NPO Q2 Deep Dive: Sealing and Surface Technologies Propel Updated Outlook Amid Mixed Margins

August 12, 2025 at 23:36 PM EDT

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Industrial technology solutions provider EnPro Industries (NYSE: NPO) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 6% year on year to $288.1 million. On the other hand, the company’s full-year revenue guidance of $0.06 at the midpoint came in 100% below analysts’ estimates. Its non-GAAP profit of $2.03 per share was 3.2% below analysts’ consensus estimates.

Is now the time to buy NPO? Find out in our full research report (it’s free).

Enpro (NPO) Q2 CY2025 Highlights:

Revenue: $288.1 million vs analyst estimates of $282.6 million (6% year-on-year growth, 1.9% beat)
Adjusted EPS: $2.03 vs analyst expectations of $2.10 (3.2% miss)
Adjusted EBITDA: $71.1 million vs analyst estimates of $73.9 million (24.7% margin, 3.8% miss)
The company lifted its revenue guidance for the full year to $0.06 at the midpoint from $0.04, a 60% increase
Management raised its full-year Adjusted EPS guidance to $7.85 at the midpoint, a 6.8% increase
EBITDA guidance for the full year is $275 million at the midpoint, above analyst estimates of $268.1 million
Operating Margin: 15.7%, down from 17.7% in the same quarter last year
Market Capitalization: $4.79 billion

StockStory’s Take

Enpro’s second quarter was marked by positive momentum, with the market responding favorably to the company’s 6% year-on-year revenue growth, driven primarily by robust performance in Advanced Surface Technologies (AST) and steady gains in Sealing Technologies. Management attributed the quarter’s top-line growth to a 14.5% increase in AST, supported by demand for precision cleaning solutions and optical coatings, as well as strength in aerospace and food and pharma markets within Sealing. CEO Eric Vaillancourt highlighted, “We continue to identify opportunities for incremental growth throughout the Sealing Technologies segment and are focused on expanding our market reach by leveraging our differentiated technological capabilities.”

Looking to the rest of the year, management’s updated guidance is anchored by anticipated continued strength in aerospace and food and biopharma markets, incremental customer wins, and ongoing investments in capacity and technology. CFO Joseph Bruderek pointed to “incrementally better demand for in-chamber semiconductor tools and assemblies and continued strength in leading-edge precision cleaning solutions” as drivers of the improved AST outlook. While ongoing growth investments and some foreign exchange headwinds are expected to impact margins, management remains focused on executing its growth and optimization programs, particularly within the AST segment, and maintaining a disciplined approach to capital deployment.

Key Insights from Management’s Remarks

Management credited Q2’s revenue gains to outperformance in AST and resilient demand in key Sealing Technologies markets, while margin contraction reflected higher operating expenses and foreign exchange headwinds.

Advanced Surface Technologies surge: AST experienced 14.5% sales growth, led by increased demand for precision cleaning and optical coatings, and improved orders for semiconductor tools and assemblies. Management cited targeted investments in Arizona, Milpitas, California, and Taiwan as drivers for future growth and operational leverage.
Sealing Technologies stability: The Sealing segment grew about 2%, with strength in aerospace and food and pharma offsetting continued commercial vehicle OEM weakness and timing shifts in nuclear orders. Strategic pricing initiatives also supported segment performance.
Operating margin compression: Company-wide adjusted EBITDA margin declined, attributed to increased operating expenses supporting growth, higher incentive compensation accruals, and transactional foreign exchange headwinds—especially in AST, where local currency expenses in Taiwan impacted profitability.
Capacity and technology investments: Enpro continued to invest in capacity expansion and engineering capabilities, particularly in Sealing Technologies and compositional analysis. The AMI acquisition (compositional analysis) outperformed expectations and is set for further capacity additions.
Balance sheet flexibility for growth: Recent refinancing and credit facility expansion have provided Enpro with capital needed to support both organic growth initiatives and potential acquisitions, particularly in targeted growth nodes like food and biopharma, aerospace, and surface protection.

Drivers of Future Performance

Management’s outlook for the remainder of the year centers on sustained end-market demand, ongoing investments in growth capacity, and the ability to manage external headwinds like currency fluctuations.

Aerospace and biopharma momentum: Management expects continued strength in aerospace and food and pharmaceutical applications to support mid-single-digit growth in Sealing Technologies, with new program wins and expanded customer relationships fueling additional upside.
Advanced Surface Technologies expansion: AST is projected to benefit from ongoing investments in platform development and geographical reach, particularly in semiconductor-related solutions. While capital equipment spending remains volatile, management anticipates high single- to low double-digit growth as new facilities and technologies come online.
Margin and FX headwinds: Foreign exchange volatility and increased operating expenses, especially in regions like Taiwan, are expected to persist, though management believes these will moderate in coming quarters. Strategic pricing and operational discipline are being used to manage profitability.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will watch (1) the pace at which new capacity investments in AST and Sealing begin generating incremental revenue, (2) the effectiveness of strategic pricing and cost discipline in offsetting margin pressures, and (3) management’s ability to navigate lingering foreign exchange headwinds. Developments in end-market demand, especially in aerospace, semiconductor, and compositional analysis, will also be critical signposts.

Enpro currently trades at $227.45, up from $214.98 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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