- Corporation reports positive EPS of $0.05 per common share
for Q2 despite impact of COVID-19 pandemic.
- Return to profitability extends through Q2 2020 with
trailing twelve-month EPS now positive.
- Air & Liquid Processing segment results approximated
prior year levels and improved sequentially.
- Liquidity position improved, including effective liquidity
preservation measures taken during the second quarter in response
to pandemic. Debt reduced 23%, or $15.9 million, from the end of Q1
2020.
Ampco-Pittsburgh Corporation (NYSE: AP) (the “Corporation”)
reports net income for the three and six months ended June 30,
2020, of $0.7 million, or $0.05 per share, and $4.8 million, or
$0.38 per share, respectively. By comparison, the Corporation
incurred a net loss of $(3.9) million, or $(0.31) per share, and
$(19.0) million, or $(1.52) per share, for the same periods of the
prior year which respectively included a $(0.27) and $(0.45) per
share loss from discontinued operations.
Sales from continuing operations were $74.8 million and $165.8
million for the three and six months ended June 30, 2020,
respectively, compared to $102.5 million and $210.0 million for the
three and six months ended June 30, 2019, respectively. The
decrease is principally attributable to a lower volume of shipments
for the Forged and Cast Engineered Products segment due to customer
deferrals in the flat-rolled steel and aluminum markets and reduced
demand for other forged engineered products.
Commenting on the quarter’s results, Brett McBrayer,
Ampco-Pittsburgh’s Chief Executive Officer, said, “I am proud of
the way our team has responded to the pandemic while generating
positive net income for Q2. We have taken extraordinary measures to
maintain safe work environments and to protect our liquidity,
including extended plant shutdowns and cost containment efforts in
the quarter to mitigate reduced customer demand in our Forged and
Cast Engineered Products segment. The restructuring of our
portfolio, cost reduction measures and production efficiency
improvements over the past two years have helped position us to
achieve positive results and, to date, minimize the effects of the
pandemic. Our Air and Liquid Processing segment also demonstrated
its strength by delivering sales and income levels for the quarter
about equal to the prior year, and sequentially better, with no
plant downtime from the pandemic. Operating measures taken during
the quarter to preserve liquidity enabled us to increase our cash
position and to pay down borrowings under our revolving credit
agreement significantly.”
The Corporation reported a modest loss from continuing
operations for the three months ended June 30, 2020, of $(0.1)
million compared to $(0.7) million for the three months ended June
30, 2019. For the six months ended June 30, 2020, income from
continuing operations was $4.3 million compared to a loss of
$(12.6) million for the same period of the prior year. (Loss)
income from continuing operations for the three and six months
ended June 30, 2020, includes net unabsorbed costs associated with
the temporary idling of certain of our forged and cast roll
manufacturing facilities due to the pandemic. Income from
continuing operations for the six months ended June 30, 2020, also
includes subsequent proceeds from a 2018 business interruption
claim (“Proceeds from Business Interruption Insurance Claim”). By
comparison, loss from continuing operations for the three and six
months ended June 30, 2019, includes excess costs of the
Corporation’s Avonmore, PA cast roll manufacturing facility
(“Avonmore”) which was sold in September 2019 (“Excess Costs of
Avonmore”), professional fees and employee severance costs
associated with the Corporation’s overall restructuring plan
(“Restructuring-Related Costs”), and bad debt expense for a cast
roll customer who had filed for bankruptcy protection (“Bad Debt
Expense”). Additionally, loss from continuing operations for the
six months ended June 30, 2019, includes an impairment loss
(“Impairment Charge”) associated with the write-down of certain
assets of Avonmore in anticipation of its sale.
Excluding the Proceeds from Business Interruption Insurance
Claim from the current year operating results and the Bad Debt
Expense, the Excess Costs of Avonmore, the Restructuring-Related
Costs, and the Impairment Charge from prior year operating results,
as applicable, adjusted (loss) income from continuing operations,
which is not based on U.S. generally accepted accounting principles
(“GAAP”), was $(0.1) million and $3.5 million for the three and six
months ended June 30, 2020, and $2.6 million and $3.8 million for
the three and six months ended June 30, 2019, respectively.
Although the current year periods benefited from improved roll
pricing, the elimination of the Excess Costs of Avonmore and lower
SG&A expense due to restructuring efforts, these factors could
not completely offset the pandemic-driven impacts of the lower
volume of shipments and net unfavorable absorption due to plant
shutdowns in the Forged and Cast Engineered Products segment. A
reconciliation of these GAAP to non-GAAP results is provided below
under “Non-GAAP Financial Measures Reconciliation Schedule.”
Other income for the three months ended June 30, 2020, improved
when compared to the same period of the prior year, which included
dividend income of $1.4 million from one of the Corporation’s
Chinese joint ventures in 2019. Partial recovery of foreign
exchange rates and equity markets during the quarter, following
pandemic-related market disruptions at the end of the first
quarter, resulted in unrealized gains and contributed to the
improvement period over period. On a year-to-date basis, the
fluctuation in other income (expense) – net is due to higher
unrealized losses on foreign exchange and unrealized losses on
rabbi trust assets versus gains in the prior year along with the
prior year benefiting from the $1.4 million of dividend income.
The income tax benefit for the six months ended June 30, 2020,
includes a benefit of $3.5 million for the additional tax loss
carryback provisions included in the CARES Act.
Segment Results
Forged and Cast Engineered
Products
Sales for the three and six months ended June 30, 2020, declined
36% and 27% from the respective prior year periods primarily due to
customers deferring shipments for mill rolls in response to the
pandemic and reduced demand for other forged engineered products.
Operating results for the three months ended June 30, 2020, were
comparable to the same period of the prior year. While the segment
was adversely impacted by the lower volume of shipments and net
unabsorbed costs associated with the temporary idling of certain of
its forged and cast roll manufacturing facilities due primarily to
the market impact of the pandemic, improved product pricing,
elimination of the Excess Costs of Avonmore and lower SG&A
expense helped mitigate the impact to operating results.
On a year-to-date basis, operating results for the current year,
which includes the Proceeds from Business Interruption Insurance
Claim, significantly improved against the prior year, which
included the Impairment Charge, the Restructuring-Related Costs,
the Bad Debt Expense, and the Excess Costs of Avonmore, which was
divested in September 2019. Similarly, the effect of the lower
volume of shipments and net unabsorbed costs associated with the
temporary idling of certain of our forged and cast roll
manufacturing facilities due to the pandemic was mitigated by
improved product pricing, elimination of the Excess Costs of
Avonmore and lower SG&A expense.
Air and Liquid Processing
Sales for the Air and Liquid Processing segment for the three
and six months ended June 30, 2020, were slightly better than the
same periods of the prior year. Operating income for the quarter
nearly met the prior year level yet continues to exceed the prior
period on a year-to-date basis. The segment has continued to
operate without disruption during the pandemic.
Teleconference Access
Ampco-Pittsburgh Corporation (NYSE: AP) will hold a conference
call on Thursday, August 6, 2020, at 10:30 a.m. Eastern Time (ET)
to discuss its financial results for the quarter ended June 30,
2020. The Corporation encourages participants to pre-register at
any time, including up to and after the call start time via this
link: http://dpregister.com/10146487. Those without internet access
or unable to pre-register should dial in at least five minutes
before the start time using:
- Participant Dial-in (Toll Free): 1-844-308-3408
- Participant International Dial-in: 1-412-317-5408
For those unable to listen to the live broadcast, a replay will
be available one hour after the event concludes on the
Corporation’s website under the Investors menu at
www.ampcopgh.com.
About Ampco-Pittsburgh Corporation
Ampco-Pittsburgh Corporation manufactures and sells highly
engineered, high-performance specialty metal products and
customized equipment utilized by industry throughout the world.
Through its operating subsidiary, Union Electric Steel Corporation,
it is a leading producer of forged and cast rolls for the global
steel and aluminum industry. It also manufactures open-die forged
products that principally are sold to customers in the steel
distribution market, oil and gas industry, and the aluminum and
plastic extrusion industries. The Corporation is also a producer of
air and liquid processing equipment, primarily custom-engineered
finned tube heat exchange coils, large custom air handling systems,
and centrifugal pumps. It operates manufacturing facilities in the
United States, England, Sweden, Slovenia, and participates in three
operating joint ventures located in China. It has sales offices in
North and South America, Asia, Europe, and the Middle East.
Corporate headquarters is located in Carnegie, Pennsylvania.
Non-GAAP Financial
Measures
The Corporation presents non-GAAP adjusted (loss) income from
continuing operations as a supplemental financial measure to GAAP
financial measures regarding the Corporation’s operational
performance. This non-GAAP financial measure excludes unusual items
affecting comparability, as described more fully in the footnotes
to the attached “Non-GAAP Financial Measures Reconciliation
Schedule,” including the Impairment Charge, the
Restructuring-Related Costs, the Excess Costs of Avonmore, the Bad
Debt Expense, and the Proceeds from Business Interruption Insurance
Claim, which the Corporation believes are not indicative of its
core operating results. A reconciliation of this non-GAAP financial
measure to (loss) income from continuing operations, the most
directly comparable GAAP financial measure, is provided below under
“Non-GAAP Financial Measures Reconciliation Schedule.”
The Corporation has presented non-GAAP adjusted (loss) income
from continuing operations because it is a key measure used by the
Corporation’s management and Board of Directors to understand and
evaluate the Corporation’s operating performance and to develop
operational goals for managing the business. Management believes
this non-GAAP financial measure provides useful information to
investors and others in understanding and evaluating the operating
results of the Corporation, enhancing the overall understanding of
the Corporation’s past performance and future prospects, and
allowing for greater transparency with respect to key financial
metrics used by management in its financial and operational
decision-making. Non-GAAP adjusted (loss) income from continuing
operations should be used only as a supplement to GAAP information,
in conjunction with the Corporation’s condensed consolidated
financial statements prepared in accordance with GAAP, and should
not be considered in isolation of, or as an alternative to,
measures prepared in accordance with GAAP. There are limitations
related to the use of non-GAAP adjusted (loss) income from
continuing operations rather than GAAP (loss) income from
continuing operations. Among other things, the Excess Costs of
Avonmore, which are excluded from the non-GAAP financial measure,
necessarily reflect judgments made by management in allocating
manufacturing and operating costs between Avonmore and the
Corporation’s other operations and in anticipating how the
Corporation will conduct business following the sale of Avonmore,
which was completed on September 30, 2019.
Forward-Looking
Statements
The Private Securities Litigation Reform Act of 1995 (the “Act”)
provides a safe harbor for forward-looking statements made by or on
behalf of the Corporation. The information contained in this press
release may include, but is not limited to, statements about
undertaking and success of the rights offering described herein,
operating performance, trends, events that we expect or anticipate
will occur in the future, statements about sales levels,
restructuring, the impact from global pandemics (including
COVID-19), profitability and anticipated expenses and cash
outflows. All statements in this document other than statements of
historical fact are statements that are, or could be, deemed
“forward-looking statements” within the meaning of the Act and
words such as “may,” “intend,” “believe,” “expect,” “anticipate,”
“estimate,” “project,” “forecast” and other terms of similar
meaning that indicate future events and trends are also generally
intended to identify forward-looking statements. Forward-looking
statements speak only as of the date on which such statements are
made, are not guarantees of future performance or expectations and
involve risks and uncertainties. For the Corporation, these risks
and uncertainties include, but are not limited to: cyclical demand
for products and economic downturns; excess global capacity in the
steel industry; increases in commodity prices or shortages of key
production materials; consequences of global pandemics (including
COVID-19); new trade restrictions and regulatory burdens associated
with “Brexit”; inability of the Corporation to successfully
restructure its operations; limitations in availability of capital
to fund the Corporation’s operations and strategic plan; inability
to satisfy the continued listing requirements of the New York Stock
Exchange; potential attacks on information technology
infrastructure and other cyber-based business disruptions; and
those discussed more fully in documents filed with the SEC by the
Corporation, particularly in Item 1A, Risk Factors, in Part I of
the Corporation’s Form 10-K for the year ended December 31, 2019,
and Part II of the Corporation’s Form 10-Q for the quarter ended
March 31, 2020. The Corporation cannot guarantee any future
results, levels of activity, performance or achievements. In
addition, there may be events in the future that the Corporation
may not be able to predict accurately or control which may cause
actual results to differ materially from expectations expressed or
implied by forward-looking statements. Except as required by
applicable law, we assume no obligation, and disclaim any
obligation, to update forward-looking statements whether as a
result of new information, events or otherwise.
AMPCO-PITTSBURGH
CORPORATION
FINANCIAL SUMMARY
(in thousands except per share
amounts)
Three
Months Ended June 30,
Six Months
Ended June 30,
2020
2019
2020
2019
Sales
$
74,778
$
102,519
$
165,841
$
210,013
Cost of products sold
(excl. depreciation and amortization)
59,983
84,536
130,143
174,757
Selling and administrative
10,199
13,929
22,029
27,814
Depreciation and amortization
4,653
4,650
9,352
9,909
Impairment charge
-
-
-
10,082
Loss on disposal of assets
29
57
52
63
Total operating expenses
74,864
103,172
161,576
222,625
(Loss) income from continuing
operations
(86
)
(653
)
4,265
(12,612
)
Other income (expense) – net
1,451
1,076
(1,081
)
1,127
Income (loss) from continuing operations
before income taxes
1,365
423
3,184
(11,485
)
Income tax (provision) benefit
(504
)
(644
)
2,279
(1,287
)
Net income (loss) from continuing
operations
861
(221
)
5,463
(12,772
)
Loss from discontinued operations, net of
tax
-
(3,391
)
-
(5,633
)
Net income (loss)
861
(3,612
)
5,463
(18,405
)
Less: Net income attributable to
noncontrolling interest
193
246
653
601
Net income (loss) attributable to
Ampco-Pittsburgh
$
668
$
(3,858
)
$
4,810
$
(19,006
)
Net income (loss) from continuing
operations per share attributable to Ampco-Pittsburgh common
shareholders:
Basic
$
0.05
$
(0.04
)
$
0.38
$
(1.07
)
Diluted
$
0.05
$
(0.04
)
$
0.37
$
(1.07
)
Loss from discontinued operations, net of
tax, per share attributable to Ampco-Pittsburgh common
shareholders:
Basic
$
-
$
(0.27
)
$
-
$
(0.45
)
Diluted
$
-
$
(0.27
)
$
-
$
(0.45
)
Net income (loss) per share attributable
to Ampco-Pittsburgh common shareholders:
Basic
$
0.05
$
(0.31
)
$
0.38
$
(1.52
)
Diluted
$
0.05
$
(0.31
)
$
0.37
$
(1.52
)
Weighted-average number of common shares
outstanding:
Basic
12,740
12,576
12,698
12,537
Diluted
13,382
12,576
12,959
12,537
AMPCO-PITTSBURGH
CORPORATION
SEGMENT INFORMATION
(in thousands)
Three
Months Ended June 30,
Six Months
Ended June 30,
2020
2019
2020
2019
Net Sales:
Forged and Cast Engineered Products
$
50,460
$
78,557
$
119,224
$
163,847
Air and Liquid Processing
24,318
23,962
46,617
46,166
Consolidated
$
74,778
$
102,519
$
165,841
$
210,013
(Loss) income from continuing
operations:
Forged and Cast Engineered Products
$
(423
)
$
(170
)
$
4,133
$
(10,203
)
Air and Liquid Processing
2,846
2,948
5,430
5,091
Corporate costs
(2,509
)
(3,431
)
(5,298
)
(7,500
)
Consolidated
$
(86
)
$
(653
)
$
4,265
$
(12,612
)
AMPCO-PITTSBURGH
CORPORATION
NON-GAAP FINANCIAL MEASURES
RECONCILIATION SCHEDULE
(in thousands)
As described under “Non-GAAP Financial
Measures” above, the Corporation presents non-GAAP adjusted (loss)
income from continuing operations as a supplemental financial
measure to GAAP financial measures. The following is a
reconciliation of this non-GAAP financial measure to (loss) income
from continuing operations, the most directly comparable GAAP
financial measure, for the three and six months ended June 30,
2020, and 2019, respectively:
Three
Months Ended June 30,
Six Months
Ended June 30,
2020
2019
2020
2019
(Loss) income from continuing operations,
as reported (GAAP)
$
(86
)
$
(653
)
$
4,265
$
(12,612
)
Impairment Charge (1)
-
-
-
10,082
Restructuring-Related Costs (2)
-
171
-
1,092
Excess Costs of Avonmore (3)
-
1,685
-
3,887
Bad Debt Expense (4)
-
1,366
-
1,366
Proceeds from Business Interruption
Insurance Claim (5)
-
-
(769
)
-
(Loss) income from continuing operations,
as adjusted (Non-GAAP)
$
(86
)
$
2,569
$
3,496
$
3,815
(1)
Represents an impairment charge to record
the Avonmore plant to its estimated net realizable value less costs
to sell in anticipation of its sale, which was completed in
2019.
(2)
Represents professional fees associated
with the Corporation’s overall restructuring plan and employee
severance costs due to reductions in force.
(3)
Represents estimated net operating costs
not expected to continue after the sale of the Avonmore plant,
which was completed in 2019. The estimated temporary excess costs
include judgments made by management in allocating manufacturing
and operating costs between Avonmore and the Corporation’s other
operations and in anticipating how it will conduct business
following the sale of the Avonmore plant.
(4)
Represents bad debt expense for a cast
roll customer who filed for bankruptcy during the second quarter of
2019.
(5)
Represents business interruption insurance
proceeds received for equipment outages that occurred in 2018.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200805006070/en/
Michael G. McAuley Senior Vice President, Chief Financial
Officer and Treasurer (412) 429-2472 mmcauley@ampcopgh.com
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