NPO - Earnings call transcript Q4 2019

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Operator

Greetings and welcome to the EnPro Industries Fourth Quarter and Full Year 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Chris O'Neal. Please go ahead, sir.

Chris O'Neal

Thanks, Kevin. to quarterly welcome conference and morning EnPro earnings Industries call. Good the is you find webcast accompany that remind also the our that can I you call being where at slides call. enproindustries.com, Milt Childress, Riley, review our moment. quarter fourth CEO; a Marvin and in our of outlook our performance will begin CFO, their and

in of statements involve discussion, and our that described call are number forward-looking our historical facts begin But point that this before these our to we statements risks XX-Q. in more filings with undertake we uncertainties that on out of and are are nature. Form considered statements. Form detail forward-looking that the most me and not any a let in SEC, XX-K will These do be making including We update recent not

we call, comparable to measures reference appendix to materials. will reconciling of the included the a the Tables measures. non-GAAP in the presentation during Also, financial these GAAP are measures number

this long-term With we order-to-shipment regard to to call, range relatively typical as businesses cycles months. visibility demand from limited and short of of order have have guidance a handful days that backlogs our we share a in couple into

which Additionally, accurate macro serve products of applications has further niche with many correlated not forecasting. well end for This our indicators. market demand complicates

costs and the legacy changes further quarter; charges. the Our future end tariffs of environmental and guidance shares to the impacts acquisitions, quarter; to of costs; excludes fourth from of costs; changes market the coronavirus impacts impact litigation trade and in outstanding; divestitures demand of exchange of transaction the fourth impacts and the subsequent the number on restructuring and spread related subsequent tensions foreign the the end of rate from

comments as a to otherwise our financial Systems is the and quarter continuing operations. accounted our as the to will discontinued in want and all to sell signing a year for full result noted, fourth of of statements. Power Fairbanks segment reference also Unless full the results in the quarter operation Morse, fourth year I in note of definitive agreement December that be

over And I'll turn the call now to Marvin.

Marvin Riley

everyone. how good some morning, we and the and in XXXX. the of as portfolio characteristics changes XXXX that enter the affected start EnPro have Chris portfolio made this Thanks, by those like to I'd the highlighting of morning changes we to

strategy to is Our services organic and actions command structurally on portfolio and attractive cash products and returns inorganic based to markets strong sustainable customers. and take greater provide shift to higher and that opportunities, margins value provided to generate flow the growth the

supported All objectives. our recent have this activities of

LeanTeq, semiconductor During completed quarter, biopharmaceutical markets and and plus equipment. acquisitions excellent the flow. refurbishment positions companies assemblies Group, Aseptic to food we competitive the pharmaceutical products which in and high Aseptic manufacture for distributes for margins design of aftermarket the The transfer third used Both have and components in other cash which strong services And industries. provides critical cleaning growth

these experienced patterns positive strong have expectations. see both integration continue to of with and We our businesses of demand in transition and line a

past the in an We on have momentum focusing have and grown outstanding process. and this in exceptional throughout these management teams maintaining who businesses job have place done growth

We the our and performance of improving heavy-duty also focus position truck the to continue competitive on business. financial

our Rome, of location the was business Georgia, brake kits. this, in manufacturing next same of this divested business XXXX. uprooted December support STEMCO we and discontinuation The of in in In following sale which shoes friction produces step,

truck product to anticipate company's steps lines. and lower of become focus ceased our heavy-duty lines. of Overtime, our our we several we on were In business our reshape truck business percentage sales exposure actions a higher reduce we continue addition, significantly as heavy-duty These have underperforming to mix. product will significantly aggressively operations important margin

a by signing and to Fairbanks reported year made we quarter, transaction sell on of us to XX, our strategy Morse. The The Fairbanks Morse was for operation. our now and significant not discontinued not was a because an businesses fourth as significant forward. divestiture is our fit closed XXXX the agreement milestone it going the with core In Fairbanks simply rest Morse of most the did January moves

the with a intensity both serve, rest While power both will military from financial businesses science, Fairbanks, components including of applications. EnPro. provide of that of and the external understand services Nearly our teams parties generation rest electrical our engineered are everything believe serve offer trying to ownership our and niche based material unlock and and businesses diesel and is strongly divestiture our Removing Fairbanks. strategy, that portfolio different We large running engines businesses. from offer that that produces that power for internal go-to-market Fairbanks ships for the our EnPro the capital Fairbanks and characteristics in are market EnPro simplified value highly markets are that products process, competency about manufacturing IP propulsion on core

These like our have actions to of into highlight as head the characteristics considerably current EnPro I'd briefly XXXX. changed we and business

now services is businesses from largely material derived our differentiating engineered that science expertise, whose composed almost trade highly entirely know-how performance portfolio of is secrets. manufacturing offer First, products and and

environments. known operating performance and Second, demanding for market leading have extreme brands our and businesses superior premium are that highly

applications pricing Third, they our with business serve, are leverage. relative value-based the low-cost which our products to provides

which businesses high are our in customers, entry. embedded costs to with barriers deeply our switching results substantial and Forth,

presence intend XX% continue our stability the sales, Finally, flows. to revenue that represent cash approximately and our of sales of the our total to aftermarket expanding aftermarket to improve we

organic and and in expertise. degree of robust a internal tailwinds, high As our to we science activities material secular returns, attractive aftermarket a go connection forward, exposure and our and profitability we will inorganic with businesses to allocate capital resources

our to now Moving quarter highlights. fourth

EBITDA earnings were above We are that and the share pleased to adjusted continuing report from operations prior per diluted year. adjusted

growth. we pharma, gas nuclear year-over-year semiconductor, markets and oil solid quarter, momentum and the in During positive achieve aerospace, experienced food and and profitability

in general industrial were and up markets. year, challenging automotive XXX% EBITDA XX% the respectively consolidated demand truck, prior the and Segment adjusted heavy-duty versus and profit conditions despite

am reducing efficiency on growth I costs, a you quarter, our we I pursuing of with operational profitable results overall that assure for While relentless across businesses. want improving our focus pleased the have all to and

I'd to fourth competitiveness In discussing our actions Sealing division. the this a several like to the more truck the heavy-truck specifically taken evaluated during spend have And improve improve moving quarter aggressively Products, several within the – to to related of fronts lines performance. financial financial business, product STEMCO we quarter results. structural we're minutes few business we heavy-duty the on

lines, a As result, ceased TrailerTail. including we to three product related operations

manufacturing improve our to reduced to quality costs, action take SG&A optimize systems. freight control to continue We cut their charges and processes

work evaluating footprint, lower ongoing to expect our and network levels our reduce Additionally, our manufacturing reshape staffing the to with demand fundamentally we're to levels this we this suppliers. and This of optimizing contracts and year. its business structure support is renegotiating cost the

improvements. center increased in businesses continue fourth the see capability continued actions SG&A declines. this cost margins across our and overhead accelerating of workforce, and demonstrate and improving in to rightsizing operational reducing structure response we to our focus we despite Products, benefits Actions spending. have This commercial taken resulted on decreasing structure plant optimized the of in quarter all Engineered our In our cost lower volume benefit our These the year, and revenue. include of our

employees I'd the steps the of and China. our business to coronavirus to we've on discuss describe to our a like take impact protect moment taken to in the now

XXX primarily Shanghai who We the in have approximately employees area. are located

We closely. have situation been following the

and health local have which checks and to return in We our involve reopen. These processes, conducting place plans a response accordingly. their response team facilities as preventative work executing they're include plans screenings

EBITDA of employees to chain closely. what that approximately as primarily report monitor million As a of this adjusted driven supply have and today, we our of that based complications, morning, impact XXXX, assure XX% $X result work the demand facility pleased we're and will we challenges to to returned to that to closures. this anticipate by situation know is very we you I decreased for our want operational continue on

And Milt. over to now the turn I'll call

Milt Childress

Marvin. Thanks,

of discontinued Fairbanks full fourth as noted, comments Power Unless to agreement is fourth Morse, a a be to December reference Before in want as statements. year my for segment otherwise financial signing and the will noted, of on that full of Systems note I in I as also definitive Chris sell to begin, the result results accounted our operations. quarter operation year continuing quarter and all the

the and the XXXX. in translation, exit exchange general impacted and businesses gas the heavy-duty were business negatively shoe the the also offset the decreased to X.X% in During XXXX. food and same compared XXXX of more contribution and period semiconductor, from was quarter, and weakness divestiture nuclear industrial from gas, including oil turbine automotive fourth markets. than of industrial acquired brake in in aerospace, by Growth sales pharma, the truck, the the foreign unfavorable by market Sales

for Excluding to businesses, translation and from the X.X% quarter the XXXX. the compared declined of acquired sales exchange sales of impact divested fourth foreign and quarter organic

year, compared full sales our the X.X% For to decreased XXXX.

Excluding impact year foreign of businesses, acquired to for sales X.X% exchange translation from the and declined and sales divested XXXX. organic the compared

XXX for Sealing in in increase fourth compared to up Gross profit by primarily business. Aseptic margin improvements Group, the XX.X%, profit Products driven fourth and was by basis gross year. segment, the quarter The last gross of points was truck of our heavy-duty our margin margin the the quarter The acquisitions LeanTeq profit and

points compared year, was XX profit gross basis For the margin full our up XXXX. XX.X%, to

the Aseptic last EBITDA million, increased up Group, and Adjusted XXX from of of XX.X% quarter divestitures, last the cost our adjusted to fourth EBITDA adjusted margin year. from Despite and year. basis and reduction fourth our to acquisitions in points margin expanded the quarter, the LeanTeq in of X.X% EBITDA brake foreign adjusted points sales efforts The the business. in excluding EBITDA biggest and the EBITDA increased XX.X%. exit and $XX.X acquisitions basis shoe businesses compared Adjusted were XXX quarter our headwinds, to increase was exchange of drivers The compared impact benefits the

decreased year, For EBITDA compared adjusted the and our $XXX.X flat remained margin million, X.X% XXXX. to full

adjusted of foreign year last impact our decreased EBITDA year primarily exchange points in described. by basis decline decreased that results the margin to divestitures, and the for adjusted compared actions acquisitions EBITDA to Marvin the XX was impacted This taking prior earlier and Excluding translation X% the year. and

the This in were year and foreign and favorable demand The the impacts Sales and Aseptic segment the heavy-duty in to unfavorable growth also declines general semiconductor the X.X% exchange prior truck of period, offset industrial versus markets. markets brake the gas, fourth of in and increased aerospace, in business. impacted part due in and Sealing and was the oil divestiture the acquisitions. and quarter the Group by LeanTeq pharma, nuclear, by translation the Products Results food shoe

acquisitions foreign period. Excluding prior-year exchange impact the to compared sales and of flat translation and relatively divestitures, the were

the of brake increased driven EBITDA business EBITDA as by improvements adjusted adjusted due reductions to XXX as the XX.X%. XX.X%, well Segment shoe business Segment expanded primarily truck margin heavy-duty basis cost sale acquisitions. points the and in

Excluding EBITDA the acquisitions and to translation compared X.X% EBITDA adjusted exchange basis XX segment impact and increased margin of divestitures, points and last foreign the year. adjusted increased segment

by One with the a operating connection on final Marvin. non-cash the in periods, practices. expenses activity the earlier in prior fourth on described ongoing business, in review excluded heavy-duty and clarity in Sealing Products, is with consistent is $XX.X truck provide impairment as order quarter, other statement charge past million This reflected we our profit in recorded charge note on of income comparisons with segment to from

markets. decreased XX.X% industrial Engineered to fourth prior and primarily, versus the in quarter automotive the the segment due the Products in weakness period, general year Sales in

in X.X% impact implemented increased primarily XX.X%, Despite segment of in market the to adjusted period. fourth quarter X.X% basis challenges. foreign market EBITDA points EBITDA headwinds, the to segment sales adjusted decreased this margin and to XXX Excluding due expanded significant translation, prior exchange the reduction initiatives compared to response cost year

increased year segment prior impact over basis of Excluding the period. quarter EBITDA margin adjusted translation, XX.X% expanded points the segment in foreign EBITDA adjusted fourth exchange XXX and the

Water a reached We continue at were favorable Goodrich of local XXXX. matters of transferred by Mississippi. In environmental discrete Valley, XXXX, from to its that the county brought claim regarding settlement in resolve a the contamination EnPro we in of the the spinoff quarter time to fourth

increase year, the also and by -- Lake settlement costs Honeywell, we with Within brought in property owners by Valley, claims claims the Water contamination property settlements the a at cash to Mississippi. private regarding these Valley pre-spin million. open a $X.X step the remediation risks resolving significant reserve expand and reducing in to matters site system environmental the These Water in are future flows. resolved and county past Onondaga the XX The resulted of

completed as At forma $XXX was in cash closed the of ratio of $XXX the borrowings approximately a December the million taking to Morse, from the our into our and million. Net pro of Fairbanks acquisitions of was million result XX, sale higher of of times. debt about net the XXXX, approximately total When million January, our account end cash end X.X debt $XXX third than balance approximately at which at XXXX. $XXX the was EBITDA estimated proceeds adjusted net quarter

During generated $XX tax expenditures to of compares period, we capital benefited capital million of flow, flow, year net million. of expenditures million net we when cash from in free XXXX, This $XX $XXX of of free of prior net cash $XXX the $XX million. proceeds of million

the million XX.X%, our around cash proceeds cash net on flow Excluding reflecting free tax focus and $XX increased increased our XXXX, year-over-year overall capital in discipline flow spending.

the to growth million. line with a investments press we million, announced quarter, to In to be XXXX, with that per in Wednesday. of expect last fourth aggregate issued several acquisitions in dividend release share expect tied capital spending in $XX the recent in the be $X.XX exception totaling million to Looking our of $X.X XXXX to paid the our range we $X as we

We annual our have dividend increased by X%.

plan $XX during we we million million have resume authorization share of repurchases existing the next window, $XX open the open which Additionally, under to remaining. market

result, share reminder, shares connection in in a the XXXX repurchase a July we quarter. paused our acquisition. fourth And with any we As repurchase LeanTeq during did our not activity as

back to guidance discuss Now I'll call Marvin comments. and the for to XXXX turn closing our

Marvin Riley

Okay.

we of with Now In XXXX. of discuss first see most our macroeconomic to for the current I'll continue the year markets expect we serve. through forecast, the in outlook half trends line current

weakness the continued throughout the year in market. heavy-duty truck expect We

We reductions semiconductor to increased be in cost EnPro by headwinds pharma offset expect across and our than earnings businesses. these food more and and

coronavirus, $X.XX and per EBITDA to flat growth EBITDA that of earnings on our $XXX of for full expect operations the our result into $XXX be continuing Taking to XX% range $X.XX. coronavirus patterns and first businesses. of the anticipated share XX% the adjusted seasonal expect diluted of these the the of be to anticipated factors account, to a as sales to adjusted We in year impact range million quarter, including XXXX in currently we be the year million impact the anticipate in adjusted of from of the we progresses relatively to as

and expense million is million depreciation guidance net and amortization $XX between Our $XX of XXXX. on $XX for and of based between interest and million expected million, $XX

the investment XX% the and our interest of hedges We have from net provided a estimated table non-U.S. normalized Fairbanks the into in of mix XX%, of divestiture that the benefits details entered to that earnings rate resulting net of of including XXXX. Morse. expense we as a the components, the impact from result updated higher XXXX We’ve tax also

we reflect does of guidance effects year impact the year full our not Additionally, the which aware. of potential the odd coronavirus, currently are full

close months, to call some several questions. comments like I'd our with some on the take then today last we'll and

high EnPro have company. my towards We've since made in into execution reshape on we reflect building with decisive have potential. CEO adopted a science-based towards technology higher company and progress been higher I and As bias flow time growth cash as and a margins July, significant becoming action we our material

we've company. last given accomplished seven months. the long businesses vision exited we EnPro what was our – the We not which seven Here's businesses owner, for several the felt of term best future over

our lines. Georgia, our the Within Rome, TrailerTail exited underperforming in located brake the business Products Sealing we number shoe segment, of smaller product and business

our the million segment taken business, Fairbanks equate compelling savings. heavy-duty multiple. times to sold actions rate our run approximately Power of We $XX constituted these The of Morse EBITDA savings truck Systems a XX.X for which business, in

that given decline. transparent are savings these markets the currently continue to However, truck not

Aseptic LeanTeq organic we made expand The to and Products, and Group Sealing strategic acquisitions: capabilities. our investments completed Within two

improvement saw We our goal. goal. above also segment on the and improvements XX% our provides EBITDA adjusted EBITDA investments stated indication that margin stated This an deliver financial will

is flow We a talent, This of the portfolio is we an that have on And on amazing story beginning. support go-forward our all focus the speed received win from and the of board overwhelming developed transformation of cash our beginning that part and execution, this have on together. where exciting most strategy. fits just is

now we'll lines questions. for the And open

Operator

today Ian Instructions] first is [Operator from from question you. Thank Oppenheimer. Zaffino coming Our

Your line is now live.

Ian Zaffino

you. everybody. Hi, Thank

transformation keying how know FME portfolio, was I the of the we kind comment, big kind remaining think in Just are on of about a divestiture.

Rome, We should else that? too. how expect? we also Anything we Or saw about think do Thanks.

Marvin Riley

holds Well, leveraging for made a science. businesses has one really is about create that fit, trying proposition material our of in that of and a the a about comments I And that knitting really portfolio high-quality It’s value us, for itself the we're together. to materials ensure the customers. to strategic it's

business we where units think pretty we look that communicated one we'll past, with we the some truck that we're at that manage the three, now. mean where our targets if to so trucking continue today. our to as work have about but heavy-duty more do portfolio business, we've And address That's line maybe lens maybe much to probably business. the in would that's the heavy-duty would have within our heavy-duty that in about businesses, that is we our Obviously, on in trucking lens right laser-focused where to

Ian Zaffino

the also, turning then coronavirus. And Okay. to just

And experience could. maybe in I you head around be how impact, kind had the we to of some make So if I guess, you it its it way measures there, thinking made and if you that it's do how given could facilities, our know would already does over Thanks. or with exposure get you've now about Europe what you've then has Europe it it? seen take though. now? that potential its early your of way financial Any the are in

Marvin Riley

contemplated dynamic I question. talking pretty a spent first corona number is Yes. will really That's That we've I in fairly that's hours say, a a lot. through just of situation good fluid. different something the And that a general. here one, is and because

the to and good place developed put of how we've issue we'll of perform a analysis we sophisticated team once taking monitoring response of, employees, in them make into that's supply of safety terms the through And saw supply we in what trying in get So we we cetera, a our through of that sort together fast-moving a and process, get with mass, to individuals and work, and that out manage that obtain job allow to a workplace, as to deal word we'll terms China develop chain how the facility. to flow required it to appropriate et the get fairly into operate we to example, chain virus amount, we our approach our spreading. sure started for cetera, would et our of develop customs

of in about preliminary So had if to with to spread And increase discussions identify that mass and measures happen would we taken mind, supply things in our worldwide. what terms we nature. that we have from some have of started it where could

our to that able above improve of really situation and beyond So We've it what that might and this that, that to gets would just we able But a as beyond really produce difficult for be we might know our operate. little started a supply We to chain, would deeply forecast period to make be -- it's see we might product happen get sites. do to supply today. time. above sure look and what warmer, at

we're the now to for we're and can bit little doing right everything as concerned, a hoping we weather warmer. far as So really get

Ian Zaffino

much. very you Thank Okay.

Operator

you. Thank

from Bergner question from Research. Justin is Our coming G. next

line is now Your live.

Justin Bergner

morning, Milt. morning, Good Marvin, good

guess, expecting a Since, restructuring, savings obviously, from on million $XX you full benefit Just market? the the of weak I in are XXXX. STEMCO to

Milt Childress

you that the that from The expecting We're decline won't to answer improvement percent see trailer is XXXX. builds no, XXXX. year-over-year to mid-XXs in

hasn't reset midst And so that market a in fully the yet. we're of

going a response have exit at to we've businesses So response -- financial been are to standpoint the the in that that strategic going to our taken and the be are forward. we actions in think that standard partly then from partly taking desire certain don't to

as the through response in really business discussed, are exits to savings conditions. improving as the business product the Marvin -- quality So of and well line of market combination the that the the

Justin Bergner

of sort million taken all going a get are Or Okay. complete more market? But of are those be normal into there actions year? to that $XX savings this to actions in

Milt Childress

have already taken. are Those that been actions

Marvin Riley

Yes.

gives more that we've taking are done actions, date. you sense We but what to of a

Justin Bergner

That's Okay. helpful.

mean, there current focus? of part that I it's expect front, acquisitions? has do a allocation Or additional if to be the so, should And focus, now capital strong is capital the preference if sort the from On where prior window at the the we of sort reopened? repurchases of changed still to all XXXX allocation, is

Marvin Riley

to do answer and to our now. but our this question pipeline back opportunities. have finish authorization we unless intention first out change, into of really likely the that certainly is market the go something we year intention is, the anticipate stated that right And Well, a would healthy we that's

So we semiconductor. would to look in continue

We will in to look continue aerospace.

look We the of an ones or in to continue food real well pharma that science interest in, particularly what the we'd deal as types have margin as like in future companies. look some expressed profile technology we've deals and like fits having to those to the where for material that we

Justin Bergner

Okay. you. Thank

Operator

you. Thank

coming Our next Hammond question from from KeyBanc. Jeff is

line now is Your live.

Jeff Hammond

guys. morning, good Hey,

And product of And And there's line shutdowns Just on of headwind, square what then contribution but if are the is? be acquisition obviously, offsets? get I'm sales? just The how really truck the a is, is divestitures? you're maybe to of each about the core growth thinking trying some you what FX segments, to impact want going of impact? see sense the any a in to

Milt Childress

fourth questions Yes. Jeff, your – our looking results? some are on of you your about forward and impact quarter referring the or to acquisitions divestitures of

Jeff Hammond

No.

Looking forward.

Milt Childress

the year full particularly overall, acquired we But that are acquisitions acquisitions last that expecting see going the organic that are in as by anticipate in as acquisitions Marvin we from as of saying businesses the we year. Well, our other Obviously, going we we to growth be business, we're said to sales. flat in growth a be from basis is growth offset getting we we third acquired, organic as parts will quarter that his as growth softness trucking. the the expecting of well guidance in Yes. well those growth, be relatively in on that that heavy-duty year the full

So you've impact EBITDA with noted our see the flat improvement, we the from year-over-year, for and however, margin guidance. relatively year sales net that is as

The heavy-duty far, So challenged by trucking. is market, picture. at a high most level, that's the

with think the Looking coronavirus. But be in given as where we're we there's expecting year-over-year what's we be little acquisition it We ahead, market market what saw to be going And us, in and the to a a than the pharma, for we in of food the some a softness some automotive. participate. that from Aerospace, growth wildcard will well stronger XXXX. reasonably it's expect bit given year-over-year semiconductor continued that believe we good made. market we as happening

so have right now. and the be would had see relatively the that year good we the strong We expecting move of with industrial, That's we'll haven't We're those tend happens of in in to has year. a what then is in be of a down industrial gas. general about believe part tough. exposed industrial other I business that kind an the the our and market then and to midstream significant GDP. particularly this been than to year, production the of year half will the in be then, And standpoint, production guess, first and XXXX. general visibility and And second with that all mentioned more in – We only the from globally, half could just oil gas, industrial so I oil

Marvin Riley

just take North American itself, now, just little our automotive North touch We automotive I'd successful. not macro has automotive but fairly in than some some the see market And American in automotive, a European bit. see but we on strength to right been activities do share in softness

sort for automotive is story. region us So of two a

up, second, due sense. is opens quarter just corona. know Asia will like. don't primarily fourth soft the automotive we'll get what look third better When and We a to in that

Jeff Hammond

offsetting Okay. was contributed? And product lines? the or LeanTeq XQ. can me Aseptic And give you what maybe What impact and for divestiture then

Milt Childress

quarter, in Yes. fourth we roughly Yes. of sales million, and of quarter. acquisitions fourth EBITDA the roughly the In of in fourth EBITDA $XX.X we generated the $X.X million million in two quarter, $X.X had the

Rome the year. look divestiture at $X and look the in happened If quarter had about in fourth that of of And had a to sales we we that the fourth you XXXX, business. million quarter of you loss last

that in significant money As addition had that, business. fourth fairly to quarter, the we then you warranty may recall, And in a charge. weren't in we making

So we the lost of that in $X million about fourth than of business. EBITDA XXXX quarter

combine both components. fourth profit So the impact if roughly standpoint year-over-year million was you a $XX.X those in taking two, from the quarter the

Jeff Hammond

in or tied what's Okay. and headwind? a And then if And know TrailerTail? I these XXXX? additional product in there's Like those to lines I revenue the -- guess headwind don't revenue exiting profit tailwind

Milt Childress

We Yes. they're relatively TrailerTail, mean, down. reasons -- small. I the one of we shut it

money of product in were you lines XXXX, of revenues any the only we these making maybe on lines. $X had And product if look roughly in other million sales had -- all we of all in million, exited we the XXXX, you $X.X that we not XXXX. at think quarter, look really $X.X was million it If I fourth at of

ahead. it in you hurt When it on be look little a what's from so heavy-duty will going at an bit but sales, us we're standpoint the And yes, rounding a trucking, expecting it's but earnings to year. market going favorable almost on in

Marvin Riley

underestimate wouldn't try lines. drain to from the that these stem of businesses And I product smaller using were resource to sort the losses these

focus redeploy can impact. and resources to exit it so businesses we sense a just of where and and lot these get greater And the made

Jeff Hammond

in then And noise other than Okay. XQ impact? any that's impacting XQ coronavirus other

Milt Childress

have question. completion. the good -- Obviously we'll Obviously, No. a it's

completion you'll discussed be of our at the we'll this not look that you our forma full sheet reflecting see continuing balance morning. If here in the by Fairbanks the pro quarter, operations changes just glimpse transaction, the we've

that's thing. So the major

Jeff Hammond

$XX you give to the million know the $XX And through two corporate? segments? million D&A, thing, can split of Okay. us it And last then don't the between any of runs I if

Milt Childress

little Yes. corporate. in Very

we've Sealing. got see Let's in

me close. of Sealing I've $XX -- XXXX, give million We going look to at had pretty you in for break Engineered be going the XXXX $XX in to I'm XXXX -- you had we front Products. in in got in Products. But If which is out million

XXXX, like So we ahead, have it in Engineered. looking million roughly in and $XX $XX roughly, looks million Sealing in

Jeff Hammond

Thanks, Perfect. guys. Okay.

Operator

Thank next Our Mondillo. coming Instructions] from is you. [Operator question Joe

is line from Company. & now live Your Sidoti

Joe Mondillo

Good guys. morning. Hi,

Marvin Riley

are Good morning, How you? Joe.

Joe Mondillo

Good.

to quick. bit a transformation the and going on, just So dive more that's really into just little

if Just these wondering you of a in you're is given little you but business the going you I forward? transformation. going place envision? do that businesses, maybe maybe to with the timing envision the the sort of challenging, kind on of now some what timing what's STEMCO of Where how industry, sell think imagine, trying

Marvin Riley

Yes. That’s and to question. we're time, type first of maximizing be impact first et of looking We're sort to underperforming, we're a maintain may I say portfolio et And that when we if looking divestiture. at always also were good any that's about foremost, at really to assets some that thinking cetera, value, over the cetera. want the

our So comprehensive we're trying to thoughts. be in

versus looking of these required turn So they businesses some at could do we're in around what businesses. resources the also to other

a take very approach. to trying comprehensive we're So

are in and As our complete to though, internal about our work this think XXXX. we aggregate, heavy-duty desire plan, plans trucking in our

our year. in execute executed be aspiration XXXX. give to this to be So needs our can't is that that's expectation but you breakdown what quarter-by-quarter, I is done to

Joe Mondillo

Okay. Good. was look to us. No, I hoping that's exactly for what

that And is for with what very it overall? you going and be your on to I so up of given cycle kind guess, Relative of go what's bringing in would What environment forward, acquisitions? going level. the and uncertainty some you to? leverage, level global appetite more just to comfortable leverage your acquisitions, now And – brought macroeconomic what down going where we especially growth a up like are how to appetite have nice to the

Marvin Riley

Yes.

mentioned, a So we've first the before right? I here lot that good really of Reflects a question, conversations all, of internally. had

and where Before to a that are stated I of we patient. imperatives today, first strategically be leverage, go of say into sort one I'll is we our like

to don't characterize go know, determine not The would unfold. will environment tenuous are in We do us anything in will uncertain, unusual, is to things a as situation rush how we that difficult a little, a it. put macro it's I

So approach. very our we're thoughtful being very We're patient. being about

especially we're what do So we've not something at anything our all we more go anything. trying rush or Now X, in is patient. do really be X, to cap to if would patient. the as give advantage above strategy internally consistent want see depressed given be that is so with not to intending macro than it that right? would if We're nice that's would Xx, about as below synergies, hard we've we be talked but thoughtful, I right see really outlined. move is an we then on we the now, something do one, fit, a we obviously, just the And environment. we it's opportunity trying to that, we're in a And do we conditions to want and see to would be stated, like of to take If good that, that something, us that

and strategically thoughtful patient things portfolio want we're and forward. fit company is way going the the our to sure our be Xx the planning shape that to simple and and we the make So with we do is answer max,

Joe Mondillo

a on but then was Okay, a the know item non-operating in in $X.X things fourth couple there's if one the the don't if I big the question just quarter. million, there, was of great. line And there's quarter, fourth income What thing.

was related to? that what curious Just

Milt Childress

second, one Joe. me give Yes,

Joe Mondillo

the you're that do Fairbanks Do then given wondering, the that, in just corporate much costs acquisitions all, looking and I'm corporate the for change changes, other XXXX? divestitures. selling cost at all change the XXXX off and in And while

Milt Childress

a back It's got said actually me question. bit an your non-operating little Let through you income. you expense. thought me because I go to But

You the million. about $X.X talked

Joe Mondillo

I’m sorry. sorry, expense – the yes

Milt Childress

disposed an previously and from was environmental million $X.X businesses. costs reserve About Yes.

comments. million environmental of reserve that $X.X in that noted my I the was So

And so loss million, but that the we other was include non-operating expense. charge. cost then biggest we of on sale piece. that include non-service we have $X pension, And a and million then business $X on of under which was And the

the components. were those So three

Joe Mondillo

XXXX? for Okay. Great. corporate And the cost then

Milt Childress

XXXX, like the $XX.X million we XXXX. for year had for cost Corporate for

the are bit our the million, we I to we're regular regardless obviously, our structure company just all size. a a support we businesses, that in of For are number mean, and we – And at a XXXX, corporate expect down we of office basis. have on looking be across $XX.X cost XXXX. functions it including at of

significant us trigger, a we when aggregate, Morse. example, trigger acquisitions Obviously, in For in Aseptic, the fairly did corporate acquired closed, LeanTeq by decline sold did corporate cost. We've increase an for in are that those that doesn't that Fairbanks not but not and costs. trigger we necessarily just itself

is relatively year-over-year. So flat our expectation

Joe Mondillo

the me, margin Day, your past, segment talked at sort of more type you've question. In Okay. And about a the targets of Investor in sort of last long-term levels. for question

targets wondering if in some on that on could you the the of moves us Just you've made of portfolio? terms those based update

Marvin Riley

think or said Long-term – I longer you term.

Joe Mondillo

Yes. term, multi-year? Longer

Marvin Riley

we'd it to we've adjusted – be – today. we as have, investment thinking or growth And we'd it see like cash XX%, right? like of about a XX%, Yes. mean, on about internally, metric to upwards like be phases, what flow what X north EBITDA return Phase use is of you of also X%. that I segment think north for right? our We our north that So we we're work, know, like of is XX%, to to I and

as greater what that's cash XX% has growing looking greater we're EBITDA that's investment flow shape than that's to greater the X% that we XX%. and than something margins return portfolio, than So create on

that good place feel feel good We to and look what prepared in really there. get we the approach might were we've of really we put of our whenever that I of And plan next my moves as so get And we'll that in the foundation we our horizon, sort we in reset said did to a get show to can making north QX some we that we're in But the of like. thinking that sense a Sealing of flash get about that XX%. that comments, there. about create right now,

level feel forward moves would right have all the now we that of pretty demonstrate can set do that we'll We'll portfolio going in strongly foundation I a performance. that further and get direction. the that So just us propel

long-term you'd hit when medium-term. little number, to more bit goal something but and timing I exactly fixed we'd our maybe that So know that is a we'll it's say like like on

Joe Mondillo

right All a thanks Great. it. Appreciate Okay. lot.

Operator

is Instructions] Thank from follow-up question from Bergner next Justin a G. Our [Operator Research. you.

is Your now line live.

Justin Bergner

current trucking look follow-up. the for a out of as we of you portfolio you question that to versus keep the you everyone that's on how to do sort in the trucking add, and STEMCO. what Thanks longer-term. business a I higher business? think should the value this guess, I want years, of revenue couple the portion mean, two-part about of of sort want And sort in keep

Marvin Riley

EnPro, let Products has give a I'll about I'll in and strategically we're it perspective, and proposition Yes. give Milt our to sense and a from advantage aspect business the core you sits a how marketplace. you lot Sealing that So of the our technology-driven, STEMCO has competitive of right? is of is how the we we science-based segment numbers, secrets thinking of just the of some very, value cetera, material customers in very manufacturing future that a company have creates real et of et where trade view how, know a which cetera, value it for lot sort and a

core. Inside beautiful what has STEMCO built portfolio looks I you like. look that let maybe we to And what from give a we I'll build-out, a moved And that. build to do of would away really And the past, tight we'd is business. a would we size that of So core what that core. back again, but of if that the in sense really adjacencies to sort Milt its from consider like

Milt Childress

Joe, it’s question. good a

truck we've this that at made, already If we talked in million. the – combination if the the at of sales you that $XXX look you And heavy-duty of about on XXXX, had look of business pieces moves long-term we've see this then business as bit described, little $XXX that has Marvin we million may our vision not those some fit a million or that could of of business. call as $XXX below well part our being about

help will you get some that So idea.

a done bit and as with contemplating. that's a And the So of get less end little our sales objective. as $XXX more that some and we run we the we things believe profitable. rate look XXXX of have we or we're business a And to million probably of Marvin that said,

Marvin Riley

goals And this Yes. earlier. bit that I've left would a that would the outlined stated little business be fit financial

Justin Bergner

Okay. Understood. that How what seems like third And of business OE that forecast is guide, basis least communicated an your XXXX, of is does trailers and on and kind XX% in you aftermarket your a correct? for mentioned at envisions in down it from trucking at trailer in bit downgrade you the look mid XXXX. the was your said number a quarter, the

Marvin Riley

I I apologize. Justin, earlier, And called I’m Yes. Joe you sorry,

The continuing last starts third right. and year, in in the really step XXXX, it quarter – You’re beginning deterioration the fourth the we've to – seen quarter. of in down outlook continue the for

quarter outlook from ago. the sorry. when yes, we question, come So – I’m down were And has other a your what's talking

Justin Bergner

The aftermarket view for XXXX on STEMCO.

Marvin Riley

going has year based on which be the in decline still the effect the a then outlook this of this just to a on market, will transition year our think in being economy, probably that And on which suppressing where the happening that We've It's to slight with have still aftermarket of things. also industrial we years, what's going of new a we're soft the this underlying I Yes. through with to several we're being in a is economy. business kind then window. period, a One function have two have, in a lot production I think, equipment currently. but going And the we're about normalize before. that aftermarket, talked few had that's

down, the digits. we're overall, single call and it, low business to aftermarket would be I So expecting the

Justin Bergner

you. Thank Great.

Operator

any back question-and-answer turn management further reached our to floor We've over end comments. of or session. I'd you. like for closing Thank to the

Marvin Riley

Thanks, right. this us joining Kevin, you and all morning. All for thank

can additional have you �� at us call If day. Have me Thank you. great you questions, XXX-XXX-XXXX. a

Operator

conclude teleconference. does Thank you. That today's

thank time, at today. participation for this lines your day. disconnect you We may You have a your and wonderful

EnPro Industries (NPO) 25 Feb 202019 Q4 Earnings call transcript