Financial Data and Key Metrics Changes - Ampco-Pittsburgh Corporation reported net sales from continuing operations of $95.8 million for Q4 2018, down from $103.6 million in Q4 2017, reflecting an approximate 8% decrease [17] - Gross profit as a percentage of net sales decreased to 13.0% in Q4 2018 from 17.9% in Q4 2017, primarily due to lower production levels in the Forged and Cast Engineered Products segment [18] - The company reported a net loss from continuing operations of $41.0 million or $3.28 per common share for Q4 2018, compared to a net loss of $4.2 million or $0.34 per common share for Q4 2017 [20] Business Segment Data and Key Metrics Changes - The Forged and Cast Engineered Products segment saw a decrease in net sales of approximately 8% compared to the prior year, driven by lower shipment volumes for oil and gas products and equipment downtime [22] - The Air and Liquid Processing segment's revenue was approximately comparable to the prior year, but it recorded an operating loss due to a $32.9 million asbestos charge [23] - Backlog at December 31, 2018, was approximately $343 million, an increase of about 6% from $325 million at the end of 2017, indicating improved demand [23] Market Data and Key Metrics Changes - The global short-range outlook for steel demand in 2019 is expected to remain positive, supported by the company's order backlog, although challenges remain due to trade tensions and currency instability [13] - The company noted that the steel industry is facing uncertainty, which could impact future demand [13] Company Strategy and Development Direction - The company is restructuring to return to profitability, including the divestiture of its Canadian subsidiary ASW Steel and pursuing cost reduction initiatives [7][8] - Plans include simplifying the manufacturing flow path to improve operational performance and free up working capital [9] - The focus for 2019 is on execution of the turnaround plan, with an emphasis on right-sizing capacity and reducing complexity in operations [27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged 2018 as a challenging year despite a 9% increase in total revenue from continuing operations, citing higher raw material costs and equipment reliability issues [9][10] - The management expressed confidence in the company's ability to adapt to both higher and lower demand environments, aiming for sustainable profitability [13] Other Important Information - The company recorded a $15 million impairment charge related to the divestiture of ASW Steel, which has been classified as a discontinued operation [15] - The asbestos charge of $32.9 million reflects estimated costs for pending and future litigation, impacting the Air and Liquid Processing segment [16] Q&A Session Summary Question: Concerns about selling the Canadian division and stock performance - Management acknowledged the challenges in the steel industry and emphasized the strategic decision to divest ASW Steel due to tariffs and loss of a key customer [30][46] Question: Complexity in manufacturing processes - Management discussed plans to simplify manufacturing processes to reduce costs and improve responsiveness to market demands [37][40] Question: Asbestos charge and future liabilities - Management clarified the change in estimating future asbestos liabilities, projecting out to 2052 to reduce volatility and provide clarity to investors [54][57]
Ampco-Pittsburgh(AP) - 2018 Q4 - Earnings Call Transcript