Ampco-Pittsburgh Corporation (NYSE: AP) reports sales from
continuing operations for the three and nine months ended September
30, 2019, of $90.9 million and $300.9 million, respectively,
compared to $98.8 million and $323.6 million for the three and nine
months ended September 30, 2018, respectively. The decline is
principally attributable to lower sales of forged engineered
products to the oil and gas industry.
Loss from continuing operations was $1.3 million and $14.0
million for the three and nine months ended September 30, 2019,
respectively, compared to $2.8 million and $4.8 million for the
comparable prior year periods. Loss from continuing operations for
the current year-to-date period includes a first quarter impairment
loss (“Impairment Charge”) of $10.1 million associated with the
then anticipated divestiture of the Corporation’s Avonmore, PA cast
roll manufacturing facility (“Avonmore”), higher professional fees
associated with the Corporation’s overall restructuring plan and
employee severance due to reductions in force
(“Restructuring-Related Costs”) of $1.7 million, and expense of
$1.4 million associated with a British cast roll customer who filed
for bankruptcy during the second quarter (“Bad Debt Expense”).
Excluding the Impairment Charge, the Restructuring-Related
Costs, the Bad Debt Expense, and estimated temporary excess costs
of Avonmore (“Excess Costs of Avonmore”), adjusted (loss) income
from continuing operations (non-GAAP measure) was a loss of
approximately $0.1 million for the three months ended September 30,
2019, and income of approximately $3.7 million for the nine-month
period then ended. This reflects an improvement of $0.6 million and
$2.5 million, respectively, when compared to the same periods of
the prior year, calculated on the same basis. The improvement is
principally attributable to higher pricing for mill rolls,
manufacturing efficiencies for the domestic forged operations and
lower overhead costs, partially offset by lower sales of forged
engineered products to the oil and gas industry. A reconciliation
of GAAP results to this non-GAAP measure is provided below under
“Non-GAAP Financial Measures Reconciliation Schedule.”
Other income for the nine months ended September 30, 2019,
declined compared to the prior year. While the current year
includes a higher dividend received from one of our Chinese joint
ventures of approximately $1.0 million, the prior year benefited
from a contractual settlement with a third party of $2.4
million.
Net loss from continuing operations for the three and nine
months ended September 30, 2019, was $1.2 million or $0.10 per
common share, and $14.0 million or $1.11 per common share,
respectively, including the negative impact of the Impairment
Charge, the Restructuring-Related Costs and the Bad Debt Expense of
approximately $0.04 and $1.04 per common share, respectively. By
comparison, net loss from continuing operations for the three and
nine months ended September 30, 2018, was $3.0 million or $0.24 per
common share, and $2.5 million or $0.20 per common share,
respectively.
Segment Results
Sales for the Forged and Cast Engineered Products segment for
the three and nine months ended September 30, 2019, declined 10%
and 9%, respectively, compared to the prior year periods
principally due to lower sales of forged engineered products to the
oil and gas industry. Operating results for the three months ended
September 30, 2019, improved from a year ago due to lower losses at
Avonmore as operations were curtailed in anticipation of its sale,
which was completed on September 30, 2019. Operating results for
the nine months ended September 30, 2019, decreased by $9.3 million
when compared to the same period of the prior year and include the
Impairment Charge, certain restructuring-related costs and the Bad
Debt Expense. Additionally, while the current year periods have
been adversely impacted by the lower sales of forged engineered
products, operating results benefited from better pricing for mill
rolls, manufacturing efficiencies in the domestic forged operations
and lower overhead costs.
Sales for the Air and Liquid Processing segment for the three
and nine months ended September 30, 2019, were relatively
comparable to prior year levels. Operating income decreased
approximately 23% and 18% for the three and nine months ended
September 30, 2019, compared to prior year levels due principally
to a shift in product mix.
Discontinued Operations
Loss from discontinued operations, net of tax, for the three and
nine months ended September 30, 2019, was $3.4 million or $0.27 per
common share, and $9.0 million or $0.72 per common share,
respectively. This compares to a net-of-tax loss of $3.4 million or
$0.28 per common share, and $5.2 million or $0.42 per common share,
respectively, for the three and nine months ended September 30,
2018. The losses reflect the operations of the Corporation’s former
Canadian subsidiary, ASW Steel Inc. (“ASW”), which was sold on
September 30, 2019.
CEO Commentary
Commenting on the quarter’s results, Brett McBrayer,
Ampco-Pittsburgh’s Chief Executive Officer, said, “The highlight of
the quarter was closing the divestitures of both our Avonmore, PA
cast roll facility and of ASW, our former Canadian specialty steel
business. These important actions remove what have been significant
financial headwinds for us. The company’s underlying performance
improved year-over-year in a seasonally weaker quarter, which
included the impact of scheduled, proactive plant shutdowns in the
U.S. and Europe to maintain asset reliability. We continue to
benefit from our operational improvement initiatives, as evidenced
by the improved adjusted results compared to prior year, despite a
significant sales downturn in our frac block business. During the
quarter, we also initiated the next phase of operational efficiency
improvements at our European cast roll plants.”
Teleconference Access
Ampco-Pittsburgh Corporation (NYSE: AP) will hold a conference
call on Thursday, November 7, 2019, at 10:30 a.m. Eastern Time (ET)
to discuss its financial results for the third quarter ended
September 30, 2019. The Corporation encourages participants to
pre-register at any time, including up to and after the call start
time via this link: http://dpregister.com/10136020. Those without
internet access or unable to pre-register should dial in at least
five minutes before the start time using:
- Participant Dial-in (Toll Free): 1-844-308-3408
- Participant International Dial-in: 1-412-317-5408
For those unable to listen to the live broadcast, a replay will
be available one hour after the event concludes on the
Corporation’s website under the Investors menu at
www.ampcopgh.com.
Non-GAAP Financial
Measures
The Corporation presents non-GAAP adjusted (loss) income from
continuing operations as a supplemental financial measure to GAAP
financial measures regarding the Corporation’s operational
performance. This non-GAAP financial measure excludes the
Impairment Charge, the Restructuring-Related Costs, the Excess
Costs of Avonmore, and the Bad Debt Expense, which the Corporation
believes are not indicative of its core operating results. A
reconciliation of this non-GAAP financial measure to loss from
continuing operations, the most directly comparable GAAP financial
measure, is provided below under “Non-GAAP Financial Measures
Reconciliation Schedule.”
The Corporation has presented non-GAAP adjusted (loss) income
from continuing operations because it is a key measure used by the
Corporation’s management and Board of Directors to understand and
evaluate the Corporation’s operating performance and to develop
operational goals for managing the business. Management believes
this non-GAAP financial measure provides useful information to
investors and others in understanding and evaluating the operating
results of the Corporation, enhancing the overall understanding of
the Corporation’s past performance and future prospects, and
allowing for greater transparency with respect to key financial
metrics used by management in its financial and operational
decision-making. Non-GAAP adjusted (loss) income from continuing
operations should be used only as a supplement to GAAP information,
in conjunction with the Corporation’s consolidated financial
statements prepared in accordance with GAAP, and should not be
considered in isolation of, or as an alternative to, measures
prepared in accordance with GAAP. There are limitations related to
the use of non-GAAP adjusted (loss) income from continuing
operations rather than GAAP loss from continuing operations. Among
other things, the Excess Costs of Avonmore, which is excluded from
the adjusted non-GAAP financial measure, necessarily reflects
judgments made by management in allocating manufacturing and
operating costs between Avonmore and the Corporation’s other
operations and in anticipating how the Corporation will conduct
business following the sale of Avonmore, which was completed on
September 30, 2019.
Forward-Looking
Statements
Information presented under the heading “CEO Commentary” above
contains forward-looking statements for purposes of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Actual results may vary significantly from the Corporation’s
expectations based on a number of risks and uncertainties,
including but not limited to the following: cyclical demand for
products and economic downturns may reduce demand for the
Corporation’s products; excess global capacity in the steel
industry could lower prices for the Corporation’s products;
economic or other factors may reduce the level of the Corporation’s
export sales; the Corporation’s profitability could be reduced by
increases in commodity prices or shortages of key production
materials; a work stoppage or similar industrial action could
disrupt the Corporation’s operations; and restructuring activities
of the Corporation may generate greater expenses or losses than
currently anticipated. Forward-looking statements speak only as of
the date on which such statements are made, are not guarantees of
future performance or expectations, and involve risks and
uncertainties. The Corporation cannot guarantee any future results,
levels of activity, performance or achievements. Except as required
by applicable law, the Corporation assumes no obligation, and
disclaims any obligation, to update forward-looking statements
whether as a result of new information, events or otherwise.
AMPCO-PITTSBURGH CORPORATION
FINANCIAL SUMMARY (in thousands except per share amounts)
Three
Months Ended September 30,
Nine Months
Ended September 30,
2019
2018
2019
2018
Sales
$ 90,872
$ 98,824
$300,885
$323,610
Cost of products sold
(excl. depreciation and amortization)
75,475
82,007
250,232
268,500
Selling and administrative
12,365
13,999
40,179
43,128
Depreciation and amortization
4,502
5,361
14,411
16,409
Impairment charge
0
0
10,082
0
(Gain) loss on disposal of assets
(130)
304
(67)
386
Total operating expenses
92,212
101,671
314,837
328,423
Loss from continuing operations
(1,340)
(2,847)
(13,952)
(4,813)
Other income – net
546
634
1,673
3,150
Loss from continuing operations before
income taxes
(794)
(2,213)
(12,279)
(1,663)
Income tax provision
(429)
(800)
(1,716)
(883)
Net loss from continuing operations
(1,223)
(3,013)
(13,995)
(2,546)
Loss from discontinued operations, net of
tax
(3,398)
(3,443)
(9,031)
(5,221)
Net loss
(4,621)
(6,456)
(23,026)
(7,767)
Net income attributable to
noncontrolling interest
434
583
1,035
1,325
Net loss attributable to
Ampco-Pittsburgh
$ (5,055)
$ (7,039)
$ (24,061)
$ (9,092)
Net loss from continuing operations per
common share:
Basic
$ (0.10)
$ (0.24)
$ (1.11)
$ (0.20)
Diluted
$ (0.10)
$ (0.24)
$ (1.11)
$ (0.20)
Loss from discontinued operations, net of
tax, per common share:
Basic
$ (0.27)
$ (0.28)
$ (0.72)
$ (0.42)
Diluted
$ (0.27)
$ (0.28)
$ (0.72)
$ (0.42)
Net loss per common share attributable to
Ampco-Pittsburgh:
Basic
$ (0.40)
$ (0.56)
$ (1.91)
$ (0.73)
Diluted
$ (0.40)
$ (0.56)
$ (1.91)
$ (0.73)
Weighted-average number of common shares
outstanding:
Basic
12,640
12,494
12,572
12,432
Diluted
12,640
12,494
12,572
12,432
AMPCO-PITTSBURGH CORPORATION NON-GAAP
FINANCIAL MEASURES RECONCILIATION SCHEDULE (in thousands)
As described under “Non-GAAP Financial Measures” above, the
Corporation presents non-GAAP adjusted (loss) income from
continuing operations as a supplemental financial measure to GAAP
financial measures. The following is a reconciliation of loss from
continuing operations, the most directly comparable GAAP financial
measure, to this non-GAAP financial measure for the three and nine
months ended September 30, 2019, and 2018:
Three
Months Ended September 30,
Nine Months
Ended September 30,
2019
2018
2019
2018
Loss from continuing operations, as reported (GAAP)
($
1,340
)
($
2,847
)
($
13,952
)
($
4,813
)
Impairment Charge (1)
0
0
10,082
0
Restructuring-Related Costs (2)
561
379
1,653
379
Excess Costs of Avonmore(3)
685
1,750
4,572
5,660
Bad Debt Expense (4)
0
0
1,366
0
(Loss) income from continuing operations, as adjusted (Non-GAAP)
($
94
)
($
718
)
$
3,721
$
1,226
(1)
Represents an impairment charge recognized
in the first quarter of 2019, to record certain assets of Avonmore
to their estimated net realizable value in anticipation of their
sale, which was completed in September 2019.
(2)
Represents professional fees associated
with the Corporation’s overall restructuring plan and employee
severance costs due to reductions in force.
(3)
Represents estimated net operating costs
not expected to continue after the sale of Avonmore, which was
completed in September 2019. The estimated temporary excess costs
include judgments made by management in allocating manufacturing
and operating costs between Avonmore and the Corporation’s other
operations and in anticipating how it will conduct business
following the sale of Avonmore.
(4)
Represents bad debt expense for a British
cast roll customer who filed for bankruptcy.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191107005573/en/
Michael G. McAuley Senior Vice President, Chief Financial
Officer and Treasurer (412) 429-2472 mmcauley@ampcopgh.com
Ampco Pittsburgh (NYSE:AP)
Historical Stock Chart
From Mar 2024 to Apr 2024
Ampco Pittsburgh (NYSE:AP)
Historical Stock Chart
From Apr 2023 to Apr 2024