Ampco-Pittsburgh(AP) - 2025 Q1 - Quarterly Report

Part I – Financial Information Item 1 – Financial Statements (Unaudited) The unaudited Q1 2025 financial statements reflect a shift to profitability, a slight increase in total assets, and a significant cash outflow from operating activities Condensed Consolidated Balance Sheets The balance sheet as of March 31, 2025, indicates a slight increase in total assets, primarily due to higher receivables and inventories, alongside a rise in shareholders' equity Condensed Consolidated Balance Sheets (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $7,129 | $15,427 | | Trade receivables, net | $82,537 | $70,611 | | Inventories | $124,183 | $116,761 | | Total current assets | $246,490 | $236,787 | | Total assets | $536,193 | $530,896 | | Liabilities & Equity | | | | Total current liabilities | $132,577 | $125,216 | | Long-term debt | $115,048 | $116,394 | | Asbestos liability | $176,317 | $183,092 | | Total liabilities | $458,523 | $459,805 | | Total shareholders' equity | $77,670 | $71,091 | | Total liabilities and shareholders' equity | $536,193 | $530,896 | Condensed Consolidated Statements of Operations The Q1 2025 statements of operations show a significant turnaround to $1.1 million net income from a prior-year loss, driven by increased operating income despite lower net sales Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total net sales | $104,265 | $110,215 | | Income from operations | $3,850 | $82 | | Net income (loss) | $1,891 | $(2,206) | | Net income (loss) attributable to Ampco-Pittsburgh | $1,142 | $(2,717) | | Diluted EPS | $0.06 | $(0.14) | Condensed Consolidated Statements of Cash Flows Q1 2025 cash flows show a $5.3 million net cash outflow from operations, primarily due to working capital investments, resulting in an overall $8.3 million decrease in cash and cash equivalents Consolidated Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(5,280) | $4,535 | | Net cash used in investing activities | $(1,711) | $(2,845) | | Net cash (used in) provided by financing activities | $(1,727) | $2,028 | | Net (decrease) increase in cash | $(8,298) | $3,543 | | Cash and cash equivalents at end of period | $7,129 | $10,829 | Notes to Condensed Consolidated Financial Statements The notes detail accounting policies, financial line items, debt structure, asbestos liabilities, and segment reporting for the Forged and Cast Engineered Products (FCEP) and Air and Liquid Processing (ALP) segments - The Corporation operates in two business segments: Forged and Cast Engineered Products (FCEP) and Air and Liquid Processing (ALP)[23] Debt Composition (in thousands) | Debt Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Revolving credit facility | $55,000 | $56,000 | | Sale-leaseback financing obligations | $45,674 | $45,451 | | Equipment financing facility | $16,262 | $16,782 | | Industrial Revenue Bonds | $9,191 | $9,191 | | Total Borrowings | $127,258 | $128,580 | Asbestos Liability and Insurance Receivable Activity (in thousands) | Metric | Three Months Ended March 31, 2025 | | :--- | :--- | | Asbestos liability, beginning of year | $207,092 | | Settlement and defense costs paid | $(6,775) | | Asbestos liability, end of period | $200,317 | | Insurance receivable, beginning of year | $139,295 | | Costs paid by insurance carriers | $(4,408) | | Insurance receivable, end of period | $134,887 | Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes improved operating income, despite lower sales, to better pricing, product mix, and manufacturing efficiencies across both segments, while consolidated backlog decreased and cash outflow from operations occurred Selected Financial Information (in thousands) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | | | | | FCEP | $72,287 | $77,189 | $(4,902) | | ALP | $31,978 | $33,026 | $(1,048) | | Consolidated | $104,265 | $110,215 | $(5,950) | | Income from Operations | | | | | FCEP | $3,905 | $1,576 | $2,329 | | ALP | $3,494 | $1,982 | $1,512 | | Consolidated | $3,850 | $82 | $3,768 | - Consolidated backlog decreased to $368.5 million as of March 31, 2025, from $378.9 million at the end of 2024. The decrease was driven by the FCEP segment, partially offset by an increase in the ALP segment's backlog[118][120] - Gross margin improved to 21.3% from 16.1% in the prior year, attributed to better performance in both the FCEP and ALP segments[121] Net Sales and Operating Results by Segment FCEP segment sales declined but operating income surged due to pricing and efficiencies, while ALP segment sales dipped slightly but operating income improved from a favorable product mix Forged and Cast Engineered Products FCEP segment net sales decreased to $72.3 million due to lower volume, yet income from operations significantly increased to $3.9 million from improved pricing and efficiencies, while backlog declined - Key drivers for the decline in net sales include: Lower volume and changes in product mix for roll sales ($6.3 million decrease). Unfavorable foreign exchange rates ($1.0 million decrease). Partially offset by higher base pricing ($2.5 million increase)[131] - The increase in income from operations was primarily due to: Benefit from improved pricing and manufacturing costs ($5.2 million increase). Better manufacturing absorption and operational efficiencies ($0.5 million increase). Partially offset by lower shipment volumes ($2.6 million decrease)[130] Air and Liquid Processing ALP segment net sales slightly decreased to $32.0 million due to shipment timing, but operating income substantially improved to $3.5 million from a favorable product mix, and backlog grew - Net sales were impacted by lower air handling unit sales ($1.9 million decrease), offset by higher sales of heat exchange coils ($0.7 million increase) and centrifugal pumps (~$0.1 million increase)[137] - The improvement in operating income of approximately $1.5 million was principally due to changes in product mix, partially offset by lower shipment volume and higher manufacturing costs[134] - Backlog improved across all product lines, with heat exchange coils increasing by $4.5 million due to record orders in the nuclear market[134][137] Liquidity and Capital Resources Cash and cash equivalents decreased by $8.3 million due to operating cash outflow and working capital investment, with liquidity expected from existing funds, future cash, and a revolving credit facility under renegotiation - Net cash used in operating activities of $5.3 million was primarily due to a higher investment in trade working capital of approximately $12.7 million[143][147] - Net cash used in investing activities decreased to $1.7 million from $2.8 million in the prior year, mainly due to lower capital spending in the FCEP segment following the completion of a major capital program[146] - As of March 31, 2025, remaining availability under the revolving credit facility was approximately $28.6 million. The facility matures on June 29, 2026, and the Corporation is currently in discussions with lenders to secure a new multi-year arrangement[151][152] Item 3 – Quantitative and Qualitative Disclosures About Market Risk This item is noted as not applicable for the current reporting period - The company has indicated that quantitative and qualitative disclosures about market risk are not applicable in this filing[157] Item 4 – Controls and Procedures Management concluded that the Corporation's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of the end of the reporting period, the principal executive officer and principal financial officer concluded that the Corporation's disclosure controls and procedures were effective[159] - No material changes to the Corporation's internal control over financial reporting were identified during the last fiscal quarter[160] Part II – Other Information Item 1 – Legal Proceedings Information regarding legal proceedings, primarily asbestos-related litigation, is incorporated by reference from Note 15 of the financial statements - Information regarding legal proceedings is incorporated by reference from Note 15 to the condensed consolidated financial statements[163] Item 1A – Risk Factors No material changes were reported to the risk factors previously disclosed in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes were reported to the 'Risk Factors' included in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2024[164] Item 5 – Other Information No material events were reported under this item, and no director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter - During the three months ended March 31, 2025, no director or officer of the Corporation adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement'[166] Item 6 – Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Exhibits filed with the report include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, and Inline XBRL documents[169]