EnPro Industries, Inc. (NYSE:NPO) Q1 2024 Earnings Call Transcript

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Isaac Sellhausen: Okay, great. That’s helpful. And then just higher level, I guess, on Sealings. I guess, you’ve had some pricing that’s helped the quarter a bit, but maybe if you could just speak to just volume versus price mix and sort of what’s embedded in guidance here?

Joe Bruderek: Yes. So Isaac, we’ve seen surgical pricing that’s been quite successful so far this year. The environment is not conducive to the broad rate pricing that we’ve seen in the post-COVID market in the last few years, but the team continues to execute well in surgical pricing. So you’re seeing low to mid single-digit pricing execution, largely beginning of the year, pricing activity and really value-based pricing for some of our businesses that are positioned quite well and have a technological advantage position. Volume, we’re definitely seeing headwinds in certain spaces. We called that out when you look at general industrial and food and pharma and volumes down in the mid single-digit range there. But on the margin side and favorable mix side being offset by – largely being offset by those two impacts.

Eric Vaillancourt: Also I want to point out another thing. We had a very successful launch of a product called Auto-Torq in our commercial vehicle market, is doing extremely well, and that will continue to grow over-time. The other thing I want to point out is the trailer builds in this year are artificially low. What you’re seeing is the CapEx spending being put towards truck to avoid expensive requirements coming in 2027 model year. So the trailer will rebound as well next year and continue to grow into 2026. So we’re still excited about that business in the future.

Isaac Sellhausen: Okay, thank you.

Operator: The next question is a follow-up from Jeff Hammond from KeyBanc Capital Markets. Your line is now live.

Jeff Hammond: Hey, guys. Just on, I guess, I’m just trying to get the shape of how – maybe at the midpoint of the guidance or sort of baseline. It sounds like AST is up slightly sequentially, but just at the midpoint of the guidance, like how much of a step-up do you need into the second half to kind of hit that midpoint?

Joe Bruderek: Yes. So Jeff, as we said, right, we’re going to see a sequential improvement in the second quarter over the fourth quarter. We talked last quarter and then reiterated again today that we believe the first quarter is the bottom in AST. And we should see sequential improvement into the second quarter. The second half includes about a low double-digit improvement in AST in the second half versus the first half. We’re seeing signs of that so far, but the timing of which is still up in the air, but that’s sort of what we’ve included in the guide for the second half.

Jeff Hammond: Okay. And then that second half, your ramp, is that more market recovery or is that some of the investments you’re making kicking in, synergies from NxEdge and LeanTeq kind of coming together?

Joe Bruderek: It’s all of the above, Jeff, as you described.

Jeff Hammond: Okay. And then just on Sealing, I guess, is kind of the best way to think about organic is kind of flat in the first half as got tough comps and negative and then the second half, you get some growth?

Joe Bruderek: There is definitely a softer Q3, Q4 period of time, so we would probably included in our guidance range is reflective of what you just said, correct. And then, of course, the addition of AMI.

Eric Vaillancourt: The good news is all the backlog in all three of those businesses grew as well in the first quarter. So we are seeing some momentum there as well.

Jeff Hammond: Okay. Thanks so much, guys.

Operator: Thank you. We reached the end of our question-and-answer session. I’d like to turn the floor back over to management for any further or closing comments.

Eric Vaillancourt: All right. Thank you for the time today. It was a pleasure. We look forward to the conversations later. Bye.

Operator: Thank you. That does conclude today’s teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.

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