Ampco-Pittsburgh Subsidiaries Announce Commercial Contract Wins and Strong Growth in Sales Order Backlog

Rhea-AI Summary

Ampco-Pittsburgh announced significant contract wins and a notable increase in sales order backlog.

Their subsidiary, Union Electric Steel, secured two major roll contracts for new rolling mill projects. The first contract is with Ternium Mexico for $6.7 million, with deliveries starting in the first half of 2025. The second contract is with a major European OEM mill builder for $5.0 million, also with deliveries beginning in the first half of 2025.

Additionally, the Air and Liquid Processing segment achieved record new orders for the quarter ending June 30, 2024, with order intake increasing more than 50% from the previous quarter. The total backlog is expected to be between $360 to $365 million, showing a sequential growth of 3.2% to 4.6% compared to the previous quarter.

CEO Brett McBrayer emphasized the company's commitment to quality and increased market presence due to strengthened sales force and manufacturing capacity.

Positive

• Union Electric Steel secured two new major contracts worth $6.7 million and $5.0 million respectively.
• Air and Liquid Processing segment achieved record new orders for the quarter ending June 30, 2024.
• Order intake for Air and Liquid Processing segment surged more than 50% from the previous quarter.
• Total backlog expected to be between $360 to $365 million, representing a sequential growth of 3.2% to 4.6%.

Negative

• None.

Insights

Financial Analyst

Ampco-Pittsburgh Corporation’s recent announcement provides some enticing entry points for those looking at the stock’s short-term potential and longer-term growth. The initial provisioning contracts valued at approximately $6.7 million and $5.0 million are promising indicators of future revenue streams starting in the first half of 2025. These contracts not only add to the company’s bottom line but also position Union Electric Steel as a key supplier in the industry, potentially attracting more business in the future.

What stands out is the 50% surge in order activity within the Air and Liquid Processing segment, achieving the highest quarterly order intake in the segment's history. This implies strong underlying demand for their products, bolstered by their recent investments in sales force and manufacturing capacity.

For retail investors, the consistent growth in the sales order backlog—expected to reach between $360 million to $365 million—is a positive indicator of sustained demand and operational efficiency. However, it’s important to observe whether this momentum can be sustained in subsequent quarters, especially given the cyclical nature of the steel and aluminum markets.

Market Research Analyst

The new contracts highlight Union Electric Steel's ability to secure significant projects in competitive markets such as North America and Europe. The piecemeal nature of these contracts, with deliveries starting in 2025, suggests a stable pipeline of work that can provide financial visibility for the company.

Additionally, the record-level sales order backlog in the Air and Liquid Processing segment demonstrates a robust demand across multiple end markets including pharmaceutical and U.S. military sectors. This diversification is important as it mitigates risk from overreliance on a single sector.

The sequential growth in backlog of 3.2% to 4.6% compared to the previous quarter is notable, particularly in a time where many industries face supply chain constraints and economic uncertainties. This could indicate that Ampco-Pittsburgh has strong operational execution capabilities and effective supply chain management.

CARNEGIE, Pa.--(BUSINESS WIRE)-- Ampco-Pittsburgh Corporation (NYSE: AP) today announced that its wholly-owned subsidiary, Union Electric Steel Corporation (“Union Electric Steel”), a leader in the manufacture of Forge and Cast rolls for the steel and aluminum industries, has been selected to supply the initial provisioning (mill fill) of rolls for two new rolling mill projects under construction.

The roll contracts for these new mills are:

1. A new cold mill for Ternium Mexico S.A. de C.V. – Pesqueria, a major North American steel producer, with roll deliveries expected to begin in the first half of 2025 valued at approximately $6.7 million; and
2. A new plant being built in Scandinavia by a major European OEM mill builder requiring rolls to be delivered in the first half of 2025 valued at approximately $5.0 million.

In addition, the Corporation has updated its sales order backlog and expects to report that its Air and Liquid Processing segment achieved a record level of new orders in the quarter ended June 30, 2024. Order activity surged more than 50% versus the quarter ended March 31, 2024, to achieve the highest quarterly order intake in the segment’s history.

Commenting on these developments, Brett McBrayer, Ampco-Pittsburgh’s Chief Executive Officer, said, “The roll contract wins underscore Union Electric’s commitment to providing high quality rolls to the global steel and aluminum markets, while solidifying our position as a key player in these markets. In Air and Liquid Processing, we saw strong order activity in multiple markets including both the Pharmaceutical and U.S. Military markets. The investments we have made to strengthen our sales force and increase our manufacturing capacity have allowed us to substantially increase our presence in the markets we serve.”

The Corporation expects total backlog for the quarter ended June 30, 2024, to be in the range of $360 to $365 million, which represents sequential growth of 3.2% to 4.6% compared to the quarter ended March 31, 2024.

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240709799747/en/

Michael G. McAuley

Senior Vice President, Chief Financial Officer and Treasurer

(412) 429-2472

mmcauley@ampcopgh.com

Source: Ampco-Pittsburgh Corporation

FAQ

What new contracts did Ampco-Pittsburgh's subsidiary Union Electric Steel secure?

Union Electric Steel secured contracts for new rolling mill projects worth $6.7 million with Ternium Mexico and $5.0 million with a major European OEM mill builder.

When will Union Electric Steel start delivering rolls for the new contracts?

Deliveries for both contracts are expected to begin in the first half of 2025.

How much did the Air and Liquid Processing segment's order intake increase in the quarter ending June 30, 2024?

The order intake for the Air and Liquid Processing segment increased by more than 50% compared to the previous quarter.

What is the expected total sales order backlog for Ampco-Pittsburgh for the June 30, 2024 quarter?

The total sales order backlog is expected to be between $360 to $365 million, showing a sequential growth of 3.2% to 4.6% from the previous quarter.