Greetings. Welcome to the Enpro's Second Quarter 202 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to James Gentile, Vice President, Investor Relations. Thank you. You may begin.

Thanks, Darryl, and good morning, everyone. Welcome to Enpro's Second Quarter 2025 Earnings Conference Call. I will remind you that our call is being webcast at enpro.com, where you can find the presentation that accompanies this call. With me today is Eric Vaillancourt, our President and Chief Executive Officer; and Joe Bruderek, Executive Vice President and Chief Financial Officer. During today's call, we will reference a number of non-GAAP financial measures. Tables reconciling the historical non-GAAP measures to the comparable GAAP measures are included in the appendix to the presentation materials. Also, a friendly reminder that we will be making statements on this call that are not historical facts and that are considered forward-looking in nature. These statements involve a number of risks and uncertainties, including those described in our filings with the SEC. Also note that during this call, we will be providing full year 2025 guidance, which excludes unforeseen impacts from these risks and uncertainties. We do not undertake any obligation to update these forward-looking statements. It is now my pleasure to turn the call over to Eric Vaillancourt, our President and Chief Executive Officer. Eric?

Thanks, James, and good morning, everyone. 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. Now on to our second quarter performance. 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 grew organic sales 6% in the second quarter, driven by 14.5% revenue growth in AST and continued top line growth in Sealing Technologies despite the difficult comparison to last year that we discussed last quarter. In Sealing Technologies, sales increased about 2%, driven by strength in aerospace and food and pharma markets, firm general industrial markets and strategic pricing initiatives more than offsetting continued weakness in commercial vehicle OEM demand. Timing of nuclear orders also impacted year-over-year performance. Adjusted segment EBITDA margin approached 34% for the quarter. 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…

Thank you, Eric, and good morning, everyone. Through the halfway mark of 2025, we have delivered strong results and our improved outlook for the year reflects the differentiation of our products and solutions, technology leadership and process know-how, customer intimacy as well as the balance inherent in the Enpro portfolio. Turning to our results for the second quarter. Sales of $288.1 million increased 6%, driven by continued strong performance in the Sealing Technologies segment and a 14.5% increase in AST. Second quarter adjusted EBITDA of $71.1 million declined 3.9% year- over-year. Total company adjusted EBITDA margin was 24.7%. Increased operating expenses supporting growth, transactional foreign exchange headwinds, which I will discuss in a moment, and increased incentive compensation accruals drove the slight year- on-year decline in total adjusted EBITDA. Corporate expenses of $12.1 million in the second quarter of 2025 increased from $10.5 million a year ago, driven primarily by higher incentive compensation accruals and increased health insurance costs. Adjusted diluted earnings per share of $2.03 decreased slightly from $2.08 last year, primarily driven by the factors behind adjusted EBITDA performance in the quarter. Moving to a discussion of segment performance. Sealing Technologies sales increased 1.9% to $187.5 million. Strength in aerospace and food and pharma applications, firm general industrial performance and strategic pricing more than offset continued slow commercial vehicle OEM demand and mix associated with timing of nuclear orders compared to last year. For the second quarter, adjusted segment EBITDA margin was 33.8%, down from last year's high watermark of 35.5%. Sequentially, Sealing segment margin expanded 110 basis points. Continued demand weakness in commercial vehicle OEM markets, timing of nuclear orders year-over-year as well as $1.9 million of transactional foreign exchange headwinds given the weakening of the U.S. dollar were the primary factors affecting segment profitability during the…

Thank you, Joe. We are eager to continue demonstrating our leading-edge capabilities and differentiated products and solutions that deliver significant value to our customers and drive long-term profitable growth. Our development programs that encourage our colleagues to grow both personally and professionally in the early days of Enpro 3.0 will help unlock the full potential of our team to advance our strategy and create value for all stakeholders. I would like to thank our shareholders for their support as we embark on the next phase of our value-creating strategy, Enpro 3.0. Thank you for your interest in Enpro, and we'll now welcome your questions.

[Operator Instructions] Our first questions come from the line of Jeff Hammond with KeyBanc Capital Markets.

I'm sorry, I missed the FX transaction headwind in Sealing. And then just on the nuclear, is that just a goodness that was there last year? Or was there timing between quarters this year as well?

Yes. Jeff, this is Joe. For the nuclear, answer is both, right? Last year, second quarter was a very, very strong nuclear quarter. We had a series of timing of orders for replacement cycles. And then this year, we kind of had the opposite effect. 1Q was very strong. Second quarter, we saw some timing just between 1Q and 3Q. So that's really a timing issue on nuclear. -- underlying demand is very strong. On the transactional FX, so the impact we're feeling here is in transactions that are in nonfunctional currency denomination. So we pointed to it most predominantly in AST, where we had $2.6 million in the quarter. Most of that impact is in Taiwan, where we're U.S. dollar functional, but we have certain local expenses that are in Taiwanese dollars, so predominantly salary and benefits, lease obligations and liabilities attached to income tax. The impact was less in Sealing, but we had a similar effect, right, with the weakening dollar overall, anywhere ranging from 5% to 12%, depending on the alternate currency, where we had expenses and liabilities tied to local currencies that were not U.S. dollar functional is where we felt that impact.

And in Sealing, it was $1.9 million.

Yes. I mean back on AST a little bit, Jeff. I mean, obviously, we felt the impact of FX on margins year-over-year in AST, and we pointed to the $2.5 million of growth investments there that we're making in OpEx tied to critical areas where we're investing with growth -- behind growth. If you just took out the FX piece of roughly $2.8 million year-over-year, right, AST segment margins would be in the mid-22% range. And then you see the growth investment expense around OpEx impacting us by another 2.5% roughly. So you can see the underlying performance of AST from an operational perspective, which we're quite happy with at the moment.

Yes, that's one I wanted to come back to. So how should we think about incremental margins in AST into the second half? And do these FX headwinds, is that kind of onetime to the quarter? Or do they stay with us for a bit?

Yes. For the most part, the FX headwinds were impacted by the significant weakening of the U.S. dollar in the second quarter. So we don't expect that to continue, especially not in the magnitude that we saw in 2Q based on the revaluation of the payment out of liabilities. But AST should continue to leverage pretty well going forward. I mean we've invested in key growth areas behind geographical expansion, technology differentiation in different areas, including Arizona, Milpitas and Taiwan. And we've put in people expenses, OpEx associated with that. So as revenue comes associated with those growth investments, it should leverage pretty well as we move into the second half of this year and into the next.

Okay. And then just last one. Sealing, I guess the inflection or improvement in ASTs was pretty apparent, and I understand the guide up there. Sealing, what's driving the better growth rate into the second half? I think you said mid-single digits you're now thinking for that business.

Yes, Jeff, there's a bunch of good things going on in Sealing. We have some new programs and customer wins, specifically in OEM commercial truck with our [indiscernible] product that we talked about several times in the past. We're starting to win more and more customer business there with the large OEMs that will transition to aftermarket over a period of time. But in addition to that, our efforts in space, we picked up some significant wins with a few new customers in the last quarter that will start to show up in the balance at the end of this year that are going to require a little bit more investment for us than we've already planned for. But they're all exciting opportunities in that business is growing rapidly. It's really got a good future ahead of us. So that's leading to the guidance improved. In addition, markets are still pretty strong. If you look across our general industrial, we're still -- our book-to-bill is strong. Our backlog is strong. And so we're excited about the second half of the year. But a lot of good things are happening. We continue to focus on execution and execute extremely well, and we control the things we can control. And life is good at Enpro.

[Operator Instructions] Our next questions come from the line of Steve Ferazani with Sidoti & Company.

Just wanted to ask about the raise -- since you talked about the raised Sealing expectations, turn over to the raised AST expectations. You were talking now potentially low double-digit growth this year, which would indicate pretty strong second half growth. Is that an extension of what you were seeing in 2Q? Or you could talk a little bit about what you're seeing second half for AST?

Second half AST, we have a lot of investment that's gone on in the past. We're starting to get a little bit of that coming in now. As we said earlier, Joe mentioned, we have investments both in Arizona, Milpitas, California and Taiwan that are all coming out along with Singapore. So we're getting a little bit of benefit from that, that will accelerate over time. In addition, I would say a little bit of market recovery, although I wouldn't say it's significant. It's still very choppy in that regard. But overall, the business is healthy and getting better.

Where are you in the Arizona? I know you're going through a lengthy certification process. Is that generating material revenue now? And what's -- can you give any kind of indication of the ramp on that this year?

I wouldn't say it's generating material revenue. We're still in the testing phase, if you will, and certification phase, and that continues.

I'd add, Steve, we're -- like Eric mentioned, we're in the qualification phase, which is going very well in Arizona. But we are supporting a little bit from Milpitas as well. So in areas where we have spent the time in the past to demonstrate our capabilities in Milpitas and have the ability to be qualified and fully support our customers there. Some of the early revenue from customer locations in Arizona is being qualified and supported with test volumes in Arizona, but also we have the ability to supplement from Milpitas. So that's supporting some of the revenue growth that we've seen as well.

Got it. I did want to ask about one comment you made in terms of Sealing growth. You mentioned compositional analysis. I know that comes out of the AMI acquisition from last year. Are you seeing any successes there yesterday -- lately? Can you sort of talk about how that market is developing for you since that acquisition?

It's been outstanding. They continue to have exceeded our growth expectations with both new customers and existing. That business has just been a home run. Outstanding leadership by Kevin out there.

Yes. We're also investing in additional capacity expansion and new capabilities within AMI. So not only we're delivering on our existing capabilities and technologies, but there's more coming, right, with additional capacity and new technologies and new products that the team is launching.

Yes, they've outgrown the space they're in and they'll be moving into a new building later this year.

[indiscernible].

And also if I could just ask about -- go ahead, go ahead.

I was just going to say we're talking about Sealing, and I want to just point out that, that was our second best quarter ever in Sealing. So although it was a difficult comp last year, it's our second best quarter ever. And I think it's going to be better in the future.

Excellent. And then just on the expanded credit availability, should we be thinking about M&A at all? How is the M&A market looking like?

Yes. I mean we continue to be very active there, proactive in working our pipeline. There are opportunities that are starting to free up a little bit, right? We're extremely active. As we've talked about in the past, Steve, we continue to be very excited by some of these growth nodes that we have in key markets where we have these kind of 5% to 8% of total Enpro revenue positions like in compositional analysis that we just talked about, food and biopharma, space and aerospace, surface protection and surface coating. These are spaces that we really like. We're actively working our development pipeline there. And it's just the ability to meet our financial and strategic criteria and be actionable at the same time. So we're working it hard.

This does now conclude the question-and-answer session. I would now like to turn the floor back over to James Gentile for closing comments.

Thank you for your interest in Enpro. We're delighted with the balance of 2025 and the forward look. It's going to be an exciting few years ahead. Take care.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect at this time. Enjoy the rest of your day.