Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 4, 2026 · Beat 5 of last 7 quarters
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Enpro's strong AST results and raised guidance underscore accelerating semiconductor capital equipment spending tied to AI and advanced computing infrastructure. The company's capacity expansions in Arizona, Milpitas, and Taiwan position it to capture leading-edge chip production growth, with visibility extending through 2027. Sealing's strength in data center and digital infrastructure applications further ties Enpro to the AI buildout.
Enpro delivered strong Q2 results with sales up 17.6% to $338.8M and adjusted EBITDA up over 22% to $86.9M. AST sales grew 21.8% with orders accelerating and book-to-bills materially increasing, while Sealing grew 15.3% (5% organic) with continued strength in aerospace and domestic general industrial, offset by soft commercial vehicle and European markets. The company raised full-year guidance and increased CapEx plans to support AST capacity expansion. Free cash flow was strong at over $60M year-to-date, and leverage fell to 1.6x after repaying $80M of debt.
Management raised full-year 2026 guidance: sales now expected to grow 14-16% (up from 10-14%), adjusted EBITDA of $330-340M (up from $315-330M), and adjusted EPS of $9.30-9.80 (up from $8.85-9.50). The raise is largely driven by AST, where they now expect 20% YoY growth in H2 with revenue growth and segment EBITDA margin both approaching 25% exiting the year. Sealing organic growth is expected to be high single digits in H2, excluding AlpHa/Overlook contributions of $60-65M, with margins remaining at the high end of the 30% ±250 bps range. CapEx guidance was raised to $60-65M (from ~$50M) to pull forward capacity investments in Arizona, Milpitas, and Taiwan. Management noted healthy visibility through 2027 for semiconductor-facing products and sees early signs of stabilization in commercial vehicle markets, though no significant recovery is assumed in guidance.
“Currently, customer build plans and lead times extend healthy visibility through 2027 for our semiconductor-facing products and solutions.”
on Semiconductor demand visibility
“We are raising our total year 2026 guidance issued in early May and now expect total Enpro sales to increase in the 14% to 16% range, up from 10% to 14%, adjusted EBITDA in the range of $330 million to $340 million, up from $315 million to $330 million and adjusted diluted earnings per share to a range of $9.30 to $9.80, up from $8.85 to $9.50 previously.”
on Guidance raise
“Thanks, Melissa, and good morning, everyone. Thank you for joining us today as we review Enpro's second quarter 2026 earnings results and discuss our increased outlook for 2026.”
on Opening remarks
Just on the guide, I mean, it seems like most or all of the raise is AST. Is that right? Or are we feeling a little bit better about Sealing? And maybe just what underpins kind of that acceleration in growth in Sealing into the second half?
Joe Bruderek confirmed the majority of the raise is AST, but Sealing is improving through the year with high single-digit organic growth expected in H2, driven by improved orders in general industrial, aerospace, and compositional analysis. Eric Vaillancourt added that CapEx is being pulled forward for the second phase of the Arizona investment, plus capacity in Milpitas and Taiwan to keep up with customer demand.
On the 430 bps AST margin improvement, could you talk about the key contributions? And if you could distinguish what portion of the AST margin uplift is sustainable versus transient going forward?
Joe Bruderek attributed about $2M of the improvement to a favorable year-over-year FX comparison (transactional Taiwanese working capital), with the rest driven by stronger volume, improved production leverage, and inventory builds to support accelerating demand. He noted demand is incredibly strong for H2 and into 2027, so the volume leverage is expected to continue.
Eric, can you talk a little bit about the performance of compositional analysis really since you acquired AMI and now adding AlpHa? Obviously, on the AMI side, probably when you acquired it, you weren't expecting the kind of domestic natural gas production growth and demand that we're seeing. I'm assuming that's got to be outperforming your expectations from a couple of years ago. And now adding it AlpHa, your outlook for an opportunities in compositional analysis, do you see ability to grow the addressable market, take share? And what are the opportunities ahead even on an M&A side?
Eric Vaillancourt said natural gas growth was part of the thesis, but they expect to expand the same sensor technology into other applications (moisture, oxygen, H2S) and geographies (Europe), growing the TAM. He noted they remain active on M&A and are accelerating growth in compositional analysis.