Slide 1: Second Quarter 2019 Earnings Review
ENPRO INDUSTRIES SECOND QUARTER 2019 EARNINGS REVIEW July 30, 2019
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Statements made in the course of 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
Slide 3: Agenda
AGENDA 1 Leadership Transition 2 Second Quarter Highlights 3 Overview of Financial Results Quarterly Results Capital Allocation Net Debt & Liquidity 4 Guidance 3
Slide 4: Leadership Transition
LEADERSHIP TRANSITION Steve Macadam – Outgoing President & Chief Executive Officer
Slide 5: Second Quarter Highlights
SECOND QUARTER HIGHLIGHTS Marvin Riley – Incoming President & Chief Executive Officer
Slide 6: Second Quarter Operations Highlights
SECOND QUARTER OPERATIONS HIGHLIGHTS ● Substantial year-over-year increase in profitability that resulted primarily from: ○ Strength in aftermarket parts and services in Power Systems ○ Productivity improvements and lower warranty charges due to unusual warranty charges in the prior-year period that
Slide 7: Second Quarter Acquisition Overview
SECOND QUARTER ACQUISITION OVERVIEW ● In support of our growth strategy and our commitment to disciplined strategic investments, we recently announced the addition of two new businesses to the EnPro portfolio within pharma and semiconductor: ○ The Aseptic Group ■ Completed on July 2 ■ The Aseptic Gr
Slide 8: LeanTeq Adds Significant Value to Our Portfolio
LEANTEQ ADDS SIGNIFICANT VALUE TO OUR PORTFOLIO Strengthens and Adds proprietary Aligns with EnPro’s Compelling growth and Expected to be expands EnPro’s technology, capabilities growth strategy and margin profile with accretive to adjusted existing $100M+ and a highly fits its acquisition consisten
Slide 9: Overview of Financial Results
OVERVIEW OF FINANCIAL RESULTS Milt Childress – Executive Vice President & CFO
Slide 10: Sales & Adjusted EBITDA
SALES & ADJUSTED EBITDA $ in millions SALES ● Sales were relatively flat compared to the second quarter of 2018 ADJUSTED EBITDA ● Excluding foreign exchange translation and the impact of foreign $ in millions exchange on the EDF contract in both periods, adjusted EBITDA was up 17.6% in the second qu
Slide 11: Gross Margin
GROSS MARGIN GROSS PROFIT & MARGIN $ in millions ● Gross profit margin increase of 2.9 percentage points compared to the second quarter of 2018 ○ Year-over-year parts volume increase in Power Systems ○ Productivity improvements and lower warranty charges due to unusual warranty charges in the prior-
Slide 12: Sealing Products
SEALING PRODUCTS SALES SEGMENT ADJUSTED EBITDA & MARGIN $ in millions $ in millions MARKET CONDITIONS KEY DEVELOPMENTS ● Sales decreased 5.4% excluding impact of FX ● Excluding impact of FX translation, segment adjusted translation EBITDA increased 15.7% ○ Strength in the aerospace and midstream oil
Slide 13: Engineered Products
ENGINEERED PRODUCTS SALES SEGMENT ADJUSTED EBITDA & MARGIN $ in millions $ in millions MARKET CONDITIONS KEY DEVELOPMENTS ● Sales decreased 3.5% excluding impact of FX ● Excluding impact of FX translation, segment adjusted translation EBITDA decreased 9.5% ○ Driven primarily by weakness in automotiv
Slide 14: Power Systems
POWER SYSTEMS SALES SEGMENT ADJUSTED EBITDA & MARGIN $ in millions $ in millions MARKET CONDITIONS KEY DEVELOPMENTS ● The sales increase was due to strong aftermarket parts ● Excluding the impact of foreign exchange on the EDF and military marine engine sales, partially offset by contract in both pe
Slide 15: Adjusted Diluted Earnings Per Share
ADJUSTED DILUTED EARNINGS PER SHARE ● Adjusted diluted EPS in Q2 2019 of $1.32/share was up 83.3% compared to the second quarter of the prior year ADJUSTED DILUTED EARNINGS PER SHARE ($ and shares in millions, except per share data) Q2 2018 Q2 2019 Adjusted EBITDA $47.2 $61.0 Less: Net Interest Expe
Slide 16: Capital Allocation Overview
CAPITAL ALLOCATION OVERVIEW CAPITAL EXPENDITURES ● Invested $8.8 million in facilities, equipment, and software compared to $14.5 million in the prior year period DIVIDENDS ● Paid $0.25/share dividend totaling $5.2M SHARE REPURCHASES ● Repurchased ~195K shares for a total value of ~$12.7 million und
Slide 17: Net Debt & Liquidity Summary
NET DEBT & LIQUIDITY SUMMARY LIQUIDITY IN 2019 ● Q2 2019 cash balance of approximately $124M ● Q2 2019 total borrowings of approximately $428M (1) Includes impact from unamortized debt issue costs. 17
Slide 18: Guidance
GUIDANCE Marvin Riley – Incoming President & Chief Executive Officer
Slide 19: 2019 Guidance
2019 GUIDANCE GUIDANCE COMMENTARY (1) ● Expect full-year adjusted EBITDA to be between $225 and $229 million and adjusted diluted EPS to be between $4.45 to $4.59 2019 Guidance(1) Low High Adjusted EBITDA $225M $229M Adjusted EPS $4.45 $4.59 (1) Ranges exclude changes in the number of shares outstan
Slide 20: Questions
QUESTIONS
Slide 21: Appendix
APPENDIX
Slide 22: LTM EBITDA Calculation
LTM EBITDA CALCULATION Er2ro (Stated in Millions of Dollars) Adjusted EBITDA Six Months Ended June 30, 2019 (A) $ 104.1 Year Ended December 31, 2018 217.4 Less: Six Months Ended June 30, 2018 (A) 98.6 Trailing Twelve Months Ended June 30, 2019 $ 222.9 {A) For reconciliations of net income to adjuste