10q10k10q10k.net

What changed in Enpro Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Enpro Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+283 added−341 removedSource: 10-K (2024-02-27) vs 10-K (2023-03-01)

Top changes in Enpro Inc.'s 2023 10-K

283 paragraphs added · 341 removed · 229 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

64 edited+11 added−21 removed28 unchanged
Biggest changeOur Sealing Technologies segment includes three operating divisions, Garlock, Technetics and Stemco, that design and manufacture value-added products and solutions that safeguard a variety of critical environments, including: metallic, non-metallic and composite material gaskets, dynamic seals, compression packing, resilient metal seals, elastomeric seals, custom-engineered mechanical seals for applications in the aerospace industry and other markets, hydraulic components, expansion joints, sanitary gaskets, hoses and fittings for the hygienic process industries, fluid transfer products for the pharmaceutical and biopharmaceutical industries, and heavy-duty commercial vehicle parts used in wheel-end and suspension components that customers rely upon to ensure safety on our roadways.
Biggest changeOur Sealing Technologies segment, composed of three operating divisions, Garlock, Technetics and STEMCO, designs, engineers and manufactures value-added products and solutions that safeguard a variety of critical environments, including: metallic, non-metallic and composite material gaskets; dynamic seals; compression packing; elastomeric components; custom-engineered mechanical seals used in diverse applications; hydraulic components; test, measurement and sensing applications; sanitary gaskets; hoses and fittings for hygienic process industries; fluid transfer products for the pharmaceutical and biopharmaceutical industries; and commercial vehicle solutions used in wheel-end and suspension components that customers rely upon to ensure safety on our roadways. 3 These products are used in a variety of markets, including chemical and petrochemical processing, nuclear energy, hydrogen, natural gas, food and biopharmaceutical processing, primary metal manufacturing, mining, water and waste treatment, commercial vehicle, aerospace, medical, filtration and semiconductor fabrication.
The sale closed on December 21, 2021 and we recorded a pretax gain of $117.6 million in the fourth quarter of 2021 as a result of this transaction. In September 2, 2021, we sold certain assets and liabilities of our polymer components business unit, which was principally located in Houston, Texas and had been included in our Sealing Technologies segment.
The sale closed on December 21, 2021 and we recorded a pretax gain of $117.6 million in the fourth quarter of 2021 as a result of this transaction. On September 2, 2021, we sold certain assets and liabilities of our polymer components business unit, which was principally located in Houston, Texas and had been included in our Sealing Technologies segment.
Dynamic elastomeric seals are used in rotating applications to contain the lubricants that protect the bearings from excessive friction and heat generation. Because these sealing products are utilized in dynamic applications, they are subject to wear. Durability, performance, and reliability are, therefore, critical requirements of our customers.
Dynamic elastomeric seals are used in rotating applications to contain the lubricants that protect bearings from excessive friction and heat generation. Because these sealing products are utilized in dynamic applications, they are subject to wear. Durability, performance, and reliability are, therefore, critical requirements of our customers.
In the United States, this includes a company-wide minimum wage of $15 per hour, a 401k plan with above-market company match, an award-winning health and wellbeing program, flexible vacation and time off policies, enhanced employee assistance programs, paid family leave, and comprehensive healthcare benefits, as well as company-paid long-term disability, critical illness, and accident coverage.
In the United States, this includes a company-wide minimum wage of $15 per hour, a 401k plan with an above-market company match, an award-winning health and wellbeing program, flexible vacation, and time off policies, enhanced employee assistance programs, paid family leave, and comprehensive healthcare benefits, as well as company-paid long-term disability, critical illness, and accident coverage.
Alluxa is an industrial technology company that provides specialized optical filters and thin-film coatings for the most challenging applications in the industrial technology, life sciences, semiconductor, defense, and communications markets. Alluxa's products are developed through a 1 proprietary coating process using state-of-the-art advanced equipment. Alluxa is included as part of the Advanced Surface Technologies segment.
Alluxa is an industrial technology company that provides specialized optical filters and thin-film coatings for the most challenging applications in the industrial technology, life sciences, semiconductor, defense, and communications markets. Alluxa's products are developed through a proprietary coating process using state-of-the-art advanced equipment. Alluxa is included as part of the Advanced Surface Technologies segment.
These capabilities extend the life cycles of parts and shorten the time for cleaning of chamber components. Alluxa manufactures specialized optical filters and thin-film coatings for the most challenging applications in the industrial technology, life sciences, and semiconductor markets. Its products are developed through a proprietary coating process using state-of-the-art, advanced equipment.
These capabilities extend the life cycles of parts and shorten the time for cleaning of chamber components. Alluxa manufactures specialized optical filters and thin-film coatings for challenging applications in the industrial technology, life sciences, and semiconductor markets. Its products are developed through a proprietary coating process using state-of-the-art, advanced equipment.
Except for proprietary formulations and know-how in our Advanced Surface Technologies segment, we do not consider our business as a whole to be materially dependent on any particular patent, patent right, trademark, trade secret or license granted or group of related patents, patent rights, trademarks, trade secrets or licenses granted.
Except for proprietary formulations and know-how in our Advanced Surface Technologies segment, we do not consider our business as a whole to be 6 materially dependent on any particular patent, patent right, trademark, trade secret or license granted or group of related patents, patent rights, trademarks, trade secrets or licenses granted.
ITEM 1. BUSINESS As used in this report, the terms “we,” “us,” “our,” “EnPro” and “Company” mean EnPro Industries, Inc. and its subsidiaries (unless the context indicates another meaning). The term “common stock” means the common stock of EnPro Industries, Inc., par value $0.01 per share.
ITEM 1. BUSINESS As used in this report, the terms “we,” “us,” “our,” “Enpro” and “Company” mean Enpro Inc. and its subsidiaries (unless the context indicates another meaning). The term “common stock” means the common stock of Enpro Inc., par value $0.01 per share.
We believe that our significant competitive advantages include our technological knowledge, proprietary processes, manufacturing and analytical capabilities and record of performance, which enable us to satisfy the substantial upfront qualification processes required by many of our customers.
We believe that our significant competitive advantages include our technological knowledge, proprietary processes, manufacturing and analytical 5 capabilities and record of performance, which enable us to satisfy the substantial upfront qualification processes required by many of our customers.
These initiatives, described in “Acquisitions” and “Dispositions” below, have increased our ability to provide solutions to the semiconductor, life sciences, and other technology industries. As of December 31, 2022, our continuing operations had 13 primary manufacturing and service facilities (approximately 50,000 square feet or larger) located in 6 countries, including the United States.
These initiatives, described in “Acquisitions” and “Dispositions” below, have increased our ability to provide solutions to the semiconductor, life sciences, and other technology industries. As of December 31, 2023, our continuing operations had 13 primary manufacturing and service facilities (approximately 50,000 square feet or larger) located in 6 countries, including the United States.
Our gender and ethnic/racial diversity including senior management and through two levels down is 46% diverse, a testament to our focus on creating a diverse and inclusive environment, and one with opportunity for growth and development. The positive impact of our care, compassion and flexible programs is demonstrated by our employee retention rates.
Our gender and ethnic/racial diversity including senior management and through two levels down is 47% diverse, a testament to our focus on creating a diverse and inclusive environment, and one with opportunity for growth and development. The positive impact of our care, compassion, and flexible programs is demonstrated by our employee retention rates.
As a result of our practices, we are able to significantly improve the quality of the services we provide and the parts we manufacture, avoid and reduce defects, and improve efficiency and reliability. As of December 31, 2022, 31 of our manufacturing and service facilities were ISO 9000 certified. Three of our facilities are ISO 14001 certified.
As a result of our practices, we are able to significantly improve the quality of the services we provide and the parts we manufacture, avoid and reduce defects, and improve efficiency and reliability. As of December 31, 2023, 31 of our manufacturing and service facilities were ISO 9000 certified. Three of our facilities are ISO 14001 certified.
In many instances, AST capabilities drive solutions that enable the maintenance of our customers’ processes through an entire life cycle. NxEdge is an advanced manufacturing, special processing (cleaning, coating, surface treatments), and refurbishment solutions provider. NxEdge serves customers across the semiconductor supply chain, including top-tier global integrated device manufacturers (“IDMs”) and original equipment manufacturers (“OEMs”).
In many instances, AST capabilities drive products and solutions that enable the maintenance of our customers’ high-value processes through an entire life cycle. NxEdge is an advanced manufacturing, special processing (cleaning, coating, surface treatments), and refurbishment solutions provider. NxEdge serves customers across the semiconductor supply chain, including top-tier global integrated device manufacturers (“IDMs”) and original equipment manufacturers (“OEMs”).
NxEdge’s unique set of vertically integrated capabilities with proprietary processes has resulted in a broad range of qualifications at top customers. 5 Technetics Semi designs and manufactures complex front-end wafer processing sub-systems, new and refurbished electrostatic chuck pedestals, thin film coatings, and edge-welded metal bellows for the semiconductor equipment industry.
NxEdge’s unique set of vertically integrated capabilities with proprietary processes has resulted in a broad range of qualifications at top customers. Technetics Semi engineers and manufactures complex front-end wafer processing sub-systems, new and refurbished electrostatic chuck pedestals, thin film coatings, and edge-welded metal bellows for the semiconductor equipment industry.
Our commitment to safety has resulted in our being the only public company to have been recognized on three separate occasions by EHS Today as “America’s Safest Company”. Each year, we enhance our safety culture and programs.
Our commitment to safety has resulted in our being the only public company to have been recognized on three separate occasions by EHS Today as “America’s Safest Company.” Each year, we enhance our safety culture and safety programs.
Our compensation programs include a focus on building long-term value and alignment with our stakeholders, including a significant portion of compensation at appropriate levels designed to foster a culture of ownership and alignment with our shareholders. We have improved these our benefit programs each year to meet the changing needs of our employees and their families.
Our compensation programs include a focus on building long-term value and alignment with our stakeholders, including a sizable portion of compensation at appropriate levels designed to foster a culture of ownership and alignment with our shareholders. We have improved our benefit programs each year to meet the changing needs of our employees and their families.
We continue to focus on the mental wellbeing of our colleagues through company-wide resource groups that focus on mental health and inclusion, as well as through our employee assistance programs. Focus on Diversity and Respect. A diverse workforce, as well as a commitment to diverse thinking, is critical to our long-term growth and success.
We continue to focus on the mental wellbeing of our colleagues through company-wide resource groups that focus on mental health and inclusion, as well as through our employee assistance programs. Focus on Diversity and Respect. A diverse workforce and a commitment to diverse, innovative thinking are critical to our long-term growth and success.
For financial information with respect to our business segments, see Item 7 , “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations,” and Note 19 to our Consolidated Financial Statements.
For financial information with respect to our business segments, see Item 7 , “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations,” and Note 18 to our Consolidated Financial Statements.
Dispositions During the third quarter of 2022, we entered into an agreement to sell our GGB business and announced our intention to sell Garlock Pipeline Technologies, Inc. (GPT). These businesses, along with Compressor Products International (CPI), which was divested on December 21, 2021, comprised our entire Engineered Materials segment ("Engineered Materials").
Dispositions During the third quarter of 2022, we entered into an agreement to sell our GGB business and announced our intention to sell Garlock Pipeline Technologies, Inc. ("GPT"), which was sold in January 2023. These businesses, along with Compressor Products International ("CPI"), which was divested on December 21, 2021, comprised our entire Engineered Materials segment ("Engineered Materials").
We routinely evaluate the need to protect new and existing products through the patent and trademark systems in the U.S. and other countries. We also have unpatented proprietary information, consisting of know-how and trade secrets relating to the design, manufacture and operation of our products and their use, and to certain services we perform.
We routinely evaluate the need to protect new and existing products through the patent and trademark systems in the U.S. and other countries. We also have unpatented proprietary information, consisting of engineering, design, and process know-how, along with trade secrets relating to the design, manufacture and operation of our products and their use, and to certain services we perform.
In all of these industries, performance and durability of our proprietary products and solutions are vital for the safety and environmental protection of our customers processes.
In all these industries, the performance and durability of our proprietary products and solutions are vital for the safety and environmental protection of our customers’ processes.
Our core value of safety, includes physical safety on our factory floors, and also the wellness and psychological safety of all colleagues. We have worked for many years to develop a world-class safety program and culture, where the intention is that each employee goes home each day as healthy as they arrived.
Our core value of safety includes physical safety on our factory floors and the wellness and psychological safety of colleagues. We have worked for many years to develop a world-class safety program and culture, where the intention is that each colleague goes home each day as healthy as they arrived.
LeanTeq is included as part of our Advanced Surface Technologies segment. During the fourth quarter of 2022, EnPro acquired all the shares of Lunar owned by the LeanTeq Executives and became sole owner of LeanTeq.
LeanTeq is included as part of our Advanced Surface Technologies segment. During the fourth quarter of 2022, Enpro acquired all of the equity interests of Lunar owned by the LeanTeq Executives and became the sole owner of LeanTeq.
We regularly conduct employee engagement and satisfaction surveys, including one completed in early 2023. Results from these surveys and engagement activities drive advances in senior management focus to continuously improve our culture and way of working. Focus on Safety and Wellbeing of our Employees.
We regularly conduct employee engagement and satisfaction surveys, including one completed in early 2023. Results from these surveys and engagement activities help senior management drive advances in our workplace and culture as we continuously focus on ways to improve our way of working. Focus on Safety and Wellbeing of our Employees.
These rotary seals are used in demanding applications in the steel, machine building, and mining and pulp and paper processing industries under the well-known brand names Klozure ® and PS Seal. 4 Compression packing is used to provide sealing in pressurized, static and dynamic applications such as pumps and valves.
These rotary seals are used for many markets, including for demanding applications in the steel, machine building, and mining and pulp and paper processing industries, under the well-known brand names Klozure® and PS Seal. Compression packing is used to provide sealing in pressurized, static and dynamic applications such as pumps and valves.
Safety, excellence and respect are our enduring core values and are the standard by which we measure all of our actions, including how we treat our colleagues. In 2023, we are introducing a new performance management and development process, placing emphasis on both manager engagement and employee ownership.
Safety, excellence, and respect are our enduring core values and are the standard by which we measure all our actions, including how we treat our colleagues, physically and psychologically. In 2023, we introduced a new performance management and development process, placing emphasis on both manager engagement and employee ownership.
Advanced Surface Technologies products and solutions are offered to global customers, with approximately 27% of sales delivered to customers outside the United States in 2022. Representative customers include leading global manufacturers of semiconductor manufacturing equipment, such as Applied Materials and ASML, as well as manufacturers of equipment used in the life sciences and industrial technology industries and government defense contractors.
Advanced Surface Technologies’ products and solutions are offered to global customers, with approximately 34% of sales delivered to customers outside the United States in 2023. Representative customers include leading global manufacturers of semiconductor manufacturing equipment, such as Applied Materials and ASML, as well as manufacturers of equipment used in the life sciences and industrial technology industries and government defense contractors.
Approximately 7% of the December 31, 2022 backlog is expected to be filled beyond 2023. Backlog represents orders on hand we believe to be firm. However, there is no certainty the backlog orders will result in actual sales at the times or in the amounts ordered.
Approximately 5% of the December 31, 2023 backlog is expected to be filled beyond 2024. Backlog represents orders on hand that we believe to be firm. However, there is no certainty the backlog orders will result in actual sales at the times or in the amounts ordered.
If this were to occur, our business, financial condition, results of operations and cash flows could be adversely affected. Human Capital As of December 31, 2022, we had approximately 3,500 employees, of which approximately 68% are in North America, 12% in Europe, and 20% in Asia Pacific.
If this were to occur, our business, financial condition, results of operations and cash flows could be adversely affected. Human Capital As of December 31, 2023, we had approximately 3,500 employees, of which approximately 66% are in North America, 12% in Europe, and 22% in Asia Pacific.
We continue to utilize inclusive practices within our talent acquisition practices, including diverse candidate slates and diverse interview panels. We have implemented tools and structures to reduce bias during the interview and selection process, including unconscious bias training. We provided Diversity Without Division to our first line supervisors in 2022 with planned roll-out to all supervisors and managers in 2023.
We continue to utilize inclusive practices within our talent acquisition practices, including diverse candidate slates and diverse interview panels. We have implemented tools and structures to reduce bias during the interview and selection process, including unconscious bias training. We provided Diversity Without Division training to our first line supervisors.
Background We were incorporated under the laws of the State of North Carolina on January 11, 2002, as a wholly owned subsidiary of Goodrich Corporation (“Goodrich”). The incorporation was in anticipation of Goodrich’s announced distribution of its Engineered Industrial Products segment to existing Goodrich shareholders. The distribution took place on May 31, 2002.
Background We were incorporated under the laws of the State of North Carolina on January 11, 2002, as a wholly owned subsidiary of Goodrich Corporation (“Goodrich”). The incorporation was in anticipation of Goodrich’s announced spin-off of its Engineered Industrial Products segment by a distribution of the Company's common stock to existing Goodrich shareholders.
Advanced Surface Technologies Segment Overview . Our Advanced Surface Technologies segment includes four operating businesses, NxEdge, Technetics Semi, LeanTeq, and Alluxa that apply proprietary technologies, processes, and capabilities to deliver a highly differentiated suite of products and solutions for the most challenging applications in high growth markets.
Advanced Surface Technologies Segment Overview . Our Advanced Surface Technologies (AST) segment is composed of four operating businesses, NxEdge, Technetics Semi, LeanTeq, and Alluxa. Our AST segment applies proprietary technologies, processes, and capabilities to deliver a highly differentiated suite of products and solutions for challenging applications in high-growth markets.
Unless otherwise indicated, amounts provided in Part I pertain to continuing operations only (see Note 2 to our Consolidated Financial Statements in this Form 10-K for information on discontinued operations and the related disposition of those operations).
Unless otherwise indicated, amounts provided in Part I pertain to continuing operations only (see Note 20 to our Consolidated Financial Statements in this Form 10-K for information on discontinued operations and the related disposition of those operations). On January 30, 2023 we completed the sale of GPT.
Today, we are a leading-edge industrial technology company focused on critical applications across a diverse group of growing end markets such as semiconductor, photonics, industrial process, aerospace, food, biopharma and life sciences.
The distribution took place on May 31, 2002. Today, we are a leading-edge industrial technology company focused on critical applications across a diverse group of growing end markets such as semiconductor, photonics, industrial process, aerospace, food, biopharmaceuticals and life sciences.
NxEdge produces and services components used in advanced nodes ( On October 26, 2020, a subsidiary of EnPro formed for this purpose (the "Alluxa Acquisition Subsidiary") acquired all of the equity securities of Alluxa, Inc. ("Alluxa"), a privately held, California-based company.
On October 26, 2020, a subsidiary of Enpro formed for this purpose (the "Alluxa Acquisition Subsidiary") acquired all of the equity securities of Alluxa, Inc. ("Alluxa"), a privately held, California-based company.
Our sales from continuing operations by geographic region in 2022, 2021 and 2020 were as follows: 2022 2021 2020 (in millions) United States $ 687.4 $ 445.7 $ 477.7 Europe 139.7 132.7 117.5 Other 272.1 262.0 204.8 Total $ 1,099.2 $ 840.4 $ 800.0 We maintain an Internet website at www.enproindustries.com.
Our sales from continuing operations by geographic region in 2023, 2022 and 2021 were as follows: 2023 2022 2021 (in millions) United States $ 640.3 $ 687.4 $ 445.7 Europe 149.6 139.7 132.7 Other 269.4 272.1 262.0 Total $ 1,059.3 $ 1,099.2 $ 840.4 We maintain an Internet website at www.enpro.com.
Net cash proceeds after selling expenses was approximately $28 million. On October 12, 2021, we entered into an Equity and Asset Purchase Agreement (the “Purchase Agreement”) providing for the sale of specified equity interests and assets of our Compressor Products International business ("CPI Business"), which had been included in our Engineered Materials segment.
On October 12, 2021, we entered into an Equity and Asset Purchase Agreement (the “Purchase Agreement”) providing for the sale of specified equity interests and assets of our CPI business, which had been included in our Engineered Materials segment.
These products are used in extreme applications for a variety of industries, including semiconductor, aerospace, power generation, oil and gas, life sciences and other markets. Brands include HELICOFLEX ® , TEXEAL ® , FELTMETAL™, CEFILAC GPA ® , Qualiseal ® , CEFIL'AIR ® , and ORIGRAF ® .
Technetics designs, manufactures and sells high performance metal seals, mechanical seals, and elastomeric seals. These products are used in extreme applications for a variety of industries, including semiconductor, aerospace (including commercial space), power generation, oil and gas, life sciences and other markets. Technetics’ brands include HELICOFLEX®, TEXEAL®, FELTMETAL™, CEFILAC GPA®, Qualiseal®, CEFIL’AIR®, and ORIGRAF®.
In September 2019, Lunar Investment LLC ("Lunar"), a subsidiary of EnPro, acquired all of the equity securities of LeanTeq Co, LTD. and its affiliate LeanTeq LLC (collectively referred to as "LeanTeq").
In the first quarter of 2024, we acquired all of these equity interests and became the sole owner of Alluxa. In September 2019, Lunar Investment LLC ("Lunar"), a subsidiary of Enpro, acquired all of the equity securities of LeanTeq Co, LTD. and its affiliate LeanTeq LLC (collectively referred to as "LeanTeq").
We strive to create an environment where all employees can flourish and develop, and view human development as a basic right, and a core foundation to achieving excellence. At Enpro, development of our colleagues leads to excellence, and creates an environment that drives strong financial performance.
We strive to create an environment where all colleagues can flourish and develop, and view human development as a basic right, and a core foundation to achieving excellence. Enpro is a dual-bottom line company - with the development of our colleagues and their excellence inextricably linked to a productive environment that drives strong financial performance.
We recorded a pretax gain of $274.3 million in the first quarter of 2020 as a result of this transaction. Operations We manage our business as two segments: a Sealing Technologies segment and an Advanced Surface Technologies segment. Our reportable segments are managed separately based on differences in their respective products and solutions and end-customers.
As a result of the sale, we recorded a pre-tax gain of $19.5 million in other income (expense) on our Consolidated Statements of Operations. Operations We manage our business as two segments: a Sealing Technologies segment and an Advanced Surface Technologies segment. Our reportable segments are managed separately based on differences in their respective products and solutions, and end-customers.
We sell these gasket products under a number of brand names, including Garlock ® , Gylon ® , Blue-Gard ® , LubriKup ® , ONE-UP ® , Bio-Pro ® , Tuf-Steel ® , Detectomer ® , and LINK-SEAL ® . These products have a long-standing reputation for performance and reliability within the industries we serve.
Our products are also used in sanitary markets, such as food and beverage and pharmaceuticals, where product integrity and safety are extremely important. We sell these gasket products under a number of brand names, including: Garlock®, Gylon®, Blue-Gard®, ONE-UP®, Bio-Pro®, Tuf-Steel®, Detectomer®, and LINK-SEAL®. These products have a long-standing reputation for performance and reliability within the industries we serve.
In a market with volatile turnover, our retention rates are at or above market level, in part due to our culture and progressive approach. Focus on the Communities and our New Employee Assistance Fund. In 2020, we launched the Enpro Foundation to support charitable organizations in the communities where our colleagues live and work.
In a market with volatile turnover, our aggregate retention rates are at or above market level, in part due to our culture and due to our progressive approach to employee development and focus on employee well-being. Focus on the Communities and our New Employee Assistance Fund.
Enpro contributed $1.5 million to the Enpro Foundation since formation in 2020 and our Foundation has made $356,000 in donations, with a special focus on charitable organizations where our colleagues are directly involved.
In 2020, we launched the Enpro Foundation to support charitable organizations in the communities where our colleagues live and work. Enpro has contributed $1.75 million to the Enpro Foundation since its formation in 2020 and our Foundation has made $690,000 in donations, with a special focus on charitable organizations nominated by our colleagues.
Many of our products and solutions are used in highly demanding applications and often in incredibly harsh environments, e.g., where extreme temperatures, extreme pressures, corrosive environments, strict tolerances, and/or worn equipment create challenges for product performance. Sealing Technologies offers customers widely recognized applied engineering, innovation, process know how and enduring reliability, driving a lasting aftermarket for many of our solutions.
Many of our products and solutions are used in highly demanding applications, often in incredibly harsh environments; for example, where extreme temperatures, extreme pressures, corrosive environments, strict tolerances, or worn equipment create challenges for product performance.
Gasket products are used for sealing flange joints in chemical, petrochemical and pulp and paper processing facilities where high pressures, high temperatures and corrosive chemicals create the need for specialized and highly engineered sealing products. Our products are also used in sanitary markets such as food and beverage and pharmaceuticals where product integrity and safety are extremely important.
Gasket products are used for sealing flange joints in a number of applications including in chemical, petrochemical and pulp and paper processing facilities where high pressures, high temperatures and corrosive chemicals create the need for specialized and highly engineered sealing products.
It designs, manufactures and sells specialized optical filters and proprietary thin-film coatings for the most challenging applications in the industrial technology, life sciences, and semiconductor markets and complex front-end wafer processing sub-systems, new and refurbished electrostatic chuck pedestals, and edge-welded metal bellows for the semiconductor equipment industry and for critical applications in the space, aerospace and defense markets.
AST’s products and solutions include: (i) cleaning, coating, testing, refurbishment and verification for critical components and assemblies used in state-of-the-art advanced node semiconductor manufacturing equipment, (ii) designing, manufacturing and selling specialized optical filters and proprietary thin-film coatings for the most challenging applications in the industrial technology, life sciences, and semiconductor markets, (iii) engineering and manufacturing complex front-end wafer processing sub-systems and new and refurbished electrostatic chuck pedestals for the semiconductor equipment industry, and (iv) engineering and manufacturing edge-welded metal bellows for the semiconductor equipment industry and critical applications in the space, aerospace and defense markets.
As a result of this sale, we recorded a $0.4 million loss in the fourth quarter of 2022 in other expense in our consolidated statement of operations. During January 2023 we completed the sale of our GPT business for approximately $31 million resulting in a pretax gain of approximately $14 million to be recorded in the first quarter of 2023.
As a result of this sale, we recorded a $0.4 million loss in the fourth quarter of 2022 in other expense in our consolidated statement of operations.
NxEdge is headquartered in Boise, Idaho and operates six main facilities located in California and Idaho. NxEdge is an advanced manufacturing, cleaning, coating, and refurbishment business serving the semiconductor industry.
On December 17, 2021, EnPro Holdings, completed the acquisition of all issued and outstanding membership interests of TCFII NxEdge LLC (“NxEdge”). NxEdge is headquartered in Boise, Idaho and operates six main facilities located in California and Idaho. NxEdge is an advanced manufacturing, cleaning, coating, and refurbishment business serving the semiconductor industry.
Sales by market for the year ended December 31, 2022 were as follows: 3 Year Ended December 31, 2022 (in millions) Total % of Total Aerospace $ 47.3 4% Chemical and material processing 77.6 7% Food and pharmaceutical 70.8 7% General industrial 190.7 17% Medium-duty/heavy-duty truck 191.2 17% Oil and gas 26.6 3% Power generation 43.2 4% Semiconductors 437.0 40% Other 14.8 1% Total third-party sales $ 1,099.2 100% Sealing Technologies Segment Overview .
Sales by market for the year ended December 31, 2023 were as follows: Year Ended December 31, 2023 (in millions) Total % of Total Aerospace $ 58.3 5.5% Chemical and material processing 84.6 8.0% Food and pharmaceutical 65.4 6.2% General industrial 171.4 16.2% Commercial vehicle 198.4 18.7% Oil and gas 27.8 2.6% Power generation 68.3 6.5% Semiconductors 363.5 34.3% Other 21.6 2.0% Total third-party sales $ 1,059.3 100.0% Sealing Technologies Segment Overview .
Through our Foundation, we have created and funded an employee assistance fund, administered by a third-party specializing in this area, where we can confidentially assist employees undergoing tragedy in a way that is objective and respectful.
Through our Foundation, we have created and funded an employee 7 assistance fund, administered by a third-party that specializes in this type of fund, where we can confidentially assist employees that are facing difficult challenges, including family sickness or impact from natural disasters or other tragedies, in a way that is objective and respectful.
The segment’s products and solutions are used in highly demanding environments requiring performance, precision and repeatability, with a low tolerance for failure. The segment’s solutions include cleaning, coating, testing, refurbishment and verification for critical components and assemblies used in state-of-the-art advanced node semiconductor manufacturing equipment.
The segment’s products and solutions are used in demanding environments requiring performance, precision and repeatability, with a low tolerance for failure.
Information included on or linked to our website is not incorporated by reference into this annual report. Acquisitions On December 17, 2021, our direct, wholly owned subsidiary, EnPro Holdings, Inc. ("EnPro Holdings"), completed the acquisition of all issued and outstanding membership interests of TCFII NxEdge LLC (“NxEdge”).
Information included on or linked to our website is not incorporated by reference into this annual report. Acquisitions On December 28, 2023, our direct, wholly owned subsidiary, EnPro Holdings, Inc. ("EnPro Holdings"), entered into an agreement to acquire Advanced Micro Instruments, Inc.
We believe that our record of product performance in the major markets in which this segment operates is a significant competitive advantage for us. Major competitors include A.W. Chesterton Company, Klinger Group, Teadit, Lamons, SIEM/Flexitallic, SKF USA Inc., Consolidated Metco, Firestone, Saint-Gobain, Eaton Corporation, Parker Hannifin Corporation, and Miropro Co. Ltd. Raw Materials and Components .
Chesterton Company, Klinger Group, Teadit, Lamons, SIEM/Flexitallic, SKF USA Inc., Consolidated Metco, Firestone, Saint-Gobain, Eaton Corporation, Parker Hannifin Corporation, and Miropro Co. Ltd. Raw Materials and Components.
The majority of our research and development spending typically is directed toward the development of new sealing solutions for the most demanding environments, the development of technology to support the cleaning and refurbishment of process critical semiconductor manufacturing equipment components, and advancing our technological and process know-how to develop opportunities in new and/or adjacent markets. 6 Backlog At December 31, 2022, we had a backlog of orders of continuing operations valued at $310.7 million, of which $123.9 million related to Sealing Technologies and $186.8 million related to Advanced Surface Technologies compared with $274.7 million at December 31, 2021, of which $102.8 million related to Sealing Technologies and $171.9 million related to Advanced Surface Technologies.
The majority of our research and development spending typically is directed toward the development of new solutions for the most demanding environments, the development of technology to support the production, cleaning and refurbishment of critical semiconductor manufacturing equipment components, and advancing our technological and process know-how to develop opportunities in new and/or adjacent niche markets that will continue to differentiate the company.
Together, they design, manufacture and sell fluid process solutions, including: single-use hygienic seals, tubing, components and assemblies; metallic, non-metallic and composite material gaskets; dynamic seals; compression packing; hydraulic components; expansion joints; and wall penetration products.
GST engineers, designs, manufactures and markets metallic, non-metallic and composite material gaskets; dynamic seals; compression packing; hydraulic components; expansion joints; and wall penetration products.
In 2023, we are 7 implementing new safety onboarding programs so that our newest colleagues can thoroughly understand our safety culture and expectations, which is often unique from any place they have worked before. Competitive Pay, Benefits and Equity : We provide comprehensive compensation and benefits programs that are designed to attract and retain colleagues – our most valuable resource.
Competitive Pay, Benefits and Equity : We provide comprehensive compensation and benefits programs that are designed to attract and retain colleagues – our most valuable resource.
Product brands include STEMCO ® , STEMCO Kaiser ® , Trifecta™, Discover ® , QWICKTIE ® , GritGuard ® , Guardian HP ® , Voyager ® , Discover ® , Pro-Torq ® , Zip-Torq ® , Sentinel ® , Defender™, DataTrac ® , and QwikKit ® . Customers .
STEMCO’s product brands include STEMCO®, STEMCO Kaiser®, Discover®, QWICKTIE®, GritGuard®, Guardian HP®, Voyager®, Discover®, Auto-Torq®, Pro-Torq®, Zip-Torq®, Sentinel®, Defender™, DataTrac®, and QwikKit®. Customers. Our Sealing Technologies segment sells products and solutions to industrial agents and distributors, original equipment manufacturers (“OEMs”), engineering and construction firms and end users worldwide.
Our Sealing Technologies segment sells products and solutions to industrial agents and distributors, original equipment manufacturers (“OEMs”), engineering and construction firms and end users worldwide. Solutions are offered to a broad range of global customers, with approximately 45% of sales delivered to customers outside the United States in 2022.
Solutions are offered to a broad range of global customers, with approximately 43% of sales delivered to customers outside the United States in 2023.
Major markets for compression packing products are the pulp and paper, mining, petrochemical and hydrocarbon processing industries. Branded products for these markets include 9000 EVSP ® , Quickset ® , and Graph-lock ® . Technetics designs, manufactures and sells high performance metal seals, mechanical seals, and elastomeric seals.
Major markets for compression packing products are the pulp and paper, mining, petrochemical and hydrocarbon processing industries. Branded products for these markets include 9000 EVSP®, Quickset®, and Graph-lock®. GHT, includes Rubber Fab and The Aseptic Group, which together, design, manufacture and sell fluid process solutions, including: single-use hygienic seals, tubing, components and assemblies, primary for food and pharma markets.
Our leading brand names, including Garlock ® , Technetics ® , and STEMCO ® , have been built upon long-standing reputations for reliability and durability. In addition, the breadth, performance and quality of our product offerings allow us to achieve premium pricing and have made us a preferred supplier among our agents and distributors.
In addition, the breadth, performance and quality of our product offerings allow us to achieve premium pricing and have made us a preferred supplier among our agents and distributors. We believe that our Sealing Segment’s record of product performance in the major markets it serves is a significant competitive advantage. Major competitors include A.W.
Differentiation in the markets we serve is based on proven product performance and reliability, as well as price, customer service, application expertise, technical support, delivery terms, breadth of product offering, reputation for quality, and the availability of product.
Our businesses differentiate themselves from competitors with product performance and reliability, as well as customer service, application expertise, technical support, delivery terms, breadth of product offering, reputation for quality, and the availability of product. Our leading brand names, including Garlock®, Technetics®, and STEMCO®, have been built 4 upon long-standing reputations for reliability and durability.
Research and Development The goal of our research and development effort is to strengthen our product portfolios for traditional markets while simultaneously creating distinctive and breakthrough products and solutions. We utilize a process to move innovations from concept to commercialization, and to identify, analyze, develop and implement new product concepts and opportunities aimed at business growth.
We utilize a process to move innovations from concept to commercialization, and to identify, analyze, develop and implement new product concepts and opportunities to expand market adjacencies with differentiated and compelling products that solve critical problems for our customers. We employ scientists, engineers and technicians throughout the organization to develop, design and test new and improved products and solutions.
We employ scientists, engineers and technicians throughout our operations to develop, design and test new and improved products and service solutions. We work closely with our customers to identify issues and develop technical solutions.
We work closely with our customers to identify issues and solve technical problems for critical applications.
Removed
The cash purchase price of Alluxa was $238.4 million, net of cash acquired. We funded the purchase with available cash and rollover equity from Alluxa executives.
Added
(“AMI”), for $210 million in cash, subject to customary purchase price adjustments related to the final acquisition date net working capital determination. AMI is a leading provider of highly-engineered, application-specific analyzers and sensing technologies that monitor critical parameters to maintain infrastructure integrity, enable process efficiency, enhance safety, and facilitate the clean energy transition.
Removed
The sale of GGB closed on November 4, 2022 to The Timken Company for total proceeds of $305 million, subject to closing date purchase price adjustments. The pre-tax gain on the disposition of GGB recognized in the fourth quarter of 2022 was $189.1 million.
Added
Since the acquisition closed on January 29, 2024, the assets and operating results of AMI are not included in our 2023 consolidated financial statements. (see Note 21 to our Consolidated Financial Statements in this Form 10-K for information on this subsequent event).
Removed
As a result of the sale, we recorded a pre-tax gain of $19.5 million in other income (expense) on our Consolidated Statements of Operations. 2 On December 31, 2020, we sold the shares of Technetics Group UK Limited ("Technetics Group UK"), a manufacturer of elastomeric components primarily for use in the aerospace industry, which had been included in our Sealing Technologies segment, for a nominal cash purchase price.
Added
AMI's financial results will be included as part of our Sealing Technologies segment beginning January 29, 2024. 1 Based in Costa Mesa, California, AMI serves customers in the midstream natural gas, biogas, industrial processing, cryogenics, food processing, laboratory, wastewater and aerospace markets.
Removed
As part of the agreement with the buyer, we delivered to the buyer £148,000 of cash to fund value added tax ("VAT") payments due for VAT liabilities already incurred and £50,000 for working capital. We incurred a loss upon the sale of approximately £976,000 ($1.3 million).
Added
AMI offers a portfolio of oxygen, hydrogen sulfide and moisture analyzers and proprietary sensing capabilities that detect contaminants in a variety of processes, including natural gas and biogas streams, which enable operators to avoid flaring and, thereby, reduce CO 2 emissions.
Removed
On November 20, 2020, we completed the sale of the Air Springs portion of our heavy-duty trucking business for $23.1 million in cash, net of an estimated working capital adjustment and fees, and a long-term promissory note with a fair-value of $6.4 million (face value of $7.5 million).
Added
NxEdge engineers, manufactures and services leading-edge systems and components critical in the production of semiconductors, offers technically-advanced coatings and surface treatments along with refurbishment services and spare parts. NxEdge is included as part of our Advanced Surface Technologies segment. We paid $853.9 million, net of cash acquired, for the business.
Removed
As part of the agreement with the buyer, we retained the U.S. accounts receivable for the business, which created a large working capital adjustment at closing. The amount of retained accounts receivable in the U.S. was approximately $8.6 million, of which approximately $2.0 million was outstanding at December 31, 2020.
Added
In 2023, we received $28.9 million, net of transaction fees and cash sold, resulting in a pretax gain of $14.6 million recognized in the first quarter of 2023. 2 The sale of GGB closed on November 4, 2022 to The Timken Company.
Removed
We recorded a $0.1 million non-cash loss on sale of this business, which had been included in our Sealing Technologies segment, in the fourth quarter of 2020. Upon the resolution of all remaining open items, we recorded an additional loss of $2.1 million in the first quarter of 2021.
Added
We received $298.2 million, net of transaction fees and cash sold, including $3.1 million of payments made in Q1 of 2023. We recorded a pre-tax gain of $189.1 million as part of our discontinued operations in the fourth quarter of 2022.
Removed
In August of 2020, subsequent to announcing the exit of our Motor Wheel® brake drum and Crewson® brake adjuster brands in the second quarter of 2020, we identified a buyer and entered into a definitive agreement to sell the assets related to the businesses. On September 2, 2020, we completed the sale for $8.9 million, net of transaction fees.
Added
Sealing Technologies offers customers widely recognized applied engineering, innovation, process know-how and enduring reliability, driving a lasting aftermarket for many of our products and solutions. Aftermarket or recurring revenue approximates two-thirds of our Sealing Technologies segment’s total revenue. Garlock consists of two companies: Garlock Sealing Technologies (GST) and Garlock Hygienic Technologies (GHT).

… 16 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

31 edited+5 added−10 removed72 unchanged
Biggest changeIn that event, if we were unable to develop products using substitute materials that provide the same reliability and performance as our current products manufactured with PTFE resins, our results of operations could be adversely affected. Our business could be materially adversely affected by numerous other risks, including rising healthcare costs, changes in environmental laws and other unforeseen business interruptions.
Biggest changeIf the manufacture or use of PTFE resins were restricted by this or other emerging regulations in the coming years, or if a substantial number of our suppliers discontinued production of PTFE resins due to regulatory pressures, and if we were unable to develop products using substitute materials that provide the same reliability and performance as our current products, our results of operations could be adversely affected.
Borrowings under our Revolving Credit Facility and our Term Loan Facilities incur interest which is variable based on fluctuations in the referenced SOFR ("Secured Overnight Financing Rate"). Increases in the referenced SOFR will increase the Company's borrowing costs and negatively impact financial results and cash flows.
Borrowings under our revolving credit facility and our term loan facilities incur interest which is variable based on fluctuations in the referenced Secured Overnight Financing Rate ("SOFR"). Increases in the referenced SOFR will increase the Company's borrowing costs and negatively impact financial results and cash flows.
Our efforts to protect our intellectual property through patents, trademarks, service marks, domain names, trade secrets, copyrights, confidentiality, non-compete and nondisclosure agreements and other measures may not be adequate to protect our proprietary 9 rights. Patents issued to third parties, whether before or after the issue date of our patents, could render our intellectual property less valuable.
Our efforts to protect our intellectual property through patents, trademarks, service marks, domain names, trade secrets, copyrights, confidentiality, non-compete and nondisclosure agreements and other measures may not be adequate to protect our proprietary rights. Patents issued to third parties, whether before or after the issue date of our patents, could render our intellectual property less valuable.
For example, medical and other healthcare costs may continue to grow faster than general inflation or employees may receive more or higher cost services in future periods. 11 Initiatives to address these costs, such as consumer driven health plan packages, may not successfully reduce these expenses to the extent expected or required.
For example, medical and other healthcare costs may continue to grow faster than general inflation or employees may receive more or higher cost services in future periods. Initiatives to address these costs, such as consumer driven health plan packages, may not successfully reduce these expenses to the extent expected or required.
Consolidation among our customers, or a decision by any one or more of our customers to no longer outsource the type of solutions provided by our Advanced Surface Technologies segment, may further concentrate our business in a limited number of customers and expose us to increased risks relating to dependence on an even smaller number of customers.
Consolidation among our customers, or a decision by any one or more of our customers to no longer outsource the type of solutions provided by our Advanced Surface Technologies segment, may further concentrate our business 8 in a limited number of customers and expose us to increased risks relating to dependence on an even smaller number of customers.
Our failure to offer to purchase all outstanding notes or to purchase all validly tendered notes would be an event of default under the indenture governing our senior notes. Such an event of default may cause the acceleration of our other debt. We may incur increased interest expense as a result of our variable rate debt.
Our failure to offer to 13 purchase all outstanding notes or to purchase all validly tendered notes would be an event of default under the indenture governing our senior notes. Such an event of default may cause the acceleration of our other debt. We may incur increased interest expense as a result of our variable rate debt.
A prolonged and severe downward cycle in our markets, particularly in our semiconductor markets, could have a material adverse effect on our business, financial condition, results of operations and cash flows. 8 We face intense competition that could have a material adverse effect on our business. We encounter intense competition in almost all areas of our businesses.
A prolonged and severe downward cycle in our markets, particularly in our semiconductor markets, could have a material adverse effect on our business, financial condition, results of operations and cash flows. We face intense competition that could have a material adverse effect on our business. We encounter intense competition in almost all areas of our businesses.
In addition, internal controls over financial reporting of acquired companies may not be up to required U.S. public company standards. Our integration activities may place substantial demands on our management, operational resources and financial and internal control systems.
In addition, internal controls over financial reporting of acquired companies may not be up to required U.S. public company standards. Our integration activities may place substantial demands on our management, operational 11 resources and financial and internal control systems.
We have internal control policies and procedures and have 13 implemented training and compliance programs with respect to the FCPA. However, we cannot assure that our policies, procedures and programs always will protect us from reckless or criminal acts committed by our employees or agents.
We have internal control policies and procedures and have implemented training and compliance programs with respect to the FCPA. However, we cannot assure that our policies, procedures and programs always will protect us from reckless or criminal acts committed by our employees or agents.
Our sales and operating activities outside of the U.S. are, and will continue to be, subject to a number of risks, including: • unfavorable fluctuations in foreign currency exchange rates, including long-term contracts denominated in foreign currencies; • adverse changes in foreign tax, legal and regulatory requirements; • political and economic instability, including instabilities associated with the armed conflict in Ukraine and any conflict or threat of conflict that may affect Taiwan; • difficulty in protecting intellectual property; • government embargoes, tariffs and trade protection measures, such as “anti-dumping” duties applicable to classes of products, and import or export licensing requirements, as well as the imposition of trade sanctions against a class of products imported from or sold and exported to, or the loss of “normal trade relations” status with, countries in which we conduct business, could significantly increase our cost of products or otherwise reduce our sales and harm our business; • cultural norms and expectations that may sometimes be inconsistent with our Code of Conduct and our requirements about the manner in which our employees, agents and distributors conduct business; • differing labor regulations; and • acts of hostility, terror or war.
Our sales and operating activities outside of the U.S. are, and will continue to be, subject to a number of risks, including: • unfavorable fluctuations in foreign currency exchange rates, including long-term contracts denominated in foreign currencies; • adverse changes in foreign tax, legal and regulatory requirements; • political and economic instability, including any conflict or threat of conflict that may affect Taiwan; • difficulty in protecting intellectual property; • government embargoes, tariffs and trade protection measures, such as “anti-dumping” duties applicable to classes of products, and import or export licensing requirements, as well as the imposition of trade sanctions against a class of products imported from or sold and exported to, or the loss of “normal trade relations” status with, countries in which we conduct business, could significantly increase our cost of products or otherwise reduce our sales and harm our business; • cultural norms and expectations that may sometimes be inconsistent with our Code of Conduct and our requirements about the manner in which our employees, agents and distributors conduct business; • differing labor regulations; and 12 • acts of hostility, terror or war.
Various provisions and laws could delay or prevent a change of control. The anti-takeover provisions of our articles of incorporation and bylaws and provisions of North Carolina law could delay or prevent a change of control or may impede the ability of the holders of our common stock to change our management.
The anti-takeover provisions of our articles of incorporation and bylaws and provisions of North Carolina law could delay or prevent a change of control or may impede the ability of the holders of our common stock to change our management.
Other factors that could significantly affect quarterly operating results include, but are not limited to: • demand for our products and services; • the timing and execution of customer contracts; • the timing of sales of our products and services; • contractual penalties for late delivery of long-lead-time products; • increases in costs due to equipment or labor issues; • changes in foreign currency exchange rates; • changes in applicable tax rates; • an impairment of goodwill or other intangibles at one of our reporting units; • unanticipated delays or problems in introducing new products; • announcements by competitors of new products, services or technological innovations; • changes in our pricing policies or the pricing policies of our competitors; • increased expenses, whether related to sales and marketing, raw materials or supplies, product development or administration; • major changes in the level of economic activity in major regions of the world in which we do business; • costs related to possible future acquisitions or divestitures of technologies or businesses; • an increase in the number or magnitude of product liability or environmental claims; • our ability to expand our operations and the amount and timing of expenditures related to expansion of our operations, particularly outside the U.S.; and • economic assumptions and market factors used to determine postretirement benefits and pension liabilities.
Other factors that could significantly affect quarterly operating results include, but are not limited to: • demand for our products and services; • the timing and execution of customer contracts; • the timing of sales of our products and services; • contractual penalties for late delivery of long-lead-time products; • increases in costs due to equipment or labor issues; • changes in foreign currency exchange rates; • changes in applicable tax rates; • an impairment of goodwill or other intangibles at one of our reporting units; • unanticipated delays or problems in introducing new products; • announcements by competitors of new products, services or technological innovations; • changes in our pricing policies or the pricing policies of our competitors; • increased expenses, whether related to sales and marketing, raw materials or supplies, product development or administration; • major changes in the level of economic activity in major regions of the world in which we do business; • costs related to possible future acquisitions or divestitures of technologies or businesses; • an increase in the number or magnitude of product liability or environmental claims; • our ability to expand our operations and the amount and timing of expenditures related to expansion of our operations, particularly outside the U.S.; and • economic assumptions and market factors used to determine postretirement benefits and pension liabilities. 14 Various provisions and laws could delay or prevent a change of control.
As a result, the segment is dependent on certain key relationships with customers in that industry, including a customer that accounted for approximately 27% of our 2022 consolidated net sales, and the loss of the segment’s relationship with that customer or other key customers or other adverse changes in the segment’s relationships with those customers could have a material adverse effect on our business, financial condition, results of operations and cash flows.
As a result, the segment is dependent on certain key relationships with customers in that industry, including a customer that accounted for approximately 26% of our 2023 consolidated net sales, and the loss of the segment’s relationship with that customer or other key customers or other adverse changes in the segment’s relationships with those customers could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Outside the U.S., we operate 12 primary manufacturing and service facilities (approximately 50,000 square feet or larger) located in 5 countries.
Outside the U.S., we operate 6 primary manufacturing and service facilities (approximately 50,000 square feet or larger) located in 5 countries.
In addition to organic changes in the prices of raw materials, the prices of some of our raw materials may increase due to supply chain limitations or the imposition (or announcement of the intended imposition) of new or increased tariffs or changes in trade laws.
The prices of some of our raw materials may continue to increase due to supply chain limitations or the imposition (or announcement of the intended imposition) of new or increased tariffs or changes in trade laws.
Because we sell our products and provide services in a number of foreign countries, we are subject to risks associated with doing business internationally. In 2022, we derived approximately 37% of our net sales from sales of our products and solutions outside of the U.S.
Because we sell our products and provide services in a number of foreign countries, we are subject to risks associated with doing business internationally. In 2023, we derived approximately 40% of our net sales from sales of our products and solutions outside of the U.S.
In such an event, we could potentially be subject to production downtimes, operational delays, other detrimental impacts on our operations or ability to provide products and services to our customers, the compromising of confidential or otherwise protected information, misappropriation, destruction or corruption of data, security breaches, misappropriation of corporate funds, other manipulation or improper use of our systems or networks, financial losses from remedial actions, loss of business or potential liability, and/or damage to our reputation, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows. 10 A failure to develop new or improved products and solutions may result in a significant competitive disadvantage.
In such an event, we could potentially be subject to production downtimes, operational delays, other detrimental impacts on our operations or ability to provide products and services to our customers, the compromising of confidential or otherwise protected information, misappropriation, destruction or corruption of data, security breaches, misappropriation of corporate funds, other manipulation or improper use of our systems or networks, financial losses from remedial actions, loss of business or potential liability, and/or damage to our reputation, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
The market price of our common stock could fluctuate significantly for many reasons, including in response to the risks described in this section and elsewhere in this report or for reasons unrelated to our operations, such as reports by industry analysts, investor perceptions or negative announcements by our customers, competitors or suppliers regarding their own performance, as well as industry conditions and general financial, economic and political instability. 14 Because our quarterly revenues and operating results may vary significantly in future periods, our stock price may fluctuate.
The market price of our common stock could fluctuate significantly for many reasons, including in response to the risks described in this section and elsewhere in this report or for reasons unrelated to our operations, such as reports by industry analysts, investor perceptions or negative announcements by our customers, competitors or suppliers regarding their own performance, as well as industry conditions and general financial, economic and political instability.
For example, in 2014 when our then Fairbanks Morse division and a consortium partner entered into a multi-year arrangement with Electricite de France ("EDF") to supply opposed-piston, diesel engine generator set to EDF for emergency backup power at 20 of EDF's nuclear power plants in France, EnPro Industries, Inc. guaranteed the performance of Fairbanks Morse's obligations under agreements with our consortium partner, which guarantee continues to be in place following our sale of Fairbanks Morse, though both Fairbanks Morse and the purchaser of Fairbanks Morse have agreed to indemnify us for any payments we are required to make pursuant to such guarantee. 12 Claims could arise relating to products, facilities, employees or former employees, or other matters related to our discontinued operations.
For example, in 2014 when our then Fairbanks Morse division and a consortium partner entered into a multi-year arrangement with Electricite de France ("EDF") to supply opposed-piston, diesel engine generator set to EDF for emergency backup power at 20 of EDF's nuclear power plants in France, Enpro Inc. guaranteed the performance of Fairbanks Morse's obligations under agreements with our consortium partner, which guarantee continues to be in place following our sale of Fairbanks Morse, though both Fairbanks Morse and the purchaser of Fairbanks Morse have agreed to indemnify us for any payments we are required to make pursuant to such guarantee.
We expect to continue to make acquisitions in the future. Acquisitions involve numerous inherent challenges, such as properly evaluating acquisition opportunities, properly evaluating risks and other diligence matters, ensuring adequate capital availability and balancing other resource constraints.
Risks Related to Our Acquisition Activities We have made and expect to continue to make acquisitions, which could involve certain risks and uncertainties. We expect to continue to make acquisitions in the future. Acquisitions involve numerous inherent challenges, such as properly evaluating acquisition opportunities, properly evaluating risks and other diligence matters, ensuring adequate capital availability and balancing other resource constraints.
In addition, if we or one of our divisions were charged with wrongdoing with respect to a U.S. government contract, the U.S. government could suspend us from bidding on or receiving awards of new government contracts pending the completion of legal proceedings, and if we are found liable, we could subject us to fines, penalties, repayments and treble and other damages, and/or debarment from bidding on or receiving new awards of U.S. government contracts.
In addition, if we or one of our divisions were charged with wrongdoing with respect to a U.S. government contract, the U.S. government could suspend us from bidding on or receiving awards of new government contracts pending the completion of legal proceedings, and if we are found liable, we could subject us to fines, penalties, repayments and treble and other damages, and/or debarment from bidding on or receiving new awards of U.S. government contracts. 10 Climate change and legal or regulatory responses thereto may have an adverse impact on our business and results of operations.
In order to maintain our market positions and margins, we need to continually develop and introduce high-quality, technologically advanced and cost-effective products and solutions on a timely basis, in many cases in multiple jurisdictions around the world. The failure to do so could result in a significant competitive disadvantage that could materially adversely affect our results of operations.
A failure to develop new or improved products and solutions may result in a significant competitive disadvantage. In order to maintain our market positions and margins, we need to continually develop and introduce high-quality, technologically advanced and cost-effective products and solutions on a timely basis, in many cases in multiple jurisdictions around the world.
Increased costs for raw materials, the termination of existing supply arrangements or other disruptions of our supply chain has had, and could continue in the future to have a material adverse effect on our business. The prices for most of the raw materials we purchase increased in 2022.
Increased costs for raw materials, the termination of existing supply arrangements or other disruptions of our supply chain has had, and could continue in the future to have, a material adverse effect on our business. We have seen organic changes related to price increases of raw materials over the past several years.
Our revenue and operating results may vary significantly from quarter to quarter. A high proportion of our costs are fixed, due in part to significant selling and manufacturing costs. Small declines in revenues could disproportionately affect operating results in a quarter and the price of our common stock may fall.
Because our quarterly revenues and operating results may vary significantly in future periods, our stock price may fluctuate. Our revenue and operating results may vary significantly from quarter to quarter. A high proportion of our costs are fixed, due in part to significant selling and manufacturing costs.
The issuance and sales of substantial amounts of common stock, or the perception that such issuances and sales may occur, could adversely affect the market price of our common stock.
We cannot predict the size of future issuances or the effect, if any, that they may have on the market price for our common stock. The issuance and sales of substantial amounts of common stock, or the perception that such issuances and sales may occur, could adversely affect the market price of our common stock.
The loss of key personnel and an inability to attract and retain qualified employees could have a material adverse effect on our operations. We are dependent on the continued services of our leadership team. The loss of these personnel without adequate replacement could have a material adverse effect on our operations.
The failure to do so could result in a significant competitive disadvantage that could materially adversely affect our results of operations. The loss of key personnel and an inability to attract and retain qualified employees could have a material adverse effect on our operations. We are dependent on the continued services of our leadership team.
Additionally, we need qualified managers and skilled employees with technical and industry experience in many locations in order to operate our business successfully. From time to time, there may be a shortage of skilled labor, which may make it more difficult and expensive for us to attract and retain qualified employees.
From time to time, there may be a shortage of skilled labor, which may make it more difficult and expensive for us to attract and retain qualified employees.
Accordingly, product and service failures can have significant consequences and could result in significant product liability, warranty and other claims against us, regardless of whether our products and services caused the incident that is the subject of the claim, and we may have obligations to participate in the recall of products in which our products are components, if any of the components or services we supply prove to be defective.
Accordingly, product and service failures can have significant consequences and could result in significant product liability, warranty and other claims against us, regardless of whether our products and services caused the incident that is the subject of the claim, and we may have obligations to participate in the recall of products in which our products are components, if any of the components or services we supply prove to be defective. 9 We endeavor to identify and obtain in established markets insurance agreements to cover certain significant risks and liabilities, though insurance against some of the risks inherent in our operations (such as insurance covering down-stream customer product recalls) is either unavailable or available only at rates or on terms that we consider excessive.
In addition, a reasonable number of shares of our common stock are reserved for issuance under our equity compensation plans, including shares to be issued upon the vesting of restricted stock or unit grants. We cannot predict the size of future issuances or the effect, if any, that they may have on the market price for our common stock.
In addition, a reasonable number of shares of our common stock are reserved for issuance under our equity compensation plans, including shares to be issued upon the vesting of restricted stock unit or performance share awards.
Our business may be negatively impacted by numerous other risks.
Our business could be materially adversely affected by numerous other risks, including rising healthcare costs, changes in environmental laws and other unforeseen business interruptions. Our business may be negatively impacted by numerous other risks.
Some of these claims could seek substantial monetary payments.
Claims could arise relating to products, facilities, employees or former employees, or other matters related to our discontinued operations. Some of these claims could seek substantial monetary payments.
Removed
We endeavor to identify and obtain in established markets insurance agreements to cover certain significant risks and liabilities, though insurance against some of the risks inherent in our operations (such as insurance covering down-stream customer product recalls) is either unavailable or available only at rates or on terms that we consider excessive.
Added
The loss of these personnel without adequate replacement could have a material adverse effect on our operations. Additionally, we need qualified managers and skilled employees with technical and industry experience in many locations in order to operate our business successfully.
Removed
Climate change and legal or regulatory responses thereto may have an adverse impact on our business and results of operations and corporate sustainability efforts by suppliers may restrict the availability of raw materials critical to certain of our products.
Added
Evolving regulatory restrictions on per- and polyfluoroalkyl substances (PFAS) may restrict the manufacture or use of fluoropolymers, including PTFE, which are currently included as critical components in certain of our products.
Removed
Corporate sustainability initiatives by suppliers could restrict the availability of raw materials critical to the manufacture of certain of our products. Recently, two major global suppliers of PTFE resins announced their intention, as part of their corporate sustainability initiatives, to discontinue the production of PTFE resins that are manufactured with the use of fluorosurfactants.
Added
In February 2023, the European Chemical Agency (ECHA) proposed several options for restricting the manufacture, import and use of PFAS in the EU under the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) regulations, potentially including PTFE and/or the fluorosurfactants that our suppliers use to manufacture PTFE.
Removed
PTFE resins are a critical raw material in the manufacture of certain of the products of our Sealing Technologies segment.
Added
ECHA is in the process of evaluating these proposed options and preparing opinions on the socio-economic, environmental and health impacts of the proposal for consideration by the European Commission. PTFE resins are currently a critical raw material in the manufacture of certain of our products, and are included as components of several of our final products.
Removed
While these actions are not expected to directly impact our ability to manufacture many of those products, as PTFE resins are currently available from other sources, similar actions by other existing suppliers could limit or restrict our ability to manufacture those products.
Added
Small declines in revenues could disproportionately affect operating results in a quarter and the price of our common stock may fall.
Removed
Risks Related to the COVID 19 pandemic The COVID-19 pandemic has adversely affected, and may continue to adversely affect, our business and results of operations The COVID-19 pandemic has adversely affected our business and consolidated financial results in the past and could have an adverse impact on our business and consolidated financial results during 2023, and we are unable to determine the extent, duration, or nature of its continuing impact at this time.
Removed
The intensity, duration and governmental responses to the pandemic, as well as the pace of vaccination efforts and the emergence of new variants of the virus that cause COVID-19, are all highly uncertain and could contribute to the ultimate impact on our business which is conducted globally.
Removed
Our customers are principally global manufacturers and the impact of the COVID-19 pandemic on general economic conditions, and more deleterious effects in certain regions or on certain markets have had and may continue to have negative implications on demand for their goods and consequently on their demand for our products and services.
Removed
Due to the scope of our operations, and our sale to customers around the world, the impact of the COVID-19 pandemic on our operations and the demand for our products and solutions may not coincide with impacts experienced in the United States in the event that the impacts in the United States continue to improve over time due to increased vaccinations or improved medical treatments.
Removed
Accordingly, to the extent that the impact of the COVID-19 pandemic in the United States may improve over time, we may continue to be adversely affected by COVID-19 impacts in other areas of the world. Risks Related to Our M&A Activities We have made and expect to continue to make acquisitions, which could involve certain risks and uncertainties.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed2 unchanged
Biggest changePalmyra, New York Sealing Technologies Owned 690,000 Longview, Texas Sealing Technologies Owned 219,000 Morgan Hill, California Advanced Surface Technologies Leased 156,000 Boise, Idaho Advanced Surface Technologies Owned 92,000 Tempe, Arizona Advanced Surface Technologies Owned 75,000 Houston, Texas Sealing Technologies Leased 66,000 Deland, Florida Sealing Technologies Owned 50,000 Foreign Mexico City, Mexico Sealing Technologies Owned 128,000 Saint Etienne, France Sealing Technologies Owned 108,000 Neuss, Germany Sealing Technologies Leased 97,000 Sherbrooke, Canada Sealing Technologies Owned 86,000 Montbrison, France Sealing Technologies Owned 79,000 Taoyuan City, Taiwan Advanced Surface Technologies Leased 50,000 Our manufacturing capabilities are flexible and allow us to tailor the manufacturing process to increase performance and value for our customers and meet particular specifications.
Biggest changePalmyra, New York Sealing Technologies Owned 690,000 Longview, Texas Sealing Technologies Owned 219,000 Morgan Hill, California Advanced Surface Technologies Leased 156,000 Boise, Idaho Advanced Surface Technologies Owned 92,000 Tempe, Arizona Advanced Surface Technologies Owned 75,000 Houston, Texas Sealing Technologies Leased 66,000 Deland, Florida Sealing Technologies Owned 50,000 Foreign Mexico City, Mexico Sealing Technologies Owned 128,000 Saint Etienne, France Sealing Technologies Owned 108,000 Taoyuan City, Taiwan Advanced Surface Technologies Leased 103,000 Neuss, Germany Sealing Technologies Leased 97,000 Sherbrooke, Canada Sealing Technologies Owned 86,000 Montbrison, France Sealing Technologies Owned 79,000 Our manufacturing capabilities are flexible and allow us to tailor the manufacturing process to increase performance and value for our customers and meet particular specifications.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeITEM 3. LEGAL PROCEEDINGS Descriptions of environmental and other legal matters are included in Item 7 of this annual report under the heading “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contingencies ” and in Note 20 to our Consolidated Financial Statements, which descriptions are incorporated by reference herein.
Biggest changeITEM 3. LEGAL PROCEEDINGS Descriptions of environmental and other legal matters are included in Item 7 of this annual report under the heading “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contingencies ” and in Note 19 to our Consolidated Financial Statements, which descriptions are incorporated by reference herein.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

6 edited+3 added−0 removed9 unchanged
Biggest changeAngelillo joined EnPro in October 2019 and has served as Vice President, Tax, since December 2019. Immediately prior to joining the Company, Mr. Angelillo served as Senior Director Global Tax Operations with XPO Logistics, from November 2018 through October 2019. Mr.
Biggest changeManz held positions of increasing responsibility with Nortel Networks, culminating in her position as HR Business Partner, Latin American Operations, Supply Chain & Manufacturing from September 2006 through November 2008. Ronald R. Angelillo joined Enpro in October 2019 and has served as Vice President, Tax, since December 2019. Immediately prior to joining the Company, Mr.
Bower held finance and accounting roles with the SGL Group from 1996 through 2014, and Collins & Aikman Corporation from 1989 through 1996. Mr. Bower was with Price Waterhouse LLP from July 1983 through November 1989, where he departed as an Audit Manager. Mr. Bower is both a Certified Public Accountant and a Certified Management Accountant. Ronald R.
Bower held finance and accounting roles with the SGL Group from 1996 through 2014, and Collins & Aikman Corporation from 1989 through 1996. Mr. Bower was with Price Waterhouse LLP from July 1983 through November 1989, where he departed as an Audit Manager. Mr. Bower is both a Certified Public Accountant and a Certified Management Accountant. Meredith L.
ITEM 4. MINE SAFETY DISCLOSURES Not Applicable 16 EXECUTIVE OFFICERS OF THE REGISTRANT Information concerning our executive officers is set forth below: Name Age Position Eric A. Vaillancourt 59 President, Chief Executive Officer and Director J. Milton Childress II 65 Executive Vice President and Chief Financial Officer Robert S.
ITEM 4. MINE SAFETY DISCLOSURES Not Applicable 17 EXECUTIVE OFFICERS OF THE REGISTRANT Information concerning our executive officers is set forth below: Name Age Position Eric A. Vaillancourt 60 President, Chief Executive Officer and Director J. Milton Childress II 66 Executive Vice President and Chief Financial Officer Robert S.
Angelillo also served as Senior Vice President, Accounting for Income Tax Operations with Bank of America from June 2016 through September 2018 and as Director, Global Tax Reporting with Stanley Black & Decker from July 2011 through June 2016. Mr. Angelillo also served as Tax Senior Manager with Deloitte from October 2006 through July 2011. Prior to that Mr.
Angelillo served as Senior Director Global Tax Operations with XPO Logistics, from November 2018 through October 2019. Mr. Angelillo also served as Senior Vice President, Accounting for Income Tax Operations with Bank of America from June 2016 through September 2018 and as Director, Global Tax Reporting with Stanley Black & Decker from July 2011 through June 2016. Mr.
McLean 58 Executive Vice President, Chief Administrative Officer, General Counsel and Secretary Steven R. Bower 64 Senior Vice President, Controller and Chief Accounting Officer Ronald R. Angelillo 52 Vice President, Tax __________________ Eric A.
McLean 59 Executive Vice President, Chief Administrative Officer, General Counsel and Secretary Steven R. Bower 65 Senior Vice President, Controller and Chief Accounting Officer Meredith L. Manz 43 Senior Vice President and Chief Human Resources Officer Ronald R. Angelillo 53 Vice President, Tax __________________ Eric A.
Angelillo held tax roles with increasing levels of responsibility from June 1996 through October 2006 with PricewaterhouseCoopers, United Technologies Corporation and Aetna Inc. 17 PART II
Angelillo also served as Tax Senior Manager with Deloitte from October 2006 through July 2011. Prior to that Mr. Angelillo held tax roles with increasing levels of responsibility from June 1996 through October 2006 with PricewaterhouseCoopers, United Technologies Corporation and Aetna Inc. 19 PART II
Added
Manz is currently Chief Human Resources Officer and Senior Vice President of Human Resources and has held that position since July 31, 2023. Prior to joining Enpro, Ms. Manz served as Managing Director with Manz Coaching & Consulting, LLC from September 2021 through July 2023 and Senior Change Management Advisor with Switch Consulting Group from August 2022 through December 2022.
Added
Prior to that, Ms. Manz served as Head, Employee Engagement NA & Global Leadership Program, AP with BASF, having previously served as Vice President, Global Human Resources from August 2018 through September 2021. Prior to that, Ms.
Added
Manz served as Head of Global HR Pre-Merger Planning with Bayer 18 Crop Science, having previously served as Vice President, Global Human Resources from October 2011 through August 2018. Prior to that, Ms.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−3 removed2 unchanged
Biggest changeWe do not consider the transfer of shares from EnPro Holdings in this context to be pursuant to a publicly announced plan or program. 18 CUMULATIVE TOTAL RETURN PERFORMANCE GRAPH Set forth below is a line graph showing the annual change in the cumulative total shareholder return for our common stock as compared to similar returns for the Russell 2000® Stock Index and the S&P 600 Capital Goods Index, which is the peer group that we selected beginning with this Form 10-K for inclusion in this graph.
Biggest changeWe do not consider the transfer of shares from EnPro Holdings in this context to be pursuant to a publicly announced plan or program. 20 CUMULATIVE TOTAL RETURN PERFORMANCE GRAPH Set forth below is a line graph showing the annual change in the cumulative total shareholder return for our common stock as compared to similar returns for the Russell 2000® Stock Index and the S&P 600 Capital Goods Index.
The following table sets forth all purchases made by us or on our behalf or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) under the Exchange Act, of shares of our common stock during each month in the fourth quarter of 2022.
The following table sets forth all purchases made by us or on our behalf or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) under the Exchange Act, of shares of our common stock during each month in the fourth quarter of 2023.
We have not made any repurchases under this authorization. (2) In December 2022, a total of 535 shares were transferred to a rabbi trust that we established in connection with our Deferred Compensation Plan for Non-Employee Directors, pursuant to which non-employee directors may elect to defer directors’ fees into common stock units.
We have not made any repurchases under this authorization. (2) In December 2023, a total of 208 shares were transferred to a rabbi trust that we established in connection with our Deferred Compensation Plan for Non-Employee Directors, pursuant to which non-employee directors may elect to defer directors’ fees into common stock units.
Returns have been calculated assuming the investment of $100 in each of the securities or indices on December 31, 2017, and reinvestment of dividends into additional shares of the respective equity securities when paid. The graph plots the respective values beginning on December 31, 2017, and continuing through December 31, 2022.
Returns have been calculated assuming the investment of $100 in each of the securities or indices on December 31, 2018, and reinvestment of dividends into additional shares of the respective equity securities when paid. The graph plots the respective values beginning on December 31, 2018, and continuing through December 31, 2023.
Period Total Number of Shares (or Units) Purchased Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs October 1 – October 31, 2022 — — — $50,000,000 (1) November 1 – November 30, 2022 — — — $50,000,000 (1) December 1 – December 31, 2022 535 (2) $ 108.58 (2) — $50,000,000 (1) Total 535 (2) $ 108.58 (2) — $50,000,000 (1) (1) In October of 2022, our board of directors authorized an expenditure program of up to $50.0 million for the repurchase of our outstanding common shares through October 2024.
Period Total Number of Shares (or Units) Purchased Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs October 1 – October 31, 2023 — — — $50,000,000 (1) November 1 – November 30, 2023 — — — $50,000,000 (1) December 1 – December 31, 2023 208 (2) $ 151.74 (2) — $50,000,000 (1) Total 208 (2) $ 151.74 (2) — $50,000,000 (1) (1) In October of 2022, our board of directors authorized the expenditure program of up to $50.0 million for the repurchase of our outstanding common shares through October 2024.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is publicly traded on the New York Stock Exchange (“NYSE”) under the symbol “NPO.” As of December 31, 2022, there were 2,088 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is publicly traded on the New York Stock Exchange (“NYSE”) under the symbol “NPO.” As of December 31, 2023, there were 1,982 holders of record of our common stock.
Accordingly, the total 535 shares were valued at a weighted average price of $108.58.
Accordingly, the total 208 shares were valued at a weighted average price of $151.74.
Of these shares, 75 shares were valued at a price of $107.94 per share, the closing trading price of our common stock on December 4, 2022, and 460 of these shares were valued at a price of $108.69 per share, the closing trading price of our common stock on December 31, 2022.
Of these shares, 64 shares were valued at a price of $140.49 per share, the closing trading price of our common stock on December 13, 2023, and 144 of these shares were valued at a price of $56.74 per share, the closing trading price of our common stock on December 31, 2023.
Removed
The graph also includes such information for a group of peer companies that we had selected for inclusion in the graph included in our Form 10-K for the year ended December 31, 2021. The companies in that peer group are Altra Industrial Motion Corp., Barnes Group, Inc., Chart Industries, Inc., Circor International, Inc., Columbus McKinnon Corporation, Crane Holdings, Inc.
Removed
(successor to Crane Co.), Curtiss Wright Corp., Enerpac Tool Group Corp., Graco Inc., IDEX Corporation, ITT Inc., Mueller Water Products, Inc., Nordson Corporation, SPX Technologies, Inc. (successor to SPX Corporation), Standex International Corporation, TriMas Corporation, Watts Water Technologies, Inc., Woodward, Inc., and Zurn Elkay Water Solutions Corporation (formerly, Regal Rexnord Corporation).
Removed
The group included in the line graph does not include SPX FLOW, Inc., which had been included in the peer group prior years, but was excluded as a result of it being acquired in 2022.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

112 edited+35 added−78 removed81 unchanged
Biggest changeA reconciliation of (i) income (loss) from continuing operations attributable to EnPro Industries, Inc. to adjusted income from continuing operations attributable to EnPro Industries, Inc., including on a per share basis, and (ii) income (loss) from continuing operations attributable to EnPro Industries, Inc. to adjusted EBITDA for the years ended December 31, 2022, 2021 and 2020 are as follows: 38 Years Ended December 31, 2022 2021 (In Millions Except Per Share Amounts) $ Average common shares outstanding, diluted Per Share $ Average common shares outstanding, diluted Per Share Income from continuing operations attributable to EnPro Industries, Inc. $ 6.7 20.9 $ 0.32 $ 56.9 20.8 $ 2.74 Net income (loss) attributable to redeemable non-controlling interests (2.8) 0.4 Income tax expense 24.4 8.7 Income from continuing operations before income taxes 28.3 66.0 Adjustments from selling, general, and administrative: Acquisition and divestiture expenses 1.2 15.6 Non-controlling interest compensation allocation 1 (0.7) 4.9 Amortization of acquisition-related intangible assets 74.8 42.1 Adjustments from other operating expense and cost of sales: Restructuring and impairment costs 2.9 2.5 Amortization of the fair value adjustment to acquisition inventory 13.1 9.4 Adjustments from other non-operating expense Asbestos receivable adjustment 2.8 — Environmental reserve adjustments 5.1 8.3 Costs associated with previously disposed businesses 0.3 0.4 Net loss (gain) on sale of businesses 0.6 (17.5) Pension income (non-service cost) (3.6) (8.4) Tax indemnification asset 2 0.9 3.0 Goodwill impairment 60.6 — Foreign exchange losses related to the divestiture of GGB 5 3.8 — Other adjustments 6 Other 0.2 (0.2) Adjusted income from continuing operations before income taxes 190.3 126.1 Adjusted tax expense (51.3) (37.8) Income from redeemable non-controlling interest, net of taxes 2.8 (0.4) Adjusted income from continuing operations attributable to EnPro Industries, Inc. $ 141.8 20.9 $ 6.79 3 $ 87.9 20.8 $ 4.23 3 39 Year Ended December 31, 2020 (In Millions Except Per Share Amounts) $ Average common shares outstanding, diluted Per Share Loss from continuing operations attributable to EnPro Industries, Inc. $ (21.4) 20.5 $ (1.05) Net income attributable to redeemable non-controlling interests 0.4 Income tax benefit (2.5) Loss from continuing operations before income taxes (23.5) Adjustments from selling, general, and administrative: Acquisition and divestiture expenses 10.9 Non-controlling interest compensation allocation 1 2.6 Amortization of acquisition-related intangible assets 34.1 Adjustments from other operating expense and cost of sales: Restructuring and impairment costs 14.3 Amortization of the fair value adjustment to acquisition inventory 2.8 Impairment of indefinite-lived trademarks 16.1 Adjustments from other non-operating expense Environmental reserve adjustments 36.0 Costs associated with previously disposed businesses 2.1 Loss on extinguishment of debt 2.7 Pensions expense (non-service cost) (3.1) Other adjustments 6 Other 0.2 Adjusted income from continuing operations before income taxes 95.2 Adjusted tax expense (28.6) Income from redeemable non-controlling interest, net of taxes (0.4) Adjusted income from continuing operations attributable to EnPro Industries, Inc. $ 66.2 20.6 4 3.21 3 Adjustments in the tables above only reflect amounts attributable to EnPro Industries, Inc. 1 Non-controlling interest compensation allocation represents compensation expense associated with a portion of the rollover equity from the acquisitions of LeanTeq and Alluxa that was and is subject to reduction for certain types of employment terminations of the LeanTeq and Alluxa sellers and is directly related to the terms of the respective acquisition.
Biggest changeIn addition, these non-GAAP measures are not necessarily comparable to similarly titled measures used by other companies. 37 A reconciliation of (i) income from continuing operations attributable to Enpro Inc. to adjusted income from continuing operations attributable to Enpro Inc., including on a per share basis, and (ii) income from continuing operations attributable to Enpro Inc. to adjusted EBITDA for the years ended December 31, 2023, 2022 and 2021 are as follows: Years Ended December 31, 2023 2022 (In Millions Except Per Share Amounts) $ Average common shares outstanding, diluted Per Share $ Average common shares outstanding, diluted Per Share Income from continuing operations attributable to Enpro Inc. $ 10.8 21.0 $ 0.51 $ 6.7 20.9 $ 0.32 Net loss attributable to redeemable non-controlling interests (3.9) (2.8) Income tax expense 30.8 24.4 Income from continuing operations before income taxes 37.7 28.3 Adjustments from selling, general, and administrative: Acquisition and divestiture expenses 1.1 1.2 Non-controlling interest compensation allocation 1 (0.3) (0.7) Amortization of acquisition-related intangible assets 68.4 74.8 Adjustments from other operating expense and cost of sales: Amortization of the fair value adjustment to acquisition inventory — 13.1 Restructuring and impairment costs 5.0 2.9 Adjustments from other non-operating expense Asbestos receivable adjustment — 2.8 Environmental reserve adjustments 2.9 5.1 Costs associated with previously disposed businesses 1.7 0.3 Net loss on sale of businesses — 0.6 Pension expense (income) (non-service cost) 1.5 (3.6) Tax indemnification asset 2 — 0.9 Goodwill impairment 56.5 60.6 Foreign exchange losses related to the divestiture of a discontinued operation 3 2.2 3.8 Other adjustments 4 Other 0.8 0.2 Adjusted income from continuing operations before income taxes 177.5 190.3 Adjusted tax expense (44.4) (51.3) Income from redeemable non-controlling interest, net of taxes 3.9 2.8 Adjusted income from continuing operations attributable to Enpro Inc. $ 137.0 21.0 $ 6.54 5 $ 141.8 20.9 $ 6.79 5 38 Year Ended December 31, 2021 (In Millions Except Per Share Amounts) $ Average common shares outstanding, diluted Per Share Income from continuing operations attributable to Enpro Inc. $ 56.9 20.8 $ 2.74 Net income attributable to redeemable non-controlling interests 0.4 Income tax expense 8.7 Income from continuing operations before income taxes 66.0 Adjustments from selling, general, and administrative: Acquisition and divestiture expenses 15.6 Non-controlling interest compensation allocation 1 4.9 Amortization of acquisition-related intangible assets 42.1 Adjustments from other operating expense and cost of sales: Restructuring and impairment costs 2.5 Amortization of the fair value adjustment to acquisition inventory 9.4 Adjustments from other non-operating expense Environmental reserve adjustments 8.3 Costs associated with previously disposed businesses 0.4 Net gain on sale of businesses (17.5) Pension income (non-service cost) (8.4) Tax indemnification asset 2 3.0 Other adjustments 4 Other (0.2) Adjusted income from continuing operations before income taxes 126.1 Adjusted tax expense (37.8) Income from redeemable non-controlling interest, net of taxes (0.4) Adjusted income from continuing operations attributable to Enpro Inc. $ 87.9 20.8 4.23 5 Adjustments in the tables above only reflect amounts attributable to Enpro Inc. 1 Non-controlling interest compensation allocation represents compensation expense associated with a portion of the rollover equity from the acquisitions of LeanTeq and Alluxa that was subject to reduction for certain types of employment terminations of the LeanTeq and Alluxa sellers and is directly related to the terms of the respective acquisition.
In connection with the completion of the transaction, we entered into a limited liability operating agreement with respect to the Alluxa Acquisition Subsidiary in connection with the rollover transaction, with three equity owners of Alluxa, who were also executives of Alluxa (the "Alluxa Executives"), receiving approximately 7% of the equity interests of the Alluxa Acquisition Subsidiary in return for their contribution of the rollover shares of Alluxa.
In connection with the completion of the transaction, we entered into a limited liability operating agreement with respect to the Alluxa Acquisition Subsidiary in connection with the rollover transaction, with three equity owners of Alluxa, who were also executives of Alluxa, receiving approximately 7% of the equity interests of the Alluxa Acquisition Subsidiary in return for their contribution of the rollover shares of Alluxa.
The Amended Credit Agreement contains certain financial covenants and required financial ratios, including: • a maximum consolidated total net leverage ratio of not more than 4.75 to 1.0 (with total debt, for the purposes of such ratio, to be net of up to $150 million of unrestricted cash of EnPro Industries, Inc. and its consolidated subsidiaries), which ratio will decrease to 4.5 to 1.0 for each fiscal quarter beginning with the fiscal quarter ending March 31, 2022 and ending with the fiscal quarter ending December 31, 2022, and to 4.0 to 1.0 for each quarter thereafter; and, once so decreased, may be increased (up to three times) at the borrowers' option to not more than 4.5 to 1.0 for the for-quarter period following a significant acquisition; and • a minimum consolidated interest coverage ratio of at least 2.5 to 1.0.
The Amended Credit Agreement contains certain financial covenants and required financial ratios, including: • a maximum consolidated total net leverage ratio of not more than 4.75 to 1.0 (with total debt, for the purposes of such ratio, to be net of up to $150 million of unrestricted cash of Enpro Inc. and its consolidated subsidiaries), which ratio will decrease to 4.5 to 1.0 for each fiscal quarter beginning with the fiscal quarter ending March 31, 2022 and ending with the fiscal quarter ending December 31, 2022, and to 4.0 to 1.0 for each quarter thereafter; and, once so decreased, may be increased (up to three times) at the borrowers' option to not more than 4.5 to 1.0 for the for-quarter period following a significant acquisition; and • a minimum consolidated interest coverage ratio of at least 2.5 to 1.0.
The Amended Credit Agreement contains affirmative and negative covenants (subject, in each case, to customary exceptions and qualifications), including covenants that limit our ability to, among other things: • grant liens on our assets; • incur additional indebtedness (including guarantees and other contingent obligations); • make certain investments (including loans and advances); • merge or make other fundamental changes; • sell or otherwise dispose of property or assets; • pay dividends and other distributions and prepay certain indebtedness; • make changes in the nature of our business; • enter into transactions with our affiliates; • enter into burdensome contracts; and • modify or terminate documents related to certain indebtedness.
The Amended Credit Agreement contains affirmative and negative covenants (subject, in each case, to customary exceptions and qualifications), including covenants that limit our ability to, among other things: 30 • grant liens on our assets; • incur additional indebtedness (including guarantees and other contingent obligations); • make certain investments (including loans and advances); • merge or make other fundamental changes; • sell or otherwise dispose of property or assets; • pay dividends and other distributions and prepay certain indebtedness; • make changes in the nature of our business; • enter into transactions with our affiliates; • enter into burdensome contracts; and • modify or terminate documents related to certain indebtedness.
A court might do so if it is found that when such Guarantor Subsidiary entered into its guarantee of the Senior Notes, or in some states when payments became due under the Senior Notes, such Guarantor Subsidiary received less than reasonably equivalent value or fair consideration and either: • was insolvent or rendered insolvent by reason of such incurrence; • was left with unreasonably small or otherwise inadequate capital to conduct our business; or • believed or reasonably should have believed that it would incur debts beyond its ability to pay.
A court might do so if it is found that when such Guarantor Subsidiary entered into its 36 guarantee of the Senior Notes, or in some states when payments became due under the Senior Notes, such Guarantor Subsidiary received less than reasonably equivalent value or fair consideration and either: • was insolvent or rendered insolvent by reason of such incurrence; • was left with unreasonably small or otherwise inadequate capital to conduct our business; or • believed or reasonably should have believed that it would incur debts beyond its ability to pay.
As a result of this note, we recorded a loss due to the change in exchange rate during December 2022. In January 2023, we hedged the outstanding notes and expect future gains or losses to be minimal. Adjusted EBITDA as presented in the table above also represents the amount defined as "EBITDA" under the indenture governing the Senior Notes.
As a result of this 40 note, we recorded a loss due to the change in exchange rate during December 2022. In January 2023, we hedged the outstanding notes and expect future gains or losses to be minimal. Adjusted EBITDA as presented in the table above also represents the amount defined as "EBITDA" under the indenture governing the Senior Notes.
This provision may not be effective to protect those 37 guarantees from being avoided under fraudulent transfer or conveyance law, or it may reduce that Guarantor Subsidiary’s obligation to an amount that effectively makes its guarantee worthless, and we cannot predict whether a court will ultimately find it to be effective.
This provision may not be effective to protect those guarantees from being avoided under fraudulent transfer or conveyance law, or it may reduce that Guarantor Subsidiary’s obligation to an amount that effectively makes its guarantee worthless, and we cannot predict whether a court will ultimately find it to be effective.
We cannot assure you, however, as to what standard a court would apply in making these determinations or that a court would agree with our conclusions in this regard. Reconciliations of Non-GAAP Financial Measures to the Comparable GAAP Measures Reconciliation of Adjusted Income from Continuing Operations Attributable to EnPro Industries, Inc .
We cannot assure you, however, as to what standard a court would apply in making these determinations or that a court would agree with our conclusions in this regard. Reconciliations of Non-GAAP Financial Measures to the Comparable GAAP Measures Reconciliation of Adjusted Income from Continuing Operations Attributable to Enpro Inc .
Our Advanced Surface Technologies (AST) segment applies proprietary technologies, processes, and capabilities to deliver a highly differentiated suite of products and solutions for the most challenging applications in high growth markets. The segment’s products and solutions are used in highly demanding environments requiring performance, precision and repeatability, with a low tolerance for failure.
Our Advanced Surface Technologies (AST) segment applies proprietary technologies, processes, and capabilities to deliver a highly differentiated suite of products and solutions for challenging applications in high-growth markets. The segment’s products and solutions are used in demanding environments requiring performance, precision and repeatability, with a low tolerance for failure.
The key assumptions used for the discounted cash flow approach include projected revenues and profit margins, projected capital expenditures, changes in working capital, and the current discount and tax rates. For the market approach, we select a group of peer companies that we believe are best representative of each reporting unit.
The key assumptions used for the discounted cash flow approach include projected revenues and profit margins, projected capital expenditures, changes in working capital, and the discount and tax rates. For the market approach, we select a group of peer companies that we believe are best representative of each reporting unit.
There is no prepayment penalty for a full or partial repayment of the Facilities at any time. 30 The Company and EnPro Holdings are the permitted borrowers under the Facilities. We have the ability to add wholly owned foreign subsidiaries as borrowers under the Revolving Credit Facility.
There is no prepayment penalty for a full or partial repayment of the Facilities at any time. The Company and EnPro Holdings are the permitted borrowers under the Facilities. We have the ability to add wholly owned foreign subsidiaries as borrowers under the Revolving Credit Facility.
We believe that it would be helpful to the readers of the financial statements to understand the impact of certain selected items on our reported income from continuing operations attributable to EnPro Industries, Inc. and diluted earnings per share attributable to EnPro Industries, Inc. continuing operations, including items that may recur from time to time.
We believe that it would be helpful to the readers of the financial statements to understand the impact of certain selected items on our reported income from continuing operations attributable to Enpro Inc. and diluted earnings per share attributable to Enpro Inc. continuing operations, including items that may recur from time to time.
The Amended Credit Agreement became effective on December 17, 2021. Borrowings under the 364-Day Facility bore interest at an annual rate of LIBOR plus 1.50% or base rate plus 0.50%.
The Amended Credit Agreement became effective on December 17, 2021. 29 Borrowings under the 364-Day Facility bore interest at an annual rate of LIBOR plus 1.50% or base rate plus 0.50%.
If the recognition threshold for the tax position is met, only the portion of the tax benefit that we believe is greater than 50 percent likely to be realized is recorded.
If the recognition threshold for the tax position is met, only the portion of the tax benefit that 34 we believe is greater than 50 percent likely to be realized is recorded.
They include adjusted income from continuing operations attributable to EnPro Industries, Inc., adjusted diluted earnings per share attributable to EnPro Industries, Inc. continuing operations, adjusted earnings before interest, taxes, depreciation, and amortization ("adjusted EBITDA"), and total adjusted segment EBITDA.
They include adjusted income from continuing operations attributable to Enpro Inc., adjusted diluted earnings per share attributable to Enpro Inc. continuing operations, adjusted earnings before interest, taxes, depreciation, and amortization ("adjusted EBITDA"), and total adjusted segment EBITDA.
The decrease in operating cash flows in 2022 versus 2021 was primarily attributable to increased income tax payments ($74.4 million) primarily related a refund from the IRS received in 2021 as a result of the conclusion of an audit of our 2014 through 2017 U.S. federal income tax returns and higher tax payments related to the divestiture of discontinued operations.
The decrease in operating cash flow in 2022 versus 2021 was primarily attributable to increased income tax payments ($74.4 million) primarily related a refund from the IRS received in 2021 as a result of the conclusion of an audit of our 2014 through 2017 U.S. federal income tax returns and higher tax payments related to the divestiture of discontinued operations.
Note 1 , “Overview, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Guidance,” to the Consolidated Financial Statements describes the significant accounting policies used to prepare the Consolidated Financial Statements and recently issued accounting guidance.
Note 1 , “Overview, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Guidance,” to the Consolidated Financial Statements describes 32 the significant accounting policies used to prepare the Consolidated Financial Statements and recently issued accounting guidance.
The Term Loan A-1 Facility amortizes on a quarterly basis in an annual amount equal to 2.50% of the original principal amount of the Term Loan A-1 Facility ($150.0 million) in year one after the closing, 5.00% of such original principal amount in year two and 1.25% of such original principal amount in each of the first three quarters of year three, with the remaining outstanding principal amount payable at maturity.
The Term Loan A-1 Facility amortized on a quarterly basis in an annual amount equal to 2.50% of the original principal amount of the Term Loan A-1 Facility ($150.0 million) in year one after the closing, 5.00% of such original principal amount in year two and 1.25% of such original principal amount in each of the first three quarters of year three, with the remaining outstanding principal amount payable at maturity.
We will perform our next annual goodwill impairment tests as of November 1, 2023; or earlier, if adverse changes in circumstances result in our assessment that a triggering event has occurred at any of our reporting units and an interim test is required.
We will perform our next annual goodwill impairment tests as of November 1, 2024; or earlier, if adverse changes in circumstances result in our assessment that a triggering event has occurred at any of our reporting units and an interim test is required.
Additional discussion regarding the Senior Notes and Amended Credit Agreement is included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations in “Liquidity and Capital Resources – Capital Resources,” and in Note 12 , "Debt," to the consolidated financial statements. The interest on debt represents the contractual interest coupon.
Additional discussion regarding the Senior Notes and Amended Credit Agreement is included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations in “Liquidity and Capital Resources – Capital Resources,” and in Note 11 , "Debt," to the consolidated financial statements. The interest on debt represents the contractual interest coupon.
Additional discussion regarding these liabilities is included earlier in this Management’s Discussion and Analysis of Financial Condition and Results of Operations in “Contingencies – Environmental" and "Contingencies – Crucible Steel Corporation a/k/a Crucible, Inc.,” and in Note 20 , "Commitments and Contingencies," to the consolidated financial statements.
Additional discussion regarding these liabilities is included earlier in this Management’s Discussion and Analysis of Financial Condition and Results of Operations in “Contingencies – Environmental" and "Contingencies – Crucible Steel Corporation a/k/a Crucible, Inc.,” and in Note 19 , "Commitments and Contingencies," to the consolidated financial statements.
Financing activities of continuing operations provided $618.2 million in 2021 primarily attributable to a net draw on our revolving credit facility ($175.0 million), new term loan facilities (as discussed below) ($465.0 million), and issuance of common stock ($10.0 million), partially offset by $22.4 million in dividend payments and $3.8 million in principal payments to our existing Term Loan A-1 facility (as defined below).
Financing activities provided $618.2 million in 2021, primarily attributable to a net draw on our revolving credit facility ($175.0 million), new Term Loan Facilities, as discussed below, ($465.0 million), and issuance of common stock ($10.0 million), partially offset by dividend payments ($22.4 million) and principal payments to our existing Term Loan A-1 Facility ($3.8 million).
The adjusted income tax expense presented above is calculated using a normalized company-wide effective tax rate excluding discrete items of 27.0% for 2022 and 30.0% for 2021 and 2020. Per share amounts were calculated by dividing by the weighted-average shares of diluted common stock outstanding during the periods.
The adjusted income tax expense presented above is calculated using a normalized company-wide effective tax rate excluding discrete items of 25.0% for 2023, 27.0% for 2022, and 30.0% for 2021. Per share amounts were calculated by dividing by the weighted-average shares of diluted common stock outstanding during the periods.
The cash used in 2021 was primarily the result of the acquisition of NxEdge ($856.8 million), partially offset by proceeds from the divestiture of CPI and other business during the year ($224.3 million).
The cash used in 2021 was primarily the result of the acquisition of NxEdge ($856.8 million), partially offset by proceeds from the divestiture of CPI and other businesses during the year ($224.3 million).
The test completed as of November 1, 2022 and 2021, indicated no impairment. Interim tests may be required if an event occurs or circumstances change that would more likely than not reduce the fair value below the carrying value or change the useful life of the asset.
The testing completed as of November 1, 2023, 2022 and 2021, indicated no impairment. Interim tests may be required if an event occurs or circumstances change that would more likely than not reduce the fair value below the carrying value or change the useful life of the asset.
For additional information, see “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview ” as well as Notes 1 and 9 to the Consolidated Financial Statements.
For additional information, see “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview ” as well as Notes 1 and 8 to the Consolidated Financial Statements.
Financing activities of continuing operations used $368.0 million in cash in 2022, primarily attributable to a net payment our Revolving Credit Facility and Term Loan Facilities (as defined below) ($337.0 million) and by $23.4 million in dividend payments.
Financing activities of continuing operations provided $368.0 million in 2022 primarily attributable to a net payment our Revolving Credit Facility, as defined below, and Term Loan Facilities ($337.0 million) and by dividend payments ($23.4 million).
In the fourth quarter of 2022, EnPro acquired all of the LeanTeq non-controlling interests. 2 In connection with the acquisition of Aseptic in 2019, we recognized a liability for uncertain tax positions and a related indemnification asset for the portion of that liability recoverable from the seller.
We acquired all of the LeanTeq non-controlling interests in the fourth quarter of 2022 and all of the Alluxa non-controlling interests in the first quarter of 2024. 2 In connection with the acquisition of Aseptic in 2019, we recognized a liability for uncertain tax positions and a related indemnification asset for the portion of that liability recoverable from the seller.
Additionally, other income (expense), net in the table above for the years ending December 31, 2022, 2021, and 2020 also includes $(1.8) million, $3.4 million, and $5.5 million, respectively, of miscellaneous expenses that are either not associated with a particular segment or not considered part of administering the corporate headquarters.
Additionally, other income (expense), net in the table above for the years ending December 31, 2023, 2022, and 2021 also includes $1.6 million, $(1.8) million, and $3.4 million, respectively, of miscellaneous expenses (credits) that are either not associated with a particular segment or not considered part of administering the corporate headquarters.
A guarantee of the Senior Notes by a Guarantor Subsidiary is subject to release in the following circumstances: (i) the sale, disposition, exchange or other transfer (including through merger, consolidation, amalgamation or otherwise) of the capital stock of the subsidiary made in a manner not in violation of the Indenture; (ii) the designation of the subsidiary as an “Unrestricted Subsidiary” under the Indenture; (iii) the legal defeasance or covenant defeasance of the Senior Notes in accordance with the terms of the Indenture; or (iv) the subsidiary ceasing to be our subsidiary as a result of any foreclosure of any pledge or security interest securing our Revolving Credit Facility or other exercise of remedies in respect thereof.
A guarantee of the Senior Notes by a Guarantor Subsidiary is subject to release in the following circumstances: (i) the sale, disposition, exchange or other transfer (including through merger, consolidation, amalgamation or otherwise) of the capital stock of the subsidiary made in a manner not in violation of the Indenture; (ii) the designation of the subsidiary as an “Unrestricted Subsidiary” under the Indenture; (iii) the legal defeasance or covenant defeasance of the Senior Notes in accordance with the terms of the Indenture; or (iv) the subsidiary ceasing to be our subsidiary as a result of any foreclosure of any pledge or security interest securing our Revolving Credit Facility or other exercise of remedies in respect thereof. 35 The following tables present summarized financial information for Enpro Inc.
In our Consolidated Balance Sheet, these amounts are shown net of a debt discount of $4.4 million.
In our Consolidated Balance Sheet, these amounts are shown net of a debt discount of $3.3 million.
The Amended Credit Agreement provides for credit facilities in the initial aggregate principal amount of $1,007.5 million, consisting of a five-year, senior secured revolving credit facility of $400.0 million (the “Revolving Credit Facility”), a $142.5 million senior secured term loan facility in replacement of the our existing senior secured term loan facility, maturing September 25, 2024 (the “Term Loan A-1 Facility”), a five-year, senior secured term loan facility of $315.0 million (the “Term Loan A-2 Facility”) and a 364-day, senior secured term loan facility of $150.0 million (the “364-Day Facility” and together with the Revolving Credit Facility, the Term Loan A-1 Facility and the Term Loan A-2 Facility, the “Facilities”).
The Amended Credit Agreement provides for credit facilities in the initial aggregate principal amount of $1,007.5 million, consisting of a five-year, senior secured revolving credit facility of $400.0 million (the “Revolving Credit Facility”), a $142.5 million senior secured term loan facility in replacement of the our existing senior secured term loan facility, maturing September 25, 2024 (the “Term Loan A-1 Facility”), a five-year, senior secured term loan facility of $315.0 million (the “Term Loan A-2 Facility”) and a 364-day, senior secured term loan facility of $150.0 million (the “364-Day Facility” and together with the Term Loan A-1 Facility and the Term Loan A-2 Facility, the "Term Loan Facilities”, which together with the Revolving Credit Facility are referred to as the "Facilities").
In the fourth quarter of 2022, EnPro acquired all of the LeanTeq non-controlling interests. 41 2 In connection with the acquisition of Aseptic in 2019, we recognized a liability for uncertain tax positions and a related indemnification asset for the portion of that liability recoverable from the seller.
We acquired all of the LeanTeq non-controlling interests in the fourth quarter of 2022 and all of the Alluxa non-controlling interests in the first quarter of 2024. 2 In connection with the acquisition of Aseptic in 2019, we recognized a liability for uncertain tax positions and a related indemnification asset for the portion of that liability recoverable from the seller.
Reconciliation of Income (Loss) from Continuing Operations Attributable to EnPro Industries, Inc. to Total Adjusted Segment EBITDA The reconciliation of income (loss) from continuing operations attributable to EnPro Industries, Inc. to total adjusted segment EBITDA for the years ended December 31, 2022, 2021 and 2020 is included in “— Results of Operations ."
Reconciliation of Income from Continuing Operations Attributable to Enpro Inc. to Total Adjusted Segment EBITDA The reconciliation of income from continuing operations attributable to Enpro Inc. to total adjusted segment EBITDA for the years ended December 31, 2023, 2022 and 2021 is included in “— Results of Operations ."
On an ongoing basis we evaluate our estimates, including, but not limited to, those related to bad debts, inventories, intangible assets, income taxes, warranty obligations, restructuring, pensions and other postretirement benefits, and contingencies and litigation. We base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances.
On an ongoing basis we evaluate our estimates, including, but not limited to, those related to bad debts, inventories, intangible assets, income taxes, warranty obligations, restructuring, pensions, and contingencies and litigation. We base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Actual results may differ from our estimates.
Reconciliation of Income (Loss) from Continuing Operations Attributable to EnPro Industries, Inc. to Adjusted EBITDA Years Ended December 31, 2022 2021 2020 Income (loss) from continuing operations attributable to EnPro Industries, Inc. $ 6.7 $ 56.9 $ (21.4) Net income (loss) attributable to redeemable non-controlling interests (2.8) 0.4 0.4 Income (loss) from continuing operations 3.9 57.3 (21.0) Adjustments to arrive at earnings before interest, income taxes, depreciation, amortization, and other selected items (" Adjusted EBITDA"): Interest expense, net 33.9 13.7 14.9 Income tax expense (benefit) 24.4 8.7 (2.5) Depreciation and amortization expense 103.1 63.8 56.6 Restructuring and impairment expense 2.9 2.5 14.3 Environmental reserve adjustments 5.1 8.3 36.0 Costs associated with previously disposed businesses 0.3 0.4 2.1 Net loss (gain) on sale of businesses 0.6 (17.5) 2.7 Acquisition and divestiture expense 1.2 15.6 11.2 Pension income (non-service cost) (3.6) (8.4) (3.1) Non-controlling interest compensation allocations 1 (0.6) 5.3 2.9 Impairment of indefinite-lived trademarks — — 16.1 Asbestos receivable adjustment 2.8 — — Amortization of the fair value adjustment to acquisition date inventory 13.3 9.9 3.0 Tax indemnification asset 2 0.9 3.0 — Goodwill impairment 65.2 — — Foreign exchange losses related to the divestiture of GGB 3 3.8 — — Other 0.2 (0.2) 0.2 Adjusted EBITDA $ 257.4 $ 162.4 $ 133.4 1 Non-controlling interest compensation allocation represents compensation expense associated with a portion of the rollover equity from the acquisitions of LeanTeq and Alluxa that was and is subject to reduction for certain types of employment terminations of the LeanTeq Executives and the Alluxa Executives and is directly related to the terms of the respective acquisition.
Reconciliation of Income from Continuing Operations Attributable to Enpro Inc. to Adjusted EBITDA Years Ended December 31, 2023 2022 2021 Income from continuing operations attributable to Enpro Inc. $ 10.8 $ 6.7 $ 56.9 Net income (loss) attributable to redeemable non-controlling interests (3.9) (2.8) 0.4 Income from continuing operations 6.9 3.9 57.3 Adjustments to arrive at earnings before interest, income taxes, depreciation, amortization, and other selected items (" Adjusted EBITDA"): Interest expense, net 30.1 33.9 13.7 Income tax expense 30.8 24.4 8.7 Depreciation and amortization expense 94.5 103.1 63.8 Restructuring and impairment expense 5.0 2.9 2.5 Environmental reserve adjustments 2.9 5.1 8.3 Costs associated with previously disposed businesses 1.7 0.3 0.4 Net loss (gain) on sale of businesses — 0.6 (17.5) Acquisition and divestiture expense 1.1 1.2 15.6 Pension expense (income) (non-service cost) 1.5 (3.6) (8.4) Non-controlling interest compensation allocations 1 (0.3) (0.6) 5.3 Asbestos receivable adjustment — 2.8 — Amortization of the fair value adjustment to acquisition date inventory — 13.3 9.9 Tax indemnification asset 2 — 0.9 3.0 Goodwill impairment 60.8 65.2 — Foreign exchange losses related to the divestiture of a discontinued operation 3 2.2 3.8 — Other 0.8 0.2 (0.2) Adjusted EBITDA $ 238.0 $ 257.4 $ 162.4 1 Non-controlling interest compensation allocation represents compensation expense associated with a portion of the rollover equity from the acquisitions of LeanTeq and Alluxa that was subject to reduction for certain types of employment terminations of the LeanTeq Executives and the Alluxa Executives and is directly related to the terms of the respective acquisition.
An offsetting decrease in expense was recorded for the release of the corresponding liability for the uncertain tax position and is reflected as a reduction in tax expense. Income tax expense from continuing operations was $24.4 million in 2022 and $8.7 million in 2021. The effective tax rates for 2022 and 2021 were 86.2% and 13.4% respectively.
An offsetting decrease in expense was recorded for the release of the corresponding liability for the uncertain tax position and is reflected as a reduction in tax expense. Income tax expense from continuing operations was $30.8 million in 2023 and $24.4 million in 2022. The effective tax rates for 2023 and 2022 were 81.6% and 86.2% respectively.
In addition, the non-GAAP measures we use are not necessarily comparable to similarly titled measures used by other companies. Overview Overview . We are a leading-edge industrial technology company focused on critical applications across a diverse group of growing end markets such as semiconductor, photonics, industrial process, aerospace, food, biopharma and life sciences.
In addition, the non-GAAP measures we use are not necessarily comparable to similarly titled measures used by other companies. Overview Overview . Enpro is a leading-edge industrial technology company focused on critical applications across a diverse group of growing end markets such as semiconductor, industrial process, commercial vehicle, sustainable power generation, aerospace, food and pharmaceuticals, photonics, and life sciences.
Additional undistributed earnings are estimated to be $66.7 million as of December 31, 2022. Whether through the application of the 100 percent dividends received deduction, or distribution of these previously-taxed earnings, we do not intend to distribute foreign earnings that will be subject to any significant incremental U.S. or foreign tax.
Additionally, undistributed earnings are estimated to be $179.5 million as of December 31, 2023. Whether through the application of the 100-percent dividends received deduction, or distribution of these previously-taxed earnings, we do not intend to distribute foreign earnings that will be subject to any significant incremental U.S. or foreign tax.
During 2022, we repatriated $298.3 million of earnings from our foreign subsidiaries, resulting in only $2.0 million of withholding taxes net of refunds to be received. We have determined that estimating any tax liability on our investment in foreign subsidiaries is not practicable. Therefore, we have not recorded any deferred tax liability on undistributed earnings of foreign subsidiaries.
During 2023, we repatriated $72.6 million of earnings from our foreign subsidiaries, resulting in only $0.4 million of withholding taxes net of refunds to be received. We have determined that estimating any tax liability on our investment in foreign subsidiaries is not practicable. Therefore, we have not recorded any deferred tax liability on undistributed earnings of foreign subsidiaries.
Highlights Financial highlights for the years ended December 31, 2022, 2021 and 2020 are as follows: 2022 2021 2020 (in millions, except per share data) Net sales $ 1,099.2 $ 840.4 $ 800.0 Income (loss) from continuing operations attributable to EnPro Industries, Inc. $ 6.7 $ 56.9 $ (21.4) Net income attributable to EnPro Industries, Inc. $ 205.1 $ 177.9 $ 177.6 Diluted earnings (loss) per share from continuing operations attributable to EnPro Industries, Inc. $ 0.32 $ 2.74 $ (1.05) Adjusted income from continuing operations attributable to EnPro Industries, Inc. 1 $ 141.8 $ 87.9 $ 66.2 Adjusted diluted earnings per share attributable to EnPro Industries, Inc. continuing operations 1 $ 6.79 $ 4.23 $ 3.21 Adjusted Segment EBITDA 2 $ 300.6 $ 215.1 $ 178.6 Adjusted EBITDA 1 $ 257.4 $ 162.4 $ 133.4 1 Reconciliation of these non-GAAP measures to their respective GAAP measure are located in "— Reconciliation of Non-GAAP Financial Measure to the Comparable GAAP Measure " at the end of this section. 2 Reconciliation of these non-GAAP measures to their respective GAAP measure are located in " — Results of Operations ".
Highlights Financial highlights for the years ended December 31, 2023, 2022 and 2021 are as follows: 2023 2022 2021 (in millions, except per share data) Net sales $ 1,059.3 $ 1,099.2 $ 840.4 Income from continuing operations attributable to Enpro Inc. $ 10.8 $ 6.7 $ 56.9 Net income attributable to Enpro Inc. $ 22.2 $ 205.1 $ 177.9 Diluted earnings (loss) per share from continuing operations attributable to Enpro Inc. $ 0.51 $ 0.32 $ 2.74 Adjusted income from continuing operations attributable to Enpro Inc. 1 $ 137.0 $ 141.8 $ 87.9 Adjusted diluted earnings per share attributable to Enpro Inc. continuing operations 1 $ 6.54 $ 6.79 $ 4.23 Adjusted Segment EBITDA 2 $ 287.8 $ 300.6 $ 215.1 Adjusted EBITDA 1 $ 238.0 $ 257.4 $ 162.4 1 Reconciliation of these non-GAAP measures to their respective GAAP measure are located in "— Reconciliation of Non-GAAP Financial Measure to the Comparable GAAP Measure " at the end of this section. 2 Reconciliation of these non-GAAP measures to their respective GAAP measure are located in " — Results of Operations ".
The Guarantor Subsidiaries at December 31, 2020 comprise all of our 35 consolidated domestic subsidiaries at that date. Our subsidiaries organized outside of the United States, (collectively, the “Non-Guarantor Subsidiaries”) did not guarantee the Old Notes and do not guarantee the Senior Notes.
The Guarantor Subsidiaries at December 31, 2023 comprise all of our consolidated domestic subsidiaries at that date. Our subsidiaries organized outside of the United States, (collectively, the “Non-Guarantor Subsidiaries”) do not guarantee the Senior Notes.
The following table summarizes the impact of acquisitions, divestitures, and foreign currency on sales by segment: Sales Percent Change 2021 vs. 2020 increase/(decrease) Acquisitions and divestitures Foreign Currency Organic Total EnPro Industries, Inc.
The following table summarizes the impact of acquisitions, divestitures, and foreign currency on sales by segment: Sales Percent Change 2023 vs. 2022 increase/(decrease) Divestiture Foreign Currency Organic Total Enpro Inc.
On October 17, 2018, we completed the offering of $350 million aggregate principal amount of our 5.75% senior notes due 2026 (the "Senior Notes") and applied the net proceeds of that offering, together with borrowings under the Revolving Credit Facility, to redeem on October 31, 2018 the full $450 million aggregate principal amount of our outstanding 5.875% senior notes due 2022 (the "Old Notes"), of which $300 million aggregate principal amount were issued in 2014 and $150 million aggregate principal amount were issued in a follow-on offering in 2017.
On October 17, 2018, we completed the offering of $350 million aggregate principal amount of our 5.75% senior notes due 2026 (the "Senior Notes") and applied the net proceeds of that offering, together with borrowings under the Revolving Credit Facility, to redeem on October 31, 2018 the full $450 million aggregate principal amount of our outstanding 5.875% senior notes due 2022.
Unless otherwise indicated, amounts presented in Management's Discussion and Analysis of Financial Condition and Results of Operations pertain to continuing operations only (see Note 2 to our Consolidated Financial Statements in this Form 10-K for information on discontinued operations and the related disposition of those operations) Other Dispositions On September 2, 2021, we sold certain assets and liabilities of our polymer components business unit, which was principally located in Houston, Texas and had been included in our Sealing Technologies segment.
The sale closed on December 21, 2021 and we recorded a pretax gain of $117.6 million in the fourth quarter of 2021 as a result of this transaction. 24 Unless otherwise indicated, amounts presented in Management's Discussion and Analysis of Financial Condition and Results of Operations pertain to continuing operations only (see Note 20 to our Consolidated Financial Statements in this Form 10-K for information on discontinued operations and the related disposition of those operations) Other Dispositions On September 2, 2021, we sold certain assets and liabilities of our polymer components business unit, which was principally located in Houston, Texas and had been included in our Sealing Technologies segment.
Expenses not directly attributable to the segments, corporate expenses, net interest expense, gains and losses related to the sale of assets, and income taxes are not included in the computation of Adjusted Segment EBITDA.
Expenses not directly attributable to the segments, corporate expenses, net interest expense, gains and losses related to the sale of assets, and income taxes are not included in the computation of Adjusted Segment EBITDA. The accounting policies of the reportable segments are the same as those for Enpro.
These products are used in a variety of markets, including chemical and petrochemical processing, nuclear energy, food and biopharmaceutical processing, primary metal manufacturing, mining, water and waste treatment, heavy-duty trucking, aerospace, medical, filtration and semiconductor fabrication.
These products are used in a variety of markets, including chemical and petrochemical processing, nuclear energy, hydrogen, natural gas, food and biopharmaceutical processing, primary metal manufacturing, mining, water and waste treatment, commercial vehicle, aerospace (including commercial space), medical, filtration and semiconductor fabrication.
Management acknowledges that there are many items that impact a company’s reported results and the adjustments reflected in these non-GAAP financial measures are not intended to present all items that may have impacted these results. In addition, these non-GAAP measures are not necessarily comparable to similarly titled measures used by other companies.
Management acknowledges that there are many items that impact a company’s reported results and the adjustments reflected in these non-GAAP financial measures are not intended to present all items that may have impacted these results.
Intangible assets with indefinite lives are subject to at least annual impairment testing, which were conducted as of November 1 in 2022 and 2021, and as of October 1, 2021 and 2020. The impairment testing compares the fair value of the intangible asset with its’ carrying amount using the relief from royalty method.
Intangible assets with indefinite lives, which consist primarily of trade names, are subject to at least annual impairment testing, which was conducted as of November 1 in 2023, 2022 and 2021. The impairment testing compares the fair value of the intangible asset with its carrying amount using the relief from royalty method.
Should we need additional capital, we have resources available, which are discussed in this section under the heading “Capital Resources.” As of December 31, 2022, we held $187.4 million of cash and cash equivalents in the United States and $147.0 million of cash outside of the United States.
Should we need additional capital, we have resources available, which are discussed in this section under the heading “Capital Resources.” As of December 31, 2023, we held $214.1 million of cash and cash equivalents in the United States and $155.7 million of cash outside of the United States.
Over the past several years, we have executed several strategic initiatives to focus the portfolio of businesses where we offer proprietary, industrial technology-related products and solutions with high barriers to entry, compelling margins, strong cash flow, and perpetual recurring/aftermarket revenue in markets with favorable secular tailwinds.
Over the past several years, we have executed several strategic initiatives to focus the portfolio of businesses where we offer proprietary, industrial technology-related products and solutions with high barriers to entry, compelling margins, strong cash flow, and perpetual recurring/aftermarket revenue in markets with favorable secular tailwinds. 22 We manage our business as two segments: a Sealing Technologies segment and an Advanced Surface Technologies segment.
Other income (expense), net in the table above contains all items included in other (operating) expense and other income (expense) on our Consolidated Statements of Operations for the years ending December 31, 2022, 2021, and 2020 with the exception of $1.9 million, $2.4 million, and $9.9 million, respectively, of segment restructuring costs and $1.1 million and $0.1 million of corporate restructuring costs in 2022 and 2021, respectively.
We acquired all of the LeanTeq non-controlling interests in the fourth quarter of 2022 and all of the Alluxa non-controlling interests in the first quarter of 2024. 26 Other income (expense), net in the table above contains all items included in other (operating) expense and other income (expense) on our Consolidated Statements of Operations for the years ending December 31, 2023, 2022, and 2021 with the exception of $4.0 million, $1.9 million, and $2.4 million, respectively, of segment restructuring costs and $1.0 million, $1.1 million and $0.1 million of corporate restructuring costs in 2023, 2022 and 2021, respectively.
The accounting policies of the reportable segments are the same as those for EnPro. 25 Non-controlling interest compensation allocation represents compensation expense associated with a portion of the rollover equity from the acquisitions of LeanTeq and Alluxa that was and is subject to reduction for certain types of employment terminations of the sellers.
Non-controlling interest compensation allocation represents compensation expense associated with a portion of the rollover equity from the acquisitions of LeanTeq and Alluxa that was subject to reduction for certain types of employment terminations of the sellers.
Results of Operations Years Ended December 31, 2022 2021 2020 (in millions) Sales Sealing Technologies $ 624.3 $ 599.8 $ 636.7 Advanced Surface Technologies 476.1 247.3 171.2 1,100.4 847.1 807.9 Intersegment sales (1.2) (6.7) (7.9) Total sales $ 1,099.2 $ 840.4 $ 800.0 Income (loss) from continuing operations attributable to EnPro Industries, Inc. $ 6.7 $ 56.9 $ (21.4) Adjusted Segment EBITDA Sealing Technologies $ 159.1 $ 141.9 $ 131.5 Advanced Surface Technologies 141.5 73.2 47.1 Total Adjusted Segment EBITDA $ 300.6 $ 215.1 $ 178.6 Reconciliations of Income (loss) from continuing operations attributable to EnPro Industries, Inc. to Adjusted Segment EBITDA Income (loss) from continuing operations attributable to EnPro Industries, Inc. $ 6.7 $ 56.9 $ (21.4) Plus: net income (loss) attributable to redeemable non-controlling interests (2.8) 0.4 0.4 Income (loss) from continuing operations 3.9 57.3 (21.0) Income tax benefit (expense) (24.4) (8.7) 2.5 Income (loss) from continuing operations before income taxes 28.3 66.0 (23.5) Acquisition and divestiture expenses 0.5 0.4 9.6 Non-controlling interest compensation allocation (0.6) 5.3 2.9 Amortization of the fair value adjustment to acquisition date inventory 13.3 9.9 3.0 Restructuring and impairment costs 1.9 2.4 14.3 Depreciation and amortization expense 102.8 63.5 56.5 Corporate expenses 47.0 64.9 41.4 Interest expense, net 33.9 13.7 14.9 Goodwill impairment 65.2 — — Other income (expense), net 8.3 (11.0) 59.5 Adjusted Segment EBITDA $ 300.6 $ 215.1 $ 178.6 We measure segment operating performance based on segment earnings before interest, income taxes, depreciation, amortization, and other selected items ("Adjusted Segment EBITDA" or "Segment AEBITDA"), which is segment revenue reduced by operating expenses and other costs identifiable with the segment, excluding acquisition and divestiture expenses, restructuring costs, impairment charges, non-controlling interest compensation, amortization of the fair value adjustment to acquisition date inventory, and depreciation and amortization.
Our portfolio presents technology leadership, compelling profitability, high cash flow return on investment, with favorable secular tailwinds. 25 Results of Operations Years Ended December 31, 2023 2022 2021 (in millions) Sales Sealing Technologies $ 658.4 $ 624.3 $ 599.8 Advanced Surface Technologies 401.2 476.1 247.3 1,059.6 1,100.4 847.1 Intersegment sales (0.3) (1.2) (6.7) Total sales $ 1,059.3 $ 1,099.2 $ 840.4 Income from continuing operations attributable to Enpro Inc. $ 10.8 $ 6.7 $ 56.9 Adjusted Segment EBITDA Sealing Technologies $ 192.3 $ 159.1 $ 141.9 Advanced Surface Technologies 95.5 141.5 73.2 Total Adjusted Segment EBITDA $ 287.8 $ 300.6 $ 215.1 Reconciliations of Income from continuing operations attributable to Enpro Inc. to Adjusted Segment EBITDA Income from continuing operations attributable to Enpro Inc. $ 10.8 $ 6.7 $ 56.9 Plus: net income (loss) attributable to redeemable non-controlling interests (3.9) (2.8) 0.4 Income from continuing operations 6.9 3.9 57.3 Income tax expense (30.8) (24.4) (8.7) Income from continuing operations before income taxes 37.7 28.3 66.0 Acquisition and divestiture expenses 1.1 0.5 0.4 Non-controlling interest compensation allocation (0.3) (0.6) 5.3 Amortization of the fair value adjustment to acquisition date inventory — 13.3 9.9 Restructuring and impairment costs 4.0 1.9 2.4 Depreciation and amortization expense 94.3 102.8 63.5 Corporate expenses 49.5 47.0 64.9 Interest expense, net 30.1 33.9 13.7 Goodwill impairment 60.8 65.2 — Other expense (income), net 10.6 8.3 (11.0) Adjusted Segment EBITDA $ 287.8 $ 300.6 $ 215.1 We measure segment operating performance based on segment earnings before interest, income taxes, depreciation, amortization, and other selected items ("Adjusted Segment EBITDA" or "Segment AEBITDA"), which is segment revenue reduced by operating expenses and other costs identifiable with the segment, excluding acquisition and divestiture expenses, restructuring costs, impairment charges, non-controlling interest compensation, amortization of the fair value adjustment to acquisition date inventory, and depreciation and amortization.
Many of our products and solutions are used in highly demanding applications and often in incredibly harsh environments, e.g., where extreme temperatures, extreme pressures, corrosive environments, strict tolerances, and/or worn equipment create challenges for product performance. Sealing Technologies offers customers widely recognized applied engineering, innovation, process know how and enduring reliability, driving a lasting aftermarket for many of our solutions.
These environments include those where extreme temperatures, extreme pressures, corrosive agents, strict tolerances, or worn equipment create challenges for product performance. Sealing Technologies offers customers widely recognized applied engineering, innovation, process know- how and enduring reliability, driving a lasting aftermarket for many of our products and solutions.
We were in compliance with all covenants of the Amended Credit Agreement as of December 31, 2022. The borrowing availability under our Revolving Credit Facility at December 31, 2022 was $389.2 million after giving consideration to $10.8 million of outstanding letters of credit and $0.0 million of outstanding borrowings.
We were in compliance with all covenants of the Amended Credit Agreement as of December 31, 2023. The borrowing availability under our Revolving Credit Facility at December 31, 2023 was $390 million after giving consideration to $10.0 million of outstanding letters of credit. The balance of our outstanding Term Loan A-2 Facility at December 31, 2023 was $299.3 million.
Sales of $624.3 million in 2022 reflect a 4.1% increase compared to $599.8 million in 2021. Excluding unfavorable foreign exchange translation ($19.2 million) on our 2022 sales and the sales from businesses that have since been divested ($27.5 million) from 2021 results, sales were up 12.4% or $71.2 million.
Sales of $658.4 million in 2023 reflect a 5.5% increase compared to $624.3 million in 2022. Excluding favorable foreign exchange translation ($3.1 million) on our 2023 sales and the sales from businesses that have since been divested ($4.1 million) from 2022 results, sales were up 5.7% or $35.1 million.
These expenses are included in selling, general and administrative expense on our Consolidated Statements of Operations. 2022 Compared to 2021 Sales of $1,099.2 million in 2022 increased 30.8% from $840.4 million in 2021.
These expenses are included in selling, general and administrative expense on our Consolidated Statements of Operations. 2023 Compared to 2022 Sales of $1,059.3 million in 2023 decreased 3.6% from $1,099.2 million in 2022.
We manage our business as two segments: a Sealing Technologies segment and an Advanced Surface Technologies segment. 20 Our Sealing Technologies segment designs and manufactures value-added products and solutions that safeguard a variety of critical environments, including: metallic, non-metallic and composite material gaskets, dynamic seals, compression packing, resilient metal seals, elastomeric seals, custom-engineered mechanical seals for applications in the aerospace industry and other markets, hydraulic components, expansion joints, sanitary gaskets, hoses and fittings for the hygienic process industries, fluid transfer products for the pharmaceutical and biopharmaceutical industries, and heavy-duty commercial vehicle parts used in wheel-end and suspension components that customers rely upon to ensure safety on our roadways.
Our Sealing Technologies segment engineers and manufactures value-added products and solutions that safeguard a variety of critical environments, including: metallic, non-metallic and composite material gaskets; dynamic seals; compression packing; elastomeric components; custom-engineered mechanical seals used in diverse applications; hydraulic components; test, measurement and sensing applications; sanitary gaskets; hoses and fittings for hygienic process industries; fluid transfer products for the pharmaceutical and biopharmaceutical industries; and commercial vehicle solutions used in wheel-end and suspension components that customers rely upon to ensure safety on our roadways.
The pre-tax gain on the disposition of GGB recognized in the fourth quarter of 2022 was $189.1 million. The sale of GGB included a subsidiary of our Sealing Technologies segment which is not part of the discontinued operations described above. The results of operations of this subsidiary are included in continuing operations for all periods being reported.
The sale of GGB included a subsidiary of our Sealing Technologies segment which is not part of the discontinued operations described above. The results of operations of this subsidiary are included in continuing operations for all periods being reported.
Annual assessments are conducted in the context of information that was reasonably available to us as of the date of the assessment including our best estimates of future sales volumes and prices; material and labor cost and availability; operational efficiency including the impact of projected capital asset additions, and the then current discount rates and tax rates.
Our annual impairment test of the goodwill for the three reporting units of our Sealing Technologies segment as of November 1, 2022 and 2021 indicated no impairment. 33 Annual assessments are conducted in the context of information that was reasonably available to us as of the date of the assessment including our best estimates of future sales volumes and prices; material and labor cost and availability; operational efficiency including the impact of projected capital asset additions, and the discount rates and tax rates.
The table does not include obligations under our pension and postretirement benefit plans, which are included in Note 15 , "Pension and Postretirement Benefits," to the consolidated financial statements. 32 Share Repurchase Program In October 2018, our board of directors authorized a two-year program for expenditures of up to $50.0 million of our outstanding common shares.
The table does not include obligations under our pension plans, which is included in Note 14 , "Pension," to the consolidated financial statements. Share Repurchase Program In October 2022, our board of directors renewed their authorization for a new two-year program of up to $50.0 million for the repurchase of our outstanding common shares.
The projection and analysis indicated that the book 34 value of the Alluxa reporting unit exceeded fair value by $65.2 million which has been recognized as an impairment charge in the fourth quarter of 2022.
At the time of our annual test as of November 1, 2022, our updated forecast and projections based upon our annual projection and analysis indicated that the carrying value of the Alluxa reporting unit exceeded fair value by $65.2 million which has been recognized as an impairment charge in the fourth quarter of 2022.
In 2022, our board declared a dividend of $0.28 per share in each quarter, and on February 16, 2023 we announced that our board of directors had increased the quarterly dividend to $0.29 per share, commencing with the dividend to be paid on March 15, 2023 to all shareholders of record as of March 1, 2023.
On February 15, 2024 we announced that our board of directors had increased the quarterly dividend to $0.30 per share, commencing with the dividend to be paid on March 20, 2024 to all shareholders of record as of March 6, 2024.
Investing activities in 2022 provided cash from the sale businesses ($301.9 million), primarily the sale of GGB, and the settlement of derivative contracts ($27.4 million). This was partially offset by the payments for acquisitions, principally driven by the acquisition of the LeanTeq minority owners ($31.2 million) and investments in property, plant and equipment ($29.4 million).
Investing activities in 2023 used cash primarily for investments in property, plant, and equipment ($33.9 million), partially offset by proceeds of the sale of businesses, principally the sale of GPT ($25.9 million). Investing activities in 2022 provided cash from the sale of businesses ($301.9 million), primarily the sale of GGB, and the settlement of derivative contracts ($27.4 million).
NxEdge is an advanced manufacturing, cleaning, coating, and refurbishment business focused on the semiconductor value chain, with six main facilities located in Idaho and California. Since the date of its acquisition, NxEdge has been included as part of the Company’s Advanced Surface Technologies segment.
NxEdge is an advanced manufacturing, cleaning, coating, and refurbishment business focused on the semiconductor value chain, with six main facilities located in Idaho and California.
Please see the " Overview " section of Management's Discussion and Analysis Financial Condition and Results of Operations and Note 4 to our consolidated financial statements for further information.
Workforce reductions associated with our restructuring activities totaled 36 administrative and manufacturing positions. Please see the " Overview " section of Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 3 to our consolidated financial statements for further information.
In September 2019, Lunar Investment LLC ("Lunar"), a subsidiary of EnPro, acquired all of the equity securities of LeanTeq Co, LTD. and its affiliate LeanTeq LLC (collectively referred to as "LeanTeq").
In the first quarter of 2024, we acquired all of these equity interests in the Alluxa Acquisition Subsidiary for $17.9 million and became the sole owner of Alluxa. In September 2019, Lunar Investment LLC ("Lunar"), a subsidiary of Enpro, acquired all of the equity securities of LeanTeq Co, LTD. and its affiliate LeanTeq LLC (collectively referred to as "LeanTeq").
We anticipate an additional $0.8 million payment in December of 2023, subject to the financial performance of LeanTeq through November 2023. We have recorded this anticipated $0.8 million payment as a liability included in accrued expenses on our consolidated balance sheet as of December 31, 2023.
As a result of the financial performance of LeanTeq in November 2023, we will make a final $1.1 million payment to the LeanTeq Executives in the first quarter of 2024. We have recorded this payment as a liability included in accrued expenses on our consolidated balance sheet as of December 31, 2023.
Contingencies A description of our contingencies is included in Note 20 to the Consolidated Financial Statements in this report, which is incorporated herein by reference.
Contingencies A description of our contingencies is included in Note 19 to the Consolidated Financial Statements in this report, which is incorporated herein by reference. Supplemental Guarantor Financial Information On October 17, 2018, we completed the offering of the Senior Notes.
Excluding the favorable foreign exchange translation ($2.5 million) and the Segment AEBITDA earned from businesses that have since been divested ($14.7 million) from 2020 results, Adjusted Segment EBITDA increased 19.4%, or $22.6 million.
Segment AEBITDA margin increased from 25.5% in 2022 to 29.2% in 2023. Excluding the favorable foreign exchange translation ($1.6 million) from 2023 results and the Segment AEBITDA earned from businesses that have since been divested ($1.9 million) from 2022 results, Adjusted Segment EBITDA increased 21.3%, or $33.5 million.
In the second quarter of 2022, we determined the performance of our Alluxa reporting unit to be a triggering event for an interim goodwill impairment test and, as a result, we performed an assessment as of June 30, 2022.
In the second quarter of 2023, we determined the lower than previously projected actual and forecasted financial performance of our Semiconductor reporting unit to be a triggering event for an interim goodwill impairment test. We determined the fair value exceeded the carrying value as of June 30, 2023.
As a result of this note, we recorded a loss due to the change in exchange rate during December 2022. In January 2023, we hedged the outstanding notes and expect future gains or losses to be minimal. 6 Other adjustments are included in selling, general, and administrative, cost of sales, and other operating expenses on the consolidated statement of operations.
In January 2023, we hedged the outstanding notes and expect future gains or losses to be minimal. 39 4 Other adjustments are included in selling, general, and administrative, cost of sales, and other operating expenses on the consolidated statement of operations. 5 Adjusted diluted earnings per share.
Because of the transition tax, GILTI, and Subpart F provisions, undistributed earnings of our foreign subsidiaries totaling $225.1 million at December 31, 2021 have been subjected to U.S. income tax or are eligible for the 100 percent dividends-received deduction under Section 245A of the Internal Revenue Code ("IRC") provided in the Tax Cuts and Jobs Act.
If the funds held outside the United States were needed for our operations in the U.S., we have several methods to repatriate such funds without significant adverse tax effects, including repayment of intercompany loans, distributions subject to a 100-percent dividends-received deduction for income tax purposes, or distributions of previously-taxed earnings. 28 Because of the transition tax, GILTI, and Subpart F provisions, undistributed earnings of our foreign subsidiaries totaling $251.0 million at December 31, 2022 have been subjected to U.S. income tax or are eligible for the 100-percent dividends-received deduction under Section 245A of the Internal Revenue Code ("IRC") provided in the Tax Cuts and Jobs Act.
As a result of classifying the GGB and GPT businesses as held for sale in the third quarter of 2022, we determined Engineered Materials to be a discontinued operation. The sale of GGB closed on November 4, 2022 to The Timken Company for total proceeds of $305 million, subject to closing date purchase price adjustments.
As a result of classifying the GGB and GPT businesses as held for sale in the third quarter of 2022, we determined Engineered Materials to be a discontinued operation. On January 30, 2023 we completed the sale of GPT.
The fair value of the three reporting units of our Sealing Technologies segment all exceeded their respective carrying values by more than 60% as of November 1, 2022. We completed our annual impairment tests of goodwill as of November 1, 2021, October 1, 2021 and 2020 with no impairment indicated.
The fair value of the three reporting units of our Sealing Technologies segment all exceeded their respective carrying values by more than 75% as of November 1, 2023.
Actual costs to be incurred in future periods may vary from estimates because of the inherent uncertainties in evaluating environmental exposures due to unknown and changing conditions, changing government regulations and legal standards regarding liability. Goodwill and Other Intangible Assets Goodwill represents the excess of the purchase price over the estimated fair value of the net assets of acquired businesses.
Actual costs to be incurred in future periods may vary from estimates because of the inherent uncertainties in evaluating environmental exposures due to unknown and changing conditions, changing government regulations and legal standards regarding liability. Income Taxes We use the asset and liability method of accounting for income taxes.
These risks and uncertainties include, but are not limited to: the risks and uncertainties set forth in Item 1A of this annual report, entitled “Risk Factors.” We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by law.
We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by law.
It does not include the debt discount accretion, which also is a component of interest expense. Payments for other liabilities are estimates for other retained liabilities of previously owned businesses included in the Consolidated Balance Sheets at December 31, 2022. These estimated payments, along with our estimated payments of environmental liabilities, are based on information currently known to us.
It does not include the debt discount accretion, which also is a component of interest expense. The estimated payments of environmental liabilities is based on information currently known to us.
In making the transition, we performed annual impairment testing for all of our intangible assets on both dates in the fourth quarter of 2021. The goodwill asset impairment test involves comparing the fair value of a reporting unit to its carrying amount.
Goodwill is not amortized, but instead is subject to annual impairment testing that is conducted each calendar year in the fourth quarter. Our annual impairment testing for all of our intangible assets is November 1 of each year. The goodwill asset impairment test involves comparing the fair value of a reporting unit to its carrying amount.

… 145 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−0 removed5 unchanged
Biggest changeThe table represents principal cash flows (in millions) and related weighted average interest rates by the contractual maturity dates. 2023 2024 2025 2026 2027 Total Fair Value Fixed rate debt $ 0.2 $ 0.2 $ 0.2 $ 350.2 $ 0.1 $ 350.9 $ 344.6 Average interest rate 4.0 % 4.0 % 4.1 % 5.8 % 5.1 % 5.8 % The table above excludes unamortized debt discount of $3.1 million at December 31, 2022.
Biggest changeThe table represents principal cash flows (in millions) and related weighted average interest rates by the contractual maturity dates. 2024 2025 2026 2027 2028 Total Fair Value Fixed rate debt $ 0.2 $ 0.2 $ 350.2 $ 0.2 $ 0.1 $ 350.9 $ 350.6 Average interest rate 4.1 % 4.1 % 5.8 % 4.9 % 4.8 % 5.7 % The table above excludes unamortized debt discount of $2.1 million at December 31, 2023.
We strive to pass along such commodity price increases to customers to avoid profit margin erosion and utilize lean initiatives to further mitigate the impact of commodity raw material price fluctuations as we achieve improved efficiencies. We do not hedge commodity risk with any market risk sensitive instruments.
We strive to pass along such commodity price increases to customers to avoid profit margin erosion and utilize lean initiatives to further mitigate the impact of commodity raw material price fluctuations as we achieve improved efficiencies. We do not hedge commodity risk with any market risk sensitive instruments. 41
In December 2022, we entered into a forward contract to hedge a 95 million Euro exposure of an intercompany note agreement related to the proceeds from the GGB sale allocated to foreign subsidiaries. We expect this position to be resolved in 2023.
In December 2022, we entered into a forward contract to hedge a 95 million Euro exposure of an intercompany note agreement related to the proceeds from the GGB sale allocated to foreign subsidiaries. We expect this position to be resolved in 2024.
The table below provides information about the maturities of our fixed rate debt obligations as of December 31, 2022.
The table below provides information about the maturities of our fixed rate debt obligations as of December 31, 2023.
The notional amount of foreign exchange contracts hedging foreign currency transactions was $103.3 million and $3.3 million as of December 31, 2022 and 2021, respectively. All foreign exchange contracts outstanding at December 31, 2022 expired in January 2023. 42 Commodity Risk We source a wide variety of materials and components from a network of global suppliers.
The notional amount of foreign exchange contracts hedging foreign currency transactions was $110.5 million and $103.3 million as of December 31, 2023 and 2022, respectively. All foreign exchange contracts outstanding at December 31, 2023 expired in January 2024. Commodity Risk We source a wide variety of materials and components from a network of global suppliers.
Additionally, we had $441.1 million outstanding on the Amended Credit Agreement as of December 31, 2022, which has a variable interest rate that adjusts at least quarterly. A change in interest rates on variable-rate debt affects the interest expense incurred and cash flows, but does not affect the net balance sheet liability of the financial instrument.
Additionally, we had $299.3 million outstanding on the Amended Credit Agreement as of December 31, 2023, which has a variable interest rate that adjusts at least quarterly. A change in interest rates on variable-rate debt affects the interest expense incurred and cash flows, but does not affect the net balance sheet liability of the financial instrument.

Other NPO 10-K year-over-year comparisons