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.

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $8 million for Q2 2025, a decline of $2.1 million compared to the prior year, primarily due to lower margins in the forged and cast engineered products segment [5][22] - Net sales for 2025 were $113.1 million, an increase of 2% compared to 2024, driven by higher sales of forged engineered products and favorable FX translation [21][22] - The net loss attributable to Ampco Pittsburgh for Q2 2025 was $7.3 million, or $0.36 per share, which includes $6.8 million related to the UK exit charge [24] Business Line Data and Key Metrics Changes - The Forged and Cast Engineered Products segment reported net sales of $77.9 million, a 3% increase compared to 2024, but adjusted EBITDA decreased by $1.5 million to $6.8 million [7][22] - The Air and Liquid Processing segment saw a 15% increase in adjusted EBITDA, reaching $3.9 million in Q2, with year-to-date adjusted EBITDA of $7.7 million, the highest in the segment's history [6][16] Market Data and Key Metrics Changes - Demand in North America and Europe for flat rolled products remains weak, with many U.S. customers postponing purchases due to tariff uncertainty [9][10] - The baseline tariff for U.S. imports from Sweden and Slovenia increased to 15%, impacting short-term expectations but not long-term fundamentals [10][12] Company Strategy and Development Direction - The company is winding down operations at its UK facility, expecting a minimum of $5 million improvement in operating income on an annualized basis once complete [6][21] - The company is focusing on reshoring opportunities in tool steel and distribution products, while maintaining pricing discipline and cost control measures [8][12] Management's Comments on Operating Environment and Future Outlook - Management noted that the pause in customer orders was due to tariff clarity, but they expect improved order activity as uncertainties are resolved [30][46] - The long-term fundamentals remain strong, with expectations for growth in construction spending, automotive production, and can sheet demand at mid-single-digit rates over the next five years [11][12] Other Important Information - The company recorded $6.8 million in expenses related to the UK exit charge, impacting various expense line items on the consolidated P&L [21][24] - The company amended and extended its credit agreement, increasing available liquidity to support global working capital needs [25] Q&A Session Summary Question: Insights on the role market and potential demand - Management indicated that the second half of the year will see lighter shipments due to fewer days and holidays, but there has been a slight uptick in order activity from large customers [29][30] Question: Impact of UK facility closure on revenues - The closure is expected to reduce revenues by approximately $25 million to $30 million, with some offset from converting products [44]