On August 6, 2024, Enpro Inc (NPO, Financial) released its 8-K filing detailing the financial results for the second quarter of 2024. Enpro Inc, a U.S.-based company, designs, develops, manufactures, and markets proprietary engineered industrial products through its Sealing Technologies and Advanced Surface Technologies segments.
Quarterly Performance Overview
Enpro Inc reported sales of $271.9 million for Q2 2024, a slight decrease of 1.8% compared to the same period last year. This figure narrowly surpassed the analyst estimate of $270.90 million. However, organic sales declined by 5.0% year-over-year, reflecting challenges in the semiconductor markets and weaker demand in commercial vehicle OEM and general industrial sectors in Asia.
GAAP income from continuing operations was $26.7 million, a significant improvement from a loss of $18.6 million in the prior-year period. Adjusted EBITDA rose by 14.0% to $74.0 million, with an adjusted EBITDA margin of 27.2%, up 380 basis points. GAAP diluted earnings per share (EPS) from continuing operations were $1.27, compared to a loss per share of $0.89 last year. Adjusted diluted EPS increased by 60.0% to $2.08, exceeding the analyst estimate of $1.30.
Segment Performance
Sealing Technologies: This segment saw a 4.1% increase in sales to $184.0 million. Adjusted segment EBITDA grew by 16.2% to $65.4 million, with an adjusted segment EBITDA margin of 35.5%. The growth was driven by strategic pricing actions, strength in nuclear and aerospace markets, and effective cost management.
Advanced Surface Technologies (AST): Sales in this segment decreased by 12.2% to $88.1 million, primarily due to current semiconductor market conditions. Adjusted segment EBITDA fell by 20.7% to $19.1 million, with a margin decline of 230 basis points to 21.7%.
Financial Metrics and Cash Flow
Enpro Inc generated $49.5 million in cash flow from operating activities of continuing operations during the first half of 2024, compared to $78.5 million in the prior year. Free cash flow was $35.5 million, net of $14.0 million in capital expenditures. The company ended the quarter with total debt of $661.5 million and cash and cash equivalents of $175.9 million.
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Net Sales | $271.9 million | $276.9 million | -1.8% |
| GAAP Income from Continuing Operations | $26.7 million | -$18.6 million | nm |
| Adjusted EBITDA | $74.0 million | $64.9 million | 14.0% |
| GAAP Diluted EPS | $1.27 | -$0.89 | nm |
| Adjusted Diluted EPS | $2.08 | $1.83 | 13.7% |
Guidance and Outlook
Enpro Inc has narrowed its full-year 2024 earnings guidance for adjusted EBITDA to a range of $260 to $270 million and adjusted diluted EPS to a range of $7.00 to $7.60. The company now expects full-year revenue to be approximately flat compared to 2023, adjusting from its previous guidance of low-to-mid single-digit growth.
“Enpro delivered strong performance in the second quarter, headlined by record profitability in Sealing Technologies. In Advanced Surface Technologies, we saw sequential improvement in segment revenue and adjusted segment EBITDA. For the remainder of the year, while we still expect sequential improvement in AST, we now expect the magnitude of recovery in semiconductor capital equipment spending to be more gradual,” said Eric Vaillancourt, President and Chief Executive Officer.
Enpro Inc's performance in Q2 2024 highlights the resilience of its diversified portfolio and business model. The company's strategic pricing actions and effective cost management have contributed to its strong financial results, despite challenges in certain markets. Investors will be keen to see how Enpro navigates the remainder of the year, particularly in the semiconductor sector.
Explore the complete 8-K earnings release (here) from Enpro Inc for further details.
