Financial Data and Key Metrics Changes - Ampco-Pittsburgh reported net sales from continuing operations of $107.5 million for Q1 2019, compared to $106.4 million in Q1 2018, reflecting a slight increase [19] - Gross profit as a percentage of net sales decreased to 16.1% in Q1 2019 from 17.6% in Q1 2018, primarily due to lower production volumes for forged engineered products [20] - The company incurred a GAAP net loss from continuing operations of $12.6 million or $1 per common share for Q1 2019, compared to a net income of $1.6 million or $0.12 per common share in Q1 2018 [24] Business Line Data and Key Metrics Changes - The Forged and Cast Engineered Products segment's net sales were flat compared to the prior year, with increased sales of cast and forged rolls offset by a decline in sales to the oil and gas industry [25] - The Air and Liquid Processing segment saw a 5% increase in net sales compared to the prior year, driven by higher sales of air handling units and centrifugal pumps [20][26] - The backlog for the Air and Liquid Processing segment reached approximately $53.7 million, the highest in 10 years, up from $44.4 million at the end of 2018 [15] Market Data and Key Metrics Changes - Sales of forged engineered products to the oil and gas industry decreased by 60% year-over-year, impacting overall sales performance [12] - The company reported a backlog of approximately $349 million as of March 31, 2019, slightly higher than the previous year, with ongoing demand for rolls and additional orders from U.S. Navy shipbuilders [27] Company Strategy and Development Direction - The company announced plans to sell its U.S. cast roll manufacturing facility in Avonmore, Pennsylvania, to improve income from continuing operations by approximately $9 million to $10 million annually [9] - Management is focused on operational improvement initiatives and additional asset restructuring opportunities to enhance efficiency and reduce overhead costs [10][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the restructuring plan, emphasizing the urgency to demonstrate earnings power and sustainable profitability [31] - The company is currently engaged in a reduction in force as part of its restructuring efforts, which is expected to yield cost savings [50] Other Important Information - The company recognized a $10.1 million noncash impairment charge related to the Avonmore facility, impacting financial results for Q1 2019 [18] - Cash and cash equivalents for continuing operations decreased to $10.4 million as of March 31, 2019, from $19.7 million at the end of 2018, primarily due to a strategic cash management approach [29] Q&A Session Summary Question: What are the gating issues that determine when you close the Avonmore transaction? - Management indicated that the closure timing is dependent on completing customer commitments [32] Question: Any update on the ASW pending sale? - Management stated that they are currently in due diligence with parties interested in the ASW sale [33] Question: Should I assume that the cash proceeds from the Avonmore sale will be minimal? - Management confirmed that the proceeds from the sale are not large and mentioned potential one-time costs associated with winding down operations [35][36] Question: What factors contributed to the positive quarter for forged and cast rolls? - Demand for larger size rolls was strong, and operational improvements led to a 10% efficiency increase, positively impacting the bottom line [44] Question: Are there plans to improve efficiencies in Europe? - Management indicated that while the focus is currently on the U.S., improvements in Europe will be considered in the near future [47]
Ampco-Pittsburgh(AP) - 2019 Q1 - Earnings Call Transcript