10.4
Power Systems8.2
 7.3
 20.6
 15.5
Total segment profit39.4
 33.3
 111.0
 88.3
Corporate expenses(9.7) (6.4) (24.3) (21.9)
Asbestos settlement—
 —
 —
 (80.0)
Gain on reconsolidation of GST and OldCo534.4
 —
 534.4
 —
Interest expense, net(10.3) (14.0) (41.2) (41.0)
Other expense, net(13.1) (2.9) (18.6) (9.8)
Income (loss) before income taxes$540.7
 $10.0
 $561.3
 $(64.4)
Segment assets are as follows:
March 31, 2024December 31, 2023
(in millions)
Sealing Technologies$934.6 $687.1 
Advanced Surface Technologies1,369.4 1,385.9 
Corporate223.8 426.5 
$2,527.8 $2,499.5 














 September 30,
2017		 December 31,
2016
 (in millions)
Sealing Products$1,088.3
 $636.4
Engineered Products231.2
 210.0
Power Systems196.3
 164.8
Corporate326.6
 535.2
 $1,842.4
 $1,546.4
14

Revenue by End Market
15.

Due to the diversified nature of our business and the wide array of products that we offer, we sell into a number of end markets. Underlying economic conditions within these markets are a major driver of our segments' sales performance. Below is a summary of our third-party sales by major end market with which we did business for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31, 2024
(in millions)Sealing TechnologiesAdvanced Surface TechnologiesTotal
Aerospace$14.2 $2.8 $17.0 
Chemical and material processing22.3 — 22.3 
Food and pharmaceutical17.0 — 17.0 
General industrial41.5 6.1 47.6 
Commercial vehicle44.9 — 44.9 
Oil and gas12.3 1.5 13.8 
Power generation17.5 — 17.5 
Semiconductors1.9 75.5 77.4 
Total third-party sales$171.6 $85.9 $257.5 

Three Months Ended March 31, 2023
(in millions)Sealing TechnologiesAdvanced Surface TechnologiesTotal
Aerospace$12.5 $1.6 $14.1 
Chemical and material processing21.6 — 21.6 
Food and pharmaceutical18.7 — 18.7 
General industrial43.9 8.8 52.7 
Commercial vehicle52.4 — 52.4 
Oil and gas5.9 1.6 7.5 
Power generation16.1 — 16.1 
Semiconductors2.2 97.3 99.5 
Total third-party sales$173.3 $109.3 $282.6 

12.    Derivatives and Hedging
We are exposed to foreign currency risks that arise from normal business operations. These risks include the translation of local currency balances on our foreign subsidiaries’ balance sheets, intercompany loans with foreign subsidiaries and transactions denominated in foreign currencies. We strive to control our exposure to these risks through our normal operating activities and, where appropriate, through derivative instruments. We periodically enter into contracts to hedge forecasted transactions that are denominated in foreign currencies. As part of our regular practice, we have entered into a forward contract to hedge a 95 million Euro exposure on an intercompany note agreement related to proceeds from the sale of our former GGB business, allocated to foreign subsidiaries. We expect this intercompany note to be settled by December 2024. The notional amount of foreign exchange contracts was $108.0 million and $110.5 million at March 31, 2024 and December 31, 2023 respectively. All foreign exchange contracts outstanding at March 31, 2024 expired in April 2024.
The earnings impact of these foreign exchange contract are recorded in selling, general and administrative expense in the Consolidated Statements of Operations. The balances of foreign exchange derivative assets are recorded in other current assets and the balances of foreign exchange derivative liabilities are recorded in accrued expenses in the Consolidated Balance Sheets.
In May 2019, we entered into cross-currency swap agreements (the "Swap") with an aggregate notional amount of $100.0 million to manage an increased portion of our foreign currency risk by effectively converting a portion of the interest payments related to our fixed-rate USD-denominated Senior Notes, including the semi-annual interest payments thereunder, to interest
15

payments on fixed-rate Euro-denominated debt of 89.6 million EUR with a weighted average interest rate of 3.5%, with interest payment dates of April 15 and October 15 of each year. The Swap matures on October 15, 2026.
During the term of the Swap, we will receive semi-annual payments from the counterparties due to the difference between the interest rate on the Senior Notes and the interest rate on the Euro debt underlying the Swap. There was no principal exchange at the inception of the arrangement, and there will be no exchange at maturity. At maturity (or earlier at our option), we and the counterparty will settle the Swap at its fair value in cash based on the aggregate notional amount and the then-applicable currency exchange rate compared to the exchange rate at the time the Swap was entered into.
We have designated the Swap as a qualifying hedging instrument and are accounting for it as a net investment hedge. At March 31, 2024, the fair value of the Swap equaled $5.6 million and was recorded within our other (non-current) assets on the Consolidated Balance Sheet. The gains and losses resulting from fair value adjustment to the Swap, excluding interest accruals related to the above receipts, are recorded in accumulated other comprehensive income within our cumulative foreign currency translation adjustment, as the Swap is effective in hedging the designated risk. Cash flows related to the Swap are included in operating activities in the Consolidated Statements of Cash Flows, aside from the ultimate settlement at maturity with the counterparty, which will be included in investing activities.

13.    Fair Value Measurements
We utilize a fair value hierarchy that categorizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs that reflect our own assumptions.



Assets and liabilities measured at fair value on a recurring basis are summarized as follows:
Fair Value Measurements as of
Fair Value Measurements as ofFair Value Measurements as of
September 30, 2017 December 31, 2016 March 31, 2024December 31, 2023
(in millions) (in millions)
Assets   
Time deposits$32.3
 $26.0
Foreign currency derivatives
Foreign currency derivatives
Foreign currency derivatives
Deferred compensation assets7.3
 7.0
$39.6
 $33.0
$
Liabilities   
Deferred compensation liabilities$8.5
 $8.3
Deferred compensation liabilities
Deferred compensation liabilities
Our time deposits and deferred compensation assets and liabilities are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. Our foreign currency derivatives and short-term investments are classified as Level 2 since their value is calculated based upon observable inputs including market USD/Euro exchange rates and market interest rates.
The carrying values of our significant financial instruments reflected in the Consolidated Balance Sheets approximated their respective fair values except for the following instruments:
 September 30, 2017 December 31, 2016
 
Carrying
Value
 
Fair
Value
 
Carrying
Value
 
Fair
Value
 (in millions)
Long-term debt$560.6
 $587.1
 $425.0
 $439.1
Notes payable to GST$—
 $—
 $295.9
 $302.7
 March 31, 2024December 31, 2023
 Carrying
Value		Fair
Value		Carrying
Value		Fair
Value
 (in millions)
Long-term debt$644.9 $648.4 $646.8 $649.8 
The fair values for long-term debt are based on quoted market prices for identical liabilities, but these would beare considered Level 2 computations because the market is not active. The notes payable to GST computations would be considered Level 2 since they are based on rates available to us for debt with similar terms and maturities.
Assets measured on a nonrecurring basis

Long-lived Assets. We review the carrying amounts of long-lived assets when certain events or changes








16

14.    Accumulated Other Comprehensive Income (Loss)

Changes in circumstances indicate that the carrying amounts may not be recoverable.  In consideration of the poor performance of the ATDynamics ("ATD") business, an asset group in the Stemco division of our Sealing Products segment,accumulated other comprehensive income (loss) by component (after tax) for the quarterthree months ended September 30, 2017 and significantly lowered expectations for the fourth quarter forecast and the budget for fiscal year 2018, we determined that a test of ATD's recoverability was required.March 31, 2024 are as follows:
(in millions)Unrealized
Translation
Adjustments		Pension
Plans		Total
Beginning balance$24.1 $(46.3)$(22.2)
Other comprehensive loss before reclassifications(3.8)— (3.8)
Amounts reclassified from accumulated other comprehensive loss— 0.3 0.3 
Net current-period other comprehensive income(3.8)0.3 (3.5)
Ending balance$20.3 $(46.0)$(25.7)

An impairment loss is recognized when the carrying amount of the asset group is not recoverable and exceeds its fair value.  We estimated the fair values of assets subject to long-lived asset impairment based on our own judgments about the assumptions that market participants would use in pricing the assets. In doing so, we used an income approach based upon discounted cash flows. The key assumptions used for the discounted cash flow approach include expected cash flows based on internal business plans, projected growth rates, discount rates, and royalty rates for certain intangible assets.  We classified these fair value measurements as Level 3.

As a result of this test, certain of ATD's definite-lived intangible assets were determined to be impaired, and were valued in total at $1.7 million, resulting in an impairment loss of $10.1 million, which equaled the excess of these assets' net book value at September 30, 2017 over their fair value. The loss is reflected in other expense (operating) in the Consolidated Statement of Operations.
Investment in GST and OldCo. As discussed further in Note 2 - "Garlock Sealing Technologies LLC, Garrison Litigation Management Group, Ltd., and OldCo, LLC - Reconsolidation," the transaction to reconsolidate GST and OldCo into our reported financial results involved the measurement of the fair value of our investment in GST and OldCo as of July 31, 2017. The transaction is accounted for under the authoritative guidance for business combinations, and the investment's fair value of $485.2 million at this date is the deemed purchase price.
The fair value was determined using a combination of a market approach based upon a multiple of GST and OldCo's trailing forecasted financial performance for fiscal 2017, and an income approach based upon discounted cash flows. The key assumptions used for the discounted cash flow approach include expected cash flows based on internal business plans,


projected growth rates and discount rates. As a result, the valuation of the investment in GST is considered Level 3 due to the absence of quoted market prices or observable inputs.

16.Accumulated Other Comprehensive Loss


Changes in accumulated other comprehensive lossincome (loss) by component (after tax) for the quarterthree months ended September 30, 2017March 31, 2023 are as follows:
(in millions)Unrealized
Translation
Adjustments		Pension
Plans		Total
Beginning balance$11.8 $(45.1)$(33.3)
Other comprehensive income before reclassifications6.8 — 6.8 
Amounts reclassified from accumulated other comprehensive (loss)— 0.3 0.3 
Net current-period other comprehensive income6.8 0.3 7.1 
Ending balance$18.6 $(44.8)$(26.2)
(in millions)
Unrealized
Translation
Adjustments
 
Pension and
Other
Postretirement
Plans
 Total
Beginning balance$(7.8) $(47.7) $(55.5)
Other comprehensive income before reclassifications3.4
 —
 3.4
Amounts reclassified from accumulated other comprehensive loss—
 1.3
 1.3
Net current-period other comprehensive income3.4
 1.3
 4.7
Ending balance$(4.4) $(46.4) $(50.8)

Changes in accumulated other comprehensive loss by component (after tax) for the quarter ended September 30, 2016 are as follows:
(in millions)
Unrealized
Translation
Adjustments
 
Pension and
Other
Postretirement
Plans
 Total
Beginning balance$(9.0) $(47.1) $(56.1)
Other comprehensive loss before reclassifications(0.4) —
 (0.4)
Amounts reclassified from accumulated other comprehensive loss—
 1.0
 1.0
Net current-period other comprehensive income (loss)(0.4) 1.0
 0.6
Ending balance$(9.4) $(46.1) $(55.5)
Changes in accumulated other comprehensive loss by component (after tax) for the nine months ended September 30, 2017 are as follows:
(in millions)
Unrealized
Translation
Adjustments
 
Pension and
Other
Postretirement
Plans
 Total
Beginning balance$(21.2) $(49.7) $(70.9)
Other comprehensive income before reclassifications16.8
 —
 16.8
Amounts reclassified from accumulated other comprehensive loss—
 3.3
 3.3
Net current-period other comprehensive income16.8
 3.3
 20.1
Ending balance$(4.4) $(46.4) $(50.8)
Changes in accumulated other comprehensive loss by component (after tax) for the nine months ended September 30, 2016 are as follows:
(in millions)
Unrealized
Translation
Adjustments
 
Pension and
Other
Postretirement
Plans
 Total
Beginning balance$(4.9) $(49.2) $(54.1)
Other comprehensive loss before reclassifications(4.3) —
 (4.3)
Amounts reclassified from accumulated other comprehensive loss(0.2) 3.1
 2.9
Net current-period other comprehensive income (loss)(4.5) 3.1
 (1.4)
Ending balance$(9.4) $(46.1) $(55.5)


Reclassifications out of accumulated other comprehensive lossincome (loss) for the ninequarters and three months ended September 30, 2017March 31, 2024 and 20162023 are as follows:
Details about Accumulated Other Comprehensive Income (Loss) ComponentsAmount Reclassified from Accumulated Other
Comprehensive Income (Loss)		Affected Statement of
Operations Caption
Three Months Ended 
 March 31,
(in millions)20242023
Pension adjustments:
Actuarial losses$0.4 $0.4 Other expense
Total before tax0.4 0.4 Income before income taxes
Tax expense(0.1)(0.1)Income tax benefit (expense)
Net of tax$0.3 $0.3 Net income
Details about Accumulated Other Comprehensive Loss Components Amount Reclassified from Accumulated Other
Comprehensive Loss		 Amount Reclassified from Accumulated Other
Comprehensive Loss		 
Affected Statement of
Operations Caption
  Quarters Ended   
 September 30,		 Nine Months Ended September 30,  
(in millions) 2017 2016 2017 2016  
Amortization of pension and other postretirement plans:          
Actuarial losses $1.8
 $1.7
 $5.4
 $5.1
 (1)
Prior service costs 0.2
 —
 0.2
 —
 (1)
Total before tax 2.0
 1.7
 5.6
 5.1
  
Tax benefit (0.7) (0.7) (2.3) (2.0) Income tax expense
Net of tax $1.3
 $1.0
 $3.3
 $3.1
  
Release of unrealized currency translation adjustment upon sale of investment in foreign entity, net of tax $—
 $—
 $—
 $(0.2) Other non-operating expense
15.    Commitments and Contingencies
(1)These accumulated other comprehensive income components are included in the computation of net periodic pension cost. (See Note 12, “Pensions and Postretirement Benefits” for additional details).
17.Commitments and Contingencies
General
A detailed description of certain environmental asbestos and other legal matters relating to certain of our subsidiaries is included in this section. In addition to the matters noted herein, we are from time to time subject to, and are presently involved in, other litigation and legal proceedings arising in the ordinary course of business. We believe the outcome of such other litigation and legal proceedings will not have a material adverse effect on our financial condition, results of operations and cash flows. Expenses for administrative and legal proceedings are recorded when incurred.
Environmental
Our facilities and operations are subject to federal, state and local environmental and occupational health and safety requirementslaws and regulations of the U.S. and foreign countries. We take a proactive approach in our efforts to comply with environmental, healththese laws and safety laws
17

regulations as they relate to our manufacturing operations and in proposing and implementing any remedial plans that may be necessary. We also regularly conduct comprehensive environmental, health and safety audits at our facilities to maintain compliance and improve operational efficiency.
Although we believe past operations were in substantial compliance with the then applicable regulations, we or one or more of our subsidiaries are involved with various investigation and remediation activities at 1519 sites. At 14 of these sites, where the future cost per site for us or our subsidiarysubsidiaries is expected to exceed $100,000. Investigations$100,000. We do not conduct manufacturing operations at any of these sites. At all 19 sites, one or more of our subsidiaries formerly conducted business operations but no longer do. Among these 19 sites, investigations have been completed for 1115 sites and are in progress at the other 4sites. Our costs at 14 ofAmong the 15 sites relatewhere investigations have been completed, 7 sites have remediation systems that are operating and our only obligation at the other 8 sites is to remediation projects for soilconduct periodic monitoring. In addition to the 19 sites referenced above, the United States Environmental Protection Agency (the "EPA") has provided us notice that Enpro has potential responsibility at 1 additional site where one of our subsidiaries formerly conducted business operations but no longer does. We have responded to the EPA that we do not have responsibility at that site and groundwater contamination at former operating facilities that were sold or closed.are awaiting EPA's response.
Our policy is to accrue environmental investigation and remediation costs when it is probable that a liability has been incurred and the amount can be reasonably estimated. For sites with multiple future projected cost scenarios for identified feasible investigation and remediation options where no one estimate is more likely than all the others, our policy is to accrue the lowest estimate among the range of estimates. The measurement of the liability is based on an evaluation of currently available facts with respect to each individual situation and takes into consideration factors such as existing technology, presently enacted laws and regulations and prior experience of the Company and engaged specialists in the remediation of similar contaminated sites. Liabilities are established for all sites based on these factors. As assessments and remediation progress at individual sites, these liabilities are reviewed at least once a quarter at the end of each quarter and adjusted to reflect additional technical data and additional legal information available.information. As of September 30, 2017March 31, 2024 and December 31, 2016,2023, we had accruedrecorded liabilities of $24.8aggregating $37.8 million and $23.1$39.0 million,, respectively, for estimated future expenditures relating to environmental contingencies. The current portion of our aggregate environmental liability included in accrued liabilities was $8.2 million at March 31, 2024. These amounts have been recorded on an undiscounted basis in the Consolidated Balance Sheets. Given the uncertainties regarding the status of laws, regulations, enforcement policies, the impact of other parties potentially being fully or partially liable, technology and information related to individual sites, we do not believe it is possible to develop an estimate of the range of reasonably possible environmental loss in excess of our recorded liabilities.
Except as described below, weWe believe that our accruals for specific environmental liabilities are adequate for those liabilities based on currently available information. Based upon limited information regarding any incremental remediation or other actions that may be required at these sites, we cannot estimate any further loss or a reasonably possible range of loss related to these matters. Actual costs to be incurred in future periods may vary from estimates


because of the inherent uncertainties in evaluating environmental exposures due to unknown and changing conditions, changing government regulations and legal standards regarding liability.
Lower Passaic River Study Area
Based on our prior ownership of Crucible Steel Corporation a/k/a Crucible, Inc. (“Crucible”), we may have additional contingent liabilities in one or more significant environmental matters. One such matter, which is included in the 1519 sites referred to above, is the Lower Passaic River Study Area of the Diamond Alkali Superfund Site in New Jersey. Crucible operated a steel mill abutting the Passaic River in Harrison, New Jersey from the 1930s until 1974, which was one of many industrial operations on the river dating back to the 1800s. Certain contingent environmental liabilities related to this site were retained by Colteca predecessor of EnPro Holdings when Coltecit sold a majority interest in Crucible Materials Corporation (the successor of Crucible) in 1985, which liabilities and other legacy non-asbestos liabilities were assumed by1985. The EPA notified our subsidiary EnPro Holdings, as part of the corporate restructuring of Coltec described below in "— Asbestos — Joint Plan of Reorganization." The United States Environmental Protection Agency (the “EPA”) notified Coltec in September 2003 that it is a potentially responsible party (“PRP”) for Superfund response actions in the lower 17-mile stretch of the Passaic River known as the Lower Passaic River Study Area. Coltec
EnPro Holdings and approximately 70 of the numerous other PRPs, known as the Cooperating Parties Group, are parties to a May 2007 Administrative Order on Consent with the EPA to perform a Remedial Investigation/Feasibility Study (“RI/FS”) of the contaminants in the Lower Passaic River Study Area. In September 2018, EnPro Holdings withdrew from the Cooperating Parties Group but remains a party to the May 2007 Administrative Order on Consent. The RI/FS was completed and submitted to the EPA at the end of April 2015. The RI/FS recommends a targeted dredge and cap remedy with monitored natural recovery and adaptive management for the Lower Passaic River Study Area. The cost of such remedy is estimated to be $726 million. Previously, on April 11, 2014, the EPA released its Focused Feasibility Study (the “FFS”) with its proposed plan for remediating the lower eight miles of the Lower Passaic River Study Area. The FFS calls for bank-to-bank dredging and capping of the riverbed of that portion of the river and estimates a range of the present value of aggregate remediation costs of approximately $953 million to approximately $1.73 billion, although estimates of the costs and the timing of costs are inherently imprecise. On March 3, 2016, the EPA issued the final Record of Decision (ROD) as to the remedy for the lower eight miles of the Lower Passaic River Study Area, with the maximum estimated cost being reduced by the EPA from $1.73 billion to $1.38 billion, primarily due to a reduction in the amount of cubic yards of material that will be dredged. In October
18

2016, Occidental Chemical Corporation, the successor to the entity that operated the Diamond Alkali chemical manufacturing facility, reached an agreement with the EPA to develop the design for this proposed remedy at an estimated cost of $165 million. The EPA has estimated that it will take approximately four years to develop this design. On June 30, 2018, Occidental Chemical Corporation sued over 120 parties, including the Company, in the United States District Court for New Jersey seeking recovery of response costs under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA").
No final allocations of responsibility have been made among the numerous PRPs that have received notices from the EPA, there are numerous identified PRPs that have not yet received PRP notices from the EPA, and there are likely many PRPs that have not yet been identified. Based on our evaluation of
On April 14, 2021, the site, during 2014 we accrued a liability of $3.5 million related to environmental remediation costs associated with the lower eight miles of the Lower Passaic River Study Area, which is our estimate of the low end of a range of reasonably possible costs, with no estimate within the range being a better estimate than the minimum. Our actual remediation costs could be significantly greater than the $3.5 million we accrued. With respect toEPA issued its proposed remedy for the upper nine miles of the river, with an estimated present value cost of approximately $441 million. The proposed remedy would involve dredging and capping of the river sediment as an interim remedy followed by a period of monitoring to evaluate the response of the river system to the interim remedy.
When the EPA initiated the allocation process in 2017, it explained that a fair, carefully structured, information-based allocation was necessary to promote settlements. With the completion of the allocation process, in the second quarter of 2021 the EPA began settlement negotiations with the parties that participated in the allocation process, including EnPro Holdings. In September 2022, EnPro Holdings paid $5.9 million as part of a settlement between those parties and EPA. The payment will be held in escrow until court approval of the settlement. Our reserve for this site at March 31, 2024 was $0.7 million. Further adjustments to our reserve for this site are possible as new or additional information becomes available.
Except with respect to the Lower Passaic River Study Area, we are unable to estimate a range of reasonably possible costs.
Another such matter involves the Onondaga Lake Superfund Site (the “Onondaga Site”) located near Syracuse, New York. Crucible operated a steel mill facility adjacent to Onondaga Lake from 1911 to 1983. The New York State Department of Environmental Conservation (“NYSDEC”) has contacted us and Coltec, as well as other parties, demanding reimbursement of unquantified environmental response costs incurred by NYSDEC and the EPA at the Onondaga Site. NYSDEC and EPA have alleged that contamination from the Crucible facility contributed to the need for environmental response actions at the Onondaga Site. In addition, Honeywell International Inc. (“Honeywell”), which has undertaken certain remediation activities at the Onondaga Site under the supervision of NYSDEC and the EPA, has informed the Company that it has claims against Coltec related to investigation and remediation at the Onondaga Site. We have entered into tolling agreements with NYSDEC, the EPA and Honeywell. On May 4, 2016, we received from Honeywell a summary of its claims. We have corresponded with Honeywell and have begun discussions with them regarding their claims. In addition, we have received notice from the Natural Resource Trustees for the Onondaga Lake Superfund Site (which are the U.S. Department of Interior, NYSDEC, and the Onondaga Nation) alleging that Coltec is considered to be a potentially responsible party for natural resource damages at the Onondaga Site. At this time, based on limited information we have with respect to estimated remediation costs and the respective allocation of responsibility for remediation among potentially responsible parties, we cannot estimate a reasonably possible range of loss associated with Crucible’s activities that may have affected the Onondaga Site. We have reserved $1.5 million for reimbursementrelated to any other contingent environmental liability based on our prior ownership of EPA response costs and certain costs associated with the remedial investigation.
Crucible. See the section entitled “Crucible Steel Corporation a/k/a Crucible, Inc.” in this footnote for additional information.
In addition to the Crucible environmental matters discussed above, ColtecArizona Uranium Mines
EnPro Holdings has received a noticenotices from the EPA asserting that Coltecit is a potentially responsible party under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA")CERCLA as the successor to a former operator in 1954 and 1955 of twoeight uranium mines in Arizona. On October 15, 2015, Coltec received another notice from the EPA asserting that Coltec is a potentially responsible party as the successor to the


The former operator conducted operations at the mines from 1954 to 1957. In the 1990s, remediation work performed by others at these sites consisted of six additional uranium mines in Arizona. In 2015, wecapping the exposed areas of the mines. We have previously reserved $1.1 million for the minimum amountamounts of probable loss associated with the first twothese mines, identified by the EPA,principally including the cost of the investigative work to be conducted at such sites. During the second quarter of 2016, we reserved an additional $1.1 million for the minimum amount of probable loss associated with the six additional mines, which includes additional estimated costs of investigative work to be conducted at the eight mines. At September 30, 2017, we increased the reserve by $1.9 million to a balance of $4.0 million in anticipation of enteringWe entered into an agreementAdministrative Settlement Agreement and Order on Consent for Interim Removal Action with the EPA to perform investigations to determineeffective November 7, 2017 for the natureperformance of this work. We entered into a First Modification of Original Administrative Settlement Agreement and extentOrder on Consent effective July 8, 2022 for the performance of contaminationEngineering Evaluations and Cost Analyses of potential remedial options at each of the sites. In 2020, the EPA initiated group discussions with EnPro Holdings and other potentially responsible parties to resolve various technical issues, including the development of cleanup standards. Based on these discussions and subsequent discussions with other responsible parties with similar sites, we have concluded that further remedial work beyond maintenance of and minor repairs to the existing caps is probable, and we have evaluated the feasibility of various remediation scenarios. Our reserve at March 31, 2024 for this site withwas $11.3 million, which reflects the investigations to be completed by thelow end of 2019.the range of our reasonably likely liability with respect to these sites. Some available remediation scenarios have higher associated costs and, if required by EPA, would require an upward adjustment of the reserve. We cannotare not able at this time to estimate the upper end of a reasonably possible range of loss associatedliability with remediation or other incremental costs relatedrespect to these mines.sites.
On October 18, 2021, the United States District Court for the District of Arizona approved and entered a Consent Decree pursuant to which the U.S government will reimburse the Company for 35% of necessary costs of response, as defined in 42 U.S.C. section 9601(25), previously or to be in the future incurred by the Company which arise out of or in connection with releases or threatened releases of hazardous substances at or emanating from the mine sites. We expect future contributions of $2.8 million from the U.S. government towards remediation of the site. This amount was included in other assets in the accompanying consolidated balance sheet at March 31, 2024.
In connection withaddition to the former operationtwo sites discussed above, we have additional reserves of $25.8 million, of which $12.5 million pertains to implementing and managing a division of Colt Industries Inc, located in Water Valley, Mississippi, which Coltec divestedsolution to BorgWarner, Inc. ("BorgWarner") in 1996, Coltec has been managingclean trichloroethylene soil and groundwater contamination at the site. In February 2016, the Mississippi Departmentlocation of Environmental Quality (MDEQ) issued an order against EnPro requiring evaluation of potential vapor intrusion into residential properties and commercial facilities located over the groundwater plume as well as requiring additional groundwater investigation and remediation. MDEQ performed the initial vapor intrusion investigations at certain residential and commercial sites, with the findings all being below the applicable screening level. In April 2016, the parties entered into a new order including negotiated time frames for groundwater remediation. Pursuant to that order, MDEQ performed a second round of seasonable vapor intrusion sampling beginning in August 2016. Results from sampling outside of three residences were above screening levels. Follow-up sampling directly underneath those residences (either sub-slab or in crawl spaces) were all below applicable screening levels. Two separate sampling events at another residence were also below applicable screening levels. Due to an increasing trend in vapor concentrations, MDEQ requested that we develop and implement initial corrective action measures to address vapor intrusion resulting from groundwater contamination in this residential area. These measures have been developed and approved by MDEQ. Implementation of the approved measures will begin when access is obtained to private properties where the corrective action system will be located. In addition, vapor intrusion sampling at the manufacturing facility owned by BorgWarner was conducted during the first quarter of 2017. The results showed exceedances of screening levels at various areas in the plant and exceedances of levels requiring responsive actions in a limited area of the plant. Implementation of the immediate responsive actions has been completed and corrective action consisting of a permanent vapor intrusion remediation system became operational in May 2017. We are also continuing soil and groundwater investigation work around the outside of the plant and developing corrective action plans for both the contamination remaining at the plant as well as contamination that has migrated off-site. All of the work to be performed at the residential area, the plant and off-site is set forth in an agreed Order that we and MDEQ entered into on September 11, 2017. During the quarter ended March 31, 2016, we established an additional $1.3 million reserve with respect to this matter. During the quarter ended March 31, 2017, we reserved an additional $3.3 million for further investigation, additional remediation, long-term monitoring costs, and legal fees to support regulatory compliance for the above noted actions. The remaining reserve at September 30, 2017 is $1.8 million. As the corrective actions are implemented and their performance monitored, further modifications to the remediation system at the site may be required which may result in additional costs beyond the current reserve.
On April 7, 2017, the State of Mississippi through its Attorney General filed suit against EnPro, OldCo and Goodrich Corporation in Mississippi Circuit Court in Yalobusha County seeking recovery of all costs and expenses to be incurred by the State in remediating the groundwater contamination, punitive damages and attorney’s fees. We plan to aggressively defend this case. The additional reserve established in the quarter ended March 31, 2017, noted above, does not include any estimate of contingent loss associated with this lawsuit other than due to remediation and other actions with respect to this site based on existing MDEQ orders and the expected order with MDEQ described above. In addition, it is our understanding that area homeowners, owners of commercial facilities and the local county government and possibly other private parties and individuals have engaged or may engage legal counsel to separately evaluate possible legal action relating to potential vapor intrusion and groundwater contamination. We have been further advised that certain of these parties intend to file legal action based on these claims. Based upon limited information regarding any further remediation or other actions that may be required at the site, we cannot estimate a minimum loss estimate or a reasonably possible range of loss for remediation costs.
Colt Firearms and Central Moloney
We may have contingent liabilities related to divested businesses for which certain of our subsidiaries retained liability or are obligated under indemnity agreements. These contingent liabilities include, but are not limited to, potential product liability and associated claims related to firearms manufactured prior to March 1990 by Colt Firearms, a former operation in Water Valley, Mississippi. These amounts represent a reasonable estimate of Coltec,our probable future costs to remediate these sites given the facts and for electrical transformers manufactured prior to May 1994 by Central Moloney, another former Coltec operation. We believe that these potential contingent liabilities are not material to our financial condition, results of operation and cash flows. Ongoing obligations with regard to workers’ compensation, retiree medical and other retiree benefit matters that relate to Coltec’s periods of ownership of these operations are included in other liabilities in our Consolidated Balance Sheets.



circumstances known at March 31, 2024.
Crucible Steel Corporation a/k/a Crucible, Inc.
Crucible, which was engaged primarily in the manufacture and distribution of high technology specialty metal products, was a wholly owned subsidiary of ColtecEnPro Holdings until 1983 when its assets and liabilities were distributed to a new Coltec subsidiary, Crucible Materials Corporation. ColtecEnPro Holdings sold a majority of the outstanding shares of Crucible Materials Corporation in 1985 and divested its remaining minority interest in 2004. Crucible Materials Corporation filed for Chapter 11 bankruptcy protection in May 2009 and is no longer conducting operations.
19

We have certain ongoing obligations, which are included in other liabilities in our Consolidated Balance Sheets, including workers’ compensation, retiree medical and other retiree benefit matters, in addition to those mentioned previously related to Coltec’sEnPro Holdings' period of ownership of Crucible. Based on Coltec’sEnPro Holdings' prior ownership of Crucible, we may have certain additional contingent liabilities, including liabilities in one or more significant environmental matters included in the matters discussed in “Environmental” above. We are investigating these matters. Except with respect to those matters for which we have an accrued liability as discussed in "Environmental" above, we are unable to estimate a reasonably possible range of loss related to these contingent liabilities.
Warranties
We provide warranties on many of our products. The specific terms and conditions of these warranties vary depending on the product and the market in which the product is sold. We record a liability based upon estimates of the costs we may incur under our warranties after a review of historical warranty experience and information about specific warranty claims. Adjustments are made to the liability as claims data, and historical experience, necessitate.and trends result in changes to our estimate.
Changes in the carrying amount of the product warranty liability for the ninethree months ended September 30, 2017March 31, 2024 and 20162023 are as follows:
20242023
 (in millions)
Balance at beginning of year$6.4 $5.2 
Net charges to expense0.2 0.3 
Settlements made(0.3)(0.3)
Balance at end of period$6.3 $5.2 


 2017 2016
 (in millions)
Balance at beginning of year$5.0
 $4.8
Net charges to expense1.4
 3.3
Settlements made(1.7) (3.4)
Balance at end of period$4.7
 $4.7
16.    Divestitures
BorgWarner
A subsidiaryOn January 30, 2023, we completed the sale of BorgWarner has asserted claims againstGarlock Pipeline Technologies, Inc. ("GPT"). In the first quarter of 2023, we received $28.4 million, net of transaction fees. We recorded a pre-tax gain on the sale of discontinued operations of $14.6 million in the first quarter of 2023. This business comprised our subsidiary, GGB France E.U.R.L. (“GGB France”remaining Engineered Materials segment ("Engineered Materials"), regarding certain bearings supplied by GGB France to BorgWarner and used by BorgWarner. In connection with the divestiture of our Engineered Materials segment, we paid $3.1 million in manufacturing hydraulic control units included in motor vehicle automatic transmission units, mainly that the bearings caused performance problems with and/or damagefirst quarter of 2023 related to the transmission units, leadingfinalization of the sale of our GGB business, which closed in December of 2022. Accordingly, we have recast, for all periods presented, the financial condition, results of operations, and cash flows of Engineered Materials as discontinued operations in the accompanying financial statements.
For the three months ended March 31, 2023, the results of operations from the discontinued Engineered Materials segment were as follows:
(in millions)2023
Net sales$2.0 
Cost of sales1.3 
Gross profit0.7 
Operating expenses:
Selling, general and administrative0.4 
Total operating expenses0.4 
Income from discontinued operation before income tax0.3 
Income tax expense(0.1)
Income from discontinued operations, net of tax0.2 
Gain from sale of discontinued operation, net of tax11.2 
Income from discontinued operations, including gain on sale, net of tax$11.4 
20

Pursuant to associated repairsapplicable accounting guidance for the reporting of discontinued operations, allocations to Engineered Materials for corporate services not expected to continue at the divested business subsequent to closing have not been reflected in the above results of discontinued operations and replacements. BorgWarner and GGB France participatedhave been reclassified to income from continuing operations in a technical review before a panelthe accompanying consolidated financial statements of expertsthe Company for all periods. In addition, divestiture-related costs previously not allocated to determine, among other things, whether there were any defects in such bearingsEngineered Materials that were a cause of the damages claimed by BorgWarner, including whether GGB France was required to notify BorgWarner of a change in the source of a raw material used in the manufacture of such bearings. This technical review was a required predicate to the commencement of a legal proceeding for damages. In June 2016, the expert panel issued a preliminary report on technical matters considered by the experts. This preliminary report concluded that the change in the source of the raw material was the technical cause of the performance problems claimed by BorgWarner and that GGB France was obligated to notify BorgWarner regarding the change. Separately, in November 2016, the expert panel issued a preliminary report on related financial matters. The expert panel issued a final report on technical and financial matters on April 6, 2017. In the final report, the expert panel concluded that GGB France had a duty to notify BorgWarner regarding the change of source of raw material used in the bearings, but that the failure of the hydraulic control units was attributable to both the raw material supplier change and the insufficient design of the units by BorgWarner. The expert panel provided detail on a possible allocation of damages alleged to have been incurred by BorgWarner and its customer. Although the language of the report is not clear, the report appears to note a potential allocation of recoverable damages 35% to BorgWarner and 65% to GGB France. It also indicates that, though it is for a court to ultimately determine, the aggregate damages to BorgWarner and its customer was in the range of 7.9 million EUR to 10.2 million EUR, with 1.8 million EUR to 2.1 million EUR of this range being for damages to BorgWarner and the remainder being for damages to its customer. The experts noted the lower end of the range as being more likely and noted a lack of sufficient evidence provided substantiating the customer's damages. Applying a 65% liability allocation to GGB to the total aggregate range yields a range of 5.1 million EUR to 6.6 million EUR. In the final report, the expert panel deferred to a court the determination of whether GGB France had breached its contractual obligations to BorgWarner. On October 25, 2017, BorgWarner initiated a legal proceeding against GGB with respect to this matter by filing a writ of claim with the Commercial Court of Brive, France.


We continue to believe that GGB France has valid factual and legal defenses to these claims and we are vigorously defending these claims. Among GGB France’s legal defenses are a contractual disclaimer of consequential damages, which, if controlling, would limit liability for consequential damages and provide for the replacement of the bearings at issue, at an aggregate replacement value we estimate to be approximately 0.4 million EUR; that the determination of any duty to notify of the change in the source of the raw material is a legal matter to be determined by the presiding court; and the insufficiency of evidence of damage to BorgWarner's customer provided to the expert panel. Based on the final report from the expert panel and GGB France's legal defenses described above, we estimate GGB France’s reasonably possible range of loss associated with this matter to be approximately 0.4 million EUR to 6.6 million EUR plus a potential undetermined amount of apportioned proceeding expenses, with no amount within the range being a better estimate than the minimum of the range. Accordingly, GGB France has retained the accrual of 0.4 million EUR associated with this matter, which was established in the second quarter of 2016.
Asbestos
Background on Asbestos-Related Litigation. The historical business operations of GST LLC and Anchor resulted in a substantial volume of asbestos litigation in which plaintiffs alleged personal injury or death as a result of exposure to asbestos fibers in products produced or sold by GST LLC or Anchor, together with products produced and sold by numerous other companies. GST LLC and Anchor manufactured and/or sold industrial sealing products that contained encapsulated asbestos fibers. Other of our subsidiaries that manufactured or sold equipment that may have at various times in the past contained asbestos-containing components have also been named in a number of asbestos lawsuits, but neither we nor any of our subsidiaries other than GST LLC and Anchor had ever paid an asbestos claim.
Since the first asbestos-related lawsuits were filed against GST LLC in 1975, GST LLC and Anchor have processed more than 900,000 claims to conclusion, and, together with insurers, have paid over $1.4 billion in settlements and judgments and over $400 million in fees and expenses. Our subsidiaries’ exposure to asbestos litigation and their relationships with insurance carriers have been managed through Garrison.
Subsidiary Chapter 11 Filings and Effect. On the GST Petition Date, GST LLC, Garrison and Anchor filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court. The filings were the initial step in a claims resolution process. See “— Joint Plan of Reorganization,” below, for a description of the comprehensive consensual settlement that we announced on March 17, 2016 to resolve current and future asbestos claims and the Joint Plan filed in the GST Chapter 11 Case to implement such settlement. As contemplated by the Joint Plan, on the OldCo Petition Date, OldCo, as the successor by merger to Coltec, filed a Chapter 11 bankruptcy petition with the Bankruptcy Court.
As a result of the initiation of the GST Chapter 11 Case and the OldCo Chapter 11 Case, the resolution of asbestos claims against these companies was subject to the jurisdiction of the Bankruptcy Court. The filing of the GST Chapter 11 Case automatically stayed the prosecution of pending asbestos bodily injury and wrongful death lawsuits, and initiation of new such lawsuits, against GST. Further, the Bankruptcy Court issued an order enjoining plaintiffs from bringing or further prosecuting asbestos products liability actions against affiliates of GST, including EnPro, Coltec and all their subsidiaries, during the pendency of the GST Chapter 11 Case, subject to further order. As a result, except as a result of the resolutiondivestiture of appeals from verdicts rendered priorEngineered Materials have been reflected in the financial results of discontinued operations.

In connection with the sale of a business in 2020, which was not classified as a discontinued operation, we received a long-term promissory note as partial consideration. We evaluate the collectability of the note at least quarterly and based on the evaluation as of March 31, 2024, we provided a $4.5 million reserve in the first quarter of 2024. The net book value of the note after the reserve was $4.0 million as of March 31, 2024. We will continue to monitor the collectability of the note and will record adjustments to the GST Petition Dateestimated net realizable value as deemed necessary until the note is settled. This note matures in 2026.
Item 2.    Management’s Discussion and the eliminationAnalysis of claims as a resultFinancial Condition and Results of information obtained in the GST Chapter 11 Case, the numbers of asbestos claims pending against our subsidiaries had not changed since the GST Petition Date.Operations.
Joint Plan of Reorganization. On March 17, 2016, EnPro announced that it had reached a comprehensive settlement (the “Consensual Settlement”) to resolve current and future asbestos claims. The settlement was reached with the court-appointed committee representing current asbestos claimants (the “GST Committee”) and the court-appointed legal representative of future asbestos claimants (the “GST FCR”) in the GST Chapter 11 Case. Representatives for current and future asbestos claimants (the “Coltec Representatives”) against Coltec also joined in the settlement. Under the settlement, the GST Committee, the GST FCR and the Coltec Representatives agreed to join GST and Coltec in proposing the Joint Plan and to ask asbestos claimants and the court to approve the Joint Plan. The Joint Plan was filed with the Bankruptcy Court on May 20, 2016 and amendments to the Joint Plan were filed with the Bankruptcy Court on June 21, 2016, July 29, 2016, December 2, 2016, April 3, 2017, May 14, 2017, May 19, 2017, June 8, 2017, and June 9, 2017. As so modified, the Joint Plan superseded all prior plans of reorganization filed by GST with the Bankruptcy Court. The Joint Plan was consummated and became effective at 12:01 a.m. on July 31, 2017 (the “Joint Plan Effective Date”).
Before the Joint Plan could be consummated, it was required to be approved by the Bankruptcy Court and the United States District Court for the Western District of North Carolina (the "District Court") after a vote of GST asbestos claimants and Coltec asbestos claimants in favor of the Joint Plan by 75% or more in number and at least two-thirds (2/3) in dollar amount of claims that were actually voted.


The Consensual Settlement and Joint Plan provided that the Joint Plan was a prepackaged plan of reorganization as to Coltec/OldCo and that Coltec would undertake a corporate restructuring (the "Coltec Restructuring") and commence a Chapter 11 case to obtain confirmation of the Joint Plan if Coltec asbestos claimants and GST asbestos claimants voted in sufficient numbers to approve the Joint Plan. Accordingly, the Coltec asbestos claimants and GST asbestos claimants were solicited simultaneously for their vote on the approval of the Joint Plan prior to the filing of a Chapter 11 case by Coltec or OldCo. The solicitation process to obtain approval of the asbestos claimants was completed successfully on December 9, 2016, with 95.85% in number and 95.80% in amount of claims held by asbestos claimants casting valid ballots voting in favor of approval of the Joint Plan.
The Joint Plan and Consensual Settlement contemplated that, as an appropriate and necessary step to facilitate the implementation of the Consensual Settlement and not to delay or hinder creditors or the resolution of claims, Coltec would, subject to the receipt of necessary consents, undergo the Coltec Restructuring in which all of its significant operating assets and subsidiaries, which included each of our major business units, would be distributed to a new direct EnPro subsidiary, EnPro Holdings. EnPro Holdings would also assume all of Coltec’s non-asbestos liabilities. The Coltec Restructuring was completed on December 31, 2016, and included the merger of Coltec with and into OldCo, which was a direct subsidiary of EnPro Holdings. OldCo, as the restructured entity, retained responsibility for all asbestos claims and rights to certain insurance assets of Coltec, as well as the business operated by our EnPro Learning System, LLC subsidiary (“EnPro Learning System”), which provides occupational safety training and consulting services to third parties. EnPro Learning System was also merged into OldCo.
On May 15, 2017, the Bankruptcy Court announced its decision recommending that the District Court confirm the Joint Plan. On June 12, 2017, the District Court issued an order confirming the Joint Plan. Prior to the Joint Plan Effective Date, the period for the filing of notice of appeal of the District Court’s confirmation order expired, with no appeal having been filed.
Pursuant to the Joint Plan, a trust (the “Trust”) was established prior to the Joint Plan Effective Date. As contemplated by the Joint Plan, the Trust was funded (i) with aggregate cash contributions by GST LLC and Garrison of $350 million made immediately prior to the Joint Plan Effective Date, (ii) by the contribution made by OldCo immediately prior to the Joint Plan Effective Date of $50 million in cash and an option, exercisable one year after the Joint Plan Effective Date, permitting the Trust to purchase for $1 shares of EnPro common stock having a value of $20 million (with OldCo having the right to call the option for payment of $20 million in cash at any time prior to the first anniversary of the Joint Plan Effective Date, with the Trust having the right to put the option to OldCo for payment by OldCo of $20 million on the day prior to the first anniversary of the Joint Plan Effective Date and with the option terminating on the second anniversary of the Joint Plan Effective Date in return for payment to the Trust of $20 million), and (iii) by the obligations under the Joint Plan of OldCo to make a deferred contribution of $40 million in cash and of GST LLC and Garrison to make an aggregate deferred contribution of $20 million in cash no later than one year after the Joint Plan Effective Date. These deferred contributions are guaranteed by EnPro and secured by a pledge of 50.1% of the outstanding voting equity interests of GST LLC and Garrison.
TheJoint Plan permanently resolves current and future asbestos claims against GST LLC, Garrison and OldCo, as the successor by merger to Coltec, and injunctions issued under the Joint Plan protect all of EnPro and its subsidiaries from those claims, which claims are enjoined under Section 524(g) of the U.S. Bankruptcy Code. Under the Joint Plan, the Trust has assumed responsibility for all present and future asbestos claims arising from the operations or products of GST LLC, Garrison or Coltec/OldCo. Under the Joint Plan, EnPro, through its subsidiaries, retained ownership of OldCo, GST LLC and Garrison. Anchor, which has not conducted business operations for many years and had nominal assets, has been dissolved.
The Consensual Settlement included as a condition to our obligations to proceed with the settlement that EnPro, Coltec, GST and Garlock of Canada Ltd (an indirect subsidiary of GST LLC) enter into a written agreement, to be consummated concurrently with the consummation of the Joint Plan on the Joint Plan Effective Date, with the Canadian provincial workers’ compensation boards (the “Provincial Boards”) resolving remedies the Provincial Boards may possess against Garlock of Canada Ltd, GST, Coltec or any of their affiliates, including releases and covenants not to sue, for any present or future asbestos-related claim, and that the agreement is either approved by the Bankruptcy Court following notice to interested parties or the Bankruptcy Court concludes that its approval is not required. On November 11, 2016, we entered into such an agreement (the “Canadian Settlement”) with the Provincial Boards to resolve current and future claims against EnPro, GST, Garrison, Coltec, and Garlock of Canada Ltd for recovery of a portion of amounts the Provincial Boards have paid and will pay in the future under asbestos-injury recovery statutes in Canada for claims relating to asbestos-containing products. The Canadian Settlement provides for an aggregate cash settlement payment to the Provincial Boards of $20 million (U.S.), payable on the fourth anniversary of the effective date of the Joint Plan. Under the Canadian Settlement, after the effective date of the Joint Plan, the Provincial Boards had the option of accelerating the payment, in which case the amount payable would be discounted from the fourth anniversary of the effective date of the Joint Plan to the payment date at a discount rate of 4.5% per annum. In return, the Provincial Boards have separately agreed to provide a covenant not to sue EnPro, any of EnPro’s affiliates or the Trust for any present or future asbestos-related claims. On February 3, 2017, the Bankruptcy Court issued an order approving


the Canadian Settlement. Prior to the Joint Plan Effective Date, the Provincial Boards provided notice of their election to accelerate the payment. After application of the discount resulting from such acceleration of payment, the settlement payment of approximately $16.7 million (U.S.) was made to the Provincial Boards on August 11, 2017.
Under the Consensual Settlement and Joint Plan, GST and OldCo retained their rights to seek reimbursement under insurance policies for any amounts they have paid in the past to resolve asbestos claims and for $480 million in aggregate contributions they will make to the Trust under the Joint Plan. These policies include a number of primary and excess general liability insurance policies that were purchased by Coltec and were in effect prior to January 1, 1976 (the “Pre-Garlock Coverage Block”). The policies provide coverage for “occurrences” happening during the policy periods and cover losses associated with product liability claims against Coltec and certain of its subsidiaries. Asbestos claims against GST are not covered under these policies because GST was not a Coltec subsidiary prior to 1976. The Joint Plan provides that OldCo may retain the first $25 million of any settlements and judgments related to insurance policies in the Pre-Garlock Coverage Block and OldCo and the Trust will share equally in any settlements and judgments OldCo may collect in excess of $25 million. As of September 30, 2017, approximately $44.4 million of available products hazard limits or insurance receivables arising from settlements with insurance carriers existed under primary and excess general liability insurance policies other than the Pre-Garlock Coverage Block (the "Garlock Coverage Block") from solvent carriers with investment grade ratings.
On June 12, 2017, the District Court approved several settlements with insurance carriers. First, with respect to available products hazard limits and insurance receivables covering claims against both GST and OldCo under the Garlock Coverage Block, the District Court approved settlements with two carriers that will pay their full aggregate remaining policy limits of approximately $18.8 million over a three-year period following consummation of the Joint Plan. A previously disclosed agreement with another group of carriers calls for the payment of $11 million. EnPro expects that the full amount of remaining policy limits and insurance receivables (approximately $19.2 million) in the Garlock Coverage Block will be received either through settlements or in reimbursement of GST’s plan funding as payments are made by the asbestos trust.
In addition, the District Court approved settlements with two insurance carriers in the Pre-Garlock Coverage Block that permit the recovery of some of OldCo’s $110 million of contributions to the Trust under the Joint Plan. Under the settlements, the two carriers were obligated to make one-time cash payments to OldCo in the aggregate amount of approximately $19.0 million within 30 days of consummation of the Joint Plan, which payments were made in August 2017. In addition, the District Court approved a settlement with the successors to Coltec’s Fairbanks Morse Pump business in which the Fairbanks Morse Pump successors agreed to pay OldCo $6 million in three installments over nine years following consummation of the Joint Plan, with the successor entities being entitled to recoup up to the full amount of their payments to OldCo from collections expected to be received from an additional insurance carrier that issued general liability policies to Coltec prior to January 1, 1976. OldCo and the Trust will share equally in any collections above that $6 million amount. OldCo estimates that the carrier will owe approximately $11 million in reimbursements over the life of the Trust for its share of Coltec claims (which includes Fairbanks Morse Pump claims). In August 2017, the Fairbanks Morse Pump successors and EnPro Holdings, as the successor to OldCo, agreed to permit accelerated settlements of the installments upon the lump sum payment of $3 million made to EnPro Holdings in August 2017, with the Fairbanks Morse Pump successors surrendering any right to recoup the amount of such payment from the additional insurance carrier that issued general liability policies to Coltec prior to January 1, 1976.
Insurance Coverage Available to GST. At September 30, 2017, we had $44.4 million of insurance coverage we believe is available to cover GST asbestos claims payments and certain expense payments, including contributions to the Trust. GST has collected insurance payments totaling $152.3 million since the GST Petition Date. We consider the $44.4 million of available insurance coverage remaining to be of high quality because the insurance policies are written or guaranteed by U.S.-based carriers whose credit rating by S&P is investment grade (BBB-) or better, and whose AM Best rating is excellent (A-) or better. Of the $44.4 million, $8.3 million is allocated to claims that were paid by GST LLC prior to the initiation of the Chapter 11 Case and submitted to insurance companies for reimbursement, and the remainder is allocated to pending and estimated future claims. There are specific agreements in place with carriers covering $29.4 million of the remaining available coverage. Based on those agreements and the terms of the policies in place and prior decisions concerning coverage, we believe that all of the $44.4 million of insurance proceeds will ultimately be collected, although there can be no assurance that the insurance companies will make the payments as and when due. Based on those agreements and policies, some of which define specific annual amounts to be paid and others of which limit the amount that can be recovered in any one year, we anticipate that $19.2 million will be received either through settlements or in reimbursements of GST's plan funding as payments are made by the asbestos trust. Assuming the insurers pay according to the agreements and policies, we anticipate that the following amounts should be collected in the years set out below:
2018 – $16.8 million
2019 – $5.9 million
2020 – $2.5 million


We are a party to legal proceedings initiated in August 2017 in the District Court with two insurers that collectively provide $15 million of coverage in the Garlock Coverage Block. The legal proceedings were initiated by one of the insurers seeking to compel arbitration of issues under its policy and, alternatively, a determination that its policy does not cover asbestos claims. We have counterclaimed, seeking a determination that the policy covers asbestos claims and that the insurer breached the terms of its policy by failing to provide coverage for these claims. We joined the second insurer in this action and are seeking similar relief against it. The magistrate judge recently issued a decision denying the petitioning insurer's motion to compel arbitration, and holding that the arbitration clause in the policy was deleted by an endorsement. We expect the insurer to seek review of that ruling by the district court judge.
GST LLC has received $8.8 million of insurance recoveries from insolvent carriers since 2007, and may receive additional payments from insolvent carriers in the future. No anticipated insolvent carrier collections are included in the $44.4 million of anticipated collections. The insurance available to cover current and future asbestos claims is from comprehensive general liability policies that cover OldCo, as the successor to Coltec, and certain of its other subsidiaries in addition to GST LLC for periods prior to 1985 and therefore could be subject to potential competing claims of other covered subsidiaries and their assignees.
18.Supplemental Guarantor Financial Information
In September 2014, we completed the offering of the Senior Notes and in March 2017 we completed the offering of the Additional Notes. The Senior Notes and the Additional Notes are fully and unconditionally guaranteed on an unsecured, unsubordinated, joint and several basis by our existing and future wholly owned direct and indirect domestic subsidiaries, that are each guarantors of our Revolving Credit Facility (collectively, the “Guarantor Subsidiaries”).  Our subsidiaries organized outside of the United States, (collectively, the “Non-Guarantor Subsidiaries”) do not guarantee the Senior Notes or the Additional Notes. A Guarantor Subsidiary's guarantee is subject to release in certain circumstances, including (i) the sale, disposition, exchange or other transfer (including through merger, consolidation, amalgamation or otherwise) of the capital stock of the subsidiary made in a manner not in violation of the indenture governing the Senior Notes and the Additional Notes; (ii) the designation of the subsidiary as an “Unrestricted Subsidiary” under the indenture governing the Senior Notes and the Additional Notes; (iii) the legal defeasance or covenant defeasance of the Senior Notes and the Additional Notes in accordance with the terms of the indenture; or (iv) the subsidiary ceasing to be our subsidiary as a result of any foreclosure of any pledge or security interest securing our Revolving Credit Facility or other exercise of remedies in respect thereof.
The following tables present condensed consolidating financial information for EnPro Industries, Inc. (the "Parent"), the Guarantor Subsidiaries on a combined basis, the Non-Guarantor Subsidiaries on a combined basis and the eliminations necessary to arrive at our consolidated results. The consolidating financial information reflects our investments in subsidiaries using the equity method of accounting. These tables are not intended to present our results of operations, cash flows or financial condition for any purpose other than to comply with the specific requirements for subsidiary guarantor reporting.



ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)
Quarter Ended September 30, 2017
(in millions)
   Guarantor Non-guarantor    
 Parent Subsidiaries Subsidiaries Eliminations Consolidated
Net sales$—
 $244.3
 $133.0
 $(33.6) $343.7
Cost of sales—
 173.1
 89.0
 (33.6) 228.5
Gross profit—
 71.2
 44.0
 —
 115.2
Operating expenses:         
Selling, general and administrative9.4
 45.9
 30.4
 —
 85.7
Other0.7
 9.7
 0.6
 —
 11.0
Total operating expenses10.1
 55.6
 31.0
 —
 96.7
Operating income (loss)(10.1) 15.6
 13.0
 —
 18.5
Interest income (expense), net(6.8) (4.2) 0.7
 —
 (10.3)
Gain on reconsolidation of GST and OldCo—
 534.4
 —
   534.4
Other expense—
 (1.9) —
 —
 (1.9)
Income (loss) before income taxes(16.9) 543.9
 13.7
 —
 540.7
Income tax benefit (expense)5.2
 (35.2) (20.5) —
 (50.5)
Income (loss) before equity in earnings of subsidiaries(11.7) 508.7
 (6.8) —
 490.2
Equity in earnings of subsidiaries, net of tax501.9
 (6.8) —
 (495.1) —
Net income (loss)$490.2
 $501.9
 $(6.8) $(495.1) $490.2
Comprehensive income (loss)$494.9
 $506.6
 $(3.5) $(503.1) $494.9













ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)
Quarter Ended September 30, 2016
(in millions)
   Guarantor Non-guarantor    
 Parent Subsidiaries Subsidiaries Eliminations Consolidated
Net sales$—
 $207.1
 $105.1
 $(19.5) $292.7
Cost of sales—
 144.8
 68.8
 (19.5) 194.1
Gross profit—
 62.3
 36.3
 —
 98.6
Operating expenses:         
Selling, general and administrative6.3
 37.9
 26.7
 —
 70.9
Other0.4
 0.1
 1.9
 —
 2.4
Total operating expenses6.7
 38.0
 28.6
 —
 73.3
Operating income (loss)(6.7) 24.3
 7.7
 —
 25.3
Interest expense, net(4.7) (9.3) —
 —
 (14.0)
Other expense—
 (1.2) (0.1) —
 (1.3)
Income (loss) before income taxes(11.4) 13.8
 7.6
 —
 10.0
Income tax benefit (expense)8.4
 (8.2) (4.2) —
 (4.0)
Income (loss) before equity in earnings of subsidiaries(3.0) 5.6
 3.4
 —
 6.0
Equity in earnings of subsidiaries, net of tax9.0
 3.4
 —
 (12.4) —
Net income$6.0
 $9.0
 $3.4
 $(12.4) $6.0
Comprehensive income$6.6
 $9.5
 $3.0
 $(12.5) $6.6

ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)
Nine Months Ended September 30, 2017
(in millions)
   Guarantor Non-guarantor    
 Parent Subsidiaries Subsidiaries Eliminations Consolidated
Net sales$—
 $663.4
 $358.2
 $(74.5) $947.1
Cost of sales—
 465.5
 234.8
 (74.5) 625.8
Gross profit—
 197.9
 123.4
 —
 321.3
Operating expenses:         
Selling, general and administrative23.4
 127.0
 82.3
 —
 232.7
Other1.4
 10.7
 3.3
 —
 15.4
Total operating expenses24.8
 137.7
 85.6
 —
 248.1
Operating income (loss)(24.8) 60.2
 37.8
 —
 73.2
Interest expense, net(18.5) (22.7) —
 —
 (41.2)
Gain on reconsolidation of GST and OldCo—
 534.4
 —
 —
 534.4
Other expense—
 (5.1) —
 —
 (5.1)
Income (loss) before income taxes(43.3) 566.8
 37.8
 —
 561.3
Income tax benefit (expense)15.2
 (44.6) (26.3) —
 (55.7)
Income (loss) before equity in earnings of subsidiaries(28.1) 522.2
 11.5
 —
 505.6
Equity in earnings of subsidiaries, net of tax533.7
 11.5
 —
 (545.2) —
Net income$505.6
 $533.7
 $11.5
 $(545.2) $505.6
Comprehensive income$525.7
 $553.8
 $28.1
 $(581.9) $525.7



ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)
Nine Months Ended September 30, 2016
(in millions)
   Guarantor Non-guarantor    
 Parent Subsidiaries Subsidiaries Eliminations Consolidated
Net sales$—
 $630.2
 $333.9
 $(63.3) $900.8
Cost of sales—
 442.0
 218.0
 (63.3) 596.7
Gross profit—
 188.2
 115.9
 —
 304.1
Operating expenses:         
Selling, general and administrative20.8
 124.2
 86.7
 —
 231.7
Asbestos settlement—
 80.0
 —
 —
 80.0
Other1.7
 2.9
 5.8
 —
 10.4
Total operating expenses22.5
 207.1
 92.5
 —
 322.1
Operating income (loss)(22.5) (18.9) 23.4
 —
 (18.0)
Interest expense, net(13.9) (26.9) (0.2) —
 (41.0)
Other expense—
 (5.1) (0.3) —
 (5.4)
Income (loss) before income taxes(36.4) (50.9) 22.9
 —
 (64.4)
Income tax benefit (expense)13.1
 28.3
 (14.2) —
 27.2
Income (loss) before equity in earnings of subsidiaries(23.3) (22.6) 8.7
 —
 (37.2)
Equity in earnings of subsidiaries, net of tax(13.9) 8.7
 —
 5.2
 —
Net income (loss)$(37.2) $(13.9) $8.7
 $5.2
 $(37.2)
Comprehensive income (loss)$(38.6) $(15.4) $4.2
 $11.2
 $(38.6)


























ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, 2017
(in millions)




Guarantor
Non-guarantor




Parent
Subsidiaries
Subsidiaries
Eliminations
Consolidated
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES$(103.2)
$94.8

$72.9

$(0.1)
$64.4
INVESTING ACTIVITIES








Purchases of property, plant and equipment—

(17.6)
(6.0)
—

(23.6)
Payments for capitalized internal-use software—

(2.6)
—

—

(2.6)
Payments for acquisitions—
 (39.5) —
 —
 (39.5)
Reconsolidation of GST and OldCo—
 41.1
 —
   41.1
Deconsolidation of OldCo—
 (4.8) —
 —
 (4.8)
Capital contribution to OldCo—
 (45.2) —
 —
 (45.2)
Other—

—

0.4

—

0.4
Net cash used in investing activities—

(68.6)
(5.6)
—

(74.2)
FINANCING ACTIVITIES








Net payments on loans between subsidiaries(20.0)
32.4

(12.4)
—

—
Intercompany dividends—

—

(0.1)
0.1

—
Proceeds from debt151.5

348.1

3.4

—

503.0
Repayments of debt—

(407.5)
(1.8)
—

(409.3)
Repurchase of common stock(11.5) —
 —
 —
 (11.5)
Dividends paid(14.3) —
 —
 —
 (14.3)
Other(2.5)
—

—

—

(2.5)
Net cash provided by (used in) financing activities103.2

(27.0)
(10.9)
0.1

65.4
Effect of exchange rate changes on cash and cash equivalents—

—

9.0

—

9.0
Net increase (decrease) in cash and cash equivalents—

(0.8)
65.4

—

64.6
Cash and cash equivalents at beginning of period—

0.8

110.7

—

111.5
Cash and cash equivalents at end of period$—

$—

$176.1

$—

$176.1



















ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, 2016
(in millions)




Guarantor
Non-guarantor




Parent
Subsidiaries
Subsidiaries
Eliminations
Consolidated
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES$(51.6)
$33.9

$25.6

$—

$7.9
INVESTING ACTIVITIES








Purchases of property, plant and equipment—

(19.5)
(5.1)
—

(24.6)
Payments for capitalized internal-use software—

(2.8)
(0.3)
—

(3.1)
Payments for acquisitions—
 (25.5) (3.0) —
 (28.5)
Other—

2.9

0.8

—

3.7
Net cash used in investing activities—

(44.9)
(7.6)
—

(52.5)
FINANCING ACTIVITIES








Net payments on loans between subsidiaries94.5
 (95.2)
0.7

—

—
Proceeds from debt—

297.2

6.1

—

303.3
Repayments of debt—

(191.7)
(1.0)
—

(192.7)
Repurchase of common stock(26.2) —
 —
 —
 (26.2)
Dividends paid(13.6) —
 —
 —
 (13.6)
Other(3.1)
—

—

—

(3.1)
Net cash provided by financing activities51.6

10.3

5.8

—

67.7
Effect of exchange rate changes on cash and cash equivalents—

—

(11.7)
—

(11.7)
Net increase (decrease) in cash and cash equivalents—

(0.7)
12.1

—

11.4
Cash and cash equivalents at beginning of period—

0.7

102.7

—

103.4
Cash and cash equivalents at end of period$—

$—

$114.8

$—

$114.8

















ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS (UNAUDITED)
As of September 30, 2017
(in millions)




Guarantor
Non-guarantor




Parent
Subsidiaries
Subsidiaries
Eliminations
Consolidated
ASSETS








Current assets








Cash and cash equivalents$—

$—

$176.1

$—

$176.1
Accounts receivable, net0.1

166.6

81.0

—

247.7
Intercompany receivables—

28.8

9.6

(38.4)
—
Inventories—

141.0

69.8

—

210.8
Prepaid expenses and other current assets33.2

27.4

24.1

(13.3)
71.4
Total current assets33.3

363.8

360.6

(51.7)
706.0
Property, plant and equipment, net—

200.4

83.8

—

284.2
Goodwill—

267.9

76.8

—

344.7
Other intangible assets, net—

290.6

62.7

—

353.3
Intercompany receivables—

9.8

5.2

(15.0)
—
Investment in subsidiaries1,305.4

449.9

—

(1,755.3)
—
Other assets19.1

121.0

14.2

(0.1)
154.2
Total assets$1,357.8

$1,703.4

$603.3

$(1,822.1)
$1,842.4
LIABILITIES AND EQUITY








Current liabilities








Current maturities of long-term debt$—

$0.2

$—

$—

$0.2
Accounts payable4.4

68.1

39.3

—

111.8
Intercompany payables—

9.6

28.8

(38.4)
—
Asbestos liability—
 80.0
 —
 —
 80.0
Accrued expenses13.5

71.1

48.4

(13.3)
119.7
Total current liabilities17.9

229.0

116.5

(51.7)
311.7
Long-term debt444.0

116.4

—

—

560.4
Intercompany payables15.0

—

—

(15.0)
—
Other liabilities14.4

52.6

36.9

(0.1)
103.8
Total liabilities491.3

398.0

153.4

(66.8)
975.9
Shareholders’ equity866.5

1,305.4

449.9

(1,755.3)
866.5
Total liabilities and equity$1,357.8

$1,703.4

$603.3

$(1,822.1)
$1,842.4






ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS (UNAUDITED)
As of December 31, 2016
(in millions)




Guarantor
Non-guarantor




Parent
Subsidiaries
Subsidiaries
Eliminations
Consolidated
ASSETS








Current assets








Cash and cash equivalents$—

$0.8

$110.7

$—

$111.5
Accounts receivable, net0.2

151.2

56.7

—

208.1
Intercompany receivables—

10.2

4.7

(14.9)
—
Inventories—

125.9

49.5

—

175.4
Prepaid expenses and other current assets21.3

8.9

17.4

(17.7)
29.9
Total current assets21.5

297.0

239.0

(32.6)
524.9
Property, plant and equipment, net0.1

148.5

66.8

—

215.4
Goodwill—

175.5

26.0

—

201.5
Other intangible assets, net—

156.5

20.4

—

176.9
Investment in GST—

236.9

—

—

236.9
Intercompany receivables—

43.6

1.5

(45.1)
—
Investment in subsidiaries681.1

236.4

—

(917.5)
—
Other assets16.4

156.2

18.2

—

190.8
Total assets$719.1

$1,450.6

$371.9

$(995.2)
$1,546.4
LIABILITIES AND EQUITY








Current liabilities








Short-term borrowings from GST$—

$—

$26.2

$—

$26.2
Notes payable to GST—

12.7

—

—

12.7
Current maturities of long-term debt—

0.2

—

—

0.2
Accounts payable2.3

61.9

38.7

—

102.9
Intercompany payables—

4.7

10.2

(14.9)
—
Accrued expenses15.3

130.1

33.3

(17.7)
161.0
Total current liabilities17.6

209.6

108.4

(32.6)
303.0
Long-term debt294.1

130.7

—

—

424.8
Notes payable to GST—

283.2

—

—

283.2
Intercompany payables35.0

1.4

8.7

(45.1)
—
Other liabilities13.9

144.6

18.4

—

176.9
Total liabilities360.6

769.5

135.5

(77.7)
1,187.9
Shareholders’ equity358.5

681.1

236.4

(917.5)
358.5
Total liabilities and equity$719.1

$1,450.6

$371.9

$(995.2)
$1,546.4





Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following is management’s discussion and analysis of certain significant factors that have affected our financial condition, cash flows and operating results during the periods included in the accompanying unaudited consolidated financial statements and the related notes. You should read this in conjunction with those financial statements and the audited consolidated financial statements and related notes included in our annual report on Form 10-K for the fiscal year ended December 31, 2016.2023.
Forward-Looking Information
This quarterly report on Form 10-Q includes statements that reflect projections or expectations of the future financial condition, results of operations and business of EnProEnpro that are subject to risk and uncertainty. We believe those statements to be “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this report, the words “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “continue,” “likely,” and other expressions generally identify forward-looking statements.
We cannot guarantee actual results or events will not differ materially from those projected, estimated, assigned or anticipated in any of the forward-looking statements contained in this report. Important factors that could result in those differences include those specifically noted in the forward-looking statements and those identified in Item 1A, “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2016,2023, which include:
general
•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, the armed conflict 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 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;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; and
•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;
21

•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.
We caution our shareholdersinvestors not to place undue reliance on theseour forward-looking statements, which speak only as of the date on which such statements were made.
Whenever you read or hear any subsequent written or oral forward-looking statements attributed to us or any person acting on our behalf, you should keep in mind the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.
Non-GAAP Financial Information
In our discussion of our outlook and results of operations, we utilize financial measures that have not been prepared in conformity with generally accepted accounting principles in the United States ("GAAP"). They include adjusted net income attributable to Enpro Inc., adjusted diluted earnings per share attributable to Enpro Inc., adjusted earnings before interest, taxes, depreciation, and amortization ("adjusted EBITDA"), and total adjusted segment EBITDA. Tables showing the reconciliation of these non-GAAP financial measures to the comparable GAAP measures are included in "— Results of Operations" and "—Reconciliations of Non-GAAP Financial Measures to the Comparable GAAP Measures"
We believe these non-GAAP metrics are commonly used financial measures for investors to evaluate our operating performance and, when read in conjunction with our consolidated financial statements, present a useful tool to evaluate our ongoing operations and performance from period to period. In addition, these non-GAAP measures are some of the factors we use in internal evaluations of the overall performance of our businesses. We acknowledge that there are many items that impact our 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 we use are not necessarily comparable to similarly titled measures used by other companies.
Discontinued Operations
On January 30, 2023, we completed the sale of Garlock Pipeline Technologies, Inc. ("GPT") for gross proceeds of $28.4 million. We recorded a pre-tax gain on the sale of discontinued operations of $14.6 million in the first quarter of 2023. This business comprised our remaining Engineered Materials segment ("Engineered Materials"). Accordingly, we have recast, for all periods presented, the financial condition, results of operations, and cash flows of Engineered Materials as discontinued operations in the accompanying financial statements. Furthermore, unless otherwise specified, amounts presented in Management's Discussion and Analysis are for continuing operations only.

Overview and Outlook
Overview. We design, develop, manufacture, serviceare a leading-edge industrial technology company focused on critical applications across a diverse group of growing end markets such as semiconductor, photonics, industrial process, aerospace, food, biopharma, nuclear and market proprietary engineered industrial products.life sciences. We have 5713 primary manufacturing and service facilities located in 126 countries, including the United States. Enpro is a leader in applied engineering and designs, develops, manufactures, and markets proprietary, value-added products and solutions that safeguard a variety of critical environments.
Over the past several years, we have executed several strategic initiatives to create a portfolio of businesses that offer proprietary, industrial technology-related products and solutions with high barriers to entry, compelling margins, strong cash flow, and recurring aftermarket revenue in markets with favorable secular tailwinds.
We manage our business as threetwo segments: a Sealing Products segment, an Engineered ProductsTechnologies segment and a Power Systemsan Advanced Surface Technologies segment.

Our Sealing ProductsTechnologies segment designs,engineers and manufactures value-added products and sells sealing products,solutions that safeguard a variety of critical environments, including: metallic, non-metallic and composite material gaskets,gaskets; dynamic seals; compression
22

packing; elastomeric components; custom-engineered mechanical seals compression packing, resilient metal seals, elastomeric seals,used in diverse applications; hydraulic components, expansion joints, flange sealingcomponents; test, measurement and isolation products, pipeline casing spacers/isolators, casing end seals, modular sealing systems for sealing pipeline penetrations,sensing applications; sanitary gaskets,gaskets; hoses and fittings for the hygienic process industries, hole formingindustries; fluid transfer products manhole infiltration sealing systems, bellowsfor the pharmaceutical and bellows assemblies, pedestals for semiconductor manufacturing, custom-engineered mechanical seals for applications in the aerospace industrybiopharmaceutical industries; and other markets, PTFE products, and heavy-duty commercial vehicle partssolutions used in the wheel-end braking,and suspension and tire and mileage optimization systems. components that customers rely upon to ensure safety on our roadways.
These products are used in a variety of industries,markets, including chemical and petrochemical processing, petroleum extraction and refining, pulp and paper processing, power generation,nuclear energy, hydrogen, natural gas, food and pharmaceuticalbiopharmaceutical processing, primary metal manufacturing, mining, water and waste treatment, heavy-duty trucking,commercial vehicle, aerospace (including commercial space), medical, filtration and semiconductor fabrication. In many ofall these industries, the performance and durability of our proprietary products and solutions are vital for the safety and environmental protection.protection of our customers’ processes. Many of our products and solutions are used in highly demanding applications, e.g.,often in harsh environments, where the cost of failure is extremely high relative to the cost of our offerings to our customers. These environments include those where extreme temperatures, extreme pressures, corrosive environments,agents, strict tolerances, and/or worn equipment makecreate challenges for product performance difficult.


performance. Sealing Technologies offers customers widely recognized applied engineering, innovation, process know- how and enduring reliability, driving a lasting aftermarket for many of our products and solutions.
Our Engineered ProductsAdvanced Surface Technologies (AST) segment includes operations that design, manufactureapplies proprietary technologies, processes, and sell self-lubricating, non-rolling, metal-polymer, solid polymercapabilities to deliver a highly differentiated suite of products and filament wound bearingsolutions for challenging applications in high-growth markets. The segment’s products aluminum blocks for hydraulic applications and precision engineered components and lubrication systems for reciprocating compressors. These productssolutions are used in demanding environments requiring performance, precision and repeatability, with a wide rangelow tolerance for failure. AST’s products and solutions include: (i) cleaning, coating, testing, refurbishment and verification for critical components and assemblies used in semiconductor manufacturing equipment, with meaningful exposures to state-of-the-art advanced node chip applications; (ii) designing, manufacturing and selling specialized optical filters and proprietary thin-film coatings for the most challenging applications in the industrial technology, life sciences, and semiconductor markets; (iii) engineering and manufacturing complex front-end wafer processing sub-systems and new and refurbished electrostatic chuck pedestals for the semiconductor equipment industry; and (iv) engineering and manufacturing edge-welded metal bellows for the semiconductor equipment industry and critical applications in the space, aerospace and defense markets. In many instances, AST capabilities drive products and solutions that enable the performance of applications, includingour customers’ high-value processes through an entire life cycle.
Acquisitions.
On January 29, 2024, Enpro acquired all of the automotive, pharmaceutical, pulpequity securities of Advanced Micro Instruments, Inc. ("AMI"), a privately held company, for $208.9 million, net of cash acquired, subject to standard purchase price adjustments. We anticipate making approximately a $0.6 million payment in the second quarter of 2024 when the purchase price adjustments are scheduled to be finalized. In connection with the acquisition of AMI, there were $3.3 million of acquisition-related costs incurred and paper,expensed during the quarter ended March 31, 2024 which are included in selling, general, and administrative expense in the accompanying Consolidated Statements of Operations.
AMI is 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. AMI is included within the Sealing Technologies segment.
Based in Costa Mesa, California, AMI serves customers in the midstream natural gas, health, power generation, machine tools, air treatment, refining, petrochemicalbiogas, industrial processing, cryogenics, food processing, laboratory wastewater and general industrial markets.
Our Power Systems segment designs, manufactures, sellsaerospace markets, The company offers a portfolio of oxygen, hydrogen, sulfide and services heavy-duty, medium-speed diesel,moisture analyzers and proprietary sensing capabilities that detect contaminants in a variety of processes, including natural gas and dual fuel reciprocating engines. The United States governmentbiogas streams, which enable operators to avoid flaring and, the general markets for marine propulsion, power generation, and pump and compressor applications use these products and services.thereby, reduce CO2 emissions.
The historical business operations of certain
23

Highlights. Financial highlights of our subsidiaries, principally GST LLCcontinuing operations for the three months ended March 31, 2024 and Anchor, have resulted in a substantial volume2023 are as follows:
 Three Months Ended March 31,
 20242023
 (in millions, except per share data)
Net sales$257.5 $282.6 
Income from continuing operations$12.5 $26.0 
Net income$12.5 $37.4 
Diluted earnings per share from continuing operations$0.59 $1.24 
Adjusted income1
$33.1 $40.7 
Adjusted diluted earnings per share1
$1.57 $1.95 
Adjusted EBITDA 1
$58.4 $68.6 
1 A reconciliation of asbestos litigation in which plaintiffs have alleged personal injury or death as a result of exposurenon-GAAP measures to asbestos fibers.
On June 5, 2010 (the “GST Petition Date”), our subsidiaries, Garlock Sealing Technologies LLC (“GST LLC”), The Anchor Packing Company (“Anchor”) and Garrison Litigation Management Group, Ltd. (“Garrison,” and, together with GST LLC and Anchor, "GST") filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code (the "GST Chapter 11 Case")their respective GAAP measure is located in the U.S. Bankruptcy Court for the Western DistrictReconciliation of North Carolina in Charlotte (the “Bankruptcy Court”). GST LLC is one of the businesses in our broader Garlock group and, priorNon-GAAP Financial Measures to the Petition Date, was included in our Sealing Products segment. GST LLC and its subsidiaries operate five manufacturing facilities, including operations in Palmyra, New York and Houston, Texas. The filings on the GST Petition Date did not include EnPro Industries, Inc. or any other EnPro Industries, Inc. operating subsidiary.
The filings were the initial step in a claims resolution process for an efficient and permanent resolution of pending and future asbestos claims through court approval of a plan of reorganization to establish a facility to resolve and pay all GST asbestos claims. On March 17, 2016, we announced that we had reached a comprehensive consensual settlement to resolve current and future asbestos claims. This comprehensive consensual settlement and details of the plans of reorganization filed in the GST Chapter 11 Case, including the joint plan of reorganization (the “Joint Plan”) filed pursuant to the comprehensive consensual settlement and consummated on July 31, 2017, are described below and in "- Contingencies - Subsidiary Asbestos Bankruptcies.” As contemplated by the Joint Plan, on January 30, 2017 (the “OldCo Petition Date”), our subsidiary, OldCo, LLC ("OldCo"), as the successor by merger to our Coltec Industries Inc subsidiary (“Coltec”), filed a Chapter 11 bankruptcy petition with the Bankruptcy Court (the “OldCo Chapter 11 Case”). On February 3, 2017, the Bankruptcy Court issued an order for the joint administration of the OldCo Chapter 11 Case with the GST Chapter 11 Case.
During the pendency of the GST Chapter 11 Case and the OldCo Chapter 11 Case, certain actions proposed to be taken by GST or OldCo not in the ordinary course of business were subject to approval by the Bankruptcy Court. As a result, during the pendency of the GST Chapter 11 Case and the OldCo Chapter 11 Case, we did not have exclusive control over these companies. Accordingly, as required byComparable GAAP GST was deconsolidated beginning on the GST Petition Date and OldCo was deconsolidated beginning on the OldCo Petition Date. Accordingly the financial results of GST and its subsidiaries were included in our consolidated results through June 4, 2010, the day prior to the GST Petition Date, and the financial results of OldCo and its subsidiaries included in our consolidated results through January 29, 2017, the day prior to the OldCo Petition Date. GST and OldCo were reconsolidated effective upon the effective date of the consummation of the Joint Plan, which effective date was 12:01 a.m. on July 31, 2017.
The reconsolidation of GST and OldCo was treated as a business acquisition in accordance with applicable accounting rules. The purchase price for the acquisition was equal to the fair value of our investment in GST and OldCo on the reconsolidation date. Associated with the reconsolidation of GST and OldCo, we recorded a pretax gain of $534.4 million. The gain on revaluation of our investment in GST and OldCo is the difference between the above-noted fair value of the investment and its book value of $236.9 million as of the date of reconsolidation as well as the elimination of the net amounts payable to GST and OldCo at the reconsolidation date.
The primary businesses comprising GST will be managed as part of the Garlock division within our Sealing Products segment. Smaller businesses also reconsolidated with GST will be managed by the Technetics and Stemco divisions within this segment, by the Compressor Products International ("CPI") division within our Engineered Products segment, and by the Fairbanks Morse division, which comprises our Power Systems segment.

The assets and liabilities of both GST and OldCo are reconsolidated into the EnPro balance sheet at their estimated fair value in accordance with authoritative guidance on business acquisitions. As a result, EnPro’s consolidated financial statements include the sales, income, expenses and cash flows of both GST and OldCo beginning on July 31, 2017. Periods prior to that date are not restated to include GST and OldCo’s results.



In May 2014, our Fairbanks Morse division and a consortium partner entered into a multi-year, Euro-denominated contractual arrangement with Electricite de France (“EDF”) to supply 23 3.5 MWe opposed-piston, diesel engine-generator sets to EDF for emergency backup power at 20 of EDF’s nuclear power plants in France. From the date the contract was signed until the end of the first quarter of 2015, the U.S. Dollar strengthened significantly against the Euro, resulting in total U.S. Dollar equivalent revenues, calculated at the exchange rate in effectMeasure at the end of the firstthis section.
First quarter of 2015, falling below total projected U.S. Dollar costs for the EDF contract, and for the first quarter of 2015 we recorded a loss provision on the contract as a result of the effect of foreign exchange rates. This evaluation was based upon the 2015 first-quarter-end U.S. Dollar to Euro exchange rate of $1.10 compared to an exchange rate of $1.36 when the contract was signed. We have not entered into any transactions to hedge the impact of future foreign exchange rate changes on this contract. The evaluation of the impact of exchange rates on the contract is updated on a quarterly basis for the duration of the contract,sales declined 8.9%, with the amount of any change in a quarterweakness in the impact of exchange rates on the loss provision affectingAdvanced Surface Technologies segment profit of the Power Systems segment for the quarter by the amount of such change. For the nine months ended September 30, 2017, we recognizedpairing with a 1.0% decrease in the loss provision of $2.8 million, which included $7.6 million of favorability related to the strengthening of the Euro versus the U.S. Dollar offset by $4.8 million in increased projected total contract costs.

The EDF contract also includes contractual penalties for late delivery and our profitability under the contract could be adversely affected if we are not timely in performing our obligations under the contract and the penalties apply. In addition, our profitability could be adversely affected if we do not realize certain internal efficiency gains that we anticipate achieving while performing under the contract.

We review the carrying amounts of long-lived assets when certain events or changes in circumstances indicate that the carrying amounts may not be recoverable.  In consideration of the poor performance of the ATDynamics ("ATD") business, an asset group in the Stemco division of our Sealing Products segment, for the quarter ended September 30, 2017 and significantly lowered expectations for the fourth quarter forecast and the budget for fiscal year 2018, we determined that a test of ATD's recoverability was required.

As a result of this test, certain of ATD's definite-lived intangible assets were determined to be impaired, resulting in an impairment loss of $10.1 million, which equaled the excess of these assets' net book value at September 30, 2017 over their fair value. The loss is reflected in other expense (operating) on the Consolidated Statement of Operations.
In 2015, we launched a focused effort to restructure underperforming units. The initial effort focused on exiting and consolidating certain facilities in the Engineered Products segment and selectively reducing costsales in the Sealing ProductsTechnologies segment. The associated activities were substantially completedSlow semiconductor markets, as well as weaker demand in commercial vehicle and food and pharmaceutical, more than offset the contribution from pricing actions and strength in the nuclear and aerospace markets.
Income from continuing operations decreased compared to the prior-year period driven primarily by results in the end of the second quarter of 2016. During the quarter ended June 30, 2016, an additional company-wide initiative to reduce cost across all operating segments and the corporate office was initiated. Although these company-wide cost reduction efforts launched in 2015 and 2016 have been completed, we continue to pursue numerousAdvanced Surface Technologies (or “AST”) segment and corporate cost-savings initiativesan increase in the valuation reserve on an ongoing basis.
Outlook

a long-term promissory note received in partial consideration for the sale of a non-strategic business in 2020.
We continue to experience strengthening conditions in several of our core end markets, and our teams are executing well on their defined growth strategies. While five of our facilities within the Sealing Products and Engineered Products segments were adversely impacted by hurricanes in Houston and Florida during the third quarter, all facilities were fully operational within two weeks of the storms. The impact of the storms, including costs associated with property damage and the contribution margin on lost sales, was approximately $2 million. Losses in Houston exceeded our insurance deductible, and we expect insurance recovery in excess of $1 million. This expected recovery is not reflected in the accompanying financial statements. No insurance recovery is expected for our losses at two facilities in Florida, as the losses were less than our insurance deductible.

We continue to be encouraged by the positive financial performance in our Sealing Products and Engineered Products segments in the third quarter, driven by increased volumes and manufacturing efficiencies. Additionally, in Power Systems, we expect continued improved activity in the fourth quarter versus 2016 largely driven by production scheduling for key programs and increases in aftermarket parts and service.
We remain committed to our strategy to create long-term shareholder value through earnings growth, strong free cash flow generation, and a balanced capital allocation including disciplinedapproach. We will continue to focus our investments for organic growthon new products, technology innovation, and innovation, strategic bolt-on acquisitions,productivity and returning capital to shareholders through dividends and share repurchases. Additionally, we invested approximately $11.5 millioncontinuous improvement initiatives in share repurchases for the nine months ended September 30, 2017 and funded a $0.22 per share dividend in eachboth of the first three quarters of this year.


Our effective tax rate is directly impacted by the relative proportions of revenue and income before taxes in the jurisdictions in which we operate. In addition, the rate can be magnified by pre-tax losses in high tax jurisdictions offset somewhat by pre-tax profits in low tax jurisdictions. Based on the expected geographical mix of domestic losses and foreign earnings, we anticipate our annual effective tax rate for 2017 will range from 8% to 13%, inclusive of the gain recognized on the reconsolidation of the GST and OldCo entities.
Unusual or discrete tax events including the reconsolidation of the GST and OldCo entities may cause our effective rate to fluctuate on a quarterly basis. Certain events, including, for example, acquisitions and other business changes, which are difficult to predict, may also cause our effective tax rate to fluctuate. We are subject to changing tax laws, regulations, and interpretations in multiple jurisdictions. Corporate tax reform continues to be a priority in the U.S. and other jurisdictions. Changes to the tax system in the U.S. could have significant effects, positive and negative, on our effective tax rate, and on our deferred tax assets and liabilities.
We estimate pension expense for the full year of 2017 will be approximately $5 million, which would be approximately $1 million less than in 2016. For the nine months ended September 30, 2017, we contributed $8.8 million to our U.S. defined benefit pension plan. This figure excludes $0.7 million of contributions to the Garlock pension plan prior to the reconsolidation of GST. Based upon available information, which is subject to change, we do not expect to make any contributions to our U.S. defined benefit pension plans in the fourth quarter of 2017.
segments. In connection with our growth strategy, we will continue to evaluate making additional acquisitions; however, the effect of such acquisitions cannot be predictedacquisition opportunities that fit our strategic frameworks in both segments, based on a consistent criteria that includes compelling margins, leading technology, aftermarket/recurring revenue characteristics, and therefore is not reflectedhigh cash flow return on investment in this outlook.markets that have secular tailwinds.
Our actions to permanently resolve asbestos claims are discussed in greater detail below in “- Contingencies - Subsidiary Asbestos Bankruptcies” and our estimate of the range of contingent liabilities associated with such claims and accruals in connection with changes in that estimate are discussed below in “— Contingencies — Asbestos — Liability Estimate.”
24

Results of Operations
 Three Months Ended March 31,
 20242023
 (in millions)
Sales
Sealing Technologies$171.6 $173.3 
Advanced Surface Technologies86.0 109.4 
257.6 282.7 
Intersegment sales(0.1)(0.1)
Net sales$257.5 $282.6 
Income from continuing operations$12.5 $26.0 
Adjusted Segment EBITDA
Sealing Technologies$53.0 $49.7 
Advanced Surface Technologies17.3 29.4 
Total Adjusted Segment EBITDA$70.3 $79.1 
Reconciliations of Income from Continuing Operations to Adjusted Segment EBITDA
Income from continuing operations$12.5 $26.0 
Income tax expense(1.8)(8.1)
Income from continuing operations before income taxes14.3 34.1 
Acquisition expenses3.3 — 
Non-controlling interest compensation allocation— 0.4 
Amortization of the fair value adjustment to acquisition date inventory1.7 — 
Restructuring and impairment costs0.5 0.4 
Depreciation and amortization expense24.6 23.5 
Corporate expenses12.2 11.0 
Interest expense, net8.2 7.9 
Other expense (income), net5.5 1.8 
Adjusted Segment EBITDA$70.3 $79.1 
 Quarters Ended   
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
 (in millions)
Sales       
Sealing Products$213.7
 $175.3
 $584.3
 $532.6
Engineered Products75.5
 65.7
 226.3
 213.5
Power Systems55.4
 52.5
 139.4
 157.2
 344.6
 293.5
 950.0
 903.3
Intersegment sales(0.9) (0.8) (2.9) (2.5)
Net sales$343.7
 $292.7
 $947.1
 $900.8
Segment Profit       
Sealing Products$23.5
 $23.1
 $65.0
 $62.4
Engineered Products7.7
 2.9
 25.4
 10.4
Power Systems8.2
 7.3
 20.6
 15.5
Total segment profit39.4
 33.3
 111.0
 88.3
Corporate expenses(9.7) (6.4) (24.3) (21.9)
Asbestos settlement—
 —
 —
 (80.0)
Gain on reconsolidation of GST and OldCo534.4
 —
 534.4
 —
Interest expense, net(10.3) (14.0) (41.2) (41.0)
Other expense, net(13.1) (2.9) (18.6) (9.8)
Income (loss) before income taxes$540.7
 $10.0
 $561.3
 $(64.4)


We measure operating performance of our reportable segments based on segment earnings before interest, income taxes, depreciation, amortization, and other selected items ("Adjusted Segment profitEBITDA" or "Segment AEBITDA"), which is total segment salesrevenue reduced by operating expenses restructuring and other expensescosts identifiable with the segment.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. Adjusted Segment EBITDA is not defined under GAAP and may not be comparable to similarly-titled measures used by other companies. Corporate expenses include general corporate administrative costs. Expenses not directly attributable to the segments,Segment non-operating expenses and income, corporate expenses, net interest expense, gains and losses related to the sale of assets, impairments, and income taxes are not included in the computation of segment profit.Adjusted Segment EBITDA. The accounting policies of the reportable segments are the same as those for EnPro.Enpro.
In 2024, we refined our definition of Adjusted Segment EBITDA and corporate expenses to include certain other income or expenses previously reported in other expense, net. These items were primarily comprised of bank fees and certain foreign exchange transaction gains and losses. As a result of this change, for the quarter ended March 31, 2023, we recast our results to decrease Advanced Surface Technologies adjusted segment EBITDA by $0.1 million and increased corporate expenses by $0.3 million.
Non-controlling interest compensation allocation represents compensation expense associated with the rollover equity subject to put and call options from the acquisition of Alluxa. This expense was recorded in selling, general, and administrative expenses on our Consolidated Statements of Operations and is directly related to the terms of the acquisition. This expense was
25

recognized as compensation expense over the term of the respective put and call options. The Alluxa non-controlling interests were acquired by Enpro in February 2024.
Other expense, net in the table above contains all items included in other (operating) expense and other expense (non-operating) on our Consolidated Statements of Operations for the quarters ended September 30, 2017 and 2016 and ninethree months ended September 30, 2017March 31, 2024 and 2016 with the exception of $0.4 million, $2.2 million, $3.8 million, and $9.2 million respectively, of restructuring costs. As noted previously, restructuring costs are considered to be a part of segment profit. Additionally, other expense, net in the table above for the quarters ended September 30, 2017 and 2016 and nine months ended September 30, 2017 and 2016 also includes $0.6 million, $1.4 million, $1.9 million and $3.2 million respectively, of miscellaneous expenses that are either not associated with a particular segment or not considered part of administering the corporate headquarters. These expenses are included in selling, general and administrative expense on our Consolidated Statements of Operations.2023.
Third Quarter of 2017
Three Months Ended March 31, 2024 Compared to the Third Quarter of 2016Three Months EndedMarch 31, 2023
Sales of $343.7$257.5 million in the third quarterfirst three months of 2017 increased 17.4%2024 decreased 8.9% from $292.7$282.6 million in the third quarterfirst three months of 2016.2023. The following table summarizes the impact of acquisitions and divestituresan acquisition and foreign currency on sales by segment:
SalesPercent Change Three Months Ended March 31, 2024 vs. Three Months Ended March 31, 2023
increase/(decrease)AcquisitionForeign
Currency		OrganicTotal
Enpro Inc.2.6 %0.1 %(11.6)%(8.9)%
Sealing Technologies4.2 %0.2 %(5.4)%(1.0)%
Advanced Surface Technologies— %— %(21.4)%(21.4)%
SalesPercent Change Third Quarter 2017 vs. Third Quarter 2016
increase/(decrease)Acquisitions/Divestiture Reconsolidation of GST and OldCo  
Foreign
Currency
 Organic Total
EnPro Industries, Inc.0.2% 12.1%  1.0% 4.1% 17.4%
Sealing Products0.3% 19.1%  0.6% 1.9% 21.9%
Engineered Products—% 0.3%  3.0% 11.6% 14.9%
Power Systems—% 3.5%  —% 2.0% 5.5%
Following are the key effects of acquisitions and divestiture (aside from the reconsolidation of GST and OldCo) on sales for the third quarter of 2017 compared to the same period in 2016:
Acquisition of Qualiseal in the second quarter of 2017 in the Sealing Products segment; and
Divestiture of our Franken Plastik business unit previously included in the Sealing Products segment at the end of 2016
See below for additional discussion on segment sales and segment profits.
Corporate expenses for the third quarter of 2017 increased $3.3 million as compared to the same period in 2016 due primarily to increased incentive compensation costs during the quarter associated with higher projected attainment under our long-term incentive program ($1.6 million), higher projected attainment under the 2017 annual incentive plan as compared to the 2016 annual incentive plan ($0.7 million), and increased professional fees ($0.4 million).
Interest expense, net in the third quarter of 2017 decreased by $3.7 million as compared to the same period of 2016, primarily due to lower average outstanding indebtedness due to the resolution of the notes payable to GST through the reconsolidation of GST and OldCo.
Other expense, net in the third quarter of 2017 increased by $10.2 million as compared to the same period of 2016, primarily due mainly to the above-mentioned long-lived asset impairment charge of $10.1 million associated with the ATD business in our Sealing Products segment.
During the third quarter of 2017, our effective tax rate was 9.3% as we recorded income tax expense of $50.5 million on pre-tax income of $540.7 million. The reduction in the effective tax rate is primarily due to the significant discrete items recorded in the current quarter including the $534.4 million non-taxable gain on the reconsolidation of the GST and OldCo entities and the $21.2 million benefit of the reversal of the deferred tax liability initially recorded on our investment in GST when GST was deconsolidated in June 2010. The reduction is partially offset by the $72.7 million charge associated with the step up of GST and OldCo's net assets to fair value upon the reconsolidation.
During the third quarter of 2016, our effective tax rate was 39.6% as we recorded an income tax expense of $4.0 million on pre-tax income of $10.0 million. The volatility in the quarterly tax rate is the result of using annual tax rates derived


from a geographic mix of pre-tax losses and income, as applied to a year-to-date ordinary loss in the prior-year quarter that exceeded the anticipated ordinary loss for the full year. The combination of mix, overall loss limitations, and small denominators resulted in an unusually high effective quarterly rate.
Net income was $490.2 million, or $22.49 per share, in the third quarter of 2017 compared to net income of $6.0 million, or $0.28 per share, in the second quarter of 2016. Earnings per share are expressed on a diluted basis.
Following is a discussion of operating results for each segment duringfor the quarter:first three months of 2024 as compared to the first three months of 2023:

Sealing ProductsTechnologies. Sales of $213.7$171.6 million in the third quarterfirst three months of 20172024 reflect a 21.9% increase1.0% decrease compared to the $175.3$173.3 million reported in the same quarterperiod of 2016. Sales to third parties from2023. Excluding the reconsolidated GST businesses were $33.4 million. Excluding these sales, the benefit of acquisitions net of the divestiture of Franken Plastik ($0.5 million), and favorable foreign exchange translation ($1.1 million),$0.4 million and the sales from a recent acquisition $7.3 million from 2023 results, sales were up 1.9%down 5.4% or $3.3 million due to$9.4 million. The decrease in sales was driven by declines in commercial vehicle original equipment manufacturer, general industrial, and food and pharmaceuticals, offset in part by the impact of pricing actions and strength in semiconductor, aerospace food & pharmaceuticals, metals and mining, and general industrial markets, while industrial gas turbines and nuclear markets experienced continued softness in the current year.nuclear.

Adjusted Segment profitEBITDA of $23.5$53.0 million in the third quarterfirst three months of 20172024 increased 1.7%6.6% from $23.1$49.7 million reported in the third quarterfirst three months of 2016. Operating2023. Segment AEBITDA margins for the segment increased from 28.7% in the first three months of 2023 to 30.9% in the first three months of 2024. Excluding the favorable foreign exchange translation $0.3 million and the contribution from a business recently acquired of $4.0 million, Adjusted Segment EBITDA decreased 2.0%, or $1.0 million. The decrease in Segment AEBITDA was primarily driven by decreased sales volume ($11.3M) partially offset by higher sales pricing ($5.7 million), favorable product mix ($2.8 million), decrease in labor and overhead costs ($1.0 million), lower foreign exchange transaction related losses ($0.6 million), and lower segment selling, general, and administrative costs ($0.2 million).

Advanced Surface Technologies. Sales of $86.0 million in the first three months of 2024 reflect a 21.4% decrease, or $23.4 million, compared to the $109.4 million reported in the same period of 2023. The decrease was driven primarily by the slowdown in the global semiconductor industry and to a lesser extent, lower sales of optical filter solutions.

Adjusted Segment EBITDA of $17.3 million in the first three months of 2024 decreased 41.2% from $29.4 million reported in the comparable period of 2023. Segment AEBITDA margins for the segment decreased from 13.2%26.9% in the third quarterfirst three months of 20162023 to 11.0%20.1% in the third quarterfirst three months of 2017.2024. The decrease in Adjusted Segment profit from the reconsolidated GST businessesEBITDA was $2.9 million. Excluding this impact, the unfavorable year-over-year impact of acquisitions (net of the divestiture of Franken Plastik) and acquisition-related costsprimarily driven by decreased sales volume ($0.5 million), the impact of a reduction of an earnout accrual in the comparable prior year period associated with the segment's previous acquisition of Fabrico ($1.5 million), the favorable year-over-year impact of restructuring costs ($0.1 million), and the unfavorable impact of foreign exchange translation ($0.2 million), segment profit was down $0.9 million or 3.4%. The positive impact of the above-mentioned sales increase was more than16.3M) partially offset by unfavorablefavorable product mix when compared to the prior year and by increased manufacturing costs.
Engineered Products. Sales in the third quarter of 2017 increased 14.9% to $75.5 million from $65.7 million reported in the third quarter of 2016. Sales to third parties from the reconsolidated GST businesses were $0.2 million. Excluding these sales and the impact of favorable foreign exchange translation ($2.0 million), higher sales were up 11.6% or $7.7 million primarily due to strength in the general industrial, automotive, aerospace, and North American and European oil and gas markets.
Segment profit in the third quarter of 2017 was $7.7 million compared to $2.9 million in the third quarter of 2016, an increase of $4.8 million, or 165.5%. Operating margins for the segment were 10.2%, which was up from the 4.4% reported in the third quarter of 2016. Segment profit from the reconsolidated GST businesses was $0.1 million. Excluding this impact, the favorable impact of current quarter foreign exchange translationpricing ($0.31.6 million), and the favorable year-over-year impact of restructuringdecrease in labor and overhead costs ($1.5 million) segment profit increased $2.9 million, or 67.3%, due mainly to the aforementioned sales increase (approximately $5 million). Partially offsetting this impact were increased manufacturing costs ($1.4 million) and increased incentive compensation accruals related to higher projected attainment under 2017 annual incentive plans ($1.00.8 million).
Power Systems. Sales of $55.4 million in the third quarter of 2017 increased $2.9 million, or 5.5%, from $52.5 million in the third quarter of 2016. Sales to third parties from the reconsolidated GST businesses were $1.8 million. Excluding these sales, sales increased $1.1 million, or 2.0%. The overall sales increase was driven by increased aftermarket parts and services revenues ($3.6 million) partially offset by a decrease in engine revenues. Price increases positively impacted sales by approximately $1 million.
The segment reported a profit of $8.2 million in the third quarter of 2017 compared to $7.3 million in the third quarter of 2016, a increase of 12.3%. Operating margins for the segment were 14.8% in the third quarter of 2017. Segment profit from the reconsolidated GST businesses was $0.5 million. Excluding this impact, segment profit was positively affected by the mix of higher margin parts sales within total sales for the quarter ($1.3 million), as well as the aforementioned price increases. These factors were offset by an increase in the loss provision on the EDF contract of $0.8 million in the current quarter compared no change in the comparable prior year period, and by lower margin percentages realized on engine contract revenue in comparison to prior year. The assessment of total EDF contract loss for the third quarter of 2017 included a positive foreign exchange effect of $2.3 million due to the weakening of the U.S. Dollar versus the Euro.
Nine Months Ended September 30, 2017 Compared to the Nine Months EndedSeptember 30, 2016
Sales of $947.1 million in the first nine months of 2017 increased 5.1% from $900.8 million in the first nine months of 2016. The following table summarizes the impact of acquisitions and divestitures and foreign currency on sales by segment:


SalesPercent Change Nine Months Ended September 30, 2017 vs. Nine Months Ended September 30, 2016
increase/(decrease)Acquisitions/Divestiture Reconsolidation of GST and OldCo 
Foreign
Currency
 Organic Total
EnPro Industries, Inc.0.5 % 3.9% (0.4)% 1.1 % 5.1 %
Sealing Products0.8 % 6.3% (0.3)% 2.9 % 9.7 %
Engineered Products(0.1)% 0.1% (0.7)% 6.7 % 6.0 %
Power Systems— % 1.2% — % (12.5)% (11.3)%
Following are the key effects of acquisitions and divestiture (aside from the reconsolidation of GST and OldCo) on sales for the first nine months of 2017 compared to the same period in 2016:
Acquisition of Qualiseal in the second quarter of 2017 in the Sealing Products segment;
Acquisition of Rubber Fab in the second quarter of 2016 included in the Sealing Products segment;
Divestiture of our Franken Plastik business unit previously included in the Sealing Products segment at the end of 2016; and
Divestiture of our CPI Thailand business unit previously included in the Engineered Products segment in the second quarter of 2016.
See below for additional discussion on segment sales and segment profits.
Corporate expenses for the first ninethree months of 20172024 increased $2.4$1.2 million as compared to the same period in 2016. The increase was driven primarily by increased incentive compensation costs during the2023. Lower current year associated with higher projected attainment under our long-termshort term incentive program ($2.7 million) and higher projected attainment under the 2017 annual incentive plan as compared to the 2016 annual incentive plan ($1.4 million) offset in part by lower compensation expense associated with 2016 headcount reductionsexpenses ($1.0 million),millon) were more than offset by the year-over-year impact of restructuring costs incurredincome in the prior yearfirst quarter associated with those reductionsshare-price-driven long-term incentive plan costs ($0.71.9 million), and other administrative cost reductions..

Interest expense, net was slightly up in the first ninethree months of 2017 increased by $0.2 million as2024 compared to the same periodfirst three months of 2016, primarily due to higher2023 driven by lower interest income associated with decreased cash equivalent investment balances, mostly offset by lower average outstanding indebtedness.debt balances

Other expense, net in the first ninethree months of 20172024 of $5.5 million increased by $8.8 million as compared to the same period of 2016, due mainly to the above-mentioned long-lived asset impairment charge of $10.1 million associated with the ATD business in our Sealing Products segment offset partially by a decrease in costs associated with previously divested businesses, including legal and environmental remediation costs.

During the first nine months of 2017, our effective tax rate was 9.9% as we recorded income tax expense of $55.7 million on pre-tax income of $561.3 million. The lower effective tax rate is primarily due to the significant discrete items recorded in the third quarter of 2017 as discussed above.
During the first nine months of 2016, our effective tax rate was 42.3% as we recorded an income tax benefit of $27.2 million on pre-tax loss of $64.4 million. The volatility during this nine-month period is a result of our geographical mix of pre-tax losses in the U.S., a higher tax jurisdiction, and pre-tax profits in lower tax jurisdictions.
Net income was $505.6 million, or $23.32 per share, in the first nine months of 2017 compared to net loss of $37.2 million, or $1.71 per share, in the same period of 2016.
Following is a discussion of operating results for each segment during the first nine months of 2017:
Sealing Products. Sales of $584.3 million in the first nine months of 2017 reflect a 9.7% increase compared to the $532.6from $1.8 million reported in the same period of 2016. Sales to third parties from the reconsolidated GST businesses were $33.4 million. Excluding these sales, the benefit of acquisitions net of the divestiture of Franken Plastik ($4.5 million) and unfavorable foreign exchange translation ($1.7 million), sales were up 2.9% or $15.4 million due to volume increases associated with strength in the semiconductor, food and pharmaceutical, and aerospace markets along with improvement in the oil and gas market. This strength was offset partially by softness in heavy-duty trucking, industrial gas turbines, and nuclear demand.
Segment profit of $65.0 million in the first nine months of 2017 increased 4.2% from $62.4 million reported in the same period of 2016. Operating margins for the segment decreased from 11.7% in the first nine months of 2016 to 11.1% in


the first nine months of 2017. Segment profit from the reconsolidated GST businesses was $2.9 million. Excluding this impact, the unfavorable year-over-year impact of acquisitions and acquisition-related costs net of the Franken Plastik divestiture ($0.6 million), a year over year decrease in restructuring costs ($0.5 million), and unfavorable foreign exchange translation ($0.3 million), segment profit was relatively flat to prior year, as the impact of the increased sales was offset by unfavorable mix mainly driven by the higher semiconductor and lower industrial gas turbines and nuclear sales compared to prior year.
Engineered Products. Sales in the first nine months of 2017 increased 6.0% to $226.3 million from $213.5 million reported in the same period of 2016. Sales to third parties from the reconsolidated GST businesses were $0.2 million. Excluding these sales, the impact of unfavorable foreign exchange translation ($1.3 million) and of the divestiture of our CPI Thailand operations ($0.3 million unfavorable), sales were up 6.7% or $14.4 million2023, primarily due to strengththe increase in the North American and European automotive market, North American oil and gas market, general industrial market, and general demandvaluation reserve on a long-term promissory note received in Asia.
Segment profit in the first nine months of 2017 was $25.4 million compared to $10.4 million in the same period of 2016, an increase of $15.0 million, or 144.2%. Operating marginspartial consideration for the segment were 11.2%, which was up from the 4.9% reportedsale of a non-strategic business in the first nine months of 2016. Segment profit from the reconsolidated GST businesses was $0.1 million. Excluding this impact, decreased restructuring costs2020 ($3.8 million) due to the costs incurred in 2016 for locations exited and unfavorable current year foreign exchange translation ($0.3 million), segment profit increased $11.3 million, or 73.3%. The increase was due primarily to the higher sales volume (approximately $10 million) and lower salaries and benefits primarily from the cost-reduction efforts in 2016 ($3.24.5 million), partially offset by increased incentive compensation accrualslower non-service pension
26

related costs ($0.4 million) and decreased foreign exchange losses related to an intercompany note denominated in Euros ($0.2 million).

The effective tax rates for the three months ended March 31, 2024 and 2023 were 12.6% and 23.7%, respectively. The lower effective tax rate for the three months ended March 31, 2024 is primarily driven by favorable state amended return filings and additional tax benefit related to share-based payment awards partially offset by higher projected attainment under 2017 annual incentive plans ($1.0 million)tax rates in most foreign jurisdictions. The effective tax rate for the three months ended March 31, 2023 is primarily the result of higher tax rates in most foreign jurisdictions partially offset by the release of a valuation allowance on certain foreign net operating losses and a tax benefit related to share-based payment awards.
Power Systems. Sales of $139.4
Income from continuing operations was $12.5 million, or $0.59 per share, in the first ninethree months of 2017 decreased $17.82024 compared to $26.0 million, or 11.3%, from $157.2 million in the same period of 2016. The decrease was net of sales to third parties from the reconsolidated GST businesses of $1.8 million. The decrease was driven mainly by lower aftermarket parts revenues ($11.7 million) and engine revenues ($9.6 million) partially offset by an increase in services revenue ($3.4 million). Year-over-year comparisons for aftermarket parts were challenging due to record parts sales in the second quarter of 2016. This overall decrease was net of approximately $4 million of favorability due to parts and services price increases in the current year.
The segment reported a profit of $20.6 million$1.24 per share, in the first ninethree months of 2017 compared2023. Earnings per share is expressed on a diluted basis.

Backlog

As of March 31, 2024, the aggregate amount of transaction price of remaining performance obligations, or backlog, on a consolidated basis was $242.8 million. Approximately 93% of these obligations are expected to $15.5 millionbe satisfied within one year. There is no certainty these orders will result in actual sales at the times or in the first nine monthsamounts ordered. In addition, for most of 2016, an increaseour business, this total is not particularly predictive of 32.9%. Operating margins for the segment were 14.8% in the first nine monthsfuture performance because of 2017. Segment profit from the reconsolidated GST businesses was $0.5 million. Excluding this impact, the year-over-year increase in segment profit is due to decreased manufacturingour short lead times and administrative costs costs partially attributable to prior year cost-savings initiatives (approximately $4.0 million), the aforementioned parts and services price increases (approximately $4 million), lower warranty costs ($2.1 million), and to the impact to 2016 associated with the AVL legal matter ($3.0 million, inclusive of the $2.7 million settlement). Lower current year inventory costs also resulted in income from the revaluation of the segment's inventory to LIFO the first nine months of 2017 ($2.2 million). Additionally, in the nine months ended September 30, 2017, a $2.8 million reduction in the loss reserve on the EDF contract was recognized compared to a $1.8 million increase to the total contract loss in the corresponding prior year period. These positive impacts were offset mainly by the aforementioned overall sales decline ($5.8 million), and further impacted by lower margins on engine sales in 2017 than in the corresponding prior year period. The reduction of total EDF contract loss for the first nine months of 2017 included a positive foreign exchange effect of $7.6 million due to the weakening of the U.S. Dollar versus the Euro, partially offset by $4.8 million in increased estimated costs to complete the contract. The assessment for the first nine months of 2016 included a positive foreign exchange effect of $1.4 million offset by $3.2 million in increased estimated costs to complete the contract.some seasonality.
Liquidity and Capital Resources

Cash requirements for, but not limited to, working capital, capital expenditures, acquisitions, and debt repayments have been funded from cash balances on hand, revolver borrowings and cash generated from operations. We are proactively pursuing acquisition opportunities. It is possible our cash requirements for one or more acquisition opportunities could exceed our cash balance at the time of closing. Should we need additional capital, we have resources available, which are discussed in this section under the heading “Capital Resources.”

As of September 30, 2017,March 31, 2024, we held all of our $176.1$2.1 million of cash and cash equivalents in the United States and $161.9 million of cash outside of the United States. If the funds held outside the United States were needed for our operations in the U.S., we have several methods to repatriate without significant tax effects, including repayment of intercompany loans, distributions subject to a 100 percent dividends-received deduction for income tax purposes, or distributions of previously taxed income. Other distributions may require us to incur U.S. or foreign taxes to repatriate these funds. However, our intent is to permanently reinvest these funds outside the U.S. and our current plans do not demonstrate a need to repatriate cash to fund our U.S. operations.previously-taxed earnings.




In February 2017, we received a private letter ruling from the Internal Revenue Service, in satisfaction of a conditionBecause of the Joint Plan, thattransition tax, GILTI, and Subpart F provisions, undistributed earnings of our foreign subsidiaries totaling $251.0 million at December 31, 2022 have been subjected to U.S. income tax or are eligible for the trust established100 percent dividends-received deduction under the Joint Plan (the "Trust") will be recognized as a “qualified settlement fund” under section 468BSection 245A of the Internal Revenue Code and any related regulations, and that amounts contributed to the Trust as contemplated by the Joint Plan would be deductible for federal income tax purposesprovided in the year inTax Cuts and Jobs Act. Additionally, undistributed earnings are estimated to be $198.7 million as of March 31, 2024. Whether through the application of the 100 percent dividends received deduction, or distribution of these previously-taxed earnings, we do not intend to distribute foreign earnings that will be subject to any significant incremental U.S. or foreign tax. During the first three months of 2024, we repatriated $10.2 million which was utilized to paydown our U.S.-based indebtedness and reduce our interest expense. We have targeted the contribution is made. Based on this ruling and section 162(a), we will deduct the Trust contributions totaling $400repatriation of an additional $165.0 million and the settlement paymentby December 31, 2024 for potential unscheduled paydowns of $16.7 million paid to the Canadian Provinces, net of related insurance reimbursementsour indebtedness. We have determined that estimating any tax liability on our current federalinvestment in foreign subsidiaries is not practicable. Therefore, we have not recorded any deferred tax return. Please refer to the "-Contingencies - Subsidiary Asbestos Bankruptcies" sectionliability on undistributed earnings of this analysis for further information on these contributions.foreign subsidiaries.


While we are currently finalizing our analysis, this deduction represents a substantial tax benefit. A portion of the benefit will offset current taxable income and the balance, representing an NOL, will be carried back and offset against taxable income in the preceding 10 years. This benefit will be realized through the filing of refund claims in conjunction with our 2017 federal tax return anticipated to be filed by end of the first quarter of 2018. The refunds are expected to be received within 90 days of filing, subject to potential delay in the event of an IRS audit review.
Cash Flows
Operating activities of continuing operations provided $64.4$6.3 million of cash in the first ninethree months of 2017 compared to $7.92024 and $26.4 million of cash in the same period last year.first three months of 2023. The improvementyear-over-year decrease was due mainly toprimarily driven by the contributions from higher segment profit as discusseddecline in the previous section, lowerrevenue, timing of working capital collections, and payments for income taxes ($17.9 million) as a result of no estimated federal tax payments having been made in 2017 due to a projected federal tax loss arising from deductions related to payments under the Joint Plan and settlement of Canadian provincial claims as described above, net asbestos insurance receipts ($9.9 million) in 2017, and lower pension contributions ($6.0 million) than in the prior year.short-term operating liabilities.
Investing activities of continuing operations used $74.2 million and $52.5$217.0 million of cash in the first three months of 2024 compared to $14.8 million of cash used during the first ninethree months of 2017 and 2016, respectively.2023. The increase was mainly due to a capital contribution ($45.2 million) made to OldCo during the time in which it was deconsolidated from EnPro in order to fund OldCo's initial $50 million payment in July 2017 to the Trust along with the expenditures for the acquisition of Qualiseal in the first nine months of 2017 ($39.5 million) compared to the acquisition of Rubber Fab in the comparable prior year period ($28.5 million). These factors were offset partiallycash used by a net cash increase of $36.3 million associated with the deconsolidation of OldCoinvesting activities in the first quarter of 20172024 was primarily driven by the $208.9 million used for acquisition of AMI and $7.3 million used for capital expenditures focused primarily on growth opportunities. This compares to the reconsolidation of GST and OldCo in the thirdfirst quarter of 2017.2023 where $35.0 million was used to purchase short-term investments and $5.0 million used to purchase property, plant and equipment. This was partially offset by $25.3 million of net cash proceeds from the sale of a business.
Financing activities of continuing operations provided $65.4$6.2 million inof cash in the first ninethree months of 2017,2024, primarily from $149.2$33.0 million in net proceeds from the offering of the Additional Notes, offset by a payment on the GST notes during the time in which GST was deconsolidated from EnPro ($45.2 million) that contributed to GST's initial funding of the above-mentioned trust, net repaymentsborrowings on our revolving credit facility ($14.1 million),partially offset by $17.9 million used for the acquisition of
27

Alluxa non-controlling interests and by cash paid to repurchase shares ($11.5 million) and$6.4 million used for dividends ($14.3 million).paid. Financing activities in the first ninethree months of 2016 provided cash of $67.72023 used $12.0 million, primarily from $105.7$6.2 million in net borrowings from our revolving credit facility, offset partially by cash paid to repurchase shares ($26.2 million) andused for dividends ($13.6 million).paid and $4.0 million used for debt repayments.
Capital Resources
Senior Secured Revolving Credit FacilityFacilities. On August 28, 2014,December 17, 2021, we amendedentered into a Third Amended and restatedRestated Credit Agreement (the “Amended Credit Agreement”) among the agreement governing ourCompany and EnPro Holdings, as borrowers, certain foreign subsidiaries of the Company from time-to-time party thereto, as designated borrowers, the guarantors party thereto, the lenders party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.

The Amended Credit Agreement provides for credit facilities in the initial aggregate principal amount of $1,007.5 million, consisting of a five-year, senior secured revolving credit facility (the “Credit Facility Amendment”). The Revolving Credit Facility expires in August 2019.
The Credit Facility Amendment provides for a five-year, $300of $400.0 million senior secured revolving credit facility (the “Revolving Credit Facility”), a $142.5 million senior secured term loan facility in replacement of the our existing senior secured term loan facility, maturing September 25, 2024 (the “Term Loan A-1 Facility”), a five-year, senior secured term loan facility of $315.0 million (the “Term Loan A-2 Facility”) and a 364-day, senior secured term loan facility of $150.0 million (the “364-Day Facility” and together with the Revolving Credit Facility, the Term Loan A-1 Facility and the Term Loan A-2 Facility, the “Facilities”). At September 30, 2017, borrowingsThe Amended Credit Agreement also provides that we may seek incremental term loans and/or additional revolving credit commitments in an amount equal to the greater of $275.0 million and 100% of consolidated EBITDA for the most recently ended four-quarter period for which we have reported financial results, plus additional amounts based on a consolidated senior secured leverage ratio. The Amended Credit Agreement became effective on December 17, 2021.
Borrowings under the Revolving Credit364-Day Facility bore interest at an annual rate of LIBOR plus 2.00%1.50% or base rate plus 1.00%0.50%. Initially, borrowings under the Facilities (other than the 364-Day Facility) bore interest at an annual rate of LIBOR plus 1.75% or base rate plus 0.75%, although thethese interest rates under the Revolving Credit Facility arewere subject to incremental increases and decreasesincrease or decrease based on a consolidated total net leverage ratio. The 364-Day Facility did not amortize and was repaid in full in the third quarter of 2022. On November 8, 2022, we entered into a First Amendment to the Amended Credit Agreement, which replaced the LIBOR-based interest rate option with an option based on Term SOFR ("Secured Overnight Financing Rate") plus (i) a credit spread adjustment of 0.10% and (ii) 1.75%, again subject to incremental increase or decrease based on a consolidated total net leverage ratio. In addition, a commitment fee accrues with respect to the unused amount of the Revolving Credit Facility at an annual rate of 0.25%0.225%, which rate is also subject to incremental increases and decreasesincrease or decrease based on a consolidated total net leverage ratio.

The Term Loan A-1 Facility amortized on a quarterly basis in an annual amount equal to 2.50% of the original principal amount of the Term Loan A-1 Facility ($150.0 million) in year one after the closing, 5.00% of such original principal amount in year two and 1.25% of such original principal amount in each of the first three quarters of year three, with the remaining outstanding principal amount payable at maturity. The Term Loan A-2 Facility amortizes on a quarterly basis in an annual amount equal to 2.5% of the original principal amount of the Term Loan A-2 Facility in each of years one through three, 5.0% of such original principal amount in year four and 1.25% of such original principal amount in each of the first three quarters of year five, with the remaining outstanding principal amount payable at maturity. The Facilities are subject to prepayment with the net cash proceeds of certain asset sales not reinvested in acquisitions within a specified period, casualty or condemnation events, and non-permitted debt issuances. There is no prepayment penalty for a full or partial repayment of the Facilities at any time.

The Company and EnPro Holdings are the permitted borrowers under the Facilities. The Company may also from time to time designate any of its wholly owned foreign subsidiaries as a borrower under the Revolving Credit Facility AmendmentFacility. Each of the Company’s domestic subsidiaries (other than any subsidiaries that may be designated as “unrestricted” by the Company from time to time, and inactive subsidiaries) is required to guarantee the obligations of the borrowers under the Facilities, and each of the Company’s existing domestic subsidiaries (other than inactive subsidiaries) has entered into the Amended Credit Agreement to provide such a guarantee.
Borrowings under the Facilities are secured by a first-priority pledge of the following assets:

•100% of the capital stock of each domestic subsidiary of the Company (other than unrestricted or inactive subsidiaries);
•65% of the capital stock of any first-tier foreign subsidiary of the Company and its domestic subsidiaries (other than unrestricted or inactive subsidiaries); and
•substantially all of the assets (including, without limitation, machinery and equipment, inventory and other goods, accounts receivable, bank accounts, general intangibles, financial assets, investment property, license rights, patents, trademarks, trade names, copyrights, chattel paper, insurance proceeds, contract rights, hedge agreements,
28

documents, instruments, indemnification rights, tax refunds and cash, but excluding real estate interests) of the Company and its domestic, consolidated subsidiaries (other than unrestricted or inactive subsidiaries)
The Amended Credit Agreement contains certain financial covenants and required financial ratios, including:
•a maximum consolidated total net leverage ratio of not more than 4.04.75 to 1.0 (with total debt, for the purposes of such ratio, to exclude the intercompany notes payable to GST LLC and to be net of up to $75$150 million of unrestricted cash of EnPro Industries,Enpro Inc. and its domestic, consolidated subsidiaries);, which ratio will decrease to 4.5 to 1.0 for each fiscal quarter beginning with the fiscal quarter ending March 31, 2022 and ending with the fiscal quarter ending December 31, 2022, and to 4.0 to 1.0 for each quarter thereafter; and, once so decrease, may be increased (up to three times) at the borrowers' option to not more than 4.5 to 1.0 for the for-quarter period following a significant acquisition; and
•a minimum consolidated interest coverage ratio of at least 2.5 to 1.0.


The Amended Credit Facility AmendmentAgreement contains affirmative and negative covenants (subject, in each case, to customary exceptions and qualifications), including covenants that limit our ability to, among other things:
•grant liens on our assets;
•incur additional indebtedness (including guarantees and other contingent obligations);
•make certain investments (including loans and advances);
•merge or make other fundamental changes;
•sell or otherwise dispose of property or assets;
•pay dividends and other distributions and prepay certain indebtedness;
•make changes in the nature of our business;
•enter into transactions with our affiliates;
•enter into burdensome contracts; and
make certain capital expenditures; and
•modify or terminate documents related to certain indebtedness.


We were in compliance with all of the covenants of the Amended Credit Facility AmendmentAgreement as of September 30, 2017.March 31, 2024.
On July 26, 2023, Enpro voluntarily prepaid all outstanding borrowings and accrued and unpaid interest under the Term Loan A-1 Facility (a remaining principal balance of $133.1 million and accrued interest of $0.6 million).
The borrowing availability at September 30, 2017, under theour Revolving Credit Facility at March 31, 2024 was $169.7$355.0 million representing the full $300after giving consideration to $10.0 million amount of the Revolving Credit Facility less $14.5 million reserved for outstanding letters of credit and $115.8$35.0 million of outstanding borrowings. The balance of borrowings outstanding under the Term Loan A-2 Facility at March 31, 2024 was $297.3 million.
Senior Notes.In October 2016,2018, we completed the Revolving Credit Facility was amended to permit various transactions as partoffering of the contemplated corporate restructuring of Coltec, which is discussed further in " — Contingencies — Subsidiary Asbestos Bankruptcies." Permitted borrowers under the Revolving Credit Facility now include our subsidiary, EnPro Holdings, Inc., in addition to EnPro. Each of our domestic consolidated subsidiaries are required to guarantee the obligations of the borrowers under the Revolving Credit Facility, and each of our existing domestic, consolidated subsidiaries has provided such a guarantee.
Senior Notes. In September 2014, we issued $300$350.0 million aggregate principal amount of our senior notes. A portion5.75% Senior Notes due 2026 (the "Senior Notes").

The Senior Notes were issued to investors at 100% of the net proceeds of the offering of the senior notes was used to repay outstanding borrowings.
principal amount thereof. The senior notesSenior Notes are unsecured, unsubordinated obligations of EnProEnpro and mature on SeptemberOctober 15, 2022.2026. Interest on the senior notesSenior Notes accrues at a rate of 5.875%5.75% per annum and is payable semi-annually in cash in arrears on MarchApril 15 and SeptemberOctober 15 of each year, commencing MarchApril 15, 2015.2019. The senior notesSenior Notes are required to be guaranteed on a senior unsecured basis by each of EnPro’sEnpro’s existing and future direct and indirect domestic subsidiaries that is a borrower under, or guarantees, our indebtedness under the Revolving Credit Facility or guarantees any other Capital Markets Indebtedness (as defined in the indenture governing the senior notes)Senior Notes) of EnProEnpro or any of the guarantors.
On or after September 15, 2017, we We may, on any one or more occasions, redeem all or a part of the senior notesSenior Notes at specified redemption prices plus accrued and unpaid interest.
Each holder of the senior notesSenior Notes may require us to repurchase some or all of the senior notesSenior Notes held by such holder for cash upon the occurrence of a defined “change of control” event. Our ability to redeem the senior notesSenior Notes prior to maturity is subject to certain conditions, including in certain cases the payment of make-whole amounts.
The indenture governing the senior notes includes covenants that restrict our ability to engage in certain activities, including incurring additional indebtedness and paying dividends, subject in each case to specified exceptions and qualifications set forth in the indenture.
In March 2017, we completed an add-on offering of $150.0 million of our 5.875% Senior Notes due 2022 (the “Additional Notes"). We issued the Additional Notes inclusive of an original issue premium of $1.5 million. Therequires us to offer was made in the United States to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act.

The indenture for the Additional Notes contains the same interest payment, redemption, change of control, covenant, and guarantee provisions as forrepurchase the Senior Notes. The debt premium is being amortized asNotes at a reductionprice equal to interest expense until the maturity date resulting in an effective interest rate100.0% of 5.660%.

The proceeds from the offering of the Additional Notes were used primarily to repay outstanding borrowings under the Revolving Credit Facility in order to increase availability to fund future capital requirements, including those funding requirements associated with the Joint Plan, which are described in "— Contingencies — Subsidiary Asbestos Bankruptcies."



Related Party Notes. Effective as of January 1, 2010, Coltec entered into an original issue amount $73.4 million Amended and Restated Promissory Note due January 1, 2017 (the “Coltec Note”) in favor of GST LLC, and our subsidiary Stemco LP entered into an original issue amount $153.8 million Amended and Restated Promissory Note due January 1, 2017, in favor of GST LLC (the “Stemco Note”, and together with the Coltec Note, the “Notes Payable to GST”). The Notes Payable to GST amended and replaced promissory notes in the same principal amounts which were initially issued in March 2005, and which matured on January 1, 2010. In connection with the Coltec Restructuring (described in “— Contingencies — Subsidiary Asbestos Bankruptcies"), the obligations of OldCo, as the successor by merger to Coltec, under the Notes Payable to GST were assumed by EnPro Holdings, and OldCo was released from those obligations. In addition, the Coltec Note and the Stemco Note were amended to extend their maturity date to January 1, 2018.
The Notes Payable to GST bear interest at 11% per annum, of which 6.5% is payable in cash and 4.5% is added to the principal amount thereof plus accrued and unpaid interest, in the event that the net cash proceeds of certain asset sales are not reinvested in acquisitions, capital expenditures, or used to repay or otherwise reduce specified indebtedness within a specified period, to the extent the remaining net proceeds exceed a specified amount.
At March 31, 2024, we were in compliance with all of the Notes Payable to GST as payment-in-kind (“PIK”) interest, with interest due on January 31 of each year. In conjunction with the interest payments in 2017 and 2016, $19.3 million and $18.4 million, respectively, was paid in cash and PIK interest of $13.4 million and $12.7 million, respectively, was added to the principal balancecovenants of the Notes Payable to GST. If GST LLC is unable to pay ordinary course operating expenses, under certain conditions, they can require EnPro Holdings and Stemco to pay in cashindenture governing the accrued PIK interest necessary to meet such ordinary course operating expenses, subject to certain caps. The interest due under the Notes Payable to GST may be satisfied through offsets of amounts due under intercompany services agreements pursuant to which we provide certain corporate services, make available access to group insurance coverage to GST, make advances to third party providers related to payroll and certain benefit plans sponsored by GST, and permit employees of GST to participate in certain of our benefit plans.Senior Notes.
The Coltec Note is secured by EnPro Holdings' pledge of certain of its equity ownership in specified U.S. subsidiaries. The Stemco Note is guaranteed by EnPro Holdings and secured by EnPro Holdings' pledge of its interest in Stemco. The Notes Payable to GST are subordinated to any obligations under the Revolving Credit Facility under existing subordination agreements which subordinate GST LLC's right to receive payment of principal on the Notes Payable to GST to the prior payment in full of all obligations under the Revolving Credit Facility. With the reconsolidation of GST in the third quarter, these borrowings are now intercompany and are therefore not reflected on our Consolidated Balance Sheet as of September 30, 2017.
29


Share Repurchase Program. In October 2015,2022, our board of directors authorized the repurchaseexpenditure of up to $50.0 million for the repurchase of our outstanding common shares. During the nine months ended September 30, 2017, we repurchased 0.2 million shares for $11.5 million. Through September 30, 2017, wethrough October 2024. We have purchased $47.2 million of the $50.0 million authorized, including purchases in 2015 and 2016. The remaining amount of authorized purchases in the program at September 30, 2017 was $2.8 million. The program authorization expired in October 2017, with no further purchasesnot made after September 30, 2017.any repurchases under this authorization.
Also in October 2017, our board of directors authorized a new program for the repurchase of up to $50.0 million of our outstanding common shares. This program authorization will expire in October 2020.
Garlock Sealing Technologies LLC and Garrison Litigation Management Group, Ltd.
The historical business operations of GST LLC and Anchor resulted in a substantial volume of asbestos litigation in which plaintiffs alleged personal injury or death as a result of exposure to asbestos fibers. Those subsidiaries manufactured and/or sold industrial sealing products, predominately gaskets and packing, containing encapsulated asbestos fibers. Anchor is an inactive and insolvent indirect subsidiary of Coltec. Our subsidiaries’ exposure to asbestos litigation and their relationships with insurance carriers have been managed through another Coltec subsidiary, Garrison.
On the GST Petition Date, GST LLC, Anchor and Garrison filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in Bankruptcy Court. The filings were the initial step in a claims resolution process for an efficient and permanent resolution of all pending and future asbestos claims through court approval of a plan of reorganization to establish a facility to resolve and pay all GST asbestos claims. On March 17, 2016, we announced that we had reached a comprehensive consensual settlement to resolve current and future asbestos claims.
Prior to its deconsolidation effective on the GST Petition Date, GST LLC and its subsidiaries operated as part of the Garlock group of companies within EnPro’s Sealing Products segment. GST LLC designs, manufactures and sells sealing products, including metallic, non-metallic and composite material gaskets, rotary seals, compression packing, resilient metal seals, elastomeric seals, hydraulic components, and expansion joints. GST LLC and its subsidiaries operate five primary manufacturing facilities, including GST LLC’s operations in Palmyra, New York and Houston, Texas.
Garrison’s principal business historically has been to manage the defense of all asbestos-related litigation affecting our subsidiaries, principally GST LLC and Anchor, arising from their sale or use of products or materials containing asbestos, and to manage, bill and collect available insurance proceeds. When it commenced business in 1996, Garrison acquired certain


assets of GST LLC and assumed certain liabilities stemming from asbestos-related claims against GST LLC. Garrison is not itself a defendant in asbestos-related litigation and has no direct liability for asbestos-related claims. Rather, it has assumed GST LLC’s liability for such claims and agreed to indemnify GST LLC from liability with respect to such claims. Anchor was a distributor of products containing asbestos and was acquired by GST LLC in 1987. Anchor has been inactive and insolvent since 1993. As contemplated by the Joint Plan, on OldCo Petition Date, OldCo, as the successor by merger to Coltec, filed a Chapter 11 bankruptcy petition with the Bankruptcy Court. On February 3, 2017, the Bankruptcy Court issued an order for the joint administration of the OldCo Chapter 11 Case with the GST Chapter 11 Case. As required by GAAP, GST was deconsolidated beginning on the GST Petition Date and OldCo was deconsolidated beginning on the OldCo Petition Date. Both GST and OldCo were reconsolidated on the effective date of the consummation of the Joint Plan, July 31, 2017.
Critical Accounting Policies and Estimates
Please refer to "Critical Accounting Estimates" in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our annual report on Form 10-K for the fiscal year ended December 31, 2016,2023, for a complete listdiscussion of our critical accounting policies and estimates.estimates, which is incorporated here by reference.
Contingencies
General
A detailed description of environmental, asbestos and other legal matters relating to certain of our subsidiariescontingencies is included in Note 15 to the Consolidated Financial Statements in this section. Inreport, which is incorporated herein by reference.
Supplemental Guarantor Financial Information

On October 17, 2018, we completed the offering of the Senior Notes. The Senior Notes are fully and unconditionally guaranteed on an unsecured, unsubordinated, joint and several basis by our wholly owned direct and indirect domestic subsidiaries, that are each guarantors of our Revolving Credit Facility, including subsidiaries that were wholly owned at the time they provided the guarantee but thereafter became majority owned subsidiaries (collectively, the “Guarantor Subsidiaries”).  The Guarantor Subsidiaries at March 31, 2024 comprise all of our consolidated domestic subsidiaries at that date. Our subsidiaries organized outside of the United States (collectively, the “Non-Guarantor Subsidiaries”) do not guarantee the Senior Notes.
The Guarantor Subsidiaries jointly and severally guarantee on an unsecured, unsubordinated basis the performance and punctual payment when due, whether at stated maturity of the Senior Notes, by acceleration or otherwise, all of our obligations under the Senior Notes and the indenture governing the Senior Notes (the “Indenture”), whether for payment of principal of, premium, if any, or interest on the Senior Notes, expenses, indemnification or otherwise (all such obligations guaranteed by the Guarantor Subsidiaries are referred to as the “Guaranteed Obligations”). The Guarantor Subsidiaries have jointly and severally agreed to pay, in addition to the mattersobligations stated above, any and all expenses (including reasonable counsel fees and expenses) incurred by the trustee (the “Trustee”) under the Indenture in enforcing any rights under their guarantees of the Guaranteed Obligations.
Each guarantee of a Guarantor Subsidiary is limited to an amount not to exceed the maximum amount that can be guaranteed by it without rendering the guarantee, as it relates to such Guarantor Subsidiary, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. Each guarantee of a Guarantor Subsidiary is a continuing guarantee and shall inure to the benefit of and be enforceable by the Trustee, the holders of the Senior Notes and their successors, transferees and assigns and, subject to the provisions described in the following sentence, remains in full force and effect until payment in full of all of the Guaranteed Obligations of such Guarantor Subsidiary and is binding upon such Guarantor Subsidiary and its successors. A guarantee of the Senior Notes by a Guarantor Subsidiary is subject to release in the following circumstances: (i) the sale, disposition, exchange or other transfer (including through merger, consolidation, amalgamation or otherwise) of the capital stock of the subsidiary made in a manner not in violation of the Indenture; (ii) the designation of the subsidiary as an “Unrestricted Subsidiary” under the Indenture; (iii) the legal defeasance or covenant defeasance of the Senior Notes in accordance with the terms of the Indenture; or (iv) the subsidiary ceasing to be our subsidiary as a result of any foreclosure of any pledge or security interest securing our Revolving Credit Facility or other exercise of remedies in respect thereof.
The following tables present summarized financial information for Enpro Inc. (the "Parent") and the Guarantor Subsidiaries on a combined basis after intercompany eliminations.








30

The summarized results of operations for the three months ended March 31, 2024 were as follows:
(in millions)Parent and Guarantor Subsidiaries
Net sales$181.5 
Gross profit64.5 
Net loss$(6.3)

The summarized balance sheet at March 31, 2024 was as follows:
(in millions)Parent and Guarantor Subsidiaries
ASSETS
Current assets$211.3 
Non-current assets1,623.3 
Total assets$1,834.6 
LIABILITIES AND EQUITY
Current liabilities$126.0 
Non-current liabilities981.3 
Total liabilities1,107.3 
Shareholders’ equity727.3 
Total liabilities and equity$1,834.6 
The table above reflects $9.3 million of current intercompany receivables due to the Guarantor Subsidiaries from the Non-Guarantor Subsidiaries and $10.2 million of current intercompany payables due to the Non-Guarantor Subsidiaries from the Guarantor Subsidiaries within total current assets and liabilities.
The summarized results of operations for the year ended December 31, 2023 were as follows:
(in millions)Parent and Guarantor Subsidiaries
Net sales$754.3 
Gross profit256.9 
Loss from continuing operations(68.2)
Income from discontinued operations, net of taxes11.4 
Net loss$(56.8)
Net loss attributable to Enpro Inc.$(52.9)

Of the $11.4 million reported in income from discontinued operations, net of taxes, $11.2 million related to gain on the sale of discontinued operations recognized by a subsidiary that is a guarantor of the Senior Notes and the remaining $0.2 million related to the operations of former subsidiary guarantors of the Senior Notes included in discontinued operations. All discontinued operations were divested by March 31, 2023 and are no longer guarantors of the Senior Notes.






31

The summarized balance sheet at December 31, 2023 was as follows:
(in millions)Parent and Guarantor Subsidiaries
ASSETS
Current assets$407.8 
Non-current assets1,403.1 
Total assets$1,810.9 
LIABILITIES AND EQUITY
Current liabilities$144.3 
Non-current liabilities921.5 
Total liabilities1,065.8 
Redeemable non-controlling interests17.9 
Shareholders’ equity727.2 
Total liabilities and equity$1,810.9 

The table above reflects $9.6 million of current intercompany receivables due to the Guarantor Subsidiaries from the Non-Guarantor Subsidiaries and $8.6 million of current intercompany payables due to the Non-Guarantor Subsidiaries from the Guarantor Subsidiaries within current assets and liabilities.

The Senior Notes are structurally subordinated to the indebtedness and other liabilities of the Non-Guarantor Subsidiaries. The Non-Guarantor Subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to the Senior Notes or the Indenture, or to make any funds available therefor, whether by dividends, loans, distributions or other payments. Any right that the Company or the Guarantor Subsidiaries have to receive any assets of any of the Non-Guarantor Subsidiaries upon the liquidation or reorganization of any Non-Guarantor Subsidiary, and the consequent rights of holders of Senior Notes to realize proceeds from the sale of any of a Non-Guarantor Subsidiary’s assets, would be effectively subordinated to the claims of such Non-Guarantor Subsidiary’s creditors, including trade creditors and holders of preferred equity interests, if any, of such Non-Guarantor Subsidiary. Accordingly, in the event of a bankruptcy, liquidation or reorganization of any of the Non-Guarantor Subsidiaries, the Non-Guarantor Subsidiaries will pay the holders of their debts, holders of preferred equity interests, if any, and their trade creditors before they will be able to distribute any of their assets to the Company or any Guarantor Subsidiaries.
If a Guarantor Subsidiary were to become a debtor in a case under the U.S. Bankruptcy Code or encounter other financial difficulty, under federal or state fraudulent transfer or conveyance law, a court may avoid, subordinate or otherwise decline to enforce its guarantee of the Senior Notes. A court might do so if it is found that when such Guarantor Subsidiary entered into its guarantee of the Senior Notes, or in some states when payments became due under the Senior Notes, such Guarantor Subsidiary received less than reasonably equivalent value or fair consideration and either:
•was insolvent or rendered insolvent by reason of such incurrence;
•was left with unreasonably small or otherwise inadequate capital to conduct our business; or
•believed or reasonably should have believed that it would incur debts beyond its ability to pay.
The court might also avoid the guarantee of the Senior Notes without regard to the above factors, if the court found that the Guarantor Subsidiary entered into its guarantee with actual intent to hinder, delay or defraud our creditors.
A court would likely find that a Guarantor Subsidiary did not receive reasonably equivalent value or fair consideration for its guarantee of the Senior Notes, if such Guarantor Subsidiary did not substantially benefit directly or indirectly from the funding made available by the issuance of the Senior Notes. If a court were to avoid a guarantee of the Senior Notes provided by a Guarantor Subsidiary, holders of the Senior Notes would no longer have any claim against such Guarantor Subsidiary. The measures of insolvency for purposes of these fraudulent transfer or conveyance laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer or conveyance has occurred, such that we cannot predict what standards a court would use to determine whether or not a Guarantor Subsidiary was solvent at the relevant time or, regardless of the standard that a court uses, that the guarantee of a Guarantor Subsidiary would not be subordinated to such Guarantor Subsidiary’s other debt. As noted herein,above, each guarantee provided by a Guarantor Subsidiary includes a provision intended to
32

limit the Guarantor Subsidiary’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its guarantee to be a fraudulent transfer or conveyance. This provision may not be effective to protect those guarantees from being avoided under fraudulent transfer or conveyance law, or it may reduce that Guarantor Subsidiary’s obligation to an amount that effectively makes its guarantee worthless, and we arecannot predict whether a court will ultimately find it to be effective.
On the basis of historical financial information, operating history and other factors, we believe that each of the Guarantor Subsidiaries, after giving effect to the issuance of its guarantee of the Senior Notes when such guarantee was issued, was not insolvent, did not have unreasonably small capital for the business in which it engaged and did not and has not incurred debts beyond its ability to pay such debts as they mature. We cannot assure you, however, as to what standard a court would apply in making these determinations or that a court would agree with our conclusions in this regard.

Reconciliations of Non-GAAP Financial Measures to the Comparable GAAP Measures
We believe that it would be helpful to the readers of the financial statements to understand the impact of certain selected items on our reported income from continuing operations attributable to Enpro Inc. and diluted earnings per share attributable to Enpro Inc. continuing operations, including items that may recur from time to time subject to, andtime. The items adjusted for in these non-GAAP financial measures are presently involvedthose that are excluded by management in other litigation and legal proceedings arising in the ordinary course of business. We believe the outcome of such other litigation and legal proceedings will not have a material adverse effect on our financial condition, results of operations and cash flows. Expensesbudgeting or projecting for administrative and legal proceedings are recorded when incurred.
Environmental
Our facilities and operations are subject to federal, state and local environmental and occupational health and safety requirements of the U.S. and foreign countries. We take a proactive approach in our efforts to comply with environmental, health and safety laws as they relate to our manufacturing operations and in proposing and implementing any remedial plans that may be necessary. We also regularly conduct comprehensive environmental, health and safety audits at our facilities to maintain compliance and improve operational efficiency.
Although we believe past operations were in substantial compliance with the then applicable regulations, we or one or more of our subsidiaries are involved with various remediation activities at 15 sites where the future cost per site for us or our subsidiary is expected to exceed $100,000. Investigations have been completed for 11 sites and are in progress at the other 4 sites. Our costs at 14 of the 15 sites relate to remediation projects for soil and groundwater contamination at former operating facilities that were sold or closed.
Except as described below, we believe that our accruals for specific environmental liabilities are adequate for those liabilities based on currently available information. Actual costs to be incurredperformance in future periods, may vary from estimates becauseas they typically relate to events specific to the period in which they occur. Accordingly, these are some of the inherent uncertaintiesfactors the company uses in evaluating environmental exposures due to unknown and changing conditions, changing government regulations and legal standards regarding liability.
Based on our prior ownership of Crucible Steel Corporation a/k/a Crucible, Inc. (“Crucible”), we may have additional contingent liabilities in one or more significant environmental matters. One such matter, which is included in the 15 sites referred to above, is the Lower Passaic River Study Areainternal evaluations of the Diamond Alkali Superfund Siteoverall performance of its businesses. In addition, management believes these non-GAAP financial measures are commonly used financial measures for investors to evaluate the company’s operating performance and, when read in New Jersey. Crucible operated a steel mill abutting the Passaic River in Harrison, New Jersey from the 1930s until 1974, which was one of many industrial operations on the river dating back to the 1800s. Certain contingent environmental liabilities related to this site were retained by Coltec when Coltec sold a majority interest in Crucible Materials Corporation (the successor of Crucible) in 1985, which liabilities and other legacy non-asbestos liabilities were assumed by our subsidiary, EnPro Holdings, as part of the corporate restructuring of Coltec described below in "— Subsidiary Asbestos Bankruptcies." The United States Environmental Protection Agency (the “EPA”) notified Coltec in September 2003 that it is a potentially responsible party (“PRP”) for Superfund response actions in the lower 17-mile stretch of the Passaic River known as the Lower Passaic River Study Area. Coltec and approximately 70 of the numerous other PRPs, known as the Cooperating Parties Group, are parties to a May 2007 Administrative Order on Consentconjunction with the EPAcompany’s consolidated financial statements, present a useful tool to performevaluate the company’s ongoing operations and performance from period to period. Management acknowledges that there are many items that impact a Remedial Investigation/Feasibility Study (“RI/FS”) of the contaminants in the Lower Passaic River Study Area. The RI/FS was completed and submitted to the EPA at the end of April 2015. The RI/FS recommends a targeted dredge and cap remedy with monitored natural recovery and adaptive management for the Lower Passaic River Study Area. The cost of such remedy is estimated to be $726 million. Previously, on April 11, 2014, the EPA released its Focused Feasibility Study (the “FFS”) with its proposed plan for remediating the lower eight miles of the Lower Passaic River Study Area. The FFS calls for bank-to-bank dredging and capping of the riverbed of that portion of the river and estimates a range of the present value of aggregate remediation costs of approximately $953 million to approximately $1.73 billion, although estimates of the costscompany’s reported results and the timing of costsadjustments reflected in these non-GAAP financial measures are inherently imprecise. On March 3, 2016, the EPA


issued the final Record of Decision (ROD) asnot intended to the remedy for the lower eight miles of the Lower Passaic River Study Area, with the maximum estimated cost being reduced by the EPA from $1.73 billion to $1.38 billion, primarily due to a reduction in the amount of cubic yards of material that will be dredged. In October 2016, Occidental Chemical Corporation, the successor to the entity that operated the Diamond Alkali chemical manufacturing facility, reached an agreement with the EPA to develop the design for this proposed remedy at an estimated cost of $165 million. The EPA has estimated that it will take approximately four years to develop this design.
No final allocations of responsibility have been made among the numerous PRPs that have received notices from the EPA, there are numerous identified PRPs that have not yet received PRP notices from the EPA, and there are likely many PRPs that have not yet been identified. Based on our evaluation of the site, during 2014 we accrued a liability of $3.5 million related to environmental remediation costs associated with the lower eight miles of the Lower Passaic River Study Area, which is our estimate of the low end of a range of reasonably possible costs, with no estimate within the range being a better estimate than the minimum. Our actual remediation costs could be significantly greater than the $3.5 million we accrued. With respect to the upper nine miles of the Lower Passaic River Study Area, we are unable to estimate a range of reasonably possible costs.
Another such matter involves the Onondaga Lake Superfund Site (the “Onondaga Site”) located near Syracuse, New York. Crucible operated a steel mill facility adjacent to Onondaga Lake from 1911 to 1983. The New York State Department of Environmental Conservation (“NYSDEC”) has contacted us and Coltec, as well as other parties, demanding reimbursement of unquantified environmental response costs incurred by NYSDEC and the EPA at the Onondaga Site. NYSDEC and EPA have alleged that contamination from the Crucible facility contributed to the need for environmental response actions at the Onondaga Site. In addition, Honeywell International Inc. (“Honeywell”), which has undertaken certain remediation activities at the Onondaga Site under the supervision of NYSDEC and the EPA, has informed us that it has claims against Coltec related to investigation and remediation at the Onondaga Site. We have entered into tolling agreements with NYSDEC, the EPA and Honeywell. On May 4, 2016, we received from Honeywell a summary of its claims. We have corresponded with Honeywell and have begun discussions with them regarding their claims. In addition, we have received notice from the Natural Resource Trustees for the Onondaga Lake Superfund Site (which are the U.S. Department of Interior, NYSDEC, and the Onondaga Nation) alleging that Coltec is considered to be a potentially responsible party for natural resource damages at the Onondaga Site. At this time, based on limited information we have with respect to estimated remediation costs and the respective allocation of responsibility for remediation among potentially responsible parties, we cannot estimate a reasonably possible range of loss associated with Crucible’s activitiespresent all items that may have affected the Onondaga Site. We have reserved $1.5 million for reimbursement of EPA response costs and certain costs associated with the remedial investigation.
As of September 30, 2017 and December 31, 2016, we had accrued liabilities of $24.8 million and $23.1 million, respectively, for estimated future expenditures relating to environmental contingencies. Given the uncertainties regarding the status of laws, regulations, enforcement policies, the impact of other parties potentially being fully or partially liable, technology and information related to individual sites, we do not believe it is possible to develop an estimate of the range of reasonably possible environmental loss in excess of our recorded liabilities.impacted these results. In addition, based on our prior ownershipthese non-GAAP measures are not necessarily comparable to similarly titled measures used by other companies.

The following presents a reconciliation of Crucible, we may have additional contingent liabilities in one or more significant environmental matters, which are included(i) income from continuing operations attributable to Enpro Inc., net of tax to adjusted net income attributable to Enpro Inc. and adjusted diluted earnings per share and (ii) income from continuing operations attributable to Enpro Inc., net of tax to adjusted EBITDA for the three months ended March 31, 2024 and 2023. The adjustments in the 15 sites referredtable below relate solely to above. Exceptexpenses attributable to Enpro Inc. and have been adjusted to remove any amounts attributable to non-controlling interests.



























33


Reconciliation of Income from Continuing Operations to Adjusted Income from Continuing Operations and Adjusted Diluted Earnings Per Share

Three Months Ended March 31,
20242023
(in millions, except per share amounts)$Average common shares outstanding, dilutedPer Share$Average common shares outstanding, dilutedPer Share
Income from continuing operations$12.5 21.1$0.59 $26.0 20.9$1.24 
Income tax expense1.8 8.1 
Income from continuing operations before income taxes14.3 34.1 
Adjustments from selling, general, and administrative:
Acquisition expenses3.3 — 
Non-controlling interest compensation allocations2
— 0.3 
Amortization of acquisition-related intangible assets18.6 17.2 
Adjustments from other operating expense and cost of sales:
Restructuring expense0.8 0.8 
Amortization of the fair value adjustment to acquisition date inventory1.7 — 
Adjustments from other non-operating expense:
Environmental reserve adjustment0.2 0.1 
Costs associated with previously disposed businesses0.3 0.2 
Pension income— 0.4 
Foreign exchange losses related to the divestiture of a discontinued operation3
0.5 0.7 
Long-term promissory note reserve4
4.5 — 
Other adjustments:
Other5
— 0.4 
Adjusted income from continuing operations before income taxes44.2 54.2 
Adjusted income tax expense6
(11.1)(13.5)
Adjusted income from continuing operations$33.1 21.1$1.57 1$40.7 20.9$1.95 1
1 Adjusted diluted earnings per share amounts were calculated by dividing by the weighted-average shares of diluted common stock outstanding during the periods.

2 Non-controlling interest compensation allocation represents compensation expense adjustment associated with respect to specific Crucible environmental matters for which we have accrued a portion of the liability set forth above, we are unablerollover equity from the acquisition of Alluxa that was subject to estimate a reasonably possible rangereduction for certain types of lossemployment terminations of the Alluxa sellers and is directly related to these contingent liabilities. See Note 17 to the Consolidated Financial Statements for additional information regarding our environmental contingenciesterms of the acquisition. This expense was recognized as compensation expense over the term of the put and see the section titled “Crucible Steel Corporation a/k/a Crucible, Inc.” in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.
In addition to the Crucible environmental matters discussed above, Coltec has received a notice from the EPA asserting that Coltec is a potentially responsible party under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") as the successor to a former operator in 1954 and 1955 of two uranium mines in Arizona. On October 15, 2015, Coltec received another notice from the EPA asserting that Coltec is a potentially responsible party as the successor to the former operator of six additional uranium mines in Arizona. In 2015, we reserved $1.1 million for the minimum amount of probable losscall option associated with the first two mines identified by the EPA, including the cost of the investigative work to be conducted at such sites. During the second quarter of 2016, we reserved an additional $1.1 million for the minimum amount of probable loss associated with the six additional mines, which includes additional estimated costs of investigative work to be conducted at the eight mines. At September 30, 2017, we increased the reserve by $1.9 million to a balance of $4.0 millionacquisition unless certain employment terminations occurred. The Alluxa non-controlling interests were acquired in anticipation of entering into an agreement with the EPA to perform investigations to determine the nature and extent of contamination at each site with the investigations to be completed by the end of 2019. We cannot at this time estimate a reasonably possible range of loss associated with remediation or other incremental costs related to these mines.February 2024.
3In connection with the formersale 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 is denominated in a foreign currency. As a result of this note, we have recorded losses due to the changes in the foreign exchange rate. The outstanding note is hedged in order to minimize related gains or losses.
34


4We issued a long-term promissory note in connection to the sale of a divisiondivested business. As part of Colt Industries Inc, located in Water Valley, Mississippi, which Coltec divested to BorgWarner, Inc. ("BorgWarner") in 1996, Coltec has been managing trichloroethylene soil and groundwater contamination at the site. In February 2016, the Mississippi Department of Environmental Quality (MDEQ) issued an order


against EnPro requiring evaluation of potential vapor intrusion into residential properties and commercial facilities located over the groundwater plume as well as requiring additional groundwater investigation and remediation. MDEQ performed the initial vapor intrusion investigations at certain residential and commercial sites, with the findings all being below the applicable screening level. In April 2016, the parties entered into a new order including negotiated time frames for groundwater remediation. Pursuant to that order, MDEQ performed a second round of seasonable vapor intrusion sampling beginning in August 2016. Results from sampling outside of three residences were above screening levels. Follow-up sampling directly underneath those residences (either sub-slab or in crawl spaces) were all below applicable screening levels. Two separate sampling events at another residence were also below applicable screening levels. Due to an increasing trend in vapor concentrations, MDEQ requested that we develop and implement initial corrective action measures to address vapor intrusion resulting from groundwater contamination in this residential area. These measures have been developed and approved by MDEQ. Implementationour regular review of the approved measures will begin when access is obtained to private properties where the corrective action system will be located. In addition, vapor intrusion sampling at the manufacturing facility owned by BorgWarner was conducted duringnote, in the first quarter of 2017. The results showed exceedances of screening levels at various areas in2024 we concluded a reserve was needed for expected credit losses. We will continue to monitor the plantnote regularly and exceedances of levels requiring responsive actions in a limited area of the plant. Implementation of the immediate responsive actions has been completed and corrective action consisting of a permanent vapor intrusion remediation system became operational in May 2017. We are also continuing soil and groundwater investigation work around the outside of the plant and developing corrective action plans for both the contamination remaining at the plant as well as contamination that has migrated off-site. All of the work to be performed at the residential area, the plant and off-site is set forth in an agreed Order that we and MDEQ entered into on September 11, 2017. During the quarter ended March 31, 2016, we established an additional $1.3 million reserve with respect to this matter. During the quarter ended March 31, 2017 we reserved an additional $3.3 million for further investigation, additional remediation, long-term monitoring costs, and legal fees to support regulatory compliance for the above noted actions. The remaining reserve at September 30, 2017 is $1.8 million. As the corrective actions are implemented and their performance monitored, further modificationsmake adjustments to the remediation system at the site may be required which may result in additional costs beyond the current reserve.
On April 7, 2017, the State of Mississippi through its Attorney General filed suit against EnPro, OldCo and Goodrich Corporation in Mississippi Circuit Court in Yalobusha County seeking recovery of all costs and expenses to be incurred by the State in remediating the groundwater contamination, punitive damages and attorney’s fees. We plan to aggressively defend this case. The additional reserve established in the quarter ended March 31 2017, noted above, does not include any estimate of contingent loss associated with this lawsuit other than due to remediation and other actions with respect to this siteas needed based on existing MDEQ ordersknown facts and the expected order with MDEQ described above. In addition, it is our understanding that area homeowners, owners of commercial facilities and the local county government and possibly other private parties and individuals have engaged or may engage legal counsel to separately evaluate possible legal action relating to potential vapor intrusion and groundwater contamination. We have been further advised that certain of these parties intend to file legal action based on these claims. Based upon limited information regarding any further remediation or other actions that may be required at the site, we cannot estimate a minimum loss estimate or a reasonably possible range of loss for remediation costs.circumstances.
Colt Firearms and Central Moloney
We may have contingent liabilities related to divested businesses for which certain of our subsidiaries retained liability or are obligated under indemnity agreements. These contingent liabilities include, but are not limited to, potential product liability and associated claims related to firearms manufactured prior to March 1990 by Colt Firearms, a former operation of Coltec, and for electrical transformers manufactured prior to May 1994 by Central Moloney, another former Coltec operation. We believe that these potential contingent liabilities are not material to our financial condition, results of operation and cash flows. Ongoing obligations with regard to workers’ compensation, retiree medical and other retiree benefit matters that relate to Coltec’s periods of ownership of these operations5 Other adjustments are included in selling, general, and administrative, cost of sales, and other liabilitiesoperating expenses on the consolidated statements of operations.

6 The adjusted income tax expense presented above is calculated using a normalized company-wide effective tax rate excluding discrete items of 25.0%.
Reconciliation of Income from Continuing Operations to Adjusted EBITDA
Three Months Ended
March 31,
(in millions)20242023
Income from continuing operations$12.5 $26.0 
Adjustments to arrive at earnings before interest, income taxes, depreciation, amortization, and other selected items (Adjusted EBITDA):
Interest expense, net8.2 7.9 
Income tax expense1.8 8.1 
Depreciation and amortization expense24.6 23.6 
Restructuring expense0.8 0.8 
Environmental reserve adjustments0.2 0.1 
Costs associated with previously disposed businesses0.3 0.2 
Acquisition expenses3.3 — 
Pension income— 0.4 
Non-controlling interest compensation allocation1
— 0.4 
Amortization of the fair value adjustment to acquisition date inventory1.7 — 
Foreign exchange losses related to the divestiture of a discontinued operation2
0.5 0.7 
Long-term promissory note reserve3
4.5 — 
Other— 0.4 
Adjusted EBITDA$58.4 $68.6 
1 Non-controlling interest compensation allocation represents compensation expense adjustment associated with a portion of the rollover equity from the acquisition of Alluxa that was subject to reduction for certain types of employment terminations of the Alluxa sellers and is directly related to the terms of the acquisition. This expense was recognized as compensation expense over the term of the put and call option associated with the acquisition unless certain employment terminations occurred. The Alluxa non-controlling interests were acquired in our Consolidated Balance Sheets.February 2024.
Crucible Steel Corporation a/k/2In connection with the sale of GGB, accounted for as a Crucible, Inc.
Crucible, which was engaged primarilydiscontinued operation, in the manufacturefourth quarter of 2022, we issued an intercompany note between a domestic and distribution of high technology specialty metal products, was a wholly owned subsidiary of Coltec until 1983 when its assets and liabilities were distributed to a new Coltec subsidiary, Crucible Materials Corporation. Coltec sold a majority of the outstanding shares of Crucible Materials Corporation in 1985 and divested its remaining minority interest in 2004. Crucible Materials Corporation filed for Chapter 11 bankruptcy protection in May 2009 andforeign entity that is no longer conducting operations. We have certain ongoing obligations, which are included in other liabilities in our Consolidated Balance Sheets, including workers’ compensation, retiree medical and other retiree benefit matters, related to Coltec’s period of ownership of Crucible. Based on Coltec’s prior ownership of Crucible, we may have certain other contingent liabilities, including liabilities in one or more significant environmental matters included in the matters discussed in “Environmental” above. We are investigating these matters. Except with respect to those matters for which we have an accrued liability as discussed in “Environmental” above, we are unable to estimate a reasonably possible range of loss


related to these contingent liabilities. See Note 17 to the Consolidated Financial Statements for information about certain liabilities relating to Coltec’s ownership of Crucible.
BorgWarner
A subsidiary of BorgWarner has asserted claims against our subsidiary, GGB France E.U.R.L. (“GGB France”), regarding certain bearings supplied by GGB France to BorgWarner and used by BorgWarner in manufacturing hydraulic control units included in motor vehicle automatic transmission units, mainly that the bearings caused performance problems with and/or damage to the transmission units, leading to associated repairs and replacements. BorgWarner and GGB France participateddenominated in a technical review before a panel of experts to determine, among other things, whether there were any defects in such bearings that were a cause of the damages claimed by BorgWarner, including whether GGB France was required to notify BorgWarner of a change in the source of a raw material used in the manufacture of such bearings. This technical review was a required predicate to the commencement of a legal proceeding for damages. In June 2016, the expert panel issued a preliminary report on technical matters considered by the experts. This preliminary report concluded that the change in the source of the raw material was the technical cause of the performance problems claimed by BorgWarner and that GGB France was obligated to notify BorgWarner regarding the change. Separately, in November 2016, the expert panel issued a preliminary report on related financial matters. The expert panel issued a final report on technical and financial matters on April 6, 2017. In the final report, the expert panel concluded that GGB France had a duty to notify BorgWarner regarding the change of source of raw material used in the bearings, but that the failure of the hydraulic control units was attributable to both the raw material supplier change and the insufficient design of the units by BorgWarner. The expert panel provided detail on a possible allocation of damages alleged to have been incurred by BorgWarner and its customer. Although the language of the report is not clear, the report appears to note a potential allocation of recoverable damages 35% to BorgWarner and 65% to GGB France. It also indicates that, though it is for a court to ultimately determine, the aggregate damages to BorgWarner and its customer was in the range of 7.9 million EUR to 10.2 million EUR, with 1.8 million EUR to 2.1 million EUR of this range being for damages to BorgWarner and the remainder being for damages to its customer. The experts noted the lower end of the range as being more likely and noted a lack of sufficient evidence provided substantiating the customer's damages. Applying a 65% liability allocation to GGB to the total aggregate range yields a range of 5.1 million EUR to 6.6 million EUR. In the final report, the expert panel deferred to a court the determination of whether GGB France had breached its contractual obligations to BorgWarner. On October 25, 2017, BorgWarner initiated a legal proceeding against GGB with respect to this matter by filing a writ of claim with the Commercial Court of Brive, France.
We continue to believe that GGB France has valid factual and legal defenses to these claims and we are vigorously defending these claims. Among GGB France’s legal defenses are a contractual disclaimer of consequential damages, which, if controlling, would limit liability for consequential damages and provide for the replacement of the bearings at issue, at an aggregate replacement value we estimate to be approximately 0.4 million EUR; that the determination of any duty to notify of the change in the source of the raw material is a legal matter to be determined by the presiding court; and the insufficiency of evidence of damage to BorgWarner's customer provided to the expert panel. Based on the final report from the expert panel and GGB France's legal defenses described above, we estimate GGB France’s reasonably possible range of loss associated with this matter to be approximately 0.4 million EUR to 6.6 million EUR plus a potential undetermined amount of apportioned proceeding expenses, with no amount within the range being a better estimate than the minimum of the range. Accordingly, GGB France has retained the accrual of 0.4 million EUR associated with this matter, which was established in the second quarter of 2016.
Subsidiary Asbestos Bankruptcies
The historical business operations of GST LLC and Anchor resulted in a substantial volume of asbestos litigation in which plaintiffs alleged personal injury or death as a result of exposure to asbestos fibers in products produced or sold by GST LLC or Anchor, together with products produced and sold by numerous other companies. GST LLC and Anchor manufactured and/or sold industrial sealing products that contained encapsulated asbestos fibers. Other of our subsidiaries that manufactured or sold equipment that may have at various times in the past contained asbestos-containing components have also been named in a number of asbestos lawsuits, but neither we nor any of our subsidiaries other than GST LLC and Anchor had ever paid an asbestos claim.
On the GST Petition Date, GST LLC, Garrison and Anchor filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court. The filings were the initial step in a claims resolution process. As contemplated by the Joint Plan, on the OldCo Petition Date, OldCo, as the successor by merger to Coltec, filed a Chapter 11 bankruptcy petition with the Bankruptcy Court.
foreign currency. As a result of this note, we have recorded losses due to the initiationchanges in the foreign exchange rate. The outstanding note is hedged in order to minimize related gains or losses.
3 We issued a long-term promissory note in connection to the sale of a divested business. As part of our regular review of the GST Chapter 11 Casenote, in the first quarter of 2024 we concluded a reserve was needed for expected credit losses. We will continue to monitor the note regularly and the OldCo Chapter 11 Case, the resolution of asbestos claims against these companies was subjectmake adjustments to the jurisdiction of the Bankruptcy Court. The filing of the GST Chapter 11 Case automatically stayed the prosecution of pending asbestos bodily injuryreserve as needed based on known facts and wrongful death lawsuits, and initiation of new suchcircumstances.



lawsuits, against GST. Further, the Bankruptcy Court issued an order enjoining plaintiffs from bringing or further prosecuting asbestos products liability actions against affiliates of GST, including EnPro, Coltec and all their subsidiaries, during the pendency of the GST Chapter 11 Case, subject to further order. As a result, exceptAdjusted EBITDA as a result of the resolution of appeals from verdicts rendered prior to the GST Petition Date and the elimination of claims as a result of information obtainedpresented in the GST Chapter 11 Case,table above also represents the numbers of asbestos claims pending against our subsidiaries had not changed since the GST Petition Date.
On March 17, 2016, EnPro announced that it had reached a comprehensive settlement (the “Consensual Settlement”) to resolve current and future asbestos claims. The settlement was reached with the court-appointed committee representing current asbestos claimants (the “GST Committee”) and the court-appointed legal representative of future asbestos claimants (the “GST FCR”) in the GST Chapter 11 Case. Representatives for current and future asbestos claimants (the “Coltec Representatives”) against Coltec also joined in the settlement. Under the settlement, the GST Committee, the GST FCR and the Coltec Representatives agreed to join GST and Coltec in proposing the Joint Plan and to ask asbestos claimants and the court to approve the Joint Plan. The Joint Plan was filed with the Bankruptcy Court on May 20, 2016 and amendments to the Joint Plan were filed with the Bankruptcy Court on June 21, 2016, July 29, 2016, December 2, 2016, April 3, 2017, May 14, 2017, May 19, 2017, June 8, 2017, and June 9, 2017. As so modified, the Joint Plan superseded all prior plans of reorganization filed by GST with the Bankruptcy Court. The Joint Plan was consummated and became effective at 12:01 a.m. on July 31, 2017 (the “Joint Plan Effective Date”).
Before the Joint Plan could be consummated, it was required to be approved by the Bankruptcy Court and the United States District Court for the Western District of North Carolina (the "District Court") after a vote of GST asbestos claimants and Coltec asbestos claimants in favor of the Joint Plan by 75% or more in number and at least two-thirds (2/3) in dollar amount of claims that were actually voted.
The Consensual Settlement and Joint Plan provided that the Joint Plan was a prepackaged plan of reorganizationdefined as to Coltec/OldCo and that Coltec would undertake a corporate restructuring (the "Coltec Restructuring") and commence a Chapter 11 case to obtain confirmation of the Joint Plan if Coltec asbestos claimants and GST asbestos claimants voted in sufficient numbers to approve the Joint Plan. Accordingly, the Coltec asbestos claimants and GST asbestos claimants were solicited simultaneously for their vote on the approval of the Joint Plan prior to the filing of a Chapter 11 case by Coltec or OldCo. The solicitation process to obtain approval of the asbestos claimants was completed successfully on December 9, 2016, with 95.85% in number and 95.80% in amount of claims held by asbestos claimants casting valid ballots voting in favor of approval of the Joint Plan.
The Joint Plan and Consensual Settlement contemplated that, as an appropriate and necessary step to facilitate the implementation of the Consensual Settlement and not to delay or hinder creditors or the resolution of claims, Coltec would, subject to the receipt of necessary consents, undergo the Coltec Restructuring in which all of its significant operating assets and subsidiaries, which included each of our major business units, would be distributed to a new direct EnPro subsidiary, EnPro Holdings, Inc. ("EnPro Holdings"). EnPro Holdings would also assume all of Coltec’s non-asbestos liabilities. The Coltec Restructuring was completed on December 31, 2016, and included the merger of Coltec with and into OldCo, which was a direct subsidiary of EnPro Holdings. OldCo, as the restructured entity, retained responsibility for all asbestos claims and rights to certain insurance assets of Coltec, as well as the business operated by our EnPro Learning System, LLC subsidiary (“EnPro Learning System”), which provides occupational safety training and consulting services to third parties. EnPro Learning System was also merged into OldCo.
On May 15, 2017, the Bankruptcy Court announced its decision recommending that the District Court confirm the Joint Plan. On June 12, 2017, the District Court issued an order confirming the Joint Plan. Prior to the Joint Plan Effective Date, the period for the filing of notice of appeal of the District Court’s confirmation order expired, with no appeal having been filed.
Pursuant to the Joint Plan, the Trust was established prior to the Joint Plan Effective Date. As contemplated by the Joint Plan, the Trust was funded (i) with aggregate cash contributions by GST LLC and Garrison of $350 million made immediately prior to the Joint Plan Effective Date, (ii) by the contribution made by OldCo immediately prior to the Joint Plan Effective Date of $50 million in cash and an option, exercisable one year after the Joint Plan Effective Date, permitting the Trust to purchase for $1 shares of EnPro common stock having a value of $20 million (with OldCo having the right to call the option for payment of $20 million in cash at any time prior to the first anniversary of the Joint Plan Effective Date, with the Trust having the right to put the option to OldCo for payment by OldCo of $20 million on the day prior to the first anniversary of the Joint Plan Effective Date and with the option terminating on the second anniversary of the Joint Plan Effective Date in return for payment to the Trust of $20 million), and (iii) by the obligations"EBITDA" under the Joint Plan of OldCo to make a deferred contribution of $40 million in cash and of GST LLC and Garrison to make an aggregate deferred contribution of $20 million in cash no later than one year after the Joint Plan Effective Date. These deferred contributions are guaranteed by EnPro and secured by a pledge of 50.1% of the outstanding voting equity interests of GST LLC and Garrison.Indenture.


TheJoint Plan permanently resolves current and future asbestos claims against GST LLC, Garrison and OldCo, as the successor by merger to Coltec, and injunctions issued under the Joint Plan protect all of EnPro and its subsidiaries from those claims, which claims are enjoined under Section 524(g) of the U.S. Bankruptcy Code. Under the Joint Plan, the Trust has assumed responsibility for all present and future asbestos claims arising from the operations or products of GST LLC, Garrison or Coltec/OldCo. Under the Joint Plan, EnPro, through its subsidiaries, retained ownership of OldCo, GST LLC and Garrison. Anchor, which has not conducted business operations for many years and had nominal assets, has been dissolved.
The Consensual Settlement included as a condition to our obligations to proceed with the settlement that EnPro, Coltec, GST and Garlock of Canada Ltd (an indirect subsidiary of GST LLC) enter into a written agreement, to be consummated concurrently with the consummation of the Joint Plan on the Joint Plan Effective Date, with the Canadian provincial workers’ compensation boards (the “Provincial Boards”) resolving remedies the Provincial Boards may possess against Garlock of Canada Ltd, GST, Coltec or any of their affiliates, including releases and covenants not to sue, for any present or future asbestos-related claim, and that the agreement is either approved by the Bankruptcy Court following notice to interested parties or the Bankruptcy Court concludes that its approval is not required. On November 11, 2016, we entered into such an agreement (the “Canadian Settlement”) with the Provincial Boards to resolve current and future claims against EnPro, GST, Garrison, Coltec, and Garlock of Canada Ltd for recovery of a portion of amounts the Provincial Boards have paid and will pay in the future under asbestos-injury recovery statutes in Canada for claims relating to asbestos-containing products. The Canadian Settlement provides for an aggregate cash settlement payment to the Provincial Boards of $20 million (U.S.), payable on the fourth anniversary of the effective date of the Joint Plan. Under the Canadian Settlement, after the effective date of the Joint Plan, the Provincial Boards had the option of accelerating the payment, in which case the amount payable would be discounted from the fourth anniversary of the effective date of the Joint Plan to the payment date at a discount rate of 4.5% per annum. In return, the Provincial Boards have separately agreed to provide a covenant not to sue EnPro, any of EnPro’s affiliates or the Trust for any present or future asbestos-related claims. On February 3, 2017, the Bankruptcy Court issued an order approving the Canadian Settlement. Prior to the Joint Plan Effective Date, the Provincial Boards provided notice of their election to accelerate the payment. After application of the discount resulting from such acceleration of payment, the settlement payment of approximately $16.7 million (U.S.) was made to the Provincial Boards on August 11, 2017.
Under the Consensual Settlement and Joint Plan, GST and OldCo retained their rights to seek reimbursement under insurance policies for any amounts they have paid in the past to resolve asbestos claims and for $480 million in aggregate contributions they will make to the Trust under the Joint Plan. These policies include a number of primary and excess general liability insurance policies that were purchased by Coltec and were in effect prior to January 1, 1976 (the “Pre-Garlock Coverage Block”). The policies provide coverage for “occurrences” happening during the policy periods and cover losses associated with product liability claims against Coltec and certain of its subsidiaries. Asbestos claims against GST are not covered under these policies because GST was not a Coltec subsidiary prior to 1976. The Joint Plan provides that OldCo may retain the first $25 million of any settlements and judgments related to insurance policies in the Pre-Garlock Coverage Block and OldCo and the Trust will share equally in any settlements and judgments OldCo may collect in excess of $25 million. As of September 30, 2017, approximately $44.4 million of available products hazard limits or insurance receivables arising from settlements with insurance carriers existed under primary and excess general liability insurance policies other than the Pre-Garlock Coverage Block (the "Garlock Coverage Block") from solvent carriers with investment grade ratings.
On June 12, 2017, the District Court approved several settlements with insurance carriers. First, with respect to available products hazard limits and insurance receivables covering claims against both GST and OldCo under the Garlock Coverage Block, the District Court approved settlements with two carriers that will pay their full aggregate remaining policy limits of approximately $18.8 million over a three-year period following consummation of the Joint Plan. A previously disclosed agreement with another group of carriers calls for the payment of $11 million. EnPro expects that the full amount of remaining policy limits and insurance receivables (approximately $19.2 million) in the Garlock Coverage Block will be received either through settlements or in reimbursement of GST’s plan funding as payments are made by the asbestos trust.
In addition, the District Court approved settlements with two insurance carriers in the Pre-Garlock Coverage Block that permit the recovery of some of OldCo’s $110 million of contributions to the Trust under the Joint Plan. Under the settlements, the two carriers were obligated to make one-time cash payments to OldCo in the aggregate amount of approximately $19.0 million within 30 days of consummation of the Joint Plan, which payments were made in August 2017. In addition, the District Court approved a settlement with the successors to Coltec’s Fairbanks Morse Pump business in which the Fairbanks Morse Pump successors agreed to pay OldCo $6 million in three installments over nine years following consummation of the Joint Plan, with the successor entities being entitled to recoup up to the full amount of their payments to OldCo from collections expected to be received from an additional insurance carrier that issued general liability policies to Coltec prior to January 1, 1976. OldCo and the Trust will share equally in any collections above that $6 million amount. OldCo estimates that the carrier will owe approximately $11 million in reimbursements over the life of the Trust for its share of Coltec claims (which includes Fairbanks Morse Pump claims). In August 2017, the Fairbanks Morse Pump successors and EnPro Holdings, as the successor to OldCo, agreed to permit accelerated settlements of the installments upon the lump sum payment


of $3 million made to EnPro Holdings in August 2017, with the Fairbanks Morse Pump successors surrendering any right to recoup the amount of such payment from the additional insurance carrier that issued general liability policies to Coltec prior to January 1, 1976.
At September 30, 2017, we had $44.4 million of insurance coverage we believe is available to cover GST asbestos claims payments and certain expense payments, including contributions to the Trust. GST has collected insurance payments totaling $152.3 million since the GST Petition Date. We consider the $44.4 million of available insurance coverage remaining to be of high quality because the insurance policies are written or guaranteed by U.S.-based carriers whose credit rating by S&P is investment grade (BBB-) or better, and whose AM Best rating is excellent (A-) or better. Of the $44.4 million, $8.3 million is allocated to claims that were paid by GST LLC prior to the initiation of the Chapter 11 Case and submitted to insurance companies for reimbursement, and the remainder is allocated to pending and estimated future claims. There are specific agreements in place with carriers covering $29.4 million of the remaining available coverage. Based on those agreements and the terms of the policies in place and prior decisions concerning coverage, we believe that all of the $44.4 million of insurance proceeds will ultimately be collected, although there can be no assurance that the insurance companies will make the payments as and when due. Based on those agreements and policies, some of which define specific annual amounts to be paid and others of which limit the amount that can be recovered in any one year, we anticipate that $19.2 million will be received either through settlements or in reimbursements of GST's plan funding as payments are made by the asbestos trust. Assuming the insurers pay according to the agreements and policies, we anticipate that the following amounts should be collected in the years set out below:
2018 – $16.8 million
2019 – $5.9 million
2020 – $2.5 million
We are a party to legal proceedings initiated in August 2017 in the District Court with two insurers that collectively provide $15 million of coverage in the Garlock Coverage Block. The legal proceedings were initiated by one of the insurers seeking to compel arbitration of issues under its policy and, alternatively, a determination that its policy does not cover asbestos claims. We have counterclaimed, seeking a determination that the policy covers asbestos claims and that the insurer breached the terms of its policy by failing to provide coverage for these claims. We joined the second insurer in this action and are seeking similar relief against it. The magistrate judge recently issued a decision denying the petitioning insurer's motion to compel arbitration, and holding that the arbitration clause in the policy was deleted by an endorsement. We expect the insurer to seek review of that ruling by the district court judge.
GST LLC has received $8.8 million of insurance recoveries from insolvent carriers since 2007, and may receive additional payments from insolvent carriers in the future. No anticipated insolvent carrier collections are included in the $44.4 million of anticipated collections. The insurance available to cover current and future asbestos claims is from comprehensive general liability policies that cover OldCo, as the successor to Coltec, and certain of its other subsidiaries in addition to GST LLC for periods prior to 1985 and therefore could be subject to potential competing claims of other covered subsidiaries and their assignees.

Item 3.Quantitative and Qualitative Disclosures About Market Risk
Item 3.     Quantitative and Qualitative Disclosures About Market Risk
We are exposed to certain market risks as part of our ongoing business operations, including risks from changes in foreign currency exchange rates and interest rates that could impact our financial condition, results of operations and cash flows. We manage our exposure to these and other market risks through regular operating and financing activities and through the use of derivative financial instruments. We intend to use derivative financial instruments as risk management tools and not
35

for speculative investment purposes. For information about our interest rate risk, see “Quantitative and Qualitative Disclosures about Market Risk – Interest Rate Risk” in our annual report on Form 10-K for the year ended December 31, 2016, and the following section.2023.
Foreign Currency Risk
We are exposed to foreign currency risks that arise from normal business operations. These risks include the translation of local currency balances ofon our foreign subsidiaries,subsidiaries’ balance sheets, intercompany loans with foreign subsidiaries and transactions denominated in foreign currencies. Our objective isWe strive to control our exposure to these risks and limit the volatility in our reported earnings due to foreign currency fluctuations through our normal operating activities and, where appropriate, through derivative instruments. We periodically enter into contracts to hedge forecasted transactions that are denominated in foreign currencycurrencies. We regularly enter into a forward contracts and option contracts.contract to hedge a 95 million Euro exposure on an intercompany note agreement related to proceeds from the GGB sale allocated to foreign subsidiaries. We expect this intercompany note to be settled during 2024. The notional amount of foreign exchange contracts hedgingwas $108.0 million and $110.5 million March 31, 2024 and December 31, 2023 respectively. All foreign exchange contracts outstanding at March 31, 2024 expired in April 2024.
The earnings impact of these foreign exchange contract are recorded in selling, general and administrative expense in the Consolidated Statements of Operations. The balances of foreign exchange derivative assets are recorded in other current assets and the balances of foreign exchange derivative liabilities are recorded in accrued expenses in the Consolidated Balance Sheets.
In May 2019, we entered into additional cross-currency swap agreements with a notional amount of $100.0 million to manage foreign currency transactionsrisk by effectively converting a portion of the interest payments related to our fixed-rate USD-denominated Senior Notes, including the semi-annual interest payments thereunder, to interest payments on fixed-rate Euro-denominated debt of 89.6 million EUR with a weighted average interest rate of 3.5%, with interest payment dates of April 15 and October 15 of each year. The swap agreement matures on October 15, 2026.
During the term of the additional swap agreement, we will receive semi-annual payments from the counterparties due to the difference between the interest rate on the Senior Notes and the interest rate on the Euro debt underlying the additional swap agreements. There was $6.9 millionno principal exchange at the inception of the arrangements, and $2.8 millionthere will be no exchange at September 30, 2017maturity. At maturity (or earlier at our option), we and December 31, 2016, respectively.



the counterparties will settle the additional swap agreements at their fair value in cash based on the aggregate notional amount and the then-applicable currency exchange rate compared to the exchange rate at the time the additional swap agreements were entered into.
Commodity Risk
We source a wide variety of materials and components from a network of global suppliers. While such materials are typically available from numerous suppliers, commodity raw materials such as steel, engineered plastics, copper and polymers, are subject to price fluctuations, which could have a negative impact on our results. We strive to pass along such commodity price increases to customers to avoid profit margin erosion and utilize lean initiatives to further mitigate the impact of commodity raw material price fluctuations as we achieve improved efficiencies. We do not hedge commodity risk with any market risk sensitive instruments.

Item 4.Controls and Procedures
Item 4.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). The purpose of our disclosure controls and procedures is to provide reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act, including this report, is recorded, processed, summarized and reported within the time periods specified, and that such information is accumulated and communicated to our management to allow timely decisions regarding disclosure.
Based on the controls evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures are effective to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified, and that
36

management will be timely alerted to material information required to be included in our periodic reports filed with the Securities and Exchange Commission.
In addition, no change in our internal control over financial reporting has occurred during the quarter ended September 30, 2017,March 31, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

37


PART II
OTHER INFORMATION

Item 1.    Legal Proceedings.
Item 1.
Legal Proceedings.
A description of environmental and other legal matters is included in Note 1715 to the Consolidated Financial Statements in this report, which is incorporated herein by reference. Those matters are also discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations. In addition to the matters noted and discussed in those sections of this report, we are from time to time subject to, and are presently involved in, other litigation and legal proceedings arising in the ordinary course of business. We believe that the outcome of such other litigation and legal proceedings will not have a material adverse effect on our financial condition, results of operations and cash flows.

Item 1A.
Risk Factors.

Increased costs for raw materials, the termination of existing supply agreements or disruptions of our supply chain could have a material adverse effect on our business.
The prices for some of the raw materials we purchase is subject to increase from time to time. While we have been successful in passing along some or all of these higher costs, there can be no assurance we will be able to continue doing so without losing customers. Additionally, our Power Systems segment has entered into long-term contracts to manufacture and sell engines and generator sets which do not allow for price adjustments to recover additional costs resulting from increases in the costs of materials and components during the contract period, and accordingly material increases in relevant costs could adversely affect the profitability of these long-term contracts and the profits of that segment. Similarly, the loss of a key supplier or the unavailability of a key raw material could adversely affect our business, financial condition, results of operations and cash flows.

We conduct a significant amount of our sales and operating activities outside of the U.S., which subjects us to additional business risks, including foreign exchange risks, that may cause our profitability to decline.
Because we sell our products in a number of foreign countries, we are subject to risks associated with doing business internationally. In 2016, we derived approximately 43% of our net sales from sales of our products outside of the U.S. In addition, we operate 57 primary manufacturing facilities located in 12 countries, including the U.S. Our sales and operating activities outside of the U.S. are, and will continue to be, subject to a number of risks, including:

unfavorable fluctuations in foreign currency exchange rates, including long-term contracts denominated in foreign currencies;
•adverse changes in foreign tax, legal and regulatory requirements;
•difficulty in protecting intellectual property;
government embargoes, 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;
cultural norms and expectations that may sometimes be inconsistent with our Code of Conduct and our requirements about the manner in which our employees, agents and distributors conduct business;
•differing labor regulations;
political and economic instability, including instabilities associated with European sovereign debt uncertainties and the future continuity of membership of the European Union; and
•acts of hostility, terror or war.
Any of these factors, individually or together, could have a material adverse effect on our business, financial condition, results of operations and cash flows. For example, tapered roller bearings manufactured at our facilities in China that are imported into the United States before re-sale to customers are potentially subject to “anti-dumping” duties imposed by the U.S. Department of Commerce based on its periodic review and analysis of the manufacturing and selling activities of larger Chinese suppliers of these products. Such duties, if imposed, could be at levels that could materially adversely affect the commercial competitiveness of these products, which could adversely affect the business and results of operations of our Sealing Products segment.
Our operations outside the United States require us to comply with a number of United States and international regulations. For example, our operations in countries outside the United States are subject to the Foreign Corrupt Practices Act


(the “FCPA”), which prohibits United States companies or their agents and employees from providing anything of value to a foreign official for the purposes of influencing any act or decision of these individuals in their official capacity to help obtain or retain business, direct business to any person or corporate entity, or obtain any unfair advantage. Our activities in countries outside the United States create the risk of unauthorized payments or offers of payments by one of our employees or agents that could be in violation of the FCPA, even though these parties are not always subject to our control. We have internal control policies and procedures and have implemented training and compliance programs with respect to the FCPA. However, we cannot assure that our policies, procedures and programs always will protect us from reckless or criminal acts committed by our employees or agents. In the event that we believe or have reason to believe that our employees or agents have or may have violated applicable anti-corruption laws, including the FCPA, we may be required to investigate or have outside counsel investigate the relevant facts and circumstances. In addition, we are subject to and must comply with all applicable export controls and economic sanctions laws and embargoes imposed by the United States and other various governments. Changes in export control or trade sanctions laws may restrict our business practices, including cessation of business activities in sanctioned countries or with sanctioned entities, and may result in modifications to compliance programs and increase compliance costs, and violations of these laws or regulations may subject us to fines, penalties and other sanctions, such as loss of authorizations needed to conduct aspects of our international business or debarments from export privileges. Violations of the FCPA or export controls or sanctions laws and regulations may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition.
We intend to continue to pursue international growth opportunities, which could increase our exposure to risks associated with international sales and operations. As we expand our international operations, we may also encounter new risks that could adversely affect our revenues and profitability. For example, as we focus on building our international sales and distribution networks in new geographic regions, we must continue to develop relationships with qualified local agents, distributors and trading companies. If we are not successful in developing these relationships, we may not be able to increase sales in these regions.
Failure to properly manage these risks could adversely affect our business, financial condition, results of operations and cash flows.

The strategy of our Power Systems segment to deliver power generating systems depends on our ability to outsource various elements of the scope of this work to third parties, which may expose us to the business risks of our suppliers and subcontractors, which could have a material adverse impact on its business and results of operations.
Our Power Systems segment is implementing a strategy to offer customers power generating systems, in which it depends on third-party suppliers and subcontractors for outsourced products, components or services. The implementation of that strategy subjects us to the risk of customer dissatisfaction with the quality or performance of the products or services we sell due to supplier or subcontractor failure. In addition, business difficulties experienced by a third-party supplier or subcontractor could lead to the interruption of our ability to obtain outsourced products or services and ultimately our inability to supply products or services to these customers. Third-party supplier and subcontractor business interruptions could include, but are not limited to, work stoppages, union negotiations and other labor disputes. Current or future economic conditions could also impact the ability of suppliers and subcontractors to access credit and, thus, impair their ability to provide us quality products or services in a timely manner, or at all. These factors may affect the timing and cost of completion of such projects and could adversely affect the business and results of operations of our Power Systems segment.

The strategy of our Power Systems segment includes development and commercialization of new power systems, including the Trident OPTM engine currently in development, to support growth, which involves significant investment and involves various risks and uncertainties. These new products may not achieve desired commercial or financial results.
The future growth of our Power Systems segment will depend, in part, on its ability to successfully develop and commercialize new product offerings, including the opposed piston engine currently in development which is being marketed as the Trident OP engine. Investments in developing new products such as the Trident OP engine involve varying degrees of uncertainties and risk, including whether a new product designed to meet specific performance, cost and safety criteria can be successfully developed in a cost effective manner and our ability to internally develop, or to license or purchase from third parties, technologies critical to new product development. Commercial success of new products depends on many factors, including the levels of innovation, the development costs, the levels of competition from others developing similar or other competing products (including the duration of our exclusive use of technologies critical to our new products), our ability to obtain or maintain government permits or certifications, the effectiveness of production, distribution and marketing efforts, and the costs to customers to deploy and provide support for the new products. We may not achieve significant revenues from new product development investments for a number of years, if at all. Moreover, new products may not be profitable, and, even if they are profitable, our operating margins from new products may not be as high as the margins we anticipate or have experienced historically.



Our products are often used in critical applications, which could expose us to potentially significant product liability, warranty and other claims. Our insurance coverage may be inadequate to cover all of our significant risks or our insurers may deny coverage of material losses we incur, which could adversely affect our profitability and overall financial condition.
Our products are often used in critical applications in demanding environments, including in the nuclear, oil and gas, automotive, aerospace and pharmaceutical industries. Accordingly, product failures can have significant consequences and could result in significant product liability, warranty and other claims against us, regardless of whether our products caused the incident that is the subject of the claim. We endeavor to identify and obtain in established markets insurance agreements to cover significant risks and liabilities, though insurance against some of the risks inherent in our operations is either unavailable or available only at rates or on terms that we consider uneconomical. Depending on competitive conditions and other factors, we endeavor to obtain contractual protection against uninsured risks from our customers, including limitations on liability and indemnification. When obtained, such contractual protection may not be as broad as we desire, may not be supported by adequate insurance maintained by the customer, or may not be fully enforceable in the jurisdictions in which our customers are located. Such insurance or contractual protection may not be sufficient or effective under all circumstances or against all hazards to which we may be subject. A successful claim for which we are not insured or for which we are underinsured could have a material adverse effect on us. Additionally, disputes with insurance carriers over coverage may affect the timing of cash flows and, if litigation with the carrier becomes necessary, an outcome unfavorable to us may have a material adverse effect on our results of operations.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.
The following table sets forth all purchases made by or on behalf of the Company or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) under the Exchange Act, of shares of our common stock during each month in the third quarter of 2017.2023.
Period(a) Total Number
of Shares
(or Units)
Purchased		(b) Average
Price Paid per
Share (or Unit)		(c) Total Number of
Shares (or Units)
Purchased as Part  of
Publicly Announced
Plans or Programs		(d) Maximum Number (or
Approximate Dollar Value) of
Shares (or  Units) That May
Yet Be Purchased Under the
Plans or Programs
January 1 -
January 31, 2024		— — — $50,000,000(1)
February 1 -
February 29, 2024		641 (2)158.77 (2)— $50,000,000(1)
March 1 -
March 31, 2024		355 (2)$167.27 (2)— $50,000,000(1)
Total996 (2)$161.80 (2)— $50,000,000(1)
(1)In October 2022, our board of directors authorized an expenditure program of up to $50.0 million for the repurchase of our outstanding common shares through October 2024. We have not made any repurchases under this authorization.

(2)In connection with the exercise of a vested employee stock option on February 27, 2024, we accepted 641 shares of outstanding common stock in payment of the option exercise price, which surrendered shares were valued at $158.77 per share, the closing trading price of our common stock on that date. In March 2024, a total of 355 shares were transferred to a rabbi trust that we established in connection with our Deferred Compensation Plan for Non-Employee Directors, pursuant to which non-employee directors may elect to defer directors’ fees into common stock units. EnPro Holdings furnished these shares in exchange for management and other services provided by Enpro. Of these shares, 59 shares were valued at a price of $159.77 per share, the closing trading price of our common stock on March 20, 2024, and 296 of these shares were valued at a price of $168.77 per share, the closing trading price of our common stock on March 28, 2024. Accordingly, the total 996 shares were valued at a weighted average price of $161.80 per share. We do not consider the transfer of shares from EnPro Holdings in this context to be pursuant to a publicly announced plan or program.
Item 5.     Other Information.
Period
(a) Total Number
of Shares
(or Units)
Purchased
 
(b) Average
Price Paid per
Share (or Unit)
 
(c) Total Number of
Shares (or Units)
Purchased as Part  of
Publicly Announced
Plans or Programs
 
(d) Maximum Number (or
Approximate Dollar Value) of
Shares (or  Units) That May
Yet Be Purchased Under the
Plans or Programs
 
July 1 – July 31, 2017—
 —
 —
 $4,519,735(1)
August 1 - August 31, 201717,494
(1)$69.54(1)17,494
(1)$3,303,203(1)
September 1 – September 30, 20177,580
(1) (2)$70.48(1) (2)7,000
(1)$2,815,233(1)
Total25,074
(1) (2)$69.83(1) (2)24,494
(1)$2,815,309(1)

During the three months ended March 31, 2024, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (as such terms are defined in Item 408 of Regulation S-K).
(1)On October 28, 2015, our board of directors authorized the repurchase of up to $50.0 million of our outstanding common shares, and we announced the share repurchase authorization in a press release issued on October 29, 2015. Pursuant to this authorization, we purchased 17,494 shares at an average purchase price of $69.54 per share during August 2017 and 7,000 shares at an average purchase price of $69.71 per share during September 2017 (with $2,815,310 remaining authority at quarter end).
(2)In September 2017, a total of 580 shares were transferred to a rabbi trust that we established in connection with our Deferred Compensation Plan for Non-Employee Directors, pursuant to which non-employee directors may elect to defer directors’ fees into common stock units. EnPro Holdings furnished these shares in exchange for management and other services provided by EnPro. Of these shares, 83 were valued at a price of $75.60, the closing trading price of our common stock on September 20, 2017, and 497 of these shares were valued at a price of $80.53 per share, the closing trading price of our common stock on September 30, 2017. Accordingly, the total 580 shares were valued at a weighted average price of $79.82. We do not consider the transfer of shares from EnPro Holdings in this context to be pursuant to a publicly announced plan or program.

Item 6.Exhibits.
Item 6.    Exhibits.
The exhibits to this report on Form 10-Q are listed in the accompanyingfollowing Exhibit Index.

38


EXHIBIT INDEX
2.1
2.2
10.1
31.1†
31.2†
32†
101.SCH†InlineXBRL Taxonomy Extension Schema Document
101.CAL†InlineXBRL Taxonomy Extension Calculation Linkbase Document
101.DEF†InlineXBRL Taxonomy Extension Definitions Linkbase Document
101.LAB†InlineXBRL Taxonomy Extension Label Linkbase Document
101.PRE†InlineXBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Interactive Data Files submitted as Exhibits 101.*)
    † Filed herewith



39

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Charlotte, North Carolina on this 2nd8th day of November, 2017.May, 2024.
 
ENPRO INC.
ENPRO INDUSTRIES, INC.
By:
By:/s/ Robert S. McLean
Robert S. McLean
Chief Administrative Officer,Executive Vice President, General Counsel and Secretary
and Secretary
By:/s/ Steven R. Bower
Steven R. Bower
Senior Vice President, Controller and Chief Accounting Officer and
Controller


EXHIBIT INDEX
2.1
Modified Joint Plan of Reorganization of Garlock Sealing Technologies LLC, et al. and OldCo, LLC, Successor by Merger to Coltec Industries Inc dated May 20, 2016, as modified on June 21, 2016, July 29, 2016, December 2, 2016, April 3, 2017, May 14, 2017, May 19, 2017, June 8, 2017, and June 9, 2017, filed in the United States Bankruptcy Court for the Western District of North Carolina (Charlotte Division) (incorporated by reference to Exhibit 2.1 to the Form 8-K filed on July 31, 2017 by EnPro Industries, Inc. (File No. 001-31225))
31.1*
Certification of Chief Executive Officer pursuant to Rule 13a – 14(a)/15d – 14(a)
31.2*
Certification of Chief Financial Officer pursuant to Rule 13a – 14(a)/15d – 14(a)
32*
Certification pursuant to Section 1350
101.INS*XBRL Instance Document
101.SCH*XBRL Taxonomy Extension Schema Document
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB*XBRL Taxonomy Extension Label Linkbase Document
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document

*Filed herewith


6040