NPO - Earnings call transcript Q3 2021

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Operator

Hello, and welcome to the EnPro Industries’ Third Quarter Earnings Review and Strategic Acquisition of NxEdge. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to James Gentile, Vice President, Investor Relations. Please go ahead.

James Gentile

Thank you, Kevin. to the quarter strategic welcome and conference and of review acquisition morning, EnPro's earnings third call Good of NxEdge. that will that you enproindustries.com, remind our being is I'll webcast where you the find accompanies presentation the call. call at our With President and President CFO. and Vice Interim me Executive Eric Childress, CEO; is and today Vaillancourt, Milt

involve And Eric. impacts over general this turn and or spread costs non-GAAP related facts making financial note this in end the changes call statements that in the are impact costs; will we I'll during COVID-XX XX-K the discussion, the restructuring friendly appendix number materials. reference from a call not Also to nature. recent do subsequent costs, any the this on rate economy, transaction of Before a that quarter, Eric? to shares outstanding, considered reminder of excludes of the to pending presentation number acquisitions, Form update year that comparable statements. of in other not with litigation and call, forward-looking environmental related the impact the call, uncertainties and a future Form of and measures the We obligation the statements number labor potential the we our historical and exchange and guidance quarter, full responses risks are our begin Also, XX-Q. third our measures dispositions we we further are be of charges. and these end foreign most forward-looking in now as and providing undertake which the on will that described these disputes; subsequent COVID-XX to changes and the GAAP any will of from the in their during well the as third to impacts uncertainties, impact be from measures. impacts of risks are governmental pandemic These filings SEC, including reconciling and Tables included including the

Eric Vaillancourt

And good today. James. you joining us Thanks, for everyone. morning, Thank

pandemic families you top and and world, safe quarter. colleagues our certainly healthy. the your this that and we a We With of mind remaining remain hope stakeholders lot the COVID-XX for around accomplished

Our exciting your focused I make teams COVID-XX, would our strategic on the EnPro of times each and the thank company. work. hard and special supply take to day every our opportunity remain to with work are for to place and you an commercial These for to like of volatility chains objectives incredibly

our which we third semiconductor industry. excited significantly In addition announce to that to to quarter will acquire agreement an NxEdge, offerings solutions in are our results, expand we the reached today

third strong will briefly to our QX and XX% another few adjusted organically first EBITDA that in We I'd like on minutes. highlights. cover delivered sales expanding touch with points. quarter We XXX in basis But news a quarter approximately margin increasing

chain, supply has As drivers our Technologies Milt performance and to Technologies results. the detail the in primary Surface our Sealing teams been greater past and growth. Advanced commercial over earnings these Heightened manufacturing collaboration shortly, describe segments, foundational strong the year of will year-over-year in were among

for for pricing our and positive chain pressures with and we suppliers also Results reflect delivering portfolio supply reshaping quarter initiatives. supply on of initiatives. in effects customer minimum material the held have a needs. and will increases growth time cost global year-to-date remain vigilant some successfully in and working continue likely the managed to our will shortages, We disruptions chain and supply The

September Components During segment. divestiture Sealing we our X, of of Technologies the our quarter, portfolio announced Polymer the we our optimize efforts additional that overall enhanced continuing On business, moves to announced businesses.

company's our will International business, announced to today significant quarter we transformational NxEdge significantly our Products of our the the announcement on oil yet back to reduce agreement gas announced which And Milt Following step we sell the and today's to in acquire another the market. is agreement which Compressor to evolution, close meaningful exposure another other journey. quarter, step will the I the following for come highlights in call acquisition. to marking will over hand

Milt Childress

Thanks, Eric.

weakness had generation, quarter, results, sales markets. we as and mentioned, partially Alluxa Eric reduction gas, oil in As by divestitures and major positive addition another to as due most last momentum across year’s markets, offset top-line of the the well in strong and power automotive end to contributed

of sales reported, in X.X% million $XXX.X third the year-over-year. As quarter increased

divesting period. offset of The compared leverage the organic growth. primarily XXX a over for by organic quarter Alluxa and to margin points ago. compared in sales $XX.X as result of basis increased earnings per basis year businesses benefited pricing Gross including raw to compared in approximately Alluxa prior Adjusted XX.X% about a pricing, the of the expenses $X.XX third XXXX. on quarter of million the the of flat the prior benefit versus period XX% of increased Corporate XX.X% increase expanded the strong profit the initiatives, reshaping Adjusted material third actions increased growth, of by increased offset and EBITDA quarter material of partially were raw by partially operating XXXX. from of lower million points Adjusted XX.X% share addition As year costs. increased costs. completed quarter margin The addition driven year of of prior XXX XXXX, essentially the to year sales EBITDA Eric sales third was organic the period. $XX.X XX% noted, increased margin increased diluted

we calls, was in of XXXX, amortization. that prior $XX.X acquisition intangible presentation year, measure the non-GAAP prior excludes million reflecting after tax, our acquisition Alluxa. previous of third in intangible during to related, this the quarter related addition from to million, quarter of adjusted fourth EPS the one noted $X Amortization the assets changed during compared As the of

EPS XX%. adjusted in rate used determining As estimated is our reminder, normalized tax

due of divestitures Technologies impact to $XXX.X decreased of in Moving discussion performance, X.X% the XXXX. segment Sealing the million to sales of

Excluding pharma markets, heavy-duty & strength and foreign driven sales in power and offset and impact industrial by translation of the divested food demand markets. the XX.X%, in generation truck, general strong increased exchange businesses, by aerospace petrochemical, partially

For The the to And material initiatives, increased points segment third expansion expanded portfolio million. pricing was expenses. driven and increased volume margin margin reshaping SG&A XX.X%. X.X%, to XXX by $XX.X by leverage basis segment adjusted EBITDA growth, costs and adjusted quarter select on EBITDA partially offset primarily operating

translation segment period. Excluding and prior of exchange XX.X% favorable the to impact EBITDA compared adjusted increased year the divestitures, foreign

XX.X%, of market strong to our now addition Technologies Alluxa. increased Turning driven $XX.X demand the continued segment, third of quarter the sales semiconductor by Advanced and Surface in

foreign acquisition, Alluxa period. XX.X% increased the impact of exchange translation Excluding versus the and the sales year prior

EBITDA EBITDA For adjusted margin third million. the segment compared ago. of quarter, XX.X% XX.X% flat a And relatively was year adjusted to segment to $XX.X increased

costs X.X%, Excluding EBITDA exchange startup the Alluxa foreign impact facility support headwinds transactional a of in and increased and reflecting translation, to Taiwan adjusted growth. foreign new LeanTeq a segment of exchange strong

growth AST More reminder, the points margins improved expect Sequentially, organic broadly acquired long-term. and adjusted of LeanTeq revenue leading strong coating we the Just the quarter. in a differentiated fourth the segment, over is basis provider profitability nodes claiming, EBITDA industry. advanced supporting highly as XXXX across entire quarter and technology within sustained the of XXX in the solutions a most related semiconductor

business. in this a about sales prior partially to general, X% markets, morning by third by quarter engineering our $XX.X more offset the of in the million increased sales to Eric announced As power markets. opportunity part we we'll compared driven industrial gas moment primarily and exciting of expand this oil materials, & In sales talk year, automotive in generation, noted,

foreign of XX%. of the and exchange impact translation block business, year's divestiture sales GGB bushing the Excluding quarter last for increased

the And EBITDA year-over-year $X.X was in result flat margin segment Third period increased bushing segment year-over-year. increase adjusted prior block EBITDA year the was adjusted over divested EBITDA quarter of as operating prior year the The to incurred business. XX.X% losses related partially relatively a to in million.

the Excluding period, higher exchange that adjusted the higher year was volumes flat of compared impact offset bushing cost translation and headwinds impact the to divestiture, prior material SG&A initiatives. relatively reflecting of and benefit EBITDA block pricing of the foreign and

Now share million letters revolver, second $XXX the talk months working the of we $X.XX and our September, year, the momentarily announced the capital sequential sales. the flow, to leverage. decline of we in quarterly driven EBITDA outstanding $XXX with the And $XX the the We'll offset million, debt paid a was in acquisition the $XX at million cash operating investments profits, of up to $XX XXXX from dividend. today's prior of primarily credit. of At million X.X Free turning million net ended full was nine times, approximately quarter. quarter, by during from reported cash our adjusted of flow per about end balance cash a higher less higher of in times by sheet on third the first quarter availability anticipated X.X supporting for end impact

first the prior months nine a totaled versus dividend of the payments, the $XX.X year. year increase million, X.X% For

moving to few subsequent quarter end. to items, events guidance, Before to like mention including I'd additional a

for Riverside of $X.X bringing closer resolving negotiations total million increased negotiations bring First, States legacy to $X.X one for in settlement These at environmental the third to and liability. remedial the EPA, about United million reserve estimated us the this end we our with reserve our environmental Passaic, response to quarter. liability the legacy costs ongoing step this

in for we the audits close $XX end, sale, estimated previously ACRP the end for of an after-tax quarter in And of agreement price CPI with refund $XXX from received of sell tax as finally, to approximately first expected with million of the Service million we subsequent process. conjunction with completion Internal signed proceeding which years Revenue conjunction next year. the XXXX Second, million of the several of by a proceeds the is $XXX quarter a to noted,

the the to and to our to sales we and $XXX business, exclusion our of in Slide the earnings $XXX $X.XXX was XX tightening our changes And sold prior to billion. September. adjusting range of XXXX to light Polymer EBITDA in we on of our range of on Polymer guidance $X.XX guidance. high-end on are the of million That business divestiture in that adjusted a guidance, billion to XXXX are of range the The Components only Moving guidance the Components from low-end million. be

range share mid-point $X.XX provided earnings to to expect in operations the diluted of last $X.XX, at cents from to $X.XX slightly up $X.XX the quarter. from range continuing We of adjusted, be per the

expense, Our net assets to amortization expense interest and guidance assumes depreciation million. $XX of $XX to million $XX of $XX range amortization of in million intangible acquisition-related excluding million and the

hand Now I'll to the to Eric discuss NxEdge. the acquisition of call back

Eric Vaillancourt

Thanks Milt.

morning, will be segment step coating semiconductor and benefits is to a business focused and refurbishment an the an believe for this is definitive we advanced we seen, chain. highly and significant financial on agreement also announced has It Capital. cleaning, that ongoing that acquire a transformative our Trive and to exciting NxEdge This of acquisition have EnPro compelling, you from entered portfolio As strategic serve. our NxEdge into complementary manufacturing, the business EnPro marks deliver next reshaping a strategy. AST we customers in a value

profitability transformative everyone consistent strengthened specifics in remind executing during and margin enhanced been growth as stronger on have strategy communications. to more possess May on Before cashflow reshape and high focus a to NxEdge, getting through we subsequent businesses, XXXX, markets. our growth of like technology-related into a portfolio. our actions in which These on operating faster have strategy and Day more I'd Investor outlined Since our

high strategic the M&A We acquisitions and as through strategy businesses divestitures businesses that margin non-core are of meet growth, our criteria. well executing lines, product of high the as

and the sale seen of announcement strategy. in past a another have the years. of announced and number Aseptic, International agreement divestitures large recently in This forward LeanTeq step business and through of our this three the acquisitions morning's Alluxa, over our NxEdge Products Compressor completed You strategy with evidence of represented

Idaho, semiconductor a look facilities Idaho company the expected Based Slide chain main six in supply in XXXX capabilities Boise, to integrated value turn of and NxEdge. NxEdge Let's from XX NxEdge and at is $XX EBITDA The California. closer very located generate in sales in for serves million aftermarket NxEdge will our team the business, approximately respectively. chain, portfolio. admired management their are long business with with $XXX familiar across its robust vertically semiconductor solutions a including We've broaden million and

AST semiconductor and AST closing, our semiconductor EnPro’s with bring of process capabilities margin will of with qualifications part customers. relationships business customer will and chain with become In during NxEdge combined business is new revenue significantly have The complementary NxEdge record opportunities high streams. the key highly enhanced across upon segment. existing addition, will expanded more value

a including talented to it NxEdge’s and Beyond highly force today. employee driving part NxEdge company culture prospect stronger of differentiated products, continue of while And leading will base. our technical has we support shared with the and into and the aligns the the excited which drawn the growth teams, profitable, a we're closely bases, compatibility We integration. businesses, is We're leadership Jackson of Chao for believe safety, believe our and ours, by that the better transition focus EnPro. we've long-term him as high-growth smooth our values excellence, profitable company combined been been customer on start NxEdge’s solutions. capabilities, NxEdge offering for and combined customers in complimentary from and of positioned and to excited experienced respect, products building making

strategic and to Day, put our XX, at set our Turning we screening and including filters adhere for thoughtful as rigorous we outlined criteria criteria. Investor financial place Slide to of have in acquisitions,

addressable trends. growing businesses teams profile, look the for benefit as found and markets with employees, recurring and relates Alluxa from critical We engaged We as management to with are for talent it organizational businesses and we secular look just revenue growth LeanTeq. focused that experienced is on streams, we

the Finally, when is breadth expected chain margins the a found we business their cashflow return value that significantly boxes. advanced to capabilities time offerings enhance and industry EBITDA you In combination greater than we driven is standpoint, through of will coatings From the materials chain, which highly-complimentary production I'll material industry. long-term provide together coatings a being IDMs supplier in value overall cleaning, secular global XX%. entire to across increasing new all of which yields, for slides. components. aftermarket will by to for an trends, facilities replacements, the U.S. mix. with development nodes. and linchpin for on these and NxEdge which across production be coatings is tier semiconductor the of services critical key customer NxEdge particular, The domestically, diversification semiconductor on process, a and that proprietary at are for chain from investment checked coating, the NxEdge scale of in driving while EnPro's and us brings growth, engagement located We a semiconductor an Advanced want highlight expansion powerful, semiconductor following as EnPro manufacturing, refurbishment science is in strong all higher position will proprietary advanced believe strategy. OEMs support geographic increasingly the the related some relationships our expanded a EnPro I semiconductor differentiator semiconductor the are us top especially show in differentiated NxEdge's high-performance NxEdge idea meaningful with a to margin on supply has including look that

global significant strategy. Slide our in on our Idaho facilities will who combination California, NxEdge and the to value EnPro shown expect expand With As footprint. with to add XX, we IDM customers degree and developing NxEdge’s AST are full high XX% aftermarket revenue focused recurring of combination with expanding expanding United increase NxEdge lead to timely. XX% and revenue integrated of superior in XXXX revenue the model horizon. a result businesses increasing NxEdge surface mix, visibility which our proforma Moreover, is of coating core component of over aftermarket life remains technology a management, cycle existing AST long-term from The provides recurring in times new the Reducing capacity U.S. in our and the supply States and will domestic service would sales. portfolio product is chains. geographic on exposure vertically

to revenue within strengthen AST deliver long-term relationships. We expect customer this and combination expand capabilities growth,

density, applications. deposition and the of semiconductor a edge, combined offer vapor range has capability unique a vertical reducing serve we many quality capabilities will differentiated cycle providing high a semiconductor refurbishment NxEdge improving NxEdge broad solutions, coatings and wide leader like from leading Together entity integration with NxEdge’s the Combining Alluxa which physical will of will life major efficiency, improved integration touch control capabilities. times and product compelling enable EnPro coating, vertical coatings. to NxEdge’s chain benefit customers steps product of benefit and from and and lead to traceability. the advantage design these base greater NxEdge’s record With of coating and our and re-coating strategy Technetics reconditioning. for and chain. will stickiness globally, design integrated a installed to strategy, for while expect process Turning through in will scope NxEdge its Slide XX, solutions from next-generation create Semi in build refurbishment vertical integration all AST cleaning, is cycle. plasma along and increasing spray and resulting engineering opportunities cleaning, advanced supply in products AST the is while provides value aftermarket capabilities coating the life a Further, growing initial differentiated

growth, As components Further chamber production at more equipment as an the base installed particularly more nodes, escalates. semiconductor nanometer advanced, of frequent annuity becomes XX manufacturing service maintenance. advanced our sub require

semiconductors and most industry XX secular Slides in Things, the XG growth tail from on and level support at which know volume you well, networks, Most are learning, expansion of the sectors. are fabs consumer and in increased wafer annual running consumer numerous the machine for powerful that and opportunities a and and power as auto wafers to as manufactured of semiconductor of semiconductor XX, Internet as of management, generated semiconductor business fabs. corresponding Looking electronics the devices are good data at starts computing aftermarket trends the use indicator silicon predicting are well winds, are in the including creating

With tied ongoing which steadily Slide aftermarket at less AST’s sensitive demand the participation on yields us preventative by areas the semiconductor able replacement regular chambers. provide demand wafer capabilities parts, NxEdge’s and relative been components the we in growing. new cycles parts, components, to spending and chamber well-positioned capital where As other the through in directly fabs, be will expanding directly go capital consistent maintenance world aftermarket NxEdge is utilization and in wafer circuits. processing expectations. the products for ensure integrated equipment the the to last shows, business These expecting show EnPro. for chart semiconductor refurbished to will expand fab be NxEdge the of decades, cycles. equipment regions and two driven Capacity will favor and in nature expansions planned makes NxEdge, to is capacity The years stars is and for XX Once growing starts NxEdge’s have of Slide growth to combined, EnPro accelerate. worn lifecycle. complimentary which capacity to around of expansions are capital meet with depicted a XX, to combination coming the in environment, correlates refurbishment

in and focused Intel that chain opportunities U.S. Milt? cleaning, capitalize to adding position more detail. call on revenue the service semiconductor coating, announced for IDM drives the to turn Advanced combination capital let will AST more our of Taiwan, replacement ongoing where U.S.-based addition, longer-term manufacturers leading-edge returning on financial step-change Samsung the In in chamber, the review development spending to OEM in business, details of the transaction incremental is opportunities coating the products, and domestically. semiconductor positioning the inside in for to helps back positions major segment expansions accelerate. domestic sub and demand TSMC, will Milt me component This Americas drive in locations but regions the products all With and expansion is fabs refurbishment expected refurbishment NxEdge’s XX supply nanometer. have providers. chip to combined nodes capabilities our subsequently our and domestic cleaning, and only equipment us for recurring revenue services. not U.S. and to IBMs manufacturing and create in

Milt Childress

to the for today, Great. Capital NxEdge will including cash, limited Thanks, announced working in terms of Eric. $XXX acquire capital. million closing adjustments, Trive agreement EnPro from the subject Under

time of cash, transaction The provided year expected facility end to following from We with additional debt to our term bank the loan a purchase the combination close our by borrowings credit approvals. regulatory and revolving of expect group. is by the

NxEdge’s those and XXXX generate we global semiconductor production Based the capabilities contribute which the annual high-single-digit, approximately $X.XX NxEdge $XXX guidance to million the of revenue on on rates, and to in As per above XXXX, announced U.S. low-double-digit five adjusted years, expansion sales combined with growth of our EBITDA current the the range. and interest in approximately represents is in to we approximately our NxEdge next of AST of share in expect earnings million, business, anticipate benchmarks, XXXX and Eric mentioned, midpoint average, $XX range. NxEdge XX% expected over adjusted diluted the respectively. wafer be of At

by noted, and current of growing in-market NxEdge As migration of of NxEdge Chao Advanced EnPro’s Technologies toward addition including segment. will CEO, become continues Eric will exposure the continue semiconductor. our be part Surface led markets, Jackson The faster to

and third impact EBITDA since XXXX gas. see our noticeable sales, proforma As would can the performance the of a of including reflect XXXX basis, you oil provides on adjusted represent trucking announced divestiture, total NxEdge trends and heavy-duty acquisition & semi the which for and margin, multi-year the adjusted about and XXXX XX drops points reshaping. as guidance. occurred the EBITDA our are shows on XXXX, XX, those Slide CPI of sales sales guidance to with CPI attributable Components XXX is at announced Slide basis of in this based are portfolio XXXX if XXXX and of results the the as adjusted current that adjusted improvement midpoint NxEdge, with the margins completed Polymer Of of proforma margins. transactions above year’s proforma reflect XXXX And reported. to note, and beginning points of midpoint And transactions. on impact XXX of year. EBITDA basis and the a

around possible will portfolio the Over our Looking of bring to back through to expect times to we of X.X leverage further of CPI expect of our the Proceeds adjusted ratio we to target optimization, X.X times. at anticipate two ratio leverage net completion EBITDA. operating times. cashflow the sheet, lower leverage from balance upon acquisition, a time, and NxEdge about approximately sale

the closing call Eric for back to Now, I’ll pass comments.

Eric Vaillancourt

Milt. Thanks

strong I'd investing reshaping consistent of ongoing third benefits to benefits actions clear open like for questions, and our portfolio, quarter strategy, opportunities. team again, thank the of we continue for intention and the sustained results, yet up our in the Before it our growth to delivering demonstrate entire which EnPro

on and operational throughout continue We expect this commercial focus excellence momentum we to company. as driving the

forward into the right This to combination. team hit [indiscernible] year excited a the very the the to a close. operator. also trillion beginning at ground dollars process, the the integration right upon focused right and with so right the excited combination. We're We're before realizing about Thank completing and NxEdge on by that the position really the value the this time, of us EnPro with is the a of it for the that company, welcome deal, us in to helped with planning growing transaction the about the exceed leadership running exciting can transaction team market expects look put you. end we’ll for up XXXX. NxEdge With open at to EnPro everyone we Our

Operator

Thank please be a poll for [Operator session. question-and-answer you. We’ll now conducting while Instructions] questions. One moment we

Markets. from Our Capital KeyBank question from Hammond Jeff today is coming first

live. now is line Your

Jeff Hammond

Hi, good guys. morning,

Eric Vaillancourt

Jeff. Good morning,

Milt Childress

Good morning, Jeff.

Jeff Hammond

and the supply a certainly challenging Congrats deal, environment. on managing chain

deal. on color want great Just to – this

Just then between I just some what's around gave NxEdge. for and forward One Kind deal? to long-term what's give the NxEdge? the – the it. And but the questions around historical bit assuming us growth rate trying cost you're little LeanTeq understand think rates, he fit of a growth us better the interest

Milt Childress

first the take I'll to fit. more Jeff. Hey, pass and then I'll comment it part Eric on to Okay. the

to remarks, because some all rates. expect low-double up NxEdge but – XXX grow. be changes our digit, nothing mentioned of our the same debt. partially prepared on debt, plus bit, variable, And the mean, you the bank idea and will the in average grid years give LIBOR growth rate, in but then will with revolver, sales I through financing high-single group. an a and Our on The new a you at little both on that pricing it of be rates to pricing bank as I our partially cost yes, the And next within on what cash, to as debt. we've we basically our right And call grid, will go raised of financing, incremental five can that interpret leverage withdrawal partially our we're digit over noted grow for terms on I EBITDA,

Some in supply the this how going to to with here development chain new develop U.S. of is the of chips the on fabrication of U.S. quickly things in depend support the

how this to we're upside and around that, planning acquisition. planning our some how things that's there's on business depending But So, develop.

Eric Vaillancourt

Hey, a Eric. Jeff, few it to Yes, us. regards it's important things does LeanTeq, for in very

First off, it customer expands our base.

footprint. geographic with going And U.S. to the it in very much Secondly, investment much very be NxEdge on needs the Asia. helps in all domestically us

those So, us things. of some two it to helps

very their In slightly now addition, the for open opportunities complimentary, up technology is similar, us. and it’s than are processes different ours, different and

can home footprint. in Jeff. all, expands revenue our our the sales it it's geographic run the it just chamber, we reoccurring So, All amount of expands our there, products a inside a increases after-marketing serve widens exposure, widens customer base,

Jeff Hammond

that. great appreciate color, a That's

going you've here? of of wondering back noise chain, most any if just the discussion And to as pinch points? a Which seen around of where lot of result biggest impacted? the a supply you're obviously Just businesses the base, some kind deferrals sales seem seeing

Milt Childress

are or referring more just you Engineered to Materials, broadly? you Jeff, referring Yes, to

Jeff Hammond

unless where yes, mostly Just it's broadly, that's focused.

Milt Childress

automotive business. And been of chip pronounced revenue because for bearings as significant down the particularly in production has that's from And segment business portion accounts where there Engineering the the Yes, shortage. let’s know, it's shortages, supply from we're of the that slowdown start automotive chain to a you our with seeing most due Materials customer supply in from headwinds chain, shortages. the

we're to that. And so, responding

was as prices a little much a down have too bit flat segment been not in a making rising. in bit of us factor So, relatively gas the that and of was really the oil quarter that was that vibrant. significant third gas Obviously, through year-over-year. for segment. & But to Oil push a it's now

pressure in quarter Materials. the saw in most the all-in-all, So, we Engineered

Jeff Hammond

excellent Great,

Eric Vaillancourt

trucking well. as heavy-duty in business [Indiscernible] the

Jeff Hammond

supply So, sounds around having truck being costs your materially like it that get you these primarily markets seem to or versus able chain. auto supply cutbacks added it's to be production

Milt Childress

been we've fires can fighting day. it that, team. It's Eric but doing to speak our Yes. every to successfully. Thanks more

Eric Vaillancourt

day. environment. and It combination this the on pricing It it of We very as is our been being I whack-a-mole, is doing keep team day and a and in meet surcharges, this weekly. challenge We've fires been a issue, pricing fighting value new issues. year capturing describing a through very increases focus throughout but we there agile. it because every good every has at is weekly

And so, off. it able of to been most we've fight

Jeff Hammond

Okay, get Thanks. queue. great. in I'll back

Operator

Thank you.

Next Zaffino Oppenheimer. coming question is from today from Ian

live. now is line Your

Ian Zaffino

guys? you Hi. Thank How very you are much.

Milt Childress

Good morning.

Eric Vaillancourt

morning. Good

Ian Zaffino

Great. A couple of questions here.

like question, price a us on in should first expect we actually Just the you what one faced gap, give of building you and the cost on basis? what a run rate kind can quarter last maybe

Milt Childress

overall, Yes, our segment. company, did most segment. Materials we cost. in look And mentioned water, I vary earlier, that above pressure price the and at above It had by the we've water as you if were the was on total business head Engineered

were were a as so, material dollars bit a We little mentioned And underwater a Engineering we underwater few costs. net and But up there. in bit were price little between a basis, overall, we on I the million Materials. trade on

at we Technetics But we've Sealing. mentioned Sealing our overall, did pressure in heavy-duty we Garlock fine, given the As had in well actually, some Eric the performance did truck segment, business. and

Eric Vaillancourt

amount of the differences, businesses engineer material versus materials, segment. Technologies Sealing and raw Biggest

material of percentage the bigger much look you if has So, cost impact.

Ian Zaffino

assumption well, that's Okay. safe above be to you'll as forward going water. a And that's make

Eric Vaillancourt

from and And read heard other probably gotten has you've tricky. you've think I companies. Well, supply that more, chain that

increases And so, are the is supply work have that doing But the chain we're let’s happens. to Eric wrestled that declaring with ahead well price reacting, confident mentioned our in of timely and our not where to are we good surcharges curve what teams, commercial teams ground. and teams, what appropriate, as see our yet coordinated stay we're we totally the victory

Ian Zaffino

us NxEdge, you Perfect. go understand And could that you did it it you was found something deal, with about? help the how what was a close that How relationship have owner? that auction,

Eric Vaillancourt

seven a Chao This relationship relationship with, being Rubber had The about had Jackson long back disciplined seven-year we close We've Aseptic I going would Fab back we and relationship the Chao you look over we've say admired. a with When had six- investor. five-year talk going with we Jackson it's often now done XXXX. to the We at recently, relationship a is with a to years. Group, with, a owner. company acquisitions

the a the to right deal right trying perfect really time. find is back moving and of for at industry with been at family. And and U.S. and the time following long team a this company this the we're have great a a happy And as part is the So, to the place. leadership semiconductor them to great we've right it's admiring time EnPro company

Ian Zaffino

that I could Okay. numbers And you cost about how last one year assuming it well? in, if that there then that for we us sneak think any or none, question, as or these next gave is just do is outs,

Milt Childress

any where isn't it a this deal find. at and baking No, you will it cost not acquiring synergies. We're

us. be our So, Eric it's they mostly going the what contribute a much pretty for standalone to. to has talked that is commercial to And expectations just basis benefits this on will

Ian Zaffino

you very much. Thank perfect. Okay,

Operator

question next Sidoti. Ferazani Our today is Instructions] from you. coming from Thank [Operator Steve

line now Your is live.

Steve Ferazani

morning, good Hi, everyone.

Milt Childress

Steve. Hi

Steve Ferazani

are a side. Engineered particularly probably Materials already the would slowdown more any and to through companies on automotive you've that how When what meaningful seen, weren't some are? Have as season, wanted that going earnings and make now you you of the beyond thinking just supply surrounding about little just seen many you seeing slowdowns questions chain you guidance are cautious? I noted, be previously follow-up

Milt Childress

primarily automotive. you Engineering Materials, It's Erik? look When at

Eric Vaillancourt

and our of have that backlogs all No, businesses continues. had growing

harmed slowing. be it we grow, at automotive. would quarter, So, say fourth growing backlogs I But to is that. There simultaneous could no, if our hasn't us than you look other the continue faster

Steve Ferazani

about, transformation said efforts were through, the the this some through concerns. the change, can this it walk caution transformation back on sort just as sudden quarter, things if wouldn't last through down, you that walk obviously there weak us leadership you we going even change? Can quarter, think efforts, a just but there slow of the of went leadership a lot obviously the was significant us and I given quarter, had yes, When you

Eric Vaillancourt

and I that at to Executive EnPro I'll we then with now, operating Milt way can going EnPro for speak jump EnPro operate Leadership and so first least EEC in. Council have XX years. Council, it that way, let and Yes, back for

leadership is executed strategy so, team divisions. and in then created the where is And the

evolving that's the So, a over been this part next. hopefully ongoing CEO is years and of our I'll just of successions, be strategy number an three through

a this just is it plug is continuation, this and stop. isn't play and So, start

easy it's so, underway you were these things was very NxEdge tell, And can actually initiated to And time as continue. and the a long ago.

Milt Childress

Steve Eric of is executing our as also add thing has strategy I described. the would result NxEdge our Another is

Steve Ferazani

timing on the Any of announcement? CEO update the

Milt Childress

let CEO. is Yes, one. that that. our Eric take get me me Let

executing with business We have strategy leadership about team he talked terrific strong and leaders a we're that and to. a as really

is final I in the Board confidence seriously. Board the with plans fiduciary that team. the taking as existing it and have saying its in think speak obligation I so, for they our can total And proceeding decision But

Steve Ferazani

you just in to of CPI soon be do then with standalone terms segment segment? as expect reporting the third report exited, GGB And to

Milt Childress

will Yes, we Engineered still which primarily. be have Yes. will GGB Materials

Steve Ferazani

long-term thoughts And you GGB? of of to on ongoing alluded optimization sort any portfolio the efforts,

Milt Childress

Well, other product and I come moves. it just mentioned possible, further from could optimization portfolio lines

decisions are made So have that really no been there there.

that noting that future of continues. in Just is the that it some possible

Steve Ferazani

everyone. much, so Thanks

Operator

Thank you.

Our next your is Justin Bergner live. from coming is question line Gabelli, today now from

Justin Bergner

Good morning, Eric. morning, Milt. Good

Eric Vaillancourt

Justin. Hey

Milt Childress

Hey Justin.

Justin Bergner

announced Congratulations on deal. the

Eric Vaillancourt

you. Thank

Milt Childress

Thank you.

Justin Bergner

start questions. of handful A I'll NxEdge. with

why but I and to semiconductor you realize major Just I are risk? there. questions do investors sort be you there it's of about would the sales considered. good lot outside not third what deal, sort first? with that analysts positives the always would would as risks roll for the the of quick And a see know the of, then there have equity vertical, Are over three be this the any The second does a be transaction guess of component?

Milt Childress

is focused The is answer the revenue the to all semiconductor base on the first the no, question company industry. of

believe. number that So question one, was I

Eric Vaillancourt

The answer from $XX Jackson two to Chao his invest take million decided EnPro stock. has to in number question and is proceeds

our years. Jackson and believer to the share as next that EnPro, wants we the So in realize strategy well, is few potential a for in

So, And of family. part have the shareholders, to him as and Jackson sorry. I'm third the we're question. one excited of will EnPro’s be I don't your remember

Justin Bergner

what perceive I and risks I of abreast of question there you've third and risks stay were consider lot are the general you you deal. just positives that but sort move will of to forward was as you that integrate? them, understand mean, The a highlighted close and about and this

Milt Childress

just general is this. are with that's competing you There some nature that there customer of in risks concentration, the have Well, the industry. semiconductor

United have the support capacity We for planned here. happening that's States expansion to what's

makes a a a know investments NxEdge, call in it's exactly you out, of working We're of because, the guess so, that because it, that's NxEdge. it's addition were problem we're going unknown the risky before to sense, going less going And mean, we risk play we I could if to U.S. than have to I on of strength on to we're make. have. in good it's how already without but NxEdge that. capability and that working just And actually probably the acquisition their at some

So, I'm not would any – that other I risks Eric? highlighted haven’t there sure I are

Eric Vaillancourt

Just timing.

the I think in out years. we the longer Samsung, think, than would takes it be or biggest investment risk gets that Intel is their delayed, but

that. the in XX, But years, the I be semiconductor in U.S. like strategy XX, something don't would see risk that So actually long-term

Justin Bergner

in in other side And very It's the helpful. equation. regards guidance. That's results just great. the the know of then to always to Okay, good

and it's the second like sales the the guide And about that better if what million, looks the of then why going the Components and So, Polymer the thing is confirm but I increasing EBITDA Is pace, isn't million the supply or plus are is midpoint the absorbing constraining some because sales, end adjusted divested offsetting $XX higher? $XX there kept the headwinds the chain it EBITDA? on increasing the would guide high divestiture, mean, seems the is yes, have EBITDA answer sales essentially to like is that? for guidance it not adjusted just

Milt Childress

little it's Yes, the to more question. answer granular bit a

a look by is I think now. it have supporting we're advance anticipating we We described, but in the of normal we’re meet future spend travel is with higher growth, little SG&A business, some we returning to because to you as and of we more for a costs and reason. some additional of it SG&A what That's business bit customers all obviously

the of guidance for quarter the that for baked outlook into some we is pass and So, our – our year. therefore fourth

Justin Bergner

have Okay, the stayed great. high it the same of would range without clipped Then would have at polymer? end the EBITDA

Milt Childress

Correct. are of we remains except time for end, our Polymer you the understand. investors unchanged at and It the which Last think it high revised I right. divestiture Components, you

Justin Bergner

costs SG&A. higher is sales of you sort part but higher also the high it's an volume-driven. there Okay. not unchanged And EBITDA guide just really and Is guide, element guide just lastly, on at the passing higher the sort of higher sales some end, of input mentioned through that

Milt Childress

Correct.

Justin Bergner

Okay.

Milt Childress

That, correct.

Eric talked well. that surcharges as the of some And about

Justin Bergner

Thanks Okay, all for taking great. the questions.

Milt Childress

Thank you.

Eric Vaillancourt

you. Thank

Operator

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

James Gentile

call Thank you very soon. I’ll much, concludes conference morning. everyone that our talk this

Operator

Thank you. That does conclude webcast. today's and teleconference

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

EnPro Industries (NPO) 5 Nov 212021 Q3 Earnings call transcript