Enpro delivered a strong second quarter of 2026 and raised full-year guidance, with sales up 17.6% to $338.8 million, adjusted EBITDA up more than 22% to $86.9 million (25.6% margin, +90 bps), adjusted diluted EPS up 23.2% to $2.50, and GAAP diluted EPS of $1.27. The standout was Advanced Surface Technologies, where sales grew 21.8% on very strong precision-cleaning and equipment demand tied to advanced-node chip production, lifting adjusted segment EBITDA 48.5% and margin 430 basis points to 23.9%, with customer build plans and lead times now providing visibility through 2027. Sealing Technologies grew 15.3% to $216.2 million (5% organic) on the AlpHa and Overlook acquisitions, aerospace strength and double-digit domestic general-industrial demand, holding a 33.2% adjusted segment margin (above 30% for the 10th straight quarter), though commercial vehicle (mostly trailer) markets stayed soft and smaller European general-industrial and food/biopharma positions were weak. Management raised full-year guidance to 14-16% sales growth (from 10-14%), $330-340 million adjusted EBITDA (from $315-330 million) and $9.30-$9.80 adjusted EPS (from $8.85-$9.50), and increased CapEx to $60-65 million to pull forward AST cleaning capacity in Arizona, Milpitas and Taiwan; the raise is driven mostly by AST (guided to ~20% H2 growth with margins approaching 25% exiting the year) with Sealing organic growth accelerating to high-single-digits. The balance sheet remains strong at 1.6x net leverage after $80 million of debt repayment, supporting the $0.32 dividend and a $50 million buyback authorization, while a ~$16 million environmental reserve build for legacy 1950s Arizona uranium-mine liabilities (cash outflow starting ~3 years out) and higher corporate expenses were modest offsets. Management framed the results within its through-2030 Enpro 3.0 strategy targeting mid-to-high-single-digit organic growth with ~30% segment margins.
Thanks, Melissa, good morning, everyone. Thank you for joining us today as we review Enpro's second quarter 2026 earnings results and discuss our increased outlook for 2026. I will remind you that this conference call is being webcast at enpro.com, where you can find the presentation that accompanies this call. With me today is Eric Vaillancourt, our President and Chief Executive Officer, and Joe Bruderek, Executive Vice President and Chief Financial Officer. During this morning's call, we will reference a number of non-GAAP financial measures. Tables reconciling the historical non-GAAP measures to the comparable GAAP measures are included in the appendix to the presentation materials. 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.
These statements involve a number of risks and uncertainties, including those described in our filings with the SEC. We do not undertake any obligation to update these forward-looking statements. It is now my pleasure to turn the call over to Eric Vaillancourt, our President and Chief Executive Officer. Eric?
Thanks, James, good morning, everyone. Thank you for your interest in Enpro as we discuss our strong second quarter results, provide an update on strategic initiatives, and share our current views for the balance of 2026. Before I review our results, I would like to recognize our colleagues across the company who are accelerating their personal and professional growth in Enpro 3.0. The individual growth aspect of Enpro 3.0 is not a side program. It is half of the strategy itself. Earlier this year, our colleagues set bold goals that range from deepening subject matter expertise to expanding leadership capabilities, achieving personal health, fitness, or academic gains. Through accountability, hard work, encouragement, and feedback, our colleagues are achieving meaningful growth. In recent years, the energy spreading throughout the organization around empowerment with purpose is motivating.
It shows in our financial results as well as the personal performance of our colleagues. I'm grateful for their hard work and dedication to their communities and loved ones. Enpro is built around highly engineered products and solutions that play a vital role in customers' mission-critical platforms across a number of key end markets supported by long-term tailwinds. Our products are integral components found in leading-edge applications such as advanced semiconductor production, customized biopharmaceutical processes, space exploration, and satellite communications, and sensing and instrumentation of critical gas and liquid paths. We also provide a variety of safety and contamination control capabilities that support the commercial transportation of goods across North America, as well as enduring specification positions in a number of critical industrial process applications. We win with our strong technical capabilities, engineering, process knowledge, and specialized small batch manufacturing footprint.
We partner with our customers to develop innovative solutions and continue to invest in new products and expand our technical capabilities, as well as pursuing targeted capacity expansions and efficiency projects across the company that will drive strong organic growth, profitability, and compelling returns over the long term. We are pleased with our strong first half results and improved outlook for the rest of the year as our products continue to help our customers solve critical problems and operate safely, reliably, and efficiently. Now onto the highlights for the second quarter. Enpro reported strong second quarter sales up 17.6% year-over-year. Strong demand across semiconductor markets drove sales in the Advanced Surface Technologies segment up 21.8%. Sealing Technologies grew 15.3% overall and 5% organically.
Total company adjusted EBITDA increased more than 22% to $86.9 million at a margin of 25.6% for the second quarter. In Sealing Technologies, revenue growth of over 15% was largely driven by contributions from the acquisitions of AlpHa Measurement Solutions and Overlook Industries, as well as solid organic growth, including double-digit growth in general industrial markets domestically and strong performance in aerospace markets. Commercial vehicle markets remained soft in the second quarter, although we are seeing early signs of stabilization and improvement. We are pleased with how our commercial vehicle business is positioned ahead of the eventual recovery in trailer demand. We also saw softness in Europe in our smaller general industrial and food and biopharmaceutical positions during the quarter. Sealing Technologies segment profitability remained strong at 33.2% with positive volume growth, pricing discipline, and excellent execution.
Aftermarket sales remained at 60% of the Sealing Technologies segment revenue in the quarter. In AST, order patterns strengthened as semiconductor industry expectations rose during the second quarter. Various market forecasts and indications from our customers suggest an acceleration of capital spending to support the need for more chip production as artificial intelligence, advanced computing, and communications infrastructure take a quantum leap. Currently, customer build plans and lead times extend healthy visibility through 2027 for our semiconductor-facing products and solutions. Demand is accelerating for precision cleaning solutions in all regions, prompting incremental investment in capacity. Demand is also very healthy for highly engineered critical in-chamber tools and our optical coatings capabilities. We remain focused on delivering for our customers by maintaining flexibility in our capacity with innovation, supply chain management, recruitment, inventory, and process controls.
Our ongoing process and qualification work, 80/20 efforts focusing resources on our best opportunities, together with completed and ongoing investments in people and capacity to support growth opportunities and new platforms, positioned the AST segment to perform well as demand continues to improve in coming periods. Before I pass the call over to Joe for a more detailed review of our results, I would like to provide updates on the integrations of AlpHa and Overlook, which are going very well. We are pleased with the process analytics and compositional analysis capabilities that AlpHa and AMI bring to Enpro. We are investing in new product development, technology, and applications expansion in these exciting areas to drive above top-line growth over the long term. With Overlook, we are delighted with how their fluid path technology for liquid dose biologics complement Enpro single-use biopharmaceutical capabilities.
We continue to support Overlook's growth with additional capital and access to our supply chain, safety, human resources, investing class financial management capabilities. In both cases, we aim to provide our newer colleagues with a safe and healthy working environment and opportunities for professional development and growth while sharing best practices across the company. Our strong specified aftermarket positions in Sealing Technologies provide ample resources and talent to reinvest in key growth areas of this segment to drive mid-single-digit organic growth over the long term, complemented by strategic acquisitions that can lift the segment's growth rate over time. We remain focused on advancing the growth priorities underpinning the Enpro 3.0 strategy, which will guide our performance through 2030.
Over the long term, we are positioned to generate mid to high single-digit organic top-line growth with strong profitability and returns, complemented by capability-expanding acquisitions in key growth areas of our portfolio that meet our stringent strategic and financial criteria. During the Enpro 3.0 horizon, we are targeting mid-single-digit organic growth in Sealing Technologies, while at AST, we are targeting high single-digit to low double-digit organic growth, with both segments capable of generating 30% adjusted EBITDA margins, ±250 basis points through 2030. Our cash flows allow us to maintain our strong balance sheet with a net leverage ratio currently at 1.6 times after taking into account the fourth quarter of 2025 acquisitions of AlpHa and Overlook and an $80 million reduction in revolving debt so far this year. Joe?
Thank you, Eric, and good morning, everyone. We are pleased to report these strong results for the second quarter of 2026 and an improved outlook for the balance of the year. For the second quarter, sales of $338.8 million increased 17.6% year-over-year, supported by 21.8% revenue growth at AST, 5% organic growth in Sealing Technologies, as well as contributions from our recent acquisitions. Second quarter adjusted EBITDA of $86.9 million increased more than 22% compared to the prior year period. Total company adjusted EBITDA margin of 25.6% expanded 90 basis points year-over-year, driven by strong operating leverage on higher sales in the AST segment and consistent best-in-class performance in the Sealing Technologies segment. Corporate expenses of $15.7 million in the second quarter of 2026 increased from $12.1 million a year ago, primarily driven by higher incentive compensation accruals and $1.3 million in restructuring costs.
Adjusted diluted earnings per share of $2.50 increased 23.2%, largely driven by the factors behind adjusted EBITDA growth year-over-year. Moving to a discussion of segment performance, Sealing Technologies sales increased 15.3% to $216.2 million. Growth was driven by contributions from the AlpHa and Overlook acquisitions, strong aerospace performance, and double-digit organic growth in domestic general industrial markets. Nuclear and power generation applications were steady in the quarter, while commercial vehicle markets remained tepid, as Eric discussed earlier. We also observed weakness in our smaller European general industrial and food and biopharmaceutical markets during the quarter. For the second quarter, adjusted segment EBITDA increased 13.3%, driven by strong operational performance, strategic pricing initiatives, contributions from AlpHa and Overlook, and foreign exchange tailwinds. These drivers were partially offset by continued softness in the commercial vehicle market and investment supporting growth initiatives across the segment.
Adjusted segment EBITDA margin was 33.2% and remained above 30% for the 10th consecutive quarter. Turning now to Advanced Surface Technologies. Sales for the second quarter increased 21.8%, with orders improving sequentially. Demand for precision cleaning solutions tied to advanced node chip production is very strong. book-to-bills for our capital equipment and coatings facing solutions have also materially increased. Our teams are working tirelessly to deliver these important products and solutions while collaborating with customers to advance and expand leading-edge semiconductor production capabilities. For the second quarter, adjusted segment EBITDA increased 48.5% over last year. Adjusted segment EBITDA margin expanded 430 basis points to 23.9%. Operating leverage on higher sales growth and production volumes were the primary drivers of the increase. We also saw the foreign exchange headwinds experienced in last year's second quarter normalize.
We continue to progress qualifications in a number of new solutions, many requiring multiple steps of our vertical integration process, and are also responding to customer demand by advancing capital investments to support new platforms driving future growth. Our number one priority is to serve our customers and remain agile as we enter the early stages of a stronger period in semiconductor capital equipment spending. Moving to the balance sheet and cash flow. Our balance sheet remains strong, and we have ample financial flexibility to execute on our long-term organic growth initiatives and consider select acquisitions that align with our strategic priorities and deliver attractive returns. We generated strong free cash flow of more than $60 million year-to-date, including investment in working capital to support strong customer demand, while capital expenditures and capitalized software approached $30 million year-to-date in support of growth and efficiency projects.
In the first half, we repaid $80 million in revolving debt, bringing our leverage ratio to 1.6 times trailing 12-month adjusted EBITDA. Net debt as of June 30th, 2026, stands at approximately $500 million, which includes $450 million in senior notes due 2033 and $130 million outstanding on our $800 million revolving credit facility, net of $77 million in cash and cash equivalents. We expect to continue generating strong free cash flow in 2026 while increasing our capital expenditure expectations to $60 million-$65 million, up from our previous expectation of around $50 million. These incremental investments are supporting growth opportunities, particularly in the AST segment in alignment with customer demand. Our strong balance sheet and cash generation provide us with ample liquidity to make these investments while continuing to return capital to shareholders.
In the second quarter, we paid a $0.32 per share quarterly dividend totaling $6.9 million. We also have an outstanding $50 million share repurchase authorization. Moving now to our increased guidance. We are raising our total year 2026 guidance issued in early May and now expect total Enpro sales to increase in the 14%-16% range, up from 10%-14%. Adjusted EBITDA in the range of $330 million-$340 million, up from $315 million-$330 million, and adjusted diluted earnings per share to a range of $9.30-$9.80, up from $8.85-$9.50 previously. The normalized tax rate used to calculate adjusted diluted earnings per share remains at 25%, and fully diluted shares outstanding are $21.4 million.
In Sealing Technologies, shorter cycle order patterns remain strong, and organic growth is expected to be in the high single digits in the second half of 2026, excluding the contributions from AlpHa and Overlook, which we still expect to be in the range of $60 million-$65 million this year. Areas such as aerospace, digital infrastructure and communications, water, and compositional analysis applications are the primary drivers of the expected strong second half performance in Sealing. We are still not contemplating a significant improvement in commercial vehicle markets in our increased 2026 guidance ranges. On profitability, we continue to expect Sealing segment margin to remain at the high end of our long-term target range of 30% ± 250 basis points for the year, with ongoing growth investments continuing throughout the segment. In the Advanced Surface Technologies segment, market conditions are bright.
Significant multi-year investment in advanced semiconductor infrastructure continues to accelerate. We are seeing strong demand for the balance of the year with increased visibility through 2027. Through close partnership with our key customers responding to industry demand, we have seen significant order and backlog growth, supporting our improved outlook for the AST segment. We now expect 20% year-over-year growth in the second half of 2026, with segment revenue growth rates and adjusted segment EBITDA margin both approaching 25% exiting the year. Thank you for your time today. I will now turn the call back to Eric for closing comments.
Thank you, Joe. Our primary goal is to maximize the potential of our business while creating an environment for our colleagues to grow and flourish. There is purposeful balance inherent in the Enpro portfolio. In addition to consistent execution and disciplined capital allocation focused on organic growth and strategic M&A position, the company performed well in a variety of macroeconomic environments while driving our goals to increase enterprise value and generate attractive returns for our shareholders. As I have said many times in the past, there is no better time to be a part of Enpro. Thank you for your interest in Enpro. We'll now welcome your questions.