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EnPro Industries Reports Results for the Fourth Quarter and Full Year of 2018

CHARLOTTE, N.C.--(BUSINESS WIRE)--

EnPro Industries, Inc. (NPO) today announced its financial results for the three-month and twelve-month periods ended December 31, 2018.

 

Consolidated and Pro Forma Financial Highlights

(Amounts in millions except per share data and percentages)

 
Results for the Quarter Ended

December 31

      Consolidated 1
2018 3     2017     % ∆
Net Sales $ 381.4     $ 362.5 5.2%
Segment Profit 5 $ 28.3 $ 38.7 (26.9%)
Segment Margin 7.4% 10.7%
Net Income (Loss) $ (22.1) $ 34.2 (164.6%)
Diluted Earnings (Loss) Per Share $ (1.07) $ 1.57 (168.2%)
Adjusted Net Income 6 $ 20.5 $ 14.8 38.5%
Adjusted Diluted Earnings Per Share 6 $ 0.98 $ 0.67 46.3%
Adjusted EBITDA 6 $ 54.5 $ 48.7 11.9%
Adjusted EBITDA Margin 6         14.3%       13.4%      
         
Results for the Fiscal Year Ended

December 31

Consolidated 1 Pro Forma 2
2018 3     2017 2017     % ∆ 4
Net Sales $ 1,532.0     $ 1,309.6 $ 1,402.5     9.2%
Segment Profit 5 $ 154.6 $ 149.9 $ 172.5 (10.4%)
Segment Margin 10.1% 11.4% 12.3%
Net Income $ 24.6 $ 539.8 $ 53.7 (54.2%)
Diluted Earnings Per Share $ 1.16 $ 24.76 $ 2.46 (52.8%)
Adjusted Net Income 6 $ 82.6 $ 50.6 $ 75.7 9.1%
Adjusted Diluted Earnings Per Share 6 $ 3.91 $ 2.32 $ 3.48 12.4%
Adjusted EBITDA 6 $ 217.4 $ 188.2 $ 215.4 0.9%
Adjusted EBITDA Margin 6         14.2%       14.4%       15.4%      

1 Consolidated results for the year ended December 31, 2017 reflect (i) the deconsolidation of Garlock Sealing Technologies LLC (“GST”) and its subsidiaries, effective June 5, 2010, when GST filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code to begin a process (the Asbestos Claims Resolution Process, or “ACRP”) in pursuit of an efficient and permanent resolution to all current and future asbestos claims against it and (ii) the deconsolidation of OldCo, LLC (“OldCo”), effective January 30, 2017, when it filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code in furtherance of the ACRP, in each case until the reconsolidation of GST, its subsidiaries and OldCo effective as of July 31, 2017 upon the consummation and effectiveness of the joint plan of reorganization confirmed in the ACRP. Consolidated results for each of the three months ended December 31, 2018 and 2017 and the year ended December 31, 2018 include the results of GST and OldCo for the entire period.
2 Pro forma financial information for the year ended December 31, 2017 in these tables and throughout this press release is presented as if GST and OldCo were reconsolidated with EnPro throughout these periods based on the consummation of the joint plan of reorganization, which was consummated on July 31, 2017. See attached unaudited condensed consolidated pro forma statement of operations.
3 Effective January 1, 2018, EnPro adopted the new comprehensive revenue recognition accounting standard using a modified retrospective transition approach. Under this approach, revenues for prior periods have not been restated. Application of the new standard for the three months and twelve months ended December 31, 2018 had an immaterial impact on items reflected in the consolidated statement of operations as compared to amounts as determined under the revenue recognition accounting standard applicable during the three months and twelve months ended December 31, 2017.
4 Due to the reconsolidation effective July 31, 2017, consolidated results for the year ended December 31, 2018 are being compared to the pro forma results for the year ended December 31, 2017.
5 Effective January 1, 2018, EnPro adopted a new accounting standard on presentation of pension and other postretirement benefits expense using a retrospective transition approach. See the attached schedule of Segment Information (Unaudited) for a description of the impact of the adoption of this standard on Segment Profit for the three months and twelve months ended December 31, 2017.
6 See the attached schedules for adjustments and reconciliations to GAAP numbers.


Key Developments

  • EnPro experienced strong fourth quarter sales growth, with total sales increasing 5.2% compared to the same period of 2017.
  • Segment profit increased 8.3% in the fourth quarter compared to the same period of 2017, excluding the impact of restructuring, acquisition-related expenses, and inventory adjustments.
  • Adjusted diluted earnings per share increased 46.3% in the fourth quarter compared to the same period of 2017.
  • Capital allocation highlights:
    • Paid a $0.24 per share quarterly dividend with a total value of $5 million.
    • Collected $13.1 million of asbestos-related insurance recoveries in the fourth quarter, bringing the total collections during the full year to $29.9 million.
    • Repatriated $11.4 million and $125.4 million of earnings from foreign subsidiaries during the fourth quarter and full year, respectively, without any incremental taxes.
  • EnPro issues 2019 adjusted EBITDA guidance of $225 million to $233 million and adjusted diluted earnings per share guidance of $4.28 to $4.55, reflecting confidence that recent issues in STEMCO’s Brake Products Group will be resolved in 2019 and taking into consideration the macroeconomic forecasts for the company’s core end markets.

“Overall, I am very pleased with the performance of our company during the fourth quarter,” said Steve Macadam, President and CEO. “Nearly all of our businesses generated year-over-year sales growth, driven by continued favorable demand in many of the markets that we serve. Sales to the aerospace, food & pharma, heavy-duty tractor and trailer builds, metals & mining, refining & processing, oil & gas, military marine engines and aftermarket parts and services markets grew year-over-year. As we communicated throughout the year, we expected Power Systems’ performance to be weighted to the second half of the year, and Power Systems delivered remarkable results in the fourth quarter, driven by record aftermarket parts and services sales. The sales momentum across the company, along with lower SG&A, resulted in adjusted EBITDA growth, despite continued cost challenges in STEMCO’s Brake Products Group in Sealing Products.

“We are focused on resolving the issues that we have faced in STEMCO’s Brake Products Group, and we recently announced a restructuring plan to discontinue the manufacturing of brake drum friction products. We believe these actions, plus others underway across the company, are positioning us for margin improvement and free cash flow growth in 2019.

“Given current macroeconomic forecasts, planned improvements in STEMCO’s Brake Products Group, and anticipated weakness in semiconductor, automotive and heavy-duty truck OE demand, we expect our 2019 full-year adjusted EBITDA to be between $225 million and $233 million. This translates to an adjusted diluted earnings per share outlook of $4.28 to $4.55 for the year,” said Mr. Macadam.

Full-year guidance excludes changes in the number of shares outstanding, impacts from future acquisitions and acquisition-related costs, restructuring costs, incremental impacts of tariffs and trade tensions on market demand and costs subsequent to year-end, the impact of foreign exchange rate changes subsequent to year-end, and environmental and any select legacy litigation charges.

Consolidated results for the periods after July 31, 2017 reflect the reconsolidation of GST, its subsidiaries and OldCo as a result of the completion of the ACRP. Given that consolidated results in the year ended December 31, 2017 did not reflect all of EnPro’s entities, investors may find comparisons of consolidated results for the year ended December 31, 2018 to pro forma results for the prior year to be most illustrative of the year-over-year performance of all of EnPro’s businesses. Pro forma results for the year ended December 31, 2017 reflect the performance of all of these businesses for that period.

Demand in the aerospace, food & pharma, heavy-duty tractor and trailer builds, metals & mining, and military marine engines and aftermarket parts and services markets was strong during the quarter, although year-over-year growth in Sealing Products and Engineered Products was muted by strong prior year results, the company’s exit of the industrial gas turbine market earlier in the year, and softness in the automotive, nuclear, and U.S. oil & gas pipeline construction markets. Foreign exchange translation reduced sales by 1.0% versus the fourth quarter of 2017.

Segment profit in the fourth quarter was down year-over-year as a result of cost challenges and restructuring expenses in the heavy-duty truck portion of Sealing Products, despite growth and improved margins outside of heavy-duty truck. Excluding the impact of costs related to acquisitions and divestitures, foreign exchange translation, the impact of the change in the loss reserve due to foreign exchange on the EDF contract in the Power Systems segment, acquisition inventory fair value adjustments, and restructuring charges, total segment profit was 15.3% higher compared to the total segment profit in the fourth quarter of last year.

As previously announced, the company implemented a restructuring plan under which its STEMCO heavy-duty truck business subsequently discontinued the manufacturing of brake drum friction products. The restructuring plan involved the shutdown of production lines that occupy a portion of STEMCO’s owned manufacturing facility in Rome, Georgia. STEMCO has elected to concentrate its drum friction resources specifically on formulating and sourcing, and the company will continue to offer a full range of high-quality brake shoes using friction manufactured by approved suppliers who meet STEMCO’s stringent quality standards.

The company recorded total restructuring expenses related to the exit of approximately $15.4 million in the fourth quarter of 2018 composed of non-cash charges primarily related to impairment of inventory, equipment and other tangible assets. Additionally, restructuring costs related to the exit include severance and other costs of approximately $0.4 million expected to be incurred in the first half of 2019.

The company’s average diluted share count in the fourth quarter of 2018 was 20.7 million shares, approximately 1.1 million less than in the same period a year ago. The decrease was primarily due to share repurchases during 2018 in connection with the $50 million share repurchase program authorized in October 2017, which was completed during the third quarter of 2018.

Pro Forma Results Including Formerly Deconsolidated Subsidiaries

To aid comparisons of year-over-year data, the company has included information in this press release showing key operating metrics for EnPro and its formerly deconsolidated subsidiaries, GST and OldCo, on a pro forma reconsolidated basis for the year ended December 31, 2017. These metrics are derived from tables attached to this press release that illustrate, on a pro forma basis, financial results for 2017 as if GST and OldCo were reconsolidated with EnPro throughout that period based on consummation of the joint plan of reorganization, which was consummated on July 31, 2017. In response to requests from investors, we are providing the pro forma financial information in this release as supplemental comparative information as it reflects the performance of all of our subsidiaries during those periods.

Conference Call and Webcast Information

EnPro will hold a conference call tomorrow, February 14, at 10:00 a.m. Eastern Time to discuss fourth quarter 2018 results. Investors who wish to participate in the call should dial 1-877-407-0832 approximately 10 minutes before the call begins and provide conference ID number 13686335. A live audio webcast of the call and accompanying slide presentation will be accessible from the company’s website, https://www.enproindustries.com. To access the presentation, log on to the webcast by clicking the link on the company’s home page.

Non-GAAP Financial Information

This press release contains financial measures that have not been prepared in conformity with GAAP. They include adjusted net income, adjusted diluted earnings per share, pro forma adjusted net income, pro forma adjusted diluted earnings per share, adjusted EBITDA, pro forma adjusted EBITDA, adjusted EBITDA margin and pro forma adjusted EBITDA margin, as well as segment adjusted EBITDA, segment adjusted EBITDA margin, pro forma segment adjusted EBITDA and pro forma segment adjusted EBITDA margin. Tables showing the effect of these non-GAAP financial measures for the three months and twelve months ended December 31, 2017 and 2018 are attached to the release. Adjusted EBITDA anticipated for full year 2019 is calculated in a manner consistent with the presentation of adjusted EBITDA in the attached tables. Adjusted diluted earnings per share anticipated for full year 2019 is calculated in a manner consistent with the presentation of adjusted diluted earnings per share in the attached tables. Because of the forward-looking nature of these estimates of adjusted EBITDA and adjusted diluted earnings per share, it is impractical to present quantitative reconciliations of such measures to comparable GAAP measures, and accordingly no such GAAP measures are being presented. These estimates exclude changes in the number of shares outstanding, impacts from future acquisitions and acquisition-related costs, restructuring costs, incremental impacts of tariffs and trade tensions on market demand and costs subsequent to year-end, the impact of foreign exchange rate changes subsequent to year-end, and any litigation or environmental charges.

Management believes these non-GAAP metrics are commonly used financial measures for investors to evaluate the company’s operating performance for the periods presented, and when read in conjunction with the company’s consolidated financial statements, present a useful tool to evaluate the company’s ongoing operations and provide investors with measures they can use to evaluate performance from period to period. In addition, these are some of the factors the company uses in internal evaluations of the overall performance of its businesses. Management acknowledges that there are many items that impact a company’s reported results and the adjustments reflected in these non-GAAP 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.

Forward-Looking Statements

Statements in this press release that express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They involve a number of risks and uncertainties that may cause actual events and results to differ materially from such forward-looking statements. These risks and uncertainties include, but are not limited to: general economic conditions in the markets served by our businesses, some of which are cyclical and experience periodic downturns; prices and availability of raw materials; the impact of fluctuations in relevant foreign currency exchange rates; unanticipated delays or problems in introducing new products; the incurrence of contractual penalties for the late delivery of long lead-time products; announcements by competitors of new products, services or technological innovations; changes in our pricing policies or the pricing policies of our competitors; and the amount of any payments required to satisfy contingent liabilities related to discontinued operations of our predecessors, including liabilities for certain products, environmental matters, employee benefit obligations and other matters. Our filings with the Securities and Exchange Commission, including the Form 10-K for the year ended December 31, 2017, describe these and other risks and uncertainties in more detail. We do not undertake to update any forward-looking statements made in this press release to reflect any change in management's expectations or any change in the assumptions or circumstances on which such statements are based.

About EnPro Industries

EnPro Industries, Inc. is a leader in sealing products, metal polymer and filament wound bearings, components and service for reciprocating compressors, diesel and dual-fuel engines, and other engineered products for use in critical applications by industries worldwide. For more information about EnPro, visit the company’s website at http://www.enproindustries.com.

 
 
 
 
 

APPENDICES

 
 
Highlights of Segment Results: Fourth Quarter of 2018
 
 
Consolidated Financial Information and Reconciliations
 
 
Introduction of Unaudited Pro Forma Financial Information
 
 
Pro Forma Financial Information and Reconciliations
 
 
 
 
 

Sealing Products Segment

 
        Consolidated     Pro Forma 1
($ in millions)       2018     2017 2017     % ∆ 2
Results for the Quarter Ended December 31              
Sales $ 217.2 $ 220.0 N/A (1.3%)
Segment Profit $ 6.3 $ 25.7 N/A (75.5%)
Segment Margin 2.9% 11.7% N/A
Adjusted EBITDA 3 $ 33.8 $ 39.5 N/A (14.4%)
Adjusted EBITDA Margin 3 15.6% 18.0% N/A

Results for the Fiscal Year Ended December 31

Sales $ 954.4 $ 804.3 $ 893.8 6.8%
Segment Profit $ 85.2 $ 90.4 $ 111.3 (23.5%)
Segment Margin 8.9% 11.2% 12.5%
Adjusted EBITDA 3 $ 159.1 $ 141.1 $ 167.4 (5.0%)
Adjusted EBITDA Margin 3         16.7%       17.5%       18.7%      

1 See attached unaudited condensed consolidated pro forma statements of operations.
2 Due to the reconsolidation on July 31, 2017, consolidated results for the year ended on December 31, 2018 are being compared to the pro forma results for the year ended December 31, 2017.
3 See attached schedules for adjustments and reconciliations to GAAP numbers.

Segment Highlights

  • Sales decreased in the fourth quarter versus the prior-year period due primarily to the company’s exit of the industrial gas turbine market earlier in the year and, to a lesser degree, reduced nuclear shipments due to the timing of customers' maintenance cycles. This decline was mostly offset by strength in the aerospace, food & pharma, heavy-duty tractor and trailer builds, and metals & mining markets.
  • Segment profit decreased in the fourth quarter versus the prior-year period, driven primarily by ongoing cost challenges in STEMCO’s brake products business, restructuring expenses related to the exit of STEMCO’s brake drum friction business, and, to a lesser degree, lower demand in the nuclear market. Excluding the impact of restructuring costs, acquisition inventory fair value adjustments, acquisitions and divestitures, and unfavorable foreign exchange translation, segment profit decreased 18.4% compared to the prior-year period.
 
 
 
 
 

Engineered Products Segment

 
 
        Consolidated     Pro Forma 1
($ in millions)       2018     2017 2017     % ∆ 2
Results for the Quarter Ended December 31              
Sales $ 74.5 $ 74.8 N/A (0.4%)
Segment Profit $ 5.2 $ 4.5 N/A 15.6%
Segment Margin 7.0% 6.0% N/A
Adjusted EBITDA 3 $ 9.0 $ 9.4 N/A (4.3%)
Adjusted EBITDA Margin 3 12.1% 12.6% N/A

Results for the Fiscal Year Ended December 31

Sales $ 323.9 $ 301.1 $ 301.5 7.4%
Segment Profit $ 40.1 $ 30.1 $ 30.3 32.3%
Segment Margin 12.4% 10.0% 10.0%
Adjusted EBITDA 3 $ 56.3 $ 48.5 $ 48.7 15.6%
Adjusted EBITDA Margin 3         17.4%       16.1%       16.2%      

1 See attached unaudited condensed consolidated pro forma statements of operations.
2 Due to the reconsolidation on July 31, 2017, consolidated results for the year ended on December 31, 2018 are being compared to the pro forma results for the year ended December 31, 2017.
3 See attached schedules for adjustments and reconciliations to GAAP numbers.

Segment Highlights

  • Sales decreased in the fourth quarter versus the prior-year period due to foreign exchange translation. Strength in the oil & gas and North American general industrial markets was partially offset by weakness in the automotive and European general industrial markets. Excluding the impact of foreign exchange translation, sales increased 1.9% compared to the prior-year period.
  • Segment profit increased in the fourth quarter versus the prior-year period primarily due to strength in the oil & gas market and reduced SG&A costs. Excluding the impact of restructuring costs, acquisition-related expenses, and unfavorable foreign exchange translation, segment profit increased 12.9% compared to the prior-year period.
 
 
 
 
 

Power Systems Segment

 
        Consolidated     Pro Forma 1
($ in millions)       2018     2017 2017     % ∆ 2
Results for the Quarter Ended December 31              
Sales $ 90.7 $ 68.8 N/A 31.8%
Segment Profit (Loss) $ 16.8 $ 8.5 N/A 97.6%
Segment Margin 18.5% 12.4% N/A
Adjusted EBITDA 3 $ 20.1 $ 10.2 N/A 97.1%
Adjusted EBITDA Margin 3 22.2% 14.8% N/A

Results for the Fiscal Year Ended December 31

Sales $ 257.9 $ 208.2 $ 211.5 21.9%
Segment Profit $ 29.3 $ 29.4 $ 30.9 (5.2%)
Segment Margin 11.4% 14.1% 14.6%
Adjusted EBITDA 3 $ 37.2 $ 34.6 $ 36.1 3.0%
Adjusted EBITDA Margin 3         14.4%       16.6%       17.1%      

1 See attached unaudited condensed consolidated pro forma statements of operations.
2 Due to the reconsolidation on July 31, 2017, consolidated results for the year ended on December 31, 2018 are being compared to the pro forma results for the year ended December 31, 2017.
3 See attached schedules for adjustments and reconciliations to GAAP numbers.

Segment Highlights

  • Sales increased considerably in the fourth quarter versus the prior-year period due to record aftermarket parts and services sales as well as a modest increase in engine revenue.
  • Segment profit increased in the fourth quarter versus the prior-year period primarily due to the increase in higher-margin aftermarket parts and service sales, and lower research and development expenses. Segment profit increased 144.4% excluding the impact of foreign exchange on the EDF contract, which had a negative impact of $0.6 million in the fourth quarter of 2018 and a positive impact of $1.4 million in the fourth quarter of 2017.
 
 
 
 
 
 
EnPro Industries, Inc.
     
Consolidated Statements of Operations (Unaudited)
 
For the Quarters and Years Ended December 31, 2018 and 2017
(Stated in Millions of Dollars, Except Per Share Data)
 
      Quarters Ended   Years Ended
December 31, December 31, December 31, December 31,
      2018 2017 (1)   2018 2017 (1)
Net sales $ 381.4 $ 362.5 $ 1,532.0 $ 1,309.6
Cost of sales   267.4     239.6       1,053.0     865.3  
 
  Gross profit   114.0     122.9       479.0     444.3  
 
Operating expenses:
Selling, general and administrative 80.0 93.2 340.4 325.7
  Other   15.0     1.5       21.3     16.9  
 
    Total operating expenses   95.0     94.7       361.7     342.6  
 
Operating income 19.0 28.2 117.3 101.7
 
Interest expense (6.9 ) (8.7 ) (28.5 ) (50.9 )
Interest income 0.4 0.5 1.2 1.5
Gain on reconsolidation of GST and OldCo - - - 534.4
Other expense   (29.0 )   (3.8 )     (43.4 )   (9.2 )
 
Income (loss) before income taxes (16.5 ) 16.2 46.6 577.5
Income tax benefit (expense)   (5.6 )   18.0       (22.0 )   (37.7 )
 
  Net income (loss) $ (22.1 ) $ 34.2     $ 24.6   $ 539.8  
 
 
Basic earnings (loss) per share $ (1.07 ) $ 1.60     $ 1.17   $ 25.28  
Average common shares outstanding (millions)   20.7     21.4       20.9     21.3  
 
Diluted earnings (loss) per share $ (1.07 ) $ 1.57     $ 1.16   $ 24.76  
Average common shares outstanding (millions)   20.7     21.8       21.1     21.8  
 

(1) In the first quarter of 2018, we adopted an accounting standard that requires an employer to report the service cost component of pension and other postretirement benefits expense in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period.  The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations.  

 

We recast our Consolidated Statements of Operations to reflect the retrospective application of this guidance. For  the quarter ended  December 31, 2017 this resulted in an increase in cost of sales of $0.2 million, a decrease in selling, general and administrative  expense of $0.4 million, and the  corresponding  increase in other (non-operating) expense of $0.2 million. For the year ended  December 31, 2017 this resulted in an increase in cost of sales of $0.1 million, a decrease in selling, general and administrative expense of $0.6 million, and the corresponding increase in other (non-operating) expense of $0.5 million.

 
 
 
 
 
 
EnPro Industries, Inc.
           
Consolidated Statements of Cash Flows (Unaudited)
 
For the Years Ended December 31, 2018 and 2017
(Stated in Millions of Dollars)
 
  2018         2017  
Operating activities
Net income $ 24.6 $ 539.8

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 39.1 32.7
Amortization 34.6 31.1
Gain on reconsolidation of GST and OldCo - (534.4 )
Loss on extinguishment of debt 18.1 -
Deferred income taxes 4.9 35.9
Stock-based compensation 6.5 9.5
Other non-cash adjustments 16.1 15.0

Change in assets and liabilities, net of effects of acquisitions, deconsolidation, and reconsolidation of businesses:

Asbestos liabilities (0.5 ) (95.5 )
Asbestos insurance receivables 29.9 26.6
Accounts receivable, net (29.6 ) (35.7 )
Inventories (35.5 ) 7.9
Accounts payable 7.5 20.5
Other current assets and liabilities 103.3 (1.1 )
      Other non-current assets and liabilities       7.4         (5.7 )
        Net cash provided by operating activities     226.4         46.6  
 
Investing activities
Purchases of property, plant and equipment (62.6 ) (41.0 )
Payments for capitalized internal-use software (3.4 ) (3.7 )
Acquisitions, net of cash acquired - (44.6 )
Reconsolidation of GST and OldCo - 41.1
Deconsolidation of OldCo - (4.8 )
Capital contribution to OldCo - (45.2 )
Receipts from settlements of derivative contracts 9.3 -
  Proceeds from sale of property, plant and equipment     30.7         0.5  
        Net cash used in investing activities       (26.0 )       (97.7 )
 
Financing activities
Proceeds from debt 1,014.7 635.7
Repayments of debt, including premiums to par value (1,184.9 ) (484.3 )
Repurchase of common stock (50.0 ) (11.5 )
Dividends paid (20.3 ) (19.0 )
  Other               (11.9 )       (2.4 )
        Net cash provided by (used in) financing activities   (252.4 )       118.5  
 
Effect of exchange rate changes on cash and cash equivalents   (7.7 )       10.4  
 
Net increase (decrease) in cash and cash equivalents (59.7 ) 77.8
Cash and cash equivalents at beginning of period     189.3         111.5  
Cash and cash equivalents at end of period     $ 129.6       $ 189.3  
 
 
Supplemental disclosures of cash flow information:
Cash paid (refunded) during the period for:
Interest $ 33.3 $ 46.4
Income taxes $ (77.5 ) $ 6.8
 
 
 
 
 
 
EnPro Industries, Inc.
         
Consolidated Balance Sheets (Unaudited)
 
As of December 31, 2018 and 2017
(Stated in Millions of Dollars)
 
  2018         2017  
Current assets
Cash and cash equivalents $ 129.6 $ 189.3
Accounts receivable 286.6 261.7
Inventories 233.1 204.1
Income tax receivable 49.5 113.2
  Other current assets     33.2         51.3  
Total current assets 732.0 819.6
 
Property, plant and equipment 301.2 296.9
Goodwill 333.7 336.1
Other intangible assets 297.3 347.0
Other assets     54.9         86.5  
    Total assets   $ 1,719.1       $ 1,886.1  
 
Current liabilities
Current maturities of long-term debt $ 2.4 $ 0.2
Accounts payable 139.2 130.7
  Accrued expenses     145.5         137.2  
Total current liabilities 287.1 268.1
 
Long-term debt 462.5 618.3
Other liabilities     106.8         96.9  
    Total liabilities     856.4         983.3  
 
 
Shareholders' equity
Common stock 0.2 0.2
Additional paid-in capital 301.0 347.9
Retained earnings 608.3 604.4
Accumulated other comprehensive loss (45.5 ) (48.4 )
  Common stock held in treasury, at cost     (1.3 )       (1.3 )
    Total shareholders' equity     862.7         902.8  
    Total liabilities and equity   $ 1,719.1       $ 1,886.1  
 
 
 
 
 
 
EnPro Industries, Inc.
         
Segment Information (Unaudited)
 
For the Quarters and Years Ended December 31, 2018 and 2017
(Stated in Millions of Dollars)
 
 
Sales
Quarters Ended Years Ended
December 31, December 31,
  2018       2017     2018       2017  
 
Sealing Products $ 217.2 $ 220.0 $ 954.4 $ 804.3
Engineered Products 74.5 74.8 323.9 301.1
Power Systems       90.7       68.8       257.9       208.2  
382.4 363.6 1,536.2 1,313.6
Less intersegment sales     (1.0 )     (1.1 )     (4.2 )     (4.0 )
          $ 381.4     $ 362.5     $ 1,532.0     $ 1,309.6  
 
 
Segment Profit
Quarters Ended Years Ended
December 31, December 31,
  2018      

2017 (1)

 

  2018      

2017 (1)

 

 
Sealing Products $ 6.3 $ 25.7 $ 85.2 $ 90.4
Engineered Products 5.2 4.5 40.1 30.1
Power Systems       16.8       8.5       29.3       29.4  
          $ 28.3     $ 38.7     $ 154.6     $ 149.9  
 
 
Segment Margin
Quarters Ended Years Ended
December 31, December 31,
  2018       2017     2018       2017  
Sealing Products 2.9 % 11.7 % 8.9 % 11.2 %
Engineered Products 7.0 % 6.0 % 12.4 % 10.0 %
Power Systems       18.5 %     12.4 %     11.4 %     14.1 %
            7.4 %     10.7 %     10.1 %     11.4 %
 
 
Reconciliation of Segment Profit to Net Income (Loss)
Quarters Ended Years Ended
December 31, December 31,
  2018      

2017 (1)

 

  2018      

2017 (1)

 

 
Segment profit $ 28.3 $ 38.7 $ 154.6 $ 149.9
Corporate expenses (7.9 ) (10.0 ) (32.7 ) (34.2 )
Gain on reconsolidation of GST and OldCo - - - 534.4
Interest expense, net (6.5 ) (8.2 ) (27.3 ) (49.4 )
Other expense, net     (30.4 )     (4.3 )     (48.0 )     (23.2 )
 
Income (loss) before income taxes (16.5 ) 16.2 46.6 577.5
Income tax benefit (expense)     (5.6 )     18.0       (22.0 )     (37.7 )
Net income (loss)   $ (22.1 )   $ 34.2     $ 24.6     $ 539.8  

(1) Segment profit for 2017 was recast to reflect the impact of adoption of an accounting standard affecting the classification of the non-service component of pension and other postretirement benefit costs.  There was no impact for the quarter ended December 31, 2017 to total segment profit, other expense, net or corporate expenses. The impact for the year ended December 31, 2017 was an increase of $0.2 million to total segment profit, a $0.3 million increase in other expense,net, and a $0.1 million decrease to corporate expenses.  Please refer to the Consolidated Statement of Operations for further information on the standard and its impact.

 

Segment profit is total segment revenue reduced by operating expenses and restructuring and other costs identifiable with the segment.  Corporate expenses include general corporate administrative costs.  Expenses not directly attributable to the segments, corporate expenses, net interest expense, asset impairments, gains/losses related to the sale of assets and income taxes are not included in the computation of segment profit.  The accounting policies of the reportable segments are the same as those for the Company.

...
 
 
 
 
 
 
EnPro Industries, Inc.
 
Reconciliation of Consolidated Net Income (Loss) to Consolidated Adjusted Net Income and
Consolidated Adjusted Diluted Earnings Per Share (Unaudited)
 
For the Quarters and Years Ended December 31, 2018 and 2017
(Stated in Millions of Dollars, Except Per Share Data)
 
 
Quarters Ended December 31,
2018 2017
  $  

Average common

shares outstanding,

diluted (millions)*

Per share   $  

Average common

shares outstanding,

diluted (millions)

Per share
 
Net income (loss) $ (22.1 ) 20.7 $ (1.07) $ 34.2 21.8 $ 1.57
 
Income tax expense (benefit)   5.6           (18.0 )    
 
Income (loss) before income taxes (16.5 ) 16.2
 
Adjustments: