EnPro Industries, Inc.

Thank you, Stephanie, and good morning everyone, and welcome to our quarterly earnings conference call. As usual, in a moment, Steve Macadam, our President and CEO; and Alex Pease, Senior Vice President and CFO, will review the results for the first quarter of 2012.

Remind you that the call is being webcast at our website enproindustries.com where you’ll also find the slides accompanying the call.

This morning, you may hear statements during the course of the call that express a belief, expectation or intention as well as those that are not historical fact. These statements are forward-looking and involve a number of risks and uncertainties that may cause actual events and results to differ materially from such forward-looking statements.

These risk and uncertainties are referenced in the Safe Harbor Statement included in our press release and are described in more detail along with other risk and uncertainties in our filings with the SEC, including the Form 10-K for the year ended December 31, 2011.

We do not undertake to update any forward-looking statements made on this call to reflect any change in management’s expectations or any change in assumptions or circumstances on which such statements are based. You should note that EnPro owns a number of direct and indirect subsidiaries.

From time to time, we may refer collectively to EnPro and one or more of its subsidiaries as we, or to the businesses’ assets, debts or affairs of EnPro or a subsidiary as ours. These and similar references are for convenience only and should not be construed to change the fact that EnPro and each subsidiary is an independent entity with separate management operations, obligations and affairs.

Also, I want to remind you that our financial results reflect the deconsolidation of Garlock Sealing Technologies LLC, Garrison Litigation Management and their subsidiaries effective June 5, 2010. These entities have been deconsolidated from EnPro’s results and will remain deconsolidated during the tendency of the Chapter 11 legal proceedings to resolve asbestos claims against GST.

We refer to this as the Asbestos Claims Resolution Process or ACRP and you will hear us use that acronym during the call today. GST’s results are presented separately in our earnings release.

And also, I’d like to remind you of our Investor Day in New York on June 19. We set our limitations earlier this week.

The half day available include presentations by the Senior Managers you’ve seen named on this slide. You can access our Web-based registration system by following the RSVP link that you see on the slide or by selecting the in dense tab in the Investor Relations section of our website.

In any case, we’ve got an exciting and informative day lined up for you and we hope you’ll be able to join us.

Now, I’ll turn the call over to Steve.

Thanks, John. Good morning, everyone, and thanks for taking time to dial in this morning.

Sales for the quarter were up 16% versus quarter a year ago. 5% of that growth was organic driven by a combination of volume mix and pricing, and 12% came from acquisitions that we completed last year which included PSI which is now included in the consolidated part of Garlock, Mid Western Companies which is now part of CPI, PI Bearings which is GGB and Tara Technologies which we combined with our other units the other units of our high performance sealing business to create Technetics Group which of course is also part of the sealing product segment.

The integration of these businesses is going actually quite well through the end of the first quarter, we’ve really completed what I would describe as the heavy lifting of the integration including facility consolidations and restructuring and some redundancy eliminations, et cetera, as well as integration of the sales forces and the product lines and so forth. So we feel very, very good about where we stand on those acquisitions relative to our original plans for integration.

Combined, these added almost $32 million of sales to the first quarter and made a modest contribution to segment profit.

Our segment margin moved back to the mid-teens, which is more normal level for us as we discussed in the fourth quarter of last year. Still a little bit below 2011 Q1 and those differences reflect 2 primary factors.

The first of which is our mix has shifted a little bit towards OEM markets as we’ve described in the past. And second, there were acquisition-related expenses that created about a point of decline in those margins in the quarter which was approximately $2.7 million, roughly half of which was a one-time restructuring events that happened in the quarter and the other half from increased amortization.

Pre-tax income is about the same as it was in the first quarter of 2011, but a higher cash rate lead to lower GAAP earnings which would add about $0.07. Adjusted EPS was about the same as it was in the first quarter of last year.

Overall, we felt like it was a decent quarter. We feel like that we’re well-positioned for the rest of the year and look forward to continued progress as we go forward.

The second quarter is also off to a good start with the acquisition we completed for Stemco about 3 weeks ago. We acquired a company called Motor Wheel which manufactures lightweight brake drums for heavy-duty trucks.

This very nicely fills out Stemco’s brake product line which now includes automatic brake adjusters, friction material, brake shoes, and now these brake terms. Motor Wheel makes premium product that has a longer life and better performance than the average heavier weight cast drums.

And the lightweight drum improved the safety, fuel efficiency, and allows a truck to carry a bigger payload. The Motor Wheel business has a 60% share today of the lightweight market which makes up only about 15% of the total market for brake drums.

So, our intention is to grow the lightweight segment of the market utilizing our world-class sales force in Stemco and our go-to-market model, which has about 5 times the number of actual sales folks as opposed versus Motor Wheel and over ten times as many distributors as they have used as a separate company. So, we completed this deal for cash of about $85 million of which we borrowed against our credit facility.

This is a great opportunity for Stemco and should contribute about $35 million to our 2012 sales.

Let’s turn for a second to the ACRP. We’re pleased with actually 3 recent developments that we’ve seen in the court.

Judge Hodges, who’s the bankruptcy court judge in the GST case overruled the other side’s objections to the mesothelioma claimant questionnaire and compelled the non-responding claimants to comply.

You may recall that there were originally 5,813 mesothelioma claims in the GST database when we - when GST entered bankruptcy. As of March 1 of this year, fewer than 600, or only about 10% have actually responded with questionnaires that GST did substantially complete.

Of the balance of 1,558 were eliminated because their claims had been dismissed or their counsels have acknowledged that they don’t have a claim or their claims were not from (inaudible) or for some other reason. And 821 had not responded to the questionnaire at all.

Of the 3,434 questionnaires that were actually submitted, 2,870 of those were deficient in some key respect. So the judge ordered claimants who had not completed questionnaires to do so, and claimants who had returned incomplete questionnaires to complete them within 60 days of March 16 when they sent an order to the claimant’s counsel.

They also ordered counsel to GST and counsel to the claimants to confer in attempt to resolve disputes about the completeness of the information. GST’s counsel and experts are reviewing and analyzing these responses as they come in.

On the second point, Judge Hodges also ruled that the ballots filed in previous bankruptcy cases are public record and that GST is entitled to subpoena and receive copies of these.

You may recall that these ballots indicate claims against other companies and are important to GST as they clearly point out other far more serious exposures to insulation and other related, other types of products are far more dangerous than anything Garlock ever made. That process is ongoing and GST counsel and experts are now receiving and reviewing the roaming records of claimants in a number of prior cases and eventually will get all significant cases that have gone before us.

We’re confident that the information will demonstrate clearly the double-dipping practices that we’ve talked about for years and will be very valuable to GST and its estimation case. And the third positive development, Judge Hodge granted GST’s motion and set a trial to estimate allowed claims both current and future on the basis of their merit.

He stated that GST would be permitted to pronoun its science based causation case to refute liability.

As we maintained from the outset, we believe that science demonstrates clearly that GST’s product were safe and that therefore the plan it has proposed provides more than ample funding to cover any in all of GST asbestos-related liabilities. The judge allowed the claim that’s represented, it also allowed that they would be permitted to present their theory that current and future claims should be valued based on GST’s settlement history in the years prior to the bankruptcy filing.

So the Judge set the date beginning - for the beginning of the estimation trial for December of 2012.

The final development that I want to make you aware of is something we’ve anticipated and shared with you from the very beginning of the ACRP process. Late last week the claimant - Asbestos Claimants Committee and the future claims representative filed a motion asking the court to allow them to file a complaint that alleges claims against EnPro and various affiliates.

We had expected this because this is standard operating procedure for the asbestos claims bar. They’re following the same playbook that they followed in many previous asbestos bankruptcy cases seeking to impose a subsidiaries - a subsidiary company’s asbestos liability on its parent and affiliates based on allegations of domination control and breach of judiciary duty.

In our case the claimants alleged there was fraudulent intent and a breach of a judiciary duty in connection with GST’s 2005 transfers of certain unrelated businesses primarily Stemco and the North American GGB businesses for other EnPro affiliates. Those transfers were in exchange for full and fair consideration.

Both the amount and the terms of which were set by and opined on by a respected independent third party valuation firm. As you know, these transactions were the source of the large promissory notes that have resulted in significant annual interest payments from consolidated EnPro affiliates to GST.

Yet the claimant representatives refer to this debt as a usury.

We’re confident that every single one of their claims and allegations is unfounded, spurious, time bound and inappropriate, and we’ll defend our company and our affiliates and we assure you that we will not succumb to these pressure tactics now or any time in the future. We continue to prepare to assist GST in its case and defend the attacks against us.

At the same time, we’re also active in supporting nationwide efforts to bring positive reform to what continues to be a broken asbestos claim in system. The week before last, I was in Washington with representatives of the U.S.

Chamber to support the Further Asbestos Claims Transparency Act or as it’s referred the FACT Act when it was actually introduced to the House of Representatives.

The Act is a bipartisan bill. It’s championed by Congressman Ben Quayle of Arizona and is designed to require regular reporting of claims made against Asbestos Trust and full disclosure of information in those claims described in exposures of the products of the Bank former asbestos defendants.

We believe this will go a long way towards discouraging the appalling double-dipping practices that are rampant today and I encourage you to contact your congressman to support this bill.

Similar asbestos transparency bills had been introduced in several states and we’ve also seen recent reform in court systems of Madison County, Illinois and Philadelphia, and a Supreme Court decision, a California Supreme Court decision, a policy for the equipment manufacturers. As you know, reform of the asbestos system is very important to me and to our company.

So, with that update on ACRP, I will turn the call over to Alex to go into a more detailed review of the quarter. Alex?

Thanks, Steve, and good morning, everyone. As Steve mentioned, sales are off to a great start this year, up 16% from last year.

If we normalize for acquisitions, we were up 5% over last year with the majority of that improvement coming from volume, and a smaller amount coming from price.

If we take a look geographically, expansion appears to be continuing in the U.S. where sales were up about 6%.

Europe was a bit softer, with sales up 3%, but that’s substantially stronger than what you read about in the news, reflecting the fact that the majority of our European exposures in France and Germany, both of which have shown strength, relative to the rest of the EU. Asia results are slightly softer, as the slowdown in China takes effect, although our largest positions in semiconductor and oil and gas, both in Singapore, related to the Tara acquisition were actually quite strong, and we continue to see that region as a platform for future growth that we’re investing in actively.

In general, we feel quite good about our market.

Very quickly, on our acquisitions. PSI, Tara, Midwestern and PI contributed almost 32 million in sales, which was in line with our expectations, and reflect the strong rebound in the semiconductor market, from the slowdown we described to you in the fourth quarter.

The integration work, which Steve also mentioned, continues to go as planned, and I'll describe that in more depth later.

If I get into the profitability details, you’ll see gross margin was basically flat, even though we have a substantially higher mix of OEM-related business, in line with elements of our growth strategies for Stemco and Technetics that we’ve described previously.

Embedded in the margin are some mix effects, operational improvements and a substantial amount of pricing discipline across the portfolio as we move to capture full value for a more specialized and engineered components. Also embedded in the margin is a reflection of our global sourcing initiatives and some other scale and leverage advantages that are offsetting the structurally lower margin OEM volume.

Quickly on SG&A, you will see that it stayed basically flat as a percentage of sales despite the increase in sales volume. The increase in dollars spent is driven significant by acquired G&A and our new business which that explains about 50% of the increase, and half of the remainder of the results in investments and sales resources in our fastest growing markets.

We also had a slight uptick incentive comp which raised corporate expenses.

I’ll use the next slide to go into the segment details. Sealing products continues to deliver very strong performance in the top line and good bottom line performance despite the change in mix and higher acquisition cost.

Of the 29% top line growth, roughly a third came organically and the remaining 2-thirds came from the Tara and PSI deals. OI margins were down almost 2 points with more than half of the compression explained through acquisition and restructuring-related expenses, all of which will deliver stronger operational performance going forward.

At the consolidated Garlock operations, geographically, we see broad-based strength across both North America and Europe with some weakness in Asia. From the markets, oil and gas have been very strong as the turnaround season picks up pace and we’re making investments for growth in both food and pharmaceuticals.

We’re also seeing strengthening in work for projects - project-related work in both petroleum and water.

The PSI integration continues with the closure to Houston facility as planned and the integration of those products into the Denver production location, and that deal is on track to perform nicely this year.

Profitability for that business is within historical ranges, with mid-teens returns on sales. At Technetics, we also saw broad-based growth, with particular strength in the semiconductor markets, rebounding from the lows of Q4.

Margin performance was a bit better than anticipated, also in the mid-teens range, as the group had less of the buy and sell related revenue that we had described in earlier calls, and more of the higher value added products, both in the semiconductor markets. In the high-margin nuclear business, demand was down slightly, although the outlook is good.

Finally, at Stemco, OEM volume has been quite strong, continuing a trend we saw taking shape in Q4. The aftermarket business is still building towards the spring peak which gives us optimism for the second quarter.

Margins are down roughly 5 points from last year, predominantly driven by the OE makes, and the nature of the break market in general, where we have growing exposure. That said, the group is moving aggressively with several product innovations and pricing initiatives to ensure we are capturing full value to the products that we sell.

In Engineered, we saw a good 9% top line growth if before adjusting for FX, although margins were 2 points lower than last year, driven by weaker than expected performance at CPI which I will explain in a minute. Acquisitions contributed 7 points of sales growth, and resulted in 1.2 million amortization and restructuring expenses, of which we expect only about 300,000 to be recurring in future periods.

Not included in these acquisition expenses is an additional approximately 350,000 in retention payments and accruals for earn outs that we expect to roll out in the near term.

In terms of individual businesses and markets, in GGB, we saw very, very strong North American results which offset some flatness in Europe and Asia. A combination of heavily weighted industrial mix versus automotive, operational improvements in pricing leverage, led to very healthy margin levels reflecting the strength of that business.

In addition, a number of interesting product and process innovations are coming to market, and the team is integrating the PI Bearings acquisition as it builds an industry-leading, global pushing block business, which we can talk about in the Q&A if you’re interested.

At CPI, we continue with substantial integration work as part of our overall growth strategy for that business. A restructuring charge reduced CPI’s income by $900,000 and is part of our efforts to create a single, optimized operating unit in Canada.

Additionally, the North American gas market and Europe in general, were somewhat weaker than anticipated. Although the U.S.

petrochemical market continues to be healthy and we anticipate continued strengthening as the turnaround season picks up.

Looking forward, we anticipate improvements in both volumes and costs, especially as the integration costs taper down and we start to see the results of our restructuring efforts. Overall, we continue to be very optimistic about the growth and the profitability outlook for CPI, but recognizing a substantial work to do to meet our own expectations.

Lastly, at FME, sales were up slightly, primarily because we recorded higher engine sales than in last quarter. As you know, engine sales are now being recorded using a percentage of completion accounting which was not the case last year.

And over time, we will migrate away from commenting specifically on engine shipments.

Aftermarket parts and service sales were also up from last year. Margins were stable on moderately higher service revenue, and the group is making progress on a number of exciting opportunities for growth in commercial markets.

The quarter was strong in terms of new orders and we closed with a healthy backlog of $194 million, which includes $24 million of orders received in Q1. As we look to Q2, you should anticipate some margin compression largely driven by mix.

If we put it altogether, GAAP EPS was about $0.07 lower than last year despite the $2.4 million higher NOI. So let me give you some color to explain the difference between the 2.

We had about $1.6 million higher in corporate expenses primarily driven by compensation in consulting-related expenses. We had just over $1 million higher in interest payments due to both the GST note as well as the revolver.

And we had about the same amount in higher taxes. On the higher tax rate, we had a rate of 36.2% compared to 30.4% last year.

The rate increase was because certain U.S. tax credits expired and are not yet done, renewed by Congress.

From a full year basis, we expect the rate to be in the 34% to 37% range. On the adjusted EPS line, we are about the same as last year.

For 2012, the adjustments include a $0.04 restructuring cost, a $0.21 of interest due to GST and tax accruals and other expenses of $0.02.

Moving to the cash flow statement, it reflects our normal seasonality trend as we always build working capital on the beginning of the year particularly in Europe. On a day’s basis, our AR balance stood at 58 days versus 61 days for this time last year so we continue to improve our overall level of effectiveness and our working capital metrics stayed flat.

After the close, we finalized the transaction for Motor Wheel that Steve mentioned, which produced a couple of implications on both the cash flow and the balance sheet. We borrowed $85 million against a revolving credit facility bringing the outstanding balance on that facility to approximately $105 million.

Through our normal cash flow generation, we anticipate having the facility largely paid down by the end of the year and are very comfortable that our operating cash will be more than sufficient to meet all of our internal capital requirements as well as paying down the revolver.

Moving quickly to GST LLC, our deconsolidated entity, we continue to see strength despite the constraints of the legal process that it worked through. Sales and profits were up around 10%, gross margin about 39%, and the team is investing in a wide range of operational and commercial opportunities to even further improve the competitive position of that business, and we’re very optimistic about its future.

ACRP related expenses were about $4 million and about the same as in Q1 of 2011. Its cash balance remains a very healthy $120 million.

Before I turnover for questions, I’ll close with a quick review of our outlook. Except for the impact of acquisition of Motor Wheel, there is no fundamental change in our outlook for the remainder of 2012.

We expect a continued organic growth in line with normal seasonal patterns. The current economic indicators combined with our current results support an outlook for modest growth in North America.

And while Europe remains uncertain, we currently expect it to be flat with 2011.

Acquisition should contribute about $55 million to $60 million of sales for the full year with Motor Wheel accounting for $35 million of that this year. It’s important to note on the acquisition line, PSI, Mid Western and - sorry, PSI, Mid Western - no - and Rome all closed in the first quarter which is why you only see a $20 million to $25 million impact for the remainder of the year.

For the year, margin should improve over the 12.8% we reported in 2011. This improvement should be driven by an improving performance from acquisitions as cost decrease and contributions to profits increase.

And also that it continued to benefit our enterprise excellence programs.

For the second quarter, we expect market conditions to be relatively stable compared to Q1. The Tara, PI and Motor Wheel acquisitions should contribute sales of about $30 million to the quarter and sales will likely be lower at Fairbanks Morse.

Mix and acquisition related costs are likely to impact segment margins again.

Overall, we feel like things are on the right track for both the second quarter and the rest of the year, so we’re very optimistic about the remainder of the year. We’ll open the line for questions now.

So clearly, you guys came in well ahead of consensus’ expectation, but I want to get a better sense of kind of where you saw the upside and downside surprises relative to your internal plan for 1Q and how that kind of shades - how you feel about the rest of the year giving kind of just unchanged expectations?

Yes, well, Jeff I think the - as you know, we don’t share exactly what our internal plan is, so I’m not going to talk specific numbers. But in general, CPI was weaker than we had had thought.

Obviously, we knew about - we knew the restructuring was coming, so we knew we were going to have about $1 million of cost to do that, which kind of brings some finality to the restructuring necessary after the Midwestern acquisition. But we also moved a facility in CPI, which we didn’t mention in the comments.

But we have a facility in Germany for CPI that’s old and too small and so forth and that. And we opened a new facility a couple of miles from that, and they actually moved during the time period of late January and early February.

So we don’t feel like we fundamentally missed any business, but we do feel the team over there feels like some of that business got moved out in time. March was back on our plan, but didn’t recover from the business that was off a little bit due to that move, we expect to make that up in the first half of the year.

So, and then - but then in general, on top of that, we saw some weakness in - and a little bit more weakness in CPI because we were counting on those 2 things, although we had underestimated the impact of the move. So CPI was behind plan, and Stemco was a little bit behind plan, but nothing to be concerned about.

We thought we’d see a little bit bigger break season in the first 3 months, because we did last year, right after we bought Rome. We did not see that as much, we think actually, there’s some reason, some industry reason why that might be more levelized going forward than peaky.

But it wasn’t a huge difference and we weren’t very far off plan in Stemco a little bit. And everybody else was ahead, probably led by the biggest gap was within the Technetics group sitting in Sealing Products, and it really was because we saw stronger semiconductor sales.

And that business in general has good margins, not just semi, but the whole Technetics group has very, very good margins, and so it leverages quite well on the upside. So we had sales planned - sales beat planned in Q1 for them.

So that’s - is that helpful? Is that what you were looking...

No. That’s perfect.

Can you just talk about cadence, seasonality, 1Q to 2Q and any of the moving pieces there we should be aware of. I know you mentioned Stemco being seasonally stronger, but anywhere else that...

Well. Yes, Garlock always does better in the first half of the year than the second just because of the turnaround season and that’s why we have that big working capital filled.

But to be honest with you, it’s really hard for us to figure out because as you peel our businesses back, they don’t have consistent, strong, repeatable, seasonality. It’s got business cycle effects folded into it.

And so it’s really hard to say. I mean I think we don’t see a huge - we think Q2 is going to be pretty consistent with Q1.

As you know, we have a short cycle business that’s hard for us to really project into the future too much.

No, that’s helpful. And then just finally on - can you give us a little more color on Motor Wheel?

I mean, it looks like based on the - maybe you can give a sense of where it fell within - where you typically pay from a multiple standpoint. But it just looks at on a sales basis, pretty profitable business, how should we think about accretion in year one...

Yes.

And how it impacts sealing margins going forward?

Well, I am on - I’m on record internally saying that this will go down in history as the best acquisition we ever made. So, we’ll see if that - longer term, we’ll see if that pans out.

This is right in the - excuse the pun, but, right in the wheelhouse for Stemco because we can fold this right into the go-to-market model. It’s a value-added product.

It’s a high end product. It’s a well recognized product brand name called Centrifuge.

They dominate the lightweight market and we’ve got a better way of bringing that to market. So we’re just really excited about it.

Now, we closed it in mid-April and so we will have a normal first year effects of an acquisition for all the transaction expenses and the inventory write-up and the amortization of intangibles. There will be some severance costs, et cetera.

So we won’t see a lot of accretion benefits in 2012 because of those factors but we expect to see a pretty decent contribution in 2013.

Steve, on that Motor Wheel deal, I think Alex said $30 million of top line for the rest of the year. So can we...

Did you say 30 or 35?

I said 35.

35. Sorry about that.

So then can we assume about 45 or 50 on a run rate basis coming in to your expansion of the channels, Steve?

Yes, yes Coming in, that’s right.

Okay. Good.

And you guys have said you plan on paying down the revolver of the course of the year but you’re getting close on that. And where are you from a financial and a management standpoint I guess on more acquisitions?

Are you pretty fully loaded or do you feel like you got some room to go or will have soon?

No. I think we’re - I think if you look at the next 6 months, I think we’re pretty fully loaded as you described.

And I mean we’ve got substantial bites in Stemco and CPI and Garlock that were - that we’ve talked about and GDB, the PI deal was not that significant from an integration standpoint. But the rest of it, we’re really looking forward to capturing the - beginning to capture some of the synergy upside of those.

And as you’d know from our revolver, we do - we are pretty much up against the limits. We got plenty of room to operate the company and we’ll release a lot of cash through working capital reduction through the balance of the year as well as generate a lot of operating cash.

Because our capital needs are, more or less, in line with what they’ve been in the past, plus or minus $40 million a year. So I think you will see us kind of just take a bit of a pause, at least until late in the year.

And that’s kind of what our pipeline reflects too. We don’t have a huge, robust pipeline that’s - we got a nice a pipeline but it’s a little bit longer, little bit more stretched out.

So is that helpful?

No. It’s very helpful.

Okay. Yes.

And then, Alex, you’ve done a good job. The past couple of quarters kind of give us a road map for how to think about the margin progression.

Obviously, you guys has got a lot of internal things going on to sort of improve those as well as the sort of weighting effects of the acquisition - the acquisitions, I should say. So if we kind of roll out that together, I mean, is there much of a change in the progression that you sort of laid out last quarter toward normalized margins or how should we think about that?

Well, I think if you think in terms of the true one-time cost that we incurred this quarter, there’s about a $1.3 million or so. So that, obviously, is truly a one-time cost issue.

Then you had about another $1.4 million or so in amortization, which obviously will be with us for some point in time. So that gets you to $2.7 million charge that Steve mentioned.

On top of that, this quarter, you had about $350,000 in retention-related payments, which it will be hard for me - they roll off over a period of time, I would say, not more than 2 years is probably generally a safe assumption. So it’s sort of a more of a midterm issue.

And then there is the more integration-related stuff, particularly at CPI that we’ve talked about. The ERP system we’ve talked about quite a bit is giving roughly 2 points of improvement on CPI’s margins as we bring that up to speed.

There’s also sales synergies that we’ll get, that we think in the CPI case, is probably another 2 to 3 points. So those are, I would say, all of its softer, certainly from an accounting standpoint, but no less real from kind of an operational standpoint.

That’s sort of the way we thought about the roadmap, it’s not fundamentally different than what I’ve said previously, it’s just the hard numbers are updated, obviously.

Got it. And on that amortization, which is - I guess, it feels like all - most of the rest of that, at least in terms of the cost rolling off is sort of a 2 year or less kind of timeframe.

How long do we think about the amortization sticking around?

Yes. Typically that’s about a 15-year period.

Just a question on the acquisitions. I’m just wondering, is there a lot of opportunity to improve your free cash flow generation, you’re working capital, things like that.

Once you get these things fully integrated or do you think it’s sort of status quo?

No, I mean I wouldn’t say there’s a big working capital pop in general. I mean, I think we kind - just because there are new product lines to us or new locations or both, so Gary there’s not a lot of redundancy in working capital that can be extracted in general.

So - and in cash flow, it’s just basically the kind of the cash flow we’re acquiring plus the synergies associated with that. What we don’t have in any of these cases is a big capital nut for - to invest for fixing things up, if you will.

I mean, we don’t - the strategic rationale behind our acquisitions is not going out and buying businesses that we believe need to be fixed up and improved. We go out and in general, buy good solid businesses that have a product line that we like or a geographic position or end-use market position that we’d like, and it can be used and leveraged much, much greater inside the EnPro family of companies.

And so we use strategy to drive acquisitions. Acquisitions in and of themselves are not a strategic thrust that we have.

We’re trying to grow our businesses and when we see a product adjacency, that’s part of what we want to accomplish and we can do that through an acquisition. That’s what drives it particularly in the Stemco example.

In the case of Garlock and CPI, it’s been really a combination of both product and geographic footprint.

Right, and then just on the acquisitions, you said that you’re probably going to take a pause here. I’m just wondering though, you’ve been very active.

So you obviously must see a lot of the acquisitions that are out there. Just your take on the opportunities generally that are out there for people that are looking to buy properties.

Is it more active than it was 3 months ago or is it about the same?

Actually, well 3 months ago, yes, I can’t comment on the - I mean, to me 3 months ago was last week. I mean, my time horizon is in years, not quarters.

So, is it better, is it continuing to get better than it was over the last 2 years and is it generally trending up? Yes, I think it is.

Our approach as you know is to really not participate in auctions. We don’t do that as a matter of policy but when - typically, when things get auctioned off by one of these extremely capable investment banks that we deal with frequently, it gets pretty frothy and the pricing gets too high quite frankly for us and we tend to back out.

So mostly, what we do is individual cultivation of owner operators or some kind of special situation. So, our cultivation timeline is also measured in - sometimes, measured in years.

So from our perspective, it feels a little bit more active than it might have been a year or 18 months ago but it was still pretty solid back then too for the types of businesses that we look at. Our need to take a pause is primarily around the fact that our revolver is getting close to the top end.

We need to generate some cash to basically restock the coffer, so to speak

But you feel you have the operational capacity to take on more stuff if you have the capital?

Yes, we do. We do.

Certainly in the second half of the year. Yes.

First question, just related to sort of your European operations, I was wondering if you could just give a little more color on that. We’ve gotten some macro data coming out, showing that Germany could be dipping down in the recession as well.

Just wondering, sort of what you guys are actually seeing.

Well, it’s - you got to think about it in 2 pieces. If you think about it from the sealing segment, it’s mostly Garlock exposure, but it’s also Technetics exposure.

And that’s very heavily energy nuclear and petrochemical, oil and gas related. That’s all doing very well.

And even as you’ll recall during the recession, we didn’t really see a lot of weakness in that segment. So, from the sealing product standpoint, Europe feels just fine.

On the engineered side, it’s both CPI and GGB that had European exposure. GGB being 2-thirds of it and the lion’s share, GGB as a business is European and probably of its European exposure over half of its automotive and the other half is industrial.

Actually, I just spoke to our industrial sales manager in Europe this morning because I wanted to get a sense of what he’s seeing. It just absolutely reflects what we’ve - most people have been reading in the press which is the businesses that we have in Germany and in the UK, and in France and Austria is solid.

We’re on plan and the outlook that we’re hearing from our customers is still good. Eastern Europe is also decent.

It’s our business in Italy - we don’t do a lot of business in Spain at all. GGB has negligible sales there.

But we do have a decent presence in Italy and that has been weak and continues to be weak. So I don’t know if that’s helpful, Joe but that’s kind of what we’re seeing there.

Sure, definitely. And then moving on to next question related to the engine segment.

I just wanted to clarify your sort of expectations for the year. Are you still expecting sort of a flattish?

I believe your past expectations were flattish to slightly down potentially. Could you just clarify what your expectations are?

For the top line?

For the top line. Yes.

For the year.

Yes, I think it’s pretty flat to maybe a little bit less than last year, but pretty flat. Obviously it’s part --we don’t know exactly what parts sales is going to look like.

We do have -don’t expect the margins that we had in the first quarter of the Engine business to continue because the margins will be a little bit less and some of which frankly is due to we’re pursuing a fairly large opportunity that’s requiring some costs and engineering expense and so forth. Nothing that will be huge, but it’s enough to be a point or so of margin for the quarter that we’re spending on costs trying to win this bit, which we’ll know about later in the fall.

But the engine margins were - in Q1 were about 19% and I’d expect - you can expect that to drift down to a more normalized level, which would still be in the high teens, but not 19%, not that high teens, so...

Okay, great.

Yes.

And then, just 2 more questions. One related to the CPI business.

I was wondering if you could talk a little bit about the directional activity that you’ve been seeing in CPI will last several quarters. Do we expect to sort of see a bottom, maybe, here in the second and third quarter, and then maybe finally as natural gas and demand, hopefully begins to pick up with gas prices so low, that maybe we start to see some growth in fourth quarter 2013?

And then the second question, just if you could address the GSP and the profitability that you’re seeing there, it seem to be a little later than it was in the fourth quarter.

Okay, well first on CPI, yes, I think you’ve characterized it well. I think I would actually say we think the bottom was in fact the first quarter.

At least from our performance, now, that’s because also of this restructuring activity that’s been underway, and a bunch of it is behind us, I mean, we are continuing to move through the ERP system that we’ve been talking about for a while. We are going to be done with that by the end of the year, and we expect to see the synergy benefits associated with Mid Western continue to grow over time, and yes, I mean, the business is, from a market standpoint, I can’t imagine gas prices would go any lower, so, and we’re beginning to see, as you can read about it in the press, more and more, and more end-uses for the low natural gas position of North America.

Many projects, developmental projects are underway for compressed natural gas, liquefied natural gas, petrochemical capacity, et cetera. Those are just - those just don’t happen overnight.

So those have been underway now for a while and are going to continue to grow and demand more gas consumption which is good for us. So, yes.

I think from our perspective, we feel like Q1 was in fact the bottom. And then your other question, what was it?

Oh, GST, GST. You’re talking about the deconsolidated GST.

Yes, I mean...

Just the margin looks like it came down from the fourth quarter. Just was wondering, what was sort of going?

Yes.

It has come down.

It’s pretty darn high in the fourth quarter and it didn’t come down much. So I’m not sure where to go with that.

It’s still - it’s a good business. We’re still trying to improve that business.

It’s still part of - 100% owned by the EnPro, it’s one of our families that we got to slide through this ATRP process but coming out of the back end, we got a good business there.

Just a couple of quick questions. Can you maybe help me understand I guess when - with regard to I guess it was - made comments with regard about high levels of restocking.

How does that work? Does that - should I like look at that and think that okay maybe so we’re going go down just because of the high stocking?

Can you maybe just talk about some of the [indiscernible] or how are they or how that moves?

Okay. Hold on one second.

I didn’t understand fully your question. I think some other guys in the room did.

So just hold on one second. Okay, you’re talking about restocking in a year ago.

Is that...

Yes. Yes, yes, yes.

Well 2 things that we sell. One is in GGB and one is in Stemco.

In GGB during the recession, that - the entire supply chain got gleaned out so much because we make bearings that go into sub-assemblies, that go into - in some cases, full assemblies that go into a car or a crane or some kind of a piece of equipment, a machine tool, a conveyor, et cetera. But remember, our bearings are typically - so we’re the tier 2 guys going to a tier 1 supplier which is going to the OEM.

And so what happened in the recession there, because the Industrial Equipment business and Automotive businesses got careened as you know. Yes, I mean, there was nothing on the shelves through that whole supply chain.

And then when we went into 2011, if you’ll remember, late 2010, early 2011, the whole world applauds, hey we’re back. The recovery is here.

Good days are here again and we’re off to the races. And so our business was exceptionally strong because a lot of that supply chain had to get restocked.

So we were running harder at GGB a year ago in 2011 from a demand standpoint; from a unit supply standpoint. We were basically running 24/7 around the globe in GGB.

That has not happened in Q1 of this year but it’s still very healthy. It’s just that it wasn’t being propped up by that artificial - to some extent one-time or artificial restocking within GGB.

In Stemco, we saw a similar effect in the first half of last year even front and loaded into the first quarter, which was during the recession when freight. And so far off in the United States, what happens is a lot of the fleet idle trailers.

But when they idle a trailer, they don’t prefer good equipment in the parking lot. They put their old equipment that needs maintenance work in the parking lot.

And so when they need that trailer again, they put - they’re ready to put it back in service, that’s when it needs work done to it in terms of brake jobs and seal jobs and so forth. And so as that equipment was being pulled back in, it needed work and we benefited from that, so again a bit of one-time restocking.

The Stemco business is still strong, it’s good. The trucking outlook is good, but we’re still not back to moving the same freight in the country that we did back in 2006.

We’re still below that. I mean, the economy is.

And so - but we’ve been able to grow Stemco both because we continue to gain share as well as the product adjacency acquisition strategy that we’ve been driving, so.

That’s very helpful. And I guess with regard to what you just said with regarding things being idle then once they start moving they’re going to be demand for bearings and brake parts and things of that nature.

How should we look at the brake market? I think you said there were some seasonality to that, can you maybe provide a little bit more color in that?

Yes. I mean, normally in the trucking industry if you talk to most people, there was a brake season that they called it which is really late first - first quarter - second half or first quarter and to the second quarter was when most of the equipment a lot of the equipment there was aftermarket brake jobs done.

And we certainly saw that last year, at least we thought we did. But because of some of the safety regulations and requirements and so forth in that industry, there’s a bit of a sense that that might get levelized a bit.

I think it will still exist to some extent but it will get levelized a little bit. So the brake business is good.

We have grown our presence. I mean, 4 years ago, Stemco wasn’t in the brake products business so we’re still learning ourselves but we have had pretty good success there so we’re pretty excited about it.

And I guess just one final thing. Sticking with Stemco, I mean, the way we should really look at the OEM component of sales is going to probably increase a little bit?

Yes. Relative to history, that would be accurate Chris.

Okay. And is this a more looking toward 20-80 split or is it quite not quite that?

Yes, I think that’s in the ballpark. 20% OEM is still 80% after market.

Yes.

I’m going to take you back to your outlook, 2012 outlook comments. My phone cut out right before you got to the good parts.

So I’m sorry if I make you repeat yourself but just on the more than 12% revenue growth over 2011 expectation for the year, obviously that could be 12.1% or much higher. What do you think would be the factors that could make your revenue growth for the year significantly higher than 12%?

Where would upside most likely come from?

I mean, I think it would be just general economic activity, Fred. I mean, because if the recovery happens to be strong and we’re still counting on what we built the plan around 2.5% plus or minus GDP growth in the U.S.

and I think we’ve built it around about a half of percent growth in Europe maybe 0. But it was coping up between 0% and 0.5%.That’s still what we see.

So if - but if we’re wrong on that and all of a sudden, the market recovers better and there’s more freight movement and people are buying more equipment, capital equipment and so forth, we would benefit from that. But I don’t know that if there’s any - there’s not any one individual economic driver that would move - be enough that would be impact the entire company.

I mean, we could see pockets of things like Alex mentioned earlier, we’ve got in the Technetics Group, we’ve got a decent business in the semiconductor industry if that continues to be healthy, we’ll see that. But there won’t be enough to make a fundamental shift in EnPro’s numbers overall.

It would help by another $5 million to $10 million would be even optimistic even if at any given one factor, if that makes any sense to you.

Yes. Absolutely.

And then my other question is on Motor Wheel. So you indicated that these lightweight brake drums only make up about 15% of the market, is that correct?

That’s correct today. That’s right.

How long has this type of product has been in existence and is there any reason that the penetration of what appears to be a superior product is still only 15%?

Well, one, it’s a lot more expensive. So you have to have a team that can - you have to have a team that can sell the value and demonstrate the lifecycle benefit because it does last a lot longer and performs a lot better.

And we do that better than anybody in the industry by far. So that’s what we’re going to do.

But yes, it’s been around for a while and there’s only - there’s one other company that makes a lightweight drum that has the other 40%. So, we just think we can - we just think with the go-to-market model that Stemco has, we can sell it better and do it better.

We bought a company called Kaiser Engineering, you may recall about 4 years ago. It was - it’s a king pin company.

And same thing, it had been around, had a great aftermarket, sales with - sales, top of the line, high margin but tremendous value product. It was a lot more expensive than a standard king pin.

It’s called a quick kit. And in 4 years, the Stemco team has essentially almost doubled the sales of that business.

So, I’m not saying we’re going to double the sales of Motor Wheel in 4 years. But I think we can grow the amount of share that’s going through the lightweight segment because it makes so much sense to fleet customers when you can make that value pitch appropriately and integrate it with a package of other brake products that’s engineered for better performance over the lifecycle.

It has dramatic effects on safety, performance, lifecycle cost, et cetera. You just have to be able to communicate that value proposition to customers and that’s what we do well.

On the ACRP, regarding the claimant’s desire to file claims against the GST affiliates, is this going to require a judge’s decision? I mean, is there - can you describe a little bit how this particular motion may proceed and what kind of timeframe we might expect?

Yes, sure. The General Counsel that we have that manages that process, Rick Magee.

is in the room, so I’m going to let Rick address that question.

Yes, Mark, that remains to be seen. There is a motion before the bankruptcy judge asking him to allow them to proceed to file those claims, and so there will be a hearing on the motion, and there’ll be lots of considerations in connection with that hearing.

Number one, whether the judge thinks they should be allowed to proceed at all. Number 2, whether he thinks they’re premature because as you know we believe that GST has way more than ample resources to find any liability that it ultimately has, so this attempt to stretch both be on GST to go after more assets is just - it’s just that part of the playbook that asbestos claimants’ counsel uses in every case, and so there are a lot of factors, there will be an initial hearing in June, and we’ll know a lot more about the timing from then.

The reason for the timing of the actual filing is a claim like that would have been - we believe it’s already time barred because the transaction they complained about was way back in 2005 but from a bankruptcy standpoint, it would have been even further and definitely time barred had it not been solved by June 5 of this year the 2-year anniversary of the case. So they got it in at that point it’s - As Steve said, the transaction they complained about involved the third-party, well-respected advisor who not only blessed the transaction but decided the terms of the transaction.

This was one where they came in and decided what the amount of the consideration should be. What form it should take and what interest rate should be attached to it.

So we feel really good about the defenses to the claim. And we hope the judge would not even let it go forward but all that remains to be seen.

Okay. And then one other question related to that, do we have any expectation yet of when the claimants are likely to present their...

Reorganization.

Yes.

Their reorganization plan?

Yes. Essentially, yes.

Yes. Mark, they’ve talked about a plan.

We know what their plan will look like whether they file it or not it will be similar to what they’ve done in other cases. We don’t think they’ll put a number on the table in the court room because the purpose of the estimation trial that as Steve said has been set to begin in December of this year will be for the judge to estimate the amount and value of allowed claims.

So that whatever plan is finally put in place whether it be the plan we’ve got on the table, some other plan GST puts on the table or some plan, a claimant group puts on the table, that trial would determine how much value would have to be in that plan to have a successful reorganization plan.

I see. So you don’t - you do not expect them to put a number on the table prior to that trial then, that’s how it is.

Am I understanding it correct?

They will have an expert who will put a number on the table at that trial. Whether they will put that number out before then or not remains to be seen.

They may well put a plan, offer a plan that they would like without a number in it. I would not be surprised to see that, with the number to be determined at estimation.

Okay, great. Well, thank you everyone for joining and have a great day.

We’ll talk to you next quarter.