Enpro Inc.

Enpro Inc. is a leading-edge industrial technology company focused on critical applications across a diverse group of growing end markets including semiconductor, industrial process, commercial vehicle, sustainable power generation, aerospace, food and biopharmaceuticals, photonics and life sciences. The company is a leader in applied engineering and designs, develops, manufactures, and markets proprietary, value-added products and solutions that generally have a specified position on a critical application, contributing key functionality with the purpose of safeguarding a variety of critical environments. Over the past several years, Enpro has executed several strategic initiatives to create a portfolio of businesses that offers proprietary, industrial technology-related products and solutions with high barriers to entry, compelling margins, strong cash flow, and perpetual recurring/aftermarket revenue in markets with favorable secular tailwinds. As of December 31, 2025, continuing operations had 15 primary manufacturing and service facility locations (approximately 50,000 square feet or larger) located in 8 countries, including the United States.

Enpro's businesses are differentiated from competitors with technology, applied engineering advantage and reliability, as well as customer service, application expertise, technical support, on-time delivery, breadth of product offering, reputation for quality, and product availability. Leading brand names, including Garlock, Technetics, STEMCO and Advanced Micro Instruments, have been built upon long-standing reputations for reliability, engineering expertise, safety and durability. In the Sealing Technologies segment, the breadth, performance and quality of product offerings allow Enpro to achieve premium pricing and make it a preferred supplier with specified positions in a variety of critical applications. In the Advanced Surface Technologies segment, significant competitive advantages include technological knowledge, proprietary processes, manufacturing and analytical capabilities and a record of performance, which enable satisfaction of substantial upfront qualification processes required by many customers. Due to consolidation in the semiconductor manufacturing equipment industry, a small number of companies control a significant majority of global production, and the segment is dependent on certain key relationships, including a customer that accounted for approximately 24% of 2025 consolidated net sales ¹.

Enpro generates revenue through two reportable segments: Sealing Technologies and Advanced Surface Technologies. The Sealing Technologies segment designs, engineers and manufactures value-added products and solutions that safeguard critical environments, including metallic, non-metallic and composite material gaskets, dynamic seals, compression packing, elastomeric components, custom-engineered mechanical seals, hydraulic components, test, measurement and sensing applications, sanitary gaskets, hoses and fittings for hygienic process industries, fluid transfer products for pharmaceutical and biopharmaceutical industries, and commercial vehicle solutions. Aftermarket or recurring revenue approximates two-thirds of the Sealing Technologies segment's total revenue ². The Advanced Surface Technologies segment applies proprietary technologies, processes, and capabilities to deliver a highly differentiated suite of products and solutions for challenging applications in high-growth markets, including engineering, manufacturing and precision machining of complex front-end wafer processing sub-systems, cleaning, testing, refurbishment and verification for critical components used in semiconductor manufacturing equipment, and coatings for critical components and assemblies. In many instances, AST capabilities drive products and solutions that enable the maintenance of customers' high-value processes through an entire life cycle.

The Sealing Technologies segment, composed of three operating divisions Garlock, Technetics and STEMCO, generated sales of $732.4 million ³ in 2025. Garlock consists of Garlock Sealing Technologies (GST) and Garlock Hygienic Technologies (GHT), with GST engineering metallic, non-metallic and composite material gaskets, dynamic seals, compression packing, hydraulic components, expansion joints, and wall penetration products, and GHT including Rubber Fab, The Aseptic Group and Overlook Industries, which design, manufacture and sell fluid process solutions including single-use hygienic seals, single-use filler needles, tubing, components, assemblies and other final-fill components primarily for food and pharma markets. Technetics consists of Technetics Sealing and the Process Analytics group (including AMI and AlpHa), designing and selling high performance metal seals, mechanical seals, and elastomeric seals for extreme applications in semiconductor, aerospace, power generation, oil and gas, life sciences and other markets. STEMCO designs, engineers and manufactures innovative wheel-end and suspension products for the medium and heavy-duty commercial vehicle and trailer markets, with approximately two-thirds of the business tied to the regular replacement of wheel-end systems through distribution. Segment AEBITDA for Sealing Technologies was $240.7 million ⁴ in 2025, with a margin of 32.9% ⁵.

The Advanced Surface Technologies segment, composed of four operating businesses NxEdge, Technetics Semi, LeanTeq, and Alluxa, generated sales of $411.6 million ⁶ in 2025. NxEdge is an advanced manufacturing, special processing (cleaning, coating, surface treatments), and refurbishment solutions provider serving customers across the semiconductor supply chain. Technetics Semi engineers, manufactures, and assembles complex front-end wafer processing sub-systems, new and refurbished electrostatic chuck pedestals, and edge-welded metal bellows for the semiconductor equipment industry, also leveraged for space, aerospace and defense markets. LeanTeq, with its primary operation in Taiwan, provides cleaning, coating, testing, refurbishment, metrology and verification solutions for critical components used in advanced node semiconductor manufacturing equipment. Alluxa manufactures specialized optical filters and thin-film coatings for challenging applications in industrial technology, life sciences, communications, and semiconductor markets. Segment AEBITDA for Advanced Surface Technologies was $83.9 million ⁷ in 2025, with a margin of 20.4% ⁸.

On October 8, 2025, Enpro acquired Overlook Industries, Inc., which specializes in the design and fabrication of single-use technologies and other critical componentry for biopharmaceutical production processes. On November 14, 2025, the Company acquired AlpHa Measurement Holdings, LLC, a leading provider of liquid analytical sensing technologies and instrumentation for the measurement of key parameters for liquid processes. Enpro paid $273.9 million ⁹, net of cash acquired, for the acquisitions completed in the fourth quarter of 2025, funded with available cash on hand in the United States and borrowings under the revolving credit facility. In connection with these acquisitions, there were $7.4 million ¹⁰ of acquisition-related costs incurred during the year ended December 31, 2025. On January 29, 2024, Enpro acquired all equity securities of Advanced Micro Instruments, Inc. (AMI) for $209.4 million ¹¹, net of cash acquired. In February 2024, Enpro acquired all outstanding equity interests in the Alluxa Acquisition Subsidiary for $17.9 million ¹². In the second quarter of 2025, Enpro completed the offering of $450 million ¹³ in aggregate principal amount of 6.125% Senior Notes due 2033, and applied a portion of the net proceeds to fund the redemption on June 12, 2025 of all outstanding 5.75% Senior Notes due 2026 having an aggregate principal amount of $350 million ¹⁴. On April 9, 2025, Enpro entered into an amended credit facility agreement providing for a senior secured revolving credit facility of up to $800.0 million ¹⁵ maturing on April 9, 2030. In the second quarter of 2024, Enpro initiated a plan to terminate and settle its remaining defined benefit pension plan in the United States, substantially completed in the fourth quarter of 2025, resulting in a pretax, noncash settlement loss of $67.2 million ¹⁶. Workforce reductions associated with restructuring activities in 2025 totaled 35 ¹⁷ administrative and manufacturing positions.

Net sales for 2025 were $1,143.3 million ¹⁸, a 9.0% increase from $1,048.7 million ¹⁹ in 2024. Income from continuing operations attributable to Enpro Inc. was $40.5 million ²⁰ in 2025, compared to $72.9 million ²¹ in 2024. Diluted earnings per share from continuing operations attributable to Enpro Inc. was $1.91 ²² in 2025 versus $3.45 ²³ in 2024. Adjusted diluted earnings per share attributable to Enpro Inc. continuing operations was $7.91 ²⁴ in 2025 compared to $6.96 ²⁵ in 2024. Adjusted EBITDA was $277.6 million ²⁶ in 2025 versus $254.8 million ²⁷ in 2024. Operating cash flow from continuing operations was $201.2 million ²⁸ in 2025, compared to $162.9 million ²⁹ in 2024.

Enpro's growth strategy is centered on executing strategic acquisitions to broaden capabilities in growing semiconductor, life sciences, and test and measurement industries. The acquisitions of Overlook and AlpHa in the fourth quarter of 2025, for which Enpro paid $273.9 million ³⁰ net of cash acquired, expand the company's presence in biopharmaceutical production processes and liquid analytical sensing technologies. Overlook specializes in single-use technologies and critical componentry for biopharmaceutical production processes, while AlpHa serves customers across industrial process control, water and wastewater, laboratory, and environmental monitoring. The company expects to continue to make acquisitions in the future, though this involves risks such as difficulties integrating acquired technology, operations, personnel and financial systems, unrealized sales expectations, and unknown liabilities.

Enpro's Advanced Surface Technologies segment is positioned for growth driven by solutions serving leading-edge applications and improvement in overall semiconductor capital equipment demand. Sales for the segment increased 13.6% ³¹ in 2025 compared to 2024, driven by higher volume of $28.4 million ³². The segment's products and solutions are used in demanding environments requiring performance, precision and repeatability, with a low tolerance for failure, and include engineering, manufacturing and precision machining of complex front-end wafer processing sub-systems, cleaning, testing, refurbishment and verification for critical components used in semiconductor manufacturing equipment, and coatings for critical components. The segment is dependent on certain key relationships with customers in the semiconductor manufacturing equipment industry, including a customer that accounted for approximately 24% ³³ of 2025 consolidated net sales.In 2025, Sealing Technologies segment AEBITDA margin increased from 32.6% ³⁴ in 2024 to 32.9% ³⁵ in 2025, while Advanced Surface Technologies segment AEBITDA margin narrowed slightly from 21.2% ³⁶ in 2024 to 20.4% ³⁷ in 2025. Corporate expenses for 2025 increased $1.4 million ³⁸ as compared to 2024, driven primarily by increased medical costs offset in part by a decrease in share-price-based long-term incentive compensation expenses and lower professional fees.

Enpro launched "Enpro 3.0 - Accelerating Personal and Profitable Growth" in the first quarter of 2025, a multi-year transformation initiative designed to drive sustained, long-term profitable growth. The company continues to focus on safety, with an OSHA recordable injury case rate of 0.64 ³⁹ and a lost time injury case rate of 0.09 ⁴⁰ in 2025, improvements of 33% ⁴¹ and 70% ⁴², respectively, compared to 2024 rates. Eleven locations now operate in accordance with ISO 45001 practices, and three locations have achieved third-party certification. The company deployed an AI-based ergonomic assessment tool across facilities to evaluate task-related ergonomic hazards.

Capital expenditures for property, plant, and equipment were $42.0 million ⁴³ in 2025, compared to $29.1 million ⁴⁴ in 2024. Enpro's board of directors approved a two-year share repurchase authorization in October 2024 for up to $50.0 million ⁴⁵ of shares. No shares were purchased under this authorization as of December 31, 2025. Quarterly dividends paid in 2025 were $0.31 ⁴⁶ per share, increased from $0.30 ⁴⁷ in 2024. On February 13, 2026, the board increased the quarterly dividend to $0.32 ⁴⁸ per share. Total dividend payments were $26.2 million ⁴⁹ in 2025. Research and development expenditures were $13.3 million ⁵⁰ in 2025.

The company faces structural headwinds from the cyclical nature of its markets, particularly wafer fab equipment for semiconductor manufacturing, which has historically experienced rapid changes in demand. A prolonged and severe downward cycle in semiconductor markets could have a material adverse effect on business. The company also faces risks from increased costs for raw materials due to supply chain limitations or the imposition of new or increased tariffs, including tariffs announced by the U.S. government in 2025 and retaliatory tariffs. Some of AST's operations rely upon sourcing certain rare earth minerals that historically have been sourced indirectly from China, and while inventories are sufficient for near-term requirements, the future supply of these materials is uncertain.

The company faces risks related to evolving regulatory restrictions on per- and polyfluoroalkyl substances (PFAS), which may restrict the manufacture or use of fluoropolymers including PTFE, a critical raw material in the manufacture of certain products. In February 2023, the European Chemical Agency proposed several options for restricting the manufacture, import and use of PFAS in the EU under REACH regulations. If the manufacture or use of PTFE resins were restricted, and if the company were unable to develop substitute materials, results of operations could be adversely affected. Additionally, the company faces risks from climate change and legal or regulatory responses, including potential increased energy or compliance costs and the need to align product investment to adjust to a low-carbon economy.

The company's Advanced Surface Technologies segment is dependent on a small number of significant customers due to consolidation in the semiconductor manufacturing equipment industry, with one customer accounting for approximately 24% ⁵¹ of 2025 consolidated net sales, and the loss of that relationship could have a material adverse effect. The business and some of the markets served are cyclical, particularly wafer fab equipment for semiconductor manufacturing, and a prolonged downturn could materially adversely affect results. The company faces intense competition and may not have sufficient resources to maintain its competitive position. Increased costs for raw materials due to supply chain limitations or tariffs, including tariffs announced by the U.S. government in 2025, could adversely affect business, and some AST operations rely on rare earth minerals historically sourced indirectly from China with uncertain future supply. Evolving regulatory restrictions on PFAS, including a February 2023 ECHA proposal to restrict PFAS under REACH, could restrict the manufacture or use of PTFE, a critical raw material in certain products, and if substitute materials cannot be developed, results of operations could be adversely affected.

Management's message emphasizes Enpro's transformation into a leading-edge industrial technology company focused on critical applications across growing end markets, with a portfolio of businesses offering proprietary products with high barriers to entry, compelling margins, strong cash flow, and perpetual recurring/aftermarket revenue. The key themes include the successful execution of strategic initiatives to focus the portfolio, including the acquisitions of Overlook and AlpHa in the fourth quarter of 2025 for $273.9 million ⁵² net of cash acquired, and the acquisition of AMI in January 2024 for $209.4 million ⁵³ net of cash acquired. Management highlights the launch of "Enpro 3.0 - Accelerating Personal and Profitable Growth" in the first quarter of 2025, a multi-year transformation initiative designed to drive sustained, long-term profitable growth while deepening commitment to personal and professional development of employees. The company reported adjusted diluted earnings per share of $7.91 ⁵⁴ for 2025 and adjusted EBITDA of $277.6 million ⁵⁵, and management emphasizes the company's dual-bottom line philosophy placing value on both financial results and human development.