Company Quick10K Filing
EnPro Industries
Price69.22 EPS1
Shares21 P/E107
MCap1,440 P/FCF18
Net Debt586 EBIT45
TEV2,026 TEV/EBIT45
TTM 2019-09-30, in MM, except price, ratios
10-Q 2021-03-31 Filed 2021-05-07
10-K 2020-12-31 Filed 2021-03-01
10-Q 2020-09-30 Filed 2020-11-03
10-Q 2020-06-30 Filed 2020-08-04
10-Q 2020-03-31 Filed 2020-05-05
10-K 2019-12-31 Filed 2020-03-11
10-Q 2019-09-30 Filed 2019-11-05
10-Q 2019-06-30 Filed 2019-08-02
10-Q 2019-03-31 Filed 2019-05-02
10-K 2018-12-31 Filed 2019-02-25
10-Q 2018-09-30 Filed 2018-11-01
10-Q 2018-06-30 Filed 2018-08-02
10-Q 2018-03-31 Filed 2018-05-03
10-K 2017-12-31 Filed 2018-02-26
10-Q 2017-09-30 Filed 2017-11-02
10-Q 2017-06-30 Filed 2017-08-01
10-Q 2017-03-31 Filed 2017-05-02
10-K 2016-12-31 Filed 2017-02-22
10-Q 2016-09-30 Filed 2016-11-03
10-Q 2016-06-30 Filed 2016-08-03
10-Q 2016-03-31 Filed 2016-05-06
10-K 2015-12-31 Filed 2016-02-26
10-Q 2015-09-30 Filed 2015-11-04
10-Q 2015-06-30 Filed 2015-08-05
10-Q 2015-03-31 Filed 2015-05-04
10-K 2014-12-31 Filed 2015-02-25
10-Q 2014-09-30 Filed 2014-11-05
10-Q 2014-06-30 Filed 2014-08-06
10-Q 2014-03-31 Filed 2014-05-08
10-K 2013-12-31 Filed 2014-02-25
10-Q 2013-09-30 Filed 2013-11-08
10-Q 2013-06-30 Filed 2013-08-08
10-Q 2013-03-31 Filed 2013-05-08
10-K 2012-12-31 Filed 2013-02-27
10-Q 2012-09-30 Filed 2012-11-08
10-Q 2012-06-30 Filed 2012-08-08
10-Q 2012-03-31 Filed 2012-05-09
10-K 2011-12-16 Filed 2012-02-27
10-Q 2011-09-30 Filed 2011-11-08
10-Q 2011-06-30 Filed 2011-08-08
10-Q 2011-03-31 Filed 2011-05-09
10-K 2010-12-31 Filed 2011-03-15
10-Q 2010-09-30 Filed 2010-11-09
10-Q 2010-06-30 Filed 2010-08-09
10-Q 2010-03-31 Filed 2010-05-10
10-K 2009-12-31 Filed 2010-03-03
8-K 2020-11-03
8-K 2020-10-26
8-K 2020-09-25
8-K 2020-08-14
8-K 2020-08-04
8-K 2020-06-19
8-K 2020-06-12
8-K 2020-05-05
8-K 2020-04-30
8-K 2020-02-25
8-K 2020-02-19
8-K 2020-01-21
8-K 2019-12-12
8-K 2019-11-05
8-K 2019-10-30
8-K 2019-09-25
8-K 2019-09-25
8-K 2019-07-29
8-K 2019-07-29
8-K 2019-07-19
8-K 2019-05-02
8-K 2019-04-30
8-K 2019-04-11
8-K 2019-03-11
8-K 2019-02-14
8-K 2019-01-11
8-K 2018-11-01
8-K 2018-10-31
8-K 2018-10-17
8-K 2018-10-02
8-K 2018-10-01
8-K 2018-08-02
8-K 2018-06-28
8-K 2018-05-03
8-K 2018-05-03
8-K 2018-02-21
8-K 2018-02-14

NPO 10Q Quarterly Report

Part I
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II
Item 1. Legal Proceedings.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 6. Exhibits.
EX-10.1 npo-2021x331xex101.htm
EX-31.1 npo-2021331xex311q1.htm
EX-31.2 npo-2021331xex312q1.htm
EX-32 npo-2021331xex32q1.htm

EnPro Industries Earnings 2021-03-31

Balance SheetIncome StatementCash Flow
2.11.71.30.80.40.02012201420172020
Assets, Equity
0.50.40.30.10.0-0.12012201420172020
Rev, G Profit, Net Income
0.20.10.0-0.0-0.1-0.22012201420172020
Ops, Inv, Fin

npo-20210331
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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 March 31, 2021
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 7(a)(2)(B) of the Securities 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 May 3, 2021, there were 20,598,605 shares of common stock of the registrant outstanding, which does not include 181,484 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)
Three Months Ended March 31, 2021 and 2020
(in millions, except per share amounts)

20212020
Net sales$279.3 $282.7 
Cost of sales169.9 187.4 
Gross profit109.4 95.3 
Operating expenses:
Selling, general and administrative80.3 73.2 
Other1.9 1.6 
Total operating expenses82.2 74.8 
Operating income27.2 20.5 
Interest expense(4.0)(4.7)
Interest income0.2 0.7 
Other income (expense)(0.1)1.4 
Income from continuing operations before income taxes23.3 17.9 
Income tax expense(5.2)(7.7)
Income from continuing operations18.1 10.2 
Income from discontinued operations, including gain on sale, net of tax 208.6 
Net income18.1 218.8 
Less: net income attributable to redeemable non-controlling interests0.1 0.1 
Net income attributable to EnPro Industries, Inc.$18.0 $218.7 
Comprehensive income$9.7 $197.2 
Less: comprehensive income (loss) attributable to redeemable non-controlling interests(0.4)1.0 
Comprehensive income attributable to EnPro Industries, Inc.$10.1 $196.2 
Income attributable to EnPro Industries, Inc. common shareholders:
Income from continuing operations, net of tax$18.0 $10.1 
Income from discontinued operations, net of tax 208.6
Net income attributable to EnPro Industries, Inc. $18.0 $218.7 
Basic earnings per share attributable to EnPro Industries, Inc.:
Continuing operations$0.87 $0.49 
Discontinued operations 10.13 
Net income per share$0.87 $10.62 
Diluted earnings per share attributable to EnPro Industries, Inc.:
Continuing operations$0.87 $0.49 
Discontinued operations 10.10 
Net income per share$0.87 $10.59 


See notes to consolidated financial statements (unaudited).
1


ENPRO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31, 2021 and 2020
(in millions)
20212020
OPERATING ACTIVITIES OF CONTINUING OPERATIONS
Net income $18.1 $218.8 
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
Income from discontinued operations, net of taxes (208.6)
Depreciation6.9 7.5 
Amortization11.9 9.7 
Deferred income taxes(1.6)(0.6)
Stock-based compensation1.7 1.3 
Other non-cash adjustments3.6 1.2 
Change in assets and liabilities, net of effects of divestitures of businesses:
Accounts receivable, net(19.8)(27.3)
Inventories(0.9)0.7 
Accounts payable4.3 0.2 
Other current assets and liabilities(2.3)(5.7)
Other non-current assets and liabilities(1.6)3.1 
Net cash provided by operating activities of continuing operations20.3 0.3 
INVESTING ACTIVITIES OF CONTINUING OPERATIONS
Purchases of property, plant and equipment(6.2)(5.2)
Proceeds from (payments for) sale of businesses(2.3)441.3 
Other0.2 (2.0)
Net cash provided by (used in) investing activities of continuing operations (8.3)434.1 
FINANCING ACTIVITIES OF CONTINUING OPERATIONS
Proceeds from debt 24.9 
Repayments of debt(1.0)(159.3)
Repurchase of common stock (5.3)
Dividends paid(5.7)(5.5)
Other(1.4)(1.3)
Net cash used in financing activities of continuing operations(8.1)(146.5)
CASH FLOWS OF DISCONTINUED OPERATIONS
Operating cash flows (6.2)
Net cash used in discontinued operations (6.2)
Effect of exchange rate changes on cash and cash equivalents(1.1)(11.9)
Net increase in cash and cash equivalents2.8 269.8 
Cash and cash equivalents at beginning of period229.5 121.2 
Cash and cash equivalents at end of period$232.3 $391.0 
Supplemental disclosures of cash flow information:
Cash paid (received) during the period for:
Interest, net$(2.3)$(2.3)
Income taxes, net$4.8 $2.6 
Non-cash investing and financing activities:
Non-cash acquisitions of property, plant, and equipment$1.0 $0.7 


See notes to consolidated financial statements (unaudited).
2


ENPRO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions, except share amounts)
March 31,
2021
December 31,
2020
ASSETS
Current assets
Cash and cash equivalents$232.3 $229.5 
Accounts receivable, net160.6 143.2 
Inventories138.6 139.1 
Income tax receivable50.3 49.6 
Prepaid expenses and other current assets16.7 17.6 
Total current assets598.5 579.0 
Property, plant and equipment, net191.0 195.0 
Goodwill617.2 621.8 
Other intangible assets, net538.3 553.6 
Other assets135.5 134.2 
Total assets$2,080.5 $2,083.6 
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt$4.0 $3.8 
Accounts payable72.1 69.8 
Accrued expenses126.9 128.4 
Total current liabilities203.0 202.0 
Long-term debt486.9 487.5 
Deferred taxes and non-current income taxes payable129.7 130.5 
Other liabilities128.8 136.7 
Total liabilities948.4 956.7 
Commitments and contingencies
Redeemable non-controlling interests51.2 48.4 
Shareholders’ equity
Common stock – $.01 par value; 100,000,000 shares authorized; issued, 20,778,138 shares in 2021 and 20,718,675 shares in 2020
0.2 0.2 
Additional paid-in capital290.7 289.6 
Retained earnings804.0 794.8 
Accumulated other comprehensive loss(12.8)(4.9)
Common stock held in treasury, at cost – 181,826 shares in 2021 and 182,511 shares in 2020
(1.2)(1.2)
Total shareholders’ equity1,080.9 1,078.5 
Total liabilities and equity$2,080.5 $2,083.6 



See notes to consolidated financial statements (unaudited).
3


ENPRO INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1.    Overview, Basis of Presentation and Recently Issued Authoritative Accounting Guidance
Overview
EnPro Industries, Inc. (“we,” “us,” “our,” “EnPro”, or the “Company”) is a leader in designing, developing, manufacturing, servicing, and marketing proprietary engineered industrial products and serve a wide variety of customers in varied industries around the world. Over the past year and a half, 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.
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 as disclosed below and 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, 2020 was derived from the audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2020. 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, 2020 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.
During March 2021, we identified two errors related to our accounting for the disposal of the Air Springs portion of the heavy-duty trucking business that closed in the fourth quarter of 2020. Such errors resulted in an understatement of the pre-tax loss on disposal for this disposition by approximately $2.0 million and an overstatement of net income by approximately $1.5 million in our previously issued consolidated financial statements. Net income for calendar 2020 was approximately $184.8 million. We evaluated the errors and concluded that they were not material to our previously issued consolidated financial statements and recorded the pre-tax loss on disposal as an out-of-period adjustment in other income (expense) in our Consolidated Statement of Operations for the first quarter of 2021.
In the first quarter of 2021, we modified the presentation of our Consolidated Statements of Operations to move income from discontinued operations directly following income from continuing operations before calculating a net income subtotal. Consistent with this change in presentation, we will also begin the Consolidated Statements of Cash Flows with net income rather than net income attributable to EnPro Industries, Inc. We have revised the prior period presented for these two financial statements to conform with this modified presentation. There is no impact to the Consolidated Balance Sheets as a result of this presentation change.

In January 2021, we adopted a standard that simplified the accounting for income taxes in nine unrelated areas. The adoption had no significant impact to our financial statements.
2.    Acquisition
On October 26, 2020, a subsidiary of EnPro formed for this purpose (the "Alluxa Acquisition Subsidiary") acquired all of the equity securities of Alluxa, Inc. ("Alluxa"), a privately held, California-based company. Alluxa is an industrial technology company that provides specialized optical filters and thin-film coatings for the most challenging applications in the industrial technology, life sciences, and semiconductor markets. Alluxa's products are developed through a proprietary coating process using state-of-the-art advanced equipment. Alluxa is included with the Advanced Surface Technologies segment.
Alluxa works in collaboration with customers across major end markets to provide customized, complex precision coating solutions through its specialized technology platform and proprietary processes. Alluxa has cultivated long-standing customer relationships across its diversified customer base. Alluxa’s global distribution capabilities support the company’s international
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reach, serving customers across the Americas, Europe, and Asia. Founded in 2007, Alluxa has two locations in California and is headquartered in Santa Rosa, California.

The following pro forma condensed consolidated financial results of operations for the three months ended March 31, 2020 are presented as if the acquisition had been completed prior to 2020:
(in millions)
Pro forma net sales$290.3 
Pro forma income from continuing operations $9.2 
These amounts have been calculated after applying our accounting policies and adjusting the results of Alluxa to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had been applied prior to 2020 as well as additional interest expense to reflect financing required, together with the consequential tax effects. 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 2020, or of future results of the consolidated entities.
3.    Income Taxes

Our income tax expense and resulting effective tax rate 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.

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.

In June 2017, the IRS began an examination of our 2014 through 2017 U.S. federal income tax returns. Although this examination is part of a routine and recurring cycle, we cannot predict the final outcome or expected conclusion date of the audit. Various foreign and state tax returns are also currently under examination and some of these exams may conclude within the next twelve months. The final outcomes of these audits are not yet determinable; however, management believes that any assessments that may arise will not have a material effect on our financial results.
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4.    Earnings Per Share
 Three months ended March 31,
 20212020
 (in millions, except per share amounts)
Numerator (basic and diluted):
Income from continuing operations, net of tax$18.1 $10.2 
Less: net income attributable to redeemable non-controlling interests0.1 0.1 
Income from continuing operations attributable to EnPro Industries, Inc.18.0 10.1 
Income from discontinued operations, net of tax 208.6 
Net income attributable to EnPro Industries, Inc.$18.0 $218.7 
Denominator:
Weighted-average shares – basic20.6 20.6 
Share-based awards0.1  
Weighted-average shares – diluted20.7 20.6 
Basic earnings per share attributable to EnPro Industries, Inc.:
Continuing operations$0.87 $0.49 
Discontinued operations 10.13 
Net income per share$0.87 $10.62 
Diluted earnings per share attributable to EnPro Industries, Inc.:
Continuing operations$0.87 $0.49 
Discontinued operations 10.10 
Net income per share$0.87 $10.59 

5.    Inventories
March 31,
2021
December 31,
2020
 (in millions)
Finished products$63.7 $69.4 
Work in process26.4 24.8 
Raw materials and supplies52.3 48.7 
142.4 142.9 
Reserve to reduce certain inventories to LIFO basis(3.8)(3.8)
Total inventories$138.6 $139.1 
We use the last-in, first-out (“LIFO”) method of valuing certain of our inventories. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs, which are subject to change until the final year-end LIFO inventory valuation.





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6.    Goodwill and Other Intangible Assets
The changes in the net carrying value of goodwill by reportable segment for the three months ended March 31, 2021, are as follows:
Sealing
Technologies
Advanced Surface TechnologiesEngineered
Materials
Total
 (in millions)
Goodwill as of December 31, 2020$297.4 $307.7 $16.7 $621.8 
Foreign currency translation(3.0)(1.6) (4.6)
Goodwill as of March 31, 2021$294.4 $306.1 $16.7 $617.2 

The goodwill balances reflected above are net of accumulated impairment losses of $27.8 million for the Sealing Technologies segment and $154.8 million for the Engineered Materials segment as of March 31, 2021 and December 31, 2020.
Identifiable intangible assets are as follows:
  As of March 31, 2021 As of December 31, 2020
 Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
 (in millions)
Amortized:
Customer relationships$501.8 $184.3 $505.5 $177.8 
Existing technology179.1 44.3 179.6 41.3 
Trademarks44.1 25.9 44.6 25.7 
Other37.5 23.1 37.6 22.3 
762.5 277.6 767.3 267.1 
Indefinite-Lived:
Trademarks53.4 — 53.4 — 
Total$815.9 $277.6 $820.7 $267.1 
Amortization for the three months ended March 31, 2021 and 2020 was $11.3 million and $9.0 million, respectively.
7.    Accrued Expenses
March 31,
2021
December 31,
2020
 (in millions)
Salaries, wages and employee benefits$40.6 $46.3 
Interest9.5 4.4 
Environmental12.6 12.6 
Income taxes12.9 9.9 
Taxes other than income taxes11.4 9.4 
Operating lease liabilities9.6 10.1 
Other30.3 35.7 
$126.9 $128.4 
8.     Long-Term Debt
Revolving Credit Facility
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
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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.
EnPro 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 Revolving Credit Facility are secured by a first-priority pledge of certain assets. The 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 Credit Agreement. We were in compliance with all covenants of the Credit Agreement as of March 31, 2021.
The borrowing availability under the Revolving Credit Facility at March 31, 2021 was $388.6 million after giving consideration to $11.4 million of outstanding letters of credit. We have $144.4 million outstanding on our Term Loan Facility borrowings.
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 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 on 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 occasion, redeem all or 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 price. 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, 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.

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.

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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.
9.    Pensions and Postretirement Benefits
The components of net periodic benefit cost for our U.S. and foreign defined benefit pension and other postretirement plans for the three months ended March 31, 2021 and 2020, are as follows:
 Three months ended March 31,
 Pension BenefitsOther Benefits
 2021202020212020
 (in millions)
Service cost$0.4 $1.0 $ $ 
Interest cost2.3 2.8   
Expected return on plan assets(4.6)(4.7)  
Amortization of net loss (gain)0.1 1.3  (1.1)
Curtailment loss 0.3   
Net periodic benefit cost (benefit)$(1.8)$0.7 $ $(1.1)

No contributions were made in the three months ended March 31, 2021 to our U.S. defined benefit pension plans and we do not anticipate making contributions in 2021 to these plans. Benefits relating to our U.S. defined benefit pension plan were frozen for all salaried employees as of January 1, 2021.
10.    Shareholders' Equity
Changes in shareholders' equity for the three months ended March 31, 2021 are as follows:
Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTreasury StockTotal Shareholders' EquityRedeemable Non-controlling Interests
(in millions, except per share data)SharesAmount
Balance, December 31, 202020.5 $0.2 $289.6 $794.8 $(4.9)$(1.2)$1,078.5 $48.4 
Net income— — — 18.0 — — 18.0 0.1 
Other comprehensive loss— — — — (7.9)— (7.9)(0.5)
Dividends ($0.27 per share)
— — — (5.7)— — (5.7)— 
Incentive plan activity0.1 — 1.2 — — — 1.2 — 
Other— — (0.1)(3.1)— — (3.2)3.2 
Balance, March 31, 202120.6 $0.2 $290.7 $804.0 $(12.8)$(1.2)$1,080.9 $51.2 
Changes in shareholders' equity for the three months ended March 31, 2020 are as follows:
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Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTreasury StockTotal Shareholders' EquityRedeemable Non-controlling Interests
(in millions, except per share data)SharesAmount
Balance, December 31, 201920.6 $0.2 $292.1 $632.2 $(36.4)$(1.2)$886.9 $28.0 
Adoption of new accounting standard— — — (0.1) — (0.1)— 
Net income— — — 218.7 — — 218.7 0.1 
Other comprehensive income (loss)— — — — (22.5)— (22.5)0.9 
Dividends ($0.26 per share)
— — — (5.3)— — (5.3)— 
Share repurchases(0.1)— (5.3)— — — (5.3)— 
Incentive plan activity— — 1.0 — — — 1.0 — 
Other— — (1.5)— — — (1.5)— 
Balance, March 31, 202020.5 $0.2 $286.3 $845.5 $(58.9)$(1.2)$1,071.9 $29.0 
We intend to declare regular quarterly cash dividends on our common stock, as determined by our board of directors, after taking into account our current and projected cash flows, earnings, financial position, debt covenants and other relevant factors. In accordance with the board of directors declaration, total dividend payments of $5.7 million were made during the three months ended March 31, 2021.
In May 2021, our board of directors declared a dividend of $0.27 per share, payable on June 16, 2021 to all shareholders of record as of June 2, 2021.
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. We have not made any repurchases under this authorization.
In February 2021, we issued stock options to certain key executives for 0.1 million common shares with an exercise price of $80.00 per share. The options vest pro-rata on the first, second and third anniversaries of the grant date, subject to continued employment. No options have a term greater than 10 years.
We determine the fair value of stock options using the Black-Scholes option pricing formula as of the grant date. Key inputs into this formula include expected term, expected volatility, expected dividend yield, and the risk-free interest rate. This fair value is amortized on a straight line basis over the vesting period.
The expected term represents the period that our stock options are expected to be outstanding, and is determined based on historical experience of similar awards, given the contractual terms of the awards, vesting schedules, and expectations of future employee behavior. The fair value of stock options reflects a volatility factor calculated using historical market data for EnPro's common stock. The time frame used was approximated as a six-year period from the grant date for the awards. The dividend assumption is based on our expectations as of the grant date. We base the risk-free interest rate on the yield to maturity at the time of the stock option grant on zero-coupon U.S. government bonds having a remaining life equal to the option's expected life.

The option awards issued in 2021 had a fair value of $27.46 per share at their grant date. The following assumptions were used to estimate the fair value of the 2021 option awards:
Average expected term6 years
Expected volatility40.29 %
Risk-free interest rate1.02 %
Expected dividend yield1.35 %
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11.    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, 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, 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. 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, 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.
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.
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Segment operating results and other financial data for the three months ended March 31, 2021 and 2020 were as follows:
20212020
 (in millions)
Sales
Sealing Technologies$146.5 $173.6 
Advanced Surface Technologies54.7 36.7 
Engineered Materials80.4 75.1 
281.6 285.4 
Intersegment sales(2.3)(2.7)
Total sales$279.3 $282.7 
Adjusted Segment EBITDA
Sealing Technologies$33.9 $33.5 
Advanced Surface Technologies17.3 7.3 
Engineered Materials12.6 8.3 
$63.8 $49.1 
Reconciliation of Adjusted Segment EBITDA to income from continuing operations before income taxes
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 
Segment assets are as follows:
March 31,
2021
December 31,
2020
(in millions)
Sealing Technologies$739.5 $741.9 
Advanced Surface Technologies759.9 768.2 
Engineered Materials249.0 245.8 
Corporate332.1 327.7 
$2,080.5 $2,083.6 
 
Backlog

As of March 31, 2021, the aggregate amount of transaction price of remaining performance obligations, or backlog, on a consolidated basis was $252.2 million. Approximately 96% of these obligations are expected to be satisfied within one year. There is no certainty these orders will result in actual sales at the times or in the amounts ordered. In addition, for most of our business, this total is not particularly predictive of future performance because of our short lead times and some seasonality.



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Revenue by End Market

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 three months ended March 31, 2021 and 2020:
Three Months Ended March 31, 2021
(in millions)Sealing TechnologiesAdvanced Surface MaterialsEngineered MaterialsTotal
Aerospace$6.7 $1.5 $1.3 $9.5 
Automotive0.4 0.3 18.7 19.4 
Chemical and material processing17.6  10.5 28.1 
Food and pharmaceutical16.4  0.5 16.9 
General industrial42.7 6.4 30.2 79.3 
Medium-duty/heavy-duty truck38.9  2.8 41.7 
Oil and gas4.2 0.7 14.9 19.8 
Power generation