Enpro Inc.

Hello, and welcome to the MPRO first quarter 2022 earnings call and webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, 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.

Thank you, Kevin, and good morning, everyone. Welcome to Enpro's first quarter 2022 earnings conference call. I will remind you that our call is being webcast at EnproIndustries.com, where you can find the presentation that accompanies this call. With me today is Eric Valancourt, 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. Also during this 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. Please note that 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 from inflation, geopolitical variables, including the conflict in Ukraine, sanctions and trade tensions on market demand, and costs subsequent to the first quarter. The impact of foreign exchange rate changes subsequent to the end of the first quarter increases in interest rates differing from assumptions outlined in guidance, impacts from further spread of COVID-19 or other variants, and environmental and litigation charges. it is my pleasure to turn the call over to Eric. Eric?

Thanks, James, and good morning, everyone. Thank you for joining us today as we provide a strategic and financial update for our first quarter of 2022. 2022 marks our 20th anniversary as an independent public company. Over the last two decades, thanks to the hard work and dedication of the EnPro team, we have built a strong foundation for sustainable growth and value creation. As we charge forward, Our enhanced cash flow models will enable us to continue to drive organic growth investments, expand in our key end markets, and selectively pursue acquisitions that fit our strategic and financial criteria. I am proud of how far we have come, and I have never been more excited for the future of EnPro and all of our stakeholders. Now on to our first quarter highlights. Our team's agile execution produced strong results in our first quarter. Despite significant inflationary pressures, geographical uncertainty, and resulting global macroeconomic headwinds. I would like to thank our entire team for their hard work, resilience, and flexibility under challenging circumstances as we continue to deliver to our customers and all of our stakeholders. I am particularly excited about the opportunities arising from our acquisition of NextEdge, as we are already realizing the significant benefits of combining the commercial and technological advantages across our advanced surface technologies platform. Our teams are coordinating closely, and the combination is demonstrating solid strategic and cultural fit. For the quarter, we delivered strong top-line results with organic sales growth of 13.5%, with demand for our products and services largely broad-based. Amid a challenging environment, our supply chain, operations, and commercials team continue to collaborate to secure supply, improve processes, and pursue pricing actions to offset rising material costs freight, and labor costs across the company. The inflationary environment also continues to present headwinds, particularly on our heavy-duty truck market in the ceiling technology segment and on our automotive exposed markets in the engineered materials segment. We expect these conditions to persist through at least year-end, and we continue to explore opportunities to mitigate these headwinds with pricing, sourcing, and continuous operational improvement. Our portfolio optimization strategy has elevated the profitability of the entire enterprise and has empowered our colleagues to execute on our value creation objectives with purpose and close collaboration. Our first quarter adjusted EBITDA of $67.9 million increased 30.6% year-over-year, largely due to contributions from NextEdge in its first full reporting quarter, and adjusted EBITDA margin expanded 210 basis points to 20.7%. I would like to point out that this is the first time in our 20-year history that our quarterly adjusted EBITDA margins exceeded 20%, which marks a tremendous milestone for our company. Just a short time ago, in 2019, we finished the year at 14% adjusted EBITDA margin. This achievement is a testament to the resilience of our operating model and the steps we have taken to create a stronger, more focused, profitable portfolio. Our 2022 sales growth and adjusted EBITDA guidance that we are reiterating today implies adjusted EBITDA margins north of 20% for the full year. From a strategic perspective, we remain focused on niche high margin material science related businesses with strong cashflow and robust aftermarket exposure. We are developing market leading leadership positions in higher growth markets that are supported by secular tailwinds as we lean into our most profitable opportunities. We continue to leverage our time-tested process improvement initiatives to preserve and increase margins in cash flow return on investment, while maximizing long-term shareholder returns through our commitment to sustainability and diversity, disciplined capital allocation, and transparency. It is now my pleasure to hand the call over to Milt for a deeper dive into our first quarter results and outlook for the balance of 2022.