Enpro (NYSE:NPO) executives used the company’s fourth-quarter and full-year 2025 earnings call to highlight progress under its “Enpro 3.0” strategy, pointing to organic growth, continued high profitability in Sealing Technologies, and early signs of an improving semiconductor capital equipment cycle that could lift results at Advanced Surface Technologies (AST) in the back half of 2026.
Full-year 2025 results and strategic progress
President and CEO Eric Vaillancourt said the company’s portfolio “shined once again in 2025,” citing progress aligning the organization to long-term strategic goals and leveraging engineering expertise to expand commercial opportunities. Vaillancourt said Enpro grew organically by 7.6% in 2025 while holding or expanding margins despite higher operating expenses tied to growth initiatives.
Vaillancourt said the company deployed two-thirds of capital expenditures toward growth and efficiency projects and allocated $280 million toward acquisitions (AlpHa and Overlook). He also reiterated long-term organic growth targets under Enpro 3.0: mid-single-digit organic growth in Sealing Technologies and at least high-single-digit organic growth in AST, with both segments capable of generating adjusted segment EBITDA margins of about 30% plus or minus 250 basis points over time.
Fourth-quarter performance: higher sales and improved profitability
Executive Vice President and CFO Joe Bruderek said fourth-quarter sales rose 14.3% to $295.4 million, supported by strength in aerospace and food and biopharma within Sealing Technologies and improved AST sales led by precision cleaning solutions for leading-edge semiconductor production. Organic sales increased approximately 10%.
Adjusted EBITDA in the quarter increased 19.2% to $69.4 million, and adjusted EBITDA margin expanded 100 basis points to 23.5%. Bruderek said stronger Sealing Technologies performance and contributions from the quarter’s acquisitions were partially offset by higher operating expenses ahead of growth programs, largely within AST. Corporate expenses were $14.2 million, up $800,000 year over year, primarily due to increased medical costs. Adjusted diluted EPS was $1.99, up nearly 27%, driven by higher adjusted EBITDA and lower interest expense tied to lower net borrowings.
Segment commentary: Sealing remains strong; AST invests ahead of a recovery
Sealing Technologies posted fourth-quarter sales of $187.1 million, up almost 15% year over year, with organic sales up nearly 8%. Management cited healthy demand in aerospace and food and biopharma, strategic pricing actions, firm domestic general industrial sales, and partial-quarter contributions from acquisitions, offset by continued weakness in commercial vehicle OEM demand and slow industrial markets internationally. Bruderek noted nuclear sales were “temporarily choppy” in Europe during the quarter.
Sealing Technologies adjusted segment EBITDA rose more than 21%, and adjusted segment EBITDA margin expanded 180 basis points to 32.8%. Management emphasized that 65% of segment sales are tied to critical aftermarket positions, which it said provides stability during uncertain periods. Vaillancourt said the company’s pipeline of strategic acquisitions for Sealing Technologies remains “robust,” and that Enpro intends to remain disciplined on valuation and timing.
Advanced Surface Technologies reported fourth-quarter sales of $108.4 million, up 13.4%, driven by continued strength in precision cleaning solutions for leading-edge applications, pockets of strength in precision components tied to semiconductor capital equipment, and growth in optical coatings. Adjusted segment EBITDA increased approximately 3% year over year, and adjusted segment EBITDA margin remained above 20%.
Bruderek said AST continues to invest in growth areas, with increased expenses supporting growth programs totaling about $2 million in the fourth quarter and more than $8 million for the full year. He also reminded investors that Enpro shipped $12 million of safety stock inventory in 2025 to support customer supply chain transitions, which is not expected to recur in 2026.
Cash flow, balance sheet, and pension plan settlement
Enpro generated more than $150 million in free cash flow in 2025, net of $48 million of property, plant, equipment, and capitalized software expenditures, up 18% from $130 million in 2024 (net of $33 million of capital expenditures). Bruderek said the company exited 2025 with a net leverage ratio of 2x, inclusive of the $280 million in cash used for the AlpHa and Overlook acquisitions.
During the fourth quarter, Enpro “substantially completed and settled” the termination of its U.S. defined benefit pension plan. Bruderek said the company recorded a non-cash settlement loss of $67.2 million in other non-operating expense, primarily associated with recognition of life-to-date actuarial losses previously deferred in accumulated other comprehensive income. He added that existing plan assets more than fully satisfied the cash settlement obligations.
On liquidity, Bruderek noted the company expanded its revolving credit facility to $800 million from $400 million and had more than $580 million of available capacity at the time of the call. Enpro also returned capital to shareholders in 2025 via a $0.31 per share quarterly dividend totaling $26.2 million for the year. The board approved an increase to $0.32 per share on Feb. 13, representing the 11th consecutive annual dividend increase since the quarterly dividend was initiated in 2015.
2026 outlook: acquisition contribution, segment expectations, and second-half AST lift
For 2026, management guided for total sales growth of 8% to 12%, including approximately $60 million of revenue contribution from AlpHa and Overlook. Enpro expects adjusted EBITDA of $305 million to $320 million, including $16 million to $17 million from the acquisitions, and adjusted diluted EPS of $8.50 to $9.20. The company assumed a normalized tax rate of 25% and approximately 21.3 million fully diluted shares outstanding. Capital expenditures are expected to be about $50 million, or roughly 4% of sales.
In Sealing Technologies, Enpro expects revenue growth approaching 15% in 2026 (including acquisition contributions), with mid-single-digit organic growth. Management said it expects continued strength in aerospace and food and biopharma, steady domestic general industrial demand, and ongoing momentum from commercial excellence and new growth programs. The company does not expect a significant recovery in commercial vehicle OEM demand in 2026, but said aftermarket drivers remain firm. Sealing Technologies adjusted segment EBITDA margin is expected to again exceed 30%.
In AST, management said it is seeing “clear signs of a robust recovery” in semiconductor capital equipment spending tied to leading-edge capacity, with second-half 2026 expected to be stronger than the first half. AST sales are expected to grow high single digits, inclusive of the $12 million of equipment sales that are not expected to recur. Bruderek said margins are expected to expand in 2026 and improve throughout the year, with second-half profitability “materially better than current run rates” as demand improves and the company leverages growth investments.
During Q&A, management provided additional cadence detail for AST. Bruderek said the company expects moderate growth in the first half, with low- to mid-single-digit growth and first-quarter sales around “$100 million-ish,” with margins similar to recent quarters. He said recovery is expected to begin in the second quarter and become “material” in the third and fourth quarters. Vaillancourt added that order patterns have been accelerating, with stronger booking trends and customers increasingly replacing orders, and said Enpro has two new platforms coming online that should begin contributing in the latter part of 2026.
Executives also said Enpro’s industrial business order demand remained strong entering 2026, with book-to-bill above 100%. On nuclear-related choppiness in Europe, Vaillancourt said he expects it to persist “for a little bit,” and that the second half is still expected to be choppy despite some improvement in order rate.
Bruderek said the company expects strong free cash flow conversion again in 2026 as a percentage of adjusted net income, while noting interest expense is expected to be higher due to revolver borrowings following late-2025 acquisitions. Management said it remains active and disciplined on M&A, describing a strong pipeline and an ability to allocate $250 million to $300 million or more for strategic acquisitions if needed, depending on timing and asset availability.
In closing comments, Vaillancourt also highlighted the company’s safety performance in 2025, reporting a total recordable incident rate of 0.64 and a lost time case rate of 0.09—its best safety statistics on record—while reiterating confidence in the company’s strategy and execution heading into 2026.
About Enpro (NYSE:NPO)
Enpro Group, Inc (NYSE: NPO) is a global industrial technology company specializing in engineered products designed to perform in critical and harsh environments. The company’s product portfolio spans proprietary bearing materials and surface enhancement technologies, high-performance sealing solutions, and fluid handling components. Enpro’s offerings are tailored for markets such as semiconductor manufacturing, aerospace, energy, chemical processing, life sciences and general industrial applications.
Formed in December 2002 as a spin-off from the aerospace and defense supplier Goodrich Corporation, Enpro has grown through a combination of targeted acquisitions and focused organic investment in research and development.
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