Enpro Inc. · NYSE:NPO
Enpro — Q3 2021 Earnings Presentation
35 slides from Enpro's earnings presentation, Nov 5, 2021
Slide 1: Third Quarter 2021 Earnings Review & Strategic Acquisition of NxEdge
Third Quarter 2021 Earnings Review & Strategic Acquisition of NxEdge November 5, 2021
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements in this presentation that express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They involve a number of risks and uncertainties that
Slide 3: Introduction & Third Quarter Highlights
Introduction & Third Quarter Highlights Eric Vaillancourt Interim President & Chief Executive Officer
Slide 4: Third Quarter 2021 Strategic & Financial Highlights
Third Quarter 2021 Strategic & Financial Highlights • Announced agreements to sell CPI and to acquire NxEdge subsequent to quarter end; Divested polymer components business in 3Q:21 Strategic & • Sales increased 5.5% to $283.1M; On an organic basis, sales increased 15.8% driven primarily by stronger
Slide 5: Overview of Third Quarter 2021 Financial Results
Overview of Third Quarter 2021 Financial Results Milt Childress Executive Vice President & Chief Financial Officer
Slide 6: Enpro Q3 2021 Financial Performance
Enpro Q3 2021 Financial Performance $ in millions, except per share data Sales Gross Profit & Margin Adjusted EBITDA* & Margin* Adjusted Diluted EPS* +5.5% +350 bps +22.3% +39% +38.6% • Momentum across most major end • Gross profit margin increased 350 bps • Adjusted EBITDA* increased 22.3% year • A
Slide 7: Sealing Technologies – Q3 2021 Performance
Sealing Technologies – Q3 2021 Performance Sales Adjusted EBITDA & Margin $ in millions $157.8 -6.9% +15.7% +7.5% +7.8% $146.9 $145.5 $125.8 Q3 2020 Q3 2021 Reported Organic • Reported sales decrease driven by divestitures completed in 2020. • Adjusted segment EBITDA increased 7.8% to $34.5M and adj
Slide 8: Advanced Surface Technologies – Q3 2021 Performance
Advanced Surface Technologies – Q3 2021 Performance Sales Adjusted EBITDA & Margin $ in millions +44.8% +44.2% +23.6% $64.3 $55.0 $44.6 $44.6 Q3 2020 Q3 2021 Reported Organic • Adjusted segment EBITDA increased 44.8% to $19.4 and • Sales increased 44.2% driven primarily by strong demand in the adjus
Slide 9: Engineered Materials – Q3 2021 Performance
Engineered Materials – Q3 2021 Performance Sales Adjusted EBITDA & Margin $ in millions +11.4% +9.0% +11.0% $73.8 $72.7 $67.7 $65.5 Q3 2020 Q3 2021 Reported Organic • Sales increased 9.0% driven primarily by stronger sales in general • Adjusted segment EBITDA increased 11.4% over the prior year peri
Slide 10: Balance Sheet, Cash Flow & Capital Allocation
Balance Sheet, Cash Flow & Capital Allocation Net Leverage Commentary Reported September 30, 2021 • Strong balance sheet; net debt to adjusted EBITDA* of 0.8x, a sequential decline from 1.1x reported at the end of the second $ in millions Credit Facility $ — quarter Senior Notes1 $ 346 Term Loan2 $
Slide 11: Current 2021 Guidance
Current 2021 Guidance Previous 2021 Guidance* Current 2021 Guidance* (as of 8/3/21) (as of 11/5/21) Sales $1.075B – $1.125B $1.085B - $1.120B Adjusted EBITDA $200M – $210M $202M – $208M Adjusted Diluted EPS $5.16 – $5.50 $5.35 – $5.55 Assumptions: 2021 Interest Expense ($ in Millions) • Guidance upd
Slide 12: Enpro Transformation & Strategic Acquisition of NxEdge
Enpro Transformation & Strategic Acquisition of NxEdge Eric Vaillancourt Interim President & Chief Executive Officer
Slide 13: Significant Portfolio Reshaping Progress
Significant Portfolio Reshaping Progress Successful Execution of Portfolio Reshaping Actions Key Enpro Strategies Result in a More Durable Business Model Transaction Strategic Rationale Focusing on high-growth, high-margin NxEdge 1 Expected to close by end of 2021 • Industrial technology-related ind
Slide 14: Enpro + NxEdge: Transformation Continues
Enpro + NxEdge: Transformation Continues NxEdge Overview Advanced Surface Technologies: Geographic Footprint • Advanced manufacturing, cleaning, coating and refurbishment business serving the semiconductor industry • Produces and supports components used in advanced nodes (<14nm) for leading- edge s
Slide 15: Compelling Strategic and Financial Benefits
Compelling Strategic and Financial Benefits Aligned with Acquisition Criteria Enhances scale and breadth of Adds complementary critical offerings across the ✓ Secular growth markets driving >5% coating capabilities, with a semiconductor value chain, from annual growth leading range of coating advanc
Slide 16: More Aftermarket & Broader Geography for AST
More Aftermarket & Broader Geography for AST Sales by Geography • AST’s Asia-based capabilities will now have broader global 22% access to leverage expertise on the most advanced nodes • Differentiated coating offerings across all AST businesses can be 44% 2020A 2020 Pro leveraged globally 56% Forma
Slide 17: Competitive Differentiator: Vertical Integration
Competitive Differentiator: Vertical Integration With its vertical integration and broad scope of solutions, NxEdge is unique in providing customers with improved supply chain efficiency and resulting benefits to their total returns Segregated Supply Chain (Competitors) Integrated Supply Chain (NxEd
Slide 18: Competitive Differentiator: Coatings
Competitive Differentiator: Coatings AST Coating Roadmap Validated by Leading OEMs & IDMs Ongoing Material Development Enables Critical Sub-14 nm Advanced Nodes Globally • Together, AST & NxEdge will offer the widest range of coating materials available in 90nm 14-5nm 5nm-2nm the Semi market • Coati
Slide 19: Enpro AST + NxEdge: Full Lifecycle Management
Enpro AST + NxEdge: Full Lifecycle Management Illustration of the Entire Part Lifecycle 3Q:21 Earnings Review & Strategic Acquisition of NxEdge 19
Slide 20: Steady Growth in Wafer Starts Since 2001
Steady Growth in Wafer Starts Since 2001 • NxEdge will provide more content into high value chamber parts for AST • Combining our Cleaning, Coating & Refurbishment (CCR) offerings is also a unique differentiator • Spares and Refurbishment service opportunity correlates with wafer starts. Proliferati
Slide 21: Fab Equipment Spending Accelerates into 2024 in US and Taiwan
Fab Equipment Spending Accelerates into 2024 in US and Taiwan Fab Equipment Spending By Region1 — Billions 35 • Our combined position in the United States and Taiwan 30 positions us in regions where spending is expected to 25 accelerate 20 • Well-positioned OEM business drives longer-term recurring
Slide 22: Semiconductor Investments Accelerating in the U.S.
Semiconductor Investments Accelerating in the U.S. Overview of Front-End Semiconductor Fabs and Foundries in the U.S. New fabs and foundries in the U.S. will create Key New Fabs Announced in the U.S. Domestic Fab / Foundry Update incremental, step-change revenue opportunities for “Intel’s new [CEO]
Slide 23: NxEdge Transaction Details
NxEdge Transaction Details Milt Childress Executive Vice President & Chief Financial Officer
Slide 24: Transaction Summary
Transaction Summary • $850 million, all cash purchase price, subject to limited closing adjustments including working capital Terms • NxEdge will join Enpro’s Advanced Surface Technologies Segment • Key managers, including Founder & CEO Jackson Chao, will continue leading NxEdge • The transaction is
Slide 25: Enpro End Market Evolution
Enpro End Market Evolution Meaningful Change in End Market Exposure 1 2 2018 pro forma 2021 LTM Pro Forma 32% 35% 30% 24% 25% 25% 20% 18% 15% 15% 13% 10% 7% 7% 8% 7% 7% 6% 6% 5% 3% 4% 3% 3% 4% 3% 3% 0% 0% 1% 1% 0% Semiconductor General MD/HD Truck Automotive Food & PowerGen PetroChem Oil, Gas Aerosp
Slide 26: Margin Expansion & Leverage Step-Down
Margin Expansion & Leverage Step-Down Margin Expansion Leverage Ratio • Material adjusted EBITDA margin expansion since 2019 resulting from portfolio • Following the completion of the NxEdge acquisition, estimated leverage ratio reshaping actions optimizing our profit margins will be approximately 3
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Slide 28: Appendix
Appendix ©
Slide 29: Reconciliation of LTM Results
Reconciliation of LTM Results 3Q:21 Earnings Review & Strategic Acquisition of NxEdge 29
Slide 30: Consolidated Adjusted EBITDA (1/2)
Consolidated Adjusted EBITDA (1/2) 3Q:21 Earnings Review & Strategic Acquisition of NxEdge 30
Slide 31: Consolidated Adjusted EBITDA (2/2)
Consolidated Adjusted EBITDA (2/2) 3Q:21 Earnings Review & Strategic Acquisition of NxEdge 31
Slide 32: Segment Information (1/2)
Segment Information (1/2) 3Q:21 Earnings Review & Strategic Acquisition of NxEdge 32
Slide 33: Segment Information (2/2)
Segment Information (2/2) 3Q:21 Earnings Review & Strategic Acquisition of NxEdge 33
Slide 34: Consolidated Adjusted Net Income
Consolidated Adjusted Net Income 3Q:21 Earnings Review & Strategic Acquisition of NxEdge 34
Slide 35: Free Cash Flow
Free Cash Flow 3Q:21 Earnings Review & Strategic Acquisition of NxEdge 35