- Corporation reports EPS of $0.07 per diluted share for Q3
2020 despite continued impact of COVID-19 pandemic on end-market
demand, sequentially higher than Q2 2020 EPS.
- Return to profitability extends for fourth consecutive
quarter.
- $19.3 million gross proceeds from equity offering completed
in Q3.
- Total debt of $32.6 million reduced by $38.3 million (54%)
from $70.9 million at December 31, 2019.
Ampco-Pittsburgh Corporation (NYSE: AP) (the "Corporation" or
“Ampco-Pittsburgh”) reported net income for the three and nine
months ended September 30, 2020, of $1.0 million, or $0.07 per
diluted share, and $5.8 million, or $0.43 per diluted share,
respectively. By comparison, the Corporation incurred a net loss of
$(5.1) million, or $(0.40) per diluted share, and $(24.1) million,
or $(1.91) per diluted share, for the same periods of the prior
year which respectively included losses of $(0.27) and $(0.72) per
diluted share from discontinued operations.
Sales from continuing operations were $75.7 million and $241.5
million for the three and nine months ended September 30, 2020,
respectively, compared to $90.9 million and $300.9 million for the
three and nine months ended September 30, 2019, respectively. The
decrease is primarily attributable to a lower volume of shipments
for the Forged and Cast Engineered Products segment due to
pandemic-related customer deferrals in the flat-rolled steel and
aluminum markets and, to a lesser extent, reduced demand for other
forged engineered products, primarily in the oil and gas
market.
Remarking on the quarter’s results, Brett McBrayer,
Ampco-Pittsburgh’s Chief Executive Officer, said, “Ampco-Pittsburgh
has continued to perform amidst the challenges presented by this
pandemic. Despite significant plant downtime experienced in the
quarter to manage through the contraction and handle scheduled
maintenance activities, we extended our positive net earnings
performance for a fourth consecutive quarter. The Forged and Cast
Engineered Products segment delivered improved results for the
quarter compared to prior year, while the Air and Liquid Processing
segment remained a stable force with results equaling prior year.
Our successful equity raise during Q3 strengthened our balance
sheet considerably and with significant liquidity and operating
leverage, we are well positioned to capitalize on recovery in our
end markets.”
Operating cash flow generation year-to-date and the proceeds
from the equity offering completed during the quarter have allowed
the Corporation to reduce its total debt balance by 54% from $70.9
million at December 31, 2019, to $32.6 million at September 30,
2020.
The Corporation reported income from continuing operations for
the three and nine months ended September 30, 2020, of $0.2 million
and $4.4 million, respectively, compared to losses of $(1.3)
million and $(14.0) million, respectively, for the same periods of
the prior year. Income from continuing operations for the nine
months ended September 30, 2020, includes $0.8 million in
subsequent proceeds from a 2018 business interruption claim
(“Proceeds from Business Interruption Insurance Claim”). By
comparison, loss from continuing operations for the nine months
ended September 30, 2019, includes $4.6 million in excess costs of
the Corporation’s Avonmore, PA cast roll manufacturing facility
(“Avonmore”) which was sold in September 2019 (“Excess Costs of
Avonmore”), $1.7 million in professional fees and employee
severance costs associated with the Corporation’s overall
restructuring plan (“Restructuring-Related Costs”), and $1.4
million in bad debt expense for a cast roll customer who had filed
for bankruptcy protection (“Bad Debt Expense”). Additionally, loss
from continuing operations for the nine months ended September 30,
2019, includes an impairment loss (“Impairment Charge”) of $10.1
million associated with the write-down of certain assets of
Avonmore in anticipation of its sale.
Excluding the Proceeds from the Business Interruption Insurance
Claim from the current year operating results and the Bad Debt
Expense, the Excess Costs of Avonmore, the Restructuring-Related
Costs, and the Impairment Charge from prior year operating results,
as applicable, adjusted income (loss) from continuing operations,
which is not based on U.S. generally accepted accounting principles
(“GAAP”), was $0.2 million and $3.7 million for the three and nine
months ended September 30, 2020, and $(0.1) million and $3.7
million for the three and nine months ended September 30, 2019,
respectively. Adjusted income from continuing operations was
approximately comparable to the prior year periods, despite
decreases in sales of approximately 17% and 20%, respectively, for
the three and nine months ended September 30, 2020, driven
principally by the pandemic. Although the current year periods
benefited from lower raw material costs, reduced SG&A expense
and, for the year-to-date period, improved roll pricing, these
factors were approximately offset by the pandemic-driven impacts of
the lower shipment volumes and net unfavorable plant absorption
from lower production levels in the Forged and Cast Engineered
Products segment. A reconciliation of these GAAP to non-GAAP
results is provided below under “Non-GAAP Financial Measures
Reconciliation Schedule.”
Other income – net for the three months ended September 30,
2020, improved in comparison to the prior year primarily due to
dividend income of $1.2 million from one of the Corporation’s
Chinese joint ventures in the current period. On a year-to-date
basis, however, lower interest expense and lower foreign exchange
transaction losses in 2020 could not offset the impact of net gains
recorded in 2019 from the curtailment of pension and postretirement
plans and special termination benefit costs associated with the
Avonmore cast roll plant exit.
The income tax benefit for the nine months ended September 30,
2020, includes a benefit of $3.5 million for the additional tax
loss carryback provisions included in the CARES Act.
Segment Results
Forged and Cast Engineered
Products
Sales for the three and nine months ended September 30, 2020,
declined 19% and 25% from the respective prior year periods
primarily due to customers deferring shipments for mill rolls in
response to pandemic-related market impacts and, to a lesser
extent, lower demand for other forged engineered products,
primarily in the oil and gas market. Operating results for the
three months ended September 30, 2020, improved compared to prior
year. While the segment was adversely impacted by the lower volume
of shipments and net unabsorbed costs associated with the temporary
idling of certain of its forged and cast roll manufacturing
facilities in response to lower demand, elimination of the Excess
Costs of Avonmore, and a reduced cost structure due to
restructuring and efficiency improvements more than offset the
impact to operating results.
Air and Liquid Processing
Sales for the Air and Liquid Processing segment for the three
and nine months ended September 30, 2020, were slightly below prior
year levels. Operating income for the quarter was approximately
equal to the prior year level yet continues to exceed prior year on
a year-to-date basis.
Teleconference Access
Ampco-Pittsburgh Corporation (NYSE: AP) will hold a conference
call on Tuesday, November 17, 2020, at 10:30 a.m. Eastern Time (ET)
to discuss its financial results for the quarter ended September
30, 2020. The Corporation encourages participants to pre-register
at any time, including up to and after the call start time via this
link: https://dpregister.com/sreg/10148835/dac17764c3. 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.
About Ampco-Pittsburgh Corporation
Ampco-Pittsburgh Corporation manufactures and sells highly
engineered, high-performance specialty metal products and
customized equipment utilized by industry throughout the world.
Through its operating subsidiary, Union Electric Steel Corporation,
it is a leading producer of forged and cast rolls for the global
steel and aluminum industry. It also manufactures open-die forged
products that principally are sold to customers in the steel
distribution market, oil and gas industry, and the aluminum and
plastic extrusion industries. The Corporation is also a producer of
air and liquid processing equipment, primarily custom-engineered
finned tube heat exchange coils, large custom air handling systems,
and centrifugal pumps. It operates manufacturing facilities in the
United States, England, Sweden, Slovenia, and participates in three
operating joint ventures located in China. It has sales offices in
North and South America, Asia, Europe, and the Middle East.
Corporate headquarters is located in Carnegie, Pennsylvania.
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
The Private Securities Litigation Reform Act of 1995 (the “Act”)
provides a safe harbor for forward-looking statements made by or on
behalf of Ampco-Pittsburgh Corporation (the “Corporation”). This
press release may include, but is not limited to, statements about
operating performance, trends, events that the Corporation expects
or anticipates will occur in the future, statements about sales and
production levels, restructurings, the impact from global pandemics
(including COVID-19), profitability and anticipated expenses,
future proceeds from the exercise of outstanding warrants, and cash
outflows. All statements in this document other than statements of
historical fact are statements that are, or could be, deemed
“forward-looking statements” within the meaning of the Act and
words such as “may,” “intend,” “believe,” “expect,” “anticipate,”
“estimate,” “project,” “forecast” and other terms of similar
meaning that indicate future events and trends are also generally
intended to identify forward-looking statements. 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. For the Corporation, these risks
and uncertainties include, but are not limited to: cyclical demand
for products and economic downturns; excess global capacity in the
steel industry; increases in commodity prices or shortages of key
production materials; consequences of global pandemics (including
COVID-19); new trade restrictions and regulatory burdens associated
with “Brexit”; inability of the Corporation to successfully
restructure its operations; limitations in availability of capital
to fund the Corporation’s operations and strategic plan; inability
to satisfy the continued listing requirements of the New York Stock
Exchange or NYSE American; potential attacks on information
technology infrastructure and other cyber-based business
disruptions; and those discussed more fully elsewhere in this
report and in documents filed with the Securities and Exchange
Commission by the Corporation, particularly in Item 1A, Risk
Factors, in Part I of the Corporation’s latest Annual Report on
Form 10-K, and Part II of the Quarterly Report on Form 10-Q. The
Corporation cannot guarantee any future results, levels of
activity, performance or achievements. In addition, there may be
events in the future that the Corporation may not be able to
predict accurately or control which may cause actual results to
differ materially from expectations expressed or implied by
forward-looking statements. 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,
2020
2019
2020
2019
Sales
$
75,674
$
90,872
$
241,515
$
300,885
Cost of products sold
(excl. depreciation and amortization)
59,461
75,475
189,604
250,232
Selling and administrative
11,445
12,365
33,474
40,179
Depreciation and amortization
4,511
4,502
13,863
14,411
Impairment charge
-
-
-
10,082
Loss (gain) on disposal of assets
79
(130
)
131
(67
)
Total operating expenses
75,496
92,212
237,072
314,837
Income (loss) from continuing
operations
178
(1,340
)
4,443
(13,952
)
Other income (expense) – net
1,690
546
609
1,673
Income (loss) from continuing operations
before income taxes
1,868
(794
)
5,052
(12,279
)
Income tax (provision) benefit
(630
)
(429
)
1,649
(1,716
)
Net income (loss) from continuing
operations
1,238
(1,223
)
6,701
(13,995
)
Loss from discontinued operations, net of
tax
-
(3,398
)
-
(9,031
)
Net income (loss)
1,238
(4,621
)
6,701
(23,026
)
Less: Net income attributable to
noncontrolling interest
270
434
923
1,035
Net income (loss) attributable to
Ampco-Pittsburgh
$
968
$
(5,055
)
$
5,778
$
(24,061
)
Net income (loss) from continuing
operations per share attributable to Ampco-Pittsburgh common
shareholders:
Basic
$
0.07
$
(0.13
)
$
0.45
$
(1.19
)
Diluted
$
0.07
$
(0.13
)
$
0.43
$
(1.19
)
Loss from discontinued operations, net of
tax, per share attributable to Ampco-Pittsburgh common
shareholders:
Basic
$
-
$
(0.27
)
$
-
$
(0.72
)
Diluted
$
-
$
(0.27
)
$
-
$
(0.72
)
Net income (loss) per share attributable
to Ampco-Pittsburgh common shareholders
Basic
$
0.07
$
(0.40
)
$
0.45
$
(1.91
)
Diluted
$
0.07
$
(0.40
)
$
0.43
$
(1.91
)
Weighted-average number of common shares
outstanding
Basic
13,343
12,640
12,915
12,572
Diluted
14,454
12,640
13,585
12,572
AMPCO-PITTSBURGH
CORPORATION
SEGMENT INFORMATION
(in thousands)
Three
Months Ended
September
30,
Nine Months
Ended
September
30,
2020
2019
2020
2019
Net Sales
Forged and Cast Engineered Products
$
54,499
$
67,452
$
173,723
$
231,299
Air and Liquid Processing
21,175
23,420
67,792
69,586
Consolidated
$
75,674
$
90,872
$
241,515
$
300,885
Income (Loss) from Continuing
Operations:
Forged and Cast Engineered Products
$
1,301
$
(437
)
$
5,434
$
(10,640
)
Air and Liquid Processing
2,261
2,280
7,691
7,371
Corporate costs
(3,384
)
(3,183
)
(8,682
)
(10,683
)
Consolidated
$
178
$
(1,340
)
$
4,443
$
(13,952
)
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 (loss) 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 and nine months ended September 30, 2020, and 2019,
respectively:
Three
Months Ended
September
30,
Nine Months
Ended
September
30,
2020
2019
2020
2019
Income (loss) from continuing operations,
as reported (GAAP)
$
178
$
(1,340
)
$
4,443
$
(13,952
)
Impairment Charge (1)
-
-
-
10,082
Restructuring-Related Costs (2)
-
561
-
1,653
Excess Costs of Avonmore (3)
-
685
-
4,572
Bad Debt Expense (4)
-
-
-
1,366
Proceeds from Business Interruption
Insurance Claim (5)
-
-
(769
)
-
Income (loss) from continuing operations,
as adjusted (Non-GAAP)
$
178
$
(94
)
$
3,674
$
3,721
(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
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 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 the Avonmore plant.
(4)
Represents bad debt expense for a cast
roll customer who filed for bankruptcy during the second quarter of
2019.
(5)
Represents business interruption insurance
proceeds received for equipment outages that occurred in 2018.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201116006056/en/
Michael G. McAuley Senior Vice President, Chief Financial
Officer and Treasurer (412) 429-2472 mmcauley@ampcopgh.com
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