Industrial technology solutions provider EnPro Industries (NYSE:NPO) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 6.1% year on year to $273.2 million. On the other hand, the company’s full-year revenue guidance of $0.04 at the midpoint came in 100% below analysts’ estimates. Its non-GAAP profit of $1.90 per share was 14% above analysts’ consensus estimates.
Revenue: $273.2 million vs analyst estimates of $266.2 million (6.1% year-on-year growth, 2.6% beat)
Adjusted EPS: $1.90 vs analyst estimates of $1.67 (14% beat)
Adjusted EBITDA: $67.8 million vs analyst estimates of $61.97 million (24.8% margin, 9.4% beat)
Management reiterated its full-year Adjusted EPS guidance of $7.35 at the midpoint
EBITDA guidance for the full year is $269.5 million at the midpoint, above analyst estimates of $267.3 million
Operating Margin: 15.3%, up from 12.7% in the same quarter last year
Free Cash Flow was $11.6 million, up from -$1.9 million in the same quarter last year
Market Capitalization: $3.28 billion
“Enpro's strong first quarter performance again highlights the resilience of the Enpro portfolio and reflects continued excellent execution amidst a dynamic macroeconomic backdrop,” said Eric Vaillancourt, President and Chief Executive Officer.
Company Overview
Holding a Guinness World Record for creating the world's largest gasket, Enpro (NYSE:NPO) designs, manufactures, and sells products used for machinery in various industries.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Enpro’s demand was weak over the last five years as its sales fell at a 2.1% annual rate. This wasn’t a great result and suggests it’s a lower quality business.
Enpro Quarterly Revenue
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Enpro’s annualized revenue declines of 2.2% over the last two years align with its five-year trend, suggesting its demand has consistently shrunk.
Enpro Year-On-Year Revenue Growth
This quarter, Enpro reported year-on-year revenue growth of 6.1%, and its $273.2 million of revenue exceeded Wall Street’s estimates by 2.6%.
Looking ahead, sell-side analysts expect revenue to grow 3.9% over the next 12 months. While this projection suggests its newer products and services will catalyze better top-line performance, it is still below average for the sector.
Enpro has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 12.2%. This result isn’t surprising as its high gross margin gives it a favorable starting point.
Looking at the trend in its profitability, Enpro’s operating margin rose by 8.2 percentage points over the last five years, showing its efficiency has meaningfully improved.
Enpro Trailing 12-Month Operating Margin (GAAP)
In Q1, Enpro generated an operating profit margin of 15.3%, up 2.6 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Enpro’s EPS grew at a spectacular 14.9% compounded annual growth rate over the last five years, higher than its 2.1% annualized revenue declines. This tells us management adapted its cost structure in response to a challenging demand environment.
Enpro Trailing 12-Month EPS (Non-GAAP)
Diving into the nuances of Enpro’s earnings can give us a better understanding of its performance. As we mentioned earlier, Enpro’s operating margin expanded by 8.2 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Enpro, its two-year annual EPS declines of 2.4% mark a reversal from its (seemingly) healthy five-year trend. We hope Enpro can return to earnings growth in the future.
In Q1, Enpro reported EPS at $1.90, up from $1.57 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Enpro’s full-year EPS of $7.29 to grow 6.2%.
Key Takeaways from Enpro’s Q1 Results
We were impressed by how significantly Enpro blew past analysts’ EBITDA expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. On the other hand, its full-year revenue guidance missed significantly. Overall, this print had some key positives. The stock traded up 2% to $158.35 immediately after reporting.
