Snapshot
Enpro Inc. reported $295M of revenue in Q4 2025, up 14.3% year over year, with diluted EPS of $-1.52 and an operating margin of 11.2%.
- Revenue
- $295M
- YoY growth
- +14.3%
- Diluted EPS
- $-1.52
- Operating margin
- 11.2%
What management said
- •Also, a friendly reminder that we will be making statements on this call, including our current perspectives for full year 2026 guidance, that are not historical facts and that are considered forward-looking in nature.
- •We have clear line of sight in areas of the business where we can accelerate the growth and profit performance, and are excited to work on these value-creating levers again in 2026.
- •Our growth priorities underpinning the Enpro 3.0 strategy remain unchanged and will guide our performance through 2030.
- •Over the long term, we are positioned to generate mid- to high single-digit organic top line growth at strong profitability and return levels.
- •Strength in aerospace, food and biopharma, firm domestic general industrial performance, as well as improving performance in semiconductor markets, were the primary drivers of the 7.6% increase in organic sales.
- •Complementing our strong organic results were the powerful quarter contributions from the acquisitions of Alpha Measurement Solutions and Overlook Industries, completed in the fourth quarter of 2025.
- •We continue to be pleased with this best-in-class performance for our Sealing Technologies segment.
- •As well, I'm encouraged by AST's steady performance during the choppiness we experienced in semiconductor capital equipment spending over the last two years.
- •In Sealing Technologies, disciplined execution and efficient operations drove an Adjusted segment EBITDA margin of over 32% for the second year in a row.
- •At AST, revenue increased nearly 14%, with strength in solutions serving leading-edge applications and pockets of recovery in semiconductor capital equipment demand.
- •We continue to proactively invest capital and operating resources throughout 2025 in preparation for new platforms in anticipation of a recovery in semiconductor capital equipment spending.
- •We remain well positioned to participate in a stronger semiconductor market in coming periods, while also seeking 80/20 improvements and cost realignment opportunities to drive incremental improvement in segment profitability over time.
What went well
- •Enpro closed 2025 with fourth quarter sales up 14.3% to $295.4 million and organic sales up roughly 10%, driven by strength in aerospace, food and biopharma, strategic pricing, and partial-quarter contributions from the AlpHa and Overlook acquisitions.
- •Fourth quarter Adjusted EBITDA rose 19.2% to $69.4 million with margin up 100 basis points to 23.5%, and Adjusted diluted EPS increased nearly 27% to $1.99, aided by lower interest expense on reduced net borrowings.
- •Sealing Technologies delivered standout results, with Q4 sales up almost 15% to $187.1 million and Adjusted segment EBITDA margin expanding 180 basis points to 32.8%, marking a second consecutive year above 32%.
- •For full year 2025, sales grew 9% to $1.14 billion on 7.6% organic growth, and free cash flow exceeded $150 million, up 18% from $130 million in 2024, supporting a net leverage ratio of 2x even after $280 million of acquisitions.
- •The board approved an eleventh consecutive annual dividend increase to $0.32 per share, and the company recorded its best-ever safety statistics with a total recordable incident rate of 0.64.
- •Advanced Surface Technologies grew Q4 sales 13.4% to $108.4 million on strength in precision cleaning solutions for leading-edge semiconductor production.
What went wrong
- •Commercial vehicle OEM demand remained weak and is expected to be flat to slightly down in 2026, while international industrial sales were slow and nuclear sales stayed temporarily choppy in Europe.
- •AST profitability was pressured by increased operating expenses ahead of growth programs, which totaled roughly $2 million in Q4 and more than $8 million for the full year, running ahead of revenue.
- •Corporate expenses rose $0.8 million year over year to $14.2 million, primarily on higher medical costs, and a $12 million safety-stock equipment shipment in 2025 is not expected to recur in 2026.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Total sales growth | FY2026 | — | 8%-12% (incl. ~$60M from AlpHa/Overlook) | new |
| Adjusted EBITDA | FY2026 | — | $305M-$320M (incl. $16M-$17M from acquisitions) | new |
| Adjusted diluted EPS | FY2026 | — | $8.50-$9.20 | new |
| Capital expenditures | FY2026 | — | ~$50M (~4% of sales) | new |
| Sealing Technologies revenue growth | FY2026 | — | approach 15% (mid-single-digit organic) | new |
| AST sales growth | FY2026 | — | high single digits, second half stronger | new |
| Normalized tax rate | FY2026 | — | 25% | new |
| Diluted shares outstanding | FY2026 | — | ~21.3 million | new |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Q4 total sales | +14.3% to $295.4M | Aerospace and food/biopharma strength, strategic pricing, and partial-quarter AlpHa/Overlook contributions offsetting weak commercial vehicle OEM and international industrial |
| Q4 Adjusted EBITDA | +19.2% to $69.4M | Sealing Technologies performance and acquisition contributions, partly offset by higher AST growth-program operating expenses |
| Q4 Adjusted diluted EPS | +~27% to $1.99 | Higher Adjusted EBITDA and lower interest expense from reduced net borrowings |
| Sealing Technologies Q4 sales | +~15% to $187.1M | Aerospace, food/biopharma, pricing, and acquisitions offsetting commercial vehicle and international weakness |
| Sealing Technologies Q4 Adjusted segment EBITDA margin | +180 bps to 32.8% | Strategic pricing, improved volume, acquisition additions, and firm aftermarket demand |
| AST Q4 sales | +13.4% to $108.4M | Strength in precision cleaning solutions for leading-edge applications and pockets of strength in precision components and optical coatings |
| FY2025 sales | +9% to $1.14B | 7.6% organic growth plus acquisition contributions |
| FY2025 free cash flow | +18% to >$150M | Strong working capital management and portfolio performance |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Semiconductor capital equipment recovery | Choppiness over the last two years | Signs of robust recovery with second half of 2026 stronger than first half, supported by accelerating order patterns | improving |
| M&A pipeline | Robust pipeline noted | Active pipeline with capacity to deploy $250M-$300M+; looking at assets once or twice a week and getting early looks before assets go to market | stable |
| AST growth-program investment | Investing ahead of revenue | At ~$2M/quarter run rate of operating expenses ahead of demand; revenue expected to leverage against these costs through 2026 | stable |
| Commercial vehicle OEM demand | Persistent weakness through 2025 | Expected flat to slightly down in 2026; aftermarket drivers remain firm | stable |
| Enpro 3.0 strategy | Launched last year | Unchanged long-term targets guiding performance through 2030, with both segments capable of 30% Adjusted segment EBITDA margins | stable |
Q&A summary
Jeff Hammond (KeyBanc) asked about AST first-half/second-half margin cadence and the order activity.
Bruderek expects moderate first-half growth (low-to-mid single digits, ~$100M Q1 sales) with margins similar to recent quarters, accelerating through the year to materially stronger second-half margins as growth programs contribute; Vaillancourt said order patterns are accelerating with two new platforms coming online in late second half.
Jeff Hammond asked about short-cycle/industrial trends and how long nuclear choppiness lasts.
Vaillancourt expects nuclear to stay choppy in the second half but said industrial demand across Enpro is very strong with book-to-bill above 100%; Bruderek characterized blended market growth at low-to-mid single digits with Sealing Technologies outperforming at mid-single digits.
Steve Ferazani (Sidoti) asked how the last two months played out versus the November guide on revenue and margins.
Bruderek said results finished as expected, with sales at the higher end of the range and EBITDA margin in line; corporate expenses ran slightly higher on increased medical costs and higher short-term incentive costs tied to strong free cash flow performance.
Steve Ferazani asked about 2026 cash conversion given higher CapEx and how cash would be used.
Bruderek expects strong free cash flow conversion around 100% of adjusted net income, with somewhat higher interest expense from revolver draw on the acquisitions; the company remains positioned to allocate $250M-$300M or more for strategic M&A.
Isaac Sellhausen (Oppenheimer) asked about AST OpEx for qualification work and the ramp through the year.
Bruderek said the company is at the run rate of about $2M per quarter of operating expenses ahead of demand with no incremental spend expected near term; revenue from growth programs will leverage against those costs, driving margin expansion predominantly in the second half.
Isaac Sellhausen asked how AlpHa and Overlook will perform versus the segment's mid-single-digit growth.
Vaillancourt said both businesses have strong backlogs and order rates and are exceeding expectations with seamless integration; Bruderek added they should grow at least high single digits combined, accretive to Sealing Technologies.