Ampco-Pittsburgh Stock Down Following Weak Q2 Earnings

Core Viewpoint - Ampco-Pittsburgh Corporation experienced a significant decline in stock performance following its earnings report, with a net loss attributed to restructuring costs and tariff-related uncertainties impacting order intake and production [1][9]. Financial Performance - For Q2 2025, Ampco-Pittsburgh reported net sales of $113.1 million, a 1.9% increase from $110.9 million year-over-year, driven by growth in forged engineered products and favorable foreign currency translation [2]. - The company posted a net loss of $7.3 million, or $0.36 per share, compared to a net income of $2 million, or $0.10 per share, in the prior year, primarily due to a $6.8 million charge related to the closure of its U.K. cast roll operations [2]. - Adjusted EBITDA for the quarter was $7.9 million, down 21.2% from $10.1 million, with margins contracting to 7.1% from 9.1% [3]. Segment Performance - The Forged and Cast Engineered Products segment generated $77.9 million in revenues, up 2.9% from $75.7 million, although margins were negatively impacted by lower forged roll demand [4]. - The Air and Liquid Processing (ALP) segment reported revenues of $35.2 million, a slight decrease of 0.2% from $35.3 million, but improved profitability was noted due to a stronger product mix and demand from nuclear and military markets [4]. Cost and Expense Analysis - Costs of products sold increased by 4.9% to $91.9 million from $87.7 million, driven by higher manufacturing costs and lower production rates [5]. - Selling and administrative expenses decreased by 4.3% to $12.9 million from $13.6 million, while depreciation rose due to accelerated write-downs associated with the U.K. plant closure [5]. Management Insights - CEO Brett McBrayer highlighted that tariff-related volatility significantly affected order intake and production, with customers in the roll market pausing orders due to uncertainty over U.S. tariff levels [7]. - CFO Michael McAuley noted that the restructuring charge masked underlying progress, particularly in the ALP segment, which achieved its highest year-to-date adjusted EBITDA [8]. Future Outlook - Management indicated an improved operating environment for 2026, citing tariff clarity and the benefits of restructuring, with expectations of at least a $5 million uplift to annual operating income post-U.K. exit [11]. - The decision to exit the U.K. cast roll business is projected to reduce revenue by approximately $20 million to $25 million annually, with plans to reallocate production to Sweden [12].