Ampco-Pittsburgh Conference Call Summary Company Overview - **Company Name**: Ampco-Pittsburgh - **Ticker**: AP - **Founded**: 1929 - **Segments**: - Forged and cast engineered products - Air and liquid processing - **2024 Revenue**: Approximately $400 million - **Employees**: About 1,500 [1][2] Core Business Insights Forged and Cast Engineered Products - **Market Position**: Global leader in forged and cast rolls for steel and aluminum rolling mills, primarily in North America and Europe [2][4] - **Revenue Contribution**: Revenue from rolling mill rolls is estimated at $250-$300 million, with the global market for rolling mill rolls around $2 billion annually [8][9] - **Customer Base**: Major customers include U.S. Steel, Steel Dynamics, and Cleveland-Cliffs [5][11] - **Production Facilities**: Operations in the U.S., Sweden, and Slovenia, with a joint venture in China [6][10] - **Market Dynamics**: The company expects $7-$8 million annual EBITDA improvement from the business reset, focusing on operational efficiencies and growth [3][16] Air and Liquid Processing - **Business Segments**: - Aerofin: Heat exchange products for nuclear power and industrial processes - Buffalo Air Handling: Custom air handling units for specialized environments - Buffalo Pumps: Centrifugal pumps primarily for the U.S. Navy and power generation [17][18] - **Growth**: 55% revenue growth over the last three years, with continued expansion expected [18][19] - **Strategic Importance**: Long-term supplier to the U.S. Navy, with significant investments to modernize facilities [20][21] Financial Performance - **EBITDA Improvement**: Anticipated annualized improvement of $7-$8 million from exiting underperforming assets [23][24] - **Debt Leverage**: Expected to improve as the company modernizes plants and exits unprofitable operations [23][24] - **Pension Plan**: Moving towards a fully funded status, which will positively impact financial health [24] Market Trends and Opportunities - **End Market Growth**: Major end markets projected to grow 3-5% over the next five years, contrasting with previous years of flat or declining growth [15][24] - **Tariff Impact**: Anticipated increase in demand due to tariff changes in Europe, potentially increasing demand by 10%-15% [14][28] - **Nuclear and Navy Markets**: Significant growth opportunities in the nuclear sector and U.S. Navy contracts, with barriers to entry providing competitive advantages [19][21] Risks and Challenges - **Market Demand Fluctuations**: Previous delays in roll purchases due to tariffs and market conditions, but signs of improvement are noted [28][29] - **Competitive Landscape**: Limited competition in the U.S. for rolling mill rolls, but ongoing monitoring of competitors like Villares is necessary [9][34] Conclusion - **Future Outlook**: Positive growth trajectory anticipated, with a focus on improving performance, reducing debt, and capitalizing on market opportunities in both segments [36]

Ampco-Pittsburgh Corporation (AP) investors have been experiencing some short-term gains from the stock of late. Shares of the Carnegie, PA-based manufacturer of highly-engineered, high-performance specialty metal products and customized industrial equipment have surged 155.8% in the past three months compared with the industry’s 19.2% rise. The stock also outperformed the sector and the S&P 500’s 8.9% and 6.4% gains, respectively, in the same time frame.A major development of AP in recent months includes t ...

Ampco-Pittsburgh Corporation (AP) , recently upgraded to an “Outperform” from “Neutral,” is emerging from a multi-year reset with a simpler footprint, firmer pricing discipline and growing exposure to end markets that are proving both resilient and strategic. After exiting structurally unprofitable operations and navigating tariff-driven volatility, management is increasingly framing the business around higher-quality earnings rather than volume for volume’s sake. Tariffs have been passed through successful ...

Group 1 - Northbound Returns shows a strong interest in real assets, financials, and insurance sectors [1] - The company has a deep understanding of the Canadian investment universe, having worked for one of the largest Canadian banks in equity research [1]

Core Viewpoint - Ampco-Pittsburgh Corporation (AP) is facing financial challenges but shows potential for undervaluation based on its price-to-sales and enterprise value metrics [3][5]. Financial Performance - The company has a negative price-to-earnings (P/E) ratio of -9.69, indicating ongoing losses [3][5]. - The price-to-sales ratio stands at 0.12, suggesting the stock may be undervalued relative to its sales [3][5]. - The enterprise value to sales ratio is 0.41, further supporting the perspective of potential undervaluation [3][5]. Financial Health - The enterprise value to operating cash flow ratio is 28.99, indicating limited cash flow coverage for its enterprise value [4]. - The debt-to-equity ratio is 2.33, highlighting a significant reliance on debt [4][5]. - A current ratio of 1.84 suggests that the company has sufficient liquidity to meet its short-term obligations [4][5]. Insider Activity - Director McNair Darrell L purchased 3,000 shares at $2.52 each, increasing his total holdings to 63,912 shares, signaling confidence in the company [2][5].

Summary of Ampco-Pittsburgh Conference Call Company Overview - **Company Name**: Ampco-Pittsburgh Corporation - **Founded**: 1929 - **Employees**: Approximately 1,500 - **Annual Revenue**: Over $400 million - **Market Capitalization**: Over $50 million - **Segments**: - Forging, Casting, and Product Segment - Air and Liquid Processing Segment - **Market Position**: - Number one in North America and Europe for forging and casting products - Number one in North America for heat exchangers in nuclear power plants [2][3] Core Business Insights - **Strategic Focus**: - Exit unprofitable assets, resulting in improved EBITDA from $78 million to a stronger position [3] - Growth in Air and Liquid Processing and operational efficiencies [3] - **Market Presence**: - 90% of nuclear power plants in North America utilize their products [3] - Leading producer of pumps for the U.S. military [3] Segment Analysis Forging, Casting, and Product Segment - **Sales Distribution**: 70% of sales in North America and Europe [4] - **Product Types**: - Backup rolls, work rolls, and forged engineered products [4] - 90% of sales are rolls, with a market size of approximately $2 billion [8] - **Tariff Impact**: - Tariffs increased from 25% to 50%, creating barriers for imports and benefiting domestic sales [5][9] - **Competitors**: - Major competitors include Lehigh Heavy Forge, Superior Steel, and Villares [9] - **Market Growth**: - Anticipated growth in steel and aluminum markets will increase demand for rolls [7][13] Air and Liquid Processing Segment - **Key Businesses**: - Aerofin (custom heat exchangers), Buffalo Air Handling (air handling units), Buffalo Pumps (custom pumps) [15] - **Market Growth**: - 55% revenue growth over the last three years, with significant barriers to entry [16][17] - **Key Customers**: - Major clients include Eli Lilly, Merck, Johnson & Johnson, and the U.S. Navy [15][16] - **Nuclear Market**: - Growth driven by the restart of nuclear plants and the emergence of small modular reactors [19] Financial Performance - **Recent Developments**: - Exited underperforming businesses, including a facility in the U.K. [23] - Anticipated increase in adjusted EBITDA by $7-8 million due to the exit of underperforming assets [24] - **Balance Sheet Improvements**: - U.S. pension plan nearing 100% funding, with a roadmap to reduce leverage from 4.0 to 3.0 [26][27] - **Future Projections**: - Expected continued growth in adjusted EBITDA and margins [24][29] Market Trends and Opportunities - **European Market Changes**: - Europe is reducing import quotas and increasing tariffs, which will benefit Ampco-Pittsburgh [12][13] - **End Market Growth**: - Mid-single-digit growth projected in key end markets over the next five years [13] - **International Expansion**: - Active steps to expand into markets outside North America, including partnerships in Australia [38] Additional Insights - **Operational Efficiency**: - Investment of approximately $30 million in equipment modernization to enhance reliability and efficiency [11] - **Customer Base**: - Top 10 customers account for roughly half of revenue, indicating a concentrated customer base [10] - **Margin Improvements**: - Recent pricing increases in the U.S. market for forged rolls, with margins improving significantly [39] This summary encapsulates the key points discussed during the conference call, highlighting Ampco-Pittsburgh's strategic direction, market position, financial performance, and growth opportunities.

Core Viewpoint - Ampco-Pittsburgh Corporation (AP) has demonstrated significant financial improvement in its third-quarter 2025 results, with a notable stock performance that outpaced the S&P 500 Index, indicating strong market confidence in the company's strategic direction and operational efficiency [1][2]. Financial Performance - Net sales increased by 12.3% to $108 million from $96.2 million year-over-year, driven by higher shipment volumes in the Air and Liquid Processing (ALP) segment and improved pricing in the Forged and Cast Engineered Products (FCEP) segment [2]. - Adjusted EBITDA rose 34.9% to $9.2 million from $6.8 million, with the adjusted EBITDA margin expanding to 8.53% from 7.10% in the prior year [2]. - Adjusted earnings per share improved to $0.04, a $0.14 increase from a loss of $0.10 per share in the previous year [3]. Segment Performance - The ALP segment achieved a revenue increase of 26.2% to $36.5 million, with adjusted EBITDA rising 31% to $4.4 million, supported by strong demand in nuclear, naval, and pharmaceutical markets [4]. - In the FCEP segment, net sales were $71.5 million, a 6.3% increase from $67.2 million, although sequentially lower due to typical summer shutdowns [5]. Cost Management - Company-wide selling and administrative expenses decreased by 4.5% year-over-year, attributed to lower employee-related costs [6]. - Interest expenses remained stable, and the income tax provision decreased due to a reduced statutory tax rate in one foreign jurisdiction [6]. Management Insights - Management highlighted that the strengthened operating performance and strategic exit decisions position the company for sustainably higher profitability, with expectations of increased adjusted EBITDA by $7 million–$8 million from the U.K. exit [7]. - There is growing momentum in multiple end markets, particularly in nuclear power and pharmaceutical manufacturing, which are expected to drive long-term demand [7]. Future Outlook - The company anticipates gradual normalization in roll ordering patterns and expects to benefit from broader industrial trends, including construction spending and automotive production [8]. - The accelerated exit from the U.K. cast roll facility and the planned exit from a small steel distribution business are expected to materially improve profitability starting in the fourth quarter of 2025 [12]. Restructuring Actions - Key restructuring actions included placing the U.K. cast roll plant into administration to halt further losses and initiating the exit from the Alloys Unlimited steel distribution business [13]. - The liquidation of the U.K. facility is expected to generate $8 million–$9 million in proceeds to reduce revolver borrowings [13].

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Financial Data and Key Metrics Changes - Consolidated adjusted EBITDA for Q3 2025 was $9.2 million, up 35% from the prior year, driven by strong performance in the Air and Liquid segment [4] - Adjusted earnings per share for Q3 2025 were $0.04, an increase of $0.14 from the prior year [4][25] - Net sales for Q3 2025 were $108 million, a 12% increase compared to Q3 2024 [20] Business Line Data and Key Metrics Changes - In the Forged and Cast Engineered Products (FCEP) segment, net sales were $71.5 million, $6.4 million lower than Q2 2025 but $4.3 million higher than Q3 2024 [6] - FCEP segment-adjusted EBITDA was $7.1 million, $0.3 million higher than both Q2 and Q3 2024 [6] - Air & Liquid Systems Corporation reported a 26% increase in Q3 revenue compared to the prior year, with year-to-date revenue nearly 7% above the prior year [13] Market Data and Key Metrics Changes - Tariffs on imports from Europe are expected to have a neutral impact on roll demand in North America, while negatively affecting Canadian and Mexican customers [8] - The cast roll market in North America continues to exceed domestic capacity, indicating strong long-term demand [9] - Construction spending, automotive production, and canned sheet demand are expected to grow at mid-single-digit rates over the next five years [9] Company Strategy and Development Direction - The company is accelerating its exit from the U.K. facility, which is expected to improve full-year adjusted EBITDA by $7-$8 million [5][19] - The decision to wind down the Alloys Unlimited steel distribution business is aimed at improving profitability [10] - The company is focusing on addressing underperforming assets to enhance overall profitability [41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong underlying performance and the strategic actions taken to transform the company [4] - The exit from the U.K. facility is expected to position the company for improved profitability moving forward [5] - Management highlighted the positive long-term growth potential in the nuclear market and strong demand from the U.S. Navy [14][16] Other Important Information - The company recorded charges totaling $3.1 million in Q3 2025 related to the exit of the U.K. cast roll business and Alloys Unlimited [18] - The liquidity position at September 30, 2025, included cash on hand of $15 million and undrawn availability on the revolving credit facility of $28.2 million [25] Q&A Session Summary Question: Clarification on U.K. closure and debt implications - Management confirmed that the insolvency process is exclusively related to the subsidiary and does not affect other segments of the company [27] Question: Pension plan evaluation - Management indicated that an evaluation of the pension plan will be conducted annually [30] Question: Capacity expansion and demand from pharmaceutical companies - Management stated that they can significantly increase throughput and are addressing this through various improvements [31] Question: Monetization from liquidation of properties - Management expects to receive approximately $8-$9 million in net proceeds from the liquidation process, which will reduce bank debt [35][36]

Financial Performance - Total net sales for Q3 2025 reached $108.009 million, a 12.5% increase from $96.166 million in Q3 2024[12] - Net loss attributable to Ampco-Pittsburgh for Q3 2025 was $2.211 million, compared to a net loss of $1.959 million in Q3 2024, reflecting a 12.9% increase in losses[12] - Operating costs for Q3 2025 were $106.886 million, a 13.4% increase from $94.296 million in Q3 2024[12] - The company reported a comprehensive loss of $2.936 million for Q3 2025, compared to a comprehensive income of $2.921 million in Q3 2024[14] - For the three months ended September 30, 2025, the net loss was $2,211 thousand, compared to a net loss of $1,959 thousand for the same period in 2024, indicating an increase in losses of approximately 12.8% year-over-year[23] - The comprehensive loss for the nine months ended September 30, 2025, was $6,484 thousand, compared to a comprehensive loss of $1,108 thousand for the same period in 2024, reflecting a significant increase in losses of approximately 584.5%[20] Assets and Liabilities - Total current assets increased to $249.539 million as of September 30, 2025, up from $236.787 million as of December 31, 2024, representing a 5.3% growth[10] - Total liabilities decreased to $449.854 million as of September 30, 2025, down from $459.805 million as of December 31, 2024, indicating a 2.3% reduction[10] - The company’s retained deficit increased to $(80.963) million as of September 30, 2025, compared to $(72.559) million as of December 31, 2024[10] - Total shareholders' equity rose to $74.559 million as of September 30, 2025, compared to $71.091 million as of December 31, 2024, reflecting a 4.0% increase[10] - Cash and cash equivalents decreased to $14.958 million as of September 30, 2025, from $15.427 million as of December 31, 2024, a decline of 3.0%[10] Cash Flow and Financing - Cash flows used in operating activities for the nine months ended September 30, 2025, were $(1,363) thousand, a decrease from cash flows provided by operating activities of $10,576 thousand in 2024[20] - The company reported net cash flows used in investing activities of $(4,507) thousand for the nine months ended September 30, 2025, compared to $(6,657) thousand in 2024, showing an improvement in cash outflows[20] - The company reported proceeds from the revolving credit facility of $27,931 thousand for the nine months ended September 30, 2025, compared to $18,396 thousand in 2024, indicating an increase of approximately 52.2%[20] - The balance of cash and cash equivalents at the end of the period on September 30, 2025, was $14,958 thousand, compared to $11,844 thousand at the end of September 30, 2024, representing an increase of approximately 26.5% year-over-year[20] Segment Performance - For the three months ended September 30, 2025, net sales for the FCEP segment were $71,467,000, an increase from $67,203,000 in the same period of 2024, representing a growth of approximately 3.4%[115] - The ALP segment reported net sales of $36,542,000 for the three months ended September 30, 2025, compared to $28,963,000 in 2024, indicating a significant increase of about 26.2%[119] - Total reportable segment net sales for the nine months ended September 30, 2025, reached $325,378,000, up from $317,369,000 in 2024, reflecting a growth of approximately 2.5%[115] - The FCEP segment incurred a loss from operations of $401,000 for the three months ended September 30, 2025, compared to a profit of $2,456,000 in the same period of 2024[119] - The ALP segment achieved a profit from operations of $4,160,000 for the three months ended September 30, 2025, an increase from $3,134,000 in 2024, representing a growth of about 32.8%[119] Pension and Employee Costs - Contributions to U.S. defined benefit pension plans were $2,488 for the nine months ended September 30, 2025, down from $4,641 in 2024[68] - The net periodic pension benefit income for U.S. defined benefit pension plans was $(533) for the three months ended September 30, 2025[69] - For the three months ended September 30, 2025, net benefit expense for foreign defined benefit pension plans was $100 million, a decrease from $153 million in the same period of 2024[70] - The company incurred a severance charge of $6,019,000 during the nine months ended September 30, 2025, which was not present in the same period of 2024[12] Impairments and Write-downs - The Corporation's investment in UES-UK was written down to an estimated fair value of approximately $0, with a non-cash impairment charge expected to range between $43,000 and $45,000 in Q4 2025[35] - The decision to exit UES-UK operations was a triggering event for evaluating potential impairments of property, plant, and equipment[39] - The Corporation expects future cash expenditures associated with the Structured Insolvency to be insignificant[35] Inventory and Assets - Total inventories as of September 30, 2025, amounted to $119,165, an increase from $116,761 as of December 31, 2024[36] - Contract assets at the end of the period were $8,905, up from $6,864 at the end of the previous year[37] - Property, plant, and equipment net value decreased to $141,285 as of September 30, 2025, from $148,056 at December 31, 2024[38] - Intangible assets net value increased to $4,609 as of September 30, 2025, compared to $4,255 at December 31, 2024[43] Debt and Borrowings - As of September 30, 2025, total outstanding borrowings amounted to $135,214, an increase from $128,580 as of December 31, 2024[48] - The Corporation's Revolving Credit Facility had outstanding borrowings of $50,530 with an average interest rate of 7.38% for the three months ended September 30, 2025[51] - The remaining availability under the Revolving Credit Facility was approximately $28,189 as of September 30, 2025[52] - The Corporation's long-term debt increased to $118,959 million as of September 30, 2025, compared to $116,394 million at the end of 2024[48] Other Financial Metrics - The balance of accumulated other comprehensive loss at September 30, 2025, was $(58,524) million, a decrease from $(67,649) million at the beginning of the year[75] - The Corporation's outstanding standby and commercial letters of credit and bank guarantees equaled $15,580 million, with more than half serving as collateral for the IRB debt[73] - The total asbestos liability at the end of the period was $186,233 million for the nine months ended September 30, 2025, down from $220,069 million in 2024, reflecting a reduction of 15.4%[103] - The insurance receivable for asbestos claims at the end of the period was $124,947 million, a decrease from $146,404 million in 2024, indicating a decline of 14.6%[104]