Greetings, welcome to the Enpro Q1 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. The Q&A 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. I would now like to turn the call over to James Gentile, Vice President of Investor Relations. Thank you. You may begin. Thanks, Darrell, and good morning, everyone. Welcome to Enpro's Q1 2023 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 Vaillancourt, our President and Chief Executive Officer, and Milt Childress, Executive Vice President and Chief Financial Officer. During today's call, we will reference a number of non-GAAP financial measures. Tables reconciling the historical non-GAAP measures to the comparable GAAP measures are included in the appendix to the presentation materials. A friendly reminder that we will be making 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 those described in our filings with the SEC, including our most recent Form 10-K. Also note that during this call, we will be discussing our full year 2023 guidance, which excludes unforeseen impacts from these risks and uncertainties, as well as changes in the number of shares outstanding, impacts from future acquisitions, dispositions, and related transaction costs, restructuring costs, incremental impacts of inflation after the end of Q1, the impact of foreign exchange rate changes subsequent to the end of Q1, and interest rate increases differing from the assumptions outlined in guidance. We do not undertake any obligation to update these forward-looking statements. It is now my pleasure to turn the call over to Eric Vaillancourt, our President and Chief Executive Officer. Eric? Thanks, James. Good morning, everyone. I'm pleased to update all of you on another outstanding quarter at Enpro. Before we begin, I would like to share that Milt Childress has announced his plans to retire in H1 2024. While Milt is not going anywhere just yet, I would like to take a moment to recognize his many contributions to Enpro over the past two decades. Milt has been a great partner to all of us. We know that his significant impact on our organization will live on well into the future. We are moving forward with the process of identifying the right leader to succeed Milt. We are pleased that he will remain with us to ensure a smooth transition once his successor is named. Now I'll turn to Q1 results. We delivered outstanding financial results this quarter, driven by a record performance in the Sealing Technologies segment and our Advanced Surface Technologies segment, successfully managing the current slowdown in semiconductor equipment markets. We are proud of all of our team members across the enterprise who together have helped us to get off to such a strong start for the year. In Q1, sales increased almost 5% year-over-year, with organic sales increasing more than 6%. We saw strong demand in several of our Sealing Technologies markets, which more than offset headwinds in certain areas of our semiconductor business. Our performance this quarter highlights the benefits of our balanced portfolio of high- margin businesses with technological advantages, serving critical applications that touch our lives every day. We achieved record results in Sealing Technologies during the quarter, evidenced by the significant year-over-year increase in adjusted EBITDA. In AST, we are actively engaged with our customers to capitalize on growth opportunities when semiconductor markets recover. We are proud of the agile culture we have built, grounded in a focus on innovation and continuous improvement, which, combined with our technological and applied engineering advantages, positions Enpro to outperform regardless of the macroeconomic environment. Now I'll hand the call over to Milt to discuss our financial results in more detail. Milt? Thanks, Eric. I appreciate the kind words in your introductory comments. Enpro's been my home for nearly two decades, and I'm incredibly proud of all of our team and what our team has accomplished over that time. Even though there's news now of my retirement, I've never been more enthused about our company, never since in my nearly 20 years of being here. I remain focused, and I'll remain focused in the year ahead on continuing to build upon our strong momentum and to ensure a seamless CFO transition prior to my retirement next year. To our financial results. As Eric noted, we had another strong quarter of execution and results. Reported sales of $282.6 million in Q1 increased 4.6% year-over-year, and organic sales were up 6.3%. Strong demand across aerospace, nuclear, general industrial, and commercial vehicle markets, in addition to pricing actions in response to inflationary pressures, more than offset a reduction in sales due to the current slowdown in the semiconductor market. Adjusted EBITDA of $68.6 million increased 16.3% over the prior year period, driven primarily by operating leverage on volume growth in Sealing Technologies and pricing initiatives in response to labor and material cost inflation, as well as cost controls keeping SG&A expenses in check. Adjusted EBITDA margin of 24.3% expanded more than 240 basis points compared to Q1 of 2022. Corporate expenses of $10.7 million in Q1 of 2023 decreased from $12.9 million a year ago, driven primarily by decreased incentive compensation accruals and reduced restructuring and professional expenses. Adjusted diluted earnings per share of $1.95 increased 25% compared to the prior year period. Strong operating results drove the increase, in addition to the decrease in our normalized tax rate to 25% from 27% in 2022. Net interest expense was up only modestly despite higher rates and the maturity of a portion of the net investment hedges in September 2022. Lower debt balances and the good work by our treasury team to deploy cash and short-term investments to save higher-yielding instruments partially mitigated the increase. Moving to a discussion of segment performance. Sealing Technologies' sales of $173.3 million increased 12.8%, driven by strong demand in several key end markets as discussed earlier. Excluding the impact of the business divested in Q4 of 2022 and foreign exchange translation, sales increased 15.1%. For Q1, adjusted segment EBITDA of $49.7 million increased almost 45%, and adjusted segment EBITDA margin expanded 640 basis points to 28.7%. Strong volume growth and favorable mix, particularly in our aerospace and nuclear businesses, operational improvements in our commercial vehicle business, and effective pricing strategies in response to inflationary pressures drove record performance in the Sealing Technologies segment. Excluding the impact of the divestiture and foreign exchange translation, adjusted segment EBITDA increased more than 48% compared to the prior year period. Turning now to Advanced Surface Technologies, Q1 sales of $109.4 million decreased 6.3%, driven by the current slowdown in semiconductor capital equipment spending. Excluding the impact of foreign exchange translation, sales decreased 5.3% versus the prior year period. For Q1, adjusted segment EBITDA decreased 15.5% to $29.5 million, driven primarily by the decline in volume, unfavorable mix, and higher material and labor costs. Excluding the impact of foreign exchange translation, adjusted segment EBITDA decreased 13.5%. For Q1, adjusted segment EBITDA margin was 27%. We have taken measured actions to reduce operating costs in response to the slowdown in demand without sacrificing our ability to capitalize on the numerous opportunities for growth driven by our positioning in the semiconductor industry and the differentiated products and solutions we offer our customers. Turning to the balance sheet and cash flow. We ended the quarter with a net leverage ratio of 1.6 times. With cash and short-term investments of more than $370 million and nearly full availability under our $400 million revolving credit facility, we have ample financial flexibility to execute on our long-term strategic growth initiatives. Free cash flow for the first three months of 2023 was $21 million, down from $24 million in the prior year. The year-over-year decrease in free cash flow was driven by higher net interest payments, higher capital spending, and working capital investments to support growth, which offset the increase in operating profit. During the quarter, we paid a $0.29 per share quarterly dividend. For the first three months of the year, dividend payments totaled $6.2 million, a 5.1% increase versus the prior year. Moving now to our 2023 guidance. We maintain the annual guidance issued in February and continue to expect revenue growth of flat to low single digits, adjusted EBITDA of $248 million-$260 million, and adjusted diluted earnings per share from continuing operations of $6.45-$7.05. Compared to a quarter ago, when we first initiated guidance for the year, we expect stronger full-year results in Sealing Technologies, offset by lower results in Advanced Surface Technologies. In Sealing Technologies, our guidance reflects expectations for continued strong results in Q2 and the assumption of some macroeconomic softness in the second half. In Advanced Surface Technologies, our guidance reflects a softer Q2 relative to Q1, and based on customer input, stabilization in semiconductor demand by Q4, with resumption of growth in 2024. Thanks for your time today. Now I'll turn the call back to Eric for some closing comments. Thank you, Milt. Our teams continue to execute at a high level and demonstrate agility to drive our strategic priorities forward and deliver to our customers. In the quarter, results in Sealing Technologies were exceptional; the power of the segment's advantages is on clear display. In Sealing, we will continue to invest in new product development and continuous operating improvements while prudently considering acquisitions that will enhance our strong competitive positions over time. In AST, we are executing very well through a short-term demand slowdown in the semiconductor. Over a multi-year period, we continue to expect strong organic growth and are well-positioned to capitalize on a variety of exciting opportunities using our technological advantages to deliver comprehensive solutions for our customers. Our results demonstrate both our ability to outperform across economic and industry cycles and the resilience of our portfolio of businesses. With our well-capitalized balance sheet and strong free cash flow generation, we will continue to invest in growth opportunities to build upon our strong foundation. As I share every quarter, I am proud of our team and our many accomplishments as we continue to do what we said we would do: execute on our multiyear strategy to drive EnPro forward as a leading industrial technology company while empowering technology with purpose. Thank you for joining us today. We appreciate your interest in EnPro. Now open the line to questions. Thank you. We will now be conducting a Q&A session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for your questions. Our first questions come from the line of Jeff Hammond with KeyBanc. Please proceed with your questions. Hey, good morning, everyone. Milt, congrats on the announcement. It's been great working with you. I look forward to, you know, certainly the next couple of quarters. Just really wanna dig in on kind of the semiconductor, you know, incremental weakness. Where are you seeing it? What's the kind of confidence that, you know, this is the last cut here? Just maybe expand on kind of the mix and cost takeout dynamics and how we should think about decrementals playing out in AST from here. Yeah. Thanks, Jeff. By the way, I'm not going anywhere. I'll be here for a while, so don't treat me like I'm retiring yet. I'll, I've told the team here that, I'd rather have a Roy Williams type retirement, which is just at the end of the season rather than a Coach K. The Coach K announcement works best for the whole process. To your question, the dynamics in Q1 in semiconductor are very similar to what we described on our Q4 results. We had areas that were still relatively strong in a good portion of our semiconductor business. What drove the decline and the weakness was primarily in the part of our business that is coatings related and happens to be one of the higher margin product lines as well. Your question about leveraging, you saw, you know, a fairly high downward leverage on the decline in sales, and it's primarily just because of mix in the pocket, in pockets of our semiconductor business. That will rebound. To your question of when, you know, based on customer feedback, we think, you know, Q2, Q3 likely will continue to be relatively slow in the industry and then stabilization in Q4 and strong growth in 2024. We have no concerns. We don't... We sleep well at night. We're doing the right things to control costs. We're still making the investments that we wanna make. We're still having the conversations with customers about new platforms, long-term growth, and we're positioned extremely well, and we're executing extremely well in that segment, notwithstanding the results. Okay. You mentioned kind of, you know, strong growth in 2024. Just maybe update us on, you know, kind of new wins, visibility there. You know, obviously it's hard to call a cycle, but, you know, just kind of seeing what you can control and some of the new opportunities, you know, kind of, you know, what kinda underpins that confidence in growth in 2024? What's underpinning the growth in 2024 is our pipeline. When you look at our pipeline of new products, new customer wins, new vertical integration from the reshoring, all that is very positive. I think we had 31 new opportunities since Q4, and we expect to capitalize in our typical close on. I should probably give you that. Typical close rates in the 30% range. I expect us to ramp up very quickly. Not only that, just the existing business is gonna recover. We're gonna continue to win new business as well as just grow with our existing customers. We've also picked up some new customers. That's really exciting, with some technology. I would also like to add that some of the recurring revenue, characteristics of the AST segment have, you know, continued to stabilize some of the cyclicality that we have, you know, in the near term here, given some weakness in the, in the capital equipment space. You can expect us to continue to move forward on building our, you know, refurbishment and clean coating capabilities moving forward. Okay, great. I'll get back in queue. Thank you. Our next questions come from the line of Steve Ferazani with Sidoti & Company. Please proceed with your questions. Morning, everyone. Appreciate all the color on the call. wanted to follow up with some of the questions on the chip industry. You know, obviously, as we go through earnings season, we're hearing a variety of very different outlooks on the timing of a recovery. I'm just trying to get your sense if it was stronger and faster in the second half than you thought. Can you give us some color on the costs you've taken out and how quickly you could put them back in if we do see a better recovery or faster than maybe you're guiding for right now? I'm not sure I understood all the question, but I can tell you that. Sorry. We don't need to put back in. The cost we took out, we've gained in improvement, so we don't need to add to actually grow. I'm not sure about the first part of your question. What we've heard is, obviously some of the larger chip makers think that the recovery could come faster in the second half than maybe reflected in your guidance for AST, is what I'm saying. How quickly you could step up again. Yeah. back to the idea if you took temporary costs out. Yeah. We can step up quickly. We've said on multiple occasions, and it's worth repeating here, is we're executing extremely well. If you look at our revenue decline, you know, it really is pretty strong results given what you see in the industry with the industry decline data, which now is WFE. The latest, I think, was down 22% for the year with Gartner on the semiconductor industry down maybe 6% for the year overall, if you just look at chip consumption units. you know, our performance, if you look at the blend of those two, is, you know, really been quite good. but yeah, we'll respond whatever the environment is. We're being cautious. We don't know with the lag and how much inventory is in the system, you know, when the uptick will start benefiting us, but when it does, we're ready. Yeah, that's the issue. Ultimately, customers have a fair amount of inventory, and we won't respond until they move through that inventory. While they see the orders upticking, it may take a little lag before we see it, but once we see it, we'll respond immediately. We can respond today, frankly, with new orders. Okay. That's fair. That's helpful. Thanks. Can you give an update on the Arizona facility and how you're seeing development on U.S. chip infrastructure? We're ready and going and keep continuing to be on target, so we're ready as soon as the customers are ready. Okay. Turning to Sealing briefly, if we can get one more in. Obviously, commercial aviation looks very strong for the remainder of the year. Commercial truck, the order books look good, but clearly the market thinks it's gonna soften if we look at some of those stocks. How are you seeing orders right now in terms of your commercial truck customers, and how are you getting more confident about the second half? Yeah. No, Sealing is performing outstanding. If you look at our commercial truck market, FTR's latest report actually shows a recovery. Since July of last year, they've been showing a decrease month-over-month, and I think it has improved from -1.6% to flat for the outlook for the rest of the year. That bounces around a little bit, and if you look at UPS package deliveries, they're down. It's a little bit hard to tell. We're getting conflicting information, but our business is doing outstanding and continues to do outstanding. We talked about it in Q1 of last year, having some softness and improving in that business, and we have. We continue to execute and do the things we say we're going to do. When you look at the rest of the Sealing Technologies business, Technetics, with space, aerospace, and nuclear performing just outstanding. It's incredible what they're doing today. Garlock just continues to surprise and deliver more and more. When you look at the margin expansion in that business, the continuous improvement efforts, it's just fantastic. They have great businesses there, and they're performing extremely well. You look at our margin right now, 28.7%. A few years back, we said we'd get to 25, and I'm not sure where the ceiling is, but we continue to find ways to improve. You find the ceiling in Sealing. Yeah, I'm just excited about all of our businesses, and we're executing flawlessly across all of them. It's exciting to see. Perfect. Thanks, Eric. Thanks, Milt. Uh-huh. Thank you. Our next question comes from the line of Ian Zaffino with Oppenheimer. Please proceed with your questions. Hi. Great. Thank you very much. Milt, it's great working with you. You're gonna be missed for sure. Thanks. Thanks, Ian. Keep in mind I'll be around. Yeah. Yeah. At least for a little while. Good. You know, as far as just if I could sneak in another question on AST. You know, when you talk about softness, can you like maybe tell us where you're seeing that or maybe just kind of parse it by, you know, what are you seeing in the equipment side versus the cleaning and coating side? Maybe, you know, what are you seeing in sort of logic versus non-logic or leading edge versus non-leading edge? If you could kind of help us understand what's the moving parts are, you know, if you bucket it that way. Thanks. Yeah. I can jump in as well. Yeah. Go ahead, Eric. Yeah. Leading edge continues to be very strong, and we see that across the portfolio. Weakness in memory and computing, CPUs, that's where it hits our cleaning business. The equipment business is, I would say, just getting inventory in balance. We have mixed kinds of results across the segments, but the biggest margin piece is in the cleaning business, and that's in memory and in CPUs. That's where we're seeing the biggest impact currently. When you look at Alluxa is doing great. Alluxa is back growing and performing as we expect, and margins are improving. Another great business. Overall, we're executing extremely well, and the only thing we need is a little bit of market stabilization, and our results will accelerate. Okay, good. How are you thinking about M&A here, the environment, you know, as far as multiples, any holes you think you need to plug right now or any kind of other areas you wanna enter or get deeper into? No, we would love to get deeper into the Garlock Hygienic technology space. We'd also look at other opportunities in nuclear, but right now we're focused on Sealing. We have some great opportunities there. Again, we're gonna remain disciplined, and we'll be very disciplined in our approach. We look at opportunities all day, every day almost but we're looking for the right opportunities at the right valuation. We continue to be disciplined and look for good opportunities. We're definitely active. We just haven't found the right thing yet. It's also a question of availability, and obviously, with the recent rate increases, affecting maybe the M&A market, you know, there's no reason for us to press, you know. We're just waiting for the right opportunities. Our pipeline is incredibly robust with very solid high-margin businesses that are, you know, participating in secular tailwinds. When one or more of those properties come available, we will definitely play to win and, you know, we'll make sure that the underlying strategy and, you know, underlying financial criteria will delight. I'll just add, you know, we'll remain vigilant and watchful to maintain a, you know, very strong balance sheet. All right. Perfect. Thank you very much. Thank you. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Our next question comes from the line of Jeff Hammond with KeyBanc. Please proceed with your questions. Hey, guys. Just a couple of follow-ups here. I'm just trying to understand, kinda the magnitude of the good in Sealing versus the offset in AST just to kinda, you know, understand kinda how much better Sealing is, how much worse AST is? Yeah. You can tell by my comments around guidance for the year and the fact that we maintained, but indicated that, you know, we expect Sealing to be stronger for the full year and, you know, AST to be lower relative to where we were a quarter ago for the full year. The two essentially offset, right? I mean, that was the message in your takeaway from my comments earlier. You know, if you look at the, maybe the outperformance in Sealing relative to your expectations in Q1, you know, add a little bit, you know, for a strong quarter, perhaps not the same, you know, magnitude of outperformance relative to your expectations. That'll give you a pretty good idea of the change from a quarter ago and our expectations. You know, Sealing up and then offset and tempered by some caution, on expectations for AST for the balance of the year. Does that help you? Does that help you, Jeff? No. Yeah. That's very helpful. Just on Sealing, you know, I know mix was favorable, but any kind of aberrations in that margin and, you know, maybe how to think about, you know, margin cadence from here and kinda revisiting that long-term, you know, margin target, which you're kinda running above. Yeah. What are you saying? We expect it to continue the way it's going. There weren't any aberrations. There wasn't any one- time thing that affected the margin. It was just excellent execution. As said before, we continue to have continuous improvement efforts. We need to remain balanced. The mix is very favorable right now when you look across the portfolio. Also, H2 is a little bit unknown, so we have some caution in there for that as well. It just depends on what the general economy does. The team will continue to perform flawlessly. I don't have any doubt about that. Okay, great. Thanks, guys. Thank you. There are no further questions at this time. I would now like to hand the call back over to James Gentile for any closing remarks. Thank you for your interest in Enpro, and have a great day. Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.