Enpro Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
February 20, 2024

There are 7 speakers on the call.

Operator

Greetings. Welcome to the EnPro Q4 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded.

Operator

I will now turn the conference over to James Gentile, Vice President, Investor Relations. Thank you. You may begin.

Speaker 1

Thanks, Daryl, and good morning, everyone. Welcome to EnPro's 4th quarter and full year 2023 earnings conference call. I will remind you that our call is being webcast at enpro.com, where you can find the presentation that accompanies this call. With me today is Eric Valancourt, our President and Chief Executive Officer Milt Childress, Executive Vice President and Chief Financial Officer and Joe Broderick, Executive Vice President, Finance. During today's call, we will reference a number of non GAAP financial measures.

Speaker 1

Tables reconciling the historical non GAAP measures to the comparable GAAP measures are included in the appendix to the presentation materials. Also a friendly reminder that we will be making statements on this call that are not historical facts and that are considered forward looking in nature. These statements involve a number of risks and uncertainties, including those described in our filings with the SEC, including our most recent Form 10 ks. Also note that during this call, we will be providing full year 2024 guidance, which excludes unforeseen impacts from these risks and uncertainties. We do not undertake any obligation to update these forward looking statements.

Speaker 1

It is now my pleasure to turn the call over to Eric Valancourt, our President and Chief Executive Officer. Eric?

Speaker 2

Thanks, James, and good morning, everyone. Thank you for joining us today as we review our results for the Q4 and full year 2023 and provide a business update that includes our outlook for 2024. Before we get started, I'd like to introduce Joe Ruderecht, who recently joined our team as Executive Vice President, Finance. Joe will be succeeding Milt Childress as Chief Financial Officer on April 1. Milt will be staying through the end of May to ensure a smooth transition of finance leadership.

Speaker 2

We are delighted to have Joe join our team following his almost 25 years of senior financial and operational experience. This is an exciting time in our company's history and I'm glad to have Joe's partnership as we look to capitalize on the opportunities ahead. Please join us in welcoming Joe to EnPro. We are pleased with EnPro's strong performance and execution in 2023. Sealing Technologies delivered strong performance, largely offsetting the negative year over year impact from a soft semiconductor market in AST.

Speaker 2

In Sealing Technologies, we saw record segment profitability with adjusted segment EBITDA margins exceeding 29% for the year. Despite a sequential decline in the 4th quarter that we anticipated and communicated on our Q3 call. We are very pleased with underlying strength of the segment, how our team is positioning the business for future growth, while maintaining our disciplined focus on profitability and continuous improvement. AST revenue ended the year down roughly 16%, driven by weakness in the global semiconductor industry. Despite the drop in volume, adjusted EBITDA margins for this segment was approximately 24% for the year, clearly demonstrating the segment's value added capabilities and resilience.

Speaker 2

Our multiyear strategy to drive growth in this attractive market remains unchanged. We reported $238,000,000 in adjusted EBITDA for 2023, which is inclusive of $7,100,000 in share price driven long term incentive compensation expense. Given the downturn experienced in the semiconductor market throughout the year, we are pleased with the total EnPro margins at 22.5%. We made meaningful progress on several long term strategic initiatives this year, including the recently completed acquisition of Advanced Micro Instruments or AMI, which broadens our Sealing Technologies segment capabilities into compositional analysis. We expect to leverage AMI's differentiated gas analyzer technologies across multiple industry segments.

Speaker 2

The unique insight we will gain into our customers' processes will expand our competitive advantage in designing seals in a variety of critical solutions. We are excited to welcome our new colleagues, AMI colleagues, Stenpro. In AST, during the year, we continue to execute on our multifaceted strategy of technological differentiation, vertical integration and regional expansion, making significant progress on the phased build out of our Arizona facility and expanding our capabilities in Asia. We are executing this expansion and strategic positioning in collaboration with key market leading customers. In 2024, we anticipate additional investments in our semiconductor business to support what's widely expected to be a near doubling of the semiconductor market by around end of this decade.

Speaker 2

I'd like to take a moment to comment on our safety accomplishments. We strive to create an injury free workplace as we deliver critical products and solutions to our customers. Safety, which includes both physical and psychological safety, is our number one core value. And for 2023, we are celebrating a 59 percent reduction in our total recordable incident rate as well as a 47% reduction in our lost time case rate. These outstanding results build upon our already world class safety record and are well below the latest industry averages presented by the Bureau of Labor Statistics.

Speaker 2

I want to recognize our environmental, health and safety leadership team and our colleagues across the company for these terrific results. Before turning the call over to Milt to discuss our Q4 results and 2024 guidance, I want to reiterate what I've said on many occasions. There is no better time to be part of EnPro. With our ReShape portfolio generating excellent margins and cash flow, with a strong balance sheet, we are well positioned to drive continued growth through focused execution as together we empower technology with purpose. Milton?

Speaker 3

Thanks, Eric, and good morning, everyone. In the 4th quarter, sales of $249,100,000 decreased 8.4% and organic sales declined 9%, driven primarily by lower results in the AST segment due to ongoing softness in semiconductor. The decrease also reflects lower results in the Sealing Technologies segment, where we saw a sharp decline in the commercial vehicle OEM market and lower demand in general industrial, commercial aerospace and pharma markets. As a reminder, we posted very strong results in Sealing in the Q4 of last year. 4th quarter adjusted EBITDA of $46,900,000 decreased roughly 12% compared to the prior year period and adjusted EBITDA margin of 18.8% decreased 80 basis points year over year.

Speaker 3

Volume declines just noted were partially offset by strategic pricing, cost mitigation and continuous improvement initiatives. Results for the quarter were also adversely affected by $6,400,000 of incremental long term incentive compensation expense tied to our strong share price performance during the Q4. By comparison, in the Q4 of 2022, share price driven long term incentive compensation expense was $4,800,000 We do not contemplate compensation expenses related to share price changes when determining guidance. As such, the incremental long term compensation expense of $6,400,000 during the Q4 of 2023 was not considered when providing prior 2023 guidance commentary. Modifications made to the long term incentive compensation program during 2023 will lessen this impact in 2024 and eliminate the impact in years thereafter.

Speaker 3

Corporate expenses of $14,400,000 in the Q4 of 2023 were down from $15,600,000 a year ago, primarily due to lower total compensation expense. Adjusted diluted earnings per share of $1.19 decreased 8.5% compared to the prior year period, largely because of the decline in adjusted EBITDA, partially offset by 35% reduction in net interest expense driven by debt repayment during the year and higher interest income on cash balances. The previously noted $6,400,000 share price driven incentive compensation expense in Q4 equates to around $0.23 per share. Moving to a discussion of segment performance. Sealing Technologies sales of $147,000,000 decreased 6.3%.

Speaker 3

During the quarter, we saw a sharp decline in commercial vehicle OEM sales as well as softness in our general industrial, aerospace, pharma and commercial vehicle aftermarket demand. Softness in these markets was partially offset by strategic pricing actions and continued strength in nuclear energy. Excluding the impact of foreign currency translation and a divested business, sales decreased 7.5% in the quarter. For the 4th quarter, adjusted segment EBITDA decreased 6.3%, in line with the sales decline, resulting in adjusted segment EBITDA margin being flat with last year. Excluding the impact of foreign exchange and divestitures, adjusted segment EBITDA decreased 7.9%.

Speaker 3

Sealing's margin performance through a sales decline reflects the benefits of strategic pricing actions, cost mitigation efforts and ongoing eightytwenty pruning across the segment. As Eric noted earlier, we are pleased with the progress made over the past few years in rationalizing the Sealing Technologies segment, and we will continue to invest in targeted growth opportunities while maintaining cost discipline and continuous improvement. Turning to Advanced Surface Technologies. While we saw sequential improvement from the Q3, 4th quarter sales of $102,100,000 decreased 11.5% over the prior year, driven by continued weakness in semiconductor capital equipment spending. Our cleaning solutions business tied to advanced node chip production was a bright spot in the quarter and throughout the year.

Speaker 3

We also saw stabilization in the optical filter business with improved profitability during the quarter. For the Q4, adjusted segment EBITDA decreased approximately 21% versus the prior year period. Adjusted EBITDA margin of 22.4 percent improved sequentially, and as Eric mentioned earlier, finished the year close to 24%. The volume decline in addition to mix, material cost increases and increased operating expenses supporting growth investments were the primary drivers of the year over year reduction in profitability, offset in part by cost mitigation efforts and pricing actions. We continue to invest in AST as the long term growth opportunities in the segment far outweigh the recent market headwinds.

Speaker 3

The phased upfit of our facility in Arizona is ongoing and as Eric noted, we are expanding our capacity in Asia. We are well positioned to see a bright future ahead for this segment. Turning to the balance sheet and cash flow. Our balance sheet remains very strong. Subsequent to quarter end in late January, we closed the AMI acquisition using $210,000,000 of cash.

Speaker 3

Our net leverage ratio inclusive of the acquisition stands at approximately 2x2023 adjusted EBITDA. With our ReShape portfolio, we continue to generate substantial cash. Free cash flow in 2023 was over $174,000,000 compared to about $77,000,000 in the prior year. Working capital management across the company and lower cash taxes were key drivers of cash flow during 2023, in addition to the stellar results in Sealing Technologies. We have strong financial flexibility execute our strategic initiatives, both organically and through strategic acquisitions that broaden our capabilities.

Speaker 3

Our goal is to build upon our leading edge positions in markets with secular growth drivers that safeguard critical environments and applications that touch our lives every day. During 2023, we paid a $0.29 per share quarterly dividend, totaling $24,300,000 for the year. On February 15, our Board approved another increase to the quarterly dividend to $0.30 per share, representing the 9th consecutive annual dividend increase since we initiated quarterly dividend in 2015. Moving now to our 2024 guidance. Taking into consideration all the factors that we know currently, we expect total EnPro sales growth to be in the low to mid single digit range in 2024.

Speaker 3

We expect adjusted EBITDA to be in the range of $260,000,000 to $280,000,000 and adjusted diluted earnings per share to range from $7 to $7.80 per share. The normalized tax rate used to calculate adjusted diluted earnings per share remains at 25 percent and fully diluted shares outstanding are approximately 21,000,000. Capital expenditures are expected to be approximately $60,000,000 or around 5% of sales in 2024, as we continue to invest in compelling future growth opportunities across the company. 2 thirds of this capital spending for 2024 will be in support of growth investments on focused leading edge platforms in the Advanced Surface Technologies segment. In AST, we expect continued demand in the first half excuse me, we expect continued demand weakness in the first half of twenty twenty four After seeing sequential improvement in AST in the Q4 of last year, based on current backlog in order patterns, we anticipate results to decline sequentially in the Q1 of this year.

Speaker 3

We believe the Q1 will represent the bottom of the semiconductor decline for our business, with adjusted EBITDA about 5% to 10% below Q3 of last year. Capital spending typically lags unit growth after a trough, and approximately 2 thirds of our semi sales are driven by equipment builds, with the remaining 1 third tied to wafer production. We are well positioned when capacity utilization improves and capital spending recovers. In the Sealing Technologies segment, we anticipate normal seasonality to return this year, resulting in incrementally stronger first half of the year compared to the second. The largest portion of segment revenue follows trends in global industrial production and North American commercial vehicle production.

Speaker 3

Although we have growing exposure to faster growing markets such as aerospace, space, sustainable power generation and pharma. As Eric noted, the acquisition of AMI will be accretive to Zealand's results both in the coming year and longer term. In commercial vehicle, the sharp decline in OEM demand anticipated this year is expected to be partially offset by improved aftermarket mix and new product advancements as the year progresses. According to industry forecasts, commercial vehicle trailer builds are expected to decline 25% in 2024. As a reminder, approximately 1 third of our commercial vehicle market our commercial vehicle business is tied to OEM trailer builds with the balance serving the aftermarket.

Speaker 3

Also of note for the Seating segment, in 2024, we expect a smaller impact from strategic pricing initiatives compared to 2023. We have made progress over the past several years optimizing and repositioning the Sealing Technologies segment, resulting in significant improvements in the composition and profitability of the segment. We are well positioned currently and will continue to invest in various pockets of growth, while focusing on broadening the segment's capabilities for selecting organic moves over time. We believe the timing of the upturn in our semiconductor business and to a lesser degree the magnitude of the decline in commercial vehicle trailer builds as well as trends in global industrial production will be the primary swing factors driving our performance in 2024. The mid to high end of our guidance range reflects a robust second half recovery in our semiconductor business, while the lower end reflects the possibility of the uptick happening later.

Speaker 3

Regardless of the precise timing, we are well positioned for the widely expected upturn, we are making the appropriate investments to drive future growth and value. Now I'll turn the call back to Eric for a few closing comments.

Speaker 2

Thanks, Milt. We continue to demonstrate our best in class balanced portfolio that generates attractive margins and cash flow returns in a variety of economic environments. Our value creating strategy remains unchanged and we continue to invest where we are the strongest while considering strategic acquisitions to build upon our leading edge capabilities. I would like to recognize the hard work of all of our colleagues across the company as we continue to differentiate ourselves in a disciplined and consistent fashion. Thank you for joining us today.

Speaker 2

We appreciate your interest in EnPro. We'll open the line to questions.

Operator

Thank you. We will now be conducting a question and answer session. Our first questions come from the line of Jeff Hammond with KeyBanc Capital Markets. Please proceed with

Speaker 4

your question.

Speaker 5

Hey, good morning, everyone. Hey. Congrats. Welcome aboard, Joe, and congrats, Mitch. Sounds like we might hear from you one more time.

Speaker 3

Yes, I think that'll be the case. I'll be in the room next quarter.

Speaker 5

Great, great. Just want to dig in the organic guide. It looks like AMI is maybe included. So I'm kind of getting down 1 to up 1. I'm just trying to kind of clarify that and then maybe how to think about the organic growth for each of the segments embedded in the guide?

Speaker 3

Yes. Jeff, I'll take the AMI question and then we go back and forth a little bit on the segments. So with AMI, when we announced the deal, we had indicated that we paid approximately 13x EBITDA at a $2,000,000 price. That gives you a general idea of what the run rate earnings for the business has been prior or at the time of the acquisition. And so when you take into account this year, which is be a partial year, we'll have it for most of the year, but it's not a full year and some one time integration costs that will work their way through in fairly short order.

Speaker 3

That will give you a general indication of what we've included in the $260,000,000 to $280,000,000 EBITDA guide. So that puts brackets in the low to mid teens of EBITDA contribution for the year.

Speaker 1

And in terms of the organic growth guide, with the balance in ceiling and the sharp decline in the commercial vehicle OEM market, you can expect kind of flat plus or minus a little bit excluding AMI. And in Advanced Surface Technologies, as we said in the prepared remarks, the second half is expecting kind of a more brisk recovery, but we still expect some softness to persist through the first half of twenty twenty four.

Speaker 5

Okay. So

Speaker 3

yes, go ahead. Go ahead and weigh in with a little more clarification on what you'd like to hear about the segments in terms of guidance, Jeff.

Speaker 5

Okay. So, yes, just so the midpoint of the guide says soft 1Q, that's the bottom for ASP. And then I think, James, you said brisk inflection into second half. And then I guess, the lower end contemplates maybe a slower recovery. Is that fair to say?

Speaker 3

Yes, you got it. And then to a lesser degree, what we see in commercial vehicle markets for the year and then just the overall economy, obviously. But the big kind of the big swing factor is going to be the pace of pickup for our business in semiconductor. We're already starting to see green shoots. You've heard it from other companies.

Speaker 3

It depends on where you play and where you're positioned in industry. And it will come it will happen for us. We're just working through this cycle for our business.

Speaker 2

Hey, Jeff. Joe and I took a tour of our West Coast facilities a week ago. And we're seeing some optimism that typically during the peak, let's say, we're making 20 parts a week and then through the trough we're making tenant. And now it seems like we're making 12 or 13 as an example. So you're seeing that momentum and seeing customers haven't purchased in a long time.

Speaker 2

So I think we're starting to see the supply chain come back into balance where they've been destocking before. So we're seeing a little bit of optimism basically at every facility we're at. But it's still going to be a while before we see the full recovery.

Speaker 5

Okay, great. That's helpful. And then just sealing, pretty kind of stark decline here in 4Q. Don't know if you saw some destocking or if that's just the commercial OE piece. But maybe just how should we think about that persisting into the 1st part of the year, that kind of organic revenue decline?

Speaker 2

Yes. It's mostly driven by the commercial OEM trailer builds that we started to see in the 4th quarter. And then we saw general slowness just in industrial production really starting in December. October November were actually where we expected and then December we started to see some fall off, but nothing significant other than, I would say, industrial production and the commercial vehicle decline.

Speaker 1

But the clear variance is commercial vehicle OEM decline quarter over quarter.

Speaker 5

Okay. I'll get back in queue. Thanks.

Operator

Thank you. Our next question comes from the line of Steve Farazani with Sidoti. Please proceed with your questions.

Speaker 4

Good morning, everyone.

Speaker 3

Hi, Steve.

Speaker 4

I guess I wanted to follow-up a little bit on the previous questions. Just for 4Q, the guidance had been 2023 sales would be relatively flat to 2022. So obviously, your 4Q sales had to have disappointed internally. Can you specifically point out, was it primarily commercial vehicle? Were there other places where you were disappointed?

Speaker 3

Well, it really is commercial vehicle OEM and then the continued softness in semiconductor and AST. Although at the time of our Q3 call, we did anticipate that we would see some sequential improvement, which we did see in the Q4. And the commentary around guidance that we made in Q3 is that we anticipated being at the low end of our previously stated guidance range. And when you take into account the $6,400,000 of

Speaker 4

I'm just referring to Milt. I'm just referring to sales.

Speaker 6

Sales of sales.

Speaker 3

Okay. Yes, I'll stop then.

Speaker 4

And then back to the point of so if I take out AMI, I guess, to the previous questions, you're looking at relatively flat 24% again. Where do you see some potential? Is the upside purely on an earlier recovery or semi or where else do you see some potential benefits in 2024?

Speaker 2

We see some upside in space. Of course, the biggest thing will be the semiconductor rebound. That will be the biggest thing by far, but we see some optimism in pharma. It seems like some of that's, I would say, recovering from the bottom as well. But it's going to be slow growth.

Speaker 3

And Steve, what you will remember is if you look at just the cadence of AST last year, notwithstanding some of the weakness we saw in part of the business starting in Q4 of 'twenty two, we did have a relatively strong Q1, Q2 of the year before things turned down in a more demonstrable way in Q3. So part of what you're seeing now is working through the trough, which is going to be a year over year decline. And that's the reason for the year, it's flattish on sales.

Speaker 5

Okay.

Speaker 4

Any reason why Q1 for AST is worse than Q4?

Speaker 3

It's just the order patterns and Okay.

Speaker 6

Anything specifically in Q4 because

Speaker 4

your Q4 was much better than Q3 as you noted on AST. Did anything specifically hit in AST or it was just that was the order pattern?

Speaker 2

Just the order pattern. There's nothing specific.

Speaker 5

Okay.

Speaker 4

The CapEx guidance was a little higher than I would have expected. Can you just point to where specific investments coming in 2024?

Speaker 2

Yes. We have several projects. We want to name them small.

Speaker 3

Well, yes.

Speaker 2

It's basically geographic expansion when you look at it. You see our investment in Asia. We also continue to upfit our Arizona facility. Joe and I were there last week. We expect to start testing in the second half of this year and be ready for revenue as soon as our customers are somewhere in 25.

Speaker 2

So we continue to make investments there and then you'll see some geographic expansion to add capabilities to Asia.

Speaker 3

And you look at 2 of the key prongs, Steve, of our semiconductor strategy that's been in place for better part of a decade. It's technology differentiation and geographic diversification are 2 of the pillars, 2 of the 3 pillars.

Speaker 4

And

Speaker 3

so these investments are really supporting both of those. It's both geographic expansion and just keeping us on leading edge, whether it's expansion in what we're doing on the cleaning side of our business or it's machining capability that give us capabilities that differentiate ourselves from others in the industry. Okay. If I

Speaker 4

could just get one more in.

Speaker 1

And technology is we're still investing in areas to support kind of new product development and efficiency projects, modernization, etcetera.

Speaker 4

Given the higher CapEx in 2024 and the overall guidance, any kind of thoughts you can provide on expectations for cash flow in 2024, cash conversion or anything around that?

Speaker 3

Well, I would say roughly in the $120,000,000 range for the year is what we would expect.

Speaker 4

And anything changing on your outlook?

Speaker 3

That's free cash flow. Free cash flow.

Speaker 4

Yes, right. And any changes in your capital allocation plans beyond that of your CapEx?

Speaker 3

No, it's investing to take advantage of the organic growth that's before us in AST. And then in Sealing, it's continued to invest in pockets of growth in markets that are growing faster than the overall economy. So strategy remains the same.

Speaker 4

Thanks, Eric. Thanks, Milt. Thanks, James.

Operator

Our next questions come from the line of Ian Zaffino with Oppenheimer. Please proceed with your questions.

Speaker 6

Hey, good morning. This is Isaac Salzen on for Ian. Thanks for taking our questions. The first is on ceilings. I guess outside of the OEM weakness you'll see in commercial vehicle.

Speaker 6

Could you maybe touch on the aftermarket side and how you expect that portion of the business to perform for the year? And then maybe what are you seeing as far as pricing there? And do you expect to maintain some pricing or to maintain some pricing power as we move through the year? Thanks.

Speaker 2

Yes, the aftermarket sales are strong and they'll continue to be strong. Usually when you see the OEM build go down, you end up having more maintenance. And so the aftermarket is still very good. The mix does change and the mix is helpful to us. But we certainly need a certain amount of volume to also drive outstanding profitability there.

Speaker 2

But overall, that business is strong and continuing to do well and really don't have any concerns once the market recovers on the OEM piece. In terms of pricing, the aftermarket pricing

Speaker 3

Isaac, this won't surprise you because it's true for all companies. The environment for pricing is not the same. The backdrop for pricing is not the same. It is currently as it was a year ago, 18 months ago, just because of moderating inflation. So just to note that, so it's unlikely we see the same year over year impact from pricing as you saw in 2023.

Speaker 6

Yes, that makes sense. Thank you. Then just as a follow-up, could you discuss the AMI acquisition and the growth profile of that business? Maybe as we look at it for this year in the longer term growth algorithm compared to maybe some of the other ceilings industrial end markets? Thanks.

Speaker 3

We see AMI at kind of mid single digit growth roughly, maybe a little bit more. And but it positions us with new capabilities and compositional analysis that we're quite excited about. The primary focus of the business currently is on kind of midstream oil and gas, although we the company does sell into other industry segments. And part of our excitement is to take compositional analysis into other applications.

Operator

Our next questions come from the line of Jeff Hammond KeyBanc Capital Markets. Please proceed with your questions.

Speaker 5

Hey, guys. Just a couple of follow ups here. Just on AMI, maybe just talk about I know the financial metrics make a lot of sense, but just talk about fit within the business and how you think of it. I think it's in the Sealing segment. But and then just I think, Milt, you said mid single digit growth.

Speaker 5

I thought the historical growth rate was higher than that. Maybe just clarify what AMI has been growing at the last 4, 5 years?

Speaker 3

Thanks. You're right, Jeff. I'll take the last one first and then turn it to Eric to talk a little bit more about AMI. But historically, the company has grown considerably faster than that. If you look at the market, the underlying market growth, it's kind of mid single digit growth.

Speaker 3

And I think maybe we had indicated at that at one point. We'll obviously aspire to do better than that. Part of the company's historical growth rate is a function of the size of the company as it's ramped up with new product introductions when the company was relatively small then incremental revenue from new product introductions adds a lot on a percentage basis to sales. And as the company gets a little larger, obviously, it doesn't have quite the same impact. But we do have some exciting new we, the AMI team does have some exciting new products that we expect to be introduced in the market in the next year or so.

Speaker 2

Yes, we can we put it in ceiling because it can affect both Technetics and Garlock both. When you look at the oxygen sensors, moisture sensors and H2S, they can be used in a variety of different applications, including food and pharma, general industrial. There's lots of applications work, spread that throughout the company. So it fits nicely into sealing.

Speaker 5

Okay. And then just on Seiling margins, really phenomenal year. Maybe just how should we be thinking about long term margins? And if we see the soft pads that you saw in 4Q extend, just speak to the resiliency of the margins in any kind of slowdown?

Speaker 2

I mean, I

Speaker 1

think longer term, I think that we have definitely gone through a very successful reshaping of the segment that enabled us to exceed our previous long term forecast of 25% through a cycle. And I'll give it to Eric in terms of the drivers moving forward.

Speaker 2

Well, we've commented before, I think back in the Q3 that we were looking at somewhere around 28% plus or minus a little bit. And I think it will still be in that range. It really depends on mix. And so it depends on industry mix and that's really the biggest driver of mix and volume. But overall, I expect the margins to hold similar to where they are now.

Speaker 5

Okay. Thanks.

Operator

Thank you. We have reached the end of our question and answer session. I would now like to turn the floor back over to James Chantilly for any closing remarks.

Speaker 1

Thank you for joining us today. Have a good day.

Operator

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

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Earnings Conference Call
Enpro Q4 2023
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