Enpro Inc. · NYSE:NPO
Enpro — EnPro Industries — Q4 2019 Earnings Presentation
25 slides from Enpro's earnings presentation, February 2020
Slide 1: EnPro Industries Investor Presentation Q4 2019
ENPRO INDUSTRIES INVESTOR PRESENTATION Q4 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: Who Is EnPro?
WHO IS ENPRO? Leading provider of highly-engineered solutions for mission critical applications 3
Slide 4: EnPro Mission and Vision
ENPRO MISSION AND VISION CUSTOMIZED SOLUTIONS FOR THE MOST DEMANDING APPLICATIONS WE ARE A PURPOSE-DRIVEN COMPANY WITH STRONG VALUES, A FORWARD-THINKING OPERATING PHILOSOPHY, AND A WAY OF WORKING THAT DRIVES HUMAN DEVELOPMENT THROUGH THE WAY WE WORK BEST-IN-CLASS VALUE CREATION OVER THE LONG TERM. C
Slide 5: EnPro (NYSE: NPO) | Attractive Portfolio of Businesses
ENPRO (NYSE: NPO) | ATTRACTIVE PORTFOLIO OF BUSINESSES COMPANY OVERVIEW 2019 REVENUE CONTRIBUTION Headquarters Charlotte, NC SALES BY SEGMENT SALES BY CHANNEL Manufacturing Facilities 27 primary 25% SEALING PRODUCTS AFTERMARKET Global Employees ~5,000 ENGINEERED PRODUCTS 48% 52% OE Customers 50,000+
Slide 6: EnPro's Segments
ENPRO’S SEGMENTS SEALING PRODUCTS ENGINEERED PRODUCTS FY 2019 REVENUE $912M FY 2019 REVENUE $298M FY 2019 ADJ. EBITDA MARGIN 18% FY 2019 ADJ. EBITDA MARGIN 16% REVENUE COMPOSITION (2019) REVENUE COMPOSITION (2019) 38% STEMCO 65% GGB 33% GARLOCK 35% CPI 29% TECHNETICS KEY PRODUCT OFFERINGS: KEY PRODU
Slide 7: Diversified Blue-Chip Customer Base
DIVERSIFIED BLUE-CHIP CUSTOMER BASE 7
Slide 8: Leveraging Our Strengths for Mission Critical Products
LEVERAGING OUR STRENGTHS FOR MISSION CRITICAL PRODUCTS STRENGTHS PRODUCTS • Nuclear reactor pressure vessel seals Leadership in high-value niche markets with established, premium brands • Aircraft engine seals & landing gear bearings SEALING • Petroleum/chemical refinery process PRODUCTS sealing Sup
Slide 9: EnPro Strategy
ENPRO STRATEGY 1 Allocate resources and capital to businesses with: • Robust secular tailwinds and structurally attractive markets • A high degree of aftermarket exposure • Differientiation based on materials science expertise • Compelling financial characteristics • A focus on sustainable markets a
Slide 10: Successful Execution of Portfolio Shaping Actions
SUCCESSFUL EXECUTION OF PORTFOLIO SHAPING ACTIONS The Aseptic Group LeanTeq Co., Ltd. Brake Shoe Business Fairbanks Morse Acquisition Acquisition Divestiture Divestiture (Closed Q3 2019) (Closed Q3 2019) (Closed Q3 2019) (Closed Q1 2020) • Distributes, designs, and • Provides cleaning and other • Ma
Slide 11: EnPro Operating System
ENPRO OPERATING SYSTEM Committed to shareholder value creation Combines capabilities that improve productivity, efficiency and innovation in all business units World class standard is always maintained Learning mentality and ownership-based leadership Everyone must play for EnPro Learn from others,
Slide 12: Underlying Trends Will Drive Long-Term Growth
UNDERLYING TRENDS WILL DRIVE LONG-TERM GROWTH SEMICONDUCTOR HYGIENIC AEROSPACE DIGITAL ECONOMY HEALTH NEEDS RISING STANDARDS OF LIVING Increased demand for semiconductor Increased pharmaceutical demand due to Increased demand for air travel logic and memory: greater life expectancy New aircraft deli
Slide 13: Driving Innovation to Unlock Further Value
DRIVING INNOVATION TO UNLOCK FURTHER VALUE SEALING PRODUCTS GYLON® EPIX ADVANCED RESTORATION HYDRODYNAMIC SEALS OF SEMICONDUCTOR CHAMBER COMPONENTS ENGINEERED PRODUCTS PROFLO® EOS EMISSIONS GUARD TRIBOLOGICAL COATINGS 13
Slide 14: Capital Allocation
CAPITAL ALLOCATION • $22 million in FY19 capital expenditures REINVEST IN THE BUSINESS • Approximately 57% in FY19 maintenance-related and 2019 CAPITAL ALLOCATION ($M) balance focused on growth $13M $9M $15M $21M 84% ACQUISITIONS • High technical know-how, IP-rich offering STRATEGIC 6% SHAREHOLDER D
Slide 15: M&A Filters and Growth Objectives
M&A FILTERS AND GROWTH OBJECTIVES ENPRO’S M&A CRITERIA ENPRO GROWTH OBJECTIVES STRATEGIC FIT ✔Highly engineered products often with mission-critical applications and materials science focus; “high-value niches” ✔IP-rich/proprietary technology or know-how ✔Attractive and growing end markets; cycle re
Slide 16: Additional Detail on Recent Acquisitions
ADDITIONAL DETAIL ON RECENT ACQUISITIONS The Aseptic Group LeanTeq Co., Ltd. ● Announced and closed on July 2, 2019 ● Announced on July 22, 2019; closed on September 25, 2019 ● Distributes, designs and manufactures sterile fluid transfer products ● Primarily provides cleaning, testing and verificati
Slide 17: EnPro Industries
ENPRO INDUSTRIES INVESTOR PRESENTATION Q1 2020
Slide 18: Appendix
APPENDIX
Slide 19: Sealing Products Snapshot
SEALING PRODUCTS SNAPSHOT HISTORICAL FINANCIALS ($M) PROFILE $954 • #1 - #3 in principal markets served; Garlock 125 year operating history • High degree of technical and application expertise; extensive trade secrets $912 SAL ES $894 • Deep customer engagement to create innovative solutions complem
Slide 20: Sealing Products: Products, Services and End Market Overview
SEALING PRODUCTS: PRODUCTS, SERVICES AND END MARKET OVERVIEW SELECT PRODUCTS & SERVICES SELECT MARKETS SOFT GASKETS BEARING ISOLATORS ISOLATION GASKETS FOOD & PHARMA SEMICONDUCTOR METAL SEALS ELECTROSTATIC CLEANING AND NUCLEAR AEROSPACE PEDESTALS REFURBISHMENT SERVICES SANITARY GASKETS SANITARY HOSE
Slide 21: Engineered Products Snapshot
ENGINEERED PRODUCTS SNAPSHOT HISTORICAL FINANCIALS ($M) PROFILE $324 • Leading brands • Technology and market leadership in plain bearings SAL ES $302 • High degree of tribological and applications expertise in bearings $298 GROSS MARGIN EBITDA MARGIN • Strong aftermarket presence in oil & gas and p
Slide 22: Engineered Products: Products and End Market Overview
ENGINEERED PRODUCTS: PRODUCTS AND END MARKET OVERVIEW SELECT PRODUCTS SELECT MARKETS METAL POLYMER BEARING TRIBOLOGICAL SOLUTIONS SOLID POLYMER AUTOMOTIVE GENERAL INDUSTRIAL BEARING DRY BEARING FILAMENT WOUND HIGH-FLOW VALVES PETROCHEM AEROSPACE BEARING MONITORING DEVICES PACKING CASES PISTON & RIDE
Slide 23: Consolidated Adjusted EBITDA
CONSOLIDATED ADJUSTED EBITDA Reconciliation of Net Income (Loss) to Adjusted EBITDA (Unaudited) For the Quarters and Years Ended December 31, 2019 and 2018 (Stated in Millions of Dollars) Quarters Ended Years Ended December 31, December 31, 2019 2018 2019 2018 Net income (loss) $ 2.8 $ (27.1) $ 38.3
Slide 24: Segment Adjusted EBITDA
SEGMENT ADJUSTED EBITDA Reconciliation of Segment Profit to Adjusted Segment EBITDA (Unaudited) For the Quarters and Years Ended December 31, 2019 and 2018 (Stated in Millions of Dollars) Quarter Ended December 31, 2019 Year Ended December 31, 2019 Sealing Engineered Total Sealing Engineered Total P
Slide 25: Net Debt Summary
NET DEBT SUMMARY Adjustments for Reported December 31, 2019 ($M) FM Proceeds (2) Pro Forma Credit Facility $134 -$134 $0 Net Debt in 2019 Senior Notes(1) $345 $345 • At year end, the company had a cash Term Loan $149 $149 balance of approximately $121M and total borrowings of approximately $629M Cap