What Enpro (NPO) Said on Its Q3 Earnings Call

Key Points

• Enpro raised its 2026 outlook after strong Q3 results: sales grew 22.4% to $350.8 million and adjusted EPS rose 33.7% to $2.66. The company now expects revenue of $1.33 billion to $1.34 billion and adjusted EPS of $9.70 to $9.95.
• Growth was broad across both segments: Sealing Technologies sales increased 20.5%, while AST sales rose 25.8% on semiconductor-related demand. Enpro expects AST revenue to grow more than 25% year over year in Q4 and plans to expand capacity in the U.S. and Asia.
• Enpro generated $129.2 million in free cash flow in the first nine months and reduced debt by $135 million year to date. It also authorized $50 million in share repurchases, while prioritizing organic growth investments and selective acquisitions.

Enpro NYSE: NPO reported stronger third-quarter results and raised its full-year 2026 outlook, citing broad-based demand in its Sealing Technologies segment and continued strength in semiconductor-related markets within Advanced Surface Technologies, or AST.

Third-quarter sales increased 22.4% year over year to $350.8 million, while adjusted EBITDA rose 31.7% to $91.3 million. The company’s adjusted EBITDA margin expanded 180 basis points to 26%, and adjusted diluted earnings per share increased 33.7% to $2.66.

President and Chief Executive Officer Eric Vaillancourt said the company’s Enpro 3.0 strategy, which centers on accelerating personal and profitable growth, is gaining traction through investments in technical capabilities, engineering talent, capacity and customer partnerships.

“We are seeing the benefits of this growth focus, greater empowerment, deeper technical expertise, stronger customer partnerships, and focused execution across the company,” Vaillancourt said.

Sealing Technologies Maintains High Profitability

Sealing Technologies sales rose 20.5% to $214.7 million in the third quarter. Organic sales grew 11.6%, while the balance of the growth reflected contributions from AlpHa Measurement Solutions and Overlook Industries, acquired in the fourth quarter of 2025, along with a modest foreign-exchange impact.

The segment benefited from commercial aerospace and space applications, domestic general industrial demand, compositional analysis applications, strategic pricing actions and the recent acquisitions. Commercial vehicle market revenue improved by more than 8% year over year. However, Enpro continued to see softness in European general industrial markets and in European food and biopharmaceutical sales.

Sealing Technologies adjusted EBITDA increased 21.8% to $69.9 million, with an adjusted EBITDA margin of 32.6%. The segment has now maintained a margin above 30% for 11 consecutive quarters.

During the question-and-answer session, Vaillancourt said demand was broad across the segment, including activity linked to digital infrastructure, space and improving commercial vehicle original-equipment demand. He said Enpro expects Sealing Technologies to continue performing near the high end of its long-term margin target of 30%, plus or minus 250 basis points.

Chief Financial Officer Joe Bruderek said the company does not view the segment’s current results as dependent on an unusually favorable sales mix. Enpro intends to retain flexibility within its margin range to pursue acquisitions that meet its financial and strategic criteria, he said.

Semiconductor Demand Drives AST Growth

AST sales increased 25.8% in the third quarter, supported by demand for precision cleaning services tied to advanced-node semiconductor production, as well as stronger activity in semiconductor capital equipment and coatings. Adjusted segment EBITDA rose 57.3% year over year to $34.3 million, and the segment’s EBITDA margin expanded 500 basis points to 25.1%.

Bruderek said approximately 60% of AST’s business is tied to the original-equipment cycle and about 40% to the aftermarket, though the aftermarket portion has grown as a share of the segment over the past five years. He said precision cleaning, which supports leading-edge chip production, is expected to continue growing at least in line with the broader AST business.

Management said customer build plans and lead times provide visibility for semiconductor-facing products and solutions through at least 2027. Enpro expects to increase capital investments in 2027 to support capacity expansions in the U.S. and Asia, including Arizona, California, Taiwan and Singapore.

Vaillancourt said the investments are tied to customer commitments and new customer wins rather than solely anticipated demand. Bruderek said some expansions are already beginning, while others will progress more materially through 2027 and may require six to 18 months depending on the nature of the project.

Enpro expects AST to deliver more than 25% year-over-year revenue growth and margin expansion in the fourth quarter. Over the longer term, Bruderek said the company believes AST can reach a 30% EBITDA margin through volume leverage, growth in higher-value offerings and operational initiatives.

Cash Flow, Capital Allocation and Raised Outlook

For the first nine months of 2026, Enpro generated $172.8 million in operating cash flow and $129.2 million in free cash flow after $43.6 million in capital expenditures. The company expects full-year capital expenditures of $60 million to $65 million, though spending is expected to increase in 2027 as it accelerates capacity investments for AST growth.

During the third quarter, Enpro reduced revolving debt by $55 million, bringing year-to-date debt reduction to $135 million. At Sept. 30, total debt was $520.7 million and cash and cash equivalents were $83.4 million. Net leverage stood at 1.4 times trailing 12-month adjusted EBITDA.

The company paid a quarterly dividend of $0.32 per share during the quarter, with dividends totaling $20.6 million through the first nine months. In October, Enpro’s board approved a new $50 million share-repurchase authorization, replacing an unused authorization that had expired.

Bruderek said Enpro’s capital-allocation priorities have not changed: organic growth investments remain the first priority, followed by disciplined acquisitions in key growth areas. Management said the company has reviewed more than 160 potential acquisition opportunities during the year and remains selective, focusing on established businesses rather than turnaround situations.

Enpro raised its 2026 guidance to revenue of $1.33 billion to $1.34 billion, representing growth of 16% to 17%. The company now expects adjusted EBITDA of $340 million to $345 million and adjusted diluted EPS of $9.70 to $9.95. Its prior outlook called for 14% to 16% revenue growth, adjusted EBITDA of $330 million to $340 million and adjusted EPS of $9.30 to $9.80.

About Enpro (NYSE:NPO)

Enpro Inc NYSE: NPO is an industrial technology company that designs and manufactures engineered products for demanding applications. Its offerings are used in industries including semiconductor manufacturing, aerospace, power generation, chemical processing, oil and gas, and general industrial markets, where reliability, precision, and resistance to heat, pressure, and corrosive environments are important.

Enpro operates through businesses focused on sealing technologies and advanced surface technologies.

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