Enpro Inc.

Hello, and welcome to the NPRO fourth quarter and full year 2021 earnings call and webcast. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to James Gentile, Vice President, Investor Relations. Please go ahead, James.

Good morning and welcome to NPRO's fourth quarter and year-end 2021 earnings conference call. I'll remind you that our call is also being webcast at NPROindustries.com, where you can find the presentation that accompanies this call. With me today is Eric Valencourt, our President and Chief Executive Officer, and Milt Childress, Executive Vice President and Chief Financial Officer. Before we begin today's discussion, a friendly reminder that we will be making forward-looking statements on this call that are not historical facts, and that are considered forward-looking in nature. These statements involve a number of risks and uncertainties, including impacts from the pandemic and related governmental responses and their impact on the general economy, as well as other risks and uncertainties that are described in our filings with the SEC, including our most recent Form 10-K and Form 10-Q. Also during the call, we will reference a number of non-GAAP financial measures, Tables reconciling these measures to the comparable GAAP measures are included in the appendix to the presentation materials. We do not undertake any obligation to update these forward-looking statements. Also during this call, we will be providing full-year guidance, which excludes changes in the numbers of shares outstanding, impacts from future acquisitions, dispositions, and related transaction costs, restructuring costs, incremental impacts of inflation, geopolitical variables, and trade tensions on market demand, and costs subsequent to the end of the fourth quarter, the impact of foreign exchange rate changes subsequent to the end of the fourth quarter, interest rate increases differing from assumptions outlined in guidance, impact from the further spread of COVID-19 or other variants and environmental and in litigation charges. With that out of the way, I'll turn the call over to Eric.

Thanks, James, and good morning, everyone. It was a successful year across ENPRO. as we continue to rise to the occasion to meet the challenges and opportunities that have arisen over the past 12 months. Thanks to our incredible teams, we once again delivered on our strategic and financial objectives. To begin, I'll provide financial and strategic highlights for the full year, and then Milt will share details on our fourth quarter results. 2021 represented another transformational year at ENPRO. We continue to successfully reshape our portfolio and shift toward growth markets with products and services that command higher margins and cash flow returns. With the acquisition of NexEdge and the divestiture of CPI in December, as well as the divestiture of the polymer components business in the third quarter, we achieved meaningful strides in our portfolio reshaping strategy, which is positioning our company for a very promising future. As volumes recovered from the 2020 pandemic lows, we saw positive momentum across the organization. For the year, sales grew 6.3% to $1.14 billion. Organic sales grew 14.4%. We saw strong demand in most markets, including general industrial, semiconductor, heavy duty truck, petrochemical, food and pharma, and aerospace. Adjusted EBITDA of $208.4 million increased by 23.8% compared to 2020. Adjusted EBITDA margin of 18.3% increased 260 basis points driven primarily by organic sales increases. Select product, select price actions and the net benefit of strategic portfolio reshaping completed in both 2020 and 2021. Partially offset by raw material inflation as well as supply chain labor and logistics constraints. As we said last quarter, we still expect raw material inflation and supply chain challenges to continue. And we will see uncertainty and volatility in the macro environment as we enter 2022. Our commercial and supply chain teams continue to evaluate all opportunities to mitigate these current circumstances while meeting the needs of our customers in this strong demand environment. We are realizing the substantial benefits of our portfolio reshaping actions. which have enabled us to capture incremental margin expansion in 2021 while keeping a close eye on cost and further simplifying our already agile organization. Our strong order trends continued during the fourth quarter and we are beginning 2022 with solid demand. In particular, we continue to see broad-based strength across our businesses and are encouraged by what we are hearing from our customers, particularly in semiconductor, heavy-duty truck, aerospace, nuclear, and food and pharma markets. As we look forward, we continue to invest both organically and inorganically in our advanced surface technologies and sealing technology segments while driving cost and return improvements in the engineered materials segment. We will build upon this core industrial technology foundation now in place, maintaining our focus on margins and cash flow returns. Further, we expect to maintain our strong recurring revenue streams. with aftermarket revenue across our businesses approaching 50% of total company revenue. Finally, we remain focused on driving long-term shareholder returns through a disciplined approach to capital allocation supported by our steady cash flows, and also through our commitment to sustainability and diversity. 2022 marks our 20th year as an independent public company. As I enter my first year as Enpro's CEO, I marvel at how far we have come and could not be more excited for what the future will hold for all of our stakeholders. I will now hand the call over to Milt for a deeper dive into our financial results for the fourth quarter. Milt.