EnPro Industries Reports Results for the First Quarter of 2013

  EnPro Industries Reports Results for the First Quarter of 2013

  *Sales declined 8% as demand fell in most markets from the high levels of
    the first quarter of 2012 and as engine revenues declined
  *Declining volumes and lower demand for high-margin aftermarket products
    reduced segment profit margin to 11.1% from 13.9% in the first quarter of
    2012
  *EPS of $0.39 in the first quarter compares to $0.64 in the first quarter
    of 2012 while adjusted EPS declined to $0.56 from $0.91
  *GST reported an 8% increase in EBITDA-A to $14.2 million on slightly lower
    third party sales of $56.5 million

Business Wire

CHARLOTTE, N.C. -- May 02, 2013

EnPro Industries (NYSE: NPO) today reported sales of $286.9 million in the
first quarter of 2013, about 8% below a strong first quarter of 2012, when
sales were $311.5 million. Excluding the effect of an acquisition, sales
declined by 12% from the first quarter of 2012, with approximately half of
this decline as the result of reduced demand in most of the company’s
industrial markets and half as a result of an $18 million reduction in new
engine revenues in the Engine Products and Services segment. Segment profit in
the first quarter of 2013 was $31.9 million, a 26% decrease over the first
quarter of 2012, and the segment profit margin fell to 11.1% compared to 13.9%
a year ago.

The company reported net income of $8.6 million, or $0.39 a share, in the
first quarter of 2013 compared to net income of $13.8 million, or $0.64 a
share in the first quarter of 2012. Before selected items, including interest
due to Garlock Sealing Technologies LLC (GST), a deconsolidated subsidiary,
restructuring costs, and other selected items, the company’s net income was
$12.5 million, or $0.56 a share, compared to $19.5 million, or $0.91 a share
in the first quarter of 2012.

A table attached to this press release shows the effect of selected items on
net income and earnings per share in the first quarters of 2013 and 2012. All
per share amounts in this release are stated on a diluted basis.

Earnings before interest, income taxes, depreciation and amortization and
other selected items (EBITDA) were $36.2 million in the first quarter of 2013,
or 12.6% as a percent of sales, compared to EBITDA of $46.5 million, or 14.9%
of sales in the first quarter of 2012.

GST and its subsidiaries, which were deconsolidated effective June 5, 2010,
when they entered a process to reach a permanent resolution of all current and
future asbestos claims, reported third party sales of $56.5 million in the
first quarter of 2013, a slight decline from the first quarter of 2012 when
third party sales were $57.6 million. GST’s adjusted net income, which
excludes intercompany interest payments and asbestos-related expense, was $8.6
million in the first quarter of 2013 compared to $7.3 million in the first
quarter of 2012.

Sealing Products Segment

($ Millions)    Quarter Ended                  Change
                 3/31/2013    3/31/2012  
Sales              146.6          149.5         -2  %
EBITDA           $ 29.1          $ 28.9          1   %
EBITDA Margin      19.8      %     19.3      %   
Segment Profit   $ 21.3          $ 22.5          -5  %
Segment Margin   14.5      %   15.1      %  

Sales in the Sealing Products segment declined 2% from the first quarter of
2012. Excluding the effect of the Motorwheel acquisition, sales were down 10%,
primarily due to lower volumes across several markets and geographies. Demand
from the segment’s semiconductor markets declined compared to the high levels
experienced in the first quarter of 2012. Demand was also lower for
aftermarket products sold into the heavy-duty truck market. In addition,
prolonged winter weather in 2013 delayed sales of construction and water and
waste water products in North America and Europe.

The segment’s profits declined 5% from the first quarter of 2012. Excluding a
benefit from the Motorwheel acquisition, profits were down 14%. Lower sales
volume compared to the first quarter of 2012 was the biggest driver of the
decline. Segment profits benefited from a $1.5 million reversal of an accrual
associated with an acquisition completed in 2009 and from lower restructuring
costs relative to the first quarter of 2012. Segment profit margin declined to
14.5% from 15.1% in the first quarter of 2012 primarily due to reduced sales
of higher-margin aftermarket components, particularly at Stemco.

Engineered Products Segment

($ Millions)    Quarter Ended                  Change
                 3/31/2013    3/31/2012  
Sales            $ 91.8         $ 100.6         -9   %
EBITDA           $ 11.3          $ 14.3          -21  %
EBITDA Margin      12.3      %     14.2      %   
Segment Profit   $ 5.8           $ 9.0           -36  %
Segment Margin   6.3       %   8.9       %  

Engineered Products segment sales decreased by 9% compared to the first
quarter of 2012, reflecting weaker demand in the segment’s European and U.S.
automotive, industrial and refining markets and continued weakness in its
Canadian natural gas markets.

Segment profits also decreased. Although segment profits benefited from cost
reductions at CPI and from price increases at both GGB and CPI, the benefits
were more than offset by declining volumes and costs at GGB. Segment margins
declined to 6.3% from 8.9%. Restructuring costs were about the same in the
first quarter of 2013 as in the first quarter of 2012.

Engine Products and Services Segment

($ Millions)    Quarter Ended                  Change
                 3/31/2013    3/31/2012  
Sales            $ 49.4         $ 62.0          -20  %
EBITDA           $ 5.6           $ 12.6          -56  %
EBITDA Margin      11.3      %     20.3      %   
Segment Profit   $ 4.8           $ 11.8          -59  %
Segment Margin   9.7       %   19.0      %  

Sales in the Engine Products and Services segment declined by 20% from the
first quarter of 2012. The decline reflects an $18.4 million decrease in
engine revenues accounted for under the completed contract method, partially
offset by an increase in engine revenues recorded under the percentage of
completion method and stronger sales of environmental upgrade packages. No
engine revenues were recorded under the completed contract method in the first
quarter of 2013. Segment profits and margins declined due to lower sales
volumes, a less profitable product mix as sales of environmental upgrade
packages increased and a low-margin engine refurbishment project was
completed, and a one-time adjustment due to a change of the accounting
treatment for foreign exchange hedges.

Garlock Sealing Technologies

($ Millions)         Quarter Ended                  Change
                      3/31/2013    3/31/2012  
Third Party Sales                   
EBITDA-A              $ 56.5          $ 57.6          -2  %
EBITDA Margin         $ 14.2          $ 13.2          8   %
Operating Profit        25.1      %     22.9      %
Operating Profit      $ 12.7          $ 11.6          9   %
Margin                  22.5      %     20.1      %
Adjusted Net Income  $ 8.6         $ 7.3         18  %

Third party sales at the deconsolidated operations of GST and its subsidiaries
were down slightly from the first quarter of 2012 reflecting a modest
reduction in activity in certain foreign markets. Lower costs improved
operating profits, and profit margins improved to 22.5%. GST’s adjusted net
income, which excludes intercompany interest income and expense associated
with its asbestos claims resolution process, increased to $8.6 million.
Asbestos-related expense at GST was $11.0 million in the quarter compared with
$4.2 million in the first quarter of 2012.

Cash Flows

EnPro’s cash balance stood at $48.5 million at March 31, 2013. For the first
three months of the year, operating activities used cash of $17.8 million
compared to providing cash of $3.4 million in the first three months of 2012.
The change largely reflects lower operating profits as a result of weaker
markets and the timing of higher pension and tax payments. Capital
expenditures were $15.4 million compared to $6.4 million in the first quarter
of 2012. The company believes operating cash flows will be sufficient to fund
working capital and anticipated capital expenditures for the remainder of
2013.

GST finished the first three months of 2013 with cash and investments totaling
$150.6 million dollars, compared with $153.6 million at the end of 2012.

Outlook

"Although we see no indication of sustained improvement, we expect seasonal
growth in some markets during the second quarter,” said Steve Macadam,
president and chief executive officer. “These seasonal factors are likely to
support an increase in sales compared to the first quarter. Profits and profit
margins should improve as volumes increase and as we continue to benefit from
previously implemented cost reductions and efficiency programs.

“Longer term, we remain cautious,” Macadam continued. “In North America, we
believe low levels of growth are likely in most of our markets during 2013. In
Europe, we anticipate little if any growth as weak economic conditions persist
in many of our markets. In these circumstances, we will continue to ensure
that our cost structure is in line with activity levels in all markets.”

Conference Call and Webcast Information

EnPro will hold a conference call today, May 2, at 10:00 a.m. Eastern Time to
discuss first quarter 2013 results. Investors who wish to participate in the
call should dial 1-800-851-4704 approximately 10 minutes before the call
begins and provide conference id number 44257427. A live audio webcast of the
call and accompanying slide presentation will be accessible from the company’s
website, http://www.enproindustries.com. To access the presentation, log on to
the webcast by clicking the link on the company’s home page.

Deconsolidation of Garlock Sealing Technologies LLC

Results for the first quarters 2013 and 2012 reflect 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 in pursuit of an efficient and permanent
resolution to all current and future asbestos claims against it.
Deconsolidation is required by generally accepted accounting principles. To
aid in comparisons of year-over-year data, the company has attached a schedule
to this press release showing key operating measures for both EnPro and GST on
a pro forma basis.

Non-GAAP Financial Information

This press release contains financial measures that have not been prepared in
accordance with GAAP. They include income before asbestos-related expenses and
other selected items, EBITDA-A, EBITDA and related per share amounts. Tables
showing the effect of these non-GAAP financial measures for first quarters of
2013 and 2012 are attached to the release.

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; 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, guaranteed debt payments, employee
benefit obligations and other matters. In addition, adverse developments could
arise in regard to voluntary petitions filed by certain of our subsidiaries in
U.S. Bankruptcy Court to establish a trust that would resolve all current and
future asbestos claims. Our filings with the Securities and Exchange
Commission, including the Form 10-K for the year ended December 31, 2012,
describe these and other risks and uncertainties in more detail. We do not
undertake to update any forward-looking statement 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.

EnPro Industries, Inc.
                                             
Consolidated Statements of Operations (Unaudited)
                                                         
For the Quarters Ended March 31, 2013 and 2012
(Stated in Millions of Dollars, Except Per Share Data)
                                                         
                                              2013    2012  
Net sales                                      $ 286.9   $ 311.5
Cost of sales                                  192.7   204.3 
                                                         
Gross profit                                   94.2    107.2 
                                                         
Operating expenses:
Selling, general and administrative              72.6      73.5
Other                                          0.9     1.5   
                                                         
Total operating expenses                       73.5    75.0  
                                                         
Operating income                                 20.7      32.2
                                                         
Interest expense                                 (11.1 )   (10.7 )
Interest income                                0.1     0.1   
                                                         
Income before income taxes                       9.7       21.6
Income tax expense                             (1.1  )  (7.8  )
                                                         
Net income                                    $ 8.6    $ 13.8  
                                                         
                                                         
Basic earnings per share                      $ 0.41   $ 0.67  
Average common shares outstanding (millions)   20.7    20.6  
                                                         
Diluted earnings per share                    $ 0.39   $ 0.64  
Average common shares outstanding (millions)   22.3    21.4  

EnPro Industries, Inc.
                                                              
Consolidated Statements of Cash Flows (Unaudited)
                                                                     
For the Three Months Ended March 31, 2013 and 2012
(Stated in Millions of Dollars)
                                                                     
                                                          2013      2012  
Operating activities
Net income                                               $ 8.6       $ 13.8
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation                                               7.4         6.5
Amortization                                               6.7         6.0
Accretion of debt discount                                 1.8         1.7
Deferred income taxes                                      (4.3  )     7.9
Stock-based compensation                                   (1.8  )     2.5
Excess tax benefits from stock-based                       (2.0  )     -
compensation
Change in assets and liabilities, net of
effects of acquisitions of businesses:
Accounts receivable                                        (19.5 )     (11.6 )
Inventories                                                (2.3  )     (15.6 )
Accounts payable                                           4.2         9.9
Other current assets and liabilities                       (8.3  )     (15.6 )
Other non-current assets and liabilities             (8.3  )    (2.1  )
Net cash provided by (used in) operating             (17.8 )    3.4   
activities
                                                                     
Investing activities
Purchases of property, plant and equipment                 (9.8  )     (5.5  )
Payments for capitalized internal-use software             (3.5  )     (0.4  )
Acquisitions, net of cash acquired                         (2.2  )     (0.5  )
Other                                                0.1       -     
Net cash used in investing activities                (15.4 )    (6.4  )
                                                                     
Financing activities
Net proceeds from (repayments of) short-term               7.4         (0.3  )
borrowings
Proceeds from debt                                         63.3        41.8
Repayments of debt                                         (42.5 )     (30.4 )
Other                                                2.0       -     
Net cash provided by financing activities            30.2      11.1  
                                                                     
Effect of exchange rate changes on cash and          (2.4  )    0.6   
cash equivalents
                                                                     
Net increase (decrease) in cash and cash                   (5.4  )     8.7
equivalents
Cash and cash equivalents at beginning of            53.9      30.7  
period
Cash and cash equivalents at end of period          $ 48.5     $ 39.4  
                                                                     
                                                                     
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest                                                 $ 16.7      $ 15.9
Income taxes                                             $ 5.4       $ (0.1  )

EnPro Industries, Inc.

Consolidated Balance Sheets (Unaudited)
                                           
As of March 31, 2013 and December 31, 2012
(Stated in Millions of Dollars)
                                                         
                                             March 31,   December 31,
                                              2013       2012    
Current assets
Cash and cash equivalents                    $ 48.5      $  53.9
Accounts receivable                            204.4        187.2
Inventories                                    131.9        130.8
Other current assets                         24.9       22.3    
Total current assets                           409.7        394.2
                                                         
Property, plant and equipment                  186.7        185.5
Goodwill                                       217.1        220.4
Other intangible assets                        216.4        222.5
Investment in GST                              236.9        236.9
Other assets                                 115.2      111.4   
Total assets                                $ 1,382.0  $  1,370.9 
                                                         
Current liabilities
Short-term borrowings from GST               $ 17.9      $  10.1
Notes payable to GST                           11.2         10.7
Current maturities of long-term debt           150.9        1.0
Accounts payable                               87.1         83.9
Accrued expenses                             101.1      121.8   
Total current liabilities                      368.2        227.5
                                                         
Long-term debt                                 57.1         184.3
Notes payable to GST                           248.1        237.4
Pension liability                              106.4        112.7
Other liabilities                            55.9       61.9    
Total liabilities                            835.7      823.8   
                                                         
Shareholders' equity
Common stock                                   0.2          0.2
Additional paid-in capital                     423.6        425.4
Retained earnings                              154.5        145.9
Accumulated other comprehensive loss           (30.6   )    (23.0   )
Common stock held in treasury, at cost       (1.4    )   (1.4    )
Total shareholders' equity                   546.3      547.1   
Total liabilities and shareholders' equity  $ 1,382.0  $  1,370.9 

EnPro Industries, Inc.
                                                         
Segment Information (Unaudited)
                                                                  
For the Quarters Ended March 31, 2013 and 2012
(Stated in Millions of Dollars)
                                                                  
                                                                  
Sales
                                              2013               2012
                                                                  
Sealing Products                              $ 146.6             $ 149.5
Engineered Products                           91.8                100.6
Engine Products and Services                49.4               62.0
                                              287.8               312.1
Less intersegment sales                     (0.9)              (0.6)
                                           $ 286.9            $ 311.5
                                                                  
                                                                  
Segment Profit                                                
                                              2013               2012
                                                                  
Sealing Products                              $ 21.3              $ 22.5
Engineered Products                           5.8                 9.0
Engine Products and Services                4.8                11.8
                                           $ 31.9             $ 43.3
                                                                  
                                                                  
Segment Margin                                                
                                              2013               2012
Sealing Products                              14.5%               15.1%
Engineered Products                           6.3%                8.9%
Engine Products and Services                9.7%               19.0%
                                           11.1%              13.9%
                                                                  
                                                                  
Reconciliation of Segment                                     
Profit to Net Income
                                              2013               2012
                                                                  
Segment profit                                $ 31.9              $ 43.3
Corporate expenses                            (9.1)               (9.1)
Interest expense, net                         (11.0)              (10.6)
Other expense, net                          (2.1)              (2.0)
                                                                  
Income before income taxes                    9.7                 21.6
Income tax expense                          (1.1)              (7.8)
Net income                                  $ 8.6              $ 13.8
                                                                  
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, gains/losses related to the sale of assets, impairments 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 Income Before Selected Items to Net Income (Unaudited)
                                                                  
For the Quarters Ended March 31, 2013 and 2012
(Stated in Millions of Dollars, Except Per Share Data)
                                                                  
                                                                  
                    2013                          2012                     
                      $          Per share         $          Per share
                                                                  
Income before       $  12.5        $  0.56         $  19.5        $  0.91
selected items
                                                                  
Adjustments (net
of tax):
                                                                  
Restructuring          (0.6  )        (0.02  )        (0.8  )        (0.04  )
costs
                                                                  
Interest expense
and royalties          (4.7  )        (0.21  )        (4.5  )        (0.21  )
with GST
                                                                  
Other                  -              -               (0.1  )        (0.01  )
                                                                  
Tax accrual           1.4          0.06         (0.3  )       (0.01  )
adjustments
                                                                  
Impact                (3.9  )       (0.17  )      (5.7  )       (0.27  )
                                                                  
Net income          $  8.6        $  0.39       $  13.8       $  0.64   
                                                                            
Management of the Company believes that it would be helpful to the readers of
the financial statements to understand the impact of certain selected items on
the Company's reported net income and earnings per share, including items that
may recur from time to time.This presentation enables readers to better
compare EnPro Industries, Inc. to other diversified industrial manufacturing
companies that do not incur the sporadic impact of restructuring activities or
other selected items. Management acknowledges that there are many items that
impact a company's reported results and this list is not intended to present
all items that may have impacted these results.
                                                                  
The amounts above, which may be considered non-GAAP financial measures, are
shown on an after-tax basis and have been calculated by applying the Company's
tax rate to the pre-tax amount. The interest expense with GST is included in
interest expense and the restructuring costs and other are included as part of
other operating expense.Per share amounts were calculated by dividing by the
weighted-average shares of diluted common stock outstanding during the
periods.

EnPro Industries, Inc.
                                                               
Reconciliation of EBITDA to Segment Profit (Unaudited)
                                                                     
For the Quarters Ended March 31, 2013 and 2012
(Stated in Millions of Dollars)
                                                                     
                                                                     
                                                                     
                        Quarter Ended March 31, 2013
                                                      Engine
                        Sealing        Engineered     Prods. and     Total
                        Products       Products       Services       Segments
                                                                     
Earnings before
interest, income
taxes, depreciation
and amortization        $  29.1        $  11.3        $  5.6         $ 46.0
(EBITDA)
                                                                     
Deduct depreciation
and amortization          (7.8  )       (5.5  )       (0.8  )      (14.1 )
expense
                                                                     
Segment profit          $  21.3       $  5.8        $  4.8        $ 31.9  
EBITDA margin             19.8  %       12.3  %       11.3  %      16.0  %
                                                                     
                        Quarter Ended March 31, 2012
                                                      Engine
                        Sealing        Engineered     Prods. and     Total
                        Products       Products       Services       Segments
                                                                     
Earnings before
interest, income
taxes, depreciation
and amortization        $  28.9        $  14.3        $  12.6        $ 55.8
(EBITDA)
                                                                     
Deduct depreciation
and amortization          (6.4  )       (5.3  )       (0.8  )      (12.5 )
expense
                                                                     
Segment profit          $  22.5       $  9.0        $  11.8       $ 43.3  
EBITDA margin             19.3  %       14.2  %       20.3  %      17.9  %
                                                                     
For a reconciliation of segment profit to net income, please refer to the
Segment Information (Unaudited) schedule.

EnPro Industries, Inc.
                                                                  
Reconciliation of Adjusted EBITDA to Net Income (Unaudited)
                                                                     
For the Quarters Ended March 31, 2013 and 2012
(Stated in Millions of Dollars)
                                                                     
                                                          2013      2012  
                                                                     
Earnings before interest, income taxes, depreciation,
amortization, and other selected items (adjusted         $ 36.2      $ 46.5
EBITDA)
                                                                     
Adjustments:
                                                                     
Interest expense, net                                      (11.0 )     (10.6 )
                                                                     
Income tax expense                                         (1.1  )     (7.8  )
                                                                     
Depreciation and amortization expense                      (14.1 )     (12.5 )
                                                                     
Restructuring costs                                        (0.9  )     (1.3  )
                                                                     
Other                                                     (0.5  )   (0.5  )
                                                                     
Impact                                                    (27.6 )   (32.7 )
                                                                     
Net income                                               $ 8.6     $ 13.8  

EnPro Industries, Inc.
                                                                
Selected Results Reflecting Deconsolidation of GST (Unaudited)
                                                                      
(Stated in Millions of Dollars)
                                                                      
                                                                      
                          Quarter Ended                  Quarter Ended
                          March 31, 2013                 March 31, 2012
                          EnPro           GST            EnPro        GST
                                                                      
Adjusted net sales *      $   280.8       $   56.5       $  306.9     $  57.6
                                                                      
Segment
profit/operating          $   31.9        $   12.7       $  43.3      $  11.6
profit
                                                                      
Adjusted EBITDA           $   36.2        $   14.2       $  46.5      $  13.2
                                                                      
Income before             $   12.5        $   8.6        $  19.5      $  7.3
selected items
                                                                      
*Adjusted net sales reflect third party sales only, which differ from the
sales reported on the accompanying consolidated statements of operations which
include intercompany sales from EnPro to GST.

Contact:

EnPro Industries
Investor Contact:
Don Washington, 704-731-1527
Director, Investor Relations and
Corporate Communications
don.washington@enproindustries.com