Enpro Inc. · NYSE:NPO
Enpro — Gabelli's 31st Annual Pump, Valve, & Water Systems Symposium (February 2021)
37 slides from Enpro's conference presentation, Feb 25, 2021
Slide 1: Investor Presentation February 2021
INVESTOR PRESENTATION FEBRUARY 2021
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: Key Messages
KEY MESSAGES Reshaping our portfolio to accelerate growth in niche, high-margin materials science-related 1 businesses with strong cash flow 2 Maintaining our high aftermarket exposure and investing in faster growth end markets Leveraging EnPro Capability Center to increase returns on invested capit
Slide 4: EnPro Overview
ENPRO OVERVIEW A leading industrial technology company using materials science to push boundaries in semiconductor, life sciences, and other technology-enabled sectors •ENPRO OVERVIEW 4
Slide 5: EnPro (NYSE: NPO) Attractive Portfolio of Businesses
ENPRO (NYSE: NPO) | ATTRACTIVE PORTFOLIO OF BUSINESSES Company Overview Revenue Contribution3 Headquarters Charlotte, NC By Segment By Channel By Geography By Market Manufacturing Facilities 22 primary Global Employees ~4,400 3% 5% 3% 14% 5% 25% 23% 6% 6% 47% Financial Overview 53% 23% 6% 59% 61% 16
Slide 6: EnPro's Segments
ENPRO’S SEGMENTS Sealing Technologies Advanced Surface Technologies Engineered Materials Enabling high performance polymer Safeguarding critical environments Advancing precision services and solutions applications 2020 REVENUE $637M 2020 REVENUE $171M 2020 REVENUE $275M 2020 ADJUSTED EBITDA MARGIN 2
Slide 7: Sealing Technologies: Safeguarding Critical Environments
SEALING TECHNOLOGIES: SAFEGUARDING CRITICAL ENVIRONMENTS Historical Financials ($M) Profile • Composed of the Garlock, Stemco, and $762 Technetics (excluding Semiconductor) $637 • High degree of materials science application SALES HYDRODYNAMIC SEALS SOFT GASKETS expertise ADJUSTED EBITDA • Extensive
Slide 8: Advanced Surface Technologies: Advancing Precision Services and Solutions
ADVANCED SURFACE TECHNOLOGIES: ADVANCING PRECISION SERVICES AND SOLUTIONS Historical Financials ($M) Profile $171 • Composed of the Technetics Semiconductor, LeanTeq, and Alluxa $120 • Utilize proprietary technologies, processes, ELECTROSTATIC CLEANING AND SALES PEDESTALS REFURBISHMENT SERVICES and
Slide 9: Engineered Materials: Enabling High Performance Polymer Applications
ENGINEERED MATERIALS: ENABLING HIGH PERFORMANCE POLYMER APPLICATIONS Historical Financials ($M) Profile • Composed of the GGB and CPI $331 • Technology and market leadership in plain $275 bearings SALES MONITORING DEVICES SOLID POLYMER BEARING • Extensive global footprints and applications 16.2% ADJ
Slide 10: EnPro Mission and Vision
ENPRO MISSION AND VISION Highly Engineered Products and Services That Provide Differentiated Performance Derived From Materials Science Expertise, Manufacturing Know-how, and Trade Secrets WE ARE A PURPOSE-DRIVEN COMPANY WITH STRONG VALUES, A FORWARD-THINKING OPERATING Dual-bottom Line Culture Enabl
Slide 11: EnPro's Portfolio Transformation
ENPRO’S PORTFOLIO TRANSFORMATION Strategic Imperatives Successful Execution of Portfolio Shaping Actions Resulting in a More Durable Business Model Focusing on niche, high- Transaction Strategic Rationale margin materials science- • Materials science 1 Alluxa related businesses with Closed 4Q20 • Hi
Slide 12: Adding Strong Characteristics to Our Portfolio
ADDING STRONG CHARACTERISTICS TO OUR PORTFOLIO Current Adding Invested in high-value niche markets with Leadership in high-value niche markets with addressable market growth of >7% p.a., driven by established, premium brands technology tailwinds Portfolio of businesses with high cash flow and low Su
Slide 13: Successful Execution of Portfolio Shaping Actions
SUCCESSFUL EXECUTION OF PORTFOLIO SHAPING ACTIONS Fairbanks Morse Heavy Duty Truck Product Bushing Block Air Springs Divestiture Lines Divestitures Divestiture Divestiture (Closed Q1 2020) (Closed Q3 2020) (Closed Q4 2020) (Closed Q4 2020) • Produces large medium-speed • Includes: TrailerTail, Brak
Slide 14: Successful Integration of Recent Acquisitions
SUCCESSFUL INTEGRATION OF RECENT ACQUISITIONS LeanTeq (joined Advanced Surface Technologies) Alluxa (joined Advanced Surface Technologies) Acquisition increases aftermarket presence in the growing Acquisition strengthens and expands materials science exposure semiconductor wafer production market ●
Slide 15: 2020 Pro Forma Bridge
2020 PRO FORMA BRIDGE $ in millions RESHAPING ACTIONS HAVE SIGNIFICANTLY ENHANCED PROFITABILITY OF THE PORTFOLIO Sales Adjusted EBITDA* Adjusted EBITDA Margin* -8.5% -0.5% +130bps $27 ($118) $1,074 $168.3 $167.5 17.0% $983 15.7% Reported Net Impact of Net Impact of Pro Forma Reported Pro Forma Repor
Slide 16: EnPro Operating System Enhancing Shareholder Value
ENPRO OPERATING SYSTEM ENHANCING SHAREHOLDER VALUE Combines capabilities that improve productivity, efficiency 1 and innovation in all business units 2 World class standard is always maintained 3 Learning mentality and ownership-based leadership Everyone must play for EnPro; learn from others, Share
Slide 17: Four-Phase Response to Navigate the COVID-19 Pandemic
FOUR-PHASE RESPONSE TO NAVIGATE THE COVID-19 PANDEMIC Our cross-functional COVID-19 Response & Support Team, made up of global executive leadership, has managed our business continuity plans and coordinated response THE HEALTH AND SAFETY OF OUR EMPLOYEES, COMMUNITIES, CUSTOMERS, AND SUPPLIERS IS OUR
Slide 18: Financial Performance
FINANCIAL PERFORMANCE $ in millions Revenue Gross Profit Margin Adjusted EBITDA Margin* $1,274 $1,206 35.0% 15.7% $1,074 33.5% 14.0% 14.0% 32.8% 2018 2019 2020 2018 2019 2020 2018 2019 2020 Portfolio Reshaping and Operational Improvements Leading to Meaningful Margin Expansion * Non-GAAP measure; re
Slide 19: Cash Flow and Leverage
CASH FLOW AND LEVERAGE $ in millions 2019 Acquisitions of LeanTeq and The Aseptic Group 2020 Fairbanks Morse Divestiture Increased Leverage Ratio 200% De-Levered Business Considerably $170.00 180% $150.00 Free Cash Flow*, 1 Net Debt To Adjusted EBITDA* Multiple 160% $130.00 135% 140% 3.0x 124% 120%
Slide 20: Debt Profile and Maturity Schedule
DEBT PROFILE AND MATURITY SCHEDULE Net Leverage Debt Maturity Schedule Reported December 31, 2020 ($M) Credit Facility $0 Undrawn3 $400M $350M Senior Notes1 $346 Revolver Senior Unsecured $150M Notes Term Loan2 $145 Term Loan A2 2020 2021 2022 2023 2024 2025 2026 Capital Lease Obligations $0 A Debt
Slide 21: Disciplined Capital Allocation Strategy
DISCIPLINED CAPITAL ALLOCATION STRATEGY 2020 Capital Allocation ($M) • Capital expenditures of $18 million in FY20 REINVEST IN THE BUSINESS • Approximately 68% in FY20 growth-related and balance $6M $5M focused on maintenance $12M $22M $238M • High technical know-how, IP-rich offering STRATEGIC • Ex
Slide 22: Value Creation Through Deliberate Approach to M&A
VALUE CREATION THROUGH DELIBERATE APPROACH TO M&A ENPRO’S M&A Criteria Illustrative Areas Of Interest Market Fit ✔Addressable market growth >7% per annum, driven by key technology growth trends ✔High barriers to entry (e.g., intellectual property, switching costs, trade secrets, etc.) Technology Ena
Slide 23: Reinstating 2021 Guidance
REINSTATING 2021 GUIDANCE 2021 Guidance (as of 2/23/21) Sales $1.04B – $1.08B Adjusted EBITDA * $178M – $188M Adjusted Diluted EPS * $4.32 – $4.66 Assumptions: 2021 Interest Expense ($M) • Anticipate slightly less than half of our full-year adjusted EBITDA and adjusted Interest Expense, Before Net I
Slide 24: Key Takeaways
KEY TAKEAWAYS 1 2 3 4 5 Reshaping our Maintaining our high Leveraging EnPro Maximizing long-term Empowering our portfolio to accelerate aftermarket exposure Capability Center to shareholder returns employees through a growth in niche, high- and investing in faster increase returns on through a forwa
Slide 25: Appendix
APPENDIX
Slide 26: Consolidated Adjusted EBITDA
CONSOLIDATED ADJUSTED EBITDA 26
Slide 27: Consolidated Adjusted EBITDA
CONSOLIDATED ADJUSTED EBITDA (Stated in Millions of Dollars) 27
Slide 28: Segment Adjusted EBITDA
SEGMENT ADJUSTED EBITDA Er?ro For the Quarters and Years Ended December 31, 2020 and 2018 (Stated in Mlions of Dollars) ‘Seang Ad Toa ‘Technoogies_ Surface Technologies Materials Segments S$ m2 $8 ays 28 m5 os 63 - 6g 7 13 : 13 7 30 2 30 13 5 54 87 3B 67 38 133 =r sass a7 Dee 0% 155 224% ‘quarter En
Slide 29: Segment Information
SEGMENT INFORMATION Er?ro For the Quaers and Yeas Ended December 31,200 and 2018 {Site llns of ols) Sales ‘esenber3) Zoo 20 a ‘Sealing Technologies Sway $e $y 8 Tee ‘eran Sutaoe Technolog: 220 m2 12 ater 738 a0 33 el Tas EE THE Less ssies 22 mo 63) 2) Seo § meas tor4o $a Eamings before interest, inc
Slide 30: Consolidated Adjusted Net Income
CONSOLIDATED ADJUSTED NET INCOME (Stated in Millions of Dollars, Except Per Share Data) 30
Slide 31: Consolidated Adjusted Net Income
CONSOLIDATED ADJUSTED NET INCOME (Stated in Millions of Dollars, Except Per Share Data) 31
Slide 32: Consolidated Adjusted Net Income
CONSOLIDATED ADJUSTED NET INCOME (Stated in Millions of Dollars, Except Per Share Data) 32
Slide 33: Free Cash Flow
FREE CASH FLOW (Stated in Millions of Dollars) 33
Slide 34: Free Cash Flow
FREE CASH FLOW ($ in Millions) FY2020 FY2019 FY2018 Net Cash Provided by (Used in) Operating Activities of 57.6 130.8 212.8 Continuing Operations Purchases of Property, Plant and Equipment (18.3) (21.6) (36.1) Free Cash Flow 39.3 109.2 176.7 Excluding: 2018 Tax Refund Benefit - - (78.0) Free Cash Fl
Slide 35: Pro Forma Calculation
PRO FORMA CALCULATION (Stated in Millions of Dollars) Year Ended December 31, 2020 Pro forma EnPro Adjustments Pro Forma Net sales $ 1,074 $ (91) $ 983 Net income (loss) attributable to EnPro Industries, Inc. $ 184 $ 21 $ 205 Adjustments to arrive at earnings before interest, income taxes, depreciat
Slide 36: 2018 Net Debt to Adjusted EBITDA
2018 NET DEBT TO ADJUSTED EBITDA $ millions December 31, 2018 Credit Facility $117 Senior Notes $345 Capital Lease Obligations $1 A Debt Components $463 B Cash and Equivalents $130 C = (A – B) Net Debt $333 D FY December 31, 2018 Adjusted EBITDA* $178 E = (C / D) Leverage Ratio 1.9x * Non-GAAP measu
Slide 37: 2019 Net Debt to Adjusted EBITDA
2019 NET DEBT TO ADJUSTED EBITDA Reported December 31, 2019 ($M) Credit Facility $134 Senior Notes1 $345 Term Loan $149 Capital Lease Obligations $1 A Debt Components $629 B Cash and Equivalents $121 C = (A – B) Net Debt $508 D December 31, 2019 Adjusted EBITDA* $169 E = (C / D) Leverage Ratio 3.0x
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