Cuộc họp công bố kết quả kinh doanh Q3 2026 của Enpro (NPO): Nâng dự báo nhờ tăng trưởng mảng bán dẫn

Thông tin chính

• Enpro đã báo cáo doanh số quý 3/2026 đạt 350,8 triệu USD, tăng 22,4% so với cùng kỳ năm ngoái, trong khi EBITDA điều chỉnh tăng 31,7% lên 91,3 triệu USD.
• Biên EBITDA điều chỉnh tăng 180 điểm cơ bản lên 26,0%, và EPS pha loãng điều chỉnh tăng 33,7% lên 2,66 USD.
• Doanh thu của Advanced Surface Technologies tăng 25,8%, nhờ nhu cầu bán dẫn mạnh mẽ. Biên EBITDA điều chỉnh của phân khúc tăng 500 điểm cơ bản lên 25,1%.
• Doanh số tự thân của Sealing Technologies tăng 11,6%. Doanh số báo cáo tăng 20,5% lên 214,7 triệu USD, bao gồm đóng góp từ AlpHa Measurement Solutions và Overlook Industries.
• Ban lãnh đạo đã nâng dự báo cả năm 2026 với doanh thu đạt từ 1,33 tỷ USD đến 1,34 tỷ USD, EBITDA điều chỉnh đạt từ 340 triệu USD đến 345 triệu USD, và EPS pha loãng điều chỉnh đạt từ 9,70 USD đến 9,95 USD.
• Theo ban lãnh đạo, kế hoạch xây dựng và thời gian thực hiện của khách hàng bán dẫn cung cấp tầm nhìn rõ ràng cho ít nhất đến năm 2027. Enpro dự kiến sẽ đẩy nhanh các khoản đầu tư công suất tại Mỹ và Châu Á trong năm 2027.

Dữ liệu tài chính chính

Trong 9 tháng đầu năm 2026, dòng tiền từ hoạt động kinh doanh đạt 172,8 triệu USD và dòng tiền tự do đạt 129,2 triệu USD, sau khi trừ 43,6 triệu USD chi phí vốn. Từ đầu năm đến nay, Enpro đã giảm 135 triệu USD nợ thấu chi quay vòng, bao gồm 55 triệu USD trong quý 3, đưa đòn bẩy ròng xuống mức 1,4 lần EBITDA điều chỉnh của 12 tháng gần nhất.

Tính đến ngày 30 tháng 9, tổng nợ là 520,7 triệu USD và tiền cùng các khoản tương đương tiền đạt 83,4 triệu USD. Hội đồng quản trị cũng đã phê duyệt hạn mức mua lại cổ phiếu mới trị giá 50 triệu USD vào tháng 10.

Kết quả hoạt động và kinh doanh

Advanced Surface Technologies

AST dẫn đầu đà tăng trưởng trong quý khi nhu cầu tăng mạnh trên các mảng làm sạch chính xác, thiết bị vốn bán dẫn và lớp phủ. Ban lãnh đạo nhấn mạnh nhu cầu đặc biệt mạnh mẽ đối với các giải pháp làm sạch chính xác gắn liền với sản xuất chip tiến trình tiên tiến, trong khi xu hướng tỷ lệ đơn hàng trên doanh số (book-to-bill) đối với thiết bị vốn và lớp phủ tiếp tục cải thiện.

Khoảng 60% doanh thu của AST gắn liền với chu kỳ thiết bị gốc (OEM) và khoảng 40% gắn với hoạt động hậu mãi, tùy thuộc vào từng quý. Ban lãnh đạo cho biết mảng làm sạch chính xác đã tăng tỷ trọng trong phân khúc và dự kiến sẽ mở rộng nhanh hơn một chút so với mảng kinh doanh tổng thể của AST.

Enpro đang đẩy nhanh việc kiểm định trên các nền tảng mới, bao gồm các sản phẩm yêu cầu giải pháp tích hợp theo chiều dọc. Các khoản đầu tư công suất đang được đẩy nhanh tại Arizona, California, Đài Loan và Singapore. Ban lãnh đạo cho biết các dự án này gắn liền với cam kết của khách hàng, các thương vụ khách hàng mới và kế hoạch công suất của khách hàng chứ không phải do nhu cầu đầu cơ.

Sealing Technologies

Mức tăng trưởng của Sealing diễn ra trên diện rộng. Hàng không vũ trụ thương mại và các ứng dụng không gian đạt kết quả tích cực, trong khi thị trường công nghiệp chung trong nước ghi nhận mức tăng trưởng tự thân khoảng 15%. Doanh thu từ xe thương mại tăng hơn 8% so với cùng kỳ năm ngoái.

AlpHa Measurement Solutions và Overlook Industries cũng đóng góp vào mức tăng trưởng báo cáo. Kỷ luật về giá và hiệu quả vận hành đã giúp phân khúc này duy trì biên EBITDA điều chỉnh ở mức 32,6%.

Ban lãnh đạo cho biết khả năng sinh lời hiện tại của Sealing không phụ thuộc vào cơ cấu sản phẩm thuận lợi bất thường. Công ty tiếp tục hướng tới mức tăng trưởng tự thân từ 5% đến 9% theo thời gian, đồng thời đầu tư vào kỹ thuật ứng dụng, công suất và các thương vụ thâu tóm giúp mở rộng năng lực.

Dự báo của ban lãnh đạo

Enpro đã nâng triển vọng cho cả năm 2026:

Triển vọng EPS điều chỉnh dựa trên giả định mức thuế suất bình thường hóa là 25% và 21,4 triệu cổ phiếu pha loãng hoàn toàn đang lưu hành.

Ban lãnh đạo kỳ vọng Sealing Technologies sẽ tiếp tục mang lại đà tăng trưởng tự thân trong quý 4. Biên lợi nhuận cả năm dự kiến sẽ duy trì ở gần mức cao trong phạm vi mục tiêu dài hạn là 30%, cộng trừ 250 điểm cơ bản, mặc dù yếu tố mùa vụ thông thường dự kiến sẽ dẫn đến sự sụt giảm nhẹ so với quý trước trong quý 4.

Đối với AST, ban lãnh đạo kỳ vọng sự cải thiện so với quý trước trong quý 4, với cả mức tăng trưởng doanh thu so với cùng kỳ năm ngoái và biên lợi nhuận phân khúc đều vượt 25%. Công ty dự kiến chi phí vốn năm 2026 từ 60 triệu USD đến 65 triệu USD.

Chi tiêu vốn dự kiến sẽ tăng trong năm 2027 khi Enpro đẩy nhanh các dự án công suất bán dẫn. Kế hoạch 5 năm của công ty đặt mục tiêu chi tiêu vốn hàng năm từ 3,5% đến 4,5% doanh thu, trong đó năm 2027 có khả năng cao hơn một chút so với phạm vi đó. Các dự án mở rộng riêng lẻ có thể mất từ 6 đến 18 tháng, tùy thuộc vào quy mô.

Rủi ro và các lĩnh vực cần theo dõi

• Enpro tiếp tục thấy sự suy yếu ở thị trường công nghiệp chung cũng như thực phẩm và sinh dược phẩm tại Châu Âu trong quý 3.
• Một số khoản đầu tư tăng trưởng của AST vẫn chưa phát sinh doanh thu, khiến thời điểm dự án và tiến độ kiểm định của khách hàng trở nên quan trọng đối với lợi nhuận trong tương lai.
• Yêu cầu công suất liên quan đến bán dẫn cao hơn dự kiến sẽ làm tăng chi tiêu vốn trong năm 2027.
• Biên lợi nhuận của Sealing dự kiến sẽ giảm nhẹ so với quý trước trong quý 4 do yếu tố mùa vụ thông thường.
• Ban lãnh đạo đang duy trì sự linh hoạt cho các thương vụ thâu tóm có thể ảnh hưởng tạm thời đến biên lợi nhuận của Sealing, mặc dù các mục tiêu phải đáp ứng các tiêu chuẩn chiến lược và tài chính của Enpro.

Điểm nổi bật trong phần Q&A với chuyên gia phân tích

• Tiềm năng biên lợi nhuận của AST: Ban lãnh đạo nhắc lại rằng AST có thể đạt biên EBITDA điều chỉnh khoảng 30% trong giai đoạn Enpro 3.0. Các đòn bẩy chính là tăng trưởng sản lượng, cải thiện cơ cấu sản phẩm, các sáng kiến 80/20 cùng sự tối ưu hóa danh mục và tài sản. Biên lợi nhuận bổ sung trong đợt tăng sản lượng gần đây đã đạt ít nhất 40%.
• Mở rộng công suất: Các khoản đầu tư theo kế hoạch chủ yếu là mở rộng các hoạt động hiện hữu thay vì các dự án xây dựng mới (greenfield). Công việc sẽ bắt đầu tại một số địa điểm vào gần cuối năm 2026 và tiến triển rõ rệt hơn trong năm 2027.
• Giá bán và chi phí đầu vào: Ban lãnh đạo kỳ vọng giá bán, hiệu quả hoạt động và các biện pháp nội bộ khác sẽ ngăn chặn tác động đáng kể đến biên lợi nhuận từ lạm phát chi phí đầu vào.
• Phân bổ vốn: Đầu tư tăng trưởng tự thân vẫn là ưu tiên hàng đầu, tiếp theo là các thương vụ thâu tóm giúp mở rộng năng lực và đáp ứng các yêu cầu về tỷ suất sinh lời. Tiền mặt thặng dư có thể được sử dụng để giảm nợ trong khi đánh giá các giao dịch phù hợp.
• Kỷ luật M&A: Enpro đã xem xét hơn 160 cơ hội thâu tóm tiềm năng trong năm. Ban lãnh đạo cho biết họ vẫn giữ sự chọn lọc và tập trung vào các doanh nghiệp chất lượng cao, đã có chỗ đứng vững chắc thay vì các doanh nghiệp cần tái thiết hoạt động.

Toàn văn biên bản cuộc họp công bố kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Greetings, and welcome to the Enpro Q3 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It's now my pleasure to turn the call over to James Gentile, Vice President, Investor Relations. Please go ahead, James.

James Gentile

Thanks, Kevin, and good morning, everyone. Thank you for joining us today as we review Enpro's Third Quarter 2026 Earnings Results and discuss our increased outlook for 2026. I will remind you that this conference call is being webcast at enpro.com, where you can find the presentation that accompanies this call.

With me today are Eric Vaillancourt, our President and Chief Executive Officer; and Joe Bruderek, our Executive Vice President and Chief Financial Officer.

During this morning's call, we will reference a number of non-GAAP financial measures. Tables reconciling the historical non-GAAP measures to the comparable GAAP measures are included in the appendix materials. Also, a friendly reminder that we'll be making statements on this call, including our current perspectives for full year 2026 guidance 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. We do not undertake any obligation to update these forward-looking statements.

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

Eric Vaillancourt

Thanks, James, and good morning, everyone. Thank you for your interest in Enpro as we discuss our third quarter results, provide an update on our strategic progress and share our current expectations for the balance of 2026.

Before reviewing the quarter, I would like to recognize our colleagues across Enpro -- over the past 2 years, they've embraced the challenge at the heart of our 5-year strategic plan called Enpro 3.0, accelerating personal and profitable growth. Throughout that time, we have encouraged and invested in our people, expanded our capabilities, strengthened our portfolio and prepared the organization to capture attractive opportunities across our key markets to drive long-term value creation.

Enpro 3.0 continues to gain traction throughout the organization, and our third quarter performance reflects our colleagues' hard work in putting this strategy into action. We are seeing the benefits of this growth focus, greater empowerment, deeper technical expertise, stronger customer partnerships and focused execution across the company. The progress has been deliberate.

In AST, we have invested to build capabilities to position the segment on the leading edge and drive higher revenue growth and profitability over the long term. For Sealing, we expanded our capabilities in compositional analysis and biopharmaceutical processing through the acquisitions of AlpHa and Overlook in the fourth quarter of last year, while investing in capacity expansions across the segment.

Across the company, we continue to invest in differentiated technologies, engineering talent, capacity and processes that allow us to solve our customers' most critical problems. Those actions are strengthening our market positions and creating additional opportunities for profitable growth. At the same time, the balance of our portfolio remains an important source of strength, allowing us to drive profitable growth through market cycles.

Sealing Technologies continues to demonstrate excellent execution and premium profitability supported by durable aftermarket positions and an expanding set of growth opportunities. In Advanced Surface Technologies, demand associated with advanced semiconductor production continues to strengthen and the investments we are making to position us to support our customers as they expand capacity for artificial intelligence, advanced computing and communications infrastructure.

We remain focused on delivering today while building the capabilities required to sustain strong organic growth, profitability and returns over the long term. Just as importantly, we are creating an environment where our colleagues can continue to grow, flourish and perform at their best. We are pleased with our progress, energized by the opportunities ahead and confident in Enpro's ability to create differentiated value for our customers and shareholders.

Now let me turn to highlights for the third quarter. Enpro reported quarter sales of $350.8 million, up 22.4% year-over-year. Strong demand across semiconductor markets drove sales in the Advanced Surface Technologies segment up 25.8% with the segment margin rate expanding 500 basis points to 25.1%. Organic sales in the Sealing Technologies segment increased 11.6% during the third quarter and 20.5%, including the contributions from the acquisitions of AlpHa Measurement Solutions and Overlook Industries completed in the fourth quarter of 2025 and the modest impact of foreign exchange translation.

Total company adjusted EBITDA increased 31.7% to $91.3 million at a margin of 26% for the third quarter. In Sealing Technologies, the strong increase in sales was driven by strength in aerospace, domestic general industrial and compositional analysis applications as well as the contribution from the recent acquisitions and strategic pricing initiatives.

Commercial vehicle OEM demand improved year-over-year during the third quarter. We are pleased with how STEMCO is performing, and we are confident the business is positioned for growth from expected improving market conditions over the coming quarters as it continues to provide critical safety solutions for trailers transporting goods on roadways across North America.

Overall, Sealing Technologies segment profitability remained strong at 32.6%, with higher sales, pricing discipline and excellent execution supporting an almost 22% increase in adjusted segment EBITDA. In AST , robust performance across the segment was led by leading-edge precision cleaning solutions as well as strong demand for semiconductor capital equipment and coatings. Our outlook for the semiconductor-facing products and solutions remains bright, and we are well positioned as the market forecasts continue strength ahead.

Investments made to expand our capabilities in regions aligned with our customers underpin a positive outlook for Advanced Surface Technologies segment. We expect to pursue additional capital investments in the United States and Asia through next year to support customers' leading-edge chip capacity expansions.

Regionalization of supply chains continues to be a driver while we proceed with longer-term customer expansion activities, apply our 80/20 processes and pursue operational excellence initiatives to drive additional value in AST. As we said last quarter, customer build plans and lead times provide visibility through at least 2027 for our semiconductor-facing products and solutions.

We remain focused on advancing the growth priorities underpinning the Enpro 3.0 strategy, which will guide our performance through 2030. Over the long term, we are positioned to generate mid- to high level -- mid- to high single-digit organic top line growth with robust profitability and returns.

Our strong balance sheet and free cash flow allow us to reinvest in attractive organic growth opportunities across the company and pursue capability-expanding acquisitions in key growth areas of our portfolio that meet our stringent strategic and financial criteria.

Joe?

Joe Bruderek

Thank you, Eric, and good morning, everyone. We are pleased to report these strong results for the third quarter of 2026 and an increased outlook for the full year. For the third quarter, sales of $350.8 million increased 22.4% year-over-year, supported by 25.8% revenue growth at AST and organic growth of 11.6% in Sealing Technologies, 20.5%, including the acquisitions and a modest impact from FX.

Third quarter adjusted EBITDA of $91.4 million (sic) [ $91.3 ] increased 31.7% compared to the prior year period. Total company adjusted EBITDA margin of 26% expanded 180 basis points year-over-year, driven by operating leverage on strong sales growth, partially offset by continued operating expenses supporting growth initiatives across the organization.

Corporate expenses of $13.5 million in the third quarter of 2026 increased from $10.2 million a year ago, primarily due to higher incentive compensation accruals. Adjusted diluted earnings per share of $2.66 increased 33.7%, largely driven by the same factors that supported adjusted EBITDA growth year-over-year.

Moving to a discussion of segment performance. Sealing Technologies sales increased 20.5% to $214.7 million. Strong performance in commercial aerospace and space applications, mid-teens organic growth in domestic general industrial markets as well as the contributions from AlpHa and Overlook were the primary drivers. Revenue from commercial vehicle markets improved over 8% year-over-year, while we continue to see softness in general industrial and food and biopharmaceutical sales in Europe during the third quarter.

Adjusted segment EBITDA increased 21.8% to $69.9 million, driven by operating leverage on higher sales, strategic pricing initiatives and contributions from AlpHa and Overlook. Adjusted segment EBITDA margin was 32.6%, remaining above 30% for the 11th consecutive quarter.

We continue making targeted investments in capacity and talent across the Sealing Technologies segment to enhance our applied engineering and applications expertise, enabling us to provide critical solutions for our customers and drive differentiated incremental organic revenue growth. As we expand our opportunity set, our highly specified solutions, in turn, drive an enduring aftermarket, which is an important characteristic of an Enpro business.

Turning now to Advanced Surface Technologies. Sales for the third quarter increased 25.8%, reflecting strong demand across the segment. Demand for precision cleaning solutions tied to advanced node chip production is very strong. In addition, book-to-bills for our capital equipment and coatings facing solutions also continue to strengthen. Our teams are working incredibly hard to deliver these important products and solutions, while collaborating with customers to advance and expand leading-edge semiconductor production capabilities.

For the third quarter, adjusted segment EBITDA increased 57.3% year-over-year to $34.3 million. Adjusted segment EBITDA margin expanded 500 basis points to 25.1% as strong sales growth drove improved operating leverage despite continued growth investments, many of which remain prerevenue.

We continue to advance qualifications on a number of new platforms, many requiring our unique vertically integrated solutions. We are also responding to customer demand by advancing capital investments to support new platforms driving future growth. Our #1 priority is to partner with our customers to enable efficient leading-edge chip production and capacity expansion.

Moving to the balance sheet and cash flow. Our balance sheet remains strong, and we have ample financial flexibility to execute on our long-term organic growth initiatives and consider acquisitions that align with our strategic priorities and deliver attractive returns.

During the first 9 months of 2026, we generated $172.8 million of cash flow from operating activities and $129.2 million of free cash flow, net of $43.6 million in capital expenditures. This compares with $138.5 million of operating cash flow and $104.9 million of free cash flow in the prior year period. We expect capital expenditures to remain in the $60 million to $65 million range for full year 2026.

During the third quarter, we reduced outstanding revolving debt by $55 million, bringing the year-to-date reduction to $135 million and our net leverage ratio to 1.4x trailing 12-month adjusted EBITDA. At September 30, total debt was $520.7 million and cash and cash equivalents was $83.4 million. Finally, our strong balance sheet and cash generation provide us with ample liquidity to invest in growth while continuing to return capital to shareholders. During the third quarter, we paid a regular quarterly dividend of $0.32 per share with dividend payments totaling $20.6 million for the first 9 months. In October, our Board approved a new $50 million share repurchase authorization in the same amount, replacing the prior unused authorization that expired.

Moving now to our increased guidance. We are raising our full year 2026 guidance and now expect revenue in the range of $1.33 billion to $1.34 billion, representing 16% to 17% year-over-year growth, adjusted EBITDA in the range of $340 million to $345 million and adjusted diluted earnings per share in the range of $9.70 to $9.95. This compares with our prior guidance of 14% to 16% revenue growth, adjusted EBITDA of $330 million to $340 million and adjusted diluted earnings per share of $9.30 to $9.80. The normalized tax rate used to calculate adjusted diluted earnings per share remains at 25% and fully diluted shares outstanding are 21.4 million.

In Sealing Technologies, order patterns remained solid into 4Q, supporting continued strong organic growth in the fourth quarter. Reported growth will also include incremental revenue from AlpHa and Overlook, which contributed only a partial quarter following our acquisitions in the fourth quarter of 2025. Aerospace, including commercial space applications and general industrial markets, including digital infrastructure and communications, water and compositional analysis applications, are the primary drivers of continued organic revenue growth in Sealing. During the third quarter, we saw improvement in commercial vehicle OEM markets, which we expect to continue through the fourth quarter and into next year.

On profitability, we continue to expect Sealing segment margin to remain at the high end of our long-term target range of 30%, plus or minus 250 basis points for the year, although slightly lower sequentially in the fourth quarter based on normal seasonality. In the Advanced Surface Technologies segment, market conditions are bright. Significant multiyear investment in advanced semiconductor infrastructure continues, and we are seeing strong demand in those areas tied to this infrastructure build-out for the balance of the year with increased visibility through at least 2027.

Through close partnership with our key customers responding to industry demand, we have seen significant order and backlog growth, supporting our improved outlook for the AST segment. We now expect sequential improvement in the fourth quarter with year-over-year revenue growth and margin rates both greater than 25%. Thank you for your time today.

I will now turn the call back to Eric for closing comments.

Eric Vaillancourt

Thank you, Joe. We are encouraged by the progress we are making across Enpro. Enpro 3.0 continues to gain traction throughout the organization. The investments made in our people are unlocking the immense potential of our team, our technological capabilities are expanding and the investments we have made in our businesses are translating into stronger performance and an increasingly attractive set of opportunities.

We remain focused on performing today while positioning the organization for tomorrow. That means continuing to invest where we have clear competitive advantages, serving our customers with excellence and maintaining a disciplined approach to capital allocation. These priorities position Enpro to compound growth over the long term. The opportunities in front of Enpro are significant, and we believe we have the people, portfolio, balance sheet and operating discipline to capture them.

I want to thank our colleagues across the world for their hard work, dedication and continued commitment to accelerating their personal and professional growth. Their performance is what makes executing our strategy possible. There is no better time to be a part of Enpro.

I'll now welcome your questions.

Operator

[Operator Instructions] Our first question today is coming from Jeff Hammond from KeyBanc Capital Markets.

Phần hỏi đáp

Jeffrey Hammond

I guess 2 questions on Sealing. One, can you just unpack a little bit more of the acceleration? It sounds like commercial OE is helping, but there seems more to it. And then you've been, kind of, saying this 30% plus or minus 250 and you've been at the high end, kind of, 3 years. Like just wondering if you're thinking differently about that or, kind of, moving the bar at all.

Eric Vaillancourt

Sealing is performing in basically all different parts of the business are doing well. A lot of it tied to the digital build-out and infrastructure, but also a lot of other good happening. Space is doing very well. You're seeing a little improvement. Third quarter, I think we said a little over 8% in commercial vehicle OEM. And so it's really coming from this broad strength across the whole segment. I expect that to continue.

In regards to your second question -- high end, Jeff, we talked about that before. Basically, we'll continue to prove out where we are. We're trying to leave a little flexibility if we want to make an acquisition that might move that down a little bit. So it's either explain later or kind of keep the range we're at. But we continue to expect to perform at that high end of the 30% plan, plus or minus 250 basis points. There isn't anything that should change that in the immediate future.

Joe Bruderek

Yes. There's nothing specifically optimal about the way the Sealing Technologies is performing right now. They're just executing very well. There's not a super optimal mix or anything like that. So we don't expect that to go backwards. We just want to give ourselves the ability to invest in good acquisitions that meet our strategic and financial criteria that are within that range that are going to continue to kick up the growth rate over time, right?

Sealing for us, as we said, is a mid- to high single-digit organic grower, and we want to continue to invest in key areas of the business like we did with AMI, AlpHa and Overlook, that are going to drive that growth rate up over time.

Jeffrey Hammond

Okay. Great. And then you mentioned some incremental capital investments in North America, Asia. Can you just maybe talk about what you're thinking about in terms of capital outlay, what that maybe means for CapEx into '27? And are these, kind of, more greenfield or expansions?

Joe Bruderek

Yes. I mean we continue to see really strong growth opportunities in our key areas of strength within AST. That's both on the design and manufacture of critical in-chamber tools in some of our key areas of strength like gas dispersion, etch, deposition broadly as well as in our precision cleaning business tied to leading-edge chip manufacturing. We continue to see great growth prospects in both of those areas.

So some of the growth that we had anticipated over the course of many years is accelerating into the near term. And the growth investments we made over the last couple of years, we see a way to grow into those. And the future growth predicted over the next few years is now anticipated to be [ needed ] sooner. So we're pulling those growth investments forward, and we expect our capital investment total outlay to increase next year. We're not ready to guide specifically on that specific number, but we do expect it to step up into '27 based on that accelerated need for more growth capacity.

Eric Vaillancourt

It's more due to expansion than greenfield at this point, Jeff. Continue to expand in Arizona, continue to expand in Taiwan, et cetera.

Joe Bruderek

Singapore.

Eric Vaillancourt

Singapore as well.

Joe Bruderek

California.

Eric Vaillancourt

California as well.

Operator

Next question is coming from Tom Sano from JPMorgan.

Tomohiko Sano

Maybe just on the business on the U.S. and Asia semiconductor capacity expansions that you talked about, could you give us a clearer time line for completion? And I think it's hard to say about the revenue impact from each regions, but is this CapEx tied to firm customer commitments? Or is it more of for bet on anticipated demand?

Eric Vaillancourt

Yes. It's tied to customer commitments and customer -- new customer wins, et cetera. So it's actually tied to that. So we have visibility into that for the future. The capacity expansions are going to be, as we said earlier, Singapore, most of it initially tied to leading-edge cleaning and then also some vertically integrated products that are new customer wins that are driving some of that expansion as well. Those would be a driving expansions in the U.S.

Joe Bruderek

And if you think about timing, I mean, some of them are starting as soon as now at the end of this year, but more meaningfully progressing through 2027. Some of them are simple additional clean room space build-outs, which have -- which can have a shorter time horizon. Others are additional building or capacity expansion on an existing site.

So those may make in the time from 6 to 12 to 18 months at sometimes. But again, as Eric mentioned, right, these are absolutely in concert with our key customers supporting their growth plans, their build plans and visibility through at least '27 and in some cases, kind of, growth predicted in '28 and '29.

James Gentile

The 5-year plan for CapEx suggests 3.5% to 4.5% of revenue for -- as a percentage of total revenue annually. Next year, we'll probably be slightly above that.

Tomohiko Sano

That's helpful. And just one follow-up on Sealing margin holding up to 32.6% pretty high level. How are you balancing pricing against the raw materials cost there? And are your pricing actions fully offsetting input cost inflation? Or is there still a lag?

Eric Vaillancourt

Yes, we expect our pricing actions along with some operational efficiencies, some other levers we can pull, so we won't have any meaningful impact in price increases. Our teams do a really good job of getting that into the marketplace so we can capture it. And when we can't, we minimize it through other improvement activities. So I don't expect any material impact on our margins. Our supply chain really, really good. They're excellent.

Operator

Our next question is coming from Ian Zaffino from Oppenheimer.

Ian Zaffino

Very good quarter and very good commentary. I don't know if you guys have this or maybe a little bit of color. Would you be able to give us, kind of, the performance of an AST, call it, OE versus aftermarket? And how do we expect that mix to, kind of, change over time, just given all the, kind of, growth projects you have and all the, kind of, contracts you've won? So just thinking about that.

Joe Bruderek

Yes. Thanks, Ian. If you look at our AST business, about 60% of our business overall is tied to the OE cycle and about 40% aftermarket in that range, depending on the quarter. The aftermarket side has been growing as a percentage of the total over the last 5 years. Our precision cleaning business has grown throughout as it's tied to leading-edge chip production. And as that part of the market has grown as a percentage of the whole, we've continued to grow significantly.

We see that as a continued driver for us going forward, right? Our Precision Cleaning business tied in with every key advanced node as that market continues to progress and that business continuing to grow over time, at least at the average of overall AST. And the areas that we have capabilities tied to vertical integration -- vertical integrated offerings, and critical in-chamber tools expected to still grow and continue to grow, right? So as a percentage of the total, we expect our precision cleaning to grow a little bit faster, but both segments driving good strong growth.

Ian Zaffino

Okay. So then I guess that will be a follow-up here is how do we then think about margins given, kind of, what we're seeing out there as far as maybe mix being moved around a little bit more than what it was previously and then maybe, kind of, not a ceiling, but what would be maybe a target margin that we can, kind of, look at as this business, kind of, develops and matures?

Joe Bruderek

We've said as part of Enpro 3.0, we believe AST has the ability to be a 30% EBITDA segment margin over time, right? And we were able to maintain 20% under all market conditions over the last several years, and we're focused on marching those margins up in the high 20s, low 30% in the Enpro 3.0 time horizon. We've seen good strong margin performance on the incremental volume that we've seen so far in the last couple of quarters.

And so if you think about what are the key -- where are the key areas that's going to come from to march it up to that 30%, it's going to come from volume leverage, continued growth in our key areas of strength that are going to drive the overall margin rate and mix up and some of the self-help 80/20 portfolio and asset optimization opportunities that we're going to have over the midterm there.

So we've seen good performance on the incremental margins of at least 40% on the volume that is coming through this ramp, and we're focused on the other 2 levers to, kind of, march up to that 30% over time.

Operator

[Operator Instructions] Our next question is coming from Steve Ferazani from Sidoti.

Steve Ferazani

Appreciate all the detail on the call. Joe, the net leverage down back to certainly the lower end we've seen over the last several years, it's about a year since you made the last -- the Overlook and the AlpHa acquisitions. 4Q typically is a very strong cash flow quarter for you guys. Any shifts in how you're thinking about capital allocation, how M&A fits in that, even, sort of, if we can look at 2027, I know it sounds like CapEx will be a little bit higher. But any shift in how you're thinking about that given the incredible strength in cash flow generation and low leverage you're back at?

Joe Bruderek

Yes. Thanks for the question, Steve. The short answer is no. No shift in capital allocation priorities. We continue to have really great opportunities to invest in organic growth in areas that meet our return thresholds and continue to drive customer support and customer advancement in a lot of key areas. So that still remains our #1 priority. We're generating good cash, as you said. And so we have the opportunity to continue to pay down debt with excess cash in the meantime.

But we are focused on critical M&A that advances our opportunities in multiple segments that is going to help us drive additional growth and meet our overall margin and return thresholds. We have a number of opportunities in our pipeline in some of our key growth segments similar to what you mentioned and where we invested in AMI and AlpHa and Overlook. And we're just looking for the right opportunity and the right timing for those to come to fruition. We feel good about the pipeline, and that continues to be a priority for cash after organic CapEx growth investment.

Steve Ferazani

In some of these nicher growth markets that you've been focused on in the last couple of years, I know compositional analysis, biopharma is in there. What's the market like? Would they typically be -- and beyond those markets, are you typically looking at smaller acquisitions? And given the growth opportunities, what's the pricing outlook look like for what you might be exploring?

Eric Vaillancourt

We look at things every week. And I mean, literally, I think we looked at 160-something this year as an example. So we just remain very, very disciplined and very focused on what we like. And we track things for a long period of time. Some of the opportunities in the pipeline have been tracking since 2012. So we like to get to know the people we're thinking about and we know the business and we spend our time doing our research. And so there's opportunities, but pricing is going to be -- the businesses we want are going to be competitive because we are buying good businesses. We're not buying fixer-uppers. At the same time, we remain disciplined and focused on what we're going to do. So we have lots of opportunities and just find them very, very selective. And so...

James Gentile

There's no question that over the last several years, Enpro's reputation as a credible acquirer has accelerated. I think our integration processes, the companies that have joined our portfolio and their experience joining Enpro has been differentiated, and we are getting much more interest from sellers as well, which is good to see.

Operator

We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

James Gentile

The energy around our company is exciting. We have strong momentum in the portfolio, and we look forward to updating you in February when we report Q4 and guide for 2027. We look forward to talking to you all as we go to the Baird conference and visit with many of you into the end of the year. Thanks.

Eric Vaillancourt

Thanks, everyone.

Operator

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.