Ampco-Pittsburgh Corporation (NYSE: AP) Announces Fourth Quarter and Full Year 2023 Results
- Net sales for Q4 2023 were $108.1 million, up from $93.5 million in Q4 2022.
- Full-year 2023 sales reached $422.3 million, compared to $390.2 million in 2022.
- The Air and Liquid Processing segment experienced a 35% sales increase in Q4 2023 and a 31% increase for the full year 2023.
- The company reported a full-year loss of $34.6 million, including a $40.9 million non-cash asbestos-related charge.
- Non-GAAP adjusted income from operations improved by $4.5 million in 2023 compared to 2022.
- Interest expense increased due to rising debt and interest rates.
- Net loss attributable to Ampco-Pittsburgh for Q4 2023 was $41.8 million, including $2.00 per share for the Asbestos-Related Charge.
- The company will hold a conference call on March 26, 2024, to discuss its financial results.
- The company reported a full-year loss of $34.6 million.
- Interest expense increased due to rising debt and interest rates.
- Net loss attributable to Ampco-Pittsburgh for Q4 2023 was $41.8 million.
Insights
The reported increase in quarterly and annual sales for Ampco-Pittsburgh Corporation, particularly in the Air and Liquid Processing segment, reflects a robust demand for the company's products, likely driven by industry growth or market share gains. Such sales growth can be a positive signal to investors about the company's revenue-generating capabilities. However, the significant loss from operations due to the asbestos-related revaluation charge is a substantial concern. This non-cash charge, while not affecting cash flow directly, represents a material impact on the company's profitability and could potentially influence investor sentiment and the stock's valuation.
Moreover, the conclusion of the U.S. forged business equipment modernization program suggests potential future improvements in operational efficiency and cost management. While this may not have immediate financial benefits, it could improve long-term profitability and competitive positioning. The increased interest expense, due to higher debt and interest rates, is another critical factor that could pressure the company's financials in the short term. Investors should carefully consider the balance between these growth prospects and the financial challenges presented.
The reported sales growth in the Air and Liquid Processing segment indicates that Ampco-Pittsburgh is effectively capitalizing on market opportunities in this area. This could be due to innovation, an expanded product line, or strategic partnerships. However, the decline in FEP product demand and softer demand for cast rolls suggests that the company may need to adjust its strategy to address shifting market dynamics. The mention of high energy costs in the European cast roll business highlights the impact of geopolitical events, like the Russia-Ukraine conflict, on global supply chains and operational costs.
Investors may find the company's ability to navigate these challenges, coupled with strategic initiatives such as the equipment modernization program, indicative of management's adaptability and long-term vision. A critical observation is the company's positioning to selectively capture market opportunities post-modernization, which could lead to an improved market share and stronger financial performance in the future.
The asbestos-related charge is a significant legal and financial issue that has affected Ampco-Pittsburgh's operational results. The revaluation reflects a trend toward higher expected settlement values and indicates that the company is adjusting its liabilities in line with recent claims experience. This adjustment is a prudent legal move, ensuring that the company's financial statements accurately reflect potential future liabilities. However, it also underscores the ongoing risks associated with legacy asbestos exposure, which can lead to substantial financial impacts and potential reputational harm.
Investors should be aware that such legal contingencies can recur and may require careful monitoring of the company's legal provisions and risk management strategies. The impact of these legal issues on the company's financial health is a critical factor for stakeholders to consider, alongside the operational performance of the business segments.
-
Q4 2023 sales up
16% over Q4 2022; full year 2023 sales up8% over full year 2022. -
Air and Liquid Processing segment sales increased
35% for Q4 2023 and31% for 2023 YTD compared to prior year periods. -
2023 full year loss from operations of
$34.6 million $40.9 million -
2023 full year non-GAAP adjusted income from operations improved
$4.5 million -
Conclusion of
U.S. forged business equipment modernization program in Q1 2024.
The Corporation reported a loss from operations for the three and twelve months ended December 31, 2023, of
CEO Brett McBrayer commented, “Our non-GAAP adjusted operating income improved by
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
Net loss attributable to Ampco-Pittsburgh for the three and twelve months ended December 31, 2023, was
Segment Results
Forged and Cast Engineered Products
Segment sales for the three months ended December 31, 2023, increased
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
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
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
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 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 |
|
(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
Source: Ampco-Pittsburgh Corporation
FAQ
What was the percentage increase in Q4 2023 sales compared to Q4 2022 for Ampco-Pittsburgh (NYSE: AP)?
What was the full-year 2023 sales increase for Ampco-Pittsburgh (NYSE: AP) compared to full-year 2022?
What segment saw a 35% sales increase in Q4 2023 for Ampco-Pittsburgh (NYSE: AP)?
What was the full-year loss from operations for Ampco-Pittsburgh (NYSE: AP) in 2023?
What was the non-GAAP adjusted income from operations improvement for Ampco-Pittsburgh (NYSE: AP) in 2023?
