CHARLOTTE - Enpro Inc. (NYSE: NPO) today announced its financial results for the three months and year ended December 31, 2023.
'We are pleased with Enpro's strong performance and execution in 2023. Sealing Technologies delivered record profitability that largely offset softness in Advanced Surface Technologies due to continued weakness in the global semiconductor industry.' said Eric Vaillancourt, President and Chief Executive Officer. 'Enpro delivered full year adjusted EBITDA margin of 22.5% while generating outstanding operating cash flow. Despite significant semiconductor headwinds, AST segment margin approached 24% in 2023, demonstrating the segment's value-added capabilities. Sealing Technologies 2023 segment margin exceeded 29%, despite a slowdown in the fourth quarter.'
Mr. Vaillancourt continued, 'We are well positioned to build on the progress achieved in 2023 by continuing to execute on our strategic growth initiatives in both Sealing Technologies and AST. While the timing of a broader semiconductor capital equipment recovery remains uncertain, the industry is showing early signs of an uptick, and we remain focused on driving growth and value in our semiconductor business over a multi-year period. Our ability to navigate through any market environment with our solid execution and disciplined cost mitigation efforts underscores the resiliency of our business. We have a strong balance sheet to drive our strategy and deliver top and bottom-line growth, while continuing to provide a safe and vibrant working environment for our colleagues.'
Sales of $249.1 million decreased 8.4% and organic sales decreased 9.0%
GAAP loss from continuing operations attributable to Enpro Inc. improved to $4.9 million, compared to a GAAP loss of $57.5 million last year
Adjusted EBITDA decreased 12.2% to $46.9 million
Diluted loss per share from continuing operations attributable to Enpro Inc. improved to $0.23, compared to a diluted loss per share of $2.76
Adjusted diluted earnings per share decreased 8.5% to $1.19 versus $1.30 last year
Full Year 2023 Results
Sales of $1.06 billion decreased 3.6% and organic sales decreased 3.3%
GAAP income from continuing operations attributable to Enpro Inc. increased $10.8 million, compared to income of $6.7 million last year
Adjusted EBITDA decreased 7.5% to $238.0 million
Diluted earnings per share from continuing operations attributable to Enpro Inc. increased to $0.51, compared to diluted earnings per share of $0.32 last year
Adjusted diluted earnings per share decreased 3.7% to $6.54 versus $6.79 last year
2024 Guidance and Update
Introducing guidance for 2024: revenue growth in the low to mid-single-digit range, adjusted EBITDA in the range of $260 million to $280 million and adjusted diluted earnings per share of $7.00 to $7.80
Subsequent to quarter end, in late January Enpro completed the previously announced acquisition of Advanced Micro Instruments, Inc. ('AMI') for $210 million
Entering 2024 with a net leverage ratio of 2.0x, inclusive of the recently completed AMI transaction
Strong balance sheet and robust free cash flow provide significant financial flexibility to further organic growth initiatives and strategic acquisitions
Fourth Quarter 2023 Consolidated Results of Continuing Operations
Sales of $249.1 million decreased 8.4% in the fourth quarter of 2023. Continued softness in the global semiconductor market, a sharp decline in demand in commercial vehicle OEM, and tepid general industrial, commercial aerospace and pharma demand during the quarter were partially offset by strategic pricing actions across markets and continued strength in nuclear energy. Excluding the impact of a divested business and foreign currency exchange translation, organic sales for the quarter declined 9.0% compared to last year.
Corporate expenses of $14.4 million in the fourth quarter of 2023 were down from $15.6 million a year ago primarily due to lower total compensation expense.
Loss from continuing operations attributable to Enpro Inc. was $4.9 million, compared to a loss of $57.5 million, impacted by a goodwill impairment charge. Adjusted income from continuing operations attributable to Enpro Inc. of $25.0 million decreased 7.7% compared to the fourth quarter of 2022. Diluted loss per share attributable to Enpro Inc. continuing operations was $0.23, compared to a diluted loss per share of $2.76 in the prior-year period, and adjusted diluted earnings per share of $1.19 decreased 8.5%.
Adjusted EBITDA of $46.9 million decreased 12.2% from $53.4 million last year. During the fourth quarter of 2023, strong share price performance increased long-term incentive compensation expense by $6.4 million, compared to an increase of $4.8 million last year.
The incremental $6.4 million in long-term compensation expense during the fourth quarter of 2023 was not considered when providing prior 2023 guidance commentary. Enpro does not contemplate compensation expenses related to share price changes when determining guidance. Modifications made during 2023 to the long-term incentive compensation program will lessen this impact in 2024 and eliminate the impact in years thereafter.
Non-GAAP Financial Information
This press release contains financial measures that have not been prepared in conformity with GAAP. They include adjusted income from continuing operations attributable to Enpro Inc., adjusted diluted earnings per share attributable to Enpro Inc., adjusted EBITDA, adjusted EBITDA margin, total adjusted segment EBITDA and free cash flow. Because of the forward-looking nature of these estimates, it is impractical to present quantitative reconciliations of such measures to comparable GAAP measures, and accordingly no such GAAP measures are being presented.
Management believes these non-GAAP metrics are commonly used financial measures for investors to evaluate the company's operating performance and, when read in conjunction with the company's consolidated financial statements, present a useful tool to evaluate the company's ongoing operations and performance from period to period. In addition, these are some of the factors the company uses in internal evaluations of the overall performance of its businesses. Management acknowledges that there are many items that impact a company's reported results and the adjustments reflected in these non-GAAP measures are not intended to present all items that may have impacted these results. In addition, these non-GAAP measures are not necessarily comparable to similarly titled measures used by other companies.
Forward-Looking Statements and Guidance
Statements in this press release that express a belief, expectation or intention, including the 2024 guidance and other statements 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 uncertainties that may cause actual events and results to differ materially from such forward-looking statements. These risks and uncertainties include, but are not limited to: economic conditions in the markets served by the company's businesses and the businesses of its customers, some of which are cyclical and experience periodic downturns; the impact of geopolitical activity on those markets, including instabilities associated with the armed conflicts in Ukraine and between Israel and Hamas and any conflict or threat of conflict that may affect Taiwan; uncertainties with respect to the imposition of government embargoes, tariffs and trade protection measures, such as 'anti-dumping' duties applicable to classes of products, and import or export licensing requirements, as well as the imposition of trade sanctions against a class of products imported from or sold and exported to, or the loss of 'normal trade relations' status with, countries in which the company conducts business, could significantly increase the company's cost of products or otherwise reduce its sales and harm its business; uncertainties with respect to prices and availability of raw materials, including as a result of instabilities from geopolitical conflicts; uncertainties with respect to the company's ability to achieve anticipated growth within the semiconductor, life sciences, and other technology-enabled markets, including uncertainties with respect to receipt of CHIPS Act support and the timing of completion of the new Arizona facility; the impact of fluctuations in relevant foreign currency exchange rates or unanticipated increases in applicable interest rates; unanticipated delays or problems in introducing new products; the impact of any labor disputes; announcements by competitors of new products, services or technological innovations; changes in the company's pricing policies or the pricing policies of its competitors; risks related to the reliance of the AST segment on a small number of significant customers; uncertainties with respect to the company's ability to identify and complete business acquisitions consistent with its strategy and to successfully integrate any businesses that it acquires and uncertainties with respect to the amount of any payments required to satisfy contingent liabilities, including those related to discontinued operations, other divested businesses and discontinued operations of the company's predecessors, including liabilities for certain products, environmental matters, employee benefit and statutory severance obligations and other matters. Enpro's filings with the Securities and Exchange Commission, including its most recent Form 10-K and Form 10-Q reports, describe these and other risks and uncertainties in more detail. Enpro does not undertake to update any forward-looking statements made in this press release to reflect any change in management's expectations or any change in the assumptions or circumstances on which such statements are based.
Full-year guidance is subject to the risks and uncertainties discussed above and specifically excludes changes in the number of shares outstanding, changes in long-term compensation expense due to changes in the company's common stock price, impacts from future and pending acquisitions, dispositions and related transaction costs, restructuring costs, incremental impacts of tariffs and trade tensions on market demand and costs subsequent to December 31, 2023, and the impact of changes in foreign exchange rates subsequent to that date.
About Enpro
Enpro is a leading industrial technology company focused on critical applications across many end-markets, including semiconductor, industrial process, commercial vehicle, sustainable power generation, aerospace, food and pharma, photonics and life sciences. Headquartered in Charlotte, North Carolina, Enpro is listed on the New York Stock Exchange under the symbol 'NPO'.
Contact:
James Gentile
Tel: 704-731-1527
Email: investor.relations@enpro.com
ENPRO INC. 
