An industrial technology company that makes gaskets, seals, and precision parts for everything from truck brakes to semiconductor manufacturing equipment. Its brands include Garlock, STEMCO, and Technetics, and its customers range from commercial vehicle fleets to chipmakers. The company was spun off from Goodrich Corporation in 2002, but its roots run deep: Garlock, one of its flagship brands, was founded in 1887 by Olin J. Garlock, who invented a better way to seal steam-engine piston rods. Today Enpro also supplies optical coatings and cleaning services for the semiconductor industry through brands like NxEdge and Alluxa.
Advanced Surface Technologies organic sales rose 21.8%, its seventh straight quarter of growth, while a $16.8M environmental charge cut into net income.
Advanced Surface Technologies delivered its strongest in over two years. rose 17.6% to $338.8 million and widened 1.2 points to 17.0%, driven by a 21.8% organic increase in AST sales, though was nearly flat at $27.1 million after a $16.8 million environmental reserve adjustment. The core industrial businesses are accelerating, but a large non-operating charge kept the gain from reaching the bottom line.
Key takeaways
Advanced Surface Technologies (AST) sales rose 21.8% organically to $122.9 million, the 's seventh consecutive quarter of growth, fueled by precision cleaning, semiconductor tools, and optical coatings.
Sealing Technologies sales rose 15.3% to $216.2 million, with of 5.0% on pricing and aerospace strength, while the Overlook Industries and AlpHa Measurement acquisitions contributed 8.8 percentage points.
Consolidated widened 0.7 points to 44.0%, as the mix continued to shift toward the higher-margin Sealing Technologies .
Section summaries
Management's Discussion and Analysis
Enpro Q2 2026 sales rose 17.6% to $338.8M driven by organic growth and acquisitions, with AST segment EBITDA up 48.5%.
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Consolidated increased 17.6% to $338.8M, with of 10.9%, acquisitions contributing 5.7%, and foreign currency 1.0%.
rose 26.3% to $57.7 million, but was nearly flat at $27.1 million because other expense increased $13.8 million, primarily from a $16.8 million net environmental reserve adjustment.
AST rose 48.5% and its margin expanded 4.3 points to 23.9%, while Sealing Technologies adjusted segment EBITDA rose 13.2% but its margin narrowed 0.6 points to 33.2% on transactional foreign-exchange headwinds and mix.
The company terminated its cross-currency swaps converting $100 million of fixed-rate USD debt to euros in June 2026, resulting in a $1.8 million settlement payment, ahead of the October 2026 maturity of its $350.9 million 5.75% Senior Notes.
What changed
AST's accelerated to 21.8% from 11.1% in Q1 2026, answering the prior quarter's question of whether the recovery would broaden — demand strengthened across precision cleaning, semiconductor tools, and optical coatings rather than remaining concentrated.
Sealing Technologies returned to of 5.0% after the 0.4% organic dip in Q1 2026, as pricing actions and aerospace demand offset the commercial vehicle OEM and international industrial weakness that had weighed on the prior quarter.
The $16.8 million environmental reserve adjustment was a new and unanticipated charge, not flagged in any prior filing, and it was the primary reason stayed flat despite a 26.3% increase in .
The cross-currency swaps that earlier filings had flagged as maturing in October 2026 were terminated early in June 2026, removing one source of and cash flow variability ahead of the Senior Notes maturity.
The Middle East geopolitical risk newly emphasized in Q1 2026 as a potential threat to helium supply and semiconductor raw material costs did not materialize in Q2 results, but the risk factor was reiterated in this filing.
What to watch
Whether AST's rate can be sustained above 20% as the semiconductor cycle matures, or whether the 21.8% Q2 rate represents a peak.
The refinancing of the $350.9 million 5.75% Senior Notes maturing in October 2026, now that the associated cross-currency swaps have been terminated and $630.6 million remains available on the .
Whether the $16.8 million environmental reserve adjustment is a one-time item or signals further environmental liabilities that could produce additional charges.
Whether Sealing Technologies' margin stabilizes above 33% or continues to compress as transactional FX headwinds and commercial vehicle OEM softness persist.
Advanced Surface Technologies (AST) sales grew 21.8% organically to $122.9M, driven by precision cleaning, semiconductor tools, and optical coatings.
Sealing Technologies sales rose 15.3% to $216.2M, including 8.8% from acquisitions; of 5.0% reflected pricing and aerospace strength, partly offset by weak commercial vehicle OEM demand.
increased 22.2% to $86.9M, with AST margin expanding 430 to 23.9% and Sealing margin narrowing 60 bps to 33.2%.
improved to $90.9M in H1 2026 from $73.2M, driven by higher adjusted and lower cash tax payments.
Other expense rose $13.8M in Q2, primarily due to a $16.8M net environmental reserve adjustment.
Quantitative and Qualitative Disclosures About Market Risk
The company faces foreign currency and commodity price risks, managing FX through forwards and swaps while absorbing commodity costs operationally.
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Foreign currency risk arises from translating foreign subsidiaries' balances, intercompany loans, and foreign-currency transactions.
The company hedges forecasted foreign-currency transactions and intercompany notes with forward contracts, including a new €19.0M/$23.4M hedge executed in February 2026.
Cross-currency swaps converting $100M of fixed-rate USD debt to €89.6M at 3.5% were terminated early in June 2026, resulting in a $1.8M settlement payment.
Gains and losses on the swaps, designated as net investment hedges, were recorded in and will remain there until the hedged foreign operations are liquidated.
Commodity raw materials like steel, plastics, copper, and polymers are subject to price fluctuations; the company does not use market-risk-sensitive instruments to hedge them.
To mitigate commodity cost pressure, the company aims to pass price increases to customers and employs lean initiatives for efficiency gains.
A description of environmental and other legal matters is included in Note 14 to the Consolidated Financial Statements in this report, which is incorporated herein by reference. In addition to the matters noted and discussed in those sections of this report, we are from time to…
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A description of environmental and other legal matters is included in Note 14 to the Consolidated Financial Statements in this report, which is incorporated herein by reference. In addition to the matters noted and discussed in those sections of this report, 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 that 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.
Geopolitical conflict in the Middle East is newly emphasized as a material risk due to potential indirect supply-chain and macroeconomic impacts.
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The U.S.-Israel-Iran conflict and Strait of Hormuz disruption could cause significant helium supply shortages, a critical semiconductor raw material.
Global supply chains, energy markets, commodity prices, and inflation may be adversely affected, indirectly impacting the company's costs and operations.
The company has no direct Middle East operations but warns the indirect financial impact could be material and is unpredictable.
No other material changes to risk factors were reported from the prior 10-K.