UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________

FORM 10-Q

_________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2022~~March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-31225

_________________________________________

ENPRO INDUSTRIES, INC.

(Exact name of registrant, as specified in its charter)

_____________________________________


North Carolina						01-0573945
(State or other jurisdiction of incorporation)						(I.R.S. Employer Identification No.)
5605 Carnegie Boulevard
Suite 500
Charlotte
North Carolina						28209
(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 class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	NPO	New 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 every Interactive Data File required to be submitted 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 such files). Yes ý No ¨

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 filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	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 13(a) of the Exchange 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~~April 27, ~~2022~~2023, there were ~~20,802,827~~ 20,878,123 s~~shares~~hares of common stock of the registrant outstanding, which does not include ~~179,345~~ 178,646 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

ENPRO INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

~~Nine~~Three Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~

(in millions, except per share amounts)


		Quarters Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022
Net sales	Net sales	$	280.1	$	209.7	$	827.3	$	627.7	Net sales	$	282.6	$	270.1
Cost of sales	Cost of sales	169.3		126.0		509.5		378.3		Cost of sales	166.5		175.4
Gross profit	Gross profit	110.8		83.7		317.8		249.4		Gross profit	116.1		94.7
Operating expenses:	Operating expenses:									Operating expenses:
Selling, general and administrative	Selling, general and administrative	65.8		60.0		205.1		182.5		Selling, general and administrative	71.5		71.7
Other	Other	0.1		0.1		2.3		1.9		Other	0.8		1.3
Total operating expenses	Total operating expenses	65.9		60.1		207.4		184.4		Total operating expenses	72.3		73.0
Operating income	Operating income	44.9		23.6		110.4		65.0		Operating income	43.8		21.7
Interest expense	Interest expense	(9.4)		(4.0)		(24.2)		(12.0)		Interest expense	(11.7)		(7.1)
Interest income	Interest income	0.1		1.4		0.3		1.8		Interest income	3.8		0.2
Other income (expense)	Other income (expense)	0.3		16.7		(1.7)		18.6		Other income (expense)	(1.8)		0.6
Income from continuing operations before income taxes	Income from continuing operations before income taxes	35.9		37.7		84.8		73.4		Income from continuing operations before income taxes	34.1		15.4
Income tax expense	Income tax expense	(9.1)		(13.6)		(19.8)		(14.8)		Income tax expense	(8.1)		(3.2)
Income from continuing operations	Income from continuing operations	26.8		24.1		65.0		58.6		Income from continuing operations	26.0		12.2
Income from discontinued operations, net of tax		0.7		3.9		13.9		16.9
Income from discontinued operations, including gain on sale, net of tax										Income from discontinued operations, including gain on sale, net of tax	11.4		4.9
Net income	Net income	27.5		28.0		78.9		75.5		Net income	37.4		17.1
Less: net income attributable to redeemable non-controlling interests	Less: net income attributable to redeemable non-controlling interests	0.6		0.1		0.8		0.1		Less: net income attributable to redeemable non-controlling interests	—		0.3
Net income attributable to EnPro Industries, Inc.	Net income attributable to EnPro Industries, Inc.	$	26.9	$	27.9	$	78.1	$	75.4	Net income attributable to EnPro Industries, Inc.	$	37.4	$	16.8
Comprehensive income (loss)		$	(5.6)	$	26.9	$	17.2	$	78.4
Less: comprehensive income (loss) attributable to redeemable non-controlling interests		(1.2)		0.2		(3.1)		0.3
Comprehensive income (loss) attributable to EnPro Industries, Inc.		$	(4.4)	$	26.7	$	20.3	$	78.1
Comprehensive income										Comprehensive income	$	44.5	$	4.4
Less: comprehensive loss attributable to redeemable non-controlling interests										Less: comprehensive loss attributable to redeemable non-controlling interests	—		(0.7)
Comprehensive income attributable to EnPro Industries, Inc.										Comprehensive income attributable to EnPro Industries, Inc.	$	44.5	$	5.1
Income attributable to EnPro Industries, Inc. common shareholders:	Income attributable to EnPro Industries, Inc. common shareholders:									Income attributable to EnPro Industries, Inc. common shareholders:
Income from continuing operations, net of tax	Income from continuing operations, net of tax	$	26.2	$	24.0	$	64.2	$	58.5	Income from continuing operations, net of tax	$	26.0	$	11.9
Income from discontinued operations, net of tax		0.7		3.9		13.9		16.9
Income from discontinued operations, including gain on sale, net of tax										Income from discontinued operations, including gain on sale, net of tax	11.4		4.9
Net income attributable to EnPro Industries, Inc.	Net income attributable to EnPro Industries, Inc.	$	26.9	$	27.9	$	78.1	$	75.4	Net income attributable to EnPro Industries, Inc.	$	37.4	$	16.8
Basic earnings per share attributable to EnPro Industries, Inc.:	Basic earnings per share attributable to EnPro Industries, Inc.:									Basic earnings per share attributable to EnPro Industries, Inc.:
Continuing operations	Continuing operations	$	1.26	$	1.17	$	3.09	$	2.84	Continuing operations	$	1.25	$	0.57
Discontinued operations	Discontinued operations	0.03		0.19		0.67		0.82		Discontinued operations	0.55		0.24
Net income per share	Net income per share	$	1.29	$	1.36	$	3.76	$	3.66	Net income per share	$	1.80	$	0.81
Diluted earnings per share attributable to EnPro Industries, Inc.:	Diluted earnings per share attributable to EnPro Industries, Inc.:									Diluted earnings per share attributable to EnPro Industries, Inc.:
Continuing operations	Continuing operations	$	1.26	$	1.16	$	3.08	$	2.82	Continuing operations	$	1.24	$	0.57
Discontinued operations	Discontinued operations	0.03		0.19		0.66		0.81		Discontinued operations	0.55		0.24
Net income per share	Net income per share	$	1.29	$	1.35	$	3.74	$	3.63	Net income per share	$	1.79	$	0.81

See notes to consolidated financial statements (unaudited).

ENPRO INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

~~Nine~~Three Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~

(in millions)


		2022		2021			2023		2022
OPERATING ACTIVITIES OF CONTINUING OPERATIONS	OPERATING ACTIVITIES OF CONTINUING OPERATIONS					OPERATING ACTIVITIES OF CONTINUING OPERATIONS
Net income	Net income	$	78.9	$	75.5	Net income	$	37.4	$	17.1
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:	Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:					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	(13.9)		(16.9)		Income from discontinued operations, net of taxes	(11.4)		(4.9)

Taxes related to sale of discontinued operations						Taxes related to sale of discontinued operations	(3.5)		—
Depreciation	Depreciation	19.4		13.4		Depreciation	6.0		6.4
Amortization	Amortization	58.5		33.3		Amortization	17.6		19.6
Deferred income taxes	Deferred income taxes	(1.9)		(2.7)		Deferred income taxes	(0.4)		(0.7)
Stock-based compensation	Stock-based compensation	4.6		3.4		Stock-based compensation	2.4		1.5
Other non-cash adjustments	Other non-cash adjustments	4.9		(15.2)		Other non-cash adjustments	1.1		2.2
Change in assets and liabilities, net of effects of divestitures of businesses:

Change in assets and liabilities, net of effects of divestiture of businesses:						Change in assets and liabilities, net of effects of divestiture of businesses:
Accounts receivable, net	Accounts receivable, net	(17.0)		(21.8)		Accounts receivable, net	(11.5)		(11.6)
Inventories	Inventories	(19.2)		(7.0)		Inventories	(4.9)		(3.5)
Accounts payable	Accounts payable	2.7		10.4		Accounts payable	(4.6)		6.4

Other current assets and liabilities	Other current assets and liabilities	(13.2)		2.6		Other current assets and liabilities	(0.9)		(7.9)
Other non-current assets and liabilities	Other non-current assets and liabilities	7.8		2.5		Other non-current assets and liabilities	(0.9)		2.8
Net cash provided by operating activities of continuing operations	Net cash provided by operating activities of continuing operations	111.6		77.5		Net cash provided by operating activities of continuing operations	26.4		27.4
INVESTING ACTIVITIES OF CONTINUING OPERATIONS	INVESTING ACTIVITIES OF CONTINUING OPERATIONS					INVESTING ACTIVITIES OF CONTINUING OPERATIONS
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(10.2)		(10.9)		Purchases of property, plant and equipment	(5.0)		(3.0)

Proceeds from sale of businesses, net	Proceeds from sale of businesses, net	0.6		38.9		Proceeds from sale of businesses, net	25.3		0.4
Acquisitions		2.9		—
Receipts from settlements of derivative contracts		27.4		—
Purchase of short-term investments						Purchase of short-term investments	(35.0)		—

Other	Other	—		0.2		Other	(0.1)		0.1
Net cash provided by investing activities of continuing operations		20.7		28.2
Net cash used in investing activities of continuing operations						Net cash used in investing activities of continuing operations	(14.8)		(2.5)
FINANCING ACTIVITIES OF CONTINUING OPERATIONS	FINANCING ACTIVITIES OF CONTINUING OPERATIONS					FINANCING ACTIVITIES OF CONTINUING OPERATIONS
Proceeds from debt	Proceeds from debt	60.5		—		Proceeds from debt	—		4.5
Repayments of debt	Repayments of debt	(304.2)		(3.0)		Repayments of debt	(4.0)		(52.4)

Dividends paid	Dividends paid	(17.6)		(16.8)		Dividends paid	(6.2)		(5.9)
Other	Other	(7.8)		(1.5)		Other	(1.8)		(6.6)
Net cash used in financing activities of continuing operations	Net cash used in financing activities of continuing operations	(269.1)		(21.3)		Net cash used in financing activities of continuing operations	(12.0)		(60.4)
CASH FLOWS OF DISCONTINUED OPERATIONS	CASH FLOWS OF DISCONTINUED OPERATIONS					CASH FLOWS OF DISCONTINUED OPERATIONS
Operating cash flows	Operating cash flows	8.8		20.3		Operating cash flows	(0.6)		(0.2)
Investing cash flows	Investing cash flows	(4.3)		(2.3)		Investing cash flows	—		(1.0)
Net cash provided by discontinued operations		4.5		18.0
Net cash used by discontinued operations						Net cash used by discontinued operations	(0.6)		(1.2)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(39.6)		(1.9)		Effect of exchange rate changes on cash and cash equivalents	2.7		(8.0)
Net increase (decrease) in cash and cash equivalents	Net increase (decrease) in cash and cash equivalents	(171.9)		100.5		Net increase (decrease) in cash and cash equivalents	1.7		(44.7)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	338.1		229.5		Cash and cash equivalents at beginning of period	334.4		338.1
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	166.2	$	330.0	Cash and cash equivalents at end of period	$	336.1	$	293.4

Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid during the period for:
Cash paid (received) during the period for:						Cash paid (received) during the period for:
Interest, net	Interest, net	$	15.8	$	6.3	Interest, net	$	7.0	$	0.1
Income taxes, net	Income taxes, net	$	35.8	$	22.8	Income taxes, net	$	(0.1)	$	1.7
Non-cash investing and financing activities:	Non-cash investing and financing activities:					Non-cash investing and financing activities:
Non-cash acquisitions of property, plant, and equipment	Non-cash acquisitions of property, plant, and equipment	$	0.2	$	1.2	Non-cash acquisitions of property, plant, and equipment	$	0.1	$	0.1

See notes to consolidated financial statements (unaudited).

ENPRO INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions, except share amounts)


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	166.2	$	338.1	Cash and cash equivalents	$	336.1	$	334.4
Short-term investments						Short-term investments	35.0		—
Accounts receivable, net	Accounts receivable, net	151.4		145.0		Accounts receivable, net	149.4		137.1
Inventories	Inventories	150.2		135.9		Inventories	157.1		151.9

Prepaid expenses and other current assets	Prepaid expenses and other current assets	34.4		35.8		Prepaid expenses and other current assets	37.7		44.9
Current assets of discontinued operations		148.4		149.9
Current assets of discontinued operation						Current assets of discontinued operation	—		15.9
Total current assets	Total current assets	650.6		804.7		Total current assets	715.3		684.2
Property, plant and equipment, net	Property, plant and equipment, net	170.5		184.3		Property, plant and equipment, net	184.7		185.2
Goodwill	Goodwill	919.2		948.0		Goodwill	866.1		863.8
Other intangible assets, net	Other intangible assets, net	811.5		894.2		Other intangible assets, net	783.8		799.8

Other assets	Other assets	142.8		143.4		Other assets	121.6		114.8

Total assets	Total assets	$	2,694.6	$	2,974.6	Total assets	$	2,671.5	$	2,647.8
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities	Current liabilities					Current liabilities
Current maturities of long-term debt	Current maturities of long-term debt	$	15.5	$	12.7	Current maturities of long-term debt	$	15.6	$	15.6
Short-term debt		—		149.3

Accounts payable	Accounts payable	72.9		72.0		Accounts payable	68.9		73.4
Accrued expenses	Accrued expenses	129.1		116.5		Accrued expenses	115.4		120.2
Current liabilities of discontinued operations		35.8		35.8
Current liabilities of discontinued operation						Current liabilities of discontinued operation	—		2.3

Total current liabilities	Total current liabilities	253.3		386.3		Total current liabilities	199.9		211.5
Long-term debt	Long-term debt	868.1		963.9		Long-term debt	771.2		775.1
Deferred taxes and non-current income taxes payable	Deferred taxes and non-current income taxes payable	148.8		166.1		Deferred taxes and non-current income taxes payable	136.3		136.5
Other liabilities	Other liabilities	107.6		137.9		Other liabilities	111.1		111.7

Total liabilities	Total liabilities	1,377.8		1,654.2		Total liabilities	1,218.5		1,234.8
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies
Redeemable non-controlling interests	Redeemable non-controlling interests	49.0		50.1		Redeemable non-controlling interests	17.9		17.9
Shareholders’ equity	Shareholders’ equity					Shareholders’ equity
Common stock – $.1 par value; 100,000,000 shares authorized; issued, 20,981,810 shares in 2022 and 20,915,793 shares in 2021		0.2		0.2
Common stock – $.01 par value; 100,000,000 shares authorized; issued, 21,055,668 shares in 2023 and 20,996,739 shares in 2022						Common stock – $.01 par value; 100,000,000 shares authorized; issued, 21,055,668 shares in 2023 and 20,996,739 shares in 2022	0.2		0.2
Additional paid-in capital	Additional paid-in capital	300.7		303.6		Additional paid-in capital	300.8		299.2
Retained earnings	Retained earnings	1,011.4		953.1		Retained earnings	1,161.5		1,130.2
Accumulated other comprehensive income (loss)		(43.3)		14.6
Common stock held in treasury, at cost – 179,833 shares in 2022 and 180,848 shares in 2021		(1.2)		(1.2)
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(26.2)		(33.3)
Common stock held in treasury, at cost – 177,868 shares in 2023 and 179,345 shares in 2022						Common stock held in treasury, at cost – 177,868 shares in 2023 and 179,345 shares in 2022	(1.2)		(1.2)
Total shareholders’ equity	Total shareholders’ equity	1,267.8		1,270.3		Total shareholders’ equity	1,435.1		1,395.1
Total liabilities and equity	Total liabilities and equity	$	2,694.6	$	2,974.6	Total liabilities and equity	$	2,671.5	$	2,647.8

See notes to consolidated financial statements (unaudited).

ENPRO INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Overview and Basis of Presentation

Overview

EnPro Industries, Inc. (“we,” “us,” “our,” “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, photonics, industrial process, aerospace, food, biopharma 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 past several years, we have executed several strategic initiatives to ~~focus the~~create a portfolio of businesses ~~where we~~that offer proprietary, industrial technology-related products and solutions with high barriers to entry, compelling margins, strong cash flow, and perpetual 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 except for the change in the accounting for inventory from Last-in, First-out basis (LIFO) to First-in, First-out basis (FIFO) at certain of our locations as described below under "Inventory".statements. The accompanying interim consolidated financial statements 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, ~~2021~~2022 was derived from the audited financial statements included in our annual report on Form 10-K for the year ended December 31, ~~2021 adjusted for the change in accounting principle noted above.~~2022. 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, ~~2021~~2022 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.

All intercompany accounts and transactions between our consolidated operations have been eliminated.

~~Goodwill~~

In the second quarter of 2022, we determined the performance of our Alluxa reporting unit to be a triggering event for a goodwill impairment test and, as a result, we performed an interim assessment. The fair value of our Alluxa reporting unit, which is included in our Advanced Surface Technologies segment, and is allocated $126.0 million of goodwill, exceeded its carrying value by an estimated 21% as of the interim testing date of June 30, 2022. If the weighted-average cost of capital used in this assessment were increased by one percentage point, then the fair value of the Alluxa reporting unit would exceed its carrying value by approximately 12%.

Management continues to monitor the actual financial performance and future expectations of Alluxa, as well as, the discount rate and other relevant factors compared to the rates and projections utilized for the interim goodwill test noted above.

Management will perform the annual goodwill impairment test for EnPro’s five reporting units as of November 1, 2022. In performing the impairment tests, a change in assumptions used in the test, such as a change in discount rate, a downward revision of financial projections, or a shift in market multiples could result in the fair value of a reporting unit dropping below the carrying value of its assets, resulting in an impairment of goodwill.

~~Inventory~~

Effective July 1, 2022, we changed our method of determining cost for certain inventories from a LIFO basis to a FIFO basis for all of our inventories that were still accounted for under LIFO. We concluded the FIFO basis of accounting is the preferable method for determining inventory cost for our businesses because it improves comparability with our peers, harmonizes our accounting for inventory across all locations, more accurately reflects the current value and physical flow of inventory, and aligns operationally with how management views the performance of the business.

We retrospectively applied this change in accounting principle to all prior periods, including discontinued operations; and recorded a cumulative effect adjustment to increase the January 1, 2021 inventory balance by $3.2 million, an increase to the January 1, 2021 current assets of discontinued operations balance by $0.6 million, and an increase to retained earnings by $2.9 million (net of tax). The Consolidated Statement of Operations for the quarter and nine months ended September 30, 2021, Consolidated Statement of Cash flows for the nine months ended September 30, 2021, and the Consolidated Balance Sheet at December 31, 2021 have been retrospectively adjusted to reflect the change in accounting principle. Had we continued to apply LIFO, cost of sales for the nine months ended September 30, 2022, would have been $3.1 million higher and inventory would have been $6.9 million lower. Additionally, income from discontinued operations, net of tax, would have been approximately $0.1 million lower and current assets of discontinued operations would have been approximately $1.2 million lower.

~~The impact of our change in accounting method for valuing certain inventories on our previously issued financial statements is presented in the following tables:~~

Consolidated Statement of Operations
(in millions) Quarter Ended September 30, 2021 Nine Months Ended September 30, 2021
As Reported 1
Effect of Change As Adjusted
As Reported 1
Effect of Change As Adjusted
Cost of sales $ 126.0 $ — $ 126.0 $ 378.5 $ (0.2) $ 378.3
Gross profit 83.7 — 83.7 249.2 0.2 249.4
Operating income 23.6 — 23.6 64.8 0.2 65.0
Income from continuing operations before income taxes 37.7 — 37.7 73.2 0.2 73.4
Income tax expense (13.6) — (13.6) (14.8) — (14.8)
Income from continuing operations 24.1 — 24.1 58.4 0.2 58.6
Income from discontinued operations, net of tax 3.5 0.4 3.9 16.5 0.4 16.9
Net income 27.6 0.4 28.0 74.9 0.6 75.5
Net income attributable to EnPro Industries, Inc. $ 27.5 $ 0.4 $ 27.9 $ 74.8 $ 0.6 $ 75.4

Consolidated Balance Sheet
(in millions) December 31, 2021
As Reported 1
Effect of Change As Adjusted
Inventories $ 132.1 $ 3.8 $ 135.9
Current assets of discontinued operations 148.9 1.0 149.9
Total current assets 799.9 4.8 804.7
Total assets $ 2,969.8 $ 4.8 $ 2,974.6
Current liabilities of discontinued operations $ 35.5 $ 0.3 $ 35.8
Total current liabilities 386.0 0.3 386.3
Deferred taxes and non-current income taxes payable 165.2 0.9 166.1
Total liabilities 1,653.0 1.2 1,654.2
Retained earnings 949.5 3.6 953.1
Total shareholders' equity 1,266.7 3.6 1,270.3
Total liabilities and equity $ 2,969.8 $ 4.8 $ 2,974.6

Consolidated Statement of Cash Flows
(in millions) Nine Months Ended September 30, 2021
As Reported 1
Effect of Change As Adjusted
OPERATING ACTIVITIES OF CONTINUING OPERATIONS
Net income $ 74.9 $ 0.6 $ 75.5
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
Income from discontinued operations, net of taxes (16.5) (0.4) (16.9)
Change in assets and liabilities, net of effects of divestitures of businesses:
Inventories (6.8) (0.2) (7.0)
Net cash provided by operating activities of continuing operations 77.5 — 77.5

1 ~~As Reported represents the consolidated financial statement balances that have been recast for discontinued operations exclusive of the impact of our change in accounting method from LIFO to FIFO.~~

2. Discontinued Operations

~~During~~On January 30, 2023 we completed the ~~third quarter~~sale of ~~2022, we entered into an agreement to sell our GGB business and announced our intention to sell~~ Garlock Pipeline Technologies, Inc. ~~(GPT). These businesses,~~("GPT") for gross proceeds of $31.4 million. We recorded a pre-tax gain on the sale of discontinued operations of $14.6 million in the first quarter of 2023.

The sale of GPT, along with ~~Compressor Products International (CPI), which~~our GGB business that was divested on ~~December 21, 2021,~~November 4, 2022 comprised our ~~entire~~remaining Engineered Materials segment ("Engineered Materials"). ~~As a result of classifying the GGB and GPT businesses as held for sale in the third quarter of 2022, we~~We determined Engineered Materials to be a discontinued ~~operations.~~operation. Accordingly, we have reported, 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 quarters and nine months ended September 30, 2022 and 2021, the results of operations from Engineered Materials were as follows:~~

(in millions) Quarters Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Net sales $ 51.8 $ 73.4 $ 166.6 $ 233.3
Cost of sales 34.9 47.0 109.1 146.0
Gross profit 16.9 26.4 57.5 87.3
Operating expenses:
Selling, general and administrative 13.0 19.9 39.3 60.5
Other — 0.9 0.2 3.4
Total operating expenses 13.0 20.8 39.5 63.9
Operating income 3.9 5.6 18.0 23.4
Other expense — (0.1) — (0.1)
Income from discontinued operations before income tax 3.9 5.5 18.0 23.3
Income tax expense (3.2) (1.6) (4.1) (6.4)
Income from discontinued operations, net of tax $ 0.7 $ 3.9 $ 13.9 $ 16.9

For the three months ended March 31, 2023 and 2022, the results of operations from the discontinued Engineered Materials segment were as follows:



(in millions)	2023		2022
Net sales	$	2.0	$	58.7
Cost of sales	1.3		37.9
Gross profit	0.7		20.8
Operating expenses:
Selling, general and administrative	0.4		14.0
Other	—		0.1
Total operating expenses	0.4		14.1


Income from discontinued operation before income tax	0.3		6.7
Income tax expense	(0.1)		(1.8)
Income from discontinued operations, net of tax	0.2		4.9
Gain from sale of discontinued operation, net of tax	11.2		—
Income from discontinued operations, including gain on sale, net of tax	$	11.4	$	4.9

The major classes of assets and liabilities for the discontinued Engineered Materials segment are shown below:

(in millions) September 30,
2022 December 31,
2021
Assets:
Accounts receivable $ 36.0 $ 32.0
Inventories 27.1 28.8
Property, plant and equipment 46.0 52.4
Goodwill 5.1 5.1
Other intangible assets 16.9 19.2
Other assets 17.3 12.4
Current assets of discontinued operations $ 148.4 $ 149.9
Liabilities
Accounts payable $ 10.1 $ 9.9
Accrued expenses 19.0 18.8
Other liabilities 6.7 7.1
Current liabilities of discontinued operations $ 35.8 $ 35.8


(in millions)	December 31, 2022
Assets:
Accounts receivable	$	3.8
Inventories	3.1
Property, plant and equipment	7.6

Intangible assets	1.2
Other assets	0.2
Current assets of discontinued operation	$	15.9

Liabilities
Accounts payable	$	1.4
Accrued expenses	0.9

Current liabilities of discontinued operation	$	2.3

Pursuant to applicable 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 financial statements of discontinued operations and have been reclassified to income from continuing operations in the accompanying consolidated financial statements of the Company for all periods. In addition, divestiture-related costs previously not allocated to Engineered Materials that were incurred as a result of the divestiture of Engineered Materials have been reflected in the financial results of discontinued operations. As a result, income before income taxes of Engineered Materials has been decreased by ~~$1.1~~$0.4 million ~~and $1.6 million, respectively,~~ for the ~~quarter and nine~~three months ended ~~September 30,~~March 31, 2022, ~~and increased by $0.1 million and $1.5 million, respectively, for the quarter and nine months ended September 30, 2021,~~ with offsetting changes in corporate expenses of continuing operations.

The sale of GGB closed on November 4, 2022 to The Timken Company for total proceeds of $305 million, subject to closing date purchase price adjustments. The pre-tax gain on the disposition of GGB to be recognized in the fourth quarter is expected to be approximately $190 million.

The Company is actively pursuing the sale of GPT, and anticipates completing the sale by December 31, 2022. Current assets and current liabilities of discontinued operations of GPT at September 30, 2022, were $16.3 million and $4.2 million respectively.

The sale of GGB included a subsidiary of our Sealing Technologies segment which is not part of the discontinued operations described above. The total assets of this subsidiary (principally allocated goodwill of $6.0 million) were $7.9 million and the liabilities of this subsidiary were $0.3 million and have been classified in other current assets, and accrued expenses, respectively, in the accompanying consolidated balance sheet at September 30, 2022. The results of operations of this subsidiary are included in continuing operations for all periods being reported.

3. ~~Acquisition~~

On December 17, 2021, our subsidiary, EnPro Holdings, Inc. ("EnPro Holdings"), completed the acquisition of all issued and outstanding membership interests of TCFII NxEdge LLC (“NxEdge”). Based in Boise, Idaho, NxEdge serves customers across the semiconductor supply chain, including top tier global integrated device manufacturers and original equipment manufacturers from six main facilities located in Idaho and California. With vertically integrated capabilities across the semiconductor value chain, including a robust aftermarket business, NxEdge is a leading supplier offering a set of integrated capabilities with unique processes resulting in a broad range of qualifications at top customers. NxEdge is included in our Advanced Surface Technologies segment.

~~The following pro forma condensed consolidated financial results of operations for EnPro are presented as if the acquisition had been completed prior to 2021:~~

Quarter Ended September 30, Nine Months Ended September 30,
(in millions) 2022 2021 2022 2021
Pro forma net sales $ 280.1 $ 256.0 $ 827.3 $ 762.1
Pro forma net income $ 28.1 $ 31.6 $ 76.2 $ 76.6

These amounts have been calculated after applying our accounting policies and adjusting the results of NxEdge to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to inventory, property, plant and equipment and intangible assets had been applied prior to 2021 as well as additional interest expense to reflect financing required, together with the corresponding tax effects. The supplemental pro forma net income for the quarter and nine months ended September 30, 2022 was adjusted to exclude $1.8 million and $14.9 million of pre-tax costs related to the amortization of the backlog intangible asset, the amortization of the fair-value adjustment to acquisition date inventory and additional transaction-related expenses incurred during the respective periods. These pro forma financial results have been prepared for comparative purposes only and do not reflect the effect of synergies that would have been expected to result from the integration of this acquisition. The pro forma information does not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred prior to 2021, or of future results of the consolidated entities.

We continue to evaluate the purchase price allocation of this acquisition, primarily the value of certain tangible and intangible assets and the related tax impacts, and, in accordance with applicable accounting guidance, we have revised the initial acquisition date purchase price allocations to increase goodwill by $0.4 million at September 30, 2022. We expect to finalize the purchase price allocation no later than November 30, 2022.

4. Income Taxes

Our income tax expense and resulting effective tax rate on income from continuing operations 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 periods. This estimated annual effective tax rate is affected 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 rate fluctuates based on the portion of our profits earned in each jurisdiction. Additionally, in accordance with discontinued operations reporting requirements, income tax expense for the current and prior periods presented have been adjusted to reflect

only the activity of continuing operations. This presentation requires removing all elements of income tax expense associated with discontinued operations entities as well as their indirect impact on the overall income tax provision.

The effective tax rates for the quarters ended September 30, 2022 and 2021 were 25.4% and 36.2%, respectively. The reduction in the effective tax rate for the three months ended September 30, 2022 is primarily the result of higher tax rates in most foreign jurisdictions.

The effective tax rates for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 were 23.7% and ~~2021 were 23.4% and 20.2%~~20.7%, respectively. The effective tax rate for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 is primarily driven ~~by a legal entity conversion in Taiwan and favorable foreign currency effects on dividends, partially offset~~ by higher tax rates in most foreign ~~jurisdictions. The effective tax rate for~~jurisdictions partially offset by the ~~nine months ended September 30, 2021 is primarily the result of the reduction~~release of a valuation allowance on certain foreign net operating losses and a tax benefit related to share-based payment awards. The effective tax rate for the ~~favorable conclusion~~three months ended March 31, 2022 is primarily the result of ~~the IRS examination, and the reversal of certain uncertain~~a tax ~~positions,~~benefit related to share-based payment awards partially offset by higher tax rates in most foreign jurisdictions.

4. Earnings Per Share


	Three Months Ended March 31,
		2023		2022
		(in millions, except per share amounts)
Numerator (basic and diluted):
Income from continuing operations		$	26.0	$	12.2
Less: net income attributable to redeemable non-controlling interests		—		0.3
Income from continuing operations attributable to EnPro Industries, Inc.		26.0		11.9
Income from discontinued operations, net of tax		11.4		4.9
Net income attributable to EnPro Industries, Inc.		$	37.4	$	16.8
Denominator:
Weighted-average shares – basic		20.8		20.8
Share-based awards		0.1		0.1

Weighted-average shares – diluted		20.9		20.9
Basic earnings per share attributable to EnPro Industries, Inc.:
Continuing operations		$	1.25	$	0.57
Discontinued operations		0.55		0.24
Basic earnings per share attributable to EnPro Industries, Inc.		$	1.80	$	0.81
Diluted earnings per share attributable to EnPro Industries, Inc.:
Continuing operations		$	1.24	$	0.57
Discontinued operations		0.55		0.24
Diluted earnings per share attributable to EnPro Industries, Inc.		$	1.79	$	0.81

5. Inventories


	March 31, 2023		December 31, 2022
	(in millions)
Finished products	$	52.3	$	51.5
Work in process	34.8		32.7
Raw materials and supplies	70.0		67.7





Total inventories	$	157.1	$	151.9

~~5. Earnings Per Share~~

Quarters Ended
September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(in millions, except per share amounts)
Numerator (basic and diluted):
Net income $ 26.8 $ 24.1 $ 65.0 $ 58.6
Less: net income attributable to redeemable non-controlling interests 0.6 0.1 0.8 0.1
Income from continuing operations attributable to EnPro Industries, Inc. 26.2 24.0 64.2 58.5
Income from discontinued operations, net of tax 0.7 3.9 13.9 16.9
Net income attributable to EnPro Industries, Inc. $ 26.9 $ 27.9 $ 78.1 $ 75.4
Denominator:
Weighted-average shares – basic 20.8 20.6 20.8 20.6
Share-based awards 0.1 0.1 0.1 0.2
Weighted-average shares – diluted 20.9 20.7 20.9 20.8
Basic earnings per share attributable to EnPro Industries, Inc.:
Continuing operations $ 1.26 $ 1.17 $ 3.09 $ 2.84
Discontinued operations 0.03 0.19 0.67 0.82
Basic earnings per share attributable to EnPro Industries, Inc. $ 1.29 $ 1.36 $ 3.76 $ 3.66
Diluted earnings per share attributable to EnPro Industries, Inc.:
Continuing operations $ 1.26 $ 1.16 $ 3.08 $ 2.82
Discontinued operations 0.03 0.19 0.66 0.81
Diluted earnings per share attributable to EnPro Industries, Inc. $ 1.29 $ 1.35 $ 3.74 $ 3.63

6. ~~Inventories~~

September 30,
2022 December 31,
2021
(in millions)
Finished products $ 49.4 $ 45.0
Work in process 35.0 38.8
Raw materials and supplies 65.8 52.1
Total inventories $ 150.2 $ 135.9

7. Goodwill and Other Intangible Assets

The changes in the net carrying value of goodwill by reportable segment for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, are as follows:

Sealing
Technologies Advanced Surface Technologies Total
(in millions)
Goodwill as of December 31, 2021 $ 279.4 $ 668.6 $ 948.0
Acquisition of business — 0.4 0.4
Reclassification to held for sale (other current assets) (6.0) — (6.0)
Foreign currency translation (8.8) (14.4) (23.2)
Goodwill as of September 30, 2022 $ 264.6 $ 654.6 $ 919.2


	Sealing Technologies		Advanced Surface Technologies		Total
	(in millions)
Goodwill as of December 31, 2022	$	270.8	$	593.0	$	863.8



Foreign currency translation	2.3		—		2.3

Goodwill as of March 31, 2023	$	273.1	$	593.0	$	866.1

The goodwill balances reflected above are net of accumulated impairment losses of $27.8 million for the Sealing Technologies segment ~~as of December 31, 2021,~~ and ~~September 30, 2022.~~$65.2 million for the Advanced Surface Technologies segment.

Identifiable intangible assets are as follows:


		As of September 30, 2022				As of December 31, 2021					March 31, 2023				December 31, 2022
		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
		(in millions)									(in millions)
Amortized:	Amortized:									Amortized:
Customer relationships	Customer relationships	$	476.1	$	148.7	$	503.4	$	132.9	Customer relationships	$	484.8	$	163.9	$	484.5	$	157.6
Existing technology	Existing technology	462.7		62.5		464.9		37.3		Existing technology	464.3		80.0		463.7		71.3
Trademarks	Trademarks	63.8		21.6		63.9		19.5		Trademarks	64.9		25.5		64.8		24.0
Other	Other	36.2		25.0		36.9		17.9		Other	36.4		28.0		36.4		27.3
		1,038.8		257.8		1,069.1		207.6			1,050.4		297.4		1,049.4		280.2
Indefinite-Lived:	Indefinite-Lived:									Indefinite-Lived:
Trademarks	Trademarks	30.5		—		32.7		—		Trademarks	30.8		—		30.6		—
Total	Total	$	1,069.3	$	257.8	$	1,101.8	$	207.6	Total	$	1,081.2	$	297.4	$	1,080.0	$	280.2

Amortization for the ~~quarters and nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were ~~$19.2 million, $10.7 million, $57.9~~$17.4 million, and ~~$32.2~~$19.5 million, respectively.

8.7. Accrued Expenses


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(in millions)					(in millions)
Salaries, wages and employee benefits	Salaries, wages and employee benefits	$	52.9	$	50.5	Salaries, wages and employee benefits	$	40.7	$	51.6
Interest	Interest	9.9		4.9		Interest	9.3		4.4
Environmental	Environmental	11.0		11.0		Environmental	10.4		10.4

Income taxes	Income taxes	15.3		9.3		Income taxes	13.8		10.7
Taxes other than income taxes	Taxes other than income taxes	7.0		7.0		Taxes other than income taxes	5.2		4.6
Operating lease liabilities	Operating lease liabilities	8.7		9.5		Operating lease liabilities	9.9		9.2

Other	Other	24.3		24.3		Other	26.1		29.3
		$	129.1	$	116.5		$	115.4	$	120.2

9.8. 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 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 amends, restates and replaces the Second Amended and Restated Credit Agreement dated as of June 28, 2018, as amended, among the Company and EnPro Holdings as 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.

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 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) ~~bear~~bore interest at an annual rate of LIBOR plus 1.75% or base rate plus 0.75%, although these interest rates ~~are~~were subject to incremental increase or decrease based on a consolidated total net leverage ratio. ~~Borrowings under~~On November 8, 2022, we entered into a First Amendment to the ~~364-Day Facility bear~~Amended Credit Agreement, which replaced the LIBOR-based interest atrate option with an ~~annual rate~~option based on Term SOFR ("Secured Overnight Financing Rate") plus (i) a credit spread adjustment of ~~LIBOR plus 1.50%~~0.10% and (ii) 1.75%, again subject to incremental increase or ~~base rate plus 0.50%.~~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 0.225%, which rate is also subject to incremental increase or decrease based on a consolidated total net leverage ratio. ~~The Amended Credit Agreement contains customary LIBOR replacement provisions.~~

The Term Loan A-1 Facility amortizes 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 364-Day Facility did not amortize and was repaid in full in the third quarter of 2022. The Facilities are subject to prepayment with the net cash proceeds of certain asset sales, casualty or condemnation events and non-permitted debt issuances.

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. 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 certain assets. The Amended Credit Agreement contains certain financial covenants and required financial ratios including a maximum consolidated total net leverage and a minimum consolidated interest coverage as defined in the Amended Credit Agreement. We were in compliance with all covenants of the Amended Credit Agreement as of ~~September 30, 2022.~~March 31, 2023.

The borrowing availability under our Revolving Credit Facility at ~~September 30, 2022~~March 31, 2023 was ~~$299.2~~$389.2 million after giving consideration to $10.8 million of outstanding letters of ~~credit and $90.0 million of outstanding borrowings.~~credit. The balance of our outstanding Term Loan A-1 Facility and Term Loan A-2 Facility at ~~September 30, 2022~~March 31, 2023 was ~~$138.8~~$134.9 million and ~~$309.1~~$305.3 million respectively. ~~The 364-Day Facility had no outstanding balance at September 30, 2022.~~

Senior Notes

On October 17, 2018, we completed the offering of $350.0 million aggregate principal amount of 5.75% Senior Notes due 2026 (the "Senior Notes") and applied the net proceeds of that offering, together with borrowings under the Revolving Credit Facility, to redeem on October 31, 2018 the full $450.0 million aggregate principal amount of the outstanding 5.875% Senior Notes due 2022 (the "Old Notes").

The Senior Notes were issued to investors at 100% of the principal amount thereof. The Senior Notes are unsecured, unsubordinated obligations of EnPro and mature on October 15, 2026. Interest on the Senior Notes accrues at a rate of 5.75% per annum and is payable semi-annually in cash in arrears on April 15 and October 15 of each year. The Senior Notes are required to be guaranteed on a senior unsecured basis by each of EnPro’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 EnPro or any of the guarantors.

~~On or after October 15, 2021, 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 held by such holder 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, paying dividends and repurchasing shares of our common stock, subject in each case to specified exceptions and qualifications set forth in the indenture. The indenture further requires us to apply the net cash proceeds of certain asset sales not reinvested in acquisitions, or used to repay or otherwise reduce specified indebtedness within a specified period, in the event of the net proceeds exceeding a specified amount, to offer to repurchase the Senior Notes at a price equal to 100.0% of the principal amount thereof plus accrued and unpaid interest. This requirement applies to the net cash proceeds received in the divestitures of GGB and GPT and could require us to make such an offer to repurchase the Senior Notes in the first quarter of 2024 to the extent we do not sufficiently invest in acquisitions, assets, property or capital expenditures or repay or otherwise reduce specified indebtedness by then.

~~10. Pensions and Postretirement Benefits~~9. Pension

The components of net periodic benefit cost for our U.S. and foreign defined benefit pension plans for the ~~quarters and nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ are as follows:


		Quarters Ended September 30,								Nine Months Ended September 30,
		Pension Benefits				Other Benefits				Pension Benefits				Other Benefits
		2022		2021		2022		2021		2022		2021		2022		2021			2023		2022
		(in millions)																	(in millions)
Service cost	Service cost	$	0.4	$	0.4	$	—	$	—	$	1.1	$	1.2	$	—	$	—	Service cost	$	0.1	$	0.4
Interest cost	Interest cost	2.5		2.3		—				7.4		6.8		—		0.1		Interest cost	3.3		2.4
Expected return on plan assets	Expected return on plan assets	(3.3)		(4.5)		—		—		(9.9)		(13.6)		—		—		Expected return on plan assets	(3.4)		(3.3)
Amortization of prior service cost		—				—		—		—		0.1		—		—

Amortization of net loss	Amortization of net loss	0.1		0.2		0.1		0.1		0.4		0.5		0.1		0.1		Amortization of net loss	0.4		0.1

Net periodic benefit cost (benefit)	Net periodic benefit cost (benefit)	$	(0.3)	$	(1.6)	$	0.1	$	0.1	$	(1.0)	$	(5.0)	$	0.1	$	0.2	Net periodic benefit cost (benefit)	$	0.4	$	(0.4)

No contributions were made induring the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 to our U.S. defined benefit pension plans and we do not anticipate making any contributions in ~~the fourth quarter of 2022 to these plans.~~

2023.

~~11.~~10. Shareholders' Equity

Changes in shareholders' equity for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 are as follows:

Common Stock Additional Paid-in Capital
Retained Earnings1
Accumulated Other Comprehensive Income Treasury Stock Total Shareholders' Equity Redeemable Non-controlling Interests
(in millions, except per share data) Shares Amount
Balance December 31, 2021 20.7 $ 0.2 $ 303.6 $ 953.1 $ 14.6 $ (1.2) $ 1,270.3 $ 50.1
Net income — — — 16.8 — — 16.8 0.3
Other comprehensive loss — — — — (11.7) — (11.7) (1.0)
Dividends ($0.28 per share) — — — (5.9) — — (5.9) —
Incentive plan activity 0.1 — (4.1) — — — (4.1) —
Other — — 0.1 — — — 0.1 (0.1)
Balance, March 31, 2022 20.8 0.2 299.6 964.0 2.9 (1.2) 1265.5 49.3
Net income (loss) — — — 34.4 — — 34.4 (0.1)
Other comprehensive loss — — — — (14.9) — (14.9) (1.1)
Dividends ($0.28 per share) — — — (5.9) — (5.9) —
Incentive plan activity — — 1.4 — — — 1.4 —
Balance, June 30, 2022 20.8 0.2 301.0 992.5 (12.0) (1.2) 1,280.5 48.1
Net income — — — 26.9 — — 26.9 0.6
Other comprehensive loss — — — — (31.3) — (31.3) (1.8)
Dividends ($0.28 per share) — — — (5.8) — — (5.8) —
Incentive plan activity — — 0.6 — — — 0.6 —
Other — — (0.9) (2.2) — — (3.1) 2.1
Balance, September 30, 2022 20.8 $ 0.2 $ 300.7 $ 1,011.4 $ (43.3) $ (1.2) $ 1,267.8 $ 49.0


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Treasury Stock		Total Shareholders' Equity		Redeemable Non-controlling Interests
(in millions, except per share data)	Shares	Amount
Balance, December 31, 2022	20.8	$	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 activity	0.1	—		1.6		—		—		—		1.6		—

Balance, March 31, 2023	20.9	$	0.2	$	300.8	$	1,161.5	$	(26.2)	$	(1.2)	$	1,435.1	$	17.9

139

Changes in shareholders' equity for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 are as follows:

Common Stock Additional Paid-in Capital
Retained Earnings1
Accumulated Other Comprehensive Loss Treasury Stock Total Shareholders' Equity Redeemable Non-controlling Interests
(in millions, except per share data) Shares Amount
Balance,December 31, 2020 20.5 $ 0.2 $ 289.6 $ 797.7 $ (4.9) $ (1.2) $ 1,081.4 $ 48.4
Net income — — — 18.0 — — 18.0 0.1
Other comprehensive loss — — — — (7.9) — (7.9) (0.5)
Dividends ($0.27 per share) — — — (5.7) — — (5.7) —
Incentive plan activity 0.1 — 1.2 — — — 1.2 —
Other — — (0.1) (3.1) — — (3.2) 3.2
Balance, March 31, 2021 20.6 0.2 290.7 806.9 (12.8) (1.2) 1,083.8 51.2
Net income (loss) — — — 29.5 — — 29.5 (0.1)
Other comprehensive income — — — — 11.8 — 11.8 0.6
Dividends ($0.27 per share) — — — (5.6) — (5.6) —
Incentive plan activity — — 1.6 — — — 1.6 —
Other — — (0.1) 0.2 — — 0.1 (0.1)
Balance, June 30, 2021 20.6 0.2 292.2 831.0 (1.0) (1.2) 1,121.2 51.6
Net income — — — 27.9 — — 27.9 0.1
Other comprehensive income (loss) — — — — (1.2) — (1.2) 0.2
Dividends ($0.27 per share) — — — (5.6) — — (5.6) —
Other (1.0) 2.9 1.9 (1.9)
Balance, September 30, 2021 20.6 $ 0.2 $ 291.2 $ 856.2 $ (2.2) $ (1.2) $ 1,144.2 $ 50.0

1 Retained earnings balances and net income for the quarter ended June 30, 2022, and all prior quarterly periods have been recast to reflect the impact of the change in accounting method from LIFO to FIFO for certain inventories, net of the related tax effect. (See ~~Note 1, "Overview and Basis of Presentation"~~ ~~for additional details).~~


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders' Equity		Redeemable Non-controlling Interests
(in millions, except per share data)	Shares	Amount
Balance, December 31, 2021	20.7	$	0.2	$	303.6	$	953.1	$	14.6	$	(1.2)	$	1,270.3	$	50.1

Net income	—	—		—		16.8		—		—		16.8		0.3
Other comprehensive loss	—	—		—		—		(11.7)		—		(11.7)		(1.0)
Dividends ($0.28 per share)	—	—		—		(5.9)		—		—		(5.9)		—

Incentive plan activity	0.1	—		(4.1)		—		—		—		(4.1)		—
Other	—	—		0.1		—		—		—		0.1		(0.1)
Balance, March 31, 2022	20.8	$	0.2	$	299.6	$	964.0	$	2.9	$	(1.2)	$	1,265.5	$	49.3

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 factors. In accordance with the board of directors' declaration, total dividend payments of ~~$17.6~~$6.2 million were made during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023.

In ~~October 2022,~~April 2023, our board of directors declared a dividend of ~~$0.28~~$0.29 per share, payable on ~~December~~June 14, ~~2022~~2023, to all shareholders of record as of ~~November 30, 2022.~~May 31, 2023.

In October 2022, our board of directors authorized the expenditure 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 or the prior ~~two-year~~two-year authorization which expired in October 2022.

In 2023, we changed our performance share awards, granted under our equity compensation plan to executives and other key employees, to be paid in shares of our common stock at the end of the three-year vesting period. Awards issued prior to 2023 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 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 prior to 2023 is computed based upon the current estimate of total projected cash to be paid at vesting.

In February ~~2022,~~2023, we issued stock options to certain key executives for 0.1 million common shares with an exercise price of ~~$106.54~~$116.69 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.

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 EnPro's common stock. The time frame used was approximated as a six-year period from the grant date for the awards. The dividend assumption is based on our expectations as of the grant date. We base the risk-free interest rate on the yield to maturity at the time of the 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 ~~2022~~February 2023 had a fair value of ~~$39.07~~$45.13 per share at their grant date. The following assumptions were used to estimate the fair value of the ~~2022~~2023 option awards:


Average expected term	6 years
Expected volatility	~~39.88~~39.75	%
Risk-free interest rate	~~1.89~~4.22	%
Expected dividend yield	1.05	%

~~12.~~11. Business Segment Information

We aggregate our operating businesses into two reportable segments. The factors considered in determining our reportable segments are the economic similarity of the businesses, the nature of products sold, or solutions provided, the production processes and the types of customers and distribution methods. Our reportable segments are managed separately based on these differences.

Our Sealing Technologies segment designs and manufactures value-added products and solutions that safeguard a variety of critical environments, including: metallic, non-metallic and composite material gaskets, dynamic seals, compression packing, resilient metal seals, elastomeric seals, custom-engineered mechanical seals for applications in the aerospace industry and other markets, hydraulic components, expansion joints, sanitary gaskets, hoses and fittings for the hygienic process industries, fluid transfer products for the pharmaceutical and biopharmaceutical industries, and heavy-duty commercial vehicle parts 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, food and biopharmaceutical processing, primary metal manufacturing, mining, water and waste treatment, heavy-duty trucking, aerospace, medical, filtration and semiconductor fabrication. In all of these industries, performance and durability of our proprietary products and solutions are vital for the safety and environmental protection of our customers processes. Many of our products and solutions are used in highly demanding applications ~~oftentimes~~ in ~~incredibly~~ harsh environments, e.g., where extreme temperatures, extreme pressures, corrosive environments, strict tolerances, and/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 demand for many of our solutions.

Our Advanced Surface Technologies (AST) segment applies proprietary technologies, processes, and capabilities to deliver a highly differentiated suite of products and solutions for the most challenging applications in high growth markets. The segment’s products and solutions are used in highly demanding environments requiring performance, precision and repeatability, with a low tolerance for failure. The segment’s solutions include cleaning, coating, testing, refurbishment and verification for critical components and assemblies used in state-of-the-art advanced node semiconductor manufacturing equipment. ItAST designs, manufactures and sells specialized optical filters and proprietary thin-film coatings for the most challenging applications in the industrial technology, life sciences, and semiconductor markets and complex front-end wafer processing sub-systems, new and refurbished electrostatic chuck pedestals, and edge-welded metal bellows for the semiconductor equipment industry and for critical applications in the space, aerospace and defense markets. In many instances, AST capabilities drive solutions that enable the maintenance of our customers’ processes through an entire life cycle.

We measure operating performance based on segment earnings before interest, income taxes, depreciation, amortization, and other selected items ("Adjusted Segment EBITDA"), which is segment revenue reduced by operating expenses and other costs identifiable with the segment, excluding acquisition and divestiture expenses, restructuring costs, impairment charges, non-controlling interest compensation, amortization of the fair value adjustment to acquisition date inventory, and depreciation and amortization. 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, corporate expenses, net interest expense, gains and losses related to the sale of assets, and income taxes are not included in the computation of Adjusted Segment EBITDA. The accounting policies of the reportable segments are the same as those for EnPro.

Non-controlling interest compensation allocation represents compensation expense associated with ~~a portion of~~ the rollover equity subject to put and call options from the acquisitions of LeanTeq and Alluxa ~~being~~ subject to reduction for certain types of employment terminations of the respective sellers. This expense is recorded in selling, general, and administrative expenses on our Consolidated Statements of Operations and is directly related to the terms of the ~~acquisitions.~~acquisition. This expense ~~will continue to be~~is recognized as compensation expense over the term of the respective put and call options ~~associated with the acquisitions~~ unless certain employment terminations ~~have occurred.~~occur. The

LeanTeq non-controlling interests were acquired by Enpro in December 2022 and, accordingly, the non-controlling interest compensation for the three months ended March 31, 2023 is attributable solely to the Alluxa rollover equity.

Segment operating results and other financial data for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows:

Quarters Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(in millions)
Sales
Sealing Technologies $ 157.9 $ 146.9 $ 467.4 $ 455.9
Advanced Surface Technologies 122.5 64.3 360.7 178.2
280.4 211.2 828.1 634.1
Intersegment sales (0.3) (1.5) (0.8) (6.4)
Total sales $ 280.1 $ 209.7 $ 827.3 $ 627.7
Adjusted Segment EBITDA
Sealing Technologies $ 39.7 $ 34.5 $ 118.1 $ 111.0
Advanced Surface Technologies 39.9 19.4 112.6 52.3
$ 79.6 $ 53.9 $ 230.7 $ 163.3
Reconciliation of Adjusted Segment EBITDA to income before income taxes
Adjusted Segment EBITDA $ 79.6 $ 53.9 $ 230.7 $ 163.3
Acquisition and divestiture expenses — (0.3) (0.4) (0.4)
Non-controlling interest compensation allocation 0.6 (1.3) 0.1 (4.1)
Amortization of fair value adjustment to acquisition date inventory (1.0) (1.0) (12.3) (5.8)
Restructuring and impairment expense (0.1) 0.2 (1.2) (1.8)
Depreciation and amortization expense (25.7) (15.4) (77.7) (46.5)
Corporate expenses (9.1) (11.6) (31.4) (37.2)
Interest expense, net (9.3) (2.6) (23.9) (10.2)
Other income (expense), net 0.9 15.8 0.9 16.1
Income before income taxes $ 35.9 $ 37.7 $ 84.8 $ 73.4

As a result of our change from the LIFO to FIFO inventory valuation as discussed in Note 1, Sealing Technologies Adjusted Segment EBITDA was recast to reflect the change. Accordingly, Sealing Technologies Adjusted Segment EBITDA for the nine months ended September 30, 2021 increased by approximately $0.2 million as a result of this change in accounting principle.


	Three Months Ended March 31,
		2023		2022
		(in millions)
Sales
Sealing Technologies		$	173.3	$	153.6
Advanced Surface Technologies		109.4		116.7
		282.7		270.3
Intersegment sales		(0.1)		(0.2)
Total sales		$	282.6	$	270.1

Adjusted Segment EBITDA
Sealing Technologies		$	49.7	$	34.3
Advanced Surface Technologies		29.5		34.9
		$	79.2	$	69.2

Reconciliation of Adjusted Segment EBITDA to income before income taxes
Income from continuing operations before income taxes		$	34.1	$	15.4
Acquisition and divestiture expenses		—		0.2
Non-controlling interest compensation allocation		0.4		(0.9)
Amortization of fair value adjustment to acquisition date inventory		—		10.3
Restructuring and impairment expense		0.4		0.3
Depreciation and amortization expense		23.5		25.9
Corporate expenses		10.7		12.9
Interest expense, net		7.9		6.9
Other income (expense), net		2.2		(1.8)
Adjusted Segment EBITDA		$	79.2	$	69.2

Segment assets are as follows:


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(in millions)					(in millions)
Sealing Technologies	Sealing Technologies	$	694.9	$	703.9	Sealing Technologies	$	708.5	$	689.6
Advanced Surface Technologies	Advanced Surface Technologies	1,591.5		1,686.5		Advanced Surface Technologies	1,514.1		1,519.6
Corporate	Corporate	259.8		434.3		Corporate	448.9		422.7
Discontinued operations	Discontinued operations	148.4		149.9		Discontinued operations	—		15.9
		$	2,694.6	$	2,974.6		$	2,671.5	$	2,647.8

Backlog

As of ~~September 30, 2022,~~March 31, 2023, the aggregate amount of transaction price of remaining performance obligations, or backlog, on a consolidated basis was ~~$335.0~~$294.0 million. Approximately ~~93%~~95% of these obligations are expected to be satisfied within one year. There is no certainty these orders will result in actual sales at the times or in the amounts ordered. In addition, for most of our business, this total is not particularly predictive of future performance because of our short lead times and some seasonality.

Revenue by End Market

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 ~~quarters and nine~~three months ended ~~September 30,~~March 31, 2023 and 2022:


	Three Months Ended March 31, 2023
(in millions)	Sealing Technologies		Advanced Surface Technologies		Total
Aerospace	$	12.5	$	1.6	$	14.1

Chemical and material processing	21.6		—		21.6
Food and pharmaceutical	18.7		—		18.7
General industrial	43.9		8.8		52.7
Commercial vehicle	52.4		—		52.4
Oil and gas	5.9		1.6		7.5
Power generation	16.1		—		16.1
Semiconductors	2.2		97.3		99.5

Total third-party sales	$	173.3	$	109.3	$	282.6


	Three Months Ended March 31, 2022
(in millions)	Sealing Technologies		Advanced Surface Technologies		Total
Aerospace	$	8.1	$	2.0	$	10.1

Chemical and material processing	20.3		—		20.3
Food and pharmaceutical	17.6		—		17.6
General industrial	42.9		7.8		50.7
Commercial vehicle	44.8		—		44.8
Oil and gas	5.1		0.6		5.7
Power generation	13.2		0.1		13.3
Semiconductors	1.6		106.0		107.6
Total third-party sales	$	153.6	$	116.5	$	270.1

In 2023, we refined the end market classification of certain sales in the Sealing Technologies segment for the quarter ended March 31, 2022. This refinement resulted in a reduction in sales reported for the quarter ended March 31, 2022 in the general industrial and ~~2021:~~other and food and pharmaceutical markets by approximately $1.7 million and $1.4 million, respectively. There was an offsetting increase in the power generation and semiconductor markets of $2.8 million and $0.3 million, respectively.

Quarter Ended September 30, 2022
(in millions) Sealing Technologies Advanced Surface Technologies Total
Aerospace $ 10.9 $ 1.5 $ 12.4
Automotive 0.6 0.5 1.1
Chemical and material processing 19.1 — 19.1
Food and pharmaceutical 17.6 — 17.6
General industrial 40.0 6.8 46.8
Medium-duty/heavy-duty truck 51.7 — 51.7
Oil and gas 5.5 1.6 7.1
Power generation 8.7 — 8.7
Semiconductors 1.9 111.5 113.4
Other 1.6 0.6 2.2
Total third-party sales $ 157.6 $ 122.5 $ 280.1
Quarter Ended September 30, 2021
(in millions) Sealing Technologies Advanced Surface Technologies Total
Aerospace $ 8.4 $ 2.6 $ 11.0
Automotive 0.6 0.2 0.8
Chemical and material processing 17.5 — 17.5
Food and pharmaceutical 16.8 — 16.8
General industrial 40.9 7.2 48.1
Medium-duty/heavy-duty truck 43.2 — 43.2
Oil and gas 4.6 1.0 5.6
Power generation 8.4 0.1 8.5
Semiconductors 3.3 52.5 55.8
Other 1.8 0.6 2.4
Total third-party sales $ 145.5 $ 64.2 $ 209.7

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 out 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 GGB sale allocated to foreign subsidiaries. We expect this intercompany note to be settled during 2023. The notional amount of foreign exchange contracts was $104.8 million and $103.3 million March 31, 2023 and December 31, 2022 respectively. All foreign exchange contracts outstanding at December 31, 2022 expired in January 2023.

The notional amounts of all of our foreign exchange contracts were recorded at their fair market value as of December 31, 2022 with changes in market value recorded in income. The earnings impact of any foreign exchange contract that is

1713

Nine Months Ended September 30, 2022
(in millions) Sealing Technologies Advanced Surface Technologies Total
Aerospace $ 29.7 $ 4.6 $ 34.3
Automotive 1.7 1.3 3.0
Chemical and material processing 59.1 — 59.1
Food and pharmaceutical 55.1 — 55.1
General industrial 123.5 21.2 144.7
Medium-duty/heavy-duty truck 139.9 — 139.9
Oil and gas 16.1 3.3 19.4
Power generation 31.6 0.1 31.7
Semiconductors 4.4 327.8 332.2
Other 5.6 2.3 7.9
Total third-party sales $ 466.7 $ 360.6 $ 827.3

Nine Months Ended September 30, 2021
(in millions) Sealing Technologies Advanced Surface Technologies Total
Aerospace $ 23.4 $ 7.1 $ 30.5
Automotive 1.6 0.7 2.3
Chemical and material processing 54.1 — 54.1
Food and pharmaceutical 49.8 — 49.8
General industrial 128.5 19.4 147.9
Medium-duty/heavy-duty truck 129.7 — 129.7
Oil and gas 14.2 3.4 17.6
Power generation 29.1 0.1 29.2
Semiconductors 13.4 145.3 158.7
Other 5.9 2.0 7.9
Total third-party sales $ 449.7 $ 178.0 $ 627.7

~~13. Derivatives and Hedging~~

In September 2018, we entered into cross-currency swap agreements (the "Original Swap") with a notional amount of $200.0 million to manage foreign currency risk by effectively converting a portion of the interest paymentsspecifically related to ~~our fixed-rate U.S. Dollar (“USD”)-denominated Senior Notes, including~~ the ~~semi-annual interest payments thereunder, to interest payments on fixed-rate Euro-denominated debt~~purchase of ~~172.8 million EUR with a weighted average interest rate~~inventory is recorded in cost of ~~2.8%, with interest payment dates of March 15~~sales and ~~September 15 of each year.~~

~~The Original Swap matured on September 15, 2022. At settlement, we received $30.8 million~~the changes in ~~cash, of which $27.4 million represented the fair~~market value of all other contracts are recorded in selling, general and administrative expense in the ~~contracts as~~Consolidated Statements of Operations. The balances of foreign exchange derivative assets are recorded in other current assets and the ~~settlement date and $3.4 million represented interest receivable. Unrealized gains totaling $20.8 million, net~~balances of ~~tax, as of~~foreign exchange derivative liabilities are recorded in accrued expenses in the ~~maturity date are included in accumulated other comprehensive income.~~Consolidated Balance Sheets.

In May 2019, we entered into ~~additional~~a cross-currency swap agreements (the ~~"Additional Swap"~~"Swap") with a 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 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 Additional 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. 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 ~~Additional~~ Swap agreement 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 ~~Additional~~ Swap agreement was entered into.

We have designated the ~~Additional~~ Swap as a qualifying hedging instruments and are accounting for it as a net investment hedge. At ~~September 30, 2022,~~March 31, 2023, the fair value of the ~~Additional~~ Swap equaled ~~$15.8~~$7.9 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 ~~Additional~~ Swap agreement, excluding interest accruals related to the above receipts, are recorded in accumulated other comprehensive income within our cumulative foreign currency translation adjustment, as the ~~Additional~~ Swap is effective in hedging the designated risk. Cash flows related to the ~~Additional~~ 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.

~~14.~~13. Fair Value Measurements

Assets and liabilities measured at fair value on a recurring basis are summarized as follows:


		Fair Value Measurements as of					Fair Value Measurements as of
		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(in millions)					(in millions)
Assets	Assets					Assets

Short-term investments						Short-term investments	35.0		—
Foreign currency derivatives	Foreign currency derivatives	15.8		8.7		Foreign currency derivatives	7.9		8.5
Deferred compensation assets	Deferred compensation assets	9.6		10.9		Deferred compensation assets	10.1		9.8
		$	25.4	$	19.6		$	53.0	$	18.3
Liabilities	Liabilities					Liabilities
Deferred compensation liabilities	Deferred compensation liabilities	$	9.9	$	11.4	Deferred compensation liabilities	$	10.5	$	10.3

Our 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. Our short-term investments represent certificates of deposits acquired in the first quarter of 2023 with a maturity date in July 2023.

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, 2022 December 31, 2021
Carrying
Value Fair
Value Carrying
Value Fair
Value
(in millions)
Long-term debt $ 883.6 $ 870.1 $ 976.6 $ 998.3


	March 31, 2023				December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in millions)
Long-term debt	$	786.8	$	782.7	$	790.7	$	788.8

The fair values for long-term debt are based on quoted market prices for identical liabilities, but these are considered Level 2 computations because the market is not active.

~~15.~~14. Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component (after tax) for the ~~quarter~~three months ended ~~September 30, 2022~~March 31, 2023 are as follows:
(in millions) Unrealized
Translation
Adjustments Pension and
Other
Postretirement
Plans Total
Beginning balance $ 19.9 $ (31.9) $ (12.0)
Other comprehensive loss before reclassifications (33.3) — (33.3)
Amounts reclassified from accumulated other comprehensive loss — 0.2 0.2
Net current-period other comprehensive income (loss) (33.3) 0.2 (33.1)
Less: other comprehensive loss attributable to redeemable non-controlling interests (1.8) — (1.8)
Net current-period other comprehensive income (loss) attributable to EnPro Industries, Inc. (31.5) 0.2 (31.3)
Ending balance $ (11.6) $ (31.7) $ (43.3)

~~Changes in accumulated other comprehensive income (loss) by component (after tax) for the quarter ended September 30, 2021 are as follows:~~
(in millions) Unrealized
Translation
Adjustments Pension and
Other
Postretirement
Plans Total
Beginning balance $ 35.3 $ (36.3) $ (1.0)
Other comprehensive loss before reclassifications (1.2) — (1.2)
Amounts reclassified from accumulated other comprehensive loss — 0.2 0.2
Net current-period other comprehensive income (loss) (1.2) 0.2 (1.0)
Less: other comprehensive income attributable to redeemable non-controlling interests 0.2 — 0.2
Net current-period other comprehensive income (loss) attributable to EnPro Industries, Inc. (1.4) 0.2 (1.2)
Ending balance $ 33.9 $ (36.1) $ (2.2)

~~Changes in accumulated other comprehensive income (loss) by component (after tax) for the nine months ended September 30, 2022 are as follows:~~
(in millions) Unrealized
Translation
Adjustments Pension and
Other
Postretirement
Plans Total
Beginning balance $ 46.7 $ (32.1) $ 14.6
Other comprehensive loss before reclassifications (62.1) (62.1)
Amounts reclassified from accumulated other comprehensive income — 0.4 0.4
Net current-period other comprehensive income (loss) (62.1) 0.4 (61.7)
Less: other comprehensive loss attributable to redeemable non-controlling interests (3.8) — (3.8)
Net current-period other comprehensive income (loss) attributable to EnPro Industries, Inc. (58.3) 0.4 (57.9)
Ending balance $ (11.6) $ (31.7) $ (43.3)


(in millions)	Unrealized Translation Adjustments		Pension and Other Postretirement Plans		Total
Beginning balance	$	11.8	$	(45.1)	$	(33.3)


Other comprehensive income before reclassifications	6.8				6.8
Amounts reclassified from accumulated other comprehensive loss	—		0.3		0.3


Net current-period other comprehensive income attributable to EnPro Industries, Inc.	6.8		0.3		7.1
Ending balance	$	18.6	$	(44.8)	$	(26.2)

Changes in accumulated other comprehensive income (loss) by component (after tax) for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 are as follows:


(in millions)	(in millions)	Unrealized Translation Adjustments		Pension and Other Postretirement Plans		Total		(in millions)	Unrealized Translation Adjustments		Pension and Other Postretirement Plans		Total
Beginning balance	Beginning balance	$	31.7	$	(36.6)	$	(4.9)	Beginning balance	$	46.7	$	(32.1)	$	14.6

Other comprehensive income before reclassifications		2.5		—		2.5
Amounts reclassified from accumulated other comprehensive loss		—		0.5		0.5
Net current-period other comprehensive income		2.5		0.5		3.0
Other comprehensive loss before reclassifications								Other comprehensive loss before reclassifications	(12.8)		—		(12.8)
Amounts reclassified from accumulated other comprehensive income								Amounts reclassified from accumulated other comprehensive income	—		0.1		0.1
Net current-period other comprehensive loss								Net current-period other comprehensive loss	(12.8)		0.1		(12.7)
Less: other comprehensive income attributable to redeemable non-controlling interests	Less: other comprehensive income attributable to redeemable non-controlling interests	0.3		—		0.3		Less: other comprehensive income attributable to redeemable non-controlling interests	(1.0)		—		(1.0)
Net current-period other comprehensive income attributable to EnPro Industries, Inc.	Net current-period other comprehensive income attributable to EnPro Industries, Inc.	2.2		0.5		2.7		Net current-period other comprehensive income attributable to EnPro Industries, Inc.	(11.8)		0.1		(11.7)
Ending balance	Ending balance	$	33.9	$	(36.1)	$	(2.2)	Ending balance	$	34.9	$	(32.0)	$	2.9

Reclassifications out of accumulated other comprehensive income (loss) for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ are as follows:
Details about Accumulated Other Comprehensive Income (Loss) Components Amount Reclassified from Accumulated Other
Comprehensive Income (Loss) Affected Statement of
Operations Caption
Quarters Ended
September 30, Nine Months Ended
September 30,
(in millions) 2022 2021 2022 2021
Pension and other postretirement plans adjustments:
Actuarial losses $ 0.2 $ 0.3 $ 0.5 $ 0.6 (1)
Prior service costs — — — 0.1 (1)
Total before tax 0.2 0.3 0.5 0.7 Income before income taxes
Tax benefit — (0.1) (0.1) (0.2) Income tax expense
Net of tax $ 0.2 $ 0.2 $ 0.4 $ 0.5 Net income

~~(1)~~These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension cost. As these are components of net periodic pension cost other than service cost, the affected Statement of Operations captions are other income (expense) (See ~~Note 10, “Pensions and Postretirement Benefits"” for additional details).~~


Details about Accumulated Other Comprehensive Income (Loss) Components		Amount Reclassified from Accumulated Other Comprehensive Income (Loss)				Affected Statement of Operations Caption
	Three Months Ended March 31,
(in millions)		2023		2022
Pension and other postretirement plans adjustments:
Actuarial losses		$	0.4	$	0.1	Other income (expense)


Total before tax		0.4		0.1		Income before income taxes
Tax benefit		(0.1)		—		Income tax expense
Net of tax		$	0.3	$	0.1	Net income

~~16.~~

15. Commitments and Contingencies

General

A description of certain environmental 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 laws and regulations of the U.S. and foreign countries. We take a proactive approach in our efforts to comply with these laws and 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 remediation activities or an investigation to determine responsibility for environmental conditions at 19 sites. At 129 of these sites, the future cost per site for us or our subsidiary is expected to exceed

~~$100,000.~~ $100,000. Of these 19 sites, 1718 are sites where we or one or more of our subsidiaries formerly conducted business operations but no longer do, and ~~2 are sites~~1 is a site where we conduct manufacturing operations. Investigations have been completed for 16 sites. At 7 of these sites, ~~and~~remediation systems are operating while at the other 9 sites, our only obligation is to conduct periodic monitoring. Investigations are in progress at 3 sites. ~~An investigation to determine responsibility for environmental conditions is ongoing at one site.~~

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 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 and adjusted to reflect additional technical data and legal information. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we had ~~accrued~~recorded liabilities aggregating ~~$37.9~~$41.2 million and ~~$46.4~~$42.1 million, respectively, for estimated future expenditures relating to environmental contingencies. The current portion of our aggregate environmental liability included in accrued liabilities was $10.4 million at ~~September 30, 2022 was $11.0 million.~~March 31, 2023. 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.

We believe that our accruals for specific environmental liabilities are adequate 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 19 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 a predecessor of EnPro Holdings when it sold a majority interest in Crucible Materials Corporation (the successor of Crucible) in 1985. The United States Environmental Protection Agency (the “EPA”) notified our subsidiary 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.

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 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.

On April 14, 2021, the EPA 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. In September 2022, EnPro 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 ~~September 30, 2022~~March 31, 2023 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 reasonably possible range of loss related to any other contingent environmental liability based on our prior ownership of Crucible. See the section entitled “Crucible Steel Corporation a/k/a Crucible, Inc.” in this footnote for additional information.

Arizona Uranium Mines

EnPro Holdings has received notices from the EPA asserting that it is a potentially responsible party under the CERCLA as the successor to a former operator of eight uranium mines in Arizona. 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 capping the exposed areas of the mines. We have previously reserved amounts of probable loss associated with these mines, principally including the cost of the investigative work to be conducted at such mines. We entered into an Administrative Settlement Agreement and Order on Consent for Interim Removal Action with the EPA effective November 7, 2017 for the performance of this work. We entered into a First Modification of Original Administrative Settlement Agreement and Order on Consent effective July 8, 2022 for the performance of Engineering Evaluations and Cost Analyses of potential remedial options at each of the sites. In 2020, 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 ~~September 30, 2022~~March 31, 2023 for this site was ~~$13.3~~$12.4 million, which reflects the low end of the range of our reasonably likely liability with respect to these sites. We are not able at this time to estimate the upper end of a range of liability with respect to these 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 $3.3 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 ~~September 30, 2022.~~March 31, 2023.

In addition to the two sites discussed above, we have additional reserves of $28.1 million, of which $14.3 million pertains to implementing and managing a solution to clean trichloroethylene soil and groundwater contamination at the location of a former operation in Water Valley, Mississippi. These amounts represent a reasonable estimate of our probable future costs to remediate these sites given the facts and circumstances known at March 31, 2023.

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 EnPro Holdings until 1983 when its assets and liabilities were distributed to a new

subsidiary, Crucible Materials Corporation. EnPro 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.

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 EnPro Holdings' period of ownership of Crucible. Based on EnPro 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, historical experience, and trends result in changes to our estimate.

Changes in the product warranty liability for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ are as follows:


		2022		2021			2023		2022
		(in millions)					(in millions)
Balance at beginning of year	Balance at beginning of year	$	4.9	$	6.5	Balance at beginning of year	$	5.2	$	4.9
Net charges to expense	Net charges to expense	0.9		1.4		Net charges to expense	0.3		0.4
Settlements made	Settlements made	(0.8)		(2.0)		Settlements made	(0.3)		(0.7)
Balance at end of period	Balance at end of period	$	5.0	$	5.9	Balance at end of period	$	5.2	$	4.6

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, ~~2021.~~2022.

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 EnPro 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, ~~2021,~~2022, 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 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 the ~~impact~~duration and severity of ~~geopolitical activity on those markets, including instabilities associated with the armed conflict in Ukraine and any conflict or threat of conflict that may affect Taiwan;~~

•impacts from the ~~coronavirus (or COVID-19)~~COVID-19 pandemic ~~and governmental responses to limit the further spread of COVID-19, including impacts~~ on our ~~company’s~~ operations, and the operations and businesses of our customers and vendors, including whether our operations and those of our customers and vendors will continue to be treated as “essential” operations under government orders restricting business activities or, even if so treated, whether site-specific health and safety concerns might otherwise require certain of our operations to be halted for some period of time;

•~~uncertainty with respect to the duration and severity of these impacts from the COVID-19 pandemic, including~~ impacts on the general economy and the markets served by our customers, ~~(including international markets~~as well as supply chain disruptions and materials cost increases that ~~may~~are not ~~recover at the same pace as markets in the United States), and consequent reductions in the demand for~~passed along to our ~~products and solutions, which could result in additional intangible asset impairment charges;~~

•customers; uncertainties with respect to prices and availability of raw materials, including as a result of the COVID-19 pandemic or ~~governmental sanctions imposed in response to the commencement or continuation of armed hostilities;~~instabilities from geopolitical conflicts;

•uncertainties with respect to our ability to achieve anticipated growth within the semiconductor, life sciences, and other technology-enabled markets;

•the impact of fluctuations in relevant foreign currency exchange rates or unanticipated increases in applicable interest rates;

•unanticipated delays or problems in introducing new products;

•the impact of any labor disputes;

•announcements by competitors of new products, services or technological innovations;

•changes in our pricing policies or the pricing policies of our competitors;

•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 shareholders not to place undue reliance on our 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 Industries, Inc., adjusted diluted earnings per share attributable to EnPro Industries, 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 "—Reconciliations of Non-GAAP Financial Measures to the Comparable GAAP Measures"

We believe 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, the non-GAAP measures we use are not necessarily comparable to similarly titled measures used by other companies.

Discontinued Operations

~~During~~On January 30, 2023, we closed on the ~~third quarter~~sale of ~~2022, we entered into an agreement to sell our GGB business and announced our intention to sell~~ Garlock Pipeline Technologies, Inc. (GPT). ~~These businesses,~~This business, along with ~~Compressor Products International (CPI),~~our GGB business which was divested on ~~December 21, 2021,~~November 4, 2022, comprised our ~~entire~~remaining Engineered Materials segment ("Engineered Materials"). ~~As a result of classifying the GGB and GPT businesses as held for sale at September 30, 2022, we determined Engineered Materials to be discontinued operations.~~ Accordingly, we have ~~reported,~~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

Overview. We are 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 life sciences. We have 1213 primary manufacturing and service facilities located in 56 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.

We manage our business as two segments: a Sealing Technologies segment and an Advanced Surface Technologies segment.

Our Sealing Technologies segment designs and manufactures value-added products and solutions that safeguard a variety of critical environments, including: metallic, non-metallic and composite material gaskets, dynamic seals, compression packing, resilient metal seals, elastomeric seals, custom-engineered mechanical seals for applications in the aerospace industry and other markets, hydraulic components, expansion joints, sanitary gaskets, hoses and fittings for the hygienic process industries, fluid transfer products for the pharmaceutical and biopharmaceutical industries, and heavy-duty commercial vehicle parts 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, food and biopharmaceutical processing, primary metal manufacturing, mining, water and waste treatment, heavy-duty trucking, aerospace, medical, filtration and semiconductor fabrication. In all of these industries, performance and durability of our proprietary products and solutions are vital for the safety and environmental protection of our customers processes. Many of our products and solutions are used in highly demanding applications ~~oftentimes in incredibly~~and harsh environments, e.g., where extreme temperatures, extreme pressures, corrosive environments, strict tolerances, and/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 demand for many of our solutions.

~~COVID-19 Impacts.~~ COVID-19 continues to significantly impact the health and economic environment around the world. Our customers are principally global manufacturers and the impact of the COVID-19 pandemic on general economic conditions, and more deleterious effects on certain markets, have had and may continue to have negative implications on demand for their goods and consequently on their demand for our products and solutions. Because of uncertainties with respect to the continuing severity and duration of the COVID-19 outbreak, which may vary significantly in different regions of the world and could be impacted by new variants, the duration and terms of related governmental orders restricting activities, and the timing and pace of any economic recovery as COVID-19 impacts abate in different regions, we cannot predict with precision the extent and duration of any future changes in demand for our products and solutions due to COVID-19 impacts and the consequent impact on our business and financial results.

All of our primary manufacturing facilities are currently open and generally have not experienced significant supply chain disruptions. Certain operations are experiencing upstream supply chain challenges for raw materials, including certain metals and rubber-related chemicals, as raw material supply, which was reduced in response to the economic slowdown related to the COVID-19 pandemic, has not sufficiently increased to address increasing demand, including inventory restocking, as general economic activity has improved. Additionally, each of our businesses has developed continuity and contingency plans, based on various scenarios in preparation for potential operational disruptions, to permit us to adjust production levels to demand. We cannot predict if and when closures or production changes may arise as a result of implications related to the COVID-19 pandemic.

2620

Highlights. Financial highlights of our continuing operations for the ~~quarters and nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ are as follows:


		Quarters Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022
		(in millions, except per share data)									(in millions, except per share data)
Net sales	Net sales	$	280.1	$	209.7	$	827.3	$	627.7	Net sales	$	282.6	$	270.1
Income from continuing operations attributable to EnPro Industries, Inc.	Income from continuing operations attributable to EnPro Industries, Inc.	$	26.2	$	24.0	$	64.2	$	58.5	Income from continuing operations attributable to EnPro Industries, Inc.	$	26.0	$	11.9
Net income attributable to EnPro Industries, Inc.	Net income attributable to EnPro Industries, Inc.	$	26.9	$	27.9	$	78.1	$	75.4	Net income attributable to EnPro Industries, Inc.	$	37.4	$	16.8
Diluted earnings per share from continuing operations attributable to EnPro Industries, Inc.	Diluted earnings per share from continuing operations attributable to EnPro Industries, Inc.	$	1.26	$	1.16	$	3.08	$	2.82	Diluted earnings per share from continuing operations attributable to EnPro Industries, Inc.	$	1.24	$	0.57
Adjusted income attributable to EnPro Industries, Inc.1	Adjusted income attributable to EnPro Industries, Inc.1	$	39.8	$	24.1	$	115.9	$	69.5	Adjusted income attributable to EnPro Industries, Inc.1	$	40.7	$	32.4
Adjusted diluted earnings per share from attributable to EnPro Industries, Inc.1	Adjusted diluted earnings per share from attributable to EnPro Industries, Inc.1	$	1.91	$	1.16	$	5.56	$	3.35	Adjusted diluted earnings per share from attributable to EnPro Industries, Inc.1	$	1.95	$	1.56
Adjusted EBITDA 1	Adjusted EBITDA 1	$	71.3	$	41.9	$	203.9	$	124.1	Adjusted EBITDA 1	$	68.6	$	59.0

1 A reconciliation of non-GAAP measures to their respective GAAP measure is located in the Reconciliation of Non-GAAP Financial Measures to the Comparable GAAP Measure at the end of this section.

~~Our strong~~

Strong sales results in the ~~third~~first quarter of ~~2022~~2023 were driven by organic growth in ~~both the~~our Sealing ~~and Advanced Surface~~ Technologies segments, pricing initiatives and the contribution from NxEdge, despite ongoing inflationary pressures, supply chain challenges and heightened macroeconomic uncertainty. Our results were driven by continued positive momentumsegment. Growth in the ~~semiconductor,~~ aerospace, power generation (nuclear), commercial vehicle, general industrial and food and ~~pharmaceutical~~pharma markets, ~~with general industrial~~positive mix and ~~power generation (nuclear)~~strategic pricing initiatives more than offset the current slowdown in semiconductor markets ~~remaining firm. Demand for our leading industrial technology applications remains high.~~during the first quarter.

Our increased income from continuing operations attributable to EnPro Industries, Inc. and adjusted EBITDA compared to the prior-year period were driven primarily by ~~the addition of NxEdge, pricing initiatives, and~~ operating leverage on organic ~~sales~~volume growth in the Sealing Technologies segment, and SG&A cost controls, and pricing initiatives to offset by inflationary ~~raw~~ material costs and rising labor ~~expenses,~~expenses.

We are committed to our strategy to create long-term shareholder value through earnings growth, strong free cash flow generation and ~~the impact~~a balanced capital allocation approach. We will continue to focus our investments on new products, technology innovation, and productivity and continuous improvement initiatives in both of ~~divestitures completed in 2021.~~

our segments. In connection with our growth strategy, we ~~will~~ continue to evaluate ~~making additional acquisitions to take advantage of~~acquisition opportunities that ~~arise. We will consider making additional divestitures over time, and under the right circumstances, to further~~fit our ~~long-term~~ strategic ~~goals of refocusing our portfolio~~frameworks in both segments, based on ~~businesses with~~a consistent criteria that includes compelling margins, leading technology, ~~compelling margins, strong~~aftermarket/recurring revenue characteristics and high cash flow ~~and high levels of recurring revenue~~return on investment in markets that ~~serve markets with favorable~~have secular tailwinds.

2721

Results of Operations


		Quarters Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
		(in millions)										(in millions)
Sales	Sales									Sales
Sealing Technologies	Sealing Technologies	$	157.9	$	146.9	$	467.4	$	455.9	Sealing Technologies		$	173.3	$	153.6
Advanced Surface Technologies	Advanced Surface Technologies	122.5		64.3		360.7		178.2		Advanced Surface Technologies		109.4		116.7
		280.4		211.2		828.1		634.1				282.7		270.3
Intersegment sales	Intersegment sales	(0.3)		(1.5)		(0.8)		(6.4)		Intersegment sales		(0.1)		(0.2)
Net sales	Net sales	$	280.1	$	209.7	$	827.3	$	627.7	Net sales		$	282.6	$	270.1

Income from continuing operations attributable to EnPro Industries, Inc., net of tax	Income from continuing operations attributable to EnPro Industries, Inc., net of tax	$	26.2	$	24.0	$	64.2	$	58.5	Income from continuing operations attributable to EnPro Industries, Inc., net of tax		$	26.0	$	11.9

Adjusted Segment EBITDA	Adjusted Segment EBITDA									Adjusted Segment EBITDA
Sealing Technologies	Sealing Technologies	$	39.7	$	34.5	$	118.1	$	111.0	Sealing Technologies		$	49.7	$	34.3
Advanced Surface Technologies	Advanced Surface Technologies	39.9		19.4		112.6		52.3		Advanced Surface Technologies		29.5		34.9
Total Adjusted Segment EBITDA	Total Adjusted Segment EBITDA	$	79.6	$	53.9	$	230.7	$	163.3	Total Adjusted Segment EBITDA		$	79.2	$	69.2

Reconciliation of Adjusted Segment EBITDA to income from continuing operations attributable to EnPro Industries, Inc., net of tax
Adjusted Segment EBITDA		$	79.6	$	53.9	$	230.7	$	163.3
Reconciliations of Income from continuing operations attributable to EnPro Industries, Inc. to Adjusted Segment EBITDA										Reconciliations of Income from continuing operations attributable to EnPro Industries, Inc. to Adjusted Segment EBITDA
Income from continuing operations attributable to EnPro Industries, Inc.										Income from continuing operations attributable to EnPro Industries, Inc.		$	26.0	$	11.9
Plus: net income attributable to redeemable non-controlling interests										Plus: net income attributable to redeemable non-controlling interests		—		0.3
Income from continuing operations										Income from continuing operations		26.0		12.2
Income tax expense										Income tax expense		(8.1)		(3.2)
Income from continuing operations before income taxes										Income from continuing operations before income taxes		34.1		15.4
Acquisition and divestiture expenses	Acquisition and divestiture expenses	—		(0.3)		(0.4)		(0.4)		Acquisition and divestiture expenses		—		0.2
Non-controlling interest compensation allocation	Non-controlling interest compensation allocation	0.6		(1.3)		0.1		(4.1)		Non-controlling interest compensation allocation		0.4		(0.9)
Amortization of fair value adjustment to acquisition date inventory		(1.0)		(1.0)		(12.3)		(5.8)
Restructuring and impairment expense		(0.1)		0.2		(1.2)		(1.8)
Amortization of the fair value adjustment to acquisition date inventory										Amortization of the fair value adjustment to acquisition date inventory		—		10.3
Restructuring and impairment costs										Restructuring and impairment costs		0.4		0.3
Depreciation and amortization expense	Depreciation and amortization expense	(25.7)		(15.4)		(77.7)		(46.5)		Depreciation and amortization expense		23.5		25.9
Corporate expenses	Corporate expenses	(9.1)		(11.6)		(31.4)		(37.2)		Corporate expenses		10.7		12.9
Interest expense, net	Interest expense, net	(9.3)		(2.6)		(23.9)		(10.2)		Interest expense, net		7.9		6.9
Other income, net		0.9		15.8		0.9		16.1
Income from continuing operations before income taxes		35.9		37.7		84.8		73.4
Income tax expense		(9.1)		(13.6)		(19.8)		(14.8)
Income from continuing operations		26.8		24.1		65.0		58.6
Less: net income attributable to redeemable non-controlling interests		0.6		0.1		0.8		0.1
Income from continuing operations attributable to EnPro Industries, Inc., net of tax		$	26.2	$	24.0	$	64.2	$	58.5

Other income (expense), net										Other income (expense), net		2.2		(1.8)
Adjusted Segment EBITDA										Adjusted Segment EBITDA		$	79.2	$	69.2

We measure operating performance based on segment earnings before interest, income taxes, depreciation, amortization, and other selected items ("Adjusted Segment EBITDA" or "Segment AEBITDA"), which is segment revenue reduced by operating expenses and other costs identifiable with the segment, excluding acquisition and divestiture expenses, restructuring costs, impairment charges, non-controlling interest compensation, amortization of the fair value adjustment to acquisition date inventory, and depreciation and amortization. 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, corporate expenses, net interest expense, gains and losses related to the sale of assets, and income taxes are not included in the computation of Adjusted Segment EBITDA. The accounting policies of the reportable segments are the same as those for EnPro.

of employment terminations of the respective sellers. This expense is recorded in selling, general, and administrative expenses on our Consolidated

Statements of Operations and is directly related to the terms of the acquisitions. This expense ~~will continue to be~~is recognized as compensation expense over the term of the respective put and call options ~~associated with each of these acquisitions~~ unless certain employment terminations ~~have occurred.~~occur. The LeanTeq non-controlling interests were acquired by EnPro in December 2022.

Other income (expense), net in the table above contains all items included in other (operating) expense and other income (expense) (non-operating) on our Consolidated Statements of Operations for the ~~quarters and nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ with the exception of ~~$0.1 million for the quarter ended September 30, 2022 and $2.2~~$0.8 million and ~~$2.0~~$1.3 million, ~~for the nine months ended September 30, 2022 and 2021,~~ respectively, of restructuring costs. As noted previously, restructuring costs are excluded from Adjusted Segment EBITDA. Additionally, other income (expense), net in the table above for the ~~quarters and nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ includes ~~$(0.6) million, $0.8 million, $(2.7)~~$0.4 million, and ~~$2.6~~$(1.2) million, respectively, of miscellaneous expenses (income) that are either not associated with a particular segment or not considered part of administering the corporate functions. These expenses are included in selling, general and administrative expense on our Consolidated Statements of Operations.

~~Third Quarter of 2022~~

Three Months Ended March 31, 2023 Compared to the ~~Third Quarter of 2021~~

Three Months Ended
March 31, 2022

Sales of ~~$280.1~~$282.6 million in the ~~third quarter~~first three months of ~~2022~~2023 increased ~~33.6%~~4.6% from ~~$209.7~~$270.1 million in the ~~third quarter~~first three months of ~~2021.~~2022. The following table summarizes the impact of ~~acquisitions, divestitures,~~a divestiture and foreign currency on sales by segment:

Sales Percent Change Third Quarter 2022 vs. Third Quarter 2021
increase/(decrease) Acquisitions and Divestitures Foreign
Currency Organic Total
EnPro Industries, Inc. 20.8 % (3.4) % 16.2 % 33.6 %
Sealing Technologies (5.1) % (4.0) % 16.6 % 7.5 %
Advanced Surface Technologies 77.4 % (2.0) % 15.1 % 90.5 %

~~Following are the key effects of acquisitions and divestitures on sales for the third quarter of 2022 compared to the same period in 2021:~~

•~~Acquisition of NxEdge (Advanced Surface Technologies) in December 2021~~

•~~Divestiture of the polymer components business unit (Sealing Technologies), which was principally located in Houston, in September 2021~~


Sales	Percent Change Three Months Ended March 31, 2023 vs. Three Months Ended March 31, 2022
increase/(decrease)	Divestiture		Foreign Currency		Organic		Total
EnPro Industries, Inc.	(0.4)	%	(1.3)	%	6.3	%	4.6	%
Sealing Technologies	(0.8)	%	(1.5)	%	15.1	%	12.8	%
Advanced Surface Technologies	—	%	(1.0)	%	(5.3)	%	(6.3)	%

Following is a discussion of operating results for each segment ~~during~~for the ~~third quarter~~first three months of 2023 as compared to the first three months of 2022:

Sealing ~~Technologies~~.Technologies. Sales of ~~$157.9~~$173.3 million in the ~~third quarter~~first three months of ~~2022~~2023 reflect a ~~7.5%~~12.8% increase compared to the ~~$146.9~~$153.6 million reported in the same period of ~~2021.~~2022. Excluding the unfavorable foreign exchange translation ($~~5.9~~2.2 million) on our sales in the first three months of 2023 and the sales ~~from businesses that have since been~~in the first three months of 2022 by the business divested in the fourth quarter of 2022 ($~~6.4~~1.1 million) ~~from 2021 results,~~, sales were up ~~16.6%,~~15.1% or ~~$23.3~~$23.0 million. ~~This~~The increase in sales was driven by strong demand in the aerospace, general industrial, power generation (nuclear), commercial vehicle and food and ~~pharmaceuticals, aerospace, and heavy-duty truck markets.~~pharmaceutical markets, along with the positive impact of strategic pricing initiatives.

Adjusted Segment EBITDA of ~~$39.7~~$49.7 million in the ~~third quarter~~first three months of ~~2022~~2023 increased ~~15.1%~~44.9% from ~~$34.5~~$34.3 million reported in the ~~same period~~first three months of ~~2021.~~2022. Segment AEBITDA margins for the segment increased from ~~23.5%~~22.3% in the ~~third~~first three months of 2022 to 28.7% in the first three months of 2023. Excluding the unfavorable foreign exchange translation ($0.5 million) and the Segment AEBITDA of the business sold in the fourth quarter of ~~2021~~2022 ($0.5 million) from 2022 results, Adjusted Segment EBITDA increased 48.5%, or $16.4 million, to ~~25.1% for~~$50.2 million. The increase in Segment AEBITDA was primarily driven by higher pricing ($12.2 million), favorable volume ($7.0 million), and decreased selling, general, and administrative costs ($0.3 million), partially offset by higher material, labor, and overhead costs ($3.1 million).

Advanced Surface Technologies. Sales of $109.4 million in the ~~third quarter~~first three months of 2023 reflect a 6.3% decrease compared to the $116.7 million reported in the same period of 2022. Excluding the unfavorable foreign exchange translation ($1.5 million) and the Segment EBITDA earned from businesses that have since been divested ($1.0 million) from 2021 results, Adjusted Segment EBITDA increased 23.4%, or $7.8 million, to $41.2 million. The increase in Segment EBITDA was driven primarily by higher pricing ($13.3 million), favorable volume, net of mix ($2.0 million), and decreased incentive compensation ($0.3 million) and foreign exchange transaction related costs ($0.6 million), partially offset by higher manufacturing costs ($7.7 million) and increased travel-related costs ($0.7 million).

~~Advanced Surface Technologies. Sales of $122.5 million~~ ~~in the third quarter of 2022~~ reflect a 90.5% increase compared to the $64.3 million reported in the same period of 2021. Excluding the unfavorable foreign exchange translation ($1.3 million) and the sales from a recent acquisition ($49.9 million) from 2022 results, sales were up 15.1%, or $9.7 million. This increase was driven primarily by strong demand in the semiconductor market.

Adjusted Segment EBITDA of $39.9 million in the third quarter of 2022 increased 105.7% from $19.4 million reported in the same period of 2021. Segment AEBITDA margins increased from 30.2% in the third quarter of 2021 to 32.6% in the third quarter of 2022. Excluding the unfavorable foreign exchange translation ($0.9 million) and the Segment AEBITDA

contributed from a business recently acquired ($16.1 million) from our 2022 results, Adjusted Segment EBITDA increased 27.3%, or $5.3 million, to $24.7 million. This increase in Adjusted Segment EBITDA was driven by favorable volume, net of mix ($4.3 million), increased pricing ($2.3 million), and decreased foreign exchange transaction related costs ($1.3 million) partially offset by increased manufacturing costs ($1.7 million) and higher selling, general, and administrative costs ($0.9 million).

Corporate expenses for the third quarter of 2022 decreased $2.5 million as compared to the same period in 2021. The decrease was driven primarily by decreased costs related to the sale of Engineered Materials ($1.5 million), costs incurred related to the CEO transition in the prior-year period ($1.7 million), and lower medical and insurance related costs ($1.0 million), partially offset by higher incentive compensation expense ($1.7 million).

Interest expense, net in the third quarter of 2022 increased $6.7 million as compared to the same period of 2021 primarily due to increased outstanding debt in 2022 as a result of indebtedness incurred to fund the recent NxEdge acquisition.

Other income, net in the third quarter of 2022 decreased by $14.9 million as compared to the same period of 2021, primarily due to gain on sale of businesses in 2021 ($19.4 million) and decreased pension income from non-service costs ($1.3 million), partially offset by $1.3 million net foreign exchange gains, and lower environmental related expense ($4.4 million).

Income from continuing operations attributable to EnPro Industries, Inc. was $26.2 million, or $1.26 per share, in the third quarter of 2022 compared to $24.0 million, or $1.16 per share, in the same period of 2021. Earnings per share is expressed on a diluted basis.

~~Nine Months Ended September 30, 2022 Compared to the Nine Months EndedSeptember 30, 2021~~

Sales of $827.3 million in the first nine months of 2022 increased 31.8% from $627.7 million in the first nine months of 2021. The following table summarizes the impact of acquisitions, divestitures, and foreign currency on sales by segment:

Sales Percent Change Nine Months Ended September 30, 2022 vs. Nine Months Ended September 30, 2021
increase/(decrease) Acquisitions and Divestitures Foreign
Currency Organic Total
EnPro Industries, Inc. 20.4 % (2.5) % 13.9 % 31.8 %
Sealing Technologies (6.5) % (3.1) % 12.1 % 2.5 %
Advanced Surface Technologies 85.7 % (1.1) % 17.8 % 102.4 %

~~Following are the key effects of acquisitions and divestitures on sales for the first nine months of 2022 compared to the same period in 2021:~~

•~~Acquisition of NxEdge (Advanced Surface Technologies) in December 2021~~

•~~Divestiture of the polymer components business unit (Sealing Technologies), which was principally located in Houston, in September 2021~~

~~Following is a discussion of operating results for each segment during the first nine months of 2022:~~

~~Sealing Technologies~~. Sales of $467.4 million in the first nine months of 2022 reflect a 2.5% increase compared to the $455.9 million reported in the same period of 2021. Excluding the unfavorable foreign exchange translation ($13.9 million) on our 2022 sales and the sales from businesses that have since been divested ($26.6 million) from 2021 results, sales were up 12.1% or $52.0 million. This increase was driven by sales price actions and strong demand in the food and pharmaceutical, aerospace, and heavy-duty truck markets.

Adjusted Segment EBITDA of $118.1 million in the first nine months of 2022 increased 6.4% from $111.0 million reported in the same period of 2021. Segment AEBITDA margins for the segment increased from 24.3% in the first nine months of 2021 to 25.3% in the first nine months of 2022. Excluding the unfavorable foreign exchange translation ($3.8 million) and the Segment AEBITDA earned from businesses that have since been divested ($5.2 million) from 2021 results, Adjusted Segment EBITDA increased 15.1%, or $16.0 million, to $121.9 million. The increase in Segment AEBITDA was

primarily driven by higher pricing ($31.0 million), increased sales volume, net of product mix ($4.1 million), and decreased incentive compensation ($1.0 million) and foreign exchange transaction related costs ($1.0 million) partially offset by increased manufacturing costs ($17.3 million), higher personnel costs in selling, general, and administrative costs ($2.3 million), and increased travel-related expense ($1.5 million).

~~Advanced Surface Technologies~~. Sales of $360.7 million in the first nine months of 2022 reflect a 102.4% increase compared to the $178.2 million reported in the same period of 2021. Excluding the unfavorable foreign exchange translation ($1.9 million) and the sales from a recent acquisition ($152.81.2 million) from the result of the first three quarters of ~~2022,~~2023, sales were ~~up 17.8%~~down 5.3%, or ~~$31.7~~$6.1 million. This ~~increase~~decrease was driven primarily by ~~strong demand~~a near-term slowdown in ~~the~~ semiconductor ~~market.~~capital equipment spending.

Adjusted Segment EBITDA of ~~$112.6~~$29.5 million in the first ~~nine~~three months of ~~2022 increased 115.3%~~2023 decreased 15.5% from ~~$52.3~~$34.9 million reported in the comparable period of ~~2021.~~2022. Segment AEBITDA margins for the segment ~~increased~~decreased from ~~29.3%~~29.9% in the first ~~nine~~three months of ~~2021~~2022 to ~~31.2%~~27.0% in the first ~~nine~~three months of ~~2022. While~~2023. Excluding the ~~impact of~~unfavorable foreign exchange translation ~~period to period was negligible for the current period, excluding the Segment AEBITDA contributed from a business recently acquired ($51.7 million) from our 2022 results,~~$0.7 million in three months ended March 31, 2023, Adjusted Segment EBITDA ~~increased $9.9~~decreased $4.7 million, or ~~18.9%~~13.5%, to ~~$62.2~~$30.2 million. The ~~increase~~decrease in Adjusted Segment EBITDA was primarily driven by ~~higher pricing ($4.7 million), increased sales~~lower volume ~~net of~~and an unfavorable change in mix ($~~13.8 million), decreased foreign exchange related transactions costs ($2.7 million) and incentive compensation ($0.3 million), partially offset by increased manufacturing costs ($7.8~~4.6 million) and higher material and labor ($2.3 million) and selling, general, and administrative costs ($~~3.8~~1.2 million), partially offset by higher pricing ($3.5 million).

Corporate expenses for the first ~~nine~~three months of ~~2022~~2023 decreased ~~$5.8~~$2.2 million as compared to the same period in ~~2021.~~2022. The decrease was driven primarily by ~~costs incurred related to the CEO transition in the prior-year period ($1.7 million),~~ lower incentive compensation costs ($~~2.2~~1.2 million), restructuring costs ($0.6 million), and ~~decreased costs related to the sale of Engineered Materials~~professional expenses ($~~3.9 million), partially offset by increased corporate restructuring charges ($1.1 million) and travel-related costs ($0.9~~0.5 million).

Interest expense, net in the first ~~nine~~three months of 2023 increased by $1.0 million from the first three months of 2022 ~~increased $13.7 million from 2021~~ primarily due to ~~increased outstanding debt in~~a higher weighted average interest rate on borrowings for the first three months of 2023 as compared to the first three months of 2022, ~~as a result of indebtedness incurred to fund the recent NxEdge acquisition~~offset partially by higher rates earned on invested cash balances.

Other income (expense), net in the first ~~nine~~three months of ~~2022~~2023 decreased by ~~$15.2~~$4.0 million as compared to other income reported in the same period of ~~2021,~~2022, primarily due to ~~gain on sale of businesses~~a year-over-year decrease in ~~2021~~pension (non-service) income ($~~17.9~~1.1 million), ~~decreased pension income from non-service costs~~increased bank fees and fewer foreign exchange gains in the current period ($~~4.2 million), an asbestos receivable adjustment ($2.8~~1.6 million), and ~~an increase in miscellaneous expenses not associated with a particular segment or not considered part of administering the corporate functions~~higher environmental charges ($~~0.7~~0.4 million)~~, partially offset by $5.9 million net~~ and foreign exchange ~~gains and decreased environmental~~losses related ~~expense~~to the divestiture of GGB ($~~4.7~~0.7 million).

The effective tax rates for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 were 23.7% and ~~2021 were 23.4% and 20.2%~~20.7%, respectively. The effective tax rate for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 is primarily driven ~~by a legal entity conversion in Taiwan and favorable foreign currency effects on dividends, partially offset~~ by higher tax rates in most foreign ~~jurisdictions. The effective tax rate for the nine months ended September 30, 2021 is primarily the result of~~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 effective tax rate for the ~~favorable conclusion~~three months ended March 31, 2022 is primarily the result of ~~the IRS examination, and the release of certain uncertain~~a tax ~~positions,~~benefit related to share-based payment awards partially offset by higher tax rates in most foreign jurisdictions.

Income from continuing operations attributable to EnPro Industries, Inc. was ~~$64.2~~$26.0 million, or ~~$3.08~~$1.24 per share, in the first ~~nine~~three months of ~~2022~~2023 compared to ~~$58.5~~$11.9 million, or ~~$2.82~~$0.57 per share, in the ~~same period~~first three months of ~~2021.~~2022. Earnings per share is expressed on a diluted basis.

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.~~hand, revolver borrowings and cash generated from operations. We ~~continue to consider~~are proactively pursuing acquisition opportunities that align with our long-term strategic goals of refocusing our portfolio on businesses with compelling margins, leading technology, high cash flow return on investment, and favorable secular tailwinds. It is possible our cash requirements for one or more acquisition opportunities could exceed our available cash balance at the time of closing.opportunities. Should we need additional capital, we ~~believe we will~~ have ~~access to necessary~~ resources ~~including the resources~~available, which are discussed in this section under the heading “Capital Resources.”

As of ~~September 30, 2022,~~March 31, 2023, we held ~~$142.9~~$176.0 million of ~~our $166.2 million~~ cash and cash equivalents in the United States, $160.1 million of cash outside of the United ~~States.~~ States, and $35.0 million in short-term interest bearing investments which mature in July 2023. 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 earnings.

Because of the transition tax, GILTI, and ~~tax on the global intangible low-taxed income~~Subpart F provisions, ~~of the U. S. Tax Cuts and Jobs Act,~~ undistributed earnings of our foreign subsidiaries totaling ~~$227.1~~$225.1 million at ~~September 30, 2022~~December 31, 2021 have been subjected to U.S. income tax or are eligible for the 100 percent dividends-received deduction under Section 245A of the Internal Revenue Code ("IRC") provided in the Tax Cuts and Jobs Act. Additional undistributed earnings are estimated to be $77.3 million as of March 31, 2023. 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 ~~nine~~three months of ~~2022~~2023 we repatriated ~~$193.3~~$8.8 million which was utilized to ~~pay down~~paydown our U.S.-based indebtedness and reduce our interest expense. We have targeted the repatriation of an additional ~~$52.0~~$90.0 million by December 31, ~~2022~~2023 for further unscheduled paydowns of our indebtedness. We have determined that estimating any tax liability on our investment in foreign subsidiaries is not practicable. Therefore, we have not recorded any deferred tax liability on undistributed earnings of foreign subsidiaries.

Cash Flows

Operating activities of continuing operations provided ~~$111.6~~$26.4 million of cash in the first ~~nine~~three months of ~~2022~~2023 and ~~$77.5~~$27.4 million of cash in the first ~~nine~~three months of ~~2021.~~2022. The year-over-year ~~increase~~decrease was primarily driven by a $6.9 million increase in interest payments partially offset by increased ~~revenue and increased insurance receipts~~profitability.

Investing activities of continuing operations used $14.8 million of cash in the first three months of ~~2022 related to legacy claims.~~

~~Investing activities of continuing operations provided $20.7 million of cash in the first nine months of 2022~~2023 compared to ~~$28.2~~$2.5 million of cash used during the first ~~nine~~three months of ~~2021.~~2022. This decrease is driven by ~~less~~the investment of $35.0 million in short-term interest bearing investments which does not qualify as a cash ~~received in the current year for sales of businesses,~~equivalent, partially offset by ~~receipts~~$25.3 million in net cash proceeds received from ~~settlements~~the sale of ~~our derivative contracts.~~businesses.

Financing activities of continuing operations used ~~$269.1~~$12.0 million of cash in the first ~~nine~~three months of ~~2022,~~2023, primarily from ~~$243.7~~$4.0 million in net repayments of debt ~~primarily related to payments on our revolving credit facility~~ and ~~364-day term loan and $17.6~~$6.2 million used for dividends paid. Financing activities in the first ~~nine~~three months of ~~2021~~2022 used ~~$21.3~~$60.4 million, primarily from ~~$16.8~~$5.9 million used for dividends paid and ~~$3.0~~$47.9 million in net repayments of debt.

Capital Resources

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 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 amends, restates and replaces the Second Amended and Restated Credit Agreement dated as of June 28, 2018, as amended, among the Company and EnPro Holdings as 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 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”). 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 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.

The Term Loan A-1 Facility amortizes 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 ~~364-Day Facility did not amortize and was repaid in full in the quarter ended September 30, 2022. 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.

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.

The Facilities are subject to prepayment with the net cash proceeds of certain asset sales, casualty or condemnation events, and non-permitted debt issuances.

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, 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 4.75 to 1.0 (with total debt, for the purposes of such ratio, to be net of up to $150 million of unrestricted cash of EnPro Industries, Inc. and its 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 Agreement 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

•modify or terminate documents related to certain indebtedness.

We were in compliance with all of the covenants of the Amended Credit Agreement as of ~~September 30, 2022.~~March 31, 2023.

Senior Notes. In October 2018, we completed the offering of $350.0 million aggregate principal amount of 5.75% Senior Notes due 2026 (the "Senior Notes").

The Senior Notes were issued to investors at 100% of the principal amount thereof. The Senior Notes are unsecured, unsubordinated obligations of EnPro and mature on October 15, 2026. Interest on the Senior Notes accrues at a rate of 5.75% per annum and is payable semi-annually in cash in arrears on April 15 and October 15 of each year, commencing April 15, 2019. The Senior Notes are required to be guaranteed on a senior unsecured basis by each of EnPro’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 EnPro or any

of the guarantors.

~~As of October 15, 2021, 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 held by such holder 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, paying dividends and repurchasing shares of our common stock, subject in each case to specified exceptions and qualifications set forth in the ~~indenture.~~indenture.The indenture further requires us to apply the net cash proceeds of certain asset sales not reinvested in acquisitions, or used to repay or otherwise reduce specified indebtedness within a specified period, in the event of the net proceeds exceeding a specified amount, to offer to repurchase the Senior Notes at a price equal to 100.0% of the principal amount thereof plus accrued and unpaid interest. This requirement applies to the net cash

proceeds received in the divestitures of GGB and GPT and could require us to make such an offer to repurchase the Senior Notes in the first quarter of 2024 to the extent we do not sufficiently invest in acquisitions, assets, property or capital expenditures or repay or otherwise reduce specified indebtedness by then.

At ~~September 30, 2022,~~March 31, 2023, we were in compliance with all of the covenants of the indenture governing the Senior Notes.

Share Repurchase Program. In October 2022, our board of directors authorized the expenditure 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 or the prior two-year $50.0 million authorization which expired in October 2022.

Critical Accounting 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, ~~2021~~2022, for a discussion of our critical accounting estimates, which is incorporated here by reference.

Contingencies

A description of our contingencies is included in Note 1615 to the Consolidated Financial Statements in this report, 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 ~~September 30, 2022~~March 31, 2023 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 obligations 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 reported amounts of income from discontinued operations, net of taxes, as well as current assets of discontinued operations and current liabilities of discontinued operations, as reflected in the following summarized results of operations for the nine months ended September 30, 2022, and summarized balance sheets at September 30, 2022, and December 31, 2021, relate solely to the subsidiaries of the Company comprising GGB and GPT that were Guarantor Subsidiaries as of such dates and which are included in discontinued operations reported in the consolidated financial statements included in this report. Upon the sale of GGB on November 4, 2022, each of the subsidiaries of the Company comprising GGB that were Guarantor Subsidiaries ceased to be a Guarantor of the Senior Notes. The Company anticipates that upon the consummation of the sale of GPT, each of the subsidiaries of the Company comprising GPT that are Guarantor Subsidiaries will at that time cease to be a guarantor of the Senior Notes.

~~The~~ following tables present summarized financial information for EnPro Industries, Inc. (the "Parent") and the Guarantor Subsidiaries on a combined basis after intercompany eliminations.

The summarized results of operations for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 were as follows:


(Stated in Millions of Dollars)	Parent and Guarantor Subsidiaries
Net sales	$	~~601.0~~201.6
Gross profit	~~194.3~~70.4
Income from continuing operations ~~attributable to EnPro Industries, Inc., net of tax~~	~~6.6~~5.0
Income from discontinued operations, net of tax	~~0.7~~11.4
Net income	$	16.4
Net income attributable to EnPro Industries, Inc.	$	~~7.3~~16.4
~~Comprehensive income attributable to EnPro Industries, Inc.~~	$	~~38.1~~

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 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 the first quarter of 2023 and are no longer guarantors of the Senior Notes.

The summarized balance sheet at ~~September 30, 2022 was as follows:~~


~~(Stated in Millions of Dollars)~~	~~Parent and Guarantor Subsidiaries~~
~~ASSETS~~
~~Total current assets~~	$	~~341.5~~
~~Non-current assets~~	~~1,612.5~~
~~Total assets~~	$	~~1,954.0~~
~~LIABILITIES AND EQUITY~~
~~Total current liabilities~~	$	~~181.4~~
~~Non-current liabilities~~	~~1,067.0~~
~~Total liabilities~~	~~1,248.4~~
~~Redeemable non-controlling interests~~	~~49.0~~
~~Shareholders’ equity~~	~~656.6~~
~~Total liabilities and equity~~	$	~~1,954.0~~

The table above reflects $14.1 million of current intercompany receivables due to the Guarantor Subsidiaries from the Non-Guarantor Subsidiaries and $10.5 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~~March 31, ~~2021 were as follows:~~


~~(Stated in Millions of Dollars)~~	~~Parent and Guarantor Subsidiaries~~
~~Net sales~~	$	~~559.9~~
~~Gross profit~~	~~180.6~~
~~Income from continuing operations attributable to EnPro Industries, Inc.~~	~~1.7~~
~~Income from discontinued operations, net of taxes~~	~~25.0~~
~~Net income attributable to EnPro Industries, Inc.~~	$	~~26.7~~
~~Comprehensive income attributable to EnPro Industries, Inc.~~	$	~~43.4~~

~~The summarized balance sheet at December 31, 2021~~2023 was as follows:


(Stated in Millions of Dollars)	Parent and Guarantor Subsidiaries
ASSETS
Current assets	$	~~335.9~~468.7
Non-current assets	~~1,666.7~~1,500.7
Total assets	$	~~2,002.6~~1,969.4
LIABILITIES AND EQUITY
Current liabilities	$	~~301.6~~144.7
Non-current liabilities	~~1,191.3~~1,057.5
Total liabilities	~~1,492.9~~1,202.2
Redeemable non-controlling interests	~~50.1~~17.9
Shareholders’ equity	~~459.6~~749.3
Total liabilities and equity	$	~~2,002.6~~1,969.4

The table above reflects ~~$11.2~~$13.0 million of current intercompany receivables due to the Guarantor Subsidiaries from the Non-Guarantor Subsidiaries and ~~$3.2~~$10.6 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, 2022 were as follows:


(Stated in Millions of Dollars)	Parent and Guarantor Subsidiaries
Net sales	$	797.8
Gross profit	257.7
Loss from continuing operations	(84.8)
Income from discontinued operations, net of taxes	60.2
Net loss	$	(24.6)
Net loss attributable to Enpro Industries, Inc	$	(21.8)

Of the $60.2 million reported in income from discontinued operations, net of taxes, $53.1 million related to gain on the sale of discontinued operations recognized by a subsidiary that is guarantor of the Senior Notes and the remaining $7.1 million related to the operations of former subsidiary guarantors of the Senior Notes included in discontinued operations. All discontinued operations were divested by the first quarter of 2023 and are no longer guarantors of the Senior Notes.

The summarized balance sheet at December 31, 2022 was as follows:


(Stated in Millions of Dollars)	Parent and Guarantor Subsidiaries
ASSETS
Current assets	$	454.5
Non-current assets	1,517.3
Total assets	$	1,971.8
LIABILITIES AND EQUITY
Current liabilities	$	158.5
Non-current liabilities	1,067.6
Total liabilities	1,226.1
Redeemable non-controlling interests	17.9
Shareholders’ equity	727.8
Total liabilities and equity	$	1,971.8

The table above reflects $11.7 million of current intercompany receivables due to the Guarantor Subsidiaries from the Non-Guarantor Subsidiaries and $9.3 million of current intercompany payables due to the Non-Guarantor Subsidiaries from the Guarantor Subsidiaries within current assets and ~~liabilities.~~liabilities held and used.

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 above, each guarantee provided by a Guarantor Subsidiary includes a provision intended to

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 cannot 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 Industries, Inc.~~, net of tax,~~ and diluted earnings per share ~~from continuing operations~~ attributable to EnPro Industries, Inc.~~, and total adjusted segment EBITDA,~~ continuing operations, including items that may recur from time to time. The items adjusted for in these non-GAAP financial measures are those that are excluded by management in budgeting or projecting for performance in future periods, as they typically relate to events specific to the period in which they occur. Accordingly, these are some of the factors the company uses in internal evaluations of the overall performance of its ~~continuing operations.~~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 conjunction with the company’s consolidated financial statements, present a useful tool to evaluate the company’s ongoing operations and performance from period to period. Management acknowledges that there are many items that impact a company’s reported results and the adjustments reflected in these non-GAAP financial measures are not intended to present all items that may have impacted these results. In addition, these non-GAAP measures are not necessarily comparable to similarly titled measures used by other companies.

The following presents a reconciliation of (i) income from continuing operations attributable to EnPro Industries, Inc., net of tax to adjusted net income attributable to EnPro Industries, Inc. and adjusted diluted earnings per share and (ii) income from continuing operations attributable to EnPro Industries, Inc., net of tax to adjusted EBITDA for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022. The adjustments in the table below relate solely to expenses attributable to EnPro Industries, Inc. and have been adjusted to remove any amounts attributable to non-controlling interests.

3730

Reconciliation of Income from Continuing Operations Attributable to EnPro Industries, Inc., Net of Tax to Adjusted Income from Continuing Operations Attributable to EnPro Industries, Inc. and Adjusted Diluted Earnings Per Share
Quarters Ended September 30,
In Millions, Except Per Share Amounts 2022 2021
$ Average common shares outstanding, diluted Per Share $ Average common shares outstanding, diluted Per Share
Income from continuing operations attributable to EnPro Industries, Inc., net of tax $ 26.2 20.9 $ 1.26 $ 24.0 20.7 $ 1.16
Net income from redeemable non-controlling interest 0.6 0.1
Income tax expense 9.1 13.6
Income from continuing operations before income taxes 35.9 37.7
Adjustments from selling, general, and administrative:
Acquisition and divestiture expenses — 0.6
Non-controlling interest compensation allocations2
(0.6) 1.3
Amortization of acquisition-related intangible assets 19.1 10.7
Adjustments from other operating expense and cost of sales:
Restructuring and impairment expense 0.1 (0.1)
Amortization of the fair value adjustment to acquisition date inventory 1.0 1.0
Adjustments from other non-operating expense:
Environmental reserve adjustment 0.1 4.5
Costs associated with previously disposed businesses 0.2 0.3
Net gain on sale of businesses — (19.5)
Pension income (non-service cost) (0.7) (2.0)
Other adjustments:
Other3
0.3 0.1
Adjusted income from continuing operations before income taxes 55.4 34.6
Adjusted income tax expense4
(15.0) (10.4)
Net income from redeemable non-controlling interest (0.6) (0.1)
Adjusted income from continuing operations attributable to EnPro Industries, Inc. $ 39.8 20.9 $ 1.91 1 $ 24.1 20.7 $ 1.16 1


In Millions, Except Per Share Amounts	In Millions, Except Per Share Amounts	Nine Months Ended September 30,												In Millions, Except Per Share Amounts	Three Months Ended March 31,
		2022						2021							2023						2022
		$		Average common shares outstanding, diluted	Per Share			$		Average common shares outstanding, diluted	Per Share				$		Average common shares outstanding, diluted	Per Share			$		Average common shares outstanding, diluted	Per Share
Income from continuing operations attributable to EnPro Industries, Inc., net of tax	Income from continuing operations attributable to EnPro Industries, Inc., net of tax	$	64.2	20.9	$	3.08		$	58.5	20.8	$	2.82		Income from continuing operations attributable to EnPro Industries, Inc., net of tax	$	26.0	20.9	$	1.24		$	11.9	20.9	$	0.57
Net income from redeemable non-controlling interests	Net income from redeemable non-controlling interests	0.8						0.1						Net income from redeemable non-controlling interests	—						0.3
Income tax expense	Income tax expense	19.8						14.8						Income tax expense	8.1						3.2
Income from continuing operations before income taxes	Income from continuing operations before income taxes	84.8						73.4						Income from continuing operations before income taxes	34.1						15.4

Adjustments from selling, general, and administrative:	Adjustments from selling, general, and administrative:													Adjustments from selling, general, and administrative:
Acquisition and divestiture expenses	Acquisition and divestiture expenses	1.0						0.7						Acquisition and divestiture expenses	—						0.6
Non-controlling interest compensation allocations2	Non-controlling interest compensation allocations2	(0.1)						4.1						Non-controlling interest compensation allocations2	0.3						(0.9)
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	57.8						32.2						Amortization of acquisition-related intangible assets	17.2						18.9
Adjustments from other operating expense and cost of sales:	Adjustments from other operating expense and cost of sales:													Adjustments from other operating expense and cost of sales:
Restructuring and impairment expense	Restructuring and impairment expense	2.2						2.0						Restructuring and impairment expense	0.8						1.3
Amortization of the fair value adjustment to acquisition date inventory	Amortization of the fair value adjustment to acquisition date inventory	12.3						5.8						Amortization of the fair value adjustment to acquisition date inventory	—						10.2

Adjustments from other non-operating expense:	Adjustments from other non-operating expense:													Adjustments from other non-operating expense:
Asbestos receivable adjustment		2.8						—

Environmental reserve adjustment	Environmental reserve adjustment	(0.2)						4.5						Environmental reserve adjustment	0.1						(0.3)
Costs associated with previously disposed businesses	Costs associated with previously disposed businesses	0.8						0.7						Costs associated with previously disposed businesses	0.2						0.2
Net loss (gain) on sale of businesses		0.1						(17.5)

Pension income (non-service cost)	Pension income (non-service cost)	(2.1)						(6.3)						Pension income (non-service cost)	0.4						(0.8)
Foreign exchange losses related to the divestiture of a discontinued operation3														Foreign exchange losses related to the divestiture of a discontinued operation3	0.7						—
Other adjustments:	Other adjustments:													Other adjustments:
Other3		0.5						(0.2)
Other4														Other4	0.4						0.2
Adjusted income from continuing operations before income taxes	Adjusted income from continuing operations before income taxes	159.9						99.4						Adjusted income from continuing operations before income taxes	54.2						44.8
Adjusted income tax expense4		(43.2)						(29.8)
Adjusted income tax expense5														Adjusted income tax expense5	(13.5)						(12.1)
Net income from redeemable non-controlling interests	Net income from redeemable non-controlling interests	(0.8)						(0.1)						Net income from redeemable non-controlling interests	—						(0.3)
Adjusted income from continuing operations attributable to EnPro Industries, Inc.	Adjusted income from continuing operations attributable to EnPro Industries, Inc.	$	115.9	20.9	$	5.56	1	$	69.5	20.8	$	3.35	1	Adjusted income from continuing operations attributable to EnPro Industries, Inc.	$	40.7	20.9	$	1.95	1	$	32.4	20.9	$	1.56	1

1 Adjusted diluted earnings per share attributable to EnPro Industries, Inc. 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 associated with ~~a portion of~~ the rollover equity subject to put and call options from the acquisitions of LeanTeq and Alluxa that is subject to reduction for certain types of employment terminations of the LeanTeq and Alluxa sellers and is directly related to the terms of the respective acquisitions. This expense ~~will continue to be~~is recognized as compensation expense over the term of the respective put and call options ~~associated with the acquisitions~~ unless certain employment terminations ~~have occurred.~~occur. The LeanTeq non-controlling interests were acquired by EnPro in December 2022.

3 In connection with the sale of GGB, accounted for as a discontinued operation, in the fourth quarter of 2022, we issued an intercompany note between a domestic and foreign entity that was denominated in a foreign currency. As a result of this note, we recorded a loss due to the change in exchange rate during the first quarter of 2023. In January 2023, we hedged the outstanding notes and expect future gains or losses to be minimal.

34 Other adjustments are included in selling, general, and administrative, cost of sales, and other operating expenses on the consolidated statements of operations.

45 The adjusted income tax expense presented above is calculated using a normalized company-wide effective tax rate excluding discrete items of ~~27.0%~~25.0% in ~~2022~~2023 and ~~30.0%~~27.0% rate in ~~2021.~~2022.

Reconciliation of Income from Continuing Operations Attributable to EnPro Industries, Inc., Net of Tax to Adjusted EBITDA


In Millions	In Millions									In Millions
		Quarters Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2022		2021		2022		2021				2023		2022
Income from continuing operations attributable to EnPro Industries, Inc., net of tax	Income from continuing operations attributable to EnPro Industries, Inc., net of tax	$	26.2	$	24.0	$	64.2	$	58.5	Income from continuing operations attributable to EnPro Industries, Inc., net of tax		$	26.0	$	11.9
Net income attributable to redeemable non-controlling interests	Net income attributable to redeemable non-controlling interests	0.6		0.1		0.8		0.1		Net income attributable to redeemable non-controlling interests		—		0.3
Income from continuing operations	Income from continuing operations	26.8		24.1		65.0		58.6		Income from continuing operations		26.0		12.2

Adjustments to arrive at earnings before interest, income taxes, depreciation, amortization, and other selected items (Adjusted EBITDA):	Adjustments to arrive at earnings before interest, income taxes, depreciation, amortization, and other selected items (Adjusted EBITDA):									Adjustments to arrive at earnings before interest, income taxes, depreciation, amortization, and other selected items (Adjusted EBITDA):
Interest expense, net	Interest expense, net	9.3		2.6		23.9		10.2		Interest expense, net		7.9		6.9
Income tax expense	Income tax expense	9.1		13.6		19.8		14.8		Income tax expense		8.1		3.2
Depreciation and amortization expense	Depreciation and amortization expense	25.7		15.4		77.9		46.7		Depreciation and amortization expense		23.6		26.1
Restructuring and impairment expense (income)		0.1		(0.1)		2.2		2.0
Asbestos receivable adjustment		—		—		2.8		—
Restructuring and impairment expense										Restructuring and impairment expense		0.8		1.3

Environmental reserve adjustments	Environmental reserve adjustments	0.1		4.5		(0.2)		4.5		Environmental reserve adjustments		0.1		(0.3)
Costs associated with previously disposed businesses	Costs associated with previously disposed businesses	0.2		0.3		0.8		0.7		Costs associated with previously disposed businesses		0.2		0.2
Net loss (gain) on sale of businesses		—		(19.5)		0.1		(17.5)

Acquisition and divestiture expenses	Acquisition and divestiture expenses	—		0.6		1.0		0.7		Acquisition and divestiture expenses		—		0.6
Pension income (non-service cost)	Pension income (non-service cost)	(0.7)		(2.0)		(2.1)		(6.3)		Pension income (non-service cost)		0.4		(0.8)
Non-controlling interest compensation allocation1	Non-controlling interest compensation allocation1	(0.6)		1.3		(0.1)		4.1		Non-controlling interest compensation allocation1		0.4		(0.9)

Amortization of the fair value adjustment to acquisition date inventory	Amortization of the fair value adjustment to acquisition date inventory	1.0		1.0		12.3		5.8		Amortization of the fair value adjustment to acquisition date inventory		—		10.3
Foreign exchange losses related to the divestiture of a discontinued operation2										Foreign exchange losses related to the divestiture of a discontinued operation2		0.7		—
Other	Other	0.3		0.1		0.5		(0.2)		Other		0.4		0.2
Adjusted EBITDA	Adjusted EBITDA	$	71.3	$	41.9	$	203.9	$	124.1	Adjusted EBITDA		$	68.6	$	59.0

1 Non-controlling interest compensation allocation represents compensation expense associated with ~~a portion of~~ the rollover equity subject to put and call options from the acquisitions of LeanTeq and Alluxa that is subject to reduction for certain types of employment terminations of the LeanTeq and Alluxa sellers and is directly related to the terms of the respective acquisitions. This expense ~~will continue to be~~is recognized as compensation expense over the term of the respective put and call options ~~associated with the acquisitions~~ unless certain employment terminations ~~have occurred.~~occur. The LeanTeq non-controlling interests were acquired by EnPro in December 2022.

2 In connection with the sale of GGB, accounted for as a discontinued operation, in the fourth quarter of 2022, we issued an intercompany note between a domestic and foreign entity that was denominated in a foreign currency. As a result of this note, we recorded a loss due to the change in exchange rate during the first quarter of 2023. In January 2023, we hedged the outstanding notes and expect future gains or losses to be minimal.

Adjusted EBITDA as presented in the table above also represents the amount defined as "EBITDA" under the Indenture.

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

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, ~~2021.~~2022.

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 is~~We 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 ~~currency~~currencies. 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 2023. The notional amount of foreign exchange contracts ~~hedging foreign currency transactions~~ was ~~$4.4~~$104.8 million and ~~$3.3~~$103.3 million ~~at September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022 respectively. All foreign exchange contracts outstanding at December 31, 2022 expired in January of 2023.

~~In September 2018, we entered into cross-currency swap agreements~~The notional amounts of all of our foreign exchange contracts were recorded at their fair market value as of December 31, 2022 with ~~a notional amount~~changes in market value recorded in income. The earnings impact of ~~$200.0 million to manage~~any foreign ~~currency risk by effectively converting a portion of the interest payments~~exchange contract that is specifically related to ~~our fixed-rate U.S. Dollar (“USD”)-denominated Senior Notes, including~~ the ~~semi-annual interest payments thereunder, to interest payments on fixed-rate Euro-denominated debt~~purchase of ~~172.8 million EUR with a weighted average interest rate~~inventory is recorded in cost of ~~2.8%, with interest payment dates~~sales and the changes in market value of ~~March 15~~all other contracts are recorded in selling, general and ~~September 15~~administrative expense in the Consolidated Statements of ~~each year.~~Operations. The ~~swap agreement matured on September 15, 2022.~~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 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 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 ~~agreements,~~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 no principal exchange at the inception of the arrangements, and there will be no exchange at maturity. At maturity (or earlier at our option), we and 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, ~~(including increases due to new or increased tariffs),~~ which could have a negative impact on our results. The impacts from the COVID-19 pandemic and geopolitical variables could further increase the risk of supply, pricing, and demand of necessary raw materials as well as drive further fluctuations in energy and natural gas costs. 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

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 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, 2022,~~March 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

4134

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

A description of environmental and other legal matters is included in Note 1615 to the Consolidated Financial Statements in this report, which is incorporated herein by reference. 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 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~~first quarter of ~~2022.~~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
July 1 -
July 31, 2022 — — — $50,000,000 (1)
August 1 -
August 31, 2022 — — — $50,000,000 (1)
September 1 -
September 30, 2022 488 (2) $ 85.93 (2) — $50,000,000 (1)
Total 488 (2) $ 85.93 (2) — $50,000,000 (1)


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, 2023	—		—			—	$50,000,000	(1)
February 1 - February 28, 2023	—		—			—	$50,000,000	(1)
March 1 - March 31, 2023	164	(2)	$	99.58	(2)	—	$50,000,000	(1)
Total	164	(2)	$	99.58	(2)	—	$50,000,000	(1)

(1)In October ~~2020,~~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 ~~2022.~~2024. We have not made any repurchases under this authorization.

(2)In ~~September 2022,~~March 2023, a total of ~~488~~164 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'~~directors’ fees into common stock units. EnPro Holdings furnished these shares in exchange for management and other services provided by EnPro. Of these shares, 8889 shares were valued at a price of ~~$90.25~~$95.94 per share, the closing trading price of our common stock on ~~September 14, 2022,~~March 15, 2023, and ~~400~~75 of these shares were valued at a price of ~~$84.98~~$103.89 per share, the closing trading price of our common stock on ~~September 30, 2022.~~March 31, 2023. Accordingly, the total ~~488~~164 shares were valued at a weighted average price of ~~$85.93.~~$99.58. 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.

The exhibits to this report on Form 10-Q are listed in the following Exhibit Index.

4235

EXHIBIT INDEX


2.1			Purchase and Sale Agreement dated as of November 4, 2021 among TCFII NxEdge Holdings, LLC, TCFII NxEdge LLC and EnPro Holdings, Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8 K filed by EnPro Industries, Inc. on November 5, 2021 (File No. 001-31225))

2.2			Equity and Asset Purchase Agreement dated as of October 12, 2021 among EnPro Holdings, Inc., Compressor Products Holdings Limited (UK), EnPro Hong Kong Holdings Company Limited, Garlock GmbH, Coltec Industries France SAS, Compressor Products International Canada, Inc., Garlock of Canada Ltd., Granite US Holdings Corporation and Granite Holdings II B.V. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8 K filed by EnPro Industries, Inc. on October 12, 2021 (File No. 001-31225))

~~2.3~~			Put Option Agreement dated as of October 12, 2021 between EnPro Holdings, Inc., Coltec Industries France SAS and Granite US Holdings Corporation (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8 K filed by EnPro Industries, Inc. on October 12, 2021 (File No. 001-31225))

~~2.4~~			~~Equity~~ Purchase Agreement dated as of September 5, 2022 between EnPro Holdings, Inc. EnPro Luxembourg Holding Company S.A.R.L., EnPro German Holding GmbH, Coltec Industries Pacific PTE. LTD. and Garlock GmbH and The Timken Company, Groeneveld-Beka GmbH, Groeneveld-Beka France S.a.r.l and Timken Europe B.V. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8 K filed by EnPro Industries, Inc. on September 6, 2022 (File No. 001-31225))

~~2.5~~2.3			Put Option Agreement dated as of September 5, 2022 between EnPro Holdings, Inc., EnPro Luxembourg Holding Company S.a.r.l., The Timken Company and Groeneveld-Beka France S.a.r.l. (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8 K filed by EnPro Industries, Inc. on September 6, 2022 (File No. 001-31225))

~~18†~~			~~Preferability Letter re Change in Accounting Principle~~

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.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
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Interactive Data Files submitted as Exhibits 101.*)

† Filed herewith

4336

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 ~~7th~~2nd day of ~~November, 2022.~~May, 2023.


ENPRO INDUSTRIES, INC.

By:			/s/ Robert S. McLean
			Robert S. McLean
			Executive Vice President, General Counsel and Secretary


By:			/s/ Steven R. Bower
			Steven R. Bower
			Senior Vice President, Controller and Chief Accounting Officer ~~and Controller~~

4437


Consolidated Statement of Operations
(in millions)	Quarter Ended September 30, 2021						Nine Months Ended September 30, 2021
	As Reported 1		Effect of Change		As Adjusted		As Reported 1		Effect of Change		As Adjusted
Cost of sales	$	126.0	$	—	$	126.0	$	378.5	$	(0.2)	$	378.3
Gross profit	83.7		—		83.7		249.2		0.2		249.4
Operating income	23.6		—		23.6		64.8		0.2		65.0
Income from continuing operations before income taxes	37.7		—		37.7		73.2		0.2		73.4
Income tax expense	(13.6)		—		(13.6)		(14.8)		—		(14.8)
Income from continuing operations	24.1		—		24.1		58.4		0.2		58.6
Income from discontinued operations, net of tax	3.5		0.4		3.9		16.5		0.4		16.9
Net income	27.6		0.4		28.0		74.9		0.6		75.5
Net income attributable to EnPro Industries, Inc.	$	27.5	$	0.4	$	27.9	$	74.8	$	0.6	$	75.4


Consolidated Balance Sheet
(in millions)	December 31, 2021
	As Reported 1		Effect of Change		As Adjusted
Inventories	$	132.1	$	3.8	$	135.9
Current assets of discontinued operations	148.9		1.0		149.9
Total current assets	799.9		4.8		804.7
Total assets	$	2,969.8	$	4.8	$	2,974.6

Current liabilities of discontinued operations	$	35.5	$	0.3	$	35.8
Total current liabilities	386.0		0.3		386.3
Deferred taxes and non-current income taxes payable	165.2		0.9		166.1
Total liabilities	1,653.0		1.2		1,654.2
Retained earnings	949.5		3.6		953.1
Total shareholders' equity	1,266.7		3.6		1,270.3
Total liabilities and equity	$	2,969.8	$	4.8	$	2,974.6


Consolidated Statement of Cash Flows
(in millions)	Nine Months Ended September 30, 2021
	As Reported 1		Effect of Change		As Adjusted
OPERATING ACTIVITIES OF CONTINUING OPERATIONS
Net income	$	74.9	$	0.6	$	75.5
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
Income from discontinued operations, net of taxes	(16.5)		(0.4)		(16.9)
Change in assets and liabilities, net of effects of divestitures of businesses:
Inventories	(6.8)		(0.2)		(7.0)

Net cash provided by operating activities of continuing operations	77.5		—		77.5


	Quarter Ended September 30,				Nine Months Ended September 30,
(in millions)	2022		2021		2022		2021
Pro forma net sales	$	280.1	$	256.0	$	827.3	$	762.1
Pro forma net income	$	28.1	$	31.6	$	76.2	$	76.6


	Common Stock			Additional Paid-in Capital		Retained Earnings1		Accumulated Other Comprehensive Income		Treasury Stock		Total Shareholders' Equity		Redeemable Non-controlling Interests
(in millions, except per share data)	Shares	Amount
Balance December 31, 2021	20.7	$	0.2	$	303.6	$	953.1	$	14.6	$	(1.2)	$	1,270.3	$	50.1

Net income	—	—		—		16.8		—		—		16.8		0.3
Other comprehensive loss	—	—		—		—		(11.7)		—		(11.7)		(1.0)
Dividends ($0.28 per share)	—	—		—		(5.9)		—		—		(5.9)		—

Incentive plan activity	0.1	—		(4.1)		—		—		—		(4.1)		—
Other	—	—		0.1		—		—		—		0.1		(0.1)
Balance, March 31, 2022	20.8	0.2		299.6		964.0		2.9		(1.2)		1265.5		49.3
Net income (loss)	—	—		—		34.4		—		—		34.4		(0.1)
Other comprehensive loss	—	—		—		—		(14.9)		—		(14.9)		(1.1)
Dividends ($0.28 per share)	—	—		—		(5.9)				—		(5.9)		—

Incentive plan activity	—	—		1.4		—		—		—		1.4		—

Balance, June 30, 2022	20.8	0.2		301.0		992.5		(12.0)		(1.2)		1,280.5		48.1
Net income	—	—		—		26.9		—		—		26.9		0.6
Other comprehensive loss	—	—		—		—		(31.3)		—		(31.3)		(1.8)
Dividends ($0.28 per share)	—	—		—		(5.8)		—		—		(5.8)		—

Incentive plan activity	—	—		0.6		—		—		—		0.6		—
Other	—	—		(0.9)		(2.2)		—		—		(3.1)		2.1
Balance, September 30, 2022	20.8	$	0.2	$	300.7	$	1,011.4	$	(43.3)	$	(1.2)	$	1,267.8	$	49.0



	Quarter Ended September 30, 2022
(in millions)	Sealing Technologies		Advanced Surface Technologies		Total
Aerospace	$	10.9	$	1.5	$	12.4
Automotive	0.6		0.5		1.1
Chemical and material processing	19.1		—		19.1
Food and pharmaceutical	17.6		—		17.6
General industrial	40.0		6.8		46.8
Medium-duty/heavy-duty truck	51.7		—		51.7
Oil and gas	5.5		1.6		7.1
Power generation	8.7		—		8.7
Semiconductors	1.9		111.5		113.4
Other	1.6		0.6		2.2
Total third-party sales	$	157.6	$	122.5	$	280.1


	Nine Months Ended September 30, 2022
(in millions)	Sealing Technologies		Advanced Surface Technologies		Total
Aerospace	$	29.7	$	4.6	$	34.3
Automotive	1.7		1.3		3.0
Chemical and material processing	59.1		—		59.1
Food and pharmaceutical	55.1		—		55.1
General industrial	123.5		21.2		144.7
Medium-duty/heavy-duty truck	139.9		—		139.9
Oil and gas	16.1		3.3		19.4
Power generation	31.6		0.1		31.7
Semiconductors	4.4		327.8		332.2
Other	5.6		2.3		7.9
Total third-party sales	$	466.7	$	360.6	$	827.3


Sales	Percent Change Third Quarter 2022 vs. Third Quarter 2021
increase/(decrease)	Acquisitions and Divestitures		Foreign Currency		Organic		Total
EnPro Industries, Inc.	20.8	%	(3.4)	%	16.2	%	33.6	%
Sealing Technologies	(5.1)	%	(4.0)	%	16.6	%	7.5	%
Advanced Surface Technologies	77.4	%	(2.0)	%	15.1	%	90.5	%


Sales	Percent Change Nine Months Ended September 30, 2022 vs. Nine Months Ended September 30, 2021
increase/(decrease)	Acquisitions and Divestitures		Foreign Currency		Organic		Total
EnPro Industries, Inc.	20.4	%	(2.5)	%	13.9	%	31.8	%
Sealing Technologies	(6.5)	%	(3.1)	%	12.1	%	2.5	%
Advanced Surface Technologies	85.7	%	(1.1)	%	17.8	%	102.4	%