Financial Data and Key Metrics Changes - Ampco-Pittsburgh reported Q4 2023 net sales of $108.1 million, a 16% increase compared to Q4 2022, with full-year sales of $422.3 million rising approximately 8% [17] - The company experienced a loss from operations of $41.6 million in Q4 2023, significantly impacted by a $40.9 million non-cash asbestos-related charge [18] - The full-year 2023 adjusted income from operations improved to $4.2 million, an increase of $4.5 million over 2022 [19] Business Line Data and Key Metrics Changes - The Air and Liquid Processing segment saw sales increase by 35% in Q4 and 31% for the full year, reaching a record high of $119 million [13][17] - The Forged and Cast Engineered Products segment reported Q4 revenues of $75.8 million, up from $69.6 million in Q4 2022, with full-year revenue of $303.8 million compared to $299.5 million in 2022 [8][17] - Forged roll revenues increased by 20% year-over-year, while cast roll revenues decreased due to lower steel production levels in Europe [9] Market Data and Key Metrics Changes - Total backlog at December 31, 2023, was $378.9 million, a 3% increase from the previous year, with the Air and Liquid segment backlog up by 12% [23] - The company noted that the intermediate to long-term demand for flat rolled steel and aluminum remains strong, with North American customers optimistic about future investments [11] Company Strategy and Development Direction - The company is focused on modernizing equipment and expanding capacity in its U.S. forged roll business and Air and Liquid Processing segment to capture market opportunities [6] - A strategic growth plan initiated in 2022 for the Air and Liquid segment has resulted in substantial backlog growth and increased manufacturing capacity [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about operational performance despite challenges in the European cast roll business and highlighted opportunities for stronger financial performance moving forward [74] - The company anticipates that the issues related to older backlog will dissipate in 2024, potentially allowing for margin expansion [32] Other Important Information - The company expects asbestos-related payments to approximate $9 million in 2024, with settlements in 2023 totaling $10.6 million [24] - Capital expenditures for Q4 2023 were $6.3 million, with full-year CapEx of $20.4 million compared to $16.7 million in 2022 [24] Q&A Session Summary Question: CapEx expectations for 2024 - Management indicated that CapEx for 2024 is expected to be in the $10 million to $11 million range, reflecting a step down from 2023 [27][29] Question: Impact of older backlog on margins - Management noted that older orders negatively impacted margins in 2023, but this issue is expected to diminish in 2024 [30][32] Question: Outlook for Forged and Cast Engineered Products - Management expects margin improvements in the second half of 2024 as the modernization program concludes and operational efficiencies are realized [60] Question: Order environment in Q1 2024 - Management reported solid bookings for Buffalo Pumps and Aerofin, while Buffalo Air experienced lower bookings due to capacity constraints [46][62] Question: Asbestos-related charge and future expectations - Management explained that the increase in asbestos-related charges is due to unfavorable trends in claims experience and higher average settlement values [72]
Ampco-Pittsburgh(AP) - 2023 Q4 - Earnings Call Transcript