Business Segment Information

12 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Business Segment Information

18. Business Segment Information

We aggregate our operating businesses into three reportable segments. The factors considered in determining our reportable segments are the economic similarity of the businesses, the nature of products sold or services provided, the production processes and the types of customers and distribution methods. Our reportable segments are managed separately based on these differences.

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, and heavy-duty commercial vehicle parts used in wheel-end and suspension components. These products are used in a variety of industries, 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 create challenges for product performance.

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. It 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, 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.

We measure operating performance based on segment earnings before interest, income taxes, depreciation, amortization, and other selected items ("Adjusted Segment EBITDA"), 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.

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 the acquisitions unless certain employment terminations have occurred.

Segment operating results and other financial data for the years ended December 31, 2021, 2020, and 2019 were as follows:

	Years Ended December 31,
	2021		2020		2019
	(in millions)
Sales
Sealing Technologies	$	599.8	$	636.7	$	762.4
Advanced Surface Technologies	247.3		171.2		120.2
Engineered Materials	302.4		275.0		331.3
	1,149.5		1,082.9		1,213.9
Intersegment sales	(7.7)		(8.9)		(8.2)
Total sales	$	1,141.8	$	1,074.0	$	1,205.7
Adjusted Segment EBITDA
Sealing Technologies	$	141.4	$	131.0	$	131.4
Advanced Surface Technologies	73.2		47.1		23.5
Engineered Materials	43.3		32.5		53.7
Total Adjusted Segment EBITDA	$	257.9	$	210.6	$	208.6
Reconciliation of Adjusted Segment EBITDA to income (loss) from continuing operations before income taxes
Adjusted Segment EBITDA	$	257.9	$	210.6	$	208.6
Acquisition and divestiture expenses	(0.4)		(9.6)		(8.4)
Non-controlling interest compensation allocation	(5.3)		(2.9)		(0.5)
Amortization of fair value adjustment to acquisition date inventory	(9.9)		(3.0)		—
Restructuring and impairment expense	(6.0)		(30.6)		(8.7)
Depreciation and amortization expense	(75.6)		(70.7)		(67.9)
Corporate expenses	(62.9)		(37.9)		(36.4)
Interest expense, net	(13.7)		(14.9)		(18.2)
Other income (expense), net	128.3		(67.8)		(64.2)
Income (loss) from continuing operations before income taxes	$	212.4	$	(26.8)	$	4.3

	Years Ended December 31,
	2021		2020		2019
	(in millions)
Net Sales by Geographic Area
United States	$	533.5	$	555.7	$	630.2
Europe	265.8		244.2		301.2
Other foreign	342.5		274.1		274.3
Total	$	1,141.8	$	1,074.0	$	1,205.7

Net sales are attributed to countries based on location of the customer.

Due to the diversified nature of our business and the wide array of products that we offer, we sell into a number of end markets. Underlying economic conditions within these markets are a major driver of our segments' sales performance. Below is a summary of our third-party sales by major end market with which we did business for the years ended December 31, 2021, 2020 and 2019:

	Year Ended December 31, 2021
	(in millions)
	Sealing Technologies		Advanced Surface Technologies		Engineered Materials		Total
Aerospace	$	32.1	$	9.8	$	6.1	$	48.0
Automotive	2.2		0.9		60.4		63.5
Chemical and material processing	72.5		—		42.8		115.3
Food and pharmaceutical	65.1		—		1.5		66.6
General industrial	161.8		25.7		115.2		302.7
Medium-duty/heavy-duty truck	174.3		—		9.6		183.9
Oil and gas	19.0		4.6		61.3		84.9
Power generation	43.6		0.2		3.0		46.8
Semiconductors	14.6		203.6		—		218.2
Other	8.1		2.4		1.4		11.9
Total third-party sales	$	593.3	$	247.2	$	301.3	$	1,141.8

	Year Ended December 31, 2020
	(in millions)
	Sealing Technologies		Advanced Surface Technologies		Engineered Materials		Total
Aerospace	$	35.5	$	8.0	$	5.4	$	48.9
Automotive	2.1		0.1		55.9		58.1
Chemical and material processing	53.0		—		43.9		96.9
Food and pharmaceutical	52.3		—		1.6		53.9
General industrial	160.7		2.9		88.2		251.8
Medium-duty/heavy-duty truck	241.7		—		6.8		248.5
Oil and gas	20.5		2.1		64.1		86.7
Power generation	43.6		—		7.5		51.1
Semiconductors	14.6		157.1		—		171.7
Other	4.9		0.9		0.6		6.4
Total third-party sales	$	628.9	$	171.1	$	274.0	$	1,074.0

	Year Ended December 31, 2019
	(in millions)
	Sealing Technologies		Advanced Surface Technologies		Engineered Materials		Total
Aerospace	$	46.9	$	10.5	$	12.0	$	69.4
Automotive	7.0		—		81.5		88.5
Chemical and material processing	48.0		—		48.3		96.3
Food and pharmaceutical	38.8		—		0.9		39.7
General industrial	174.9		1.3		88.6		264.8
Medium-duty/heavy-duty truck	340.9		—		1.2		342.1
Oil and gas	25.2		4.8		83.1		113.1
Power generation	47.7		—		9.5		57.2
Semiconductors	12.2		103.5		—		115.7
Other	13.8		0.1		5.0		18.9
Total third-party sales	$	755.4	$	120.2	$	330.1	$	1,205.7

In 2021, we refined the end market classification of certain sales in the Engineered Materials segment for the year ended December 31, 2020. This refinement resulted in a reduction in sales reported in the automotive and power generation markets of approximately $10.4 million and $12.6 million, respectively, with an offsetting increase in the general industrial, medium duty/heavy duty truck, and other markets of approximately, $15.9 million, $6.7 million, and $0.4 million respectively.

Sales to one customer of our Sealing Technologies and Advanced Surface Technologies segments represented approximately $164.6 million and $132.2 million of our consolidated sales for the years ended December 31, 2021 and 2020, respectively. No customer accounted for 10% or more of net sales in 2019.

	Years Ended December 31,
	2021		2020		2019
	(in millions)
Capital Expenditures
Sealing Technologies	$	6.3	$	8.0	$	12.7
Advanced Surface Technologies	8.6		5.3		1.5
Engineered Materials	3.9		4.9		7.4
Corporate	—		0.1		—
Total capital expenditures	$	18.8	$	18.3	$	21.6
Depreciation and Amortization Expense
Sealing Technologies	$	30.6	$	36.5	$	45.0
Advanced Surface Technologies	32.9		20.0		7.0
Engineered Materials	12.1		14.2		15.9
Corporate	0.2		0.1		—
Total depreciation and amortization	$	75.8	$	70.8	$	67.9

	As of December 31,
	2021		2020
	(in millions)
Assets
Sealing Technologies	$	697.5	$	741.9
Advanced Surface Technologies	1,686.5		768.2
Engineered Materials	160.3		245.8
Corporate	425.5		327.7
	$	2,969.8	$	2,083.6

Long-Lived Assets
United States	$	169.8	$	115.9
France	15.8		21.0
Other Europe	14.4		20.3
Other foreign	36.7		37.8
Total	$	236.7	$	195.0

Corporate assets include all of our cash and cash equivalents and long-term deferred income taxes. Long-lived assets consist of property, plant and equipment.