- Q4 2023 sales up 16% over Q4 2022; full year 2023 sales up
8% over full year 2022.
- Air and Liquid Processing segment sales increased 35% for Q4
2023 and 31% for 2023 YTD compared to prior year periods.
- 2023 full year loss from operations of $34.6 million
includes a $40.9 million non-cash, undiscounted asbestos-related
revaluation charge recorded in Q4 2023.
- 2023 full year non-GAAP adjusted income from operations
improved $4.5 million vs 2022.
- Conclusion of U.S. forged business equipment modernization
program in Q1 2024.
Ampco-Pittsburgh Corporation (NYSE: AP) reported net sales of
$108.1 million and $422.3 million for the three and twelve months
ended December 31, 2023, compared to $93.5 million and $390.2
million for the three and twelve months ended December 31, 2022,
respectively. The increase for both the three and twelve months
ended December 31, 2023, over the prior year periods was primarily
driven by record Air and Liquid segment sales, higher forged roll
shipment volumes, and higher net roll pricing, offset in part by
lower shipments of forged engineered products.
The Corporation reported a loss from operations for the three
and twelve months ended December 31, 2023, of $41.6 million and
$34.6 million, respectively, compared to income from operations for
the three and twelve months ended December 31, 2022, of $0.9
million and $2.8 million, respectively. The three- and twelve-month
periods ended December 31, 2023, include an asbestos-related charge
resulting from the net effect of the revaluation of asbestos
liabilities and the related insurance receivables (the
“Asbestos-Related Charge”) of $40.9 million. This revaluation
reflects more recent claims experience, indicating primarily a
trend toward higher expected settlement values for pending and
future asbestos claims. By comparison, the three- and twelve-month
periods ended December 31, 2022, include an asbestos-related
benefit of $2.2 million resulting from a reduction in the estimated
long-term defense cost portion of the Corporation’s asbestos
liability (the “Asbestos-Related Credit”). Both the
Asbestos-Related Charge and the Asbestos-Related Credit are
recorded in the Air and Liquid Processing segment’s operating
results for the applicable periods.
CEO Brett McBrayer commented, “Our non-GAAP adjusted operating
income improved by $4.5 million in 2023 over 2022, each of which
exclude the impact of the non-cash and undiscounted
Asbestos-Related Charge (Credit) and other unusual items. Record
sales in Air and Liquid Processing, and the positive impacts of
higher forged roll volumes and higher net pricing in our roll
business collectively overcame a significant market decline in FEP
product demand and softer demand for cast rolls. Although our U.S.
forged roll business performed well, excess plant capacity for
current demand levels coupled with high energy costs in our
European cast roll business continued to weigh heavily on our
results in 2023. With the conclusion of the equipment
revitalization effort in our U.S. forged business in Q1 2024 and
some relief with lower energy prices in Europe, we are better
positioned to selectively capture market opportunities.”
Interest expense for the three and twelve months ended December
31, 2023, increased due to a rise in total debt and interest rates
for the current year periods when compared to the same periods of
the prior year. “Other – net” improved for the three months ended
December 31, 2023, when compared to the prior year period primarily
due to lower foreign exchange losses, partly offset by lower
pension income; however, “Other – net” declined for the full year
primarily due to fluctuations in foreign exchange and lower pension
income, partly offset by unrealized gains in Rabbi Trust
investments compared to prior year unrealized losses.
The income tax provision for the three and twelve months ended
December 31, 2023, includes a $1.3 million income tax benefit
related to the Asbestos-Related Charge. The income tax provision
for the three and twelve months ended December 31, 2023, also
includes the recognition of a $0.3 million valuation allowance
against the net deferred income tax assets of the Corporation’s
U.K. operations, which entered into a three-year cumulative loss
position during the quarter, given the higher energy costs it
experienced in the wake of the Russia-Ukraine conflict and the
resulting shift in the majority of its production load to another
facility.
Net loss attributable to Ampco-Pittsburgh for the three and
twelve months ended December 31, 2023, was $41.8 million, or $2.12
per share, and $39.9 million, or $2.04 per share, respectively,
which include approximately $2.00 per share and $2.02 per share,
respectively, for the after-tax impact of the Asbestos-Related
Charge. This compares to net loss attributable to Ampco-Pittsburgh
for the three months ended December 31, 2022, of $0.5 million, or
$0.02 per share, and net income attributable to Ampco-Pittsburgh
for the twelve months ended December 31, 2022, of $3.4 million, or
$0.18 per share.
Segment Results
Forged and Cast Engineered
Products
Segment sales for the three months ended December 31, 2023,
increased 9% compared to the prior year period primarily due to a
higher volume of mill roll shipments and improved pricing. Sales
for the twelve months ended December 31, 2023, were comparable to
the prior year period, as higher forged roll shipment volumes and
improved roll pricing approximately offset a decline in shipments
of forged engineered products and cast rolls.
Segment operating results for the three months ended December
31, 2023, improved compared to the prior year primarily due to
higher shipment volumes. For the twelve months ended December 31,
2023, segment operating results improved primarily due to higher
net pricing, improved product sales mix and the benefit from a
foreign energy credit, which more than offset lower manufacturing
cost absorption due to the temporary idling of capacity to align
production with demand, and higher selling and administrative
costs. The segment’s prior full year selling and administrative
costs were lower in part due to the impact of a change in an
employee benefit policy, which reduced expense in 2022.
Air and Liquid Processing
Sales for the three and twelve months ended December 31, 2023,
improved when compared to the prior year periods by 35% and 31%,
respectively, due to a higher volume of shipments of heat exchange
coils, custom air handlers and centrifugal pumps.
Segment operating results declined for the three and twelve
months ended December 31, 2023, primarily due to the
Asbestos-Related Charge in the current year periods and the absence
of the Asbestos-Related Credit from the prior-year periods.
Business unit operations improved due to the higher volume of
shipments, offset in part by higher operating costs, including
those associated with the segment’s commercial growth and plant
expansions, as well as an unfavorable product mix effect.
Teleconference Access
Ampco-Pittsburgh Corporation will hold a conference call on
March 26, 2024, at 10:30 a.m. Eastern Time (ET) to discuss its
financial results for the fourth quarter and fiscal year ended
December 31, 2023. 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/10186688/fbaa9e10c0. Those
without internet access or unable to pre-register should dial in at
least five minutes before the start time using:
- Domestic: 1-844-308-3408
- International: 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 industries. It also manufactures open-die forged
products that are sold principally 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, and Slovenia and participates in
three operating joint ventures located in China. It has sales
offices in North America, Asia, Europe, and the Middle East.
Corporate headquarters is located in Carnegie, Pennsylvania.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 (the “Act”)
provides a safe harbor for forward-looking statements made by us or
on behalf of the Corporation. This press release may include, but
is not limited to, statements about operating performance, trends
and events that the Corporation may expect or anticipate will occur
in the future, statements about sales and production levels,
restructurings, the impact from pandemics and geopolitical
conflicts, profitability and anticipated expenses, inflation, the
global supply chain, 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,” “will,” “intend,”
“believe,” “expect,” “anticipate,” “estimate,” “project,” “target,”
“goal,” “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: economic downturns,
cyclical demand for our products and insufficient demand for our
products; excess global capacity in the steel industry; limitations
in availability of capital to fund our strategic plan; inability to
maintain adequate liquidity to meet our operating cash flow
requirements, repay maturing debt and meet other financial
obligations; fluctuations in the value of the U.S. dollar relative
to other currencies; increases in commodity prices or insufficient
hedging against increases in commodity prices, reductions in
electricity and natural gas supply or shortages of key production
materials for us or our customers; inability to obtain necessary
capital or financing on satisfactory terms to acquire capital
expenditures that may be necessary to support our growth strategy;
inoperability of certain equipment on which we rely; inability to
execute our capital expenditure plan; liability of our subsidiaries
for claims alleging personal injury from exposure to
asbestos-containing components historically used in certain
products of our subsidiaries; changes in the existing regulatory
environment; inability to successfully restructure our operations
and/or invest in operations that will yield the best long-term
value to our shareholders; consequences of pandemics and
geopolitical conflicts; work stoppage or another industrial action
on the part of any of our unions; inability to satisfy the
continued listing requirements of the New York Stock Exchange or
the NYSE American Exchange; potential attacks on information
technology infrastructure and other cyber-based business
disruptions; failure to maintain an effective system of internal
control; and those discussed more fully elsewhere in Item 1A, Risk
Factors, in Part I of the Corporation’s latest Annual Report on
Form 10-K. The Corporation cannot guarantee any future results,
levels of activity, performance or achievements. In addition, there
may be events in the future that it is not 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.
NON-GAAP FINANCIAL MEASURES
The Corporation presents non-GAAP adjusted income (loss) from
operations, which is calculated as (loss) income from operations
excluding the Asbestos-Related Charge (Credit), the
Asbestos-Related Proceeds, the Foreign Energy Credit, the Change in
Employee Benefit Policy, and the Refund of Excess COVID-19
Subsidies, for each of the years, as applicable. This non-GAAP
financial measure is not based on any standardized methodology
prescribed by accounting principles generally accepted in the
United States of America (“GAAP”) and may not be comparable to
similarly titled measures presented by other companies.
The Corporation has presented non-GAAP adjusted income (loss)
from 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 its business. This non-GAAP
financial measure excludes significant charges or credits that are
one-time charges or credits, or unrelated to the Corporation’s
ongoing results of operations, or beyond its control. Additionally,
a portion of the incentive and compensation arrangements for
certain employees is based on the Corporation’s business
performance. The Corporation believes this non-GAAP financial
measure helps identify underlying trends in its business that
otherwise could be masked by the effect of the items it excludes
from adjusted income (loss) from operations. In particular, the
Corporation believes the exclusion of the Asbestos-Related Charge
(Credit), the Asbestos-Related Proceeds, the Foreign Energy Credit,
the Change in Employee Benefit Policy, and the Refund of Excess
COVID-19 Subsidies, can provide a useful measure for
period-to-period comparisons of the Corporation’s core business
performance. The Corporation also believes this non-GAAP financial
measure provides useful information to management, shareholders and
investors, and others in understanding and evaluating its operating
results, enhancing the overall understanding of its past
performance and future prospects and allowing for greater
transparency with respect to key financial metrics used by the
Corporation’s management in its financial and operational
decision-making.
Adjusted (loss) income from operations is not 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 adjusted (loss) income
from operations rather than (loss) income from operations, which is
the nearest GAAP equivalent. Among other things, there can be no
assurance that additional benefits similar to the Asbestos-Related
Credit, the Asbestos-Related Proceeds, the Foreign Energy Credit
and the Change in Employee Benefit Policy or additional expenses
similar to the Asbestos-Related Charge and the Refund of Excess
COVID-19 Subsidies will not occur in future periods.
The adjustments reflected in adjusted (loss) income from
operations are pre-tax.
AMPCO-PITTSBURGH
CORPORATION
FINANCIAL SUMMARY
(Unaudited)
(in thousands, except per
share amounts)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2023
2022
2023
2022
Total net sales
$
108,108
$
93,534
$
422,340
$
390,189
Cost of products sold (excl. depreciation
and amortization)
91,448
78,296
347,781
327,996
Selling and administrative
12,783
11,586
50,884
43,527
Depreciation and amortization
4,564
4,275
17,674
17,408
Charge (credit) for asbestos related
costs, net
40,887
(2,226
)
40,696
(2,226
)
Loss (gain) on disposal of assets
3
659
(121
)
706
Total operating costs and expenses
149,685
92,590
456,914
387,411
(Loss) income from operations
(41,577
)
944
(34,574
)
2,778
Other (expense) income:
Investment-related income
14
6
128
519
Interest expense
(2,563
)
(1,750
)
(9,347
)
(5,434
)
Other – net
1,092
674
4,516
7,693
Total other (expense) income – net
(1,457
)
(1,070
)
(4,703
)
2,778
(Loss) income before income taxes
(43,034
)
(126
)
(39,277
)
5,556
Income tax benefit (provision)
1,699
(144
)
1,158
(1,576
)
Net (loss) income
(41,335
)
(270
)
(38,119
)
3,980
Less: Net income attributable to
noncontrolling interest
501
193
1,809
564
Net (loss) income attributable to
Ampco-Pittsburgh
$
(41,836
)
$
(463
)
$
(39,928
)
$
3,416
Net (loss) income per share attributable
to Ampco-Pittsburgh common shareholders:
Basic
$
(2.12
)
$
(0.02
)
$
(2.04
)
$
0.18
Diluted
$
(2.12
)
$
(0.02
)
$
(2.04
)
$
0.18
Weighted-average number of common shares
outstanding:
Basic
19,729
19,404
19,617
19,319
Diluted
19,729
19,404
19,617
19,444
AMPCO-PITTSBURGH
CORPORATION
SEGMENT INFORMATION
(in thousands)
(Unaudited)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2023
2022
2023
2022
Net Sales:
Forged and Cast Engineered Products
$
75,757
$
69,636
$
303,761
$
299,484
Air and Liquid Processing
32,351
23,898
118,579
90,705
Consolidated
$
108,108
$
93,534
$
422,340
$
390,189
(Loss) income from Operations:
Forged and Cast Engineered Products
$
4
$
(1,648
)
$
7,580
$
444
Air and Liquid Processing
(38,470
)
5,509
(29,084
)
13,686
Corporate costs
(3,111
)
(2,917
)
(13,070
)
(11,352
)
Consolidated
$
( 41,577
)
$
944
$
(34,574
)
$
2,778
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 operations as a supplemental financial measure to GAAP
financial measures. The following is a reconciliation of (loss)
income from operations, the most directly comparable GAAP financial
measure, to this non-GAAP financial measure for the three and
twelve months ended December 31, 2023, and 2022:
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2023
2022
2023
2022
(Loss) income from operations, as reported
(GAAP)
$
(41,577
)
$
944
$
(34,574
)
$
2,778
Asbestos-Related Charge (Credit) (1)
40,887
(2,226
)
40,887
(2,226
)
Asbestos-Related Proceeds (2)
-
-
(191
)
-
Foreign Energy Credit (3)
-
-
(1,874
)
-
Change in Employee Benefit Policy (4)
-
--
-
(1,431
)
Refund of Excess COVID-19 Subsidies
(5)
--
--
-
664
(Loss) income from operations, as adjusted
(Non-GAAP)
$
(690
)
$
(1,282
)
$
4,248
$
(215
)
(1)
For 2023, represents an increase in the
estimated settlement costs of pending and future asbestos claims,
net of additional insurance recoveries and a reduction in the
estimated defense-to-indemnity cost ratio from 65% to 60%. For
2022, represents a benefit from the reduction in the estimated
defense-to-indemnity cost ratio from 70% to 65%.
(2)
Represents proceeds received from an
insolvent asbestos-related insurance carrier.
(3)
Represents reimbursement of past energy
costs at one of the Corporation’s foreign operations by its local
government.
(4)
Represents a benefit resulting from a
change in how certain employees earn certain benefits.
(5)
Represents excess COVID-19 subsidies
received in 2020 and returned in 2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240325688195/en/
Michael G. McAuley Senior Vice President, Chief Financial
Officer and Treasurer (412) 429-2472 mmcauley@ampcopgh.com
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