EnPro Industries, Inc. (NYSE:NPO) Q4 2023 Earnings Call Transcript

Milt Childress: You’re right, Jeff. I’ll take the last one first and then turn it to Eric to talk a little bit more about AMI. But the — historically, the company has grown considerably faster than that. If you look at the market, the underlying market growth, it’s kind of mid-single-digit growth. And I think maybe we had indicated that, that at one point, we’ll obviously aspire to do better than that. Part of the company’s historical growth rate is a function of the size of the company as it’s ramped up with new product introductions, when the company was relatively small than incremental revenue from new product introductions adds a lot on a percentage basis to sales. And as the company gets a little larger, obviously, it doesn’t have quite the same impact. But we do have some exciting new — we — the AMI team does have some exciting new products that we expect to be introduced in the market in the next year or so.

Eric Vaillancourt: Yes. We put it in Sealing because it can affect both Technetics and Garlock, both when you look at oxygen sensors and moisture sensors and H2S, I think we use a variety of different applications, including food and pharma, general industrial. So there’s lots of applications work spread that throughout the company. So it fits nicely into Sealing.

Jeff Hammond: Okay. And then just on Sealing margins, really a phenomenal year. Maybe just how should we be thinking about kind of long-term margins? And if we see the soft patch that you saw in 4Q kind of extend just speak to the resiliency of the margins in any kind of slowdown?

James Gentile: I mean I think longer term, I think that we have definitely gone through a very successful reshaping of the segment that enabled us to exceed our previous long-term forecast of 25% through a cycle, and I’ll give it to Eric in terms of the drivers moving forward.

Eric Vaillancourt: Well, we’ve commented before I think back in the third quarter that we were looking at somewhere around 28%, plus or minus a little bit. And I think it will still be in that range. It really depends on mix. And so it depends on industry mix, and that’s really the biggest driver of mix and volume. But overall, I expect the margins to hold similar to where they are now.

Jeff Hammond: Okay, thanks.

Operator: Thank you. We have reached the end of our question-and-answer session. I would now like to turn the floor back over to James Gentile for any closing remarks.

James Gentile: Thank you for joining us today. Have a good day.

Operator: 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.