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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _________________________________________
FORM 10-Q
 _________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-31225
 _________________________________________ 
ENPRO INDUSTRIES, INC.
(Exact name of registrant, as specified in its charter)
_____________________________________  
North Carolina 01-0573945
(State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.)
5605 Carnegie Boulevard 
Suite 500
Charlotte
North Carolina28209
(Address of principal executive offices) (Zip Code)
(704) 731-1500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
__________________________________________
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.01 par valueNPONew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  ý
As of October 27, 2022, there were 20,802,827 shares of common stock of the registrant outstanding, which does not include 179,345 shares of common stock held by a subsidiary of the registrant and accordingly are not entitled to be voted. There is only one class of common stock.



PART I
FINANCIAL INFORMATION
 Item 1.    Financial Statements
ENPRO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Nine Months Ended September 30, 2022 and 2021
(in millions, except per share amounts)

Quarters Ended September 30,Nine Months Ended September 30,
2022202120222021
Net sales$280.1 $209.7 $827.3 $627.7 
Cost of sales169.3 126.0 509.5 378.3 
Gross profit110.8 83.7 317.8 249.4 
Operating expenses:
Selling, general and administrative65.8 60.0 205.1 182.5 
Other0.1 0.1 2.3 1.9 
Total operating expenses65.9 60.1 207.4 184.4 
Operating income44.9 23.6 110.4 65.0 
Interest expense(9.4)(4.0)(24.2)(12.0)
Interest income0.1 1.4 0.3 1.8 
Other income (expense)0.3 16.7 (1.7)18.6 
Income from continuing operations before income taxes35.9 37.7 84.8 73.4 
Income tax expense(9.1)(13.6)(19.8)(14.8)
Income from continuing operations26.8 24.1 65.0 58.6 
Income from discontinued operations, net of tax0.7 3.9 13.9 16.9 
Net income27.5 28.0 78.9 75.5 
Less: net income attributable to redeemable non-controlling interests0.6 0.1 0.8 0.1 
Net income attributable to EnPro Industries, Inc.$26.9 $27.9 $78.1 $75.4 
Comprehensive income (loss)$(5.6)$26.9 $17.2 $78.4 
Less: comprehensive income (loss) attributable to redeemable non-controlling interests(1.2)0.2 (3.1)0.3 
Comprehensive income (loss) attributable to EnPro Industries, Inc.$(4.4)$26.7 $20.3 $78.1 
Income attributable to EnPro Industries, Inc. common shareholders:
Income from continuing operations, net of tax$26.2 $24.0 $64.2 $58.5 
Income from discontinued operations, net of tax0.7 3.9 13.9 16.9
Net income attributable to EnPro Industries, Inc. $26.9 $27.9 $78.1 $75.4 
Basic earnings per share attributable to EnPro Industries, Inc.:
Continuing operations$1.26 $1.17 $3.09 $2.84 
Discontinued operations0.03 0.19 0.67 0.82 
Net income per share$1.29 $1.36 $3.76 $3.66 
Diluted earnings per share attributable to EnPro Industries, Inc.:
Continuing operations$1.26 $1.16 $3.08 $2.82 
Discontinued operations0.03 0.19 0.66 0.81 
Net income per share$1.29 $1.35 $3.74 $3.63 
See notes to consolidated financial statements (unaudited).
1


ENPRO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, 2022 and 2021
(in millions)
20222021
OPERATING ACTIVITIES OF CONTINUING OPERATIONS
Net income $78.9 $75.5 
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
Income from discontinued operations, net of taxes(13.9)(16.9)
Depreciation19.4 13.4 
Amortization58.5 33.3 
Deferred income taxes(1.9)(2.7)
Stock-based compensation4.6 3.4 
Other non-cash adjustments4.9 (15.2)
Change in assets and liabilities, net of effects of divestitures of businesses:
Accounts receivable, net(17.0)(21.8)
Inventories(19.2)(7.0)
Accounts payable2.7 10.4 
Other current assets and liabilities(13.2)2.6 
Other non-current assets and liabilities7.8 2.5 
Net cash provided by operating activities of continuing operations111.6 77.5 
INVESTING ACTIVITIES OF CONTINUING OPERATIONS
Purchases of property, plant and equipment(10.2)(10.9)
Proceeds from sale of businesses, net0.6 38.9 
Acquisitions2.9  
Receipts from settlements of derivative contracts27.4  
Other 0.2 
Net cash provided by investing activities of continuing operations20.7 28.2 
FINANCING ACTIVITIES OF CONTINUING OPERATIONS
Proceeds from debt60.5  
Repayments of debt(304.2)(3.0)
Dividends paid(17.6)(16.8)
Other(7.8)(1.5)
Net cash used in financing activities of continuing operations(269.1)(21.3)
CASH FLOWS OF DISCONTINUED OPERATIONS
Operating cash flows8.8 20.3 
Investing cash flows(4.3)(2.3)
Net cash provided by discontinued operations4.5 18.0 
Effect of exchange rate changes on cash and cash equivalents(39.6)(1.9)
Net increase (decrease) in cash and cash equivalents(171.9)100.5 
Cash and cash equivalents at beginning of period338.1 229.5 
Cash and cash equivalents at end of period$166.2 $330.0 
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net$15.8 $6.3 
Income taxes, net$35.8 $22.8 
Non-cash investing and financing activities:
Non-cash acquisitions of property, plant, and equipment$0.2 $1.2 
See notes to consolidated financial statements (unaudited).
2


ENPRO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions, except share amounts)
September 30,
2022
December 31,
2021
ASSETS
Current assets
Cash and cash equivalents$166.2 $338.1 
Accounts receivable, net151.4 145.0 
Inventories150.2 135.9 
Prepaid expenses and other current assets34.4 35.8 
Current assets of discontinued operations148.4 149.9 
Total current assets650.6 804.7 
Property, plant and equipment, net170.5 184.3 
Goodwill919.2 948.0 
Other intangible assets, net811.5 894.2 
Other assets142.8 143.4 
Total assets$2,694.6 $2,974.6 
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt$15.5 $12.7 
Short-term debt 149.3 
Accounts payable72.9 72.0 
Accrued expenses129.1 116.5 
Current liabilities of discontinued operations35.8 35.8 
Total current liabilities253.3 386.3 
Long-term debt868.1 963.9 
Deferred taxes and non-current income taxes payable148.8 166.1 
Other liabilities107.6 137.9 
Total liabilities1,377.8 1,654.2 
Commitments and contingencies
Redeemable non-controlling interests49.0 50.1 
Shareholders’ equity
Common stock – $.1 par value; 100,000,000 shares authorized; issued, 20,981,810 shares in 2022 and 20,915,793 shares in 2021
0.2 0.2 
Additional paid-in capital300.7 303.6 
Retained earnings1,011.4 953.1 
Accumulated other comprehensive income (loss)(43.3)14.6 
Common stock held in treasury, at cost – 179,833 shares in 2022 and 180,848 shares in 2021
(1.2)(1.2)
Total shareholders’ equity1,267.8 1,270.3 
Total liabilities and equity$2,694.6 $2,974.6 



See notes to consolidated financial statements (unaudited).
3


ENPRO INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1.    Overview and Basis of Presentation
Overview
EnPro Industries, Inc. (“we,” “us,” “our,” “EnPro,” or the “Company”) is a leading-edge industrial technology company focused on critical applications across a diverse group of growing end markets such as semiconductor, photonics, industrial process, aerospace, food, biopharma and life sciences. EnPro is a leader in applied engineering and designs, develops, manufactures, and markets proprietary, value-added products and solutions that safeguard a variety of critical environments.
Over the past several years, we have executed several strategic initiatives to focus the portfolio of businesses where we offer proprietary, industrial technology-related products and solutions with high barriers to entry, compelling margins, strong cash flow, and perpetual recurring/aftermarket revenue in markets with favorable secular tailwinds.
Basis of Presentation
The accompanying interim consolidated financial statements are unaudited, and certain related information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted in accordance with Rule 10-01 of Regulation S-X. They were prepared following the same policies and procedures used in the preparation of our annual financial statements except for the change in the accounting for inventory from Last-in, First-out basis (LIFO) to First-in, First-out basis (FIFO) at certain of our locations as described below under "Inventory". The accompanying interim consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of results for the periods presented. The Consolidated Balance Sheet as of December 31, 2021 was derived from the audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2021 adjusted for the change in accounting principle noted above. The results of operations for the interim periods are not necessarily indicative of the results for the fiscal year. These consolidated financial statements should be read in conjunction with our annual consolidated financial statements for the year ended December 31, 2021 included within our annual report on Form 10-K.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amount of assets and liabilities and the disclosures regarding contingent assets and liabilities at period end and the reported amounts of revenue and expenses during the reporting period.
All intercompany accounts and transactions between our consolidated operations have been eliminated.
Goodwill
In the second quarter of 2022, we determined the performance of our Alluxa reporting unit to be a triggering event for a goodwill impairment test and, as a result, we performed an interim assessment. The fair value of our Alluxa reporting unit, which is included in our Advanced Surface Technologies segment, and is allocated $126.0 million of goodwill, exceeded its carrying value by an estimated 21% as of the interim testing date of June 30, 2022. If the weighted-average cost of capital used in this assessment were increased by one percentage point, then the fair value of the Alluxa reporting unit would exceed its carrying value by approximately 12%.
Management continues to monitor the actual financial performance and future expectations of Alluxa, as well as, the discount rate and other relevant factors compared to the rates and projections utilized for the interim goodwill test noted above.
Management will perform the annual goodwill impairment test for EnPro’s five reporting units as of November 1, 2022. In performing the impairment tests, a change in assumptions used in the test, such as a change in discount rate, a downward revision of financial projections, or a shift in market multiples could result in the fair value of a reporting unit dropping below the carrying value of its assets, resulting in an impairment of goodwill.
Inventory
Effective July 1, 2022, we changed our method of determining cost for certain inventories from a LIFO basis to a FIFO basis for all of our inventories that were still accounted for under LIFO. We concluded the FIFO basis of accounting is the preferable method for determining inventory cost for our businesses because it improves comparability with our peers, harmonizes our accounting for inventory across all locations, more accurately reflects the current value and physical flow of inventory, and aligns operationally with how management views the performance of the business.
4


We retrospectively applied this change in accounting principle to all prior periods, including discontinued operations; and recorded a cumulative effect adjustment to increase the January 1, 2021 inventory balance by $3.2 million, an increase to the January 1, 2021 current assets of discontinued operations balance by $0.6 million, and an increase to retained earnings by $2.9 million (net of tax). The Consolidated Statement of Operations for the quarter and nine months ended September 30, 2021, Consolidated Statement of Cash flows for the nine months ended September 30, 2021, and the Consolidated Balance Sheet at December 31, 2021 have been retrospectively adjusted to reflect the change in accounting principle. Had we continued to apply LIFO, cost of sales for the nine months ended September 30, 2022, would have been $3.1 million higher and inventory would have been $6.9 million lower. Additionally, income from discontinued operations, net of tax, would have been approximately $0.1 million lower and current assets of discontinued operations would have been approximately $1.2 million lower.
The impact of our change in accounting method for valuing certain inventories on our previously issued financial statements is presented in the following tables:
Consolidated Statement of Operations
(in millions)Quarter Ended September 30, 2021Nine Months Ended September 30, 2021
As Reported 1
Effect of ChangeAs Adjusted
As Reported 1
Effect of ChangeAs Adjusted
Cost of sales$126.0 $ $126.0 $378.5 $(0.2)$378.3 
Gross profit83.7  83.7 249.2 0.2 249.4 
Operating income23.6  23.6 64.8 0.2 65.0 
Income from continuing operations before income taxes37.7  37.7 73.2 0.2 73.4 
Income tax expense(13.6) (13.6)(14.8) (14.8)
Income from continuing operations24.1  24.1 58.4 0.2 58.6 
Income from discontinued operations, net of tax3.5 0.4 3.9 16.5 0.4 16.9 
Net income27.6 0.4 28.0 74.9 0.6 75.5 
Net income attributable to EnPro Industries, Inc. $27.5 $0.4 $27.9 $74.8 $0.6 $75.4 
Consolidated Balance Sheet
(in millions)December 31, 2021
As Reported 1
Effect of ChangeAs Adjusted
Inventories$132.1 $3.8 $135.9 
Current assets of discontinued operations148.9 1.0 149.9 
Total current assets799.9 4.8 804.7 
Total assets$2,969.8 $4.8 $2,974.6 
Current liabilities of discontinued operations$35.5 $0.3 $35.8 
Total current liabilities386.0 0.3 386.3 
Deferred taxes and non-current income taxes payable165.2 0.9 166.1 
Total liabilities1,653.0 1.2 1,654.2 
Retained earnings949.5 3.6 953.1 
Total shareholders' equity1,266.7 3.6 1,270.3 
Total liabilities and equity$2,969.8 $4.8 $2,974.6 

5


Consolidated Statement of Cash Flows
(in millions)Nine Months Ended September 30, 2021
As Reported 1
Effect of ChangeAs Adjusted
OPERATING ACTIVITIES OF CONTINUING OPERATIONS
Net income$74.9 $0.6 $75.5 
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
Income from discontinued operations, net of taxes(16.5)(0.4)(16.9)
Change in assets and liabilities, net of effects of divestitures of businesses:
Inventories(6.8)(0.2)(7.0)
Net cash provided by operating activities of continuing operations77.5  77.5 
1 As Reported represents the consolidated financial statement balances that have been recast for discontinued operations exclusive of the impact of our change in accounting method from LIFO to FIFO.
2.    Discontinued Operations
During the third quarter of 2022, we entered into an agreement to sell our GGB business and announced our intention to sell Garlock Pipeline Technologies, Inc. (GPT). These businesses, along with Compressor Products International (CPI), which was divested on December 21, 2021, comprised our entire Engineered Materials segment ("Engineered Materials"). As a result of classifying the GGB and GPT businesses as held for sale in the third quarter of 2022, we determined Engineered Materials to be discontinued operations. Accordingly, we have reported, for all periods presented, the financial condition, results of operations, and cash flows of Engineered Materials as discontinued operations in the accompanying financial statements.
For the quarters and nine months ended September 30, 2022 and 2021, the results of operations from Engineered Materials were as follows:
(in millions)Quarters Ended September 30,Nine Months Ended September 30,
2022202120222021
Net sales$51.8 $73.4 $166.6 $233.3 
Cost of sales34.9 47.0 109.1 146.0 
Gross profit16.9 26.4 57.5 87.3 
Operating expenses:
Selling, general and administrative13.0 19.9 39.3 60.5 
Other 0.9 0.2 3.4 
Total operating expenses13.0 20.8 39.5 63.9 
Operating income3.9 5.6 18.0 23.4 
Other expense (0.1) (0.1)
Income from discontinued operations before income tax3.9 5.5 18.0 23.3 
Income tax expense(3.2)(1.6)(4.1)(6.4)
Income from discontinued operations, net of tax$0.7 $3.9 $13.9 $16.9 





6


The major classes of assets and liabilities for Engineered Materials are shown below:
(in millions)September 30,
2022
December 31,
2021
Assets:
Accounts receivable $36.0 $32.0 
Inventories27.1 28.8 
Property, plant and equipment46.0 52.4 
Goodwill5.1 5.1 
Other intangible assets16.9 19.2 
Other assets17.3 12.4 
Current assets of discontinued operations$148.4 $149.9 
Liabilities
Accounts payable$10.1 $9.9 
Accrued expenses19.0 18.8 
Other liabilities 6.7 7.1 
Current liabilities of discontinued operations$35.8 $35.8 
Pursuant to applicable accounting guidance for the reporting of discontinued operations, allocations to Engineered Materials for corporate services not expected to continue at the divested business subsequent to closing have not been reflected in the above financial statements of discontinued operations and have been reclassified to income from continuing operations in the accompanying consolidated financial statements of the Company for all periods. In addition, divestiture-related costs previously not allocated to Engineered Materials that were incurred as a result of the divestiture of Engineered Materials have been reflected in the financial results of discontinued operations. As a result, income before income taxes of Engineered Materials has been decreased by $1.1 million and $1.6 million, respectively, for the quarter and nine months ended September 30, 2022 and increased by $0.1 million and $1.5 million, respectively, for the quarter and nine months ended September 30, 2021, with offsetting changes in corporate expenses of continuing operations.
The sale of GGB closed on November 4, 2022 to The Timken Company for total proceeds of $305 million, subject to closing date purchase price adjustments. The pre-tax gain on the disposition of GGB to be recognized in the fourth quarter is expected to be approximately $190 million.
The Company is actively pursuing the sale of GPT, and anticipates completing the sale by December 31, 2022. Current assets and current liabilities of discontinued operations of GPT at September 30, 2022, were $16.3 million and $4.2 million respectively.
The sale of GGB included a subsidiary of our Sealing Technologies segment which is not part of the discontinued operations described above. The total assets of this subsidiary (principally allocated goodwill of $6.0 million) were $7.9 million and the liabilities of this subsidiary were $0.3 million and have been classified in other current assets, and accrued expenses, respectively, in the accompanying consolidated balance sheet at September 30, 2022. The results of operations of this subsidiary are included in continuing operations for all periods being reported.
3.    Acquisition
On December 17, 2021, our subsidiary, EnPro Holdings, Inc. ("EnPro Holdings"), completed the acquisition of all issued and outstanding membership interests of TCFII NxEdge LLC (“NxEdge”). Based in Boise, Idaho, NxEdge serves customers across the semiconductor supply chain, including top tier global integrated device manufacturers and original equipment manufacturers from six main facilities located in Idaho and California. With vertically integrated capabilities across the semiconductor value chain, including a robust aftermarket business, NxEdge is a leading supplier offering a set of integrated capabilities with unique processes resulting in a broad range of qualifications at top customers. NxEdge is included in our Advanced Surface Technologies segment.

The following pro forma condensed consolidated financial results of operations for EnPro are presented as if the acquisition had been completed prior to 2021:
7


Quarter Ended September 30, Nine Months Ended September 30,
(in millions)2022202120222021
Pro forma net sales$280.1 $256.0 $827.3 $762.1 
Pro forma net income$28.1 $31.6 $76.2 $76.6 
These amounts have been calculated after applying our accounting policies and adjusting the results of NxEdge to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to inventory, property, plant and equipment and intangible assets had been applied prior to 2021 as well as additional interest expense to reflect financing required, together with the corresponding tax effects. The supplemental pro forma net income for the quarter and nine months ended September 30, 2022 was adjusted to exclude $1.8 million and $14.9 million of pre-tax costs related to the amortization of the backlog intangible asset, the amortization of the fair-value adjustment to acquisition date inventory and additional transaction-related expenses incurred during the respective periods. These pro forma financial results have been prepared for comparative purposes only and do not reflect the effect of synergies that would have been expected to result from the integration of this acquisition. The pro forma information does not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred prior to 2021, or of future results of the consolidated entities.
We continue to evaluate the purchase price allocation of this acquisition, primarily the value of certain tangible and intangible assets and the related tax impacts, and, in accordance with applicable accounting guidance, we have revised the initial acquisition date purchase price allocations to increase goodwill by $0.4 million at September 30, 2022. We expect to finalize the purchase price allocation no later than November 30, 2022.
4.    Income Taxes

Our income tax expense and resulting effective tax rate on income from continuing operations are based upon the estimated annual effective tax rates applicable for the respective periods adjusted for the effect of items required to be treated as discrete in the interim periods. This estimated annual effective tax rate is affected by the relative proportions of revenue and income before taxes in the jurisdictions in which we operate. Based on the geographical mix of earnings, our annual effective tax rate fluctuates based on the portion of our profits earned in each jurisdiction. Additionally, in accordance with discontinued operations reporting requirements, income tax expense for the current and prior periods presented have been adjusted to reflect only the activity of continuing operations. This presentation requires removing all elements of income tax expense associated with discontinued operations entities as well as their indirect impact on the overall income tax provision.
The effective tax rates for the quarters ended September 30, 2022 and 2021 were 25.4% and 36.2%, respectively. The reduction in the effective tax rate for the three months ended September 30, 2022 is primarily the result of higher tax rates in most foreign jurisdictions.

The effective tax rates for the nine months ended September 30, 2022 and 2021 were 23.4% and 20.2%, respectively. The effective tax rate for the nine months ended September 30, 2022 is primarily driven by a legal entity conversion in Taiwan and favorable foreign currency effects on dividends, partially offset by higher tax rates in most foreign jurisdictions. The effective tax rate for the nine months ended September 30, 2021 is primarily the result of the reduction of a valuation allowance on certain foreign net operating losses, the favorable conclusion of the IRS examination, and the reversal of certain uncertain tax positions, partially offset by higher tax rates in most foreign jurisdictions.
8


5.    Earnings Per Share
 Quarters Ended   
 September 30,
Nine Months Ended September 30,
 2022202120222021
 (in millions, except per share amounts)
Numerator (basic and diluted):
Net income$26.8 $24.1 $65.0 $58.6 
Less: net income attributable to redeemable non-controlling interests0.6 0.1 0.8 0.1 
Income from continuing operations attributable to EnPro Industries, Inc.26.2 24.0 64.2 58.5 
Income from discontinued operations, net of tax0.7 3.9 13.9 16.9 
Net income attributable to EnPro Industries, Inc.$26.9 $27.9 $78.1 $75.4 
Denominator:
Weighted-average shares – basic20.8 20.6 20.8 20.6 
Share-based awards0.1 0.1 0.1 0.2 
Weighted-average shares – diluted20.9 20.7 20.9 20.8 
Basic earnings per share attributable to EnPro Industries, Inc.:
Continuing operations$1.26 $1.17 $3.09 $2.84 
Discontinued operations0.03 0.19 0.67 0.82 
Basic earnings per share attributable to EnPro Industries, Inc.$1.29 $1.36 $3.76 $3.66 
Diluted earnings per share attributable to EnPro Industries, Inc.:
Continuing operations$1.26 $1.16 $3.08 $2.82 
Discontinued operations0.03 0.19 0.66 0.81 
Diluted earnings per share attributable to EnPro Industries, Inc.$1.29 $1.35 $3.74 $3.63 

6.    Inventories
September 30,
2022
December 31,
2021
 (in millions)
Finished products$49.4 $45.0 
Work in process35.0 38.8 
Raw materials and supplies65.8 52.1 
Total inventories$150.2 $135.9 

7.    Goodwill and Other Intangible Assets
The changes in the net carrying value of goodwill by reportable segment for the nine months ended September 30, 2022, are as follows:
Sealing
Technologies
Advanced Surface TechnologiesTotal
 (in millions)
Goodwill as of December 31, 2021
$279.4 $668.6 $948.0 
Acquisition of business 0.4 0.4 
Reclassification to held for sale (other current assets)(6.0) (6.0)
Foreign currency translation(8.8)(14.4)(23.2)
Goodwill as of September 30, 2022
$264.6 $654.6 $919.2 
9


The goodwill balances reflected above are net of accumulated impairment losses of $27.8 million for the Sealing Technologies segment as of December 31, 2021, and September 30, 2022.
Identifiable intangible assets are as follows:
  As of September 30, 2022 As of December 31, 2021
 Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
 (in millions)
Amortized:
Customer relationships$476.1 $148.7 $503.4 $132.9 
Existing technology462.7 62.5 464.9 37.3 
Trademarks63.8 21.6 63.9 19.5 
Other36.2 25.0 36.9 17.9 
1,038.8 257.8 1,069.1 207.6 
Indefinite-Lived:
Trademarks30.5 — 32.7 — 
Total$1,069.3 $257.8 $1,101.8 $207.6 
Amortization for the quarters and nine months ended September 30, 2022 and 2021 were $19.2 million, $10.7 million, $57.9 million, and $32.2 million, respectively.
8.    Accrued Expenses
September 30,
2022
December 31,
2021
 (in millions)
Salaries, wages and employee benefits$52.9 $50.5 
Interest9.9 4.9 
Environmental11.0 11.0 
Income taxes15.3 9.3 
Taxes other than income taxes7.0 7.0 
Operating lease liabilities8.7 9.5 
Other24.3 24.3 
$129.1 $116.5 

9.     Long-Term Debt
Senior Secured Credit Facilities
On December 17, 2021, we entered into a Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”) among the Company and EnPro Holdings, as borrowers, certain foreign subsidiaries of the Company from time to time party thereto, as designated borrowers, the guarantors party thereto, the lenders party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer. The Amended Credit Agreement amends, restates and replaces the Second Amended and Restated Credit Agreement dated as of June 28, 2018, as amended, among the Company and 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 L/C Issuer.

The Amended Credit Agreement provides for credit facilities in the initial aggregate principal amount of $1,007.5 million, consisting of a five-year, senior secured revolving credit facility of $400.0 million (the “Revolving Credit Facility”), a $142.5 million senior secured term loan facility in replacement of our existing senior secured term loan facility, maturing September 25, 2024 (the “Term Loan A-1 Facility”), a five-year, senior secured term loan facility of $315.0 million (the “Term Loan A-2 Facility”) and a 364-day, senior secured term loan facility of $150.0 million (the “364-Day Facility” and together with the Revolving Credit Facility, the Term Loan A-1 Facility and the Term Loan A-2 Facility, the “Facilities”). The Amended Credit
10


Agreement also provides that we may seek incremental term loans and/or additional revolving credit commitments in an amount equal to the greater of $275.0 million and 100% of consolidated EBITDA 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. The Amended Credit Agreement became effective on December 17, 2021.

Initially, borrowings under the Facilities (other than the 364-Day Facility) bear interest at an annual rate of LIBOR plus 1.75% or base rate plus 0.75%, although these interest rates are subject to incremental increase or decrease based on a consolidated total net leverage ratio. Borrowings under the 364-Day Facility bear interest at an annual rate of LIBOR plus 1.50% or base rate plus 0.50%. In addition, a commitment fee accrues with respect to the unused amount of the Revolving Credit Facility at an annual rate of 0.225%, which rate is also subject to incremental increase or decrease based on a consolidated total net leverage ratio. The Amended Credit Agreement contains customary LIBOR replacement provisions.

The Term Loan A-1 Facility amortizes on a quarterly basis in an annual amount equal to 2.50% of the original principal amount of the Term Loan A-1 Facility ($150.0 million) in year one after the closing, 5.00% of such original principal amount in year two and 1.25% of such original principal amount in each of the first three quarters of year three, with the remaining outstanding principal amount payable at maturity. The Term Loan A-2 Facility amortizes on a quarterly basis in an annual amount equal to 2.5% of the original principal amount of the Term Loan A-2 Facility in each of years one through three, 5.0% 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 364-Day Facility did not amortize and was repaid in full in the third quarter of 2022. 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 Facilities. The Company may also from time to time designate any of its wholly owned foreign subsidiaries as a borrower under the Revolving Credit Facility. Each of the Company’s domestic subsidiaries (other than any subsidiaries that may be designated as “unrestricted” by the Company from time to time, and inactive subsidiaries) is required to guarantee the obligations of the borrowers under the Facilities, and each of the Company’s existing domestic subsidiaries (other than inactive subsidiaries) has entered into the Amended Credit Agreement to provide such a guarantee.
Borrowings under the Facilities are secured by a first-priority pledge of certain assets. The Amended Credit Agreement contains certain financial covenants and required financial ratios including a maximum consolidated total net leverage and a minimum consolidated interest coverage as defined in the Amended Credit Agreement. We were in compliance with all covenants of the Amended Credit Agreement as of September 30, 2022.
The borrowing availability under our Revolving Credit Facility at September 30, 2022 was $299.2 million after giving consideration to $10.8 million of outstanding letters of credit and $90.0 million of outstanding borrowings. The balance of our outstanding Term Loan A-1 Facility and Term Loan A-2 Facility at September 30, 2022 was $138.8 million and $309.1 million respectively. The 364-Day Facility had no outstanding balance at September 30, 2022.
Senior Notes
On October 17, 2018, we completed the offering of $350.0 million aggregate principal amount of 5.75% Senior Notes due 2026 (the "Senior Notes") and applied the net proceeds of that offering, together with borrowings under the Revolving Credit Facility, to redeem on October 31, 2018 the full $450.0 million aggregate principal amount of the outstanding 5.875% Senior Notes due 2022 (the "Old 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. 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. 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. Our ability to redeem the Senior Notes prior to maturity is subject to certain conditions, including in certain cases the payment of make-whole amounts.
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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. The indenture further requires us to apply the net cash proceeds of certain asset sales not reinvested in acquisitions, or used to repay or otherwise reduce specified indebtedness within a specified period, in the event of the net proceeds exceeding a specified amount, to offer to repurchase the Senior Notes at a price equal to 100.0% of the principal amount thereof plus accrued and unpaid interest.

10.    Pensions and Postretirement Benefits
The components of net periodic benefit cost for our U.S. and foreign defined benefit pension plans for the quarters and nine months ended September 30, 2022 and 2021, are as follows:
 Quarters Ended September 30,Nine Months Ended September 30,
 Pension BenefitsOther BenefitsPension BenefitsOther Benefits
 20222021202220212022202120222021
 (in millions)
Service cost$0.4 $0.4 $ $ $1.1 $1.2 $ $ 
Interest cost2.5 2.3  7.4 6.8  0.1 
Expected return on plan assets(3.3)(4.5)