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. 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. Through accountability, hard work, encouragement, and feedback, our colleagues are achieving meaningful growth.
Strong demand across semiconductor markets drove sales in the Advanced Surface Technologies segment up 21.8%. Total company adjusted EBITDA increased more than 22% to $86.9 million at a margin of 25.6% for the second quarter. We are pleased with how our commercial vehicle business is positioned ahead of the eventual recovery in trailer demand. 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. 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. 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.
| Metric | Period | Current guidance |
|---|---|---|
| Total sales growth | FY2026 | 14%-16% |
| Adjusted EBITDA | FY2026 | $330M-$340M |
| Adjusted diluted EPS | FY2026 | $9.30-$9.80 (25% normalized tax rate, ~21.4M diluted shares) |
| Capital expenditures | FY2026 | $60M-$65M (pulling forward AST capacity investments) |
| Sealing Technologies organic growth | H2 2026 | High single digit (ex AlpHa/Overlook, still ~$60M-$65M for the year) |
| AST revenue growth | H2 2026 | ~20% year over year, with growth and adjusted segment EBITDA margin both approaching 25% exiting the year |
| Metric | YoY | Note |
|---|---|---|
| Total sales | +17.6% to $338.8M | 21.8% AST growth, 5% Sealing organic growth, and contributions from the AlpHa and Overlook acquisitions. |
| AST sales | +21.8% | Very strong precision-cleaning demand tied to advanced-node chip production plus rising equipment and coatings book-to-bill. |
| AST adjusted segment EBITDA margin | +430 bps to 23.9% | Operating leverage on higher sales and production volumes, plus normalization of the prior-year Taiwanese-FX headwind (~$2M). |
| Sealing Technologies sales | +15.3% to $216.2M (5% organic) | AlpHa/Overlook, aerospace, and double-digit domestic general-industrial growth, offset by soft commercial vehicle and weak European positions. |
| Sealing adjusted segment EBITDA margin | 33.2% | Strong operational performance, strategic pricing and FX tailwinds; above 30% for the 10th consecutive quarter. |
| Adjusted diluted EPS | +23.2% to $2.50 | Driven by the same factors behind adjusted EBITDA growth; GAAP diluted EPS $1.27 versus $1.25. |
| Net leverage | 1.6x | After Q4 2025 AlpHa/Overlook acquisitions and $80 million of revolving-debt repayment; net debt ~$500 million. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Semiconductor capital-equipment upcycle | Improving order patterns | AST demand accelerating with visibility through 2027; significant multi-year advanced-semiconductor infrastructure investment driving precision cleaning (all leading-edge), equipment and coatings, prompting capacity additions in Arizona, Milpitas and Taiwan. | — |
| Enpro 3.0 strategy | Portfolio around highly engineered products | Through-2030 framework targeting mid-to-high-single-digit organic growth (mid-single Sealing, high-single-to-low-double-digit AST) with both segments capable of ~30% (+/-250 bps) adjusted EBITDA margins; individual colleague growth is half the strategy. | — |
| Compositional analysis expansion | AMI natural-gas sensing | AlpHa and AMI expanding the TAM - the same moisture/oxygen/H2S sensing technology can move into biopharmaceutical and other applications and into Europe from a North American base, aided by natural-gas and data-center demand. | — |
| Acquisition integration | Closed AlpHa and Overlook in Q4 2025 | Integrations going well; AlpHa adds process/compositional analytics and Overlook adds fluid-path technology for liquid-dose biologics, both receiving capital and supply-chain support (~$60-65M combined revenue in 2026). | — |
| Commercial vehicle bottoming | Persistent trailer weakness | Management believes the market is at the bottom and improving, with FTR forecasting ~17-18% growth next year; Enpro added an aftermarket line and took share during the downturn to position for the recovery. | — |
| Capital allocation | Organic growth plus strategic M&A | Raised CapEx to $60-65M for AST capacity, maintained the $0.32 quarterly dividend, retains a $50M buyback authorization, and remains active on capability-expanding M&A within its financial criteria. | — |