Sales increased 23% over the first quarter of 2009 as demand improved in most of the company's markets -- Before asbestos-related expense and other selected items, earnings from continuing operations reached $0.73 a share compared to $0.20 a share in 2009 -- Net income of $4.83 a share in the quarter includes $4.56 a share from discontinued operations, primarily reflecting a gain on the sale of Quincy Compressor -- Proceeds from Quincy sale increase cash balance and give company ample resources for growth

EnPro Industries today reported net income of $99.0 million, or $4.83 a share, for the first quarter of 2010. Earnings in the quarter benefited from income from discontinued operations of $93.4 million, or $4.56 a share, reflecting the operating performance of Quincy Compressor in the first two months of the quarter and an after-tax gain of $91.9 million on its sale, which closed on March 1. The pre-tax gain on the Quincy sale was $147.1 million.

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In the first quarter of 2009, the company reported net income of $3.2 million, or $0.16 a share, including income from discontinued operations of $2.1 million or $0.10 a share. Per share amounts are expressed on a diluted basis throughout this release.

Before asbestos-related expenses and other selected items, the company's income from continuing operations in the first quarter of 2010 was $15.0 million, or $0.73 a share, a substantial increase over the first quarter of 2009, when income from continuing operations before asbestos-related expenses and other selected items was $4.0 million, or $0.20 a share.

Earnings before interest, income taxes, depreciation, amortization, asbestos-related expenses and other selected items (EBITDAA) more than doubled, reaching $37.0 million in the first quarter of 2010 from $18.1 million in the first quarter of 2009.

Sales in the first quarter were $228.2 million, a 23% improvement over the first quarter of 2009, when sales were $185.1 million. Excluding the benefits of foreign exchange and acquisitions, sales increased by 16% over the first quarter of 2009.

"We are pleased with our first quarter results," said Steve Macadam, president and chief executive officer. "Activity increased across a broad range of our end markets, and we continued to benefit from the cost reductions we implemented over the past 18 months. As a result, our segment profit margins more than doubled to 15% from 7.1% in the first quarter of 2009.

"While all of our businesses reported higher levels of activity, we are particularly encouraged to see improvements in the heavy-duty truck markets served by Stemco and the automotive and industrial markets served by GGB," Macadam said. "Because conditions in these markets have been weak for some time, their improvement confirms our expectations for a healthier business environment in 2010."

Sealing Products Segment

The Sealing Products Segment reported a 17% increase in sales, including a benefit of 6% from foreign exchange and acquisitions.

($ Millions) 3/31/10 3/31/09 ------------ ------- ------- Quarter Ended ------------- Sales $113.8 $97.1 EBITDA $23.0 $16.9 EBITDA Margin 20.2% 17.4% ------------- ---- ----

Sales in the Garlock businesses improved as activity in many of Garlock's North American industrial markets increased, but the businesses' sales also benefited from the acquisitions of Technetics and Wide Range Elastomers, both of which closed in the fourth quarter of 2009. Stemco's sales grew as demand increased in both original equipment markets and the aftermarket. Stemco also benefited from sales of Stemco-Duroline brake products, which were introduced in the fourth quarter of 2009.

Sealing Products segment EBITDA improved by 36% over the first quarter of 2009 and EBITDA margins improved by nearly three percentage points as results in all operations benefited from acquisitions, increased volumes and favorable pricing.

Engineered Products Segment

Sales in the Engineered Products segment grew by 32%, which included 12% from favorable foreign exchange and acquisitions.

($ Millions) 3/31/10 3/31/09 ------------ ------- ------- Quarter Ended ------------- Sales $75.1 $56.8 EBITDA $11.0 $(0.5) EBITDA Margin 14.6% n/a ------------- ---- ---

GGB Bearing Technology's sales benefited from strong global demand in its automotive markets as well as from increases in demand from its industrial markets, primarily in the United States and Asia. At Compressor Products International (CPI) demand was about the same as a year ago, but CPI's sales improved as the result of favorable foreign exchange and the contributions of acquisitions.

Segment EBITDA improved dramatically in the first quarter of 2010 to $11.0 million from a slight loss in the first quarter of 2009. The improvement is primarily the result of higher volumes and lower costs at GGB, which was solidly profitable after recording a significant loss a year ago. CPI reported higher profits and better profit margins compared to the first quarter of 2009, primarily because of lower costs and acquisitions.

Engine Products and Services Segment

A significant increase in aftermarket and parts sales at Fairbanks Morse Engine led to an overall sales increase of 25% in the Engine Products and Services segment. Engine sales were about the same as in the first quarter of 2009. The increase in aftermarket and parts sales led to a more profitable product mix at Fairbanks Morse, and as a result, segment EBITDA nearly doubled while EBITDA margins reached record levels.

($ Millions) 3/31/10 3/31/09 ------------ ------- ------- Quarter Ended ------------- Sales $39.6 $31.7 EBITDA $11.0 $6.5 EBITDA Margin 27.8% 20.5% ------------- ---- ---- Cash Flow

The company's cash balance increased to $253.8 million at March 31, 2010 from $76.8 million at December 31, 2009, reflecting $184.2 million in proceeds from the sale of Quincy Compressor. (An additional $6 million will be due at the closing of the sale of Quincy's operations in China, which is expected later this year.) The proceeds received in the first quarter will be reduced by a tax payment of approximately $50 million in the second quarter.

Operating activities used cash of $3.8 million in the first quarter of 2010 as volumes increased and working capital needs grew. Operating activities used $1.0 million of cash in the first quarter of 2009. The timing of several settlements and the payment of a significant amount of legal fees led net cash outflows for asbestos-related expenses to increase to $16.4 million in the first quarter of 2010 from $8.1 million in the first quarter of 2009. The company expects net cash outflows for asbestos to moderate in the second quarter.

Outlook

"The year is off to a solid start," Macadam said. "Demand has increased and our markets are showing signs that their recovery will extend into the second half. While seasonal factors are likely to affect the pace of improvement later in the year, we should continue to see favorable year-over-year comparisons in the performance of our operations throughout 2010. Our financial condition remains strong, and with the proceeds of the Quincy sale, we have substantial capacity to pursue acquisitions and capture other opportunities to improve our company."

Non-GAAP Financial Information

This press release contains financial measures that have not been prepared in accordance with GAAP. They include income before asbestos-related expenses and other selected items, EBITDAA, EBITDA and related per share amounts. Tables showing the effect of these non-GAAP financial measures for the first quarter of 2010 and 2009 are attached to the release.

Conference Call and Webcast Information

EnPro will hold a conference call today, May 6, at 10:00 a.m. Eastern Time to discuss fourth quarter and full year results. Investors who wish to participate in the call should dial 1-800-851-4704 approximately 10 minutes before the call begins and provide conference id number 69498308. A live audio webcast of the call and accompanying slide presentation will be accessible from the company's website, http://www.enproindustries.com/. To access the presentation, log on to the webcast by clicking the link on the company's home page.

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