Release Date: March 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ampco-Pittsburgh Corp (NYSE:AP) reported earnings per common share of $0.16 for Q4 2024, indicating profitability.
• The Air and Liquid Processing segment achieved record sales in 2024, improving by 11% from the prior year.
• The Forged and Cast Engineered Products segment saw a 38% improvement in income from operations compared to 2023.
• The company received $4 million in additional funding from the US Navy to modernize its Buffalo facility, indicating strong government support.
• Ampco-Pittsburgh Corp (NYSE:AP) reported a net cash flow from operating activities of $18 million for 2024, a significant improvement from the previous year.

Negative Points

• Consolidated net sales for Q4 2024 declined by 6.6% compared to Q4 2023, primarily due to lower shipment volumes of mill rolls.
• The UK operations have been a financial burden, with losses over $5 million in the past two years, prompting a formal collective consultation process.
• High energy costs and market overcapacity in the UK plant are significant challenges, with energy costs being double those in the Sweden plant.
• Interest expenses increased in 2024 due to higher equipment financing debt balance and higher average interest rates.
• The income tax provision was higher in 2024 due to the establishment of a valuation allowance on the net deferred tax assets of UK operations.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Signs with AP.

Q: Can you clarify the situation with the UK plant? Are you considering reducing the workforce, operations, or possibly exiting the operation altogether? A: Sam Lyon, President of Forged and Cast Engineer Product Segment, explained that the UK plant has been experiencing significant losses over the past three years. The company has entered a formal collective consultation process to explore options, which could range from government support to potentially closing the plant if no viable solution is found.

Q: Regarding the Air and Liquid division, are there additional markets you can enter, or is the current market expanding? A: Dave Anderson, President of Air and Liquid Systems, noted that both scenarios are true. The current markets, including the Navy and nuclear sectors, are expanding, and there are opportunities to extend beyond North America, particularly as the nuclear market gains traction globally.

Q: With your CapEx and equipment renewal largely behind you, do you plan to address and reduce debt levels? A: Mike McCauley, CFO, stated that while the equipment financing is term debt, the revolving credit facility can fluctuate with business activity. The main variable affecting debt levels is working capital, which depends on demand. The company is also utilizing government grants to fund CapEx, helping to keep debt levels stable.

Q: Are mill rolls subject to tariffs, and do you foresee any changes in this regard? A: Sam Lyon clarified that mill rolls are classified as rolling mill components and have not been subject to tariffs in the past. The company does not anticipate any changes in this classification.

Q: Can you provide details on the year-end backlog by business segment? A: Mike McCauley reported that the year-end backlog was flat compared to 2023, totaling $379 million. This includes $250.5 million for Forged and Cast Engineered Products and $128.4 million for Air and Liquid Processing.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.