NYSE:AP Ampco-Pittsburgh Q1 2023 Earnings Report $1.96 -0.08 (-3.68%) Closing price 04/25/2025 03:58 PM EasternExtended Trading$1.97 +0.00 (+0.25%) As of 04/25/2025 05:46 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings History Ampco-Pittsburgh EPS ResultsActual EPS$0.03Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/AAmpco-Pittsburgh Revenue ResultsActual Revenue$104.80 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/AAmpco-Pittsburgh Announcement DetailsQuarterQ1 2023Date5/15/2023TimeN/AConference Call DateTuesday, May 16, 2023Conference Call Time10:30AM ETUpcoming EarningsAmpco-Pittsburgh's Q1 2025 earnings is scheduled for Monday, May 12, 2025, with a conference call scheduled on Tuesday, May 13, 2025 at 10:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Earnings HistoryCompany ProfilePowered by Ampco-Pittsburgh Q1 2023 Earnings Call TranscriptProvided by QuartrMay 16, 2023 ShareLink copied to clipboard.There are 8 speakers on the call. Operator00:00:01Welcome to the Ampco Pittsburgh Corporation First Quarter 2023 Earnings Results Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I'd now like to turn the conference over to Kim Ngoc, Corporate Secretary, please go ahead. Speaker 100:00:40Thank you, Vaishnavi, and good morning to everyone joining us on today's Q1 2023 Joining me today are Brett McBrayer, our Chief Executive Officer and Mike McAuley, Senior Vice President and Chief Financial Officer. Also joining us on the call today are Sam Lyon, President of Union Electric Steel Corporation and Dave Anderson, President of Aaron Liquid Systems Corporation. Before we begin, I would like to remind everyone that participants on this call Many statements or comments that are forward looking and may include financial projections or other statements of the Corporation's plans, Objectives, expectations or intentions. These matters involve certain risks and uncertainties, many of which are outside the Corporation's control. The Corporation's actual results may differ significantly from those projected or suggested in any forward looking statements due to various risk factors, including those discussed in the corporation's most recently filed Form 10 ks and subsequent filings with the Securities and Exchange Commission. Speaker 100:01:47We do not undertake any obligation to update or otherwise release publicly any revision to our forward looking statements. A replay of this call will be posted on our website later today. To access the earnings release or the webcast replay, Please consult the Investors section of our website at amcopgh.com. With that, I will turn the call over to Brett McBrayer, Ampco Pittsburgh CEO, Brett? Speaker 200:02:14Thank you, Kim. Good morning and thank you for joining our call. As shared in yesterday's press release, Ampco Pittsburgh achieved a net income of $700,000 or $0.03 per share in quarter 1 of 2023. Sales were up 11% versus the prior year and 12% over the prior quarter. We experienced backlog growth in both our Forged and Cast Engineered Products and Air and Liquid Processing segments With total backlog up 16% versus the prior year and 3% over the prior quarter, our Air and Liquid Processing segment has now We've seen 5 consecutive quarters of record backlog. Speaker 200:02:55We continue to see strong demand for our products in North America with softness continuing in Europe. The recent announced blast furnace restarts, however, in Europe indicate demand may be recovering. Our pricing actions and expanded surcharges continue to improve the performance of our Forged and Cast Engineered Products segment. Our U. S. Speaker 200:03:15Equipment modernization program remains on track with completion expected in the Q4 of this year. From a health and safety perspective, our company had a solid quarter as we continue to focus on our goal of 0 injuries in the workplace. David Anderson, President of Air and Liquid Systems will now discuss his segment's performance in more detail. Speaker 300:03:38Thank you, Brett. Good morning. In the Q1 of 2023, we continued to see the positive results of our strategic growth plan. One of our initiatives was to strengthen our sales force, both internally and for our 3rd party representative network. The results of this quarter show the tremendous progress we have made with our sales teams. Speaker 300:03:59Sales increased 42% versus prior year as all three divisions achieved double digit sales growth. Q1 sales of $28,000,000 was the highest for any quarter in the last 10 years. Even with the higher sales level, our backlog grew once Again to a new record this quarter as order activity continues to be very strong. This means we have now achieved a new record backlog for 5 consecutive quarters. As our sales have continued to grow, we have also addressed our manufacturing capacity to make sure our production capabilities allow our sales growth Plans to continue forward. Speaker 300:04:36On April 1, we leased 61,000 square feet of additional manufacturing space in Lynchburg, Virginia that was needed as a direct result of the sales growth we are seeing at both our Aerofin and Buffalo Air Handling businesses. Operating income for Q1 was $3,000,000 versus an income of $2,700,000 in the prior year. The prior year income included $700,000 in income for a one time employee benefit policy adjustment. Excluding the one time adjustment shows operating income growth of 50% versus prior year. With a record backlog, Quarterly revenue at the highest level in more than a decade and increased manufacturing capabilities, Air Liquide is well positioned to continue forward with our growth plans in Thank you, Dave. Speaker 200:05:27I will now turn the call over to Sam Lyon, President of Foraging, Cast Engine and Products segment. Speaker 400:05:32Thanks, Brett, and good morning. We had a strong Q1 with an operating income of $2,200,000 versus a loss of $400,000 in Q1 of 2022. The significant improvement in operating results year over year primarily reflects our pricing strategy initiated in January of 'twenty two, implementing surcharges for energy and transportation and base price increases. In 2022, the world faced unprecedented Inflationary headwinds fueled by post pandemic demand issues, supply chain restrictions, the Russian Ukraine conflict and the ensuing Europe Energy crisis. In Q1 of 2022, sales pricing initiatives lagged our increased costs, particularly for raw materials, energy, transportation and supplies. Speaker 400:06:19By June of 2022, inflation hit a 41 year high of approximately 9% for moderating. Counter to the instability of 2022, the Q1 of 2023 benefited from the tailwind associated with deflation and positive Surcharge recovery as higher cost inventory was sold through. In the forged engineered products area referred to as FEP, A softening of the energy market, particularly in the U. S, lowered overall demand. Lower demand for oil and gas, High year end inventory levels at our customers and increased imports have resulted in an approximately 70% decrease in the backlog The World Steel Association estimates that the global steel demand, excluding China, will increase by 2.3% in 2023. Speaker 400:07:20Our customer base states similar sentiments as evidenced by the restart of 7 blast furnaces, the modernization of 2 additional blast furnaces and investments in new aluminum rolling mills in the United States. Our forge roll backlog is robust, showing a 26% year over year increase is reflective of a positive North American steel industry outlook driven by increased demand from the automotive industry. Our total backlog was $258,000,000 at the end of Q1, the 3rd quarter of sequential growth in the highest of the last eight quarters. For 2024, the World Steel Association estimates the demand to increase by another 2.5% in the U. S. Speaker 400:08:01With Europe growing by a robust 5.6%. Pricing negotiations are complete for 2024 for many of our larger roll customers. We are continuing to see a robust demand for our forged rules and steady demand for our cast rules made in Europe. The ability to increase pricing has remained strong as the market recovers and our customers desire to purchase locally to protect their supply security. In our Bergestahl facility, we have installed the first of 5 new machining centers as part of our capital expansion and improvement program in the U. Speaker 400:08:35S. We are currently in the testing phase of the equipment and the preliminary results are in line with our expectations. We are excited about the forthcoming Positive impact on our operating results as we achieve the commissioning of the first machining tool. The remaining 4 machine centers And the new furnaces are scheduled to be commissioned by year end. Speaker 200:08:56Thank you, Sam. At this time, Mike McAuley, our Chief Financial Officer, will share more detail regarding our Speaker 500:09:04Thank you, Brett. As shared in the press release and shown in the corporation's Form 10 Q filed last week, Ampco Pittsburgh recorded net income in the Q1 of 2023 of $700,000 or $0.03 per diluted share. This compares to an approximate breakeven position in the prior year. Ampco's net sales for the Q1 of 2023 were $104,800,000 an increase of approximately 11% to net sales for the Q1 of 2022. Net sales in the Air and Liquid Processing segment grew 42% year over year, driven primarily by higher shipments of heat exchange coils and air handling units. Speaker 500:09:47Net sales for the forged and cast engineered product segment in the first Quarter of 2023 were approximately 3% higher than the prior year period, primarily due to higher roll pricing and shipment volume, offset in part by a decline in shipments of other forged engineered products and an unfavorable foreign exchange translation effect. Income from operations for the Q1 of 2023 was $2,000,000 This compares to a loss from operations in the prior year quarter of $500,000 Higher pricing and overall shipment volumes were the primary drivers for the improvement, despite the impact of lower manufacturing overhead cost absorption dollars benefit for a change in an employee benefit policy, which reduced SG and A as well as cost of sales in Q1 of last year. Therefore, the underlying improvement in operating results versus prior year was even larger on a non GAAP basis. Interest expense for the quarter increased compared to prior year due to a rise in both total debt and interest rates. Backlog at March 31, 2023 of $380,600,000 increased approximately 3% sequentially and rose 16% from a year ago. Speaker 500:11:11Backlog for the Forged and Cast Engineered product segment increased approximately 2% sequentially And approximately 7% year over year, while backlog for the Air and Liquid Processing segment continues to be at record highs, up 5% sequentially and up 40% versus prior year. Net cash flows used in operating activities was approximately $4,300,000 for Q1 2023, primarily in support of working capital. This represents a significant improvement from Q1 of 2022 due to improved operating results and lower investment and overall working capital in the current year quarter. Capital expenditures for the Q1 of 2023 were $3,700,000 primarily for the Forged and Cast Engineered Products segment. At March 31, 2023, the Corporation's balance sheet and liquidity position included cash on hand of $6,100,000 and undrawn availability Operator, at this time, we would now like to open the line for questions. Operator00:12:22Thank you. We will now Our first question comes from Justin Bergner with Gabelli Funds. Please go ahead. Speaker 600:12:57Hi, Brett, Mike and rest of the team. Speaker 500:13:00Hi, Justin. Hi, Justin. Speaker 600:13:03Couple of just clarifying questions. So, I guess to start, I thought I heard you talking about 2024 pricing contracts on the Forged in Engineered Product side of the business, did I hear that correctly that you're entering into contracts for 2024 or was that just the consummation of 2023 contracts? Speaker 400:13:30Justin, this is Sam. Yes, so all the big customers, ArcelorMittal, U. S. Steel, Cleveland Cliffs, People like that. So we are currently in negotiations for 2024 and many of those are allocations and pricing are established. Speaker 600:13:47And is that earlier than normal to begin at this stage in the year? Speaker 400:13:52No, it's actually it's a little earlier than last year just because Lead times are going out, but it's typically done around this time of the year or even a little earlier sometimes. Speaker 600:14:03Okay. Great. And then the comment I think you made about the projected demand increase In the U. S. And Europe, those were 2024 numbers as well? Speaker 400:14:14Correct. Speaker 600:14:15Okay. Switching to sort of more general financial questions, the CapEx number, did I hear it was $23,000,000 or did I hear too high of a number and what is the projected current sort of anticipation for the 2023 year? Speaker 500:14:36For the current quarter, I think we quoted, it's $3,700,000 for Q1. Speaker 600:14:43Okay, thank you. Speaker 500:14:45Yes, That was total CapEx. And then for the full year, we are projecting in the range of 20 $2,000,000 or Speaker 600:14:58so. Okay. That was going Speaker 500:15:01to be stepping up in the next couple of quarters, Coincident with the delivery of the Machining assets that Sam described. Speaker 600:15:14Okay. Yes, and I want to turn my attention to those. If all the machining assets are delivered by year end. How many quarters thereafter should one expect those assets to be operating You know it, normal efficiencies or run rate efficiencies? Speaker 400:15:32Probably 6 weeks to 3 months kind of, yes, roughly a quarter to get them up and running fully. Speaker 600:15:42So the full operating efficiency benefit should be sort of in the numbers sort of by the second quarter or The mid part of 2024? Speaker 500:15:55Yes. Speaker 600:15:56Okay. Great. Thank you. Speaker 700:16:00Thanks, Justin. Operator00:16:07The next question comes from David Wright with Henry Investment Trust. Please go ahead. Speaker 700:16:14Hi, good morning. One for Dave. On the additional space in Lynchburg, will you have much CapEx to get that up and going? Speaker 300:16:26David, no. There's not a lot of CapEx involved in it. Basically putting in a crane is all we need to do. Everything else is really minor. So there is not a lot of CapEx for it. Speaker 700:16:40And how about labor to staff, Is that going to be much of an issue? Speaker 300:16:46No. We already have a good bit of the labor. They've been training in recent weeks. So we Expect we'll hit the ground running pretty quickly. Speaker 700:16:56That's great. Sam, I wanted to ask on Forogen Engineered Products, the drop in revenue in the Q1 is noticeable. And thanks for your commentary about The causes, I wondered what could we be thinking about for the entire year? Could we get to 20 '22 numbers or even 2021 numbers or would it could it remain muted down here? Speaker 400:17:31Let's see. I'm just looking at a file here. One second, David. Speaker 500:17:39I mean, go ahead, Mike. We think that for the full year of 2023, we should probably We should be exceeding 2022 sales for the Forged and Cast Engineered Products segment for full year 'twenty three versus 2022, David. Yes. Speaker 700:17:56Right. But I was asking about FEP, which was like Speaker 500:18:00Oh, FEP. Speaker 700:18:01Last year, yes, just like $5,000,000 in the Q1 of this year. Speaker 400:18:06Yes. We anticipate that to increase in the second half, but that's kind of yet to be seen. There are the frac spreads are increasing, the inventory is diminishing, we're starting to see activity. So We would fully expect next year for sure to be higher than the 2022 number, but again, So that's yet to be seen. Speaker 700:18:32Right. So if we went back 3 or 4 quarters, This was kind of an important part of the turnaround in that excess capacity could be used And you were going to step up the marketing efforts. I'm wondering, as we are today with New equipment starting to come in and the rolled business being stronger and I guess more profitable. Are these forge engineered products still as important at the margin? Speaker 400:19:07Yes. They are still in our plans because it's number 1, it diversifies us and allows some different market When the rules may be down a little bit, that would be up a bit. So it's still important to us, so we're still going after it. But you are right, the increase in the Forge rule particularly yes, the Forge rule in the United States is offset the drop in the FPP at this point in time, but we're not Stopping our efforts to grow that side Speaker 500:19:34of the business. But David, we are staging our receipts of equipment And prioritizing our machine tools, our machining assets first and the furnaces Later. So we acknowledge that there's been a market factor going on in oil and gas. And so what's coming in and what's going in first are the large lays on the furnaces are coming later, That's accurate. Speaker 700:20:08Thanks. And then 2 for you, Mike. SG and A costs in the Q1, is that going to be run rate for the year? Speaker 500:20:26I don't think that we have an unusual quarter in that regard. I think the only major Variable would probably be any movement in foreign exchange or if we have higher Commissions on depending on where forged engineered products might go, depending on that last conversation we just had about that question, Those would be the variables in SG and A. Speaker 700:20:51Okay. And then lastly, any sense of When the debt might peak the absolute balance? Speaker 500:21:02I expect the debt to peak probably by Q4 of this year Based on the CapEx and the timing of that, and I think it will probably be Reaching a peak of 119, 118 something like that. Speaker 700:21:23Okay. That's great. Thanks for answering these questions. And hey, that's a black ink is great and The progress is the issue making. The plan is starting to show up. Speaker 700:21:34So continued good luck there. Speaker 500:21:37Thanks, David. Thanks, David. Operator00:21:42Next, we have a follow-up from Justin Bergner with GabelliSense. Please go ahead. Speaker 600:21:48Thank you. Given the improved profitability of your Fortune Engineered Products segment this quarter, Would it be safe to say that your pricing mechanisms have caught up With your costs as it relates to some of these lagged surcharges or other pricing mechanisms that you might have put through? Or Should we see further improvement on sort of that price cost dynamic as we get into the later quarters this year? Speaker 400:22:21I'd say it's caught up. The and we don't know what's going to happen with some of these things. Right now, The energy market has been pretty stable, as has been the raw materials and scrap some movement, but Right now, it should be, I think, fairly well caught up. I agree. Yes. Speaker 600:22:48Okay. Thank you. Speaker 700:22:49Thanks, Justin. Thanks, Justin. Operator00:22:53As we have no further questions, I would like to turn the conference back over to Brett McSprayer for any closing remarks. Speaker 200:23:03Thank you. Our focus on improving financial performance continues with actions underway to accelerate growth and expand margins. The completion of our equipment modernization anticipated at the end of this year is a significant component of this strategy with full benefits expected to be realized I want to thank our employees for their continued hard work and dedication. Their relentless Focus on improving our business has been impressive. I also want to thank you, our shareholders, for your continued support. Speaker 200:23:35Thank you for joining our call this morning. Operator00:23:42The conference has now concluded. Thank you for your participation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallAmpco-Pittsburgh Q1 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K) Ampco-Pittsburgh Earnings HeadlinesAmpco-Pittsburgh (NYSE:AP) Earns Hold Rating from Analysts at StockNews.comApril 20, 2025 | americanbankingnews.comAmpco-Pittsburgh Corporation (NYSE:AP) Q4 2024 Earnings Call TranscriptMarch 14, 2025 | msn.comTrump purposefully forcing markets to crash…Whether you agree with the plan or not doesn’t matter. It’s happening. The only question is – are you ready for it?April 26, 2025 | Porter & Company (Ad)Ampco-Pittsburgh Corp (AP) Q4 2024 Earnings Call Highlights: Navigating Challenges with ...March 14, 2025 | gurufocus.comQ4 2024 Ampco-Pittsburgh Corp Earnings Call TranscriptMarch 14, 2025 | gurufocus.comAmpco-Pittsburgh Reports 2024 Financial ResultsMarch 14, 2025 | tipranks.comSee More Ampco-Pittsburgh Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Ampco-Pittsburgh? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Ampco-Pittsburgh and other key companies, straight to your email. Email Address About Ampco-PittsburghAmpco-Pittsburgh (NYSE:AP), together with its subsidiaries, engages in manufacture and sale of specialty metal products and customized equipment to commercial and industrial users worldwide. The company operates through Forged and Cast Engineered Products (FCEP); and Air and Liquid Processing (ALP) segments. The FCEP segment produces forged hardened steel rolls, cast rolls and, forged engineered products that are used in cold rolling mills by producers of steel, aluminum, and other metals; cast rolls for hot strip mills, medium/heavy section mills, roughing mills, and plate mills; and forged engineered products for narrow and wide strip and aluminum mills, back-up rolls for narrow strip mills, and leveling rolls and shafts. The ALP segment produces custom-engineered finned tube heat exchange coils and related heat transfer products for various industries, including OEM/commercial, nuclear power generation, and industrial manufacturing; custom-designed air handling systems for institutional, pharmaceutical, and general industrial building markets; and manufacture centrifugal pumps for the fossil fueled power generation, marine defense, and industrial refrigeration industries. Ampco-Pittsburgh Corporation was incorporated in 1929 and is headquartered in Carnegie, Pennsylvania.View Ampco-Pittsburgh ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Market Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Tesla Earnings Miss, But Musk Refocuses and Bulls ReactQualcomm’s Range Narrows Ahead of Earnings as Bulls Step In Upcoming Earnings Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Starbucks (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Regeneron Pharmaceuticals (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 8 speakers on the call. Operator00:00:01Welcome to the Ampco Pittsburgh Corporation First Quarter 2023 Earnings Results Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I'd now like to turn the conference over to Kim Ngoc, Corporate Secretary, please go ahead. Speaker 100:00:40Thank you, Vaishnavi, and good morning to everyone joining us on today's Q1 2023 Joining me today are Brett McBrayer, our Chief Executive Officer and Mike McAuley, Senior Vice President and Chief Financial Officer. Also joining us on the call today are Sam Lyon, President of Union Electric Steel Corporation and Dave Anderson, President of Aaron Liquid Systems Corporation. Before we begin, I would like to remind everyone that participants on this call Many statements or comments that are forward looking and may include financial projections or other statements of the Corporation's plans, Objectives, expectations or intentions. These matters involve certain risks and uncertainties, many of which are outside the Corporation's control. The Corporation's actual results may differ significantly from those projected or suggested in any forward looking statements due to various risk factors, including those discussed in the corporation's most recently filed Form 10 ks and subsequent filings with the Securities and Exchange Commission. Speaker 100:01:47We do not undertake any obligation to update or otherwise release publicly any revision to our forward looking statements. A replay of this call will be posted on our website later today. To access the earnings release or the webcast replay, Please consult the Investors section of our website at amcopgh.com. With that, I will turn the call over to Brett McBrayer, Ampco Pittsburgh CEO, Brett? Speaker 200:02:14Thank you, Kim. Good morning and thank you for joining our call. As shared in yesterday's press release, Ampco Pittsburgh achieved a net income of $700,000 or $0.03 per share in quarter 1 of 2023. Sales were up 11% versus the prior year and 12% over the prior quarter. We experienced backlog growth in both our Forged and Cast Engineered Products and Air and Liquid Processing segments With total backlog up 16% versus the prior year and 3% over the prior quarter, our Air and Liquid Processing segment has now We've seen 5 consecutive quarters of record backlog. Speaker 200:02:55We continue to see strong demand for our products in North America with softness continuing in Europe. The recent announced blast furnace restarts, however, in Europe indicate demand may be recovering. Our pricing actions and expanded surcharges continue to improve the performance of our Forged and Cast Engineered Products segment. Our U. S. Speaker 200:03:15Equipment modernization program remains on track with completion expected in the Q4 of this year. From a health and safety perspective, our company had a solid quarter as we continue to focus on our goal of 0 injuries in the workplace. David Anderson, President of Air and Liquid Systems will now discuss his segment's performance in more detail. Speaker 300:03:38Thank you, Brett. Good morning. In the Q1 of 2023, we continued to see the positive results of our strategic growth plan. One of our initiatives was to strengthen our sales force, both internally and for our 3rd party representative network. The results of this quarter show the tremendous progress we have made with our sales teams. Speaker 300:03:59Sales increased 42% versus prior year as all three divisions achieved double digit sales growth. Q1 sales of $28,000,000 was the highest for any quarter in the last 10 years. Even with the higher sales level, our backlog grew once Again to a new record this quarter as order activity continues to be very strong. This means we have now achieved a new record backlog for 5 consecutive quarters. As our sales have continued to grow, we have also addressed our manufacturing capacity to make sure our production capabilities allow our sales growth Plans to continue forward. Speaker 300:04:36On April 1, we leased 61,000 square feet of additional manufacturing space in Lynchburg, Virginia that was needed as a direct result of the sales growth we are seeing at both our Aerofin and Buffalo Air Handling businesses. Operating income for Q1 was $3,000,000 versus an income of $2,700,000 in the prior year. The prior year income included $700,000 in income for a one time employee benefit policy adjustment. Excluding the one time adjustment shows operating income growth of 50% versus prior year. With a record backlog, Quarterly revenue at the highest level in more than a decade and increased manufacturing capabilities, Air Liquide is well positioned to continue forward with our growth plans in Thank you, Dave. Speaker 200:05:27I will now turn the call over to Sam Lyon, President of Foraging, Cast Engine and Products segment. Speaker 400:05:32Thanks, Brett, and good morning. We had a strong Q1 with an operating income of $2,200,000 versus a loss of $400,000 in Q1 of 2022. The significant improvement in operating results year over year primarily reflects our pricing strategy initiated in January of 'twenty two, implementing surcharges for energy and transportation and base price increases. In 2022, the world faced unprecedented Inflationary headwinds fueled by post pandemic demand issues, supply chain restrictions, the Russian Ukraine conflict and the ensuing Europe Energy crisis. In Q1 of 2022, sales pricing initiatives lagged our increased costs, particularly for raw materials, energy, transportation and supplies. Speaker 400:06:19By June of 2022, inflation hit a 41 year high of approximately 9% for moderating. Counter to the instability of 2022, the Q1 of 2023 benefited from the tailwind associated with deflation and positive Surcharge recovery as higher cost inventory was sold through. In the forged engineered products area referred to as FEP, A softening of the energy market, particularly in the U. S, lowered overall demand. Lower demand for oil and gas, High year end inventory levels at our customers and increased imports have resulted in an approximately 70% decrease in the backlog The World Steel Association estimates that the global steel demand, excluding China, will increase by 2.3% in 2023. Speaker 400:07:20Our customer base states similar sentiments as evidenced by the restart of 7 blast furnaces, the modernization of 2 additional blast furnaces and investments in new aluminum rolling mills in the United States. Our forge roll backlog is robust, showing a 26% year over year increase is reflective of a positive North American steel industry outlook driven by increased demand from the automotive industry. Our total backlog was $258,000,000 at the end of Q1, the 3rd quarter of sequential growth in the highest of the last eight quarters. For 2024, the World Steel Association estimates the demand to increase by another 2.5% in the U. S. Speaker 400:08:01With Europe growing by a robust 5.6%. Pricing negotiations are complete for 2024 for many of our larger roll customers. We are continuing to see a robust demand for our forged rules and steady demand for our cast rules made in Europe. The ability to increase pricing has remained strong as the market recovers and our customers desire to purchase locally to protect their supply security. In our Bergestahl facility, we have installed the first of 5 new machining centers as part of our capital expansion and improvement program in the U. Speaker 400:08:35S. We are currently in the testing phase of the equipment and the preliminary results are in line with our expectations. We are excited about the forthcoming Positive impact on our operating results as we achieve the commissioning of the first machining tool. The remaining 4 machine centers And the new furnaces are scheduled to be commissioned by year end. Speaker 200:08:56Thank you, Sam. At this time, Mike McAuley, our Chief Financial Officer, will share more detail regarding our Speaker 500:09:04Thank you, Brett. As shared in the press release and shown in the corporation's Form 10 Q filed last week, Ampco Pittsburgh recorded net income in the Q1 of 2023 of $700,000 or $0.03 per diluted share. This compares to an approximate breakeven position in the prior year. Ampco's net sales for the Q1 of 2023 were $104,800,000 an increase of approximately 11% to net sales for the Q1 of 2022. Net sales in the Air and Liquid Processing segment grew 42% year over year, driven primarily by higher shipments of heat exchange coils and air handling units. Speaker 500:09:47Net sales for the forged and cast engineered product segment in the first Quarter of 2023 were approximately 3% higher than the prior year period, primarily due to higher roll pricing and shipment volume, offset in part by a decline in shipments of other forged engineered products and an unfavorable foreign exchange translation effect. Income from operations for the Q1 of 2023 was $2,000,000 This compares to a loss from operations in the prior year quarter of $500,000 Higher pricing and overall shipment volumes were the primary drivers for the improvement, despite the impact of lower manufacturing overhead cost absorption dollars benefit for a change in an employee benefit policy, which reduced SG and A as well as cost of sales in Q1 of last year. Therefore, the underlying improvement in operating results versus prior year was even larger on a non GAAP basis. Interest expense for the quarter increased compared to prior year due to a rise in both total debt and interest rates. Backlog at March 31, 2023 of $380,600,000 increased approximately 3% sequentially and rose 16% from a year ago. Speaker 500:11:11Backlog for the Forged and Cast Engineered product segment increased approximately 2% sequentially And approximately 7% year over year, while backlog for the Air and Liquid Processing segment continues to be at record highs, up 5% sequentially and up 40% versus prior year. Net cash flows used in operating activities was approximately $4,300,000 for Q1 2023, primarily in support of working capital. This represents a significant improvement from Q1 of 2022 due to improved operating results and lower investment and overall working capital in the current year quarter. Capital expenditures for the Q1 of 2023 were $3,700,000 primarily for the Forged and Cast Engineered Products segment. At March 31, 2023, the Corporation's balance sheet and liquidity position included cash on hand of $6,100,000 and undrawn availability Operator, at this time, we would now like to open the line for questions. Operator00:12:22Thank you. We will now Our first question comes from Justin Bergner with Gabelli Funds. Please go ahead. Speaker 600:12:57Hi, Brett, Mike and rest of the team. Speaker 500:13:00Hi, Justin. Hi, Justin. Speaker 600:13:03Couple of just clarifying questions. So, I guess to start, I thought I heard you talking about 2024 pricing contracts on the Forged in Engineered Product side of the business, did I hear that correctly that you're entering into contracts for 2024 or was that just the consummation of 2023 contracts? Speaker 400:13:30Justin, this is Sam. Yes, so all the big customers, ArcelorMittal, U. S. Steel, Cleveland Cliffs, People like that. So we are currently in negotiations for 2024 and many of those are allocations and pricing are established. Speaker 600:13:47And is that earlier than normal to begin at this stage in the year? Speaker 400:13:52No, it's actually it's a little earlier than last year just because Lead times are going out, but it's typically done around this time of the year or even a little earlier sometimes. Speaker 600:14:03Okay. Great. And then the comment I think you made about the projected demand increase In the U. S. And Europe, those were 2024 numbers as well? Speaker 400:14:14Correct. Speaker 600:14:15Okay. Switching to sort of more general financial questions, the CapEx number, did I hear it was $23,000,000 or did I hear too high of a number and what is the projected current sort of anticipation for the 2023 year? Speaker 500:14:36For the current quarter, I think we quoted, it's $3,700,000 for Q1. Speaker 600:14:43Okay, thank you. Speaker 500:14:45Yes, That was total CapEx. And then for the full year, we are projecting in the range of 20 $2,000,000 or Speaker 600:14:58so. Okay. That was going Speaker 500:15:01to be stepping up in the next couple of quarters, Coincident with the delivery of the Machining assets that Sam described. Speaker 600:15:14Okay. Yes, and I want to turn my attention to those. If all the machining assets are delivered by year end. How many quarters thereafter should one expect those assets to be operating You know it, normal efficiencies or run rate efficiencies? Speaker 400:15:32Probably 6 weeks to 3 months kind of, yes, roughly a quarter to get them up and running fully. Speaker 600:15:42So the full operating efficiency benefit should be sort of in the numbers sort of by the second quarter or The mid part of 2024? Speaker 500:15:55Yes. Speaker 600:15:56Okay. Great. Thank you. Speaker 700:16:00Thanks, Justin. Operator00:16:07The next question comes from David Wright with Henry Investment Trust. Please go ahead. Speaker 700:16:14Hi, good morning. One for Dave. On the additional space in Lynchburg, will you have much CapEx to get that up and going? Speaker 300:16:26David, no. There's not a lot of CapEx involved in it. Basically putting in a crane is all we need to do. Everything else is really minor. So there is not a lot of CapEx for it. Speaker 700:16:40And how about labor to staff, Is that going to be much of an issue? Speaker 300:16:46No. We already have a good bit of the labor. They've been training in recent weeks. So we Expect we'll hit the ground running pretty quickly. Speaker 700:16:56That's great. Sam, I wanted to ask on Forogen Engineered Products, the drop in revenue in the Q1 is noticeable. And thanks for your commentary about The causes, I wondered what could we be thinking about for the entire year? Could we get to 20 '22 numbers or even 2021 numbers or would it could it remain muted down here? Speaker 400:17:31Let's see. I'm just looking at a file here. One second, David. Speaker 500:17:39I mean, go ahead, Mike. We think that for the full year of 2023, we should probably We should be exceeding 2022 sales for the Forged and Cast Engineered Products segment for full year 'twenty three versus 2022, David. Yes. Speaker 700:17:56Right. But I was asking about FEP, which was like Speaker 500:18:00Oh, FEP. Speaker 700:18:01Last year, yes, just like $5,000,000 in the Q1 of this year. Speaker 400:18:06Yes. We anticipate that to increase in the second half, but that's kind of yet to be seen. There are the frac spreads are increasing, the inventory is diminishing, we're starting to see activity. So We would fully expect next year for sure to be higher than the 2022 number, but again, So that's yet to be seen. Speaker 700:18:32Right. So if we went back 3 or 4 quarters, This was kind of an important part of the turnaround in that excess capacity could be used And you were going to step up the marketing efforts. I'm wondering, as we are today with New equipment starting to come in and the rolled business being stronger and I guess more profitable. Are these forge engineered products still as important at the margin? Speaker 400:19:07Yes. They are still in our plans because it's number 1, it diversifies us and allows some different market When the rules may be down a little bit, that would be up a bit. So it's still important to us, so we're still going after it. But you are right, the increase in the Forge rule particularly yes, the Forge rule in the United States is offset the drop in the FPP at this point in time, but we're not Stopping our efforts to grow that side Speaker 500:19:34of the business. But David, we are staging our receipts of equipment And prioritizing our machine tools, our machining assets first and the furnaces Later. So we acknowledge that there's been a market factor going on in oil and gas. And so what's coming in and what's going in first are the large lays on the furnaces are coming later, That's accurate. Speaker 700:20:08Thanks. And then 2 for you, Mike. SG and A costs in the Q1, is that going to be run rate for the year? Speaker 500:20:26I don't think that we have an unusual quarter in that regard. I think the only major Variable would probably be any movement in foreign exchange or if we have higher Commissions on depending on where forged engineered products might go, depending on that last conversation we just had about that question, Those would be the variables in SG and A. Speaker 700:20:51Okay. And then lastly, any sense of When the debt might peak the absolute balance? Speaker 500:21:02I expect the debt to peak probably by Q4 of this year Based on the CapEx and the timing of that, and I think it will probably be Reaching a peak of 119, 118 something like that. Speaker 700:21:23Okay. That's great. Thanks for answering these questions. And hey, that's a black ink is great and The progress is the issue making. The plan is starting to show up. Speaker 700:21:34So continued good luck there. Speaker 500:21:37Thanks, David. Thanks, David. Operator00:21:42Next, we have a follow-up from Justin Bergner with GabelliSense. Please go ahead. Speaker 600:21:48Thank you. Given the improved profitability of your Fortune Engineered Products segment this quarter, Would it be safe to say that your pricing mechanisms have caught up With your costs as it relates to some of these lagged surcharges or other pricing mechanisms that you might have put through? Or Should we see further improvement on sort of that price cost dynamic as we get into the later quarters this year? Speaker 400:22:21I'd say it's caught up. The and we don't know what's going to happen with some of these things. Right now, The energy market has been pretty stable, as has been the raw materials and scrap some movement, but Right now, it should be, I think, fairly well caught up. I agree. Yes. Speaker 600:22:48Okay. Thank you. Speaker 700:22:49Thanks, Justin. Thanks, Justin. Operator00:22:53As we have no further questions, I would like to turn the conference back over to Brett McSprayer for any closing remarks. Speaker 200:23:03Thank you. Our focus on improving financial performance continues with actions underway to accelerate growth and expand margins. The completion of our equipment modernization anticipated at the end of this year is a significant component of this strategy with full benefits expected to be realized I want to thank our employees for their continued hard work and dedication. Their relentless Focus on improving our business has been impressive. I also want to thank you, our shareholders, for your continued support. Speaker 200:23:35Thank you for joining our call this morning. Operator00:23:42The conference has now concluded. Thank you for your participation. You may now disconnect.Read morePowered by