Ampco-Pittsburgh(AP) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Ampco-Pittsburgh reported operating income of $1.9 million for Q3 2024, slightly higher than the prior year quarter, which included a$0.2 million insurance recovery [7][24] - Consolidated net sales for Q3 2024 were $96.2 million, a decline of 5.9$2 million or $0.10 per diluted share, compared to net income of$0.8 million or 0.04 per diluted share for Q3 2023 [30] Business Line Data and Key Metrics Changes - Air & Liquid segment revenue was consistent with the prior year for Q3, while year-to-date revenue increased by 13% due to increased shipments of custom air handling units [9] - Forged and Cast Engineered Products segment net sales were 67.2 million for Q3 2024, down from $73.6 million in the same period last year, primarily due to lower rural volumes and reduced shipments [17] - Segment income from operations for Forged and Cast Engineered Products increased to$2.5 million compared to $1.4 million in Q3 2023, reflecting improved pricing and efficiencies [18] Market Data and Key Metrics Changes - Total backlog at September 30, 2024, was$383.6 million, an increase of approximately 4.6 million from December 31, 2023, primarily in the Forged and Cast Engineered Products segment [32] - The rural market in North America and Europe remained flat due to end customer demand, with ongoing headwinds related to competitive pressures and economic uncertainties [20][21] Company Strategy and Development Direction - The company is focused on lowering its debt position and restructuring actions to improve shareholder returns, with targeted actions for further restructuring [38][58] - Investments in capital equipment are contributing to improved operational efficiencies and positioning the company for future growth [19][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth prospects in the Air & Liquid segment, particularly due to increased demand from the pharmaceutical market and potential opportunities in the nuclear sector [15][14] - The company anticipates low to mid-single-digit volume growth in the Forged and Cast Engineered Products segment for 2025, driven by improved demand and operational efficiencies [19][48] Other Important Information - Capital expenditures for Q3 2024 were 2.9 million, with expectations for full-year 2024 CapEx in the range of $9 million to$10 million [34] - The company has received additional funding from the U.S. Navy to modernize production equipment, which is expected to enhance manufacturing capabilities [11][12] Q&A Session Summary Question: Long-term visibility and restructuring plans - Management indicated that they have targeted actions for restructuring and are focused on lowering the debt position, with expectations to execute significant solutions within the next 12 to 24 months [36][38] Question: Impact of fracking on Forged and Engineered products - Management noted that the fracking business and general industrial distribution markets are significant factors affecting revenues, with stable orders expected to increase next year [40] Question: Cash flow dynamics year-to-date - Management confirmed a release of working capital contributing to positive cash flow from operating activities, despite pension contributions affecting the total [46][47] Question: Production capacity for heat exchangers in the nuclear market - Management stated that production capacity constraints are minimal, and they can ramp up production as needed for the nuclear market [43] Question: Onshoring trends and market share - Management confirmed that onshoring has already benefited the company, with increased market share among U.S. customers over the past 18 months [56]