Ampco-Pittsburgh (AP) Q2 Earnings call transcript Aug 13, 2024

Ampco-Pittsburgh Corporation held its second quarter 2024 earnings call, providing a comprehensive overview of its financial performance and outlook. The call, led by CEO Brett McBrayer, revealed a strong sequential earnings improvement, driven by operational efficiencies and strategic pricing actions.

Strong Performance in the Second Quarter

Ampco-Pittsburgh Corporation reported a significant increase in income from operations for the second quarter, reaching $5 million, compared to $1.4 million in the same period last year. This improvement was attributed to the utilization of new equipment in the Forged and Cast Engineered Products segment and record order intake for Air and Liquid Systems. The net income for the quarter was $2 million, or $0.10 per diluted share.

Forged and Cast Engineered Products Segment

Samuel Lyon, President of the Forged and Cast Engineered Products segment, reported a stabilization of market conditions, with the roll market remaining flat due to consistent end-customer demand and ongoing economic uncertainties. Despite these challenges, Ampco-Pittsburgh is optimistic about improved order intake in the second half of the year, particularly for deliveries in 2025. The company's strategic pricing actions and operational improvements have mitigated challenges in shipment volumes and market conditions, allowing it to maintain market leadership.

Air and Liquid Processing Segment

David Anderson, President of the Air and Liquid Processing segment, highlighted a record high quarter for revenue, driven by increased shipments of custom air handling units and the opening of a new manufacturing facility in Virginia. The strong demand for Ampco-Pittsburgh's products is expected to continue, with the company taking steps to increase manufacturing capacity to meet this demand.

Financial Performance and Outlook

Michael McAuley, Senior Vice President, Chief Financial Officer, and Treasurer, provided details on the company's financial performance, including a 3.5% increase in net sales for the second quarter, primarily driven by the Air and Liquid Processing segment. The company reported a decrease in total selling and administrative expenses, primarily due to lower commissions and professional services and the Forged and Cast Engineered Products segment. However, higher equipment financing debt balance for new machinery and higher average revolving credit facility borrowings contributed to increased interest expense.

Looking Ahead

The outlook for the remainder of 2024 is positive, with the company expecting stable capital expenditures and a strong liquidity position, including a significant increase in availability on a revolving credit facility. The Air and Liquid Processing segment, in particular, is expected to continue its strong performance, driven by demand from the U.S. Navy and other markets.

Investor Questions and Answers

During the Q&A session, investors raised questions about the company's liquidity position, debt reduction strategy, and the impact of new equipment on market entry and Navy business. Ampco-Pittsburgh's management team provided detailed answers, emphasizing the company's focus on operational efficiencies, strategic investments, and market leadership.

Conclusion

Ampco-Pittsburgh Corporation's second quarter 2024 earnings call highlighted the company's strong financial performance, strategic initiatives, and optimistic outlook for the future. The company's operational improvements and strategic pricing actions have positioned it well to navigate market challenges and capitalize on growth opportunities. With a focus on innovation, efficiency, and market leadership, Ampco-Pittsburgh is poised for continued success in the second half of 2024 and beyond.