Enpro Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Third quarter 2026 net sales reached $350.8 million, a 22.4% increase year-over-year from $286.6 million; nine-month 2026 net sales were $992.6 million, up 17.1% from $847.9 million.
• Net income for the third quarter was $40.3 million, up 86.6% from $21.6 million in the prior year; nine-month net income was $94.8 million, up 30.8% from $72.5 million.
• GAAP diluted earnings per share (EPS) were $1.88 for the quarter (vs. $1.01) and $4.44 for the nine months (vs. $3.41).
• Adjusted net income was $57.0 million for the quarter (up 34.4%) and $156.2 million for the nine months (up 24.2%).
• Adjusted diluted EPS was $2.66 for the quarter (up 33.7%) and $7.30 for the nine months (up 23.3%).
• Adjusted EBITDA was $91.3 million for the quarter (up 31.7%) and $254.6 million for the nine months (up 22.2%).
• Operating margin improved to 18.0% in the third quarter (from 14.3%) and 16.6% for the nine months (from 15.1%).
• Adjusted EBITDA margin was 26.0% in the third quarter (from 24.2%) and 25.6% for the nine months (from 24.6%).
• Cash flow from operating activities for the nine months ended September 30, 2026, was $172.8 million, compared to $138.5 million in the prior year.
• Free cash flow for the nine months was $129.2 million, compared to $104.9 million in the prior year.
• Total debt was $520.7 million at quarter-end, with a net leverage ratio of 1.4x to trailing twelve-month adjusted EBITDA.
• Cash and cash equivalents were $83.4 million at quarter-end.

Guidance and Future Outlook:

• Full-year 2026 revenue guidance raised to $1.33 billion–$1.34 billion (previously $1.29 billion–$1.31 billion implied by prior 14-16% growth range).
• Full-year 2026 adjusted EBITDA guidance raised to $340 million–$345 million (previously $330 million–$340 million).
• Full-year 2026 adjusted diluted EPS guidance raised to $9.70–$9.95 (previously $9.30–$9.80).
• Management cites robust demand across the portfolio and strong momentum heading into 2027 as drivers for the guidance increase.

Business Segments and Product Lines:

• Sealing Technologies sales increased 20.5% to $214.7 million in the quarter; nine-month sales were $629.9 million (up 15.5%).
• Sealing Technologies adjusted segment EBITDA was $69.9 million (up 21.8%) with a margin of 32.6%.
• Sealing Technologies organic sales growth was 11.6% excluding foreign exchange and acquisitions.
• Advanced Surface Technologies (AST) sales increased 25.8% to $136.5 million in the quarter; nine-month sales were $363.6 million (up 19.9%).
• AST adjusted segment EBITDA was $34.3 million (up 57.3%) with a margin of 25.1% (up 500 bps).
• AST performance was driven by leading-edge precision cleaning solutions, semiconductor capital equipment, and coatings demand.
• Acquisitions AlpHa Measurement Solutions and Overlook Industries, completed in Q4 2025, contributed to segment growth.

Market and Competitive Landscape:

• Semiconductor industry demand drove AST sales growth of nearly 26%.
• Sealing Technologies saw strength in aerospace, domestic general industrial, and compositional analysis applications.
• Commercial vehicle OEM revenue improved year-over-year in both segments.
• Slow European general industrial and food and biopharmaceutical demand partially offset growth in other areas.

Risks and Challenges:

• Risks include economic conditions, cyclical market downturns, and potential tariffs or trade protection measures.
• Geopolitical instabilities in the Middle East, Ukraine, and potential conflicts affecting Taiwan may impact markets and shipping.
• Uncertainties regarding raw material prices and availability due to geopolitical conflicts and tariffs.
• Risks related to reliance on a small number of significant customers and geographic concentration within the AST segment.
• Potential delays in facility expansions and challenges in identifying and integrating acquisitions.
• Foreign currency exchange rate fluctuations and interest rate changes.

Management Commentary and Tone:

• CEO Eric Vaillancourt described the quarter as "strong," citing disciplined execution and the success of "Enpro 3.0."
• Management expressed confidence in accelerating profitable growth and reinvesting in organic opportunities.
• The tone highlighted significant flexibility to invest in high-growth areas and pursue strategic acquisitions due to strong cash generation and a healthy balance sheet.

Other Key Points:

• Board of Directors approved a new $50 million share repurchase authorization in October 2026, replacing the expired program; the new authorization expires in October 2028.
• Regular quarterly dividend of $0.32 per share declared on October 28, 2026, payable December 16, 2026, to shareholders of record as of December 2, 2026.
• Corporate expenses increased to $13.5 million in the quarter from $10.2 million, primarily due to higher incentive compensation accruals and restructuring costs.
• Revolving debt was reduced by $55.0 million during the quarter and $135.0 million year-to-date.
• Capital expenditures for the nine months were $43.6 million ($39.9 million for PP&E and $3.7 million for software).