Ampco-Pittsburgh(AP) - 2019 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Ampco-Pittsburgh's net sales from continuing operations for Q3 2019 were $90.9 million, down from $98.8 million in Q3 2018, reflecting a decline of approximately 10% in the Forged and Cast Engineered Products segment due to lower sales to the oil and gas industry [19] - Gross profit as a percentage of net sales was 16.9% for Q3 2019, approximately flat compared to Q3 2018 [19] - The company reported a GAAP net loss from continuing operations of $1.2 million or $0.10 per share for Q3 2019, compared to a net loss of $3 million or $0.24 per share for Q3 2018, indicating an improvement [24] Business Line Data and Key Metrics Changes - In the Forged and Cast Engineered Products segment, sales declined by approximately 10% in Q3 2019, but operating results improved by $1.1 million due to lower losses at the Avonmore facility [25] - The Air and Liquid Processing segment's net sales were down approximately 3% compared to the prior year, but operating income increased by 23% or $685,000 due to changes in product mix and shipment timing [26] Market Data and Key Metrics Changes - The backlog for the Air and Liquid Processing segment as of September 30, 2019, was approximately $53 million, an increase from about $44.4 million at December 31, 2018 [16] Company Strategy and Development Direction - The company completed the sale of its cast roll manufacturing facility in Avonmore and its Canadian subsidiary ASW Steel, which is expected to improve the cost structure and lead to positive operating profit [7] - Operational efficiency improvements were launched at European cast roll facilities, expected to deliver $3 million to $4 million in operating cost reductions in 2020 [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving improved operating income in Q4 2019 due to ongoing projects and initiatives [28] - The company remains focused on top-line growth and operational efficiencies across its core businesses [28] Other Important Information - The divestitures are expected to improve net income by approximately $16 million to $18 million compared to the last 12-month run rate [11] - Capital expenditures for Q3 2019 were $3.4 million, with cash and cash equivalents decreasing to $9.8 million from $19.7 million at the end of 2018 [26] Q&A Session Summary Question: Initiatives to improve operating efficiencies - Management discussed ongoing restructuring and cost improvement programs in Europe, expecting $3 million to $4 million in improvements [31] Question: Air and Liquid business shipment delays - Delayed shipments were due to customer requests, with approximately 3% of shipments affected [32][34] Question: Proceeds from divestitures - Combined proceeds from the sale of the Avonmore facility and ASW were in the range of $8 million, used to pay down debt [38] Question: Clarification on operating profit swing from divestitures - Management clarified that the $16 million to $18 million figure refers to net income impact from the divestitures, not operating profit [40] Question: Impact of Avonmore costs on breakeven results - The excess costs of Avonmore in Q3 were approximately $685,000, lower than previous quarters as operations wound down [46]