Enpro Inc. · NYSE:NPO
Enpro — EnPro Industries — Q3 2019 Earnings Presentation
26 slides from Enpro's earnings presentation, Nov 5, 2019
Slide 1: Enpro Industries Third Quarter 2019 Earnings Review
ENPRO INDUSTRIES THIRD QUARTER 2019 EARNINGS REVIEW November 5, 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 Third Quarter Highlights 2 Overview of Financial Results Quarterly Results Capital Allocation Net Debt & Liquidity 3 Guidance 3
Slide 4: Third Quarter Highlights
THIRD QUARTER HIGHLIGHTS Marvin Riley – President & Chief Executive Officer
Slide 5: Third Quarter Operations Highlights
THIRD QUARTER OPERATIONS HIGHLIGHTS ● Results in heavy-duty trucking within Sealing Products segment overshadowed a strong year-over-year third quarter operating performance in the rest of the company ● Q3 sales down 4% and adjusted EBITDA down 15%, both versus the prior year, as a result of: ○ Chal
Slide 6: Portfolio Shaping Actions
PORTFOLIO SHAPING ACTIONS ● Sale of brake shoe business is extension of decision in December 2018 to discontinue friction manufacturing in Rome facility ○ Consistent with new strategy of shifting EnPro’s portfolio to products and services in structurally attractive markets that generate strong cash
Slide 7: Inaugural Sustainability Report
INAUGURAL SUSTAINABILITY REPORT ● Issued inaugural sustainability report in September ● Illustrates EnPro’s commitment to: ○ Delivering strong financial results ○ Maximizing the development of our employees ○ Protecting our planet and minimizing our environmental impacts across our operations ● High
Slide 8: Overview of Financial Results
OVERVIEW OF FINANCIAL RESULTS Milt Childress – Executive Vice President & CFO
Slide 9: Sales & Adjusted EBITDA
SALES & ADJUSTED EBITDA $ in millions SALES ● Sales decreased 3.9% compared to the third quarter of 2018 ● Excluding the heavy-duty trucking business, sales were up 0.9% for the quarter versus third quarter of last year ADJUSTED EBITDA $ in millions ● Adjusted EBITDA decreased 14.8% in the third qua
Slide 10: Gross Margin
GROSS MARGIN GROSS PROFIT & MARGIN $ in millions ● Gross profit margin decrease of 1.2 percentage points compared to the third quarter of 2018 ○ Lower volume and unfavorable mix in heavy-duty trucking ○ Year-over-year increase in warranty accruals in heavy-duty trucking ○ Offset in part by the high
Slide 11: Sealing Products
SEALING PRODUCTS SALES SEGMENT ADJUSTED EBITDA & MARGIN $ in millions $ in millions MARKET CONDITIONS KEY DEVELOPMENTS ● Sales decreased 7.6% excluding impact of FX translation ● Excluding impact of FX translation and acquisitions and acquisitions and divestitures and divestitures, segment adjusted
Slide 12: Engineered Products
ENGINEERED PRODUCTS SALES SEGMENT ADJUSTED EBITDA & MARGIN $ in millions $ in millions MARKET CONDITIONS KEY DEVELOPMENTS ● Sales decreased 4.2% excluding impact of FX ● Excluding impact of FX translation, segment adjusted translation EBITDA increased 7.5% ○ Weakness in the automotive and general in
Slide 13: Power Systems
POWER SYSTEMS SALES SEGMENT ADJUSTED EBITDA & MARGIN $ in millions $ in millions MARKET CONDITIONS KEY DEVELOPMENTS ● Sales increase driven by strong aftermarket parts and ● Excluding the impact of foreign exchange on the EDF military marine engine sales contract in both periods, segment adjusted EB
Slide 14: Adjusted Diluted Earnings Per Share
ADJUSTED DILUTED EARNINGS PER SHARE ● Adjusted diluted EPS in Q3 2019 of $1.13/share was down 17.5% compared to the third quarter of the prior year ADJUSTED DILUTED EARNINGS PER SHARE ($ and shares in millions, except per share data) Q3 2018 Q3 2019 Adjusted EBITDA $64.3 $54.8 Less: Net Interest Exp
Slide 15: Other Non-Operating Expense and Environmental Update
OTHER NON-OPERATING EXPENSE AND ENVIRONMENTAL UPDATE OTHER NON-OPERATING EXPENSE ● Other non-operating expense totaled $24.6 million in the third quarter of 2019, as a result of: ○ $15.3 million non-cash loss on the sale of the brake shoe business ○ $7.9 million increase in environmental reserve adj
Slide 16: Capital Allocation Overview
CAPITAL ALLOCATION OVERVIEW ACQUISITIONS ● Completed the Aseptic Group and LeanTeq acquisitions in the quarter ● Combined cash investment in the two businesses was ~$310 million (~$345 million total consideration including LeanTeq rollover equity) CAPITAL EXPENDITURES ● Invested $6.8 million in purc
Slide 17: Cash Flow, Net Debt & Liquidity Summary
CASH FLOW, NET DEBT & LIQUIDITY SUMMARY LIQUIDITY IN 2019 ● For the nine months ended September 30, cash flow from operations, net of purchases of property, plant and equipment, was $126.9 million compared to $112.7 million for the same period a year ago ● At 9/30/19, cash balance of approximately $
Slide 18: Guidance
GUIDANCE Marvin Riley – President & Chief Executive Officer
Slide 19: 2019 Guidance
2019 GUIDANCE GUIDANCE COMMENTARY (1) ● Expect full-year adjusted EBITDA to be between $210 and $214 million and adjusted diluted EPS to be between $3.90 to $4.04 2019 Guidance(1) Low High Adjusted EBITDA $210M $214M Adjusted EPS $3.90 $4.04 (1) Full-year guidance excludes changes in the number of s
Slide 20: Questions
QUESTIONS
Slide 21: Appendix
APPENDIX
Slide 22: LTM Adjusted EBITDA
LTM ADJUSTED EBITDA Er”=ro Industries (Stated in Millions of Dollars) Nine Months Ended September 30, 2019 (A) Year Ended December 31, 2018 Less: Nine Months Ended September 30, 2018 (A) Trailing Twelve Months Ended September 30, 2019 $ $ Adjusted EBITDA 158.9 217.4 162.9 213.4 22
Slide 23: Adjusted EBITDA
ADJUSTED EBITDA Er”=ro Industries Reconciliation of Net Income (Loss) to Adjusted EBITDA (Unaudited) For the Quarters ard Nine Months Ended September 30, 2019 and 2018 (Stated in Milions of Dotars) ‘Quarters Ended Nine Montns Ended September 30, September 20, 2019 2018 2019 2018 Net income (loss) 8
Slide 24: Adjusted EBITDA
ADJUSTED EBITDA Er2ro Reconciliation of Consolidated Net Income (Loss) to Consolidated Adjusted EBITDA (Unaudited) For the Year Ended December 31, 2018 (Stated in Millions of Dollars) Years Ended December 31 2018 Netincome (1s) $ 196 ‘Adusments fo arte at eamings neiore interes. Income taxes, ‘depre
Slide 25: Segment Adjusted EBITDA
SEGMENT ADJUSTED EBITDA Er”=ro Industries Reconciliation of Segment Profit to Adjusted Segment EBITDA (Unaudited) (Stated in Millions of Dollars) Segment profit Acquisition expenses Restructuring and impairment costs Depreciation and amortization expense Eamings before interest, income taxes, deprec
Slide 26: Consolidated Adjusted Net Income
CONSOLIDATED ADJUSTED NET INCOME 26