NPO - Earnings call transcript Q1 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings and welcome to the EnPro Industries First Quarter 2020 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Mr. Chris O’Neal, Senior Vice President, Strategy, Corporate Development and Investor Relations. Thank you.

begin. may You

Chris O’Neal

that welcome our I’ll and being Industries’ earnings CFO. today the quarterly at me referencing. Good the and on you to Milt that call. call presentation find can remind where Marvin also will our conference be enproindustries.com With Riley, morning are you EnPro we CEO call webcast our is Childress,

for in first statements Systems will accounted for our results to you is quarter segment I as historical measures. the want most will facts definitive let of be reference reference the of signing agreement our appendix to impacts reconciling that on of periods. involve which update responses We filings in materials. number we discussion, Also, well me the that non-GAAP Tables economy undertake our a Morse Power as and noted, point the risks first operation pandemic are as XX, that statements on call that the recent of do GAAP call, begin result the the the from quarter forward-looking not financial continuing not statements these making are risks considered closed of we in and in governmental discontinued on the Fairbanks during on December operations. are comments as presentation including Unless including measures SEC, these comparable measures These remind are in will Form the described this their be all we to Before a with of included our out and COVID-XX related XX-K. to XXXX, to and January nature. our general uncertainties, statements. a otherwise both also forward-looking number XXXX and impact any other to uncertainties that sell a

over to the Marvin. now, will call turn I And

Marvin Riley

for you morning Chris everyone. Thanks, joining Thank us. good and

We like the around today, expressing but first, colleagues on I the on have would government gratitude grocery proactively excellence cover world. to while heroes the pandemic. a the emergency our our true employees working adopting of very have I adjusted factories heart battling this service I core thank solutions. professionals, by been am throughout EnPro’s start with have and the EnPro and actions COVID-XX employees, sincere different practices officials working store to products we frontlines been have want to customers the who proud lot safety the frontline have healthcare respect in to to our at as of responders, my the quality of of how continued safety, organization. enhanced values to way our our and

on to we to the everyone relate performance, like Before I take center to important our that opportunity EnPro. themes get would into financial three

we acted COVID-XX. urgency of decisiveness we with about when seriousness First, and the first learned

on this top support And was COVID-XX moment. our safety quickly protocols, health priority in team and do world. a a around and implemented to more employees well-being so, response enacted Our to dedicated the we and the new ensure of

current strong cash Second, we untapped largely recent economic cash, proceeds and by sheet strong Morse very relentless have Fairbanks revolver a cash to fortified a With position of a weather $XXX a are conditions. balance focus the very million results nearly from divestiture. on we in the generation the

and growth organic building on generation. that businesses margin more we weighted portfolio inorganic a recurring last revenue that durable cash through significantly higher and are markets of towards and year and emphasis places the Third, flow spent have higher actions more

the company we are our timeframe. achieve a much on we than in still are vision While our XXXX/XXXX EnPro, stronger to journey for

we to navigating have tested talent emerged force environment We even where organization. and an a team, cycle the leadership dedicated have path and stronger strengthened strategy a a current clear through

With that, our let results. review quarter first me

EBITDA approximately to points increased We adjusted that in XX% $XX.X million are share, while earnings petrochemical markets and duty sheet, heavy additional and margin in that of EBITDA sales division truck, per $X.XX to our basis per Fairbanks challenging late the strengthened share adjusted was to divestiture a XXX general liquidity. XX% industrial, increased of XX.X%. resulted The conditions and navigating January to demand timely pleased Morse expanded report Adjusted automotive decrease in providing X%. balance diluted

QX, adjusted of X.Xx. to As EBITDA and just a our net result was in our divestiture this performance debt

CEO Since taking XXXX, July of been focus. margin on the has in position core expansion a

improving quality across SG&A all and maintain these on productivity to costs relentless improving of strong led systems a we Our improve results. and efficiency And to businesses. focus our our reducing reduce team’s control operational efforts costs while to continue

sit great only this here we’re started. getting is I progress, As today, but

Group, declines truck right-size in For heavy-duty was measures points. This control elsewhere plant and quarter, due and decrease grew meaningful overhead response in first to improvements EBITDA adjusted business we margin Products basis improve structure the primarily adjusted last and our cost optimize the workforce, to In EBITDA business Aseptic Engineered this in and segment. in expanded volume Sealing XX% year’s our acquisitions cost taking year-over-year are Products, the continue LeanTeq implemented XXX of and SG&A actions spending. the to to

pandemic beyond year identified for full broader COVID-XX, and the risks earnings a continued late it potential China. call the of impact we to our associated if February, in On with spread

of share of Chinese we While we in a our have pleased forced our period region for operations to to operations time, are normal in short that all were of facilities our that suspend levels production. resumed

Overall, safety able provided help insights been combat with situation many gleaned COVID-XX have globally. effective COVID-XX a experience had current procedures quarter have to Our in across manage situation. our we this sites first diligently on leverage to been to learnings China the working and strong we early and

is on X a and is health progression, to Phase the resetting our discuss Slide Phase from Phase conditions, while centers pandemic. well X focused developed to and to period on pandemic be business business through the post the is take to and like stability to capture the based we normal managing that levels, X the And customers. I’d four-phased running we’ve learnings moments improvement including focused new adverse will responsive demand on safety, growth phases. previous where to positioned Turning the COVID-XX X, new in adapt few Phase and it our X process liquidity business navigate to on to approach being as returns.

have discussing during I the phase, time is as we most have the actions taken this taken to of where the will morning date. spend our steps bulk been of first this my

the overriding as focus is our we the this families with priority. company, our have pandemic, our placed health challenge and always a of global as As safety customers well-being suppliers. communities plus of well our on their and and as employees, our Faced X,XXX

was we across subset leadership this global team During local of along and meeting in this developing mobilized team. protocols This phase, is site involved team, company. is coordination emerged internal our response COVID-XX manage teams, daily China. executive and created our issue when safety with A support in of our the composed deeply team, efforts which this to

the the remote have and the line the measures with local presiding locations have options also and we over enacted for where Organization, implemented feasible, Health World from preventative Where of Control we operations. Center flexible We work in Disease recommendations governments have employees.

access, plexiglass and enacted to screening and for distancing to we’ve essential operating As within management working PPE for close include visual practices. proximity, separate physical procedures gloves, additional temperature safe enhanced good that social facility face our employees, including masks employees barriers support on-site

to throughout sanitizing training stations In in cleaning and our disinfecting, broad-based facilities perform strategically employee addition, we we placed cleaning. enhanced with need services third-party event deep and have and contracted developed the

supply urgency. and and manner a a phenomenal Our have a while in of manufacturing creative moving executing also chain sense with done teams job proactive

our event global adjust COVID-XX have our operation positive individuals. an pandemic practice to the learnings which way allowing playbook, interactive to of and safe work This for respond to safe is the of as developed educate, preparedness of transfer of collaborate to This working. how for a new a multiple playbook manufacturing facilities, is guidelines well standardization of each provides distribute in we manufacturing case level sites as Additionally, and this response. quickly us our as of best we single community to guide

training facilities. We playbook for our are each of conducting currently

to have we this cases steps XX had supply our fully chain significant happy recovered. manufacturing May of many of COVID-XX facing levels difficult facilities enhanced as employees currently XXX% challenge to the various today, to have families not our taken thanks although them whom are and of recognize our support We and their benefits to exceptional Friday, have X,XXX-plus have that provide and primary operating, of X, tireless during am experienced time. at as confirmed teams. we disruptions workforce, are effort Of report of our I the capacity, and of global

implemented those As we we employees impacted. our have right-size for business, had have benefits to healthcare

with safety and first We are around efforts security. enhanced our colleagues phase confident provided the have our

continuing However, as to this new virus. more everyday about we are learn we more practices implement and

focus a supporting are live. we to on we With local communities our committed people, work and where

States have medical-grade the suppliers including materials aid the difficult-to-locate and Europe. thousand in several institutions to United We connected thermometers, with infrared in sourcing EnPro and distributed have like doctors and hospitals NXX masks, to

we everything to to continue curve. to flatten medical the will can We our assist do professionals

second business keen now involves stability our on we are a of progression. phase The focus and response, which entering,

continuity the have and detail so action the are agile pockets new discuss to spread maintaining COVID-XX for the in We of informed further will are analysis starts adjust in several ensuring initiatives increasing have playbook any enact business will businesses prevent environment of of of Milt levels. detailed success and the a and developed to know in be will planned to has moments. severity ability our future while demand uncertainty, Each contingency improve. environment. a our to when scenarios few taking to necessary decisive we We sensitivity as

supply for standard chain mitigation is perspective, From focus. a us a risk

which supply We of council, and risk focused on have sessions progression our businesses, all from with our chain leadership mitigation. stability, working solely representatives weekly across includes

tracking And years we chain during supply X supply chain a demonstrated fortunate our major system have in for playbook levels feel workshops. operational suppliers communicate and such the strength the in businesses, a our suppliers basis. developed supply our at to times. all has of implemented We organization ago. capability-building these with We We organization regularly to status each supply competence consistent during chain chain everyone on understand have of a

and plan emerge and involves our processes, two monitoring phases. that of phase The from the procedures improving ways first of the new third working

will phase we in legacy our changes that to new to finding solutions confident businesses, thrive will While we’re many acknowledge environment. this allow the our employees involve in

and example, returned a to For communication state point embracing by Phase the video usage. in as speed, X, conditions relative phase We of our facilitated already have view the increased last efficiency market we’re increased which normalcy.

X Phase we as on to resources point progress we shift While the at back the EnPro fully economic strategy broader downturn, which a view priorities our portfolio. transform continue and to plan during making our strategy to we can

our Now, let me few spend discussing strategic a moments outlook.

include been with on leading strong trends. in and our strategy cash businesses reshaping remains has Our portfolio technologies markets focused compelling and with secular favorable to flow margins,

and where exposure recurring We concentration aftermarket can are drive our focused on even greater we businesses increase of revenues.

committed investment. approach allocation increase leveraging to EnPro capital to are to flow margins balanced and system and maintaining on We operating cash a the return

businesses Aeris shoe January, completed our sale our Power and like TrailerTail, that future strong, Rome, balance product brake our business, with to did in businesses exited time this, year, In in company. of our lines business in Longview, including located Georgia, located Fairbanks thanks Texas. we the truck In in a progress which constituted at we Importantly, over for portfolio our part align exiting well Sealing reshaping is as sheet AirBatRF the segment. several the last Morse heavy-duty not our Products, Systems vision as our and

two made pharmaceutical acquisitions semiconductor and Aseptic also into the Group, our expanding biopharmaceutical XXXX, strategic industries. We in attractive the and reach LeanTeq equipment,

flow secular applications Both positions for These faster of significant the our remain strong durability focused business current growth and with our in The over. when our contributions. COVID-XX, markets, supporting am past we this we strategy. prospects growth aftermarket portfolio technical has crisis business trends on leadership acquisitions expertise, is cash as strategy, high-growth niche emerge margins, near-term companies mission-critical the long-term over stronger, have dynamics will confident compelling with done model. year the market long-term on advancing with align strong shaping their And associated through I a excellent we’ve their growing Despite businesses. competitive strengthened and profiles focus

on discussion And Milt? the to over now our additional turn I will for call results. quarterly Milt

Milt Childress

being Thanks, good Marvin for and Thanks here today. us with morning everyone.

earnings that based As time earnings Marvin that view call, economic million, quarter, derivative to than time noted, the businesses coronavirus hit on to we novel of less this the the volumes $X to from quickly quarter in in fourth economy. At we be the during to industrial quarter estimated expected our impact reduced of confined much our adapted growing first which Asia changing COVID-XX on the at the primarily be the the impact and climate. Asia, of might European

world the products and able Demand know, workers migration of the our essentially of sealing all teams earnings quarter thanks we the to for safety considerably levels. changed every such and March As the demand healthy of sales frontline in new protocols, virus part in remained we steady who implemented much globe. to and operations to convert were to with

the food including backdrop, the the and the held was the to economic by in truck, offset sales automotive, contribution XXXX, businesses majority semiconductor during in the in began significant and markets, petrochemical of industrial, quarter was demand general In same contrast petrochemical total pharma to softening markets, markets. quarter, of driven Engineered period industrial but from which of see we acquired and weakness compared heavy-duty to changes first Sealing strong in the Against general more X.X% to automotive COVID-XX. the primarily XXXX. than by in Products, quarter, and this Products due Growth decreased for the much

Excluding the and from businesses, the organic X.X% quarter divested for declined exchange translation and impact of sales sales foreign year-over-year. acquired

Aseptic XXX from in quarter profit expanded The resulting LeanTeq margin primarily the drivers XX% results truck acquisitions volume primarily XX XX.X%, shoe first profitability per improved and recent EBITDA cost for EBITDA offset $X.XX truck Sealing points sales decreases improved increase Products and business. up the result our the benefits Products Adjusted driven was by of in in our as Gross biggest Sealing margin for per basis diluted million, from the in driven to quarter points. expansion. this increase adjusted adjusted quarter of XX.X%, nearly sale our XX.X%. Company-wide of and to of cost while were well margin a basis The segment, the was acquisitions, EBITDA up brake portion heavy-duty reductions business. share, heavy-duty the was mix earnings first the as share increased our $XX.X Adjusted Group segment. improvements by

Turning three decreased markets, truck due to quarter Results to growth foreign of shoe Products in divestiture year segment unfavorable XXXX, quarter decision exchange X.X% our as lines in performance, semiconductor and were of the long-term also first quarter underperforming well in fourth translation, brake food pharma, general heavy-duty the industrial the markets. of company. for and in which all Sealing versus product by as third the and despite vision demand support the to segment cease the impacted sales the in period prior and operations petrochemical the decreased our XXXX in during of business

and decreased Excluding the X.X%. translation, acquisitions sales first of impact foreign quarter exchange divestitures, and

sale operation. basis of Segment adjusted due to the to the and margin heavy-duty the XXX well business XX.X% year to realignment brake points increased compared the expanded XX.X% as period. prior EBITDA EBITDA adjusted Segment primarily in as truck cost acquisitions shoe

impact of EBITDA compared foreign divestiture two acquisitions and year to as result business, costs. and focus margin the of shoe managing segment the the the on a XXX Excluding points translation, of basis brake relentless disciplined a adjusted expanded exchange last

to XX.X% the by weakness automotive, exacerbated the versus segment due decreased year primarily prior petrochemical progressed. the markets, general period, first the in quarter Engineered and industrial as quarter in Sales Products the COVID-XX in

the sales impact XX.X%. foreign of translation, Excluding decreased exchange

sales to offset the XXX a reduction quarter as basis XX.X% volume, the EBITDA result lower initiatives. by year XX% prior of compared cost decreased partially and declined EBITDA First adjusted adjusted margin to segment segment points period

segment basis foreign adjusted translation, points. exchange of XXX Excluding declined margin EBITDA the impact

to financial current turn economic crisis. be position. positioned to when key strategic current the act our Maintaining to of to well sheet balance are let’s we is a strength from the our Now environment emerge priority a opportunities position in ensure the on we and navigate

the At million the be this cash hand very million approximately million ended in is half that ratio Of paid of the sheet estimated while $XXX by letters facility sale our our completed EBITDA Fairbanks does Our on from and adjusted availability the million over credit. of revolver the last $XXX the notes the and cash second year. million outstanding quarter approximately Morse, sale plus to was the of X.Xx. $XX of We balance end refinancings XX with the debt of the it credit includes March, $XX full senior on and of Morse of the note, proceeds include strong, of net months. the $XXX in taxes on Fairbanks sale bolstered will not gain

Our mature subject share a Morse $X.X related respectively repurchased leaving XXXX million and repurchase XXXX requirements applicable suspended credit after our approximately program we under reinvestment in divestiture. million to XXX,XXX facility to In $XX in current million authorization. mid-March, COVID-XX, and the response $XX remaining senior of at the notes during having approximately Fairbanks repurchase to the quarter, shares cost

to strength the we legacy our receivables in resolve of capital the a $X.XX quarter of we quarter dividend. flow and approximately the matters was is last quarterly $XX our the a Sealing in million, totaling And share of paid the first a negative million, working balance environmental Morse divestiture. largely per which committed payments dividend in quarter $X.X very $XX.X million. connection quarter, million sheet, Free reflecting Given a result to remain Products increase Fairbanks discussed of strong $X.X first to during cash with end and

the we first maintain is Fairbanks free A and negative ours this to of first compared quarter receivables strong was priority ensure year, quarter year. the a in of million focus growth, $X.X last spending in continue profitable and both or in of the payments related growth environmental cash $XX.X with flow Excluding to million the recent preservation our plan expect be tied at but strategy opportunities position throughout long-term we in short-term levels. below our XXXX the capital cash acquisitions, to invest cash year. Balancing to overall to periods to

our and pandemic, Given withdrawing evolving the COVID-XX guidance. we surrounding macroeconomic are the climate uncertainty XXXX

the COVID-XX the we on on at with planning like cannot impact of forecast provide how While color to our business year. I’d we’re for some accuracy time, this

our segment, industrial truck, Products are medium markets Sealing heavy duty our general In duty served and semiconductor. and largest

order general see We industrial, of exposures these and and markets market automotive, primary general market. we and trucking started weakness to will the and weakness quarter, our the Engineered that we progressed, accelerate compared of second the gas are in anticipate accelerating In oil soft to are petrochemical. half into the have year. quarter in anticipating Products, industrial the signs experienced in some We first second semiconductor the in first the possibly quarter remain and as push-outs

While softness limited balance QX. in that year, quarter, and we the hardest-hit very we of our in continued visibility in by have the recovery will quarter beginning a of the followed the a QX be anticipate second

taken, actions positive spending for a result we additional our and free of year to generate a scenarios demand year, benefits year modeled range, management. we suggests our the of mix capital and the on if different various levers may acquisitions demand of and for XX% our for on the decline. the aggregate, the adjusted this Even account pull to have market falling cash planning in revenue flow compared If of will capital We our XX% XX% and we the to have identified variety scenario range expect of from from XX% decline in in revenues actions working for as case, the into XXXX. decline disciplined taking deteriorates, downside based the recent levels cost to EBITDA margins depending

guidance be trends, will crisis market reminder, are surrounding as do a margins demand uncertainties revenue. the not are illustrative on EBITDA represent there intended adjusted and to As many for only, revenues and purposes and how my comments impact COVID-XX

have impacts the we will as pandemic to As many a that our needed. demand Marvin of actions have and discussed decreased plans the COVID-XX earlier enact businesses further contingency result on the mitigate of call, if already taken

additional prepared and are that move may quickly arise risks the to We as address the year for progresses. well near-term we’ll challenges,

call back this Marvin closing for comments. turn I’ll to Now

Marvin Riley

In navigate and people. begins Thanks, ability organization. strengthen taking with our That environment, we’re in current confident closing, safely to opportunity Milt. focus our successfully the every to

employees to EnPro of the safety for. will the health We ensure level continue service that of deliver and to high is and customers our our known

position ample with We’re in liquidity. a strong financial

confident management team recession. have leaders environments the navigate comprises XXXX XXXX successfully the crisis. challenging am to managed industrial through this experienced through recession successfully past, economic will XXXX we in including and Our global who the And I

We employees continue and are dedication. protect end compassion challenging their maximize thanking is managing control to successfully where the this with EnPro shareholder necessary for all we its want measures what to to our I of to agility. take determined acting hard value time and within and are We’ll are stakeholders, and beyond. our over during call our began, work X,XXX and and

and me. Thank You are the questions. the inspire heart you organization open of doing. And line you for our you’re that we’ll now for all

Operator

to get the we would session, back Before floor additional for Chris to the Instructions] like over [Operator into comments. Q&A I some turn

Chris O’Neal

COVID-XX Q&A. Thank virtual the responses we ask today’s we during coordinate observe distancing. is attempting we Due to holding a to social understanding call our our are you, as for This Donna. virtually time your so call, first pandemic,

take Now questions. your we’ll

Operator

Thank you.

go Markets. from coming question first Capital of KeyBanc Please Hammond Jeff today ahead. is Our

Jeff Hammond

good Hi, morning guys.

Marvin Riley

Good morning, Jeff.

Jeff Hammond

planning, those saw good you more activity was break there. that seeing by So of April XQ and you what sales April can kind Certainly, Can lot ranges? appreciate of in maybe was segment? to scenario helpful. some you’re that in that and of but I A speak of or kind informs if very what color resilient, just the order much out you maybe or

Marvin Riley

I’ll level provide can in maybe and a little then Milt maybe chime and color, bit. Milt, tag why some try we to don’t team, high

some just impacted we decline a industrial bit. to down to little our most in general for And on think need Like have context to we’ll well. started you think where of to businesses to work China a touch little operate. that So And oil in as as areas we more we this, bit and gas a sort of know, continue little later. decline should to we’ve acutely started the later, sized I bit do us,

China Our seems They in line in to settled expectations operations, April. performed have down. with

a in that of overall our it by was just I means mean just you fits context sort Milt of performance What line outlined So in sense and scenarios of you. to in in also that give for line EnPro the the April.

So understanding have that we any would say Milt, that do feel of pretty good but April to would you on provide coming of a out might we color? out. happen, what good I April say, we more turned we’re based how fairly want optimistic,

Milt Childress

before results April. for But they’re we come in generally seeing April, initial is consistent for covered planning you’ve obviously, a the only Marvin think the outlined. I just we it, point our maybe that work The is as note, made, would scenario of Marvin. the did seeing on lot a this Jeff, noted, that scenarios thing after you’ve results with reiterating I that that,

Jeff Hammond

And gets imagine that Q core. better imagine it there. I But I’d perception, the then – was Okay. first like from April is from bottom certainly, and maybe your sequentially the that down only X% probably

get So XX%, in and bottoming at trend term? near April better? worse then least I’m the that it than at is that, of, gets are Or just to the kind of sense down out we trying a

Marvin Riley

Yes.

would... I Jeff, So

Milt Childress

the... So

Marvin Riley

know. you ahead, Go

Milt Childress

got You Marvin. it,

Marvin Riley

We right? No. to be I cautious is be with thing that to one you. bottom, honest April don’t very just about the the know, was I assume would would that say

roughly down was XX%. April Our

know think would the from go all bottom. I up happy. we there, We whether bottom that we though, Now and be is the don’t that’s

So I just want caution on you that. to

Jeff Hammond

maybe played where fully at look that hasn’t you down worse are getting risk markets if April what But out? still XX%, it to at

Marvin Riley

holding effectively do of and right all there some adopting markets new movement now much given and But food well. of holding that restrictions of is in planned. is as as in are flat, up Semiconductor we but had we the about there to pharma sort our drive customers down. there, Just not on can

don’t but know recover can any is will from think we we business automotive We to that like here, automotive in don’t know. further down. We Our go would automotive. if down

us question sure. further, down, go was that down any we one So that’s mark. for Aerospace, are not could

don’t we have caution. that’s if I color I you any add more think So Milt, that. where know bit of want to little to a

Milt Childress

– that, to as is range, not we we planning thinking XX% for XX% up our XX% of If know, don’t as If it’s we’re to demand said, than is as than assuming least know. better to probably at you full for we’ll our it’s the XX%, that we short-cycle to But composed for – year then are planning. year, Jeff, quickly. realistic do scenario XX% XX% at the that, happy. largely the the looked a it, No, better the that still we to very just it’s have be we planning businesses. pick real going Because Marvin

as whole to the internally rather period term longer needed, on worst. own so to look over difficult are to it a it’s the need we do that We planning ready So that’s take depending the because just a point levers year pull to say at scenario unfolds. and April we’re would our demand

Marvin Riley

happen X an the for not In going our quarter. is what’s enough to of month business, of indicator just

we on decisions base that. our can’t So

Jeff Hammond

then mean, food I presumably, comments, trends on holding Engineered so the like see Sealing, pharma hold and And based the up than if XQ and sharper better, Products the semi up? and year declines for business those for

Marvin Riley

That’s That’s right. right.

Jeff Hammond

truck margin performance these coming But excellent certainly, Sealing that’s the exiting some in Products think how of EBITDA a for Okay. of markets. some Aseptic and I’d of within that’s can segment of some margins Yes. in, in LeanTeq us imagine then was And XQ. for the look look planning decrementals an basis? on sense Sealing those Thanks. scenarios, give the you decremental the you Engineered and how

Milt Childress

demand than And as from off be what has cost it we to focus able our to going to – to of giving were will our in and XXXX. that we’re they a better going Jeff, how XXXX back year. look what were dropped in precipitously, our structure, you’re decrementals at that we this is – going XXXX, do we total, we’re to as to this, work, believe position think XXXX early did I because a lot see

do at back range. If in to look know business we Sealing probably in in us period, and the that a Engineered well, that have you XX% Products. we a would XX% company, in that very to go were because so, than probably XX% or as Worse you more due total fact we OE you lot as you expect, Engineered, in

– the XXXX, so little better than then time bit Products. Sealing that in and And a XXXX in frame

the to in the drop do We expect, kind margins. XX% you EBITDA XX% sales, if on analysis the the XX% XX% of just of to numbers based

You go decrementals mid under you compare manage be year believe year-over-year scenario through math XXs the we XXXX, able we’ll closer planning to to percent. to it and ‘XX, roughly that versus this our

better for will as the in going obviously, be that acquisitions of than to to going to year. better we’ve Engineered X Sealing and be in Now is the reasons. Engineered. the in volume It’s in declines One, for made get as beneficial Sealing – we in it plus not it’s Sealing XXXX in expected severe be we the impact the are

I’ve between So individual of detail that or a little getting the without helps noted. businesses bit other that’s hopefully the into on differences And of than two what segments color. lot a

Jeff Hammond

I’ll back in No, that. that’s get Thanks. perfect. queue. I appreciate

Marvin Riley

you, Jeff. Thank

Operator

Thank you.

Research. Please Our is coming of Bergner from G. ahead. question next Justin go

Justin Bergner

Good morning.

Marvin Riley

morning, Justin. Good

Milt Childress

Justin. Hi,

Justin Bergner

Sealing to in ask I to quarter? the guess acquisition the to start, I contribution wanted in dollars just the performance quantify first you or products could percent if

Milt Childress

XXX provided know, for this, and to of on Sealing for noted, year-over-year margins. in the then provided of some normalized we’ve you XXX margins the if of on would and our and so which those Sealing we those basis. if exclude but margins kind give a the basis, a point you Sealing release at Products, about a about And look not We our I’ll our basis you’ve And color, – exclude out color impact I information tell also in the will kind the at Rome expectations that a of past – Products look what And acquisitions divestiture, segment, in Justin, as little you – exclude on as the had improvement compares sales specific translation. point businesses. year-over-year in you Products you of scrubbing see a as basis Well, bit overall. improvement were you you that acquisitions.

help the Aseptic and to the of combination LeanTeq divestiture. currency, the you was difference will related Rome that that quantify acquisition a acquisition, So the

Justin Bergner

actually hoping of I between could how if understood. currency the much sales guess organic just maybe dollars from was sort number? you was that the constant on currency? margins, decline away stay but clarify the versus just acquisition and Okay, I reported we decline, of

Milt Childress

minor. staying staying about with products, million It QX Yes. at XXXX. Well, $X.X QX was was translation again, the impact if to year-over-year, look once ‘XX fairly you – Sealing

and impact way, So, differential acquisitions – the on margin XXX, two the impact was the by the was the noted most was of EBITDA divestiture sales that million result of the impact the of versus then the $X.X that I about Rome is currency and that $XXX,XXX a earlier, XXX on and the of year-over-year. on

Justin Bergner

great. That’s Okay, helpful.

the shaping is how of the does to and respect aftermarket your And wanted decrementals sort I and ask in decrementals, question at margin margins help potentially declines, other limit to all? that coming if expectations how – quarters? for your up versus OE The with

Marvin Riley

take You to want do want it? take Milt, or me to that, you

Milt Childress

jump why just will in? stating I by which Marvin, I’ll – where you’re you the I maybe start Justin, don’t obvious, think is Well, headed. out

we look of the decline at you If see. impact the immediate

industry shuts – lot OE way that see seen the that it’s business, with of of our decline We’ve you auto-related there magnified shuts And see is Engineered in the business in down when a off, true. automotive. that’s also. a portion which big with our You Products it

in seeing We are heavy-duty the business. truck also it

were decline say, it’s pretty year expected decline expecting in in noticeable OE a trucking. worse. coming will heavy-duty the already I We year-over-year making and trucking this OE in Now

I think drop in from, So the be where I focused a early with is demand impact our agree going is you’re coming OE part of lot business. to of on the demand, the decline the that

is weakens, I going not but economy impact side we’re only expecting be as think aftermarket. we overall the on also the As into though, to look OE the that QX, demand

Justin Bergner

I I months just is for aftermarket. not ago, of this respect market need truck looking three truck, dropped heavy-duty off on of am the much that or more considerably? quick helpful. the the has EnPro, given for it following just half transport environment? With know than your aftermarket business trajectory one worse that’s in after that’s and did Okay, than the the trucking And question, to up also view

Marvin Riley

that Yes. as I down it would go It’s settled yet. to But in right out FDR, down and as what just predict not has trucking will happen. say that it’s the others example, may reports aftermarket our XX%. difficult for much aftermarket many that to There are call difficult project of now. like

it more end trucking. a But the what call on quarter, at difficult color really think lot now seeing. it’s of to have we’re we’ll I the obviously right in

Justin Bergner

thanks. in I will Okay queue. hop back

Operator

Please question is of Joe Sidoti Company. Mondillo Our Instructions] ahead. coming next [Operator go from &

Joe Mondillo

morning. Good guys. Hi

Marvin Riley

Joe. Morning

Milt Childress

Joe. Morning

Joe Mondillo

I to talk in Europe bit and what yet exposures your U.S.? a maybe how was it see does just in is could to terms �� geographically, a you early? general, rebound in to general little U.S. you you’re the two of of sort of if seeing started And biggest wondering geographic or Europe in still just too compare your Have that

Marvin Riley

Yes.

able European open too think have see have say have something gauge. Europe, wouldn’t just we to in month maybe we of still into we What for down. broader that the and as we The of really looks we’re starting as Asia, it’s I only April a they though China Singapore mean, settled same Southeast [indiscernible] market is say the is, look And as to up. the as gauge. a I the all I early. April

that’s started the Europe So places. for would to looking the But they’ve anything to it’s don’t say of me, get indication good Obviously, concrete early indication. starts be have I’d in China. etcetera, for trend in whether and like give to up at we those that point to the us follow I’d too Germany that and this a May Netherlands case. open

but expect So little they we’ll a see. in improve to we that May, have bit should would

Joe Mondillo

Okay.

– of worst it sort or has it a just In Is just – you are from little whether see that the to rebound actually a of bit February terms was seeing starting months, March? of there? exactly China, what is stabilized? Or you are

Marvin Riley

we right, month. Yes. I hard X tell, because have mean, to it’s

a were right? QX the bottom – would to pick from if we have what probably as the of very my quarter an well would see or where uptick we’ll not. well, definitely start have be So that’s to in we rest to we QX, the some sense up China to Europe as the happens demand in through data they’re found QX. out – So an were ways, come economy ended little stable April, lift But the of would is much we’ll to see coupled we I April. at signals it, if that, because bit enough look dependent we but going get from to then in continue to it’s run think right? whether if on expect, And to to in, that get strength we So the I of with where we to at seen pick China. a I if but indication European in end in not month, have April, performed And in a we’ve do of up

Joe Mondillo

Okay.

cost of able the this temporary? advantage while economy of changes that, to that regardless – on your structural would cost your is how sort to strategies, maybe structure downturn footing? permanent were you was your take of And consider make you the harder versus terms anything to depending answer are management better what to a the in of is what major to answer a that any or little – cost much changes of In is,

Marvin Riley

Yes.

And now early you a the some it. of a things, call looking But that things little yes, can the we decisions. answer is a bit specifics be to do your where we the always then we there we’re And at of first So about versus do. people I’ll cover we’ve that good of color sense definitely, underway. add that. by are get to these the half we’d things might need scenario won’t to looking course, do some question definitely But Milt, And plans we contemplated, temporary. It to really too structural first permanent maybe, makes impacted have – half because have question. on of like but some I to little it, of at we into are bit it

sort speak. of that executing we We’re as

we be the end provide the probably we’ll some not able probably, of to color well, quarter. So definitely on can – at that

costs, much structure things relates of think there is that are we working changes need way to do selling, some for etcetera the How that for out that a at, forward, example. trying we require evaluating you – are we reduced that now I of it we’re cost that into fundamentally we taking sort the to stick, are take we Before contact travel, of look may can if the re-imagine example. some figure go you and not of how there maybe of more a face-to-face will functions travel that we give going do to as a hard how amount to our corporate etcetera, like do will fair benefits sense to thing are we

quarter, one what underway. are some discussions we will that can would basis. those it you on but we rate able we’re be those can of things do of without think color a we it If into something to on if piece those then – that work, network, be the we will do so run quantify the will look think specifics. already And action the I everywhere that’s that works like that’s successful. taken But can in on as we give We’ve getting definitely across

Joe Mondillo

that to – whole? we regarding with update now you all I percent terms then wanted market or wondering in question Could market you regarding could us be us, ask just changes have breakout the you – the given there? there? what used a trucking the see if roughly just just Thanks the changes up heavy-duty haven’t what your portfolio two-third was all I on made of Okay. breakout exposure. of to And at as that a changed the one-third business, makes that that to update

Marvin Riley

now. – a Yes, but little yes, go you were breaking ahead, up bit Milt

Milt Childress

say going thing, same the No, Joe. to I was

QX question the your of the so breaking even you at you you have on had We XXXX, or But may it’s part total more in last heavy-duty on the a the it expected just our for profitable has reshaping it were happen in to good that maybe that call was piece was and $XXX call, revenues quarter, I quarter, continue mentioned smaller in heavy-duty trucking missed is the in than that a much than envisioned bit got that to gist call range roughly we sales the and of I��ve business that looked some XXXX. think that truck it. and the expect if would based up, though be trucking I our the last sales. time, at heavy-duty XX% earnings of over – we – happened in look million

anything we’re – that’s things term. it’s Marvin, we’re get as we you the still heading. look longer add? Obviously, which our do the want a still current you But may situation, direction So pushed have in – of part things bit. to vision under out else

Marvin Riley

their the on for They’ve just systems about new it, They’ve lot big here, actions. and feed the control if cost really, which No, president issues in already hard mean put I within was executed improving really credit. and working been quality very, TrailerTail. place on on over causing really, the working a order, They’ve give still look think I the in here you truck lot well only Rome. they’re worked in that really solution. They’ve picture feedback working team shop, already he’s unit developed short with senior of is I we of thing on team. very nice on – a they a a executed had. aggressive take and They’ve that a year to would really leadership just to executed a heavy-duty the systems, already would forward do add AirBatRF,

opportunity really great it’d thought good just is to our to got share plan, turn that just be that’s working to I a So we’ve our been which hard I team outlined EBITDA share there but heavy-duty a profitable just I thought characteristics that exceptionally that financial that. fit into smaller margins a the of we’ve business business, before. would with truck sort And execute

the this end that’s around in of them line getting expectation. continuing thinking my our in to of execute So terms year, there and with fully by

They’ll they’ll work year. work think move doing that here on move done be the to this next be mean I – and they’re growth. this year year I on growth with to done and

Joe Mondillo

taking luck with for Good thanks my Okaym everything. questions.

Marvin Riley

Thank you

Operator

Please And go your question Bergner G. is of next follow-up a Research. Justin ahead. coming from

Justin Bergner

for Hi, follow-up. thank you the

to understand earlier. sure make I Just what heard I

maybe So you at point? with cost then And you Could actions verify are the not time, at June the this savings that providing numbers of point maybe around costs in free associated end of quarter. cash just again – quarter to relates restructuring sort to if desired, can flow any it just or view and June costs this the cash wait as generation XXXX? thinking about until in the

Milt Childress

Yes.

a now. repeat to right go maybe lot planning and are the we Justin, of doing back bookends, just

are the scenarios we So visibility the the to that be depending able demand we out on a year get a business the really cost of until various bit little know won’t year. more we – take to which on bit might vary going quite estimates

it that to a But not and XX% year-over-year are margins with together, specifically. following you we’ll imagine, suspect it’s we’re XX% to be to presuming need that might to is to But to point costs So managing QX, we’re able the there we EBITDA, as at out revenue back talk decline, – more going vary. that insignificant. XX% I take XX%

So major knowing and seeing. be in the our read markets. month a we depending what that is we kind the we’re But needs and get locked unfolds and going point kind with we’re better as the done number our to are to here loaded on each of demand teams of on what’s happening where is vary

Justin Bergner

in clarify, acquisitions would the ‘XX. be understood. And just decline the to the of XX% Okay, to benefit XX% of revenue half scenarios made of those net that you second

Milt Childress

that actual – would That year-over-year. is

highly businesses benefit the of bit profitable. as, are would be year-over-year a But acquisitions, decline mind, So the in effectively, the little greater. bought if in you keep the we throw

it impact basis. at if the earnings significant so on look sales, more you impact than the And on is on percentage a

Justin Bergner

for follow-up. Okay. the Thank you

Operator

closing for like turn floor O’Neal the I’d over comments Chris time, this to back At to

Chris O’Neal

a day. Thank for this us you, Donna, great and morning. Have joining thank you all

Operator

for thank event. today’s gentlemen, and your participation. Ladies concludes you This

lines have this time a wonderful day. You at your may disconnect and

EnPro Industries (NPO) 10 May 202020 Q1 Earnings call transcript