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EnPro Industries, Inc. (NPO)
Q2 2013 Earnings Call
August 1, 2013 10:00 AM ET
Don Washington – Director, IR
Alex Pease – SVP and CFO
Tom Narayan – Oppenheimer
Jeff Hammond – KeyBanc Capital Market
Joe Mondale – Sidoti & Company
Previous Statements by NPO
» EnPro' CEO Discusses Q1 2013 Results - Earnings Call Transcript
» EnPro Industries CEO Discusses Q3 2010 Results - Earnings Call Transcript
» EnPro Industries, Inc. Q2 2010 Earnings Call Transcript
» EnPro Industries, Inc. Q1 2010 Earnings Call Transcript
Mr. Don Washington, Director of Investor Relations for EnPro Industries, you may begin your conference call.
Thank you, Steve. And good morning everyone. Welcome to our quarterly earnings conference call. I remind you that our call is also being webcasted in enproindustries.com, and you can find the website link and the slides accompanying the call in the Investor Relations section of our website. In a moment Alex Pease, our Senior Vice President and CFO will review the results for the second quarter of 2013. Steve Macadam, our President and CEO who is usually on these calls is chosen to attend GST’s Asbestos Liability Estimation Trial Today. And so he won’t be with us.
Before we begin, I will point out to you that you may hear statements during the course of this call that express the belief, expectation or intension as well as those that are not historical fact. These statements are forward-looking and involve a number of risks and uncertainties that may cause actual events and results to differ materially from such forward-looking statements. These risks and uncertainties are referenced in the Safe Harbor statement included in our press release and are described in more detail along with other risks and uncertainties in our filings with the SEC including the Form 10-K for the year ended December 31, 2012 and the Form 10-Q for the quarter ended March 31, 2013. We do not undertake to update any forward-looking statements made on this conference call to reflect any change in management’s expectations or any change in assumptions or circumstances on of which such statements are based.
You should also note that EnPro owns a number of direct and indirect subsidiaries. From time to time, we may refer collectively to EnPro and one or more of its subsidiaries as we, or to the businesses, assets and debts or affairs of EnPro or a subsidiary as ours. These and similar references are for convenience only, and should not be construed to change the fact that EnPro and each subsidiary is an independent entity, with separate management, operations, obligations and affairs.
I want to remind you that to our financial results reflect the deconsolidation of Garlock Sealing Technologies LLC and Garrison Litigation Management and their subsidiaries, effective June 5, 2010. The results of these entities will remain deconsolidated during the pendency of the Chapter 11 legal proceedings to resolve asbestos claims against GST. We refer to this as you know as the Asbestos Claims Resolution Process or ACRP. GST’s summary results are presented separately in our earnings release.
Now I’ll turn the call over to Alex.
Thanks Don. Thanks to everyone who has joined us on the call this morning. As Don mentioned, Steve is attending GST’s Asbestos Liability Estimation Trial today. As I’m sure most of you know that trail began last week and is scheduled to conclude at the end of next week. Because the trials in progress it’s not appropriate for us to make any comment about it beyond our continued confidence in the arguments GST has presented to the core. We believe that GST’s argument show a couple of important points, first its products were not cause of asbestos related disease. And secondly its settlements in the NEW York leading up to Chapter 11 to filing in 2010 reflected increased cost of defense and higher trial cost – higher trial risk caused by Tort system abuses including the depression of evidence and we’re not representative of any true legal liability.
Although portions of the trial are being held under a confidentiality order from the court the order does not prevent GST from presenting these arguments and evidence supporting them in full during the trial. We appreciate your understanding of our reasons for not commenting further on the trial or on when or how the case may be resolved. Well it remains possible that a settlement maybe the ultimate outcome of the ACRP we have no assurance that this will be the case nor can we anticipate what if any value of GST might be preserved.
Now let’s look at our second quarter performance. Sales in the quarter in the second quarter were up $306 million were $306 million up $4.1 million from the second quarter of last year, more than half of the increase or about $2.3 million came from the benefit of two extra weeks to Motorwheel sales in the year’s second quarter. As you recall we closed the Motorwheel acquisition in mid-April of last year. The remainder came primarily from increased sales in environmental upgrades in the Engine Products and Services segment.
Conditions in most of our markets were consistent with the second quarter of last year with two notable exceptions. At the Technetics Group demand was down especially in the semiconductor market and sales remained below the high levels we saw in the second quarter of last year. At STEMCO however demand improved and sales were up across all product lines including break products. STEMCO also benefited from the two weeks to Motorwheel sales that weren’t included in the – in last year’s second quarter.