Ampco-Pittsburgh Corporation (NYSE: AP) Announces Second Quarter 2024 Results

Rhea-AI Summary

Ampco-Pittsburgh (NYSE: AP) reported Q2 2024 results with net sales of $111.0 million, up from $107.2 million in Q2 2023. Income from operations rose to $5.0 million, a 53% increase from $3.3 million in the prior-year period. The Air and Liquid Processing segment saw a 19% sales increase for both Q2 and YTD compared to 2023. Net income for Q2 2024 was $2.0 million, or $0.10 per diluted share, compared to $0.4 million, or $0.02 per diluted share, in Q2 2023.

CEO Brett McBrayer noted that Q2 results were at the high end of previous guidance, reflecting strong sequential improvement in both segments. The Forged and Cast Engineered Products segment improved due to higher net roll pricing, while the Air and Liquid Processing segment benefited from increased shipments of air handling systems.

Positive

• Q2 2024 operating income up 53% over prior-year period
• Air and Liquid Processing segment sales up 19% for both Q2 and YTD
• Net income increased to $2.0 million in Q2 2024 from $0.4 million in Q2 2023
• Higher net roll pricing in the Forged and Cast Engineered Products segment
• Improved backlog due to higher order intake during the quarter

Negative

• Losses in European cast roll business due to excess capacity
• Weak market for forged engineered products
• Increased interest expense due to higher debt balance and interest rates
• Slight decline in Forged and Cast Engineered Products segment sales
• Higher costs in Air and Liquid Processing segment due to expansion and new facility

Insights

Financial Analyst

Ampco-Pittsburgh's Q2 2024 results show mixed performance. Net sales increased by 3.5% to $111.0 million, while operating income rose significantly by 51.5% to $5.0 million. The improvement was primarily driven by higher net roll pricing in the Forged and Cast Engineered Products segment. However, the company still faces challenges, including losses in the European cast roll business and weak demand for forged engineered products.

The Air and Liquid Processing segment showed strong growth, with sales up 19% both quarterly and year-to-date. This growth was attributed to increased shipments of air handling systems. Despite this, the segment's operating results only improved slightly for Q2 and declined for the six-month period due to unfavorable product mix and higher costs.

While the company achieved net income of $2.0 million ($0.10 per diluted share) for Q2, it reported a net loss of $0.7 million for the first half of 2024. This performance, coupled with increased interest expenses and ongoing challenges in certain business areas, suggests that Ampco-Pittsburgh still has work to do to achieve consistent profitability and growth across all segments.

Manufacturing Industry Expert

Ampco-Pittsburgh's Q2 results highlight the importance of operational efficiency and market positioning in the manufacturing sector. The company's investment in new machinery for its U.S. forged plants is starting to pay off, contributing to the improved performance in the Forged and Cast Engineered Products segment. This demonstrates the potential benefits of modernizing manufacturing facilities to enhance productivity and competitiveness.

However, the challenges in the European cast roll business due to excess capacity underscore the need for strategic capacity management in cyclical industries. The company may need to consider restructuring or realigning its European operations to address this issue.

The strong performance in the Air and Liquid Processing segment, driven by expansion of its sales distribution network and a new manufacturing facility, showcases the value of strategic growth initiatives. However, the impact on margins due to unfavorable product mix and higher costs highlights the importance of managing growth carefully to maintain profitability.

Market Research Analyst

Ampco-Pittsburgh's Q2 results reflect broader trends in the industrial manufacturing sector. The company's improved performance in forged and cast engineered products, despite weak demand for forged engineered products, suggests a potential stabilization or slight recovery in certain industrial markets.

The 19% growth in the Air and Liquid Processing segment aligns with increasing demand for HVAC and air handling systems, possibly driven by ongoing focus on air quality and energy efficiency in commercial and industrial settings. This trend could present further growth opportunities for Ampco-Pittsburgh if capitalized upon effectively.

However, the challenges in the European cast roll business highlight ongoing pressures in the global steel industry, which continues to grapple with overcapacity issues. This situation may persist in the near term, potentially impacting Ampco-Pittsburgh's performance in this segment.

The sequential improvement in total backlog due to higher order intake is a positive sign for future revenue, but the company will need to manage costs carefully to translate this into improved profitability, especially given the increased interest expenses and operational challenges in some areas.

• Strong sequential earnings improvement delivered at top end of previous guidance range.
• Q2 2024 operating income up 53% over prior-year period led by Forged and Cast Engineered Products segment improvement.
• Air and Liquid Processing segment sales up 19% for both Q2 and YTD compared to prior-year periods.

CARNEGIE, Pa.--(BUSINESS WIRE)-- Ampco-Pittsburgh Corporation (NYSE: AP) reported net sales of $111.0 million and $221.2 million for the three and six months ended June 30, 2024, respectively, compared to $107.2 million and $212.0 million for the three and six months ended June 30, 2023, respectively. The increase is attributable to sales growth in the Air and Liquid Processing segment.

The Corporation reported income from operations for the three and six months ended June 30, 2024, of $5.0 million and $5.1 million, respectively, compared to $3.3 million and $5.3 million for the three and six months ended June 30, 2023, respectively. The three and six months ended June 30, 2023, include a benefit from a $1.9 million foreign energy credit. The underlying improvement is primarily due to higher net roll pricing in the Forged and Cast Engineered Products segment.

Commenting on the quarter, Ampco-Pittsburgh’s CEO, Brett McBrayer, said, “Our final Q2 results came in at the high end of our previous guidance range, reflecting the strong sequential improvement we expected in both segments. With the first full quarter of all the new machinery running in our U.S. forged plants and a sequential rebound in Air and Liquid Processing segment margins during the quarter, our Q2 results reflect our current potential in a steady production environment with no unusual items coming into play. We are still experiencing losses in our European cast roll business due to excess capacity and the market for forged engineered products remains weak, but total backlog has improved sequentially due to higher order intake during the quarter.”

Interest expense for the three and six months ended June 30, 2024, increased in comparison to the same periods of the prior year primarily due to the higher equipment financing debt balance, higher average revolving credit facility borrowings and higher average interest rates. Other income – net improved for the three and six months ended June 30, 2024, compared to the same periods of the prior year, primarily due to higher losses on foreign exchange in the prior year periods.

Net income (loss) for the current year periods equaled $2.0 million, or $0.10 per diluted share, and $(0.7) million, or $(0.04) per share, for the three and six months ended June 20, 2024, respectively. This compares to net income of $0.4 million, or $0.02 per diluted share, and $1.1 million, or $0.06 per diluted share, for the three and six months ended June 30, 2023, respectively. The foreign energy credit improved earnings per share by $0.10 for the three and six months ended June 30, 2023.

Segment Results

Forged and Cast Engineered Products

Sales for the Forged and Cast Engineered Products segment for the three and six months ended June 30, 2024, declined slightly from the same periods of the prior year primarily due to a lower volume of shipments, offset by improved pricing and favorable changes in product mix.

Operating results for the three and six months ended June 30, 2024, improved when compared to the same periods of the prior year primarily due to improved pricing and fluctuations in manufacturing costs, net of lower variable-index surcharges. The three and six months ended June 30, 2023, include a $1.9 million benefit for a foreign energy credit.

Air and Liquid Processing

Sales for the Air and Liquid Processing segment for both the three and six months ended June 30, 2024, improved 19% compared to the same periods of the prior year due primarily to an increase in shipments of air handling systems as a result of expansion of its sales distribution network and the additional manufacturing facility opened in the third quarter of 2023.

Operating results for the three months ended June 30, 2024, improved slightly compared to the prior year period but declined for the six months ended June 30, 2024. The benefit from the higher sales volume was minimized by an unfavorable product mix of heat exchangers, caused by the timing of shipments for several large orders, and centrifugal pumps, due to shipping older lower margin orders. In addition, higher commissions and employee-related costs associated with the expansion of the segment’s sales distribution network and higher lease costs associated with the additional manufacturing facility negatively impacted operating income when compared to the prior year periods.

Teleconference Access

Ampco-Pittsburgh Corporation will hold a conference call on Tuesday August 13, 2014, at 10:30 a.m. Eastern Time (ET) to discuss its financial results for the second quarter ended June 30, 2024. 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/10188757/fc6d48eec8. 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 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 and Part II of the latest 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 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.

AMPCO-PITTSBURGH CORPORATION
FINANCIAL SUMMARY
(in thousands, except per share amounts)
	Three Months Ended June 30,								Six Months Ended June 30,
	2024				2023				2024				2023
Total net sales	$	110,988			$	107,211			$	221,203			$	212,014
Cost of products sold (excl. depreciation and amortization)		87,684				85,471				180,174				171,843
Selling and administrative		13,550				14,093				26,523				26,280
Depreciation and amortization		4,698				4,354				9,368				8,728
Loss (gain) on disposal of assets		13				5				13				(118	)
Total operating costs and expenses		105,945				103,923				216,078				206,733
Income from operations		5,043				3,288				5,125				5,281
Other expense - net:
Investment-related income		8				7				27				16
Interest expense		(3,017	)			(2,245	)			(5,774	)			(4,316	)
Other income – net		1,381				98				2,285				1,465
Total other expense – net		(1,628	)			(2,140	)			(3,462	)			(2,835	)
Income before income taxes		3,415				1,148				1,663				2,446
Income tax provision		(863	)			(152	)			(1,317	)			(465	)
Net income		2,552				996				346				1,981
Less: Net income attributable to noncontrolling interest		540				573				1,051				882
Net income (loss) attributable to Ampco-Pittsburgh	$	2,012			$	423			$	(705	)		$	1,099
Net income (loss) per share attributable to Ampco-Pittsburgh common shareholders:
Basic	$	0.10			$	0.02			$	(0.04	)		$	0.06
Diluted	$	0.10			$	0.02			$	(0.04	)		$	0.06
Weighted-average number of common shares outstanding:
Basic		19,859				19,541				19,794				19,504
Diluted		19,875				19,590				19,794				19,587

AMPCO-PITTSBURGH CORPORATION
SEGMENT INFORMATION
(in thousands)
	Three Months Ended June 30,								Six Months Ended June 30,
	2024				2023				2024				2023
Net Sales:
Forged and Cast Engineered Products	$	75,713			$	77,581			$	152,902			$	154,379
Air and Liquid Processing		35,275				29,630				68,301				57,635
Consolidated	$	110,988			$	107,211			$	221,203			$	212,014
Income from Operations:
Forged and Cast Engineered Products	$	5,361			$	3,904			$	6,937			$	6,128
Air and Liquid Processing		3,174				2,977				5,156				5,930
Corporate costs		(3,492	)			(3,593	)			(6,968	)			(6,777	)
Consolidated	$	5,043			$	3,288			$	5,125			$	5,281

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240812995167/en/

Michael G. McAuley

Senior Vice President, Chief Financial Officer and Treasurer

(412) 429-2472

mmcauley@ampcopgh.com

Source: Ampco-Pittsburgh Corporation

FAQ

What were Ampco-Pittsburgh's (AP) Q2 2024 financial results?

Ampco-Pittsburgh reported Q2 2024 net sales of $111.0 million and income from operations of $5.0 million. Net income was $2.0 million, or $0.10 per diluted share.

How did Ampco-Pittsburgh's (AP) Q2 2024 results compare to Q2 2023?

Q2 2024 net sales increased from $107.2 million in Q2 2023, and income from operations rose 53% from $3.3 million. Net income improved from $0.4 million, or $0.02 per diluted share, in Q2 2023.

What was the performance of Ampco-Pittsburgh's (AP) Air and Liquid Processing segment in Q2 2024?

The Air and Liquid Processing segment saw a 19% sales increase for both Q2 and YTD compared to 2023, primarily due to increased shipments of air handling systems.

What factors affected Ampco-Pittsburgh's (AP) Forged and Cast Engineered Products segment in Q2 2024?

The segment saw improved operating results due to higher net roll pricing, but experienced slightly lower sales due to decreased shipment volume. The European cast roll business faced losses due to excess capacity.