Also, a friendly reminder that we will be making statements on this call, including our perspectives for full year 2025 guidance that are not historical facts and considered forward-looking in nature. Enpro reported organic sales growth of nearly 10% during the third quarter, with mid-single digit revenue growth year-over-year in sealing technologies and more than 17% top line growth at AST. The strength of our business model was demonstrated again during the quarter with total Enpro adjusted EBITDA margin above 24%, which included increased operating expenses supporting both growth initiatives in both segments. Complementing the strong quarterly performance, we continue to advance Enpro 3.0 strategy with the Overlook Industries acquisition and our agreement to acquire Alpha Measurement Solutions, which we announced on October 13th.
Both of these acquisitions will expand our capabilities in critical growth areas of the portfolio without the use of excess leverage. Alpha and Overlook are great examples of our ability to identify businesses that fit our strategic growth characteristics while meeting our stringent financial criteria. Overlook's capabilities expand into liquid dose biologics, a secular growth area that continues to expand as liquid single-use medicines are increasingly replacing those taken orally. Our business teams are continuing to identify acquisition targets that broaden our leading-edge capabilities and bring them into Enpro as we strategically expand our portfolio of critical products and solutions.
Solid performance in these areas more than offset persistent weakness in commercial vehicle OEM market and soft overall industrial demand in Asia and Europe. In advanced surface technologies segment, sales increased more than 17%, led by growth in leading-edge precision cleaning solutions and improved demand for certain semiconductor tools and assemblies. In sealing technologies, for example, we are currently expanding capacity and investing resources to support future growth in compositional analysis, aerospace, and commercial space applications. Our teams are excited about these efforts as we expand our capabilities and reinvest in growth opportunities to drive long-term profitable growth in sealing technologies.
| Metric | Period | Current guidance |
|---|---|---|
| Capital expenditures | FY2025 | ~$50 million (reaffirmed) |
| Net leverage ratio | Year-end 2025 | ~2x after announced transactions (increase from deal funding) |
| Combined Overlook + Alpha revenue | FY2026 | ~$60 million (new) |
| Overlook + Alpha Q4 2025 revenue contribution | Q4 2025 | just under $10 million revenue, ~$3 million EBITDA (new) |
| Metric | YoY | Note |
|---|---|---|
| Total sales | +~10% (organic) to $286.6M | Strong sealing performance overall and 17%+ AST growth, even with choppy markets |
| Adjusted EBITDA | +8% to $69.3M | Operating performance partly offset by growth investments and AST mix |
| Adjusted EBITDA margin | 24.2%, down slightly | Growth investments in people/processes and unfavorable AST mix absorbed operating leverage |
| Adjusted diluted EPS | +14%+ to $1.99 | EBITDA improvement plus lower net interest expense |
| Sealing Technologies sales | +5.7% to $178.2M | Aerospace, food and biopharma strength, firm aftermarket demand, and strategic pricing offset commercial vehicle OEM weakness |
| AST sales | +17.3% to $108.5M | Acceleration in precision cleaning for advanced node chips plus some recovery in semiconductor tools and assemblies |
| AST adjusted segment EBITDA margin | 20.1% | Operating leverage offset by growth-initiative opex and mix impact of semiconductor tools and assemblies |
| Free cash flow (YTD) | $105M vs $83M | Higher net income and lower interest payments |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Programmatic M&A (Enpro 3.0) | — | Overlook closed Oct 8 and Alpha agreed Oct 13, both additive to organic growth and accretive to core margins without excess leverage | Expanding |
| Compositional analysis / sensing | AMI entry point ~2 years ago with four gas analytes | Alpha adds eight liquid parameters; management sees further M&A opportunity in the space | Expanding |
| AST advanced node vs legacy mix | Historically ~50/50 leading edge vs legacy | Now leaning toward advanced node exposure; precision cleaning growing while legacy tools choppy | Shifting toward leading edge |
| Semiconductor demand environment | Choppy in recent quarters | Choppy through Q4 and first half 2026, with signals of stronger WFE and capital spending in the back half of 2026 | Near-term soft, second-half-2026 recovery expected |
| Supply chain regionalization | Capacity expanded in Southeast Asia over past two years | Demand shifting for certain legacy product lines from U.S. to Asia; ~$12M legacy revenue pulled into 2025 | Ongoing |
| Nuclear and commercial space | Big contributors this year; nuclear soft this quarter on France timing | Well-positioned for reactor pressure vessels, SMRs, and space; produced new space parts in nine weeks vs typical 26 | Positive long-term |