Also note that during this call, we will be providing full-year 2025 guidance, which excludes unforeseen impacts from these risks and uncertainties. We appreciate your interest in Enpro as we discuss second quarter financial results and our improved sales and earnings outlook for the full year 2025. After my overview, Joe will provide a more detailed discussion of our quarterly results and perspectives driving our improved outlook for the balance of 2025. Enpro delivered another strong quarter, demonstrating the resilience of our business while continuing to invest in growth with discipline.
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 and applied engineering expertise. We are focused on capturing opportunities in key markets such as aerospace, sustainable power generation, including nuclear, food and pharma, and compositional analysis, where our differentiated capabilities can drive long-term profitable growth. We continue to invest in incremental capacity expansion, supporting new platforms and enhanced strategic marketing and engineering capabilities to position the segment to deliver on our targeted mid-single-digit organic revenue growth rate. More than 60% of the segment's revenue is tied to the aftermarket, with specified positions providing critical process and safety functions for our customers.
We continue to be delighted with the best-in-class performance of the sealing technologies segment, which we expect to perform well in a variety of macroeconomic environments. In the advanced surface technologies segment, sales increased more than 14%, led by growth in leading-edge precision cleaning solutions, optical coatings, and improved demand for in-chamber semiconductor tools and assemblies. Operating expenses supporting growth in new platforms and transactional foreign exchange headwinds crimped operating leverage during Q2, which Joe will discuss later. We continue to make targeted organic investments at AST and expect execution of our growth and optimization plans to drive high single to low double-digit revenue growth with improved profitability over time.
| Metric | Period | Current guidance |
|---|---|---|
| Sales growth | FY2025 | 5% to 7% (Raised) |
| Adjusted EBITDA | FY2025 | $270M-$280M (Raised) |
| Adjusted diluted EPS | FY2025 | $7.60-$8.10 (Raised) |
| Net interest expense | FY2025 | $26M-$28M (Lowered) |
| Capital expenditures | FY2025 | ~$50M (Reaffirmed) |
| Sealing Technologies top-line growth | FY2025 | Mid-single-digit range |
| AST sales growth | FY2025 | High single to low double-digit range |
| Metric | YoY | Note |
|---|---|---|
| Total sales | +6% to $288.1M | Strong Sealing Technologies performance and a 14.5% increase in AST |
| Adjusted EBITDA | -3.9% to $71.1M | Increased growth-supporting operating expenses, transactional FX headwinds, and higher incentive compensation accruals |
| Adjusted diluted EPS | -$0.05 to $2.03 | Same factors driving the adjusted EBITDA decline |
| Sealing Technologies sales | +1.9% to $187.5M | Aerospace, food and pharma, firm general industrial, and strategic pricing more than offset weak commercial vehicle OEM demand and nuclear order timing |
| Sealing Technologies adjusted segment EBITDA margin | 33.8% vs 35.5% | Weak commercial vehicle OEM demand, nuclear order timing versus a strong prior year, and $1.9M of transactional FX headwinds |
| AST sales | +14.5% to $100.9M | Growth in leading-edge precision cleaning solutions, optical coatings, and improved in-chamber semiconductor tool and assembly demand |
| AST adjusted segment EBITDA margin | 19.6% vs 21.7% | $2.5M of higher growth-investment OpEx and $2.8M of transactional FX headwinds absorbed operating leverage |
| Free cash flow (six months) | $52.8M vs $35.5M | Higher net income, working capital management, and lower cash interest expense |
| Corporate expenses | $12.1M vs $10.5M | Higher incentive compensation accruals and increased health insurance costs |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Enpro 3.0 multi-year strategy | — | First year underway, emphasizing both personal employee development and profitable growth | New |
| Transactional FX headwinds | — | Weakening U.S. dollar drove ~$2.6-$2.8M of headwinds in AST and $1.9M in Sealing; not expected to continue at the same magnitude | Emerging |
| Commercial vehicle OEM demand | Weak | Continued weakness expected for the remainder of 2025 | Stable/weak |
| Nuclear order timing | Very strong prior-year Q2 | Q1 strong, Q2 softer due to timing between quarters; underlying demand very strong | Stable |
| AST growth investments | — | Investments in Arizona, Milpitas, Taiwan, and Singapore expected to leverage well into the second half and beyond | Building |
| M&A pipeline | Active | Very active and proactive; opportunities freeing up in growth nodes like compositional analysis, food/biopharma, space/aerospace, and surface coating | Up |