Overview

Ampco-Pittsburgh Corporation manufactures and sells highly engineered metal products and equipment. It operates in two segments:

• Forged and Cast Engineered Products (FCEP) - produces forged hardened steel rolls, cast rolls, and forged engineered products. Serves industries like steel, aluminum, oil & gas, and plastic extrusion.

• Air and Liquid Processing (ALP) - produces custom air handling systems, heat exchange coils, and centrifugal pumps. Serves markets like hospitals, pharmaceuticals, and general industrial.

Financial Performance

• Q1 2024 consolidated net sales were $110.2 million, up 5% from $104.8 million in Q1 2023. ALP sales were up 18% while FCEP sales were flat.

• Q1 2024 operating income was minimal at $82 thousand, down from $2.0 million in Q1 2023. FCEP operating income fell due to costs from a fire at a cast rolls facility. ALP operating income declined due to higher costs and selling/administrative expenses.

• Q1 2024 interest expense rose 32% to $2.8 million due to higher debt levels and interest rates. Other income was $0.9 million.

• Q1 2024 net loss attributable to Ampco-Pittsburgh was $2.7 million or $(0.14) per share, versus net income of $0.7 million or $0.03 per share in Q1 2023.

Revenue/Profit Trends

• FCEP forged roll sales increased in Q1 2024 after flat North American market demand in 2023. Full year 2024 forged roll sales are expected to rise on higher pricing and market share gains.

• FCEP operating income fell in Q1 2024 mostly due to fire-related costs. But forged roll profit should improve over 2023 on better pricing/volumes.

• ALP Q1 2024 sales rose 18% on higher air handling system shipments. Full year growth is expected but inflationary pressures will continue. Q1 operating income declined on product mix shifts and higher costs.

Strengths and Weaknesses

Strengths:

• Leading manufacturer in niche engineered metal product markets
• Completed multi-year investments to upgrade equipment
• Strong backlog of $349 million provides revenue visibility
  

Weaknesses:

• Exposure to cyclical end markets
• Rising costs and inflationary pressures
• Higher debt levels
  

Outlook

• FCEP anticipates improving demand and pricing in 2H 2024
• ALP targeting further growth from distribution network expansion
• Monitoring economy, geopolitics, and supply chain dynamics
• Sufficient liquidity but higher interest costs from rising rates
• Backlog down 8% from year-end 2023 but still sizable

Liquidity

• Cash from operations was $4.5 million in Q1 2024 versus cash used of $4.4 million in Q1 2023

• Investing activities used cash of $2.8 million for capital expenditures

• Debt borrowings and repayments provided net cash of $2.0 million

• Cash and availability under credit facility expected to meet funding needs