The following is management's discussion and analysis of certain significant
factors that have affected our financial condition, cash flows and operating
results during the periods included in the accompanying unaudited consolidated
financial statements and the related notes. You should read this in conjunction
with those financial statements and the audited consolidated financial
statements and related notes included in our annual report on Form 10-K for the
fiscal year ended December 31, 2020.
Forward-Looking Information
This quarterly report on Form 10-Q includes statements that reflect projections
or expectations of the future financial condition, results of operations and
business of EnPro that are subject to risk and uncertainty. We believe those
statements to be "forward-looking" statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. When used in this report, the words "may," "hope," "will," "should,"
"expect," "plan," "anticipate," "intend," "believe," "estimate," "predict,"
"potential," "continue," "likely," and other expressions generally identify
forward-looking statements.
We cannot guarantee actual results or events will not differ materially from
those projected, estimated, assigned or anticipated in any of the
forward-looking statements contained in this report. Important factors that
could result in those differences include those specifically noted in the
forward-looking statements and those identified in Item 1A, "Risk Factors" of
our annual report on Form 10-K for the year ended December 31, 2020, which
include:

•impacts from the coronavirus (or COVID-19) pandemic and governmental responses
to limit the further spread of COVID-19, including impacts on our company's
operations, and the operations and businesses of our customers and vendors,
including whether our operations and those of our customers and vendors will
continue to be treated as "essential" operations under government orders
restricting business activities or, even if so treated, whether site-specific
health and safety concerns might otherwise require certain of our operations to
be halted for some period of time;
•uncertainty with respect to the duration and severity of these impacts from the
COVID-19 pandemic, including impacts on the general economy, the markets served
by our customers, and consequent reductions
                                       19
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in the demand for our products and services, which could result in additional
intangible asset impairment charges beyond the charges recognized in the third
quarter of 2020;
•general economic conditions in the markets served by our businesses and the
businesses of our customers, some of which are cyclical and experience periodic
downturns;
•prices and availability of raw materials, including as a result of the COVID-19
pandemic;
•the impact of fluctuations in currency exchange rates;
•unanticipated delays or problems in introducing new products;
•the incurrence of contractual penalties for the late delivery of long lead-time
products;
•announcements by competitors of new products, services or technological
innovations;
•changes in our pricing policies or the pricing policies of our competitors; and
•the amount of any payments required to satisfy contingent liabilities,
including those related to discontinued operations of our predecessors,
including liabilities for certain products, environmental matters, employee
benefit obligations and other matters.
We caution our shareholders not to place undue reliance on these statements,
which speak only as of the date on which such statements were made.
Whenever you read or hear any subsequent written or oral forward-looking
statements attributed to us or any person acting on our behalf, you should keep
in mind the cautionary statements contained or referred to in this section. We
do not undertake any obligation to release publicly any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this report or to reflect the occurrence of unanticipated events.
Non-GAAP Financial Information
In our discussion of our outlook and results of operations, we utilize financial
measures that have not been prepared in conformity with generally accepted
accounting principles in the United States ("GAAP"). They include adjusted
income from continuing operations attributable to EnPro Industries, Inc.,
adjusted diluted earnings per share attributable to EnPro Industries, Inc.
continuing operations, adjusted earnings before interest, taxes, depreciation,
and amortization ("adjusted EBITDA"), and total adjusted segment EBITDA. Tables
showing the reconciliation of these non-GAAP financial measures to the
comparable GAAP measures are included in "-  Reconciliations of Non-GAAP
Financial Measures to the Comparable GAAP Measures  "
We believe non-GAAP metrics are commonly used financial measures for investors
to evaluate our operating performance and, when read in conjunction with our
consolidated financial statements, present a useful tool to evaluate our ongoing
operations and performance from period to period. In addition, these non-GAAP
measures are some of the factors we use in internal evaluations of the overall
performance of our businesses. We acknowledge that there are many items that
impact our reported results and the adjustments reflected in these non-GAAP
measures are not intended to present all items that may have impacted these
results. In addition, the non-GAAP measures we use are not necessarily
comparable to similarly titled measures used by other companies.

Overview and Outlook
Overview. We design, develop, manufacture, service and market proprietary
engineered industrial products. We have 45 primary manufacturing and service
facilities located in 13 countries, including the United States. Over the past
several years, we have executed several strategic initiatives to change the
portfolio of businesses that we operate to focus on materials science-based
businesses with leading technologies, compelling margins, strong cash flow, and
high levels of recurring revenue that serve markets with favorable secular
tailwinds. These initiatives, which are described below, have increased our
ability to provide solutions to the semiconductor, life sciences, and other
technology industries.
We manage our business as three segments: a Sealing Technologies segment, an
Advanced Surface Technologies segment, and an Engineered Materials segment.
Our Sealing Technologies segment designs, manufactures and sells sealing
products, including: metallic, non-metallic and composite material gaskets,
dynamic seals, compression packing, resilient metal seals, elastomeric seals,
custom-engineered mechanical seals for applications in the aerospace industry
and other markets, hydraulic components, expansion joints, sanitary gaskets,
hoses and fittings for the hygienic process industries, fluid transfer products
for the pharmaceutical and biopharmaceutical industries, hole forming products,
bellows and bellows assemblies, PTFE products, and heavy-duty commercial vehicle
parts used in wheel-end and suspension components. These products are used in a
variety of industries,
                                       20
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including chemical and petrochemical processing, pulp and paper processing,
power generation, food and pharmaceutical processing, primary metal
manufacturing, mining, water and waste treatment, heavy-duty trucking,
aerospace, medical, filtration and semiconductor fabrication. In many of these
industries, performance and durability are vital for safety and environmental
protection. Many of our products are used in highly demanding applications,
e.g., where extreme temperatures, extreme pressures, corrosive environments,
strict tolerances, and/or worn equipment make product performance difficult.
Our Advanced Surface Technologies segment applies proprietary technologies,
processes, and capabilities to deliver highly differentiated suites of products
and services for the most challenging applications in high growth markets. The
segment's products and services are used in highly demanding environments
requiring performance, precision and repeatability, with a low tolerance for
failure. The segment's services include cleaning, coating, testing,
refurbishment and verification services for critical components and assemblies
used in state-of-the-art advanced node semiconductor manufacturing equipment.
The segment also designs, manufactures and sells specialized optical filters and
thin-film coatings for the most challenging applications in the industrial
technology, life sciences, and semiconductor markets and complex front-end wafer
processing sub-systems, new and refurbished electrostatic chuck pedestals, thin
film coatings, and edge-welded metal bellows for the semiconductor equipment
industry and for critical applications in the space, aerospace and defense
markets.
Our Engineered Materials segment includes operations that design, manufacture
and sell self-lubricating, non-rolling metal-polymer, engineered plastics, and
fiber reinforced composite bearing products, precision engineered components and
lubrication systems for reciprocating compressors and engines, critical service
flange gaskets, seals and electrical flange isolation kits used in high-pressure
wellhead equipment, flow lines, water injection lines, sour hydrocarbon process
applications, and crude oil and natural gas pipeline/transmission line
applications. These products are used in a wide range of applications, including
the automotive, aerospace, pharmaceutical, pulp and paper, natural gas, health,
power generation, machine tools, air treatment, refining, petrochemical and
general industrial markets.
COVID-19 Response. As COVID-19 has spread, it has significantly impacted the
health and economic environment around the world. Our customers are principally
global manufacturers and the impact of the COVID-19 pandemic on general economic
conditions, and more deleterious effects on certain markets, have had and may
continue to have negative implications on demand for their goods and
consequently on their demand for our products and services. Because of
uncertainties with respect to the continuing severity and duration of the
COVID-19 outbreak, the duration and terms of related governmental orders
restricting activities, and the timing and pace of any economic recovery as
COVID-19 impacts ultimately abate, we cannot predict with precision the extent
and duration of any future decreased demand for our products and services and
the consequent impact on our business and financial results.
With respect to business operations and the protection of our employees, we
have taken numerous actions in response to the COVID-19 pandemic, including:
•Suspension of all non-essential travel;
•Implementation of mandatory work from home, where feasible;
•Expansion of information technology infrastructure to
enable working remotely and holding virtual meetings;
•Implementation of employee testing and contact tracing;
•Restrictions on visitors to EnPro facilities;
•Training of employees in enhanced cleaning and disinfecting protocols and
providing
supplemental personal protective equipment at each of our facilities;
•Safe operating procedures such as temperature scanning and the use of masks;
•Establishing social distancing protocols in our manufacturing sites;
•Implementation of quarantining policies and practices with respect to any
infected employee;
•Supporting voluntary immunizations upon employee request, subject to
availability;
•Creation of a dedicated communications platform and internal website to address
questions from employees
and provide frequent updates; and,
•Development of a virtual sales platform.
All of our primary manufacturing facilities are currently open and generally
have not experienced significant supply chain disruptions. Certain operations
are experiencing supply chain disruptions for raw materials, principally steel
in the United States, as raw material supply, which was reduced in response to
the economic slowdown related to the COVID-19 pandemic, has not sufficiently
increased to address increasing demand as general economic activity in the
United States has improved. Additionally, each of our businesses has developed
continuity and contingency plans, based on various scenarios in preparation
                                       21
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for potential operational disruptions, to permit us to adjust production levels
to demand. We cannot predict if and when closures or production changes may
arise as a result of implications related to the COVID-19 pandemic.
To help protect the strength of our financial position, we have implemented
several measures including:
•Aggressive cost management initiatives;
•Discretionary spending reductions;
•Capital expenditure prioritization;
•Headcount optimization plans, as needed; and
•Increased working capital monitoring to ensure timely accounts receivable
collections and inventory level
optimization.
Outlook
Financial highlights for the three months ended March 31, 2021 and 2020 are as
follows:
                                                                                Three Months Ended
                                                                                     March 31,
                                                                                          2021               2020
                                                                                      (in millions, except per share
                                                                                                   data)
Net sales                                                                             $    279.3          $  282.7
Income from continuing operations attributable to EnPro Industries, Inc               $     18.0          $   10.1
Net income attributable to EnPro Industries, Inc.

$ 18.0 $ 218.7 Diluted earnings per share from continuing operations attributable to EnPro Industries, Inc.

$ 0.87 $ 0.49 Adjusted income from continuing operations attributable to EnPro Industries, Inc.1

$ 28.3 $ 19.8 Adjusted diluted earnings per share attributable to EnPro Industries, Inc. continuing operations 1

$     1.37          $   0.96
Adjusted EBITDA 1                                                                     $     52.0          $   40.6


1 A reconciliation of non-GAAP measures to their respective GAAP measure is
located in the   Reconciliation of Non-GAAP Financial Measures to the Comparable
GAAP Measure   at the end of this section.
First quarter results reflect strong demand growth, cost management actions, and
increased exposure to higher margins and faster growth resulting from our recent
portfolio reshaping. In addition, we experienced positive momentum within the
semiconductor, food and pharmaceutical, automotive and heavy-duty truck. All of
our segments contributed to year-over-year adjusted EBITDA improvement.
In connection with our growth strategy, we will continue to evaluate making
additional acquisitions to take advantage of opportunities that arise. We will
consider making additional divestitures over time, and under the right
circumstances, to further our long-term strategic goals of refocusing our
portfolio on businesses with compelling margins, leading technology, high cash
flow return on investment, and favorable secular tailwinds.
                                       22
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Results of Operations
                                                                                         Three Months
                                                                                       Ended March 31,
                                                                                                2021             2020
                                                                                                    (in millions)
Sales
Sealing Technologies                                                                         $ 146.5          $ 173.6
Advanced Surface Technologies                                                                   54.7             36.7
Engineered Materials                                                                            80.4             75.1
                                                                                               281.6            285.4
Intersegment sales                                                                              (2.3)            (2.7)
Net sales                                                                                    $ 279.3          $ 282.7

Income from continuing operations attributable to EnPro Industries, Inc

                 $  18.0          $  10.1

Adjusted Segment EBITDA
Sealing Technologies                                                                         $  33.9          $  33.5
Advanced Surface Technologies                                                                   17.3              7.3
Engineered Materials                                                                            12.6              8.3
Total Adjusted Segment EBITDA                                                                $  63.8          $  49.1

Reconciliation of Adjusted Segment EBITDA to income from continuing operations
attributable to EnPro Industries, Inc.
Adjusted Segment EBITDA                                                                      $  63.8          $  49.1
Acquisition and divestiture expenses                                                            (0.1)            (0.9)
Non-controlling interest compensation allocation                                                (1.6)            (0.5)

Amortization of fair value adjustment to acquisition date inventory

                     (2.4)               -
Restructuring and impairment expense                                                            (1.8)            (1.4)
Depreciation and amortization expense                                                          (18.8)           (17.2)
Corporate expenses                                                                             (11.6)            (8.5)
Interest expense, net                                                                           (3.8)            (4.0)
Other income (expense), net                                                                     (0.4)             1.3
Income from continuing operations before income taxes                                           23.3             17.9
Income tax expense                                                                              (5.2)            (7.7)
Income from continuing operations                                                               18.1             10.2

Less: net income attributable to redeemable non-controlling interests

                      0.1              0.1

Income from continuing operations attributable to EnPro Industries, Inc.

                  $  18.0          $  10.1


We measure operating performance based on segment earnings before interest,
income taxes, depreciation, amortization, and other selected items ("Adjusted
Segment EBITDA" or "Segment AEBITDA"), which is segment revenue reduced by
operating expenses and other costs identifiable with the segment, excluding
acquisition and divestiture expenses, restructuring costs, impairment charges,
non-controlling interest compensation, amortization of the fair value adjustment
to acquisition date inventory, and depreciation and amortization. Adjusted
Segment EBITDA is not defined under GAAP and may not be comparable to
similarly-titled measures used by other companies. Corporate expenses include
general corporate administrative costs. Expenses not directly attributable to
the segments, corporate expenses, net interest expense, gains and losses related
to the sale of assets, and income taxes are not included in the computation of
Adjusted Segment EBITDA. The accounting policies of the reportable segments are
the same as those for EnPro.


                                       23

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Non-controlling interest compensation allocation represents compensation expense
associated with a portion of the rollover equity from the acquisitions of
LeanTeq and Alluxa being subject to reduction for certain types of employment
terminations of the sellers. This expense is recorded in selling, general, and
administrative expenses on our Consolidated Statements of Operations and is
directly related to the terms of the acquisitions. This expense will continue to
be recognized as compensation expense over the term of the put and call options
associated with each of these acquisitions unless certain employment
terminations have occurred.
Other income (expense), net in the table above contains all items included in
other (operating) expense and other income (expense) (non-operating) on our
Consolidated Statements of Operations for the three months ended March 31, 2021
and 2020 with the exception of $1.8 million, and $1.5 million, respectively, of
restructuring costs. As noted previously, restructuring costs are excluded from
Adjusted Segment EBITDA. Additionally, other income (expense), net in the table
above for the three months ended March 31, 2021 includes $0.2 million of
miscellaneous expenses that are either not associated with a particular segment
or not considered part of administering the corporate headquarters. These
expenses are included in selling, general and administrative expense on our
Consolidated Statements of Operations.

Three Months Ended March 31, 2021 Compared to the Three Months Ended March 31,
2020
Sales of $279.3 million in the first three months of 2021 decreased 1.2% from
$282.7 million in the first three months of 2020. The following table summarizes
the impact of acquisitions, divestitures, and foreign currency on sales by
segment:
Sales                                              Percent Change Three 

Months Ended March 31, 2021 vs. Three Months Ended March 31, 2020


                                             Acquisitions and                  Foreign
increase/(decrease)                            Divestitures                   Currency                    Organic                     Total
EnPro Industries, Inc.                                    (9.6) %                      2.9  %                     5.5  %                    (1.2) %
Sealing Technologies                                     (18.7) %                      2.2  %                     0.9  %                   (15.6) %
Advanced Surface Technologies                             24.0  %                      2.4  %                    22.6  %                    49.0  %
Engineered Materials                                      (2.9) %                      4.7  %                     5.3  %                     7.1  %


Following are the key effects of acquisitions and divestitures on sales for the three months of 2021 compared to the same period in 2020:



•Acquisition of Alluxa in October 2020
•Divestiture of Technetics Group UK Limited in December 2020
•Divestiture of the bushing block business principally located in Dieuze, France
in November 2020
•Divestiture of the Air Springs portion of our heavy duty trucking business in
November 2020
•Divestiture of Motorwheel® brake drum and Crewson® brake adjuster brands in
September 2020
•Divestiture of the Lunar® air disc brake business both the U.S. and Shanghai
China in the second and third quarters of 2020
Following is a discussion of operating results for each segment during the first
three months of 2021:

Sealing Technologies. Sales of $146.5 million in the first three months of 2021
reflect a 15.6% decrease compared to the $173.6 million reported in the same
period of 2020. Excluding the favorable foreign exchange translation ($3.7
million) on our 2021 sales and the sales from businesses that have since been
divested ($32.1 million) from 2020 results, sales were up 0.9% or $1.3 million.
This increase was driven by increased demand in food and pharmaceuticals,
petrochemical, and heavy-duty truck markets, partially offset by decline in
demand in the general industrial, aerospace, and oil and gas markets.

Adjusted Segment EBITDA of $33.9 million in the first three months of 2021
increased 1.2% from $33.5 million reported in the same period of 2020. Segment
AEBITDA margins for the segment increased from 19.3% in the first three months
of 2020 to 23.1% in the first three months of 2021. Excluding the favorable
foreign exchange translation ($0.8 million) and the Segment AEBITDA earned from
businesses that have since been divested ($2.3 million) from 2020 results,
Adjusted Segment EBITDA increased 6.1%, or $1.9 million, to $33.1 million. The
increase in Segment AEBITDA was driven by reduced selling, general, and
administrative costs, primarily as the result of marketing and selling cost
saving initiatives ($1.7 million), less travel-related expense ($1.3 million),
increased pricing ($1.4 million), and increased sales volume ($0.6 million),
partially offset by an unfavorable product mix ($1.7 million) and discontinued
businesses and product lines ($1.4 million).

                                       24
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Advanced Surface Technologies. Sales of $54.7 million in the first three months
of 2021 reflect a 49.0% increase compared to the $36.7 million reported in the
same period of 2020. Excluding the favorable foreign exchange translation ($0.8
million) and the sales from a recent acquisition ($8.9 million) from 2021
results, sales were up 22.6% or $8.3 million. This increase was driven by
stronger demand in the semiconductor market.

Adjusted Segment EBITDA of $17.3 million in the first three months of 2021
increased 137.0% from $7.3 million reported in the same period of 2020. Segment
AEBITDA margins for the segment increased from 19.9% in the first three months
of 2020 to 31.6% in the first three months of 2021. Excluding the favorable
foreign exchange translation ($0.5 million) and the Segment AEBITDA contributed
from a business recently acquired ($5.3 million) from our 2021 results, Adjusted
Segment EBITDA increased $4.2 million, or 57.5%, to $11.5 million. The increase
in Adjusted Segment EBITDA was driven by increased sales ($4.9 million) and
material cost decreases ($0.3 million), partially offset by increased selling,
general, and administrative costs ($1.3 million).

Engineered Materials. Sales in the first three months of 2021 increased 7.1% to
$80.4 million from $75.1 million reported in the same period of 2020. Excluding
the impact of favorable foreign exchange translation ($3.6 million) and the
sales from businesses that have since been divested ($2.1 million), sales were
up 5.3% or $3.8 million, primarily due to stronger demand in automotive and
power generation markets, partially offset by weakness in the oil and gas and
aerospace markets.

Adjusted Segment EBITDA in the first three months of 2021 was $12.6 million
compared to Segment EBITDA of $8.3 million in the same period of 2020, an
increase of $4.3 million, or 51.8%. Adjusted Segment EBITDA margins for the
segment were 15.7%, which was an increase from 11.1% in the first three months
of 2020. Excluding the impact of favorable foreign exchange translation ($1.0
million), Segment AEBITDA increased $3.3 million, or 39.3%, driven mainly by
increased sales ($2.0 million), manufacturing efficiencies driven by cost saving
initiatives and improved labor efficiencies ($2.6 million), and reduced travel
($0.6 million), partially offset by increased incentive compensation ($1.3
million) and increased material costs ($0.6 million).

Corporate expenses for the first three months of 2021 increased $3.1 million as compared to the same period in 2020. The increase was driven primarily by increased professional service fees ($0.8 million), and higher incentive compensation costs ($2.5 million).

Interest expense, net in the first three months of 2021 decreased by $0.2 million as compared to the same period of 2020, primarily due to the lower average outstanding balance on our revolving credit facility in the current quarter.



Other income (expense) in the first three months of 2021 declined by $1.7
million as compared to other income reported in the same period of 2020,
primarily due to $1.9 million in loss on sale of businesses in 2021 compared to
a gain of $1.1 million on sale of businesses in 2020 (a year-over-year increased
expense of $3.0 million) partially offset by $1.4 million increase in pension
income (non-service costs).

The effective tax rates for the three months ended March 31, 2021 and 2020 were
22.2% and 43.2%, respectively. The effective tax rate for the three months ended
March 31, 2021 is primarily the result of higher tax rates in most foreign
jurisdictions and an increase in valuation allowances related to certain net
operating losses and tax attributes offset by the settlement of a state tax
audit. The effective tax rate for the three months ended March 31, 2020 reflects
the impact of the minimum tax on certain non-U.S. earnings, an increase in
valuation allowance against certain net operating losses and higher tax rates in
most foreign jurisdictions. The effective rate for the current period is lower
than the prior period primarily due to the global intangible low-taxed income
regulation changes, enacted in July 2020, which lowers the minimum tax on
non-U.S. earnings.
Income from continuing operations attributable to EnPro Industries, Inc. was
$18.0 million, or $0.87 per share, in the first three months of 2021 compared to
income from continuing operations attributable to EnPro Industries, Inc. of
$10.1 million, or $0.49 per share, in the same period of 2020. Earnings per
share is expressed on a diluted basis.
Liquidity and Capital Resources
Cash requirements for, but not limited to, working capital, capital
expenditures, acquisitions, and debt repayments have been funded from cash
balances on hand. We continue to consider acquisition opportunities that align
with our long-term strategic goals of refocusing our portfolio on businesses
with compelling margins, leading technology, high cash flow return on
investment, and favorable secular tailwinds. It is possible our cash
requirements for one or more acquisition opportunities could exceed our cash
balance at the time of closing. Should we need additional capital, we have
resources available, which are discussed in this section under the heading
"Capital Resources."
                                       25
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As of March 31, 2021, we held $162.8 million of our $232.3 million cash and cash
equivalents outside of the United States. If the funds held outside the United
States were needed for our operations in the U.S., we have several methods to
access funds without a significant incremental tax cost, including repayment of
intercompany loans or distributions of previously taxed income. In addition, as
of March 31, 2021, we had a net current income tax receivable totaling $37.4
million.
Because of the transition tax and tax on the global intangible low-taxed income
provisions, undistributed earnings of our foreign subsidiaries totaling $198.2
million at March 31, 2021 have been subjected to U.S. income tax. Whether
through the application of the 100 percent dividends-received deduction provided
in the Tax Cuts and Jobs Act, or the distribution of these previously-taxed
earnings, we do not intend to distribute foreign earnings that will be subject
to any significant incremental U.S. or foreign tax.

Cash Flows
Operating activities provided $20.3 million of cash in the first three months of
2021 and $0.3 million of cash in the first three months of 2020. The
year-over-year increase was driven by increased income from continuing
operations and improved working capital.
Investing activities used $8.3 million of cash in the first three months of 2021
and provided $434.1 million of cash during the first three months of 2020. The
decrease in cash provided is primarily driven by $441.3 million in cash proceeds
from the sale of businesses in 2020, due primarily to the closing on the sale of
Fairbanks Morse in January 2020.
Financing activities used $8.1 million of cash in the first three months of
2021, primarily from $5.7 million used for dividends paid and $1.0 million in
repayments of debt. Financing activities in the first three months of 2020 used
$146.5 million, primarily used in net payments of $134.4 million on our
revolving credit facility, $5.5 million used for dividends paid, and $5.3
million used in the repurchase of shares.
Capital Resources
Senior Secured Credit Facilities. On September 25, 2019, we entered into a First
Amendment (the "First Amendment") to our Second Amended and Restated Credit
Agreement (the "Credit Agreement") among EnPro Industries, Inc. and EnPro
Holdings, Inc., a wholly owned subsidiary of the Company ("EnPro Holdings"), as
borrowers, the guarantors party thereto, the lenders party thereto and Bank of
America, N.A., as Administrative Agent, Swing Line Lender and Letter of Credit
Issuer. The Credit Agreement provides for a five-year, senior secured revolving
credit facility of $400.0 million (the "Revolving Credit Facility") and a
five-year, senior secured term loan facility of $150.0 million (the "Term Loan
Facility" and, together with the Revolving Credit Facility, the
"Facilities"). The Amended Credit Agreement also provides that the borrowers may
seek incremental term loans and/or additional revolving credit commitments in an
amount equal to the greater of $225.0 million and 100% of consolidated EBITDA
(as defined) for the most recently ended four-quarter period for which we have
reported financial results, plus additional amounts based on a consolidated
senior secured leverage ratio.
Initially, borrowings under the Facilities bore interest at an annual rate of
LIBOR plus 1.50% or base rate plus 0.50%, with the interest rates under the
Facilities being subject to incremental increases based on a consolidated total
net leverage ratio.  In addition, a commitment fee accrues with respect to the
unused amount of the Revolving Credit Facility at an annual rate of 0.175%,
which rate is also subject to incremental increase or decrease based on a
consolidated total net leverage ratio.
The Term Loan Facility amortizes on a quarterly basis in an annual amount equal
to 2.50% of the original principal amount of the Term Loan Facility in each of
years one through three, 5.00% of such original principal amount in year four,
and 1.25% of such original principal amount in each of the first three quarters
of year five, with the remaining outstanding principal amount payable at
maturity.
The Facilities are subject to prepayment with the net cash proceeds of certain
asset sales, casualty or condemnation events, and non-permitted debt issuances.
The Company and EnPro Holdings are the permitted borrowers under the Revolving
Credit Facility.  We have the ability to add foreign subsidiaries as borrowers
under the Revolving Credit Facility for up to $100.0 million (or its foreign
currency equivalent) in aggregate borrowings, subject to certain conditions.
Each of our domestic, consolidated subsidiaries are required to guarantee the
obligations of the borrowers under the Revolving Credit Facility, and each of
our existing domestic, consolidated subsidiaries has entered into the Credit
Agreement to provide such a guarantee.
Borrowings under the Facilities are secured by a first-priority pledge of the
following assets:

                                       26
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•100% of the capital stock of each domestic, consolidated subsidiary of the
Company (other than unrestricted subsidiaries);
•65% of the capital stock of any first tier foreign subsidiary of the Company
and its domestic, consolidated subsidiaries (other than unrestricted
subsidiaries); and
•substantially all of the assets (including, without limitation, machinery and
equipment, inventory and other goods, accounts receivable, certain owned real
estate and related fixtures, bank accounts, general intangibles, financial
assets, investment property, license rights, patents, trademarks, trade names,
copyrights, chattel paper, insurance proceeds, contract rights, hedge
agreements, documents, instruments, indemnification rights, tax refunds and
cash) of the Company and its domestic, consolidated subsidiaries (other than
unrestricted subsidiaries)
The Credit Agreement contains certain financial covenants and required financial
ratios, including:
•a maximum consolidated total net leverage ratio of not more than 4.25 to 1.0
(with total debt, for the purposes of such ratio, to be net of up to $125
million of unrestricted cash of EnPro Industries, Inc. and its domestic,
consolidated subsidiaries), which ratio will decrease to 4.0 to 1.0 for each
fiscal quarter beginning with the fiscal quarter ending December 31, 2020 and,
once so decrease, may be increased (up to three times) at the borrowers' option
to not more than 4.5 to 1.0 for the for-quarter period following a significant
acquisition; and
•a minimum consolidated interest coverage ratio of at least 2.5 to 1.0.
The Credit Agreement contains affirmative and negative covenants (subject, in
each case, to customary exceptions and qualifications), including covenants that
limit our ability to, among other things:
•grant liens on our assets;
•incur additional indebtedness (including guarantees and other contingent
obligations);
•make certain investments (including loans and advances);
•merge or make other fundamental changes;
•sell or otherwise dispose of property or assets;
•pay dividends and other distributions and prepay certain indebtedness;
•make changes in the nature of our business;
•enter into transactions with our affiliates;
•enter into burdensome contracts; and
•modify or terminate documents related to certain indebtedness.

We were in compliance with all covenants of the Revolving Credit Facility as of March 31, 2021.



The borrowing availability at March 31, 2021 under the Revolving Credit Facility
was $388.6 million, representing the full $400.0 million of availability less
$11.4 million reserved for outstanding letters of credit. We have $144.4 million
of outstanding borrowings on our Term Loan Facility.

Senior Notes. In October 2018, we completed the offering of $350.0 million aggregate principal amount of 5.75% Senior Notes due 2026 (the "Senior Notes").



The Senior Notes were issued to investors at 100% of the principal amount
thereof. The Senior Notes are unsecured, unsubordinated obligations of EnPro and
mature on October 15, 2026. Interest on the Senior Notes accrues at a rate of
5.75% per annum and is payable semi-annually in cash in arrears on April 15 and
October 15 of each year, commencing April 15, 2019. The Senior Notes are
required to be guaranteed on a senior unsecured basis by each of EnPro's
existing and future direct and indirect domestic subsidiaries that is a borrower
under, or guarantees, our indebtedness under the Revolving Credit Facility or
guarantees any other Capital Markets Indebtedness (as defined in the indenture
governing the Senior Notes) of EnPro or any of the guarantors.

On or after October 15, 2021, we may, on any one or more occasions, redeem all
or a part of the Senior Notes at specified redemption prices plus accrued and
unpaid interest. In addition, we may redeem a portion of the aggregate principal
amount of the Senior Notes before October 15, 2021 with the net cash proceeds
from certain equity offerings at a specified redemption price plus accrued and
unpaid interest, if any, to, but not including, the redemption date. We may also
redeem some or all of the Senior Notes before October 15, 2021 at a redemption
price of 100% of the principal amount, plus accrued and unpaid interest, if any,
to, but not including, the redemption date, plus a "make whole" premium.

Each holder of the Senior Notes may require us to repurchase some or all of the Senior Notes held by such holder for cash upon the occurrence of a defined "change of control" event.


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The indenture governing the Senior Notes includes covenants that restrict our
ability to engage in certain activities, including incurring additional
indebtedness, paying dividends and repurchasing shares of our common stock,
subject in each case to specified exceptions and qualifications set forth in the
indenture.

In April of 2021, we met all reinvestment requirements outlined in the indenture
governing the Senior Notes with respect to the net cash proceeds from the sale
of Fairbanks Morse in January 2020.

Share Repurchase Program. In October 2018, our board of directors authorized the
expenditure of up to $50.0 million for the repurchase of our outstanding common
shares. During the three months ended March 31, 2020, we repurchased 0.1 million
shares for $5.3 million. Prior to the expiration of the authorization in October
2020, total repurchases under the October 2018 authorization aggregated 0.3
million shares for $20.3 million.

In October 2020, our board of directors authorized the expenditure of up to $50 million for the repurchase of our outstanding common shares through October 2022. No repurchases have been made under this program.



Critical Accounting Policies and Estimates
Please refer to our annual report on Form 10-K for the fiscal year ended
December 31, 2020, for a discussion of our critical accounting policies and
estimates.
Contingencies
General
A detailed description of environmental and other legal matters relating to
certain of our subsidiaries is included in this section. In addition to the
matters noted herein, we are from time to time subject to, and are presently
involved in, other litigation and legal proceedings arising in the ordinary
course of business. We believe the outcome of such other litigation and legal
proceedings will not have a material adverse effect on our financial condition,
results of operations and cash flows. Expenses for administrative and legal
proceedings are recorded when incurred.
Environmental
Our facilities and operations are subject to federal, state and local
environmental and occupational health and safety laws and regulations of the
U.S. and foreign countries. We take a proactive approach in our efforts to
comply with these laws and regulations as they relate to our manufacturing
operations and in proposing and implementing any remedial plans that may be
necessary. We also regularly conduct comprehensive environmental, health and
safety audits at our facilities to maintain compliance and improve operational
efficiency.
Although we believe past operations were in substantial compliance with the then
applicable regulations, we or one or more of our subsidiaries are involved with
various remediation activities or an investigation to determine responsibility
for environmental conditions at 20 sites. At 14 of these sites, the future cost
per site for us or our subsidiary is expected to exceed $100,000. Of these 20
sites, 18 are sites where we or one or more of our subsidiaries formerly
conducted business operations but no longer do, and 2 are sites where we conduct
manufacturing operations. Investigations have been completed for 16 sites and
are in progress at 3 sites. An investigation to determine responsibility for
environmental conditions is ongoing at one site.
Our policy is to accrue environmental investigation and remediation costs when
it is probable that a liability has been incurred and the amount can be
reasonably estimated. For sites with multiple future projected cost scenarios
for identified feasible investigation and remediation options where no one
estimate is more likely than all the others, our policy is to accrue the lowest
estimate among the range of estimates. The measurement of the liability is based
on an evaluation of currently available facts with respect to each individual
situation and takes into consideration factors such as existing technology,
presently enacted laws and regulations and prior experience in the remediation
of similar contaminated sites. Liabilities are established for all sites based
on these factors. As assessments and remediation progress at individual sites,
these liabilities are reviewed and adjusted to reflect additional technical data
and legal information. As of March 31, 2021 and December 31, 2020, we had
accrued liabilities aggregating $41.2 million and $42.2 million, respectively,
for estimated future expenditures relating to environmental contingencies. These
amounts have been recorded on an undiscounted basis in the Consolidated Balance
Sheets. Given the uncertainties regarding the status of laws, regulations,
enforcement policies, the impact of other parties potentially being fully or
partially liable, technology and information related to individual sites, we do
not believe it is possible to develop an estimate of the range of reasonably
possible environmental loss in excess of our recorded liabilities.
We believe that our accruals for specific environmental liabilities are adequate
based on currently available information. Based upon limited information
regarding any incremental remediation or other actions that may be required at
these sites, we cannot estimate any further loss or a reasonably possible range
of loss related to these matters. Actual costs to be incurred in
                                       28
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future periods may vary from estimates because of the inherent uncertainties in
evaluating environmental exposures due to unknown and changing conditions,
changing government regulations and legal standards regarding liability.
Based on our prior ownership of Crucible Steel Corporation a/k/a Crucible, Inc.
("Crucible"), we may have additional contingent liabilities in one or more
significant environmental matters. One such matter, which is included in the 20
sites referred to above, is the Lower Passaic River Study Area of the Diamond
Alkali Superfund Site in New Jersey. Crucible operated a steel mill abutting the
Passaic River in Harrison, New Jersey from the 1930s until 1974, which was one
of many industrial operations on the river dating back to the 1800s. Certain
contingent environmental liabilities related to this site were retained by a
predecessor of our EnPro Holdings, Inc. subsidiary (which, including its
corporate predecessors is referred to as "EnPro Holdings") when it sold a
majority interest in Crucible Materials Corporation (the successor of Crucible)
in 1985. The United States Environmental Protection Agency (the "EPA") notified
our subsidiary in September 2003 that it is a potentially responsible party
("PRP") for Superfund response actions in the lower 17-mile stretch of the
Passaic River known as the Lower Passaic River Study Area.
EnPro Holdings and approximately 70 of the numerous other PRPs, known as the
Cooperating Parties Group, are parties to a May 2007 Administrative Order on
Consent with the EPA to perform a Remedial Investigation/Feasibility Study
("RI/FS") of the contaminants in the Lower Passaic River Study Area. In
September 2018, EnPro Holdings withdrew from the Cooperating Parties Group but
remains a party to the May 2007 Administrative Order on Consent. The RI/FS was
completed and submitted to the EPA at the end of April 2015. The RI/FS
recommends a targeted dredge and cap remedy with monitored natural recovery and
adaptive management for the Lower Passaic River Study Area. The cost of such
remedy is estimated to be $726 million. Previously, on April 11, 2014, the EPA
released its Focused Feasibility Study (the "FFS") with its proposed plan for
remediating the lower eight miles of the Lower Passaic River Study Area. The FFS
calls for bank-to-bank dredging and capping of the riverbed of that portion of
the river and estimates a range of the present value of aggregate remediation
costs of approximately $953 million to approximately $1.73 billion, although
estimates of the costs and the timing of costs are inherently imprecise. On
March 3, 2016, the EPA issued the final Record of Decision (ROD) as to the
remedy for the lower eight miles of the Lower Passaic River Study Area, with the
maximum estimated cost being reduced by the EPA from $1.73 billion to $1.38
billion, primarily due to a reduction in the amount of cubic yards of material
that will be dredged. In October 2016, Occidental Chemical Corporation, the
successor to the entity that operated the Diamond Alkali chemical manufacturing
facility, reached an agreement with the EPA to develop the design for this
proposed remedy at an estimated cost of $165 million. The EPA has estimated that
it will take approximately four years to develop this design. On June 30, 2018,
Occidental Chemical Corporation sued over 120 parties, including the Company, in
the United States District Court for New Jersey seeking recovery of response
costs under the Federal Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA").
No final allocations of responsibility have been made among the numerous PRPs
that have received notices from the EPA, there are numerous identified PRPs that
have not yet received PRP notices from the EPA, and there are likely many PRPs
that have not yet been identified. In September 2017, EPA hired a third-party
allocator to develop an allocation of costs among a large number of the parties
identified by EPA as having potential responsibility, including the Company. In
the fourth quarter of 2020, the third-party allocator issued his report, which
determined the range for EnPro's liability for the lower eight miles of the
river to be between $35,000 and $950,000. Our reserve at March 31, 2021 was $1.0
million.
On April 14, 2021, the EPA issued its proposed remedy for the upper nine miles
of the river, with an estimated present value cost of approximately
$441 million. The proposed remedy would involve dredging and capping of the
river sediment as an interim remedy followed by a period of monitoring to
evaluate the response of the river system to the interim remedy.
When the EPA initiated the allocation process in 2017, it explained that a fair,
carefully structured, information-based allocation was necessary to promote
settlements. With the completion of the allocation process, the EPA has
indicated that settlement discussions will begin soon. Further adjustments to
our reserve for this site are possible as further information is developed in
the course of these discussions.
Except with respect to the lower eight miles of the Lower Passaic River Study
Area, we are unable to estimate a reasonably possible range of loss related to
any other contingent environmental liability based on our prior ownership of
Crucible. See the following section entitled "Crucible Steel Corporation a/k/a
Crucible, Inc." for additional information.
Crucible Steel Corporation a/k/a Crucible, Inc.
Crucible, which was engaged primarily in the manufacture and distribution of
high technology specialty metal products, was a wholly owned subsidiary of EnPro
Holdings until 1983 when its assets and liabilities were distributed to a new
subsidiary, Crucible Materials Corporation. EnPro Holdings sold a majority of
the outstanding shares of Crucible Materials Corporation in 1985 and divested
its remaining minority interest in 2004. Crucible Materials Corporation filed
for Chapter 11 bankruptcy protection in May 2009 and is no longer conducting
operations.
                                       29
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We have certain ongoing obligations, which are included in other liabilities in
our Consolidated Balance Sheets, including workers' compensation, retiree
medical and other retiree benefit matters, in addition to those mentioned
previously related to EnPro Holdings' period of ownership of Crucible. Based on
EnPro Holdings' prior ownership of Crucible, we may have certain additional
contingent liabilities, including liabilities in one or more significant
environmental matters included in the matters discussed in "Environmental"
above. We are investigating these matters. Except with respect to those matters
for which we have an accrued liability as discussed in "Environmental" above, we
are unable to estimate a reasonably possible range of loss related to these
contingent liabilities.
Warranties
We provide warranties on many of our products. The specific terms and conditions
of these warranties vary depending on the product and the market in which the
product is sold. We record a liability based upon estimates of the costs we may
incur under our warranties after a review of historical warranty experience and
information about specific warranty claims. Adjustments are made to the
liability as claims data, historical experience, and trends result in changes to
our estimate.
Changes in the product warranty liability for the three months ended March 31,
2021 and 2020 are as follows:
                                                    2021         2020
                                                      (in millions)
                   Balance at beginning of year   $   6.7      $ 10.1
                   Net charges to expense             0.5         0.7
                   Settlements made                  (0.4)       (1.3)
                   Balance at end of period       $   6.8      $  9.5

The lower level of warranty expense, settlements made and ending balance as compared to the prior-year period is primarily due to the disposal, during the second half of 2020, of portions of our businesses supplying the heavy-duty trucking end market.



Asbestos Insurance Receivables
The historical business operations of certain of our subsidiaries resulted in a
substantial volume of asbestos litigation in which plaintiffs alleged personal
injury or death as a result of exposure to asbestos fibers. In 2010, certain of
these subsidiaries, including Garlock Sealing Technologies, LLC ("GST"), filed
voluntary petitions for reorganization under Chapter 11 of the United States
Bankruptcy Code in the U.S. Bankruptcy Court for the Western District of North
Carolina (the "Bankruptcy Court"). An additional subsidiary filed a Chapter 11
bankruptcy petition with the Bankruptcy Court in 2017. The filings were part of
a claims resolution process for an efficient and permanent resolution of all
pending and future asbestos claims through court approval of a plan of
reorganization to establish a facility to resolve and pay these asbestos claims.
These claims against GST and other subsidiaries were resolved pursuant to a
joint plan of reorganization (the "Joint Plan") filed with the Bankruptcy Court
which was consummated on July 29, 2017. Under the Joint Plan, GST and EnPro
Holdings retained their rights to seek reimbursement under insurance policies
for any amounts they have paid in the past to resolve asbestos claims, including
contributions made to the asbestos claims resolution trust established under the
Joint Plan (the "Trust"). These policies include a number of primary and excess
general liability insurance policies that were purchased by EnPro Holdings and
were in effect prior to January 1, 1976 (the "Pre-GST Coverage Block"). The
policies provide coverage for "occurrences" happening during the policy periods
and cover losses associated with product liability claims against EnPro Holdings
and certain of its subsidiaries. Asbestos claims against GST are not covered
under these policies because GST was not a subsidiary of EnPro Holdings prior to
1976. The Joint Plan provides that EnPro Holdings may retain the first $25
million of any settlements and judgments collected for non-GST asbestos claims
related to insurance policies in the Pre-GST Coverage Block and EnPro Holdings
and the Trust will share equally in any settlements and judgments EnPro Holdings
may collect in excess of $25 million. To date, EnPro Holdings has collected
almost $22 million in settlements for non-GST asbestos claims related to the
Pre-GST Coverage Block and anticipates further collections once the Trust begins
making claims payments on non-GST Claims.
As of March 31, 2021, approximately $4.2 million of available products hazard
limits or insurance receivables existed under primary and excess general
liability insurance policies other than the Pre-GST Coverage Block (the "GST
Coverage Block") from solvent carriers, which we believe is available to cover
contributions made to the Trust under the Joint Plan as the Trust uses those
contributions to pay GST asbestos claims covered by policies in the GST Coverage
Block. There are specific agreements in place with carriers regarding the
remaining available coverage. We believe that all of the $4.2 million of
insurance proceeds will ultimately be collected, although there can be no
assurance that the insurance companies will make the payments as and when due.
In the fourth quarter of 2020, we billed an insurer in the GST Coverage Block
$0.8 million for GST
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Claims paid by the Trust through December 2020. This amount is included in Other
assets on our Consolidated Balance Sheet at March 31, 2021.
We also believe that EnPro Holdings will bill, and could collect over time, as
much as $10 million of insurance coverage for non-GST asbestos claims to
reimburse it for Trust payments to non-GST Trust claimants. After EnPro Holdings
collects the first approximately $3 million of that coverage, remaining
collections for non-GST asbestos claims from the Pre-GST Coverage Block will be
shared equally with the Trust.
GST has received $8.8 million of insurance recoveries from insolvent carriers
since 2007, and may receive additional payments from insolvent carriers in the
future. No anticipated insolvent carrier collections are included in the $4.2
million of anticipated collections. The insurance available to cover current and
future asbestos claims is from comprehensive general liability and excess
liability policies that cover EnPro Holdings and certain of its other
subsidiaries in addition to GST for periods prior to 1985 and therefore could be
subject to potential competing claims of other covered subsidiaries and their
assignees.
Supplemental Guarantor Financial Information

On October 17, 2018, we completed the offering of the Senior Notes. The Senior
Notes are fully and unconditionally guaranteed on an unsecured, unsubordinated,
joint and several basis by our wholly owned direct and indirect domestic
subsidiaries, that are each guarantors of our Revolving Credit Facility,
including subsidiaries that were wholly owned at the time they provided the
guarantee but thereafter became majority owned subsidiaries (collectively, the
"Guarantor Subsidiaries").  The Guarantor Subsidiaries at March 31, 2021
comprise all of our consolidated domestic subsidiaries at that date. Our
subsidiaries organized outside of the United States (collectively, the
"Non-Guarantor Subsidiaries") do not guarantee the Senior Notes.
The Guarantor Subsidiaries jointly and severally guarantee on an unsecured,
unsubordinated basis the performance and punctual payment when due, whether at
stated maturity of the Senior Notes, by acceleration or otherwise, all of our
obligations under the Senior Notes and the indenture governing the Senior Notes
(the "Indenture"), whether for payment of principal of, premium, if any, or
interest on the Senior Notes, expenses, indemnification or otherwise (all such
obligations guaranteed by the Guarantor Subsidiaries are referred to as the
"Guaranteed Obligations"). The Guarantor Subsidiaries have jointly and severally
agreed to pay, in addition to the obligations stated above, any and all expenses
(including reasonable counsel fees and expenses) incurred by the trustee (the
"Trustee") under the Indenture in enforcing any rights under their guarantees of
the Guaranteed Obligations.
Each guarantee of a Guarantor Subsidiary is limited to an amount not to exceed
the maximum amount that can be guaranteed by it without rendering the guarantee,
as it relates to such Guarantor Subsidiary, voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally. Each guarantee of a Guarantor
Subsidiary is a continuing guarantee and shall inure to the benefit of and be
enforceable by the Trustee, the holders of the Senior Notes and their
successors, transferees and assigns and, subject to the provisions described in
the following sentence, remains in full force and effect until payment in full
of all of the Guaranteed Obligations of such Guarantor Subsidiary and is binding
upon such Guarantor Subsidiary and its successors. A guarantee of the Senior
Notes by a Guarantor Subsidiary is subject to release in the following
circumstances: (i) the sale, disposition, exchange or other transfer (including
through merger, consolidation, amalgamation or otherwise) of the capital stock
of the subsidiary made in a manner not in violation of the Indenture; (ii) the
designation of the subsidiary as an "Unrestricted Subsidiary" under the
Indenture; (iii) the legal defeasance or covenant defeasance of the Senior Notes
in accordance with the terms of the Indenture; or (iv) the subsidiary ceasing to
be our subsidiary as a result of any foreclosure of any pledge or security
interest securing our Revolving Credit Facility or other exercise of remedies in
respect thereof.
The following tables present summarized financial information for EnPro
Industries, Inc. (the "Parent") and the Guarantor Subsidiaries on a combined
basis after intercompany eliminations.





                                       31

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The summarized results of operations for the three months ended March 31, 2021
were as follows:
                                                                                 Parent and
                                                                                  Guarantor
                                                                                Subsidiaries
Net sales                                                                    $          162.3
Gross profit                                                                 $           51.3

Loss from continuing operations attributable to EnPro Industries, Inc.

  $           (1.4)

Net loss attributable to EnPro Industries, Inc                               $           (1.4)
Comprehensive income attributable to EnPro Industries, Inc.                  $            5.8



The summarized balance sheet at March 31, 2021 was as follows:


                                              Parent and Guarantor Subsidiaries
    ASSETS
    Current assets                           $                            299.1
    Non-current assets                                                    900.2
    Total assets                             $                          1,199.3

LIABILITIES AND EQUITY


    Current liabilities                      $                            

121.9


    Non-current liabilities                                               

648.4


    Total liabilities                                                     

770.3


    Redeemable non-controlling interests                                   

51.2


    Shareholders' equity                                                  

377.8


    Total liabilities and equity             $                          

1,199.3




The table above reflects $14.3 million of current intercompany receivables due
to the Guarantor Subsidiaries from the Non-Guarantor Subsidiaries and $6.0
million of current intercompany payables due to the Non-Guarantor Subsidiaries
from the Guarantor Subsidiaries within current assets and liabilities.
The summarized results of operations for the year ended December 31, 2020 were
as follows:
                                                                                 Parent and
                                                                                  Guarantor
                                                                                Subsidiaries
Net sales                                                                    $          632.9
Gross profit                                                                 $          172.4
Loss from continuing operations attributable to EnPro Industries, Inc.       $          (67.1)
Income from discontinued operations, net of taxes                            $          208.9
Net income attributable to EnPro Industries, Inc                             $          141.8
Comprehensive income attributable to EnPro Industries, Inc.                  $          133.5












                                       32

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The summarized balance sheet at December 31, 2020 was as follows:


                                          Parent and Guarantor Subsidiaries
ASSETS
Current assets                           $                            300.4
Non-current assets                                                    904.4
Total assets                             $                          1,204.8
LIABILITIES AND EQUITY
Current liabilities                      $                            122.8
Non-current liabilities                                               653.9
Total liabilities                                                     776.7
Redeemable non-controlling interests                                   48.4
Shareholders' equity                                                  379.7
Total liabilities and equity             $                          1,204.8



The table above reflects $11.8 million of current intercompany receivables due
to the Guarantor Subsidiaries from the Non-Guarantor Subsidiaries and $4.4
million of current intercompany payables due to the Non-Guarantor Subsidiaries
from the Guarantor Subsidiaries within current assets and liabilities.

The Senior Notes are structurally subordinated to the indebtedness and other
liabilities of the Non-Guarantor Subsidiaries. The Non-Guarantor Subsidiaries
are separate and distinct legal entities and have no obligation, contingent or
otherwise, to pay any amounts due pursuant to the Senior Notes or the Indenture,
or to make any funds available therefor, whether by dividends, loans,
distributions or other payments. Any right that the Company or the Guarantor
Subsidiaries have to receive any assets of any of the Non-Guarantor Subsidiaries
upon the liquidation or reorganization of any Non-Guarantor Subsidiary, and the
consequent rights of holders of Senior Notes to realize proceeds from the sale
of any of a Non-Guarantor Subsidiary's assets, would be effectively subordinated
to the claims of such Non-Guarantor Subsidiary's creditors, including trade
creditors and holders of preferred equity interests, if any, of such
Non-Guarantor Subsidiary. Accordingly, in the event of a bankruptcy, liquidation
or reorganization of any of the Non-Guarantor Subsidiaries, the Non-Guarantor
Subsidiaries will pay the holders of their debts, holders of preferred equity
interests, if any, and their trade creditors before they will be able to
distribute any of their assets to the Company or any Guarantor Subsidiaries.
If a Guarantor Subsidiary were to become a debtor in a case under the U.S.
Bankruptcy Code or encounter other financial difficulty, under federal or state
fraudulent transfer or conveyance law, a court may avoid, subordinate or
otherwise decline to enforce its guarantee of the Senior Notes. A court might do
so if it is found that when such Guarantor Subsidiary entered into its guarantee
of the Senior Notes, or in some states when payments became due under the Senior
Notes, such Guarantor Subsidiary received less than reasonably equivalent value
or fair consideration and either:
•was insolvent or rendered insolvent by reason of such incurrence;

•was left with unreasonably small or otherwise inadequate capital to conduct our
business; or
•believed or reasonably should have believed that it would incur debts beyond
its ability to pay.
The court might also avoid the guarantee of the Senior Notes without regard to
the above factors, if the court found that the Guarantor Subsidiary entered into
its guarantee with actual intent to hinder, delay or defraud our creditors.
A court would likely find that a Guarantor Subsidiary did not receive reasonably
equivalent value or fair consideration for its guarantee of the Senior Notes, if
such Guarantor Subsidiary did not substantially benefit directly or indirectly
from the funding made available by the issuance of the Senior Notes. If a court
were to avoid a guarantee of the Senior Notes provided by a Guarantor
Subsidiary, holders of the Senior Notes would no longer have any claim against
such Guarantor Subsidiary. The measures of insolvency for purposes of these
fraudulent transfer or conveyance laws will vary depending upon the law applied
in any proceeding to determine whether a fraudulent transfer or conveyance has
occurred, such that we cannot predict what standards a court would use to
determine whether or not a Guarantor Subsidiary was solvent at the relevant time
or, regardless of the standard that a court uses, that the guarantee of a
Guarantor Subsidiary would not be subordinated to such Guarantor Subsidiary's
other debt. As noted above, each guarantee provided by a Guarantor Subsidiary
includes a provision intended to
                                       33
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limit the Guarantor Subsidiary's liability to the maximum amount that it could
incur without causing the incurrence of obligations under its guarantee to be a
fraudulent transfer or conveyance. This provision may not be effective to
protect those guarantees from being avoided under fraudulent transfer or
conveyance law, or it may reduce that Guarantor Subsidiary's obligation to an
amount that effectively makes its guarantee worthless, and we cannot predict
whether a court will ultimately find it to be effective.
On the basis of historical financial information, operating history and other
factors, we believe that each of the Guarantor Subsidiaries, after giving effect
to the issuance of its guarantee of the Senior Notes when such guarantee was
issued, was not insolvent, did not have unreasonably small capital for the
business in which it engaged and did not and has not incurred debts beyond its
ability to pay such debts as they mature. We cannot assure you, however, as to
what standard a court would apply in making these determinations or that a court
would agree with our conclusions in this regard.

Reconciliations of Non-GAAP Financial Measures to the Comparable GAAP Measures



We believe that it would be helpful to the readers of the financial statements
to understand the impact of certain selected items on our reported income from
continuing operations attributable to EnPro Industries, Inc., diluted earnings
per share attributable to EnPro Industries, Inc. continuing operations, and
total adjusted segment EBITDA, including items that may recur from time to time.
The items adjusted for in these non-GAAP financial measures are those that are
excluded by management in budgeting or projecting for performance in future
periods, as they typically relate to events specific to the period in which they
occur. Accordingly, these are some of the factors the company uses in internal
evaluations of the overall performance of its businesses. In addition,
management believes these non-GAAP financial measures are commonly used
financial measures for investors to evaluate the company's operating performance
and, when read in conjunction with the company's consolidated financial
statements, present a useful tool to evaluate the company's ongoing operations
and performance from period to period. Management acknowledges that there are
many items that impact a company's reported results and the adjustments
reflected in these non-GAAP financial measures are not intended to present all
items that may have impacted these results. In addition, these non-GAAP measures
are not necessarily comparable to similarly titled measures used by other
companies.

The following presents a reconciliation of (i) income from continuing operations
attributable to EnPro Industries, Inc. to adjusted income from continuing
operations attributable to EnPro Industries, Inc.and (ii) income from continuing
operations attributable to EnPro Industries, Inc. to adjusted EBITDA for the
three months ended March 31, 2021 and 2020.





























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Reconciliation of Adjusted Income from Continuing Operations Attributable to
EnPro Industries, Inc.


                                                                               Three Months Ended March 31,
                                                                  2021                                                2020
                                                              Average common                                   Average common
                                                                  shares                                           shared
                                                               outstanding,                                     outstanding,
                                                   $        diluted (millions)   Per Share             $     diluted (millions)   Per Share
Income from continuing operations
attributable to EnPro Industries, Inc.       $   18.0              20.7        $     0.87          $ 10.1           20.6        $     0.49
Net income from redeemable non-controlling
interests                                         0.1                                                 0.1
Income tax expense                                5.2                                                 7.7
Income from continuing operations before
income taxes                                     23.3                                                17.9

Adjustments from selling, general, and
administrative:
Acquisition and divestiture expenses                -                                                 0.9
Non-controlling interest compensation
allocations2                                      1.6                                                 0.5
Amortization of acquisition-related
intangible assets                                11.3                                                 9.0
Adjustments from other operating expense and
cost of sales:
Restructuring and impairment expense              1.8                                                 1.4
Amortization of the fair value adjustment to
acquisition date inventory                        2.4                                                   -

Adjustments from other non-operating
expense:

Costs associated with previously disposed
businesses                                        0.3                                                 0.4
Net loss (gain) on sale of businesses             1.9                                                (1.1)
Pension income (non-service cost)                (2.1)                                               (0.7)
Other adjustments:
Other3                                            0.1                                                 0.1
Adjusted income from continuing operations
before income taxes                              40.6                                                28.4
Adjusted income tax expense4                    (12.2)                                               (8.5)
Net income from redeemable non-controlling
interests                                        (0.1)                                               (0.1)
Adjusted income from continuing operations                                                   1                                                1
attributable to EnPro Industries, Inc.       $   28.3              20.7        $     1.37          $ 19.8           20.6        $     0.96

1 Adjusted diluted earnings per share attributable to EnPro Industries, Inc. continuing operations. Per share amounts were calculated by dividing by the weighted-average shares of diluted common stock outstanding during the periods.


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2 Non-controlling interest compensation allocation represents compensation
expense associated with a portion of the rollover equity from the acquisitions
of LeanTeq and Alluxa that is subject to reduction for certain types of
employment terminations of the LeanTeq and Alluxa sellers and is directly
related to the terms of the respective acquisitions. This expense will continue
to be recognized as compensation expense over the term of the put and call
options associated with the acquisitions unless certain employment terminations
have occurred.

3Other adjustments are included in selling, general, and administrative, cost of sales, and other operating expenses on the consolidated statements of operations.



4 The adjusted income tax expense presented above is calculated using a
normalized company-wide effective tax rate excluding discrete items of 30.0% for
continuing operations.
Reconciliation of Income from Continuing Operations Attributable to EnPro
Industries, Inc. to Adjusted EBITDA
(Stated in Millions of Dollars)
                                                                                               Three Months
                                                                                                  Ended
                                                                                                March 31,
                                                                                                    2021        2020

Income from continuing operations attributable to EnPro Industries, Inc.

$   18.0    $   10.1
Net income attributable to redeemable non-controlling interests                                       0.1         0.1
Income from continuing operations                                                                    18.1        10.2

Adjustments to arrive at earnings from continuing operations before interest, income taxes, depreciation, amortization, and other selected items (Adjusted EBITDA): Interest expense, net

                                                                                 3.8         4.0
Income tax expense                                                                                    5.2         7.7
Depreciation and amortization expense                                                                18.9        17.2
Restructuring and impairment expense                                                                  1.8         1.4

Costs associated with previously disposed businesses                                                  0.3         0.4
Net loss (gain) on sale of businesses                                                                 1.9        (1.1)
Acquisition and divestiture expenses                                                                    -         0.9
Pension income (non-service cost)                                                                    (2.1)       (0.7)
Non-controlling interest compensation allocation1                                                     1.6         0.5

Amortization of the fair value adjustment to acquisition date
inventory                                                                                             2.4           -
Other                                                                                                 0.1         0.1
Adjusted EBITDA                                                                                  $   52.0    $   40.6


1 Non-controlling interest compensation allocation represents compensation
expense associated with a portion of the rollover equity from the acquisitions
of LeanTeq and Alluxa that is subject to reduction for certain types of
employment terminations of the LeanTeq and Alluxa sellers and is directly
related to the terms of the respective acquisitions. This expense will continue
to be recognized as compensation expense over the term of the put and call
options associated with the acquisitions unless certain employment terminations
have occurred.

Adjusted EBITDA as presented in the table above also represents the amount
defined as "EBITDA" under the indenture governing the Senior Notes.
Item 3.   Quantitative and Qualitative Disclosures About Market Risk
We are exposed to certain market risks as part of our ongoing business
operations, including risks from changes in foreign currency exchange rates and
interest rates that could impact our financial condition, results of operations
and cash flows. We manage our exposure to these and other market risks through
regular operating and financing activities and through the use of derivative
financial instruments. We intend to use derivative financial instruments as risk
management tools and not for speculative investment purposes. For information
about our interest rate risk, see "Quantitative and Qualitative Disclosures
about Market Risk - Interest Rate Risk" in our annual report on Form 10-K for
the year ended December 31, 2020.
Foreign Currency Risk
We are exposed to foreign currency risks that arise from normal business
operations. These risks include the translation of local currency balances of
our foreign subsidiaries, intercompany loans with foreign subsidiaries and
transactions
                                       36

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denominated in foreign currencies. Our objective is to control our exposure to
these risks and limit the volatility in our reported earnings due to foreign
currency fluctuations through our normal operating activities and, where
appropriate, through foreign currency forward contracts and option contracts.
The notional amount of foreign exchange contracts hedging foreign currency
transactions was $3.2 million and $3.3 million at March 31, 2021 and
December 31, 2020, respectively.
In September 2018, we entered into cross-currency swap agreements with a
notional amount of $200.0 million to manage foreign currency risk by effectively
converting a portion of the interest payments related to our fixed-rate U.S.
Dollar ("USD")-denominated Senior Notes, including the semi-annual interest
payments thereunder, to interest payments on fixed-rate Euro-denominated debt of
172.8 million EUR with a weighted average interest rate of 2.8%, with interest
payment dates of March 15 and September 15 of each year. The swap agreement
matures on September 15, 2022.
In May 2019, we entered into additional cross-currency swap agreements with a
notional amount of $100.0 million to manage foreign currency risk by effectively
converting a portion of the interest payments related to our
fixed-rate USD-denominated Senior Notes, including the semi-annual interest
payments thereunder, to interest payments on fixed-rate Euro-denominated debt of
89.6 million EUR with a weighted average interest rate of 3.5% , with interest
payment dates of April 15 and October 15 of each year. The swap agreement
matures on October 15, 2026.
During the term of the swap agreements, we will receive semi-annual payments
from the counterparties due to the difference between the interest rate on the
Senior Notes and the interest rate on the Euro debt underlying the swap. There
was no principal exchange at the inception of the arrangements, and there will
be no exchange at maturity. At maturity (or earlier at our option), we and the
counterparties will settle the swap agreements at their fair value in cash based
on the aggregate notional amount and the then-applicable currency exchange rate
compared to the exchange rate at the time the swap agreements were entered into.
Commodity Risk
We source a wide variety of materials and components from a network of global
suppliers. While such materials are typically available from numerous suppliers,
commodity raw materials such as steel, engineered plastics, copper and polymers,
are subject to price fluctuations (including increases due to new or increased
tariffs), which could have a negative impact on our results. The impacts from
the COVID-19 pandemic may further increase the risk of price fluctuations or the
availability of necessary raw materials. We strive to pass along commodity price
increases to customers to avoid profit margin erosion and utilize lean
initiatives to further mitigate the impact of commodity raw material price
fluctuations as we achieve improved efficiencies. We do not hedge commodity risk
with any market risk sensitive instruments.

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