NYSE:AP Ampco-Pittsburgh Q3 2024 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-$0.10Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/AAmpco-Pittsburgh Revenue ResultsActual Revenue$96.17 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/AAmpco-Pittsburgh Announcement DetailsQuarterQ3 2024Date11/12/2024TimeBefore Market OpensConference Call DateTuesday, November 12, 2024Conference 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)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Ampco-Pittsburgh Q3 2024 Earnings Call TranscriptProvided by QuartrNovember 12, 2024 ShareLink copied to clipboard.There are 9 speakers on the call. Operator00:00:00Good day, and welcome to the Ampco Pittsburgh Corporation Third Quarter 20 24 Earnings Results Conference Call. All participants will be in a listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Ms. Kim Knox, Corporate Secretary. Operator00:00:31Please go ahead, ma'am. Speaker 100:00:33Thank you, and good morning to everyone joining us on today's Q3 2024 conference call. Joining me today are Brett McBrayer, our Chief Executive Officer and Mike McAuley, Senior Vice President, Chief Financial Officer and Treasurer. Also joining us on the call today are Sam Lyon, President of Union Electric Steel Corporation and Dave Anderson, President of Air and Liquid Systems Corporation. Before we begin, I would like to remind everyone that participants on this call may make 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. Speaker 100:01:21The 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 in subsequent filings with the Securities and Exchange Commission. We 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 web site at ampcopgh.com. With that, I would now like to turn the call over to Brett McBrayer, Ampco Pittsburgh's CEO. Speaker 100:02:05Brett? Speaker 200:02:06Thank you, Kim. Good morning and thank you everyone for joining our call. As stated in our press release this morning, Ampco Pittsburgh reported operating income for the 3 9 month period of 2024 of $1,900,000 $7,000,000 Our Q3 performance includes the impact of our seasonal plant shutdowns, Improved margins and operating efficiencies directly related to our recent capital investments in the Forage and Cast Engineered Products segments continues to offset weaker cast roll demand. Additionally, backlog increased for the quarter with recent additions of roll orders for our 2025 order book. We continue to be encouraged by the growth prospects available in our Air and Liquids segment as we improve efficiencies to capture these future opportunities. Speaker 200:02:57I will now turn the call over to David Anderson, President of our Air and Liquids segment for further comments on the quarter's results. Speaker 300:03:04Thank you, Brett. Good morning. Air and Liquid Q3 revenue was consistent with prior year, while year to date revenue increased 13% versus prior year. The year to date increase was primarily due to increased shipments of custom air handling units. The increase was driven by the additional manufacturing capacity achieved by opening the new Virginia facility in mid-twenty 23. Speaker 300:03:28Backlog increased in the quarter due to a significant order for air handlers that was received from the pharmaceutical market. Operating income for Air and Liquid was slightly lower in the quarter versus prior year. The lower income was mainly due to a $200,000 asbestos credit that was received in the prior year. The production equipment that was purchased with the $1,600,000 funding provided by the U. S. Speaker 300:03:54Navy was installed and began to operate in Q3. We are also pleased to announce that Air and Liquid has been approved by the U. S. Navy to receive additional funding to purchase more equipment. This additional funding of $4,000,000 will be used to further modernize our production equipment in our Buffalo facility. Speaker 300:04:14The equipment from this second funding is expected to arrive in our facility in late 2025 and along with the recently installed equipment will significantly upgrade our manufacturing capabilities. We continue to see positive signs in many of the markets we serve. Recent announcements to reopen 2 decommissioned U. S. Nuclear plants seem to show that the U. Speaker 300:04:36S. Power generation market is increasingly embracing nuclear power as an answer for capacity issues. This is a key market for our heat exchanger product line. We also recently received our first request to quote a heat exchanger for a small modular reactor. While the modular reactor market is still being developed, there is good potential for these reactors to also add to the future growth in the nuclear market. Speaker 300:05:02The U. S. Navy continues to move forward with long term plans to expand the size of the Navy fleet. The funding for the Navy is doing to increase the U. S. Speaker 300:05:11Industrial base is a clear indicator that they want and need more manufacturing capacity to achieve the fleet expansion goals. And the U. S. Pharmaceutical market continues to expand production capabilities. Air handling orders received from this market in 2024 have already exceeded any prior full year order activity. Speaker 300:05:32We expect to continue to see strong demand in this market over the next several years. Speaker 200:05:38Over the Speaker 300:05:38last 3 years, we have seen significant sales growth due to increasing our production capacity and investing in our sales force. These steps have also positioned Air and Liquid to be able to respond to the future market growth in the years ahead. Speaker 200:05:52Thank you, David. Sam Lyon, President of Foraging and Cast Engineered Products segment, will now share more detail regarding his group's performance. Speaker 400:06:01Thank you, Brett, and good morning, everyone. For the 3 months ending September 30, 2024, net sales for the FCEP segment were $67,200,000 down from $73,600,000 in the same period last year, primarily due to lower rule volumes, reduced FEP shipments and lower surcharge pass throughs. Segment income from operations for Q3 increased to $2,500,000 compared to $1,400,000 in Q3 of 2023, reflecting the benefits of improved pricing and improved efficiencies, which have more than offset the reduction in volume. At the end of the quarter, the segment backlog increased by approximately $4,500,000 from December 31, 2020 3, driven primarily by higher order intake for mill rolls. Our backlog and indicated allocations from our largest customers are positioning us for low to mid single digit volume growth in 2025. Speaker 400:06:57Our recent investments in capital equipment are already contributing to improved operational efficiencies and positioning us well to take advantage of any market recovery. Market conditions remained stable during the Q3. The rural market and Europe over the last quarter was essentially flat due to end customer demand. Following 2 quarters will be lighter in volume for our forge rules, somewhat offset by improved demand in our cast roll facilities. While we continue to experience market stability, European and North American steel producers still operate below pre pandemic levels due to economic uncertainties and increased imports of low priced products from China. Speaker 400:07:39Our customers in the U. S. Have issued petitions for trade action against these imports and we expect the situation to improve soon. In summary, although we face ongoing headwinds related to competitive pressures in Europe and muted on customer Operator00:07:51demand, our pricing Speaker 400:07:51strategy, operational improvements through our recently completed capital upgrades and improvements through our recently completed capital upgrades and increased market share in key areas are mitigating these impacts. As stated, we are seeing improved demand for 2025. We are confident that our continued focus on operational efficiency, customer satisfaction will position us well for future growth and value creation. Speaker 200:08:15Thanks, Sam. I'll now turn the call over to Mike McAuley, our Chief Financial Officer, for more detail regarding our financial performance for the quarter. Speaker 500:08:25Thank you, Brett. As indicated in our Form 10 Q and in our press release issued this morning, Ampco's consolidated net sales for the Q3 of 2024 were $96,200,000 a decline of 5.9% compared to net sales for the Q3 of 2023, due primarily to lower shipment volumes and lower surcharge pass through revenues in the Forged and Gas Engineered Products segment. Air and Liquid Processing segment sales were about flat prior year for the quarter. Income from operations for the Q3 of 2024 was $1,900,000 slightly higher than the prior year quarter, which included a $200,000 insurance recovery. The underlying improvement was principally higher pricing net of surcharges and improved manufacturing cost absorption in the Forest and Cast Engineered Products segment. Speaker 500:09:19The sequential decline in Q3 twenty twenty four operating income versus Q2 2024 was due mainly to lower sales volume and the seasonal plant shutdowns taken in Q3 2024 in the Forged and Cast Engineered Products segment. I would also remind listeners that results for the 9 months ended September 30, 2023 included a $1,900,000 foreign energy credit. So the underlying improvement for the 9 months ended September 30, 2024 is actually greater than as reported results. Corporation's total selling and administrative expenses increased for Q3 2024 compared to Q3 2023, primarily due to higher employee related expense, an increase in exchange rates used to translate the SG and A of our foreign subsidiaries and higher professional fees. Interest expense of approximately $3,000,000 for the quarter increased by $500,000 compared to prior year quarter, primarily due to higher equipment financing debt balance for the new machinery in the U. Speaker 500:10:30S. Forged Business, which was completed and converted to term notes earlier this year, as well as higher average revolving credit facility borrowings to support working capital growth, and higher average interest rates on our floating rate instruments due to interest rate market movements. Other income net declined primarily due to foreign exchange transaction losses recorded in Q3 2024 versus gains recorded in Q3 2023. The income tax provision for both the 3 9 months ended September 30, 2024 increased compared to the prior year periods, primarily due to the establishment of a valuation allowance on the net deferred tax assets of our U. K. Speaker 500:11:18Operations at December 31, 2024. Given its cumulative 3 year loss history due to continued casserole market weakness and the corporation shift of certain casserole production to its more energy efficient plant in Sweden. As a result, the income tax provision in 2024 does not include any benefit for the operating losses of the U. K. Facility. Speaker 500:11:43By comparison, the tax provision for the 3 9 months ended September 30, 2023 included income tax benefits of $600,000 $1,200,000 respectively, for the operating loss of the U. K. The income tax provisions are otherwise comparable with slight differences for income mix by jurisdictions not under valuation allowances. As a result, net loss for Q3 2024 equaled $2,000,000 or $0.10 per diluted share, compared to net income of $800,000 or $0.04 per diluted share for Q3 2023. Net income and earnings per share for the 3 months ended September 30, 2023 included an after tax benefit of $200,000 or $0.01 for the asbestos related credit. Speaker 500:12:38Please note that the net income and basic earnings per share for the 9 months ended September 30, 2023 included after tax benefits of $2,100,000 or $11,000,000 or $0.11 per share associated with the asbestos related insurance credit and the foreign energy credit. Total backlog at September 30, 2024 of $383,600,000 increased approximately $4,600,000 from December 31, 2023, primarily in the Forged and Cast Engineered Products segment, due to an increase in backlog for mill roll orders and to a lesser extent, a higher foreign exchange translation effect. Net cash flows provided by operating activities was $10,600,000 for the 9 months ended September 30, 2024, which compares to a use of $10,300,000 for the 9 months ended September 30, 2023. Primary change item is lower changes in working capital investment between the periods, which more than offset higher pension contributions in the current year period. Capital expenditures for the Q3 of 2024 were $2,900,000 or $2,400,000 net of government grant funding. Speaker 500:14:03We expect full year 2024 CapEx net of grant funding in the range of $9,000,000 to $10,000,000 At September 30, 2024, the September's liquidity position included cash on hand of $11,800,000 and undrawn availability on our revolving credit facility of $20,500,000 Operator, at this time, we would now like to open the line for questions. Operator00:14:31Thank you. We will now begin the question and answer session. And the first question will come from Greg Bennett, Investor. Please go ahead. Speaker 600:15:10I'm sorry, I didn't ask a question. Excuse me. Operator00:15:16The next question will come from David Wright with Henry Investment Trust. Please go ahead. Speaker 600:15:21Hey, good morning, everyone. Operator00:15:24Good morning. Speaker 600:15:27Hey, Brett, it's continued slow progress. It's a big shift to turn around. Kind of a big picture question for you. When the company did the rights offering 4 years ago, you would have had a plan in mind and some certain things that you hope to happen by certain times and you can only control so much for sure. But 4 years into it now, when you look forward, do you have maybe I'll say a better visibility on where you want to get to and when you're going to be able to get there? Speaker 200:16:11David, I believe so. We have some targeted actions, I think, further from a restructuring standpoint that we are focused on for the corporation. Those continue to progress, I think, well, although not at the pace that I think myself nor the team nor our shareholders had hoped they would. But they're still clearly in our focus. There's actions that we obviously are taking, being very mindful of our current debt position and trying to make sure that our focus as we move forward is continue to lower our debt position and don't want to impede on that those efforts. Speaker 200:16:57But yes, I believe the answer to your question is yes. And my hope our focus is within the next 12 to 24 months, we'll be able to be pretty significant for Ampco moving forward. Speaker 600:17:19That's helpful. When you talk about restructuring and you talk about debt, are you working on things that would result in a reduction in the debt, taking a slug out of it? Speaker 200:17:36Yes, yes. That's clearly in our focus and on our radar, Dave. Speaker 600:17:43Yes. Well, that's super, that's super because obviously the interest expense is sort of it's hard to kind of overcome that. So that's great. A question for Sam. Origin Engineered Products, you had hoped that it would maybe be a larger business than it has been lately. Speaker 600:18:13Are there is that really because of fracking? Is that really the major market that would increase revenues in that segment? Speaker 400:18:24David, it's really 2 things. The fracking business is, I'll say, 1 half or a big portion and then the other is just general industrial distribution markets. And both are down significantly. So there we're seeing stable orders. We think next year the distribution markets will increase. Speaker 400:18:50We did actually just receive our first small frac block order within the last 2 weeks for delivery in Q1, which is good, lower volumes, but we haven't had an order for over 18 months probably. But those are the 2 big ones. It's really just the distribution market and then the fracking. Speaker 600:19:12Okay. Well, I'd commend you. It's really great to see consistent operating profit come from your unit. I know it's been a long slog to get there. So that's great. Speaker 600:19:27Well done. 2 for Dave. Dave, good Speaker 300:19:33morning. Good morning, David. Operator00:19:37Can Speaker 600:19:40you quantify like what would a heat exchanger on an SMR be? Is that a $5,000 item or $25,000 item? Speaker 300:19:54It will vary and we're learning that as we go, but no, it would be significantly more than that. Selling a heat exchanger into the nuclear market, you're talking at least a 6 figure unit typically. Speaker 600:20:11Even on an SMR? Speaker 300:20:14We don't know for sure because it's so new, but still they are not inexpensive. Anytime you're doing something in the nuclear market, there's a lot more involved in it. Speaker 600:20:29SMRs, if and well, when they happen, there's they're going to be building more of them a year than they build nuclear reactors in a year. Do you have any production capacity constraints for that project? Speaker 300:20:50Not too much. It's mostly welding and things, which we can add more welders. We have the space to do that. So we can ramp up fairly easily to address that. And that's a problem that I would love to have, honestly. Speaker 300:21:04I think it's a good market potential for us. Speaker 600:21:08Yes. Well, thanks for sharing that opportunity with the call. And then the other question, this kind of below market contract that you've been working off over the course of the year, you've kind of previously said that the last effects of that will be gone by the Q4 of this year. Is that still your thinking? Speaker 300:21:34Yes. I mean, there may be a few minimal ones that carry forward, but the bulk of this issue is going through to the end of this year and then there won't be much left after that. Speaker 600:21:49And what's the can you quantify what the impact of that has been on your operating results? Speaker 300:21:58I would say it's in the estimate of $500,000 to 1,000,000. Speaker 600:22:06Great. Okay. Mike, I don't have anything for you today, but good morning anyway. And thanks very much. Speaker 500:22:15Well, thank you, David. Operator00:22:22Our next question will come from Justin Bergner with Gabriela Funds. Please go ahead. Speaker 700:22:28Hi, good morning, Brett. Good morning, Michael. Good morning. Speaker 200:22:30Good morning. Speaker 700:22:32Could you just review again the cash flow sort of dynamic year to date? How much have you gotten from working capital? Is that mostly exhausted? Or is there more inflows from reducing working capital yet to come? I think, capital yet to come? Speaker 500:22:53So in terms of the cash flow statement in the 10 Q, if we peel apart the cash flow from operating activities, we did see a release of working capital in the quarter and year to date. So that has been part of the story for net cash flow from operating activities, Justin, for sure. One thing we did mention or we talked about on the prepared remarks is that we have made pension contributions in the current year, which have taken a little away from that, but we're still positive about 10.6 percent cash flow from operating activities for the year to date period. Speaker 700:23:40Okay, got you. Second question was regarding the comment about low to mid single digit volume growth for forged and cast engineered products next year. Just is that sort of what you think the market is going to do? Is that what you think you're going to do outgrowing the market? Any further color you can provide on that view? Speaker 400:24:00Yes, Justin, this is Sam. We're seeing a recovery in the cash side of the business, so U. K. And Sweden. 2 dynamics, 1, just the market was very depressed last year or in 2024. Speaker 400:24:16Secondly, I think I mentioned on the last call that WEMCO had gotten out of the large cast roll, static cast roll business. And so we're seeing increased orders due to that. And with 2 of our largest customers, actually our 2 largest customers, we've increased share by several points in the latest negotiations. Speaker 700:24:43Got you. Those would be U. S. Or international customers? Speaker 400:24:47U. S. Speaker 700:24:49Okay. And are you still poised to get upside? And is it meaningful from sort of the new aluminum rolling mills in the U. S? Speaker 400:24:59Yes, we continue to do well there. Our of our total revenues somewhere in the 15 percentage points or so come from aluminum and that's continuing to grow. The new Steel Dynamics mill will be online coming online next year, aluminum dynamics as well as others. So we continue to do well there. Speaker 700:25:27Okay. And then lastly, any update to the efficiency gains from the equipment that's been installed in your Fortune Cast Engineered Products segment? Speaker 400:25:41Yes, that's been one of the drivers as to why we're performing better this year. And it does operate more efficiently, but more importantly, it operates when you want it to. Our equipment was very old and reliability was becoming an issue. So we're seeing, I'd say, compared to what we thought we would get out of the equipment, we're doing much better than what we had anticipated. So and we still need to staff one shift on 2 of the pieces of equipment just due to some attrition that we had. Speaker 400:26:14So there's some potential future gains that we can get on top of where we're already at. Operator00:26:20Got it. Thank you. Speaker 400:26:23Thanks, Justin. Operator00:26:24This concludes our question and answer session. I'm sorry, we actually have one question that came in. That will come from John Baer with Ascend Wealth Advisors. Please go ahead. Speaker 800:26:36Thank you. Good morning. I appreciate getting in here at the last minute. With the change of the administration after the selection, I'm wondering how you see a potential improvement for your orders regarding the energy space in general. Hopefully, there will be a change in the permitting process for LNG facilities in the Gulf Coast. Speaker 800:27:09I'm wondering if you have any applicable presence there that might you might see some benefit if that comes to pass. And you did reference something about I didn't quite catch it about the frac equipment or whatever. So just wondering if you can kind of broadly address that and what your thoughts or hopes are in that regards? Thanks a Speaker 400:27:36lot. I think, John, in the short term, I don't think we'll see much of an effect because it takes a long time to build any additional liquefied natural gas facilities and things like that. I think where we would see a benefit is on any tariffs preventing blocks flowing in from other countries, even including one of our main competitors is in Mexico. And so there could be a potential benefit from that. I think we'll see a bigger benefit on the business in the near term, just due to the fact that imports have increased, don't quote me exactly, but greater than 5 percentage points in the U. Speaker 400:28:26S. And in Europe compared to history from dumping and there's current trade cases going on in the U. S. To prevent that, which will increase domestic steel production. And then we would see be a direct beneficiary of utilization rates increasing domestically. Speaker 800:28:46Okay. And then do you sense that this trend towards on shoring will benefit you in any meaningful way? Speaker 400:28:57It already has. And so our market share with our largest U. S. Customers has definitely increased in the last 18 months due to that. So we think that that will continue to occur. Speaker 400:29:13The wildcard, it would be nice if Europe would do something, but so far they have it. But domestically here in the U. S, yes, we will see I think that that will help us help protect our share. Speaker 800:29:27All right. Very good. Thank you for taking my questions. Operator00:29:35This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks. Please go ahead. Speaker 200:29:46Thank you, Chuck. As we continue to take required actions to drive improvements in segment performance and capture future growth opportunities, We are focused on lowering our debt position and further restructuring actions to improve shareholder returns. I want to recognize the tremendous work of our employees across the globe. I also want to thank our shareholders and the Board of Directors for your continued support. Thank you for joining our call. Operator00:30:16This concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallAmpco-Pittsburgh Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) 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.comFrom Social Security to Social Prosperity?In less than a decade, Social Security could be out of money. But a surprising plan from Trump’s inner circle may not just save the system — it could unlock a major opportunity for savvy investors. Financial insider Jim Rickards calls it “Social Prosperity,” and says those who act now could see the biggest gains.April 26, 2025 | Paradigm Press (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)Booking (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Mondelez International (4/29/2025)PayPal (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 9 speakers on the call. Operator00:00:00Good day, and welcome to the Ampco Pittsburgh Corporation Third Quarter 20 24 Earnings Results Conference Call. All participants will be in a listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Ms. Kim Knox, Corporate Secretary. Operator00:00:31Please go ahead, ma'am. Speaker 100:00:33Thank you, and good morning to everyone joining us on today's Q3 2024 conference call. Joining me today are Brett McBrayer, our Chief Executive Officer and Mike McAuley, Senior Vice President, Chief Financial Officer and Treasurer. Also joining us on the call today are Sam Lyon, President of Union Electric Steel Corporation and Dave Anderson, President of Air and Liquid Systems Corporation. Before we begin, I would like to remind everyone that participants on this call may make 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. Speaker 100:01:21The 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 in subsequent filings with the Securities and Exchange Commission. We 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 web site at ampcopgh.com. With that, I would now like to turn the call over to Brett McBrayer, Ampco Pittsburgh's CEO. Speaker 100:02:05Brett? Speaker 200:02:06Thank you, Kim. Good morning and thank you everyone for joining our call. As stated in our press release this morning, Ampco Pittsburgh reported operating income for the 3 9 month period of 2024 of $1,900,000 $7,000,000 Our Q3 performance includes the impact of our seasonal plant shutdowns, Improved margins and operating efficiencies directly related to our recent capital investments in the Forage and Cast Engineered Products segments continues to offset weaker cast roll demand. Additionally, backlog increased for the quarter with recent additions of roll orders for our 2025 order book. We continue to be encouraged by the growth prospects available in our Air and Liquids segment as we improve efficiencies to capture these future opportunities. Speaker 200:02:57I will now turn the call over to David Anderson, President of our Air and Liquids segment for further comments on the quarter's results. Speaker 300:03:04Thank you, Brett. Good morning. Air and Liquid Q3 revenue was consistent with prior year, while year to date revenue increased 13% versus prior year. The year to date increase was primarily due to increased shipments of custom air handling units. The increase was driven by the additional manufacturing capacity achieved by opening the new Virginia facility in mid-twenty 23. Speaker 300:03:28Backlog increased in the quarter due to a significant order for air handlers that was received from the pharmaceutical market. Operating income for Air and Liquid was slightly lower in the quarter versus prior year. The lower income was mainly due to a $200,000 asbestos credit that was received in the prior year. The production equipment that was purchased with the $1,600,000 funding provided by the U. S. Speaker 300:03:54Navy was installed and began to operate in Q3. We are also pleased to announce that Air and Liquid has been approved by the U. S. Navy to receive additional funding to purchase more equipment. This additional funding of $4,000,000 will be used to further modernize our production equipment in our Buffalo facility. Speaker 300:04:14The equipment from this second funding is expected to arrive in our facility in late 2025 and along with the recently installed equipment will significantly upgrade our manufacturing capabilities. We continue to see positive signs in many of the markets we serve. Recent announcements to reopen 2 decommissioned U. S. Nuclear plants seem to show that the U. Speaker 300:04:36S. Power generation market is increasingly embracing nuclear power as an answer for capacity issues. This is a key market for our heat exchanger product line. We also recently received our first request to quote a heat exchanger for a small modular reactor. While the modular reactor market is still being developed, there is good potential for these reactors to also add to the future growth in the nuclear market. Speaker 300:05:02The U. S. Navy continues to move forward with long term plans to expand the size of the Navy fleet. The funding for the Navy is doing to increase the U. S. Speaker 300:05:11Industrial base is a clear indicator that they want and need more manufacturing capacity to achieve the fleet expansion goals. And the U. S. Pharmaceutical market continues to expand production capabilities. Air handling orders received from this market in 2024 have already exceeded any prior full year order activity. Speaker 300:05:32We expect to continue to see strong demand in this market over the next several years. Speaker 200:05:38Over the Speaker 300:05:38last 3 years, we have seen significant sales growth due to increasing our production capacity and investing in our sales force. These steps have also positioned Air and Liquid to be able to respond to the future market growth in the years ahead. Speaker 200:05:52Thank you, David. Sam Lyon, President of Foraging and Cast Engineered Products segment, will now share more detail regarding his group's performance. Speaker 400:06:01Thank you, Brett, and good morning, everyone. For the 3 months ending September 30, 2024, net sales for the FCEP segment were $67,200,000 down from $73,600,000 in the same period last year, primarily due to lower rule volumes, reduced FEP shipments and lower surcharge pass throughs. Segment income from operations for Q3 increased to $2,500,000 compared to $1,400,000 in Q3 of 2023, reflecting the benefits of improved pricing and improved efficiencies, which have more than offset the reduction in volume. At the end of the quarter, the segment backlog increased by approximately $4,500,000 from December 31, 2020 3, driven primarily by higher order intake for mill rolls. Our backlog and indicated allocations from our largest customers are positioning us for low to mid single digit volume growth in 2025. Speaker 400:06:57Our recent investments in capital equipment are already contributing to improved operational efficiencies and positioning us well to take advantage of any market recovery. Market conditions remained stable during the Q3. The rural market and Europe over the last quarter was essentially flat due to end customer demand. Following 2 quarters will be lighter in volume for our forge rules, somewhat offset by improved demand in our cast roll facilities. While we continue to experience market stability, European and North American steel producers still operate below pre pandemic levels due to economic uncertainties and increased imports of low priced products from China. Speaker 400:07:39Our customers in the U. S. Have issued petitions for trade action against these imports and we expect the situation to improve soon. In summary, although we face ongoing headwinds related to competitive pressures in Europe and muted on customer Operator00:07:51demand, our pricing Speaker 400:07:51strategy, operational improvements through our recently completed capital upgrades and improvements through our recently completed capital upgrades and increased market share in key areas are mitigating these impacts. As stated, we are seeing improved demand for 2025. We are confident that our continued focus on operational efficiency, customer satisfaction will position us well for future growth and value creation. Speaker 200:08:15Thanks, Sam. I'll now turn the call over to Mike McAuley, our Chief Financial Officer, for more detail regarding our financial performance for the quarter. Speaker 500:08:25Thank you, Brett. As indicated in our Form 10 Q and in our press release issued this morning, Ampco's consolidated net sales for the Q3 of 2024 were $96,200,000 a decline of 5.9% compared to net sales for the Q3 of 2023, due primarily to lower shipment volumes and lower surcharge pass through revenues in the Forged and Gas Engineered Products segment. Air and Liquid Processing segment sales were about flat prior year for the quarter. Income from operations for the Q3 of 2024 was $1,900,000 slightly higher than the prior year quarter, which included a $200,000 insurance recovery. The underlying improvement was principally higher pricing net of surcharges and improved manufacturing cost absorption in the Forest and Cast Engineered Products segment. Speaker 500:09:19The sequential decline in Q3 twenty twenty four operating income versus Q2 2024 was due mainly to lower sales volume and the seasonal plant shutdowns taken in Q3 2024 in the Forged and Cast Engineered Products segment. I would also remind listeners that results for the 9 months ended September 30, 2023 included a $1,900,000 foreign energy credit. So the underlying improvement for the 9 months ended September 30, 2024 is actually greater than as reported results. Corporation's total selling and administrative expenses increased for Q3 2024 compared to Q3 2023, primarily due to higher employee related expense, an increase in exchange rates used to translate the SG and A of our foreign subsidiaries and higher professional fees. Interest expense of approximately $3,000,000 for the quarter increased by $500,000 compared to prior year quarter, primarily due to higher equipment financing debt balance for the new machinery in the U. Speaker 500:10:30S. Forged Business, which was completed and converted to term notes earlier this year, as well as higher average revolving credit facility borrowings to support working capital growth, and higher average interest rates on our floating rate instruments due to interest rate market movements. Other income net declined primarily due to foreign exchange transaction losses recorded in Q3 2024 versus gains recorded in Q3 2023. The income tax provision for both the 3 9 months ended September 30, 2024 increased compared to the prior year periods, primarily due to the establishment of a valuation allowance on the net deferred tax assets of our U. K. Speaker 500:11:18Operations at December 31, 2024. Given its cumulative 3 year loss history due to continued casserole market weakness and the corporation shift of certain casserole production to its more energy efficient plant in Sweden. As a result, the income tax provision in 2024 does not include any benefit for the operating losses of the U. K. Facility. Speaker 500:11:43By comparison, the tax provision for the 3 9 months ended September 30, 2023 included income tax benefits of $600,000 $1,200,000 respectively, for the operating loss of the U. K. The income tax provisions are otherwise comparable with slight differences for income mix by jurisdictions not under valuation allowances. As a result, net loss for Q3 2024 equaled $2,000,000 or $0.10 per diluted share, compared to net income of $800,000 or $0.04 per diluted share for Q3 2023. Net income and earnings per share for the 3 months ended September 30, 2023 included an after tax benefit of $200,000 or $0.01 for the asbestos related credit. Speaker 500:12:38Please note that the net income and basic earnings per share for the 9 months ended September 30, 2023 included after tax benefits of $2,100,000 or $11,000,000 or $0.11 per share associated with the asbestos related insurance credit and the foreign energy credit. Total backlog at September 30, 2024 of $383,600,000 increased approximately $4,600,000 from December 31, 2023, primarily in the Forged and Cast Engineered Products segment, due to an increase in backlog for mill roll orders and to a lesser extent, a higher foreign exchange translation effect. Net cash flows provided by operating activities was $10,600,000 for the 9 months ended September 30, 2024, which compares to a use of $10,300,000 for the 9 months ended September 30, 2023. Primary change item is lower changes in working capital investment between the periods, which more than offset higher pension contributions in the current year period. Capital expenditures for the Q3 of 2024 were $2,900,000 or $2,400,000 net of government grant funding. Speaker 500:14:03We expect full year 2024 CapEx net of grant funding in the range of $9,000,000 to $10,000,000 At September 30, 2024, the September's liquidity position included cash on hand of $11,800,000 and undrawn availability on our revolving credit facility of $20,500,000 Operator, at this time, we would now like to open the line for questions. Operator00:14:31Thank you. We will now begin the question and answer session. And the first question will come from Greg Bennett, Investor. Please go ahead. Speaker 600:15:10I'm sorry, I didn't ask a question. Excuse me. Operator00:15:16The next question will come from David Wright with Henry Investment Trust. Please go ahead. Speaker 600:15:21Hey, good morning, everyone. Operator00:15:24Good morning. Speaker 600:15:27Hey, Brett, it's continued slow progress. It's a big shift to turn around. Kind of a big picture question for you. When the company did the rights offering 4 years ago, you would have had a plan in mind and some certain things that you hope to happen by certain times and you can only control so much for sure. But 4 years into it now, when you look forward, do you have maybe I'll say a better visibility on where you want to get to and when you're going to be able to get there? Speaker 200:16:11David, I believe so. We have some targeted actions, I think, further from a restructuring standpoint that we are focused on for the corporation. Those continue to progress, I think, well, although not at the pace that I think myself nor the team nor our shareholders had hoped they would. But they're still clearly in our focus. There's actions that we obviously are taking, being very mindful of our current debt position and trying to make sure that our focus as we move forward is continue to lower our debt position and don't want to impede on that those efforts. Speaker 200:16:57But yes, I believe the answer to your question is yes. And my hope our focus is within the next 12 to 24 months, we'll be able to be pretty significant for Ampco moving forward. Speaker 600:17:19That's helpful. When you talk about restructuring and you talk about debt, are you working on things that would result in a reduction in the debt, taking a slug out of it? Speaker 200:17:36Yes, yes. That's clearly in our focus and on our radar, Dave. Speaker 600:17:43Yes. Well, that's super, that's super because obviously the interest expense is sort of it's hard to kind of overcome that. So that's great. A question for Sam. Origin Engineered Products, you had hoped that it would maybe be a larger business than it has been lately. Speaker 600:18:13Are there is that really because of fracking? Is that really the major market that would increase revenues in that segment? Speaker 400:18:24David, it's really 2 things. The fracking business is, I'll say, 1 half or a big portion and then the other is just general industrial distribution markets. And both are down significantly. So there we're seeing stable orders. We think next year the distribution markets will increase. Speaker 400:18:50We did actually just receive our first small frac block order within the last 2 weeks for delivery in Q1, which is good, lower volumes, but we haven't had an order for over 18 months probably. But those are the 2 big ones. It's really just the distribution market and then the fracking. Speaker 600:19:12Okay. Well, I'd commend you. It's really great to see consistent operating profit come from your unit. I know it's been a long slog to get there. So that's great. Speaker 600:19:27Well done. 2 for Dave. Dave, good Speaker 300:19:33morning. Good morning, David. Operator00:19:37Can Speaker 600:19:40you quantify like what would a heat exchanger on an SMR be? Is that a $5,000 item or $25,000 item? Speaker 300:19:54It will vary and we're learning that as we go, but no, it would be significantly more than that. Selling a heat exchanger into the nuclear market, you're talking at least a 6 figure unit typically. Speaker 600:20:11Even on an SMR? Speaker 300:20:14We don't know for sure because it's so new, but still they are not inexpensive. Anytime you're doing something in the nuclear market, there's a lot more involved in it. Speaker 600:20:29SMRs, if and well, when they happen, there's they're going to be building more of them a year than they build nuclear reactors in a year. Do you have any production capacity constraints for that project? Speaker 300:20:50Not too much. It's mostly welding and things, which we can add more welders. We have the space to do that. So we can ramp up fairly easily to address that. And that's a problem that I would love to have, honestly. Speaker 300:21:04I think it's a good market potential for us. Speaker 600:21:08Yes. Well, thanks for sharing that opportunity with the call. And then the other question, this kind of below market contract that you've been working off over the course of the year, you've kind of previously said that the last effects of that will be gone by the Q4 of this year. Is that still your thinking? Speaker 300:21:34Yes. I mean, there may be a few minimal ones that carry forward, but the bulk of this issue is going through to the end of this year and then there won't be much left after that. Speaker 600:21:49And what's the can you quantify what the impact of that has been on your operating results? Speaker 300:21:58I would say it's in the estimate of $500,000 to 1,000,000. Speaker 600:22:06Great. Okay. Mike, I don't have anything for you today, but good morning anyway. And thanks very much. Speaker 500:22:15Well, thank you, David. Operator00:22:22Our next question will come from Justin Bergner with Gabriela Funds. Please go ahead. Speaker 700:22:28Hi, good morning, Brett. Good morning, Michael. Good morning. Speaker 200:22:30Good morning. Speaker 700:22:32Could you just review again the cash flow sort of dynamic year to date? How much have you gotten from working capital? Is that mostly exhausted? Or is there more inflows from reducing working capital yet to come? I think, capital yet to come? Speaker 500:22:53So in terms of the cash flow statement in the 10 Q, if we peel apart the cash flow from operating activities, we did see a release of working capital in the quarter and year to date. So that has been part of the story for net cash flow from operating activities, Justin, for sure. One thing we did mention or we talked about on the prepared remarks is that we have made pension contributions in the current year, which have taken a little away from that, but we're still positive about 10.6 percent cash flow from operating activities for the year to date period. Speaker 700:23:40Okay, got you. Second question was regarding the comment about low to mid single digit volume growth for forged and cast engineered products next year. Just is that sort of what you think the market is going to do? Is that what you think you're going to do outgrowing the market? Any further color you can provide on that view? Speaker 400:24:00Yes, Justin, this is Sam. We're seeing a recovery in the cash side of the business, so U. K. And Sweden. 2 dynamics, 1, just the market was very depressed last year or in 2024. Speaker 400:24:16Secondly, I think I mentioned on the last call that WEMCO had gotten out of the large cast roll, static cast roll business. And so we're seeing increased orders due to that. And with 2 of our largest customers, actually our 2 largest customers, we've increased share by several points in the latest negotiations. Speaker 700:24:43Got you. Those would be U. S. Or international customers? Speaker 400:24:47U. S. Speaker 700:24:49Okay. And are you still poised to get upside? And is it meaningful from sort of the new aluminum rolling mills in the U. S? Speaker 400:24:59Yes, we continue to do well there. Our of our total revenues somewhere in the 15 percentage points or so come from aluminum and that's continuing to grow. The new Steel Dynamics mill will be online coming online next year, aluminum dynamics as well as others. So we continue to do well there. Speaker 700:25:27Okay. And then lastly, any update to the efficiency gains from the equipment that's been installed in your Fortune Cast Engineered Products segment? Speaker 400:25:41Yes, that's been one of the drivers as to why we're performing better this year. And it does operate more efficiently, but more importantly, it operates when you want it to. Our equipment was very old and reliability was becoming an issue. So we're seeing, I'd say, compared to what we thought we would get out of the equipment, we're doing much better than what we had anticipated. So and we still need to staff one shift on 2 of the pieces of equipment just due to some attrition that we had. Speaker 400:26:14So there's some potential future gains that we can get on top of where we're already at. Operator00:26:20Got it. Thank you. Speaker 400:26:23Thanks, Justin. Operator00:26:24This concludes our question and answer session. I'm sorry, we actually have one question that came in. That will come from John Baer with Ascend Wealth Advisors. Please go ahead. Speaker 800:26:36Thank you. Good morning. I appreciate getting in here at the last minute. With the change of the administration after the selection, I'm wondering how you see a potential improvement for your orders regarding the energy space in general. Hopefully, there will be a change in the permitting process for LNG facilities in the Gulf Coast. Speaker 800:27:09I'm wondering if you have any applicable presence there that might you might see some benefit if that comes to pass. And you did reference something about I didn't quite catch it about the frac equipment or whatever. So just wondering if you can kind of broadly address that and what your thoughts or hopes are in that regards? Thanks a Speaker 400:27:36lot. I think, John, in the short term, I don't think we'll see much of an effect because it takes a long time to build any additional liquefied natural gas facilities and things like that. I think where we would see a benefit is on any tariffs preventing blocks flowing in from other countries, even including one of our main competitors is in Mexico. And so there could be a potential benefit from that. I think we'll see a bigger benefit on the business in the near term, just due to the fact that imports have increased, don't quote me exactly, but greater than 5 percentage points in the U. Speaker 400:28:26S. And in Europe compared to history from dumping and there's current trade cases going on in the U. S. To prevent that, which will increase domestic steel production. And then we would see be a direct beneficiary of utilization rates increasing domestically. Speaker 800:28:46Okay. And then do you sense that this trend towards on shoring will benefit you in any meaningful way? Speaker 400:28:57It already has. And so our market share with our largest U. S. Customers has definitely increased in the last 18 months due to that. So we think that that will continue to occur. Speaker 400:29:13The wildcard, it would be nice if Europe would do something, but so far they have it. But domestically here in the U. S, yes, we will see I think that that will help us help protect our share. Speaker 800:29:27All right. Very good. Thank you for taking my questions. Operator00:29:35This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks. Please go ahead. Speaker 200:29:46Thank you, Chuck. As we continue to take required actions to drive improvements in segment performance and capture future growth opportunities, We are focused on lowering our debt position and further restructuring actions to improve shareholder returns. I want to recognize the tremendous work of our employees across the globe. I also want to thank our shareholders and the Board of Directors for your continued support. Thank you for joining our call. Operator00:30:16This concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by