- Corporation improves performance in Q1 following a return to
profitability in Q4 2019
- GAAP EPS of $0.33 for quarter ended March 31, 2020, versus
GAAP net loss per share of $(1.21) in the year-ago quarter
- GAAP Operating Income improves by 43% from Q4 2019 to Q1
2020 as restructuring and efficiency improvements continue
Ampco-Pittsburgh Corporation (NYSE: AP) reports sales from
continuing operations of $91.1 million for the three months ended
March 31, 2020, compared to $107.5 million for the three months
ended March 31, 2019. The decrease is principally attributable to a
lower volume of shipments for the Forged and Cast Engineered
Products segment due to weaker demand in the flat rolled steel and
oil and gas markets.
Income from continuing operations for the three months ended
March 31, 2020, was $4.4 million compared to a loss from continuing
operations for the three months ended March 31, 2019, of $12.0
million which included a $10.1 million impairment charge and $0.9
million of restructuring-related costs. Income from continuing
operations for the current quarter also benefited from the
elimination of excess carrying costs of the Avonmore, PA cast roll
plant which was divested in 2019, additional proceeds from a 2018
insurance claim, manufacturing efficiencies and cost reduction
actions across the Corporation.
Adjusted income from continuing operations for the quarter,
which is not based on U.S. generally accepted accounting principles
(“GAAP”), was $3.6 million, an improvement of $2.3 million when
compared to the same period of the prior year prepared on the same
basis. The improvement is primarily driven by the aforementioned
manufacturing efficiencies and cost reductions. A reconciliation of
these GAAP to non-GAAP results is provided below under “Non-GAAP
Financial Measures Reconciliation Schedule.”
Other expense for the three months ended March 31, 2020,
includes higher foreign exchange losses and unrealized losses on
rabbi trust investments, which are principally due to market
disruptions caused by the COVID-19 pandemic, when compared to the
same period of the prior year. The income tax benefit recognized in
the current quarter includes a benefit of approximately $3.5
million for the reversal of previously established valuation
allowances due to expanded tax loss carryback provisions made
possible by the CARES Act.
Net income attributable to Ampco-Pittsburgh for the three months
ended March 31, 2020, was $4.1 million, or $0.33 per common share.
By comparison, net loss for the three months ended March 31, 2019,
was $15.1 million, or $1.21 per common share, including
approximately $0.88 per common share for the impairment charge and
restructuring-related costs and $0.18 per common share for the loss
from discontinued operations.
Segment Results
Sales from continuing operations for the Forged and Cast
Engineered Products segment for the three months ended March 31,
2020, declined compared to the prior year due to a lower volume of
shipments of mill rolls, both forged and cast, and forged
engineered products offset slightly by a more favorable product
mix. Operating results for the Forged and Cast Engineered Products
segment for the three months ended March 31, 2020, improved
significantly compared to the prior year quarter, which included
the impairment charge, excess carrying costs of the Avonmore, PA
cast roll plant, and certain restructuring-related costs. In
addition, the segment’s cost structure has improved year-over-year
as a result of manufacturing efficiencies and cost reductions
implemented.
Sales for the Air and Liquid Processing segment for the three
months ended March 31, 2020, were comparable to the prior year
quarter with operating results improving primarily due to product
mix and cost reductions.
CEO Commentary
Commenting on the quarter’s results, Brett McBrayer,
Ampco-Pittsburgh’s Chief Executive Officer, said, “After returning
to profitability last quarter, we improved our positive trajectory
in Q1. Operating income improved by 43% sequentially from Q4 2019
to Q1 2020, and excluding unusual items, adjusted operating income
from continuing operations was up 85% sequentially. The cost
reductions and right-sizing of our operations through the
divestitures we completed last year are paying off as anticipated.
The effect of COVID-19 is evident in some of our Q1 numbers, such
as the impacts from changes in the foreign exchange and equity
markets, as well as the impact of Federal relief actions on income
taxes. Our leaner cost structure and agility to respond to changes
in our markets position us to better weather the evolving effects
of COVID-19 as the year progresses.”
Teleconference Access
Ampco-Pittsburgh Corporation (NYSE: AP) will hold a conference
call on Wednesday, May 6, 2020, at 10:30 a.m. Eastern Time (ET) to
discuss its financial results for the quarter ended March 31, 2020.
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/10141809. 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 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 unusual items
affecting comparability, as described more fully in the footnotes
to the attached “Non-GAAP Financial Measures Reconciliation
Schedule,” including the Impairment Charge, the
Restructuring-Related Costs, the Excess Costs of Avonmore, and the
Proceeds from Business Interruption Insurance Claim, which the
Corporation believes are not indicative of its core operating
results. A reconciliation of this non-GAAP financial measure to
income (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 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 income from continuing
operations should be used only as a supplement to GAAP information,
in conjunction with the Corporation’s condensed 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 income from continuing
operations rather than GAAP income (loss) from continuing
operations. Among other things, the Excess Costs of Avonmore, which
are excluded from the non-GAAP financial measure, necessarily
reflect 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; the
Corporation’s profitability could be reduced by increases in
commodity prices or shortages of key production materials;
restructuring activities of the Corporation may generate greater
expenses or losses than currently anticipated; new trade
restrictions and regulatory burdens associated with “Brexit” could
adversely impact the Corporation’s operations and financial
performance; disruptions caused by global pandemics could cause the
Corporation and its customers and suppliers to temporarily idle
operations resulting in orders being delayed or potentially
cancelled; and the other risks described under the heading “Risk
Factors” in the Corporation’s Annual Report on Form 10-K and other
reports required to be filed by the Corporation under the
Securities Exchange Act of 1934, as amended. 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
March
31,
2020
2019
Sales
$
91,063
$
107,494
Cost of products sold (excl. depreciation
and amortization)
70,160
90,221
Selling and administrative
11,830
13,885
Depreciation and amortization
4,699
5,259
Impairment charge
-
10,082
Loss on disposal of assets
23
6
Total operating expenses
86,712
119,453
Income (loss) from continuing
operations
4,351
(11,959
)
Other (expense) income – net
(2,532
)
51
Income (loss) from continuing operations
before income taxes
1,819
(11,908
)
Income tax benefit (provision)
2,783
(643
)
Net income (loss) from continuing
operations
4,602
(12,551
)
Loss from discontinued operations, net of
tax
-
(2,242
)
Net income (loss)
4,602
(14,793
)
Less: Net income attributable to
noncontrolling interest
460
355
Net income (loss) attributable to
Ampco-Pittsburgh
$
4,142
$
(15,148
)
Net income (loss) from continuing
operations per share attributable to Ampco-Pittsburgh common
shareholders:
Basic
$
0.33
$
(1.03
)
Diluted
$
0.33
$
(1.03
)
Loss from discontinued operations, net of
tax, per share attributable to Ampco-Pittsburgh common
shareholders:
Basic
$
-
$
(0.18
)
Diluted
$
-
$
(0.18
)
Net income (loss) per share attributable
to Ampco-Pittsburgh common shareholders:
Basic
$
0.33
$
(1.21
)
Diluted
$
0.33
$
(1.21
)
Weighted-average number of common shares
outstanding:
Basic
12,656
12,497
Diluted
12,672
12,497
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 income from continuing
operations as a supplemental financial measure to GAAP financial
measures. The following is a reconciliation of this non-GAAP
financial measure to income (loss) from continuing operations, the
most directly comparable GAAP financial measure, for the three
months ended March 31, 2020 and 2019:
Three Months Ended
March 31,
2020
2019
Income (loss) from continuing operations,
as reported (GAAP)
$
4,351
$
(11,959
)
Impairment Charge(1)
-
10,082
Restructuring-Related Costs(2)
-
921
Excess costs of Avonmore(3)
-
2,202
Proceeds from Business Interruption
Insurance Claim(4)
(769
)
-
Income from continuing operations, as
adjusted (Non-GAAP)
$
3,582
$
1,246
(1)
Represents an impairment charge
to record the Avonmore plant to its estimated net realizable value
less costs to sell in anticipation of its 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 the
Avonmore plant, which was completed in September 2019. The
estimated excess costs include judgments made by management in
allocating manufacturing and operating costs between the Avonmore
plant and the Corporation’s other operations and in anticipating
how it will conduct business following the sale of the Avonmore
plant.
(4)
Represents business interruption
insurance proceeds received in 2020 for equipment outages that
occurred in 2018.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200506005511/en/
Michael G. McAuley Senior Vice President, Chief Financial
Officer and Treasurer (412) 429-2472 mmcauley@ampcopgh.com
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