Ampco-Pittsburgh's Q3 2025: Contradictions Emerge on Asbestos Liability Evaluations, Supply Chain Dynamics, and European Operations Strategy

Date of Call: November 13, 2025

Financials Results

• Revenue: $108.0M, up 12% YOY
• EPS: Adjusted EPS $0.04, up $0.14 YOY; GAAP net loss $0.11 per share (includes $0.15 per share of exit charges)

Guidance:

• Adjusted EBITDA expected to improve $7M–$8M per full year beginning in early Q4 2025 due to U.K. deconsolidation.
• Estimated net proceeds of ~$8M–$9M from U.K. liquidation expected to reduce revolving credit facility (material reduction by mid-2026).
• Sweden plant to run at higher utilization in 2026; expect a slight revenue reduction from U.K. exit but materially improved profitability.
• Air & Liquid expects continued strong demand (nuclear, Navy, pharma) and capacity expansion from Navy-funded equipment arriving in 2025–2026.

Business Commentary:

* Strong Financial Performance and Strategic Actions: - Ampco-Pittsburgh reported consolidated adjusted EBITDA of $9.2 million for Q3 2025, up 35% from the prior year, with adjusted earnings per share of $0.04, up $0.14 from the prior year. - The growth was driven by strong performance in the Air and Liquids segment and strategic actions to exit underperforming assets like the U.K. facility and AUP operations.

• Improvement in Forged and Cast Engineered Products Segment:
• FCEP's adjusted EBITDA was $8.1 million higher than Q2 and $0.3 million better than Q3 2024, despite a $6.4 million decrease in net sales from Q2 to Q3.
• This improvement was due to tariff pass-throughs, increased FEP revenue, and strategic pricing adjustments.

• Air and Liquid Systems Segment Growth:
• Air and Liquid's revenue in Q3 was 26% higher than the prior year, with year-to-date revenue nearly 7% above the prior year.

• Growth was driven by increased revenue across all product lines, notably pumps, and strong demand in the nuclear and pharmaceutical markets.

• Impact of U.K. Facility Exit:

• The exit from the U.K. facility is expected to improve full-year adjusted EBITDA by $7 million to $8 million.

• This action removed an operational drag on profitability, with the U.K. facility's losses ceasing as of October 14, 2025.

• Navy Funding and Capacity Expansion:

• New manufacturing equipment from the Navy funding program is expected to arrive, further expanding capacity for the pump product line.
• This investment supports long-term growth in the Navy market and positions the company to meet increasing demand.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted consolidated adjusted EBITDA of $9.2M (up 35% YOY) and adjusted EPS of $0.04 (up $0.14 YOY). They expect U.K. deconsolidation to improve full-year adjusted EBITDA by $7M–$8M and estimate $8M–$9M of liquidation proceeds to reduce revolver, framing the quarter as a turning point with accelerating profitability.

Q&A:

• Question from David Wright (Henry Investment Trust, L.P): On the U.K. closure and the question on the difference between bankruptcy filing in the U.S. and this filing in the U.K. You addressed the operating results and being absolved of them. Is the subsidiary's debt is the parent also absorbed that as a result of the filing?
  Response: The U.K. insolvency is limited to the subsidiary; its liabilities will be settled from subsidiary assets and will not materially affect the parent—previously recorded closure-cost charges (e.g., severance) will be reversed upon deconsolidation.

• Question from David Wright (Henry Investment Trust, L.P): So the secured debt is just secured against the U.K. assets?
  Response: Liabilities tied to the U.K. liquidation (accounts payable, real-estate liabilities, admin/commission costs) will be paid from the subsidiary's remaining assets.

• Question from David Wright (Henry Investment Trust, L.P): The other question for you, Mike, is you alluded to the pension plan. Are you doing an evaluation again this year -- the pension plan excuse me, the asbestos liability.
  Response: Yes — the asbestos liability evaluation will be performed again in Q4; the company has migrated to annual reviews.

• Question from David Wright (Henry Investment Trust, L.P): And remind me on the nuclear plants, like where are you in the food chain, if they want to restart a plan or they want to build a new one. Are you early or late?
  Response: Air & Liquid is typically early in nuclear projects, supplying heat exchangers well in advance of plant openings.

• Question from David Wright (Henry Investment Trust, L.P): It looks like your run rate based off the last quarter sales were $140 million annualized. How much more can you put through the system given capacity expansion?
  Response: Significantly more — Navy-funded equipment and other efficiency projects materially expand manufacturing capacity and provide a long runway for growth.

• Question from John Bair (Ascend Wealth Advisors, LLC): Do you anticipate getting any kind of monetization, I guess, from the liquidation of properties and so forth in those operations? Or will it all go to the trustee that's the receivership, I guess, that's settling that out?
  Response: Administrator follows U.K. priority rules: secured creditors (bank group) are paid first; management expects net proceeds of ~$8M–$9M that will reduce the revolver and have been included in the Q4 charge estimate.

• Question from John Bair (Ascend Wealth Advisors, LLC): So just high altitude, you're looking at possibly somewhere in the $8 million, $9 million that could flow back to you after this is all closed out, right?
  Response: Yes — roughly $8M–$9M in proceeds are expected, realized as a reduction in our bank debt/revolver.

• Question from John Bair (Ascend Wealth Advisors, LLC): Following up, you'd be supplying existing customers that have been served by that facility from your other European operations. Is that right?
  Response: Partially — Sweden will absorb much of the demand (higher utilization); some specialized rolls will shift to U.S. forged production; expect slight revenue decline but a sizable improvement in segment profitability.

• Question from John Bair (Ascend Wealth Advisors, LLC): So the Sweden plant will be more efficient and more higher utilization? Is that a fair way to look at it?
  Response: Yes — Sweden utilization and efficiency will increase following the U.K. closure.

Contradiction Point 1

Asbestos Liability Evaluation Frequency

It involves a change in the frequency of asbestos liability evaluations, which could affect financial planning and risk management strategies.

Are you evaluating the asbestos liability this year? - David Wright (Henry Investment Trust, L.P)

2025Q3: Yes, we will. We have evolved to an annual evaluation of the asbestos liability, which we will conduct again in Q4. - [Michael McAuley](CFO)

Asbestos revaluations were previously done every two years, but have occurred in consecutive years. Is this a change and will it be annual moving forward? - David Wright (Henry Investment Trust)

2024Q4: The revaluations will likely be done annually moving forward to stay on top of changing trends and conditions. - [Michael McAuley](CFO)

Contradiction Point 2

Supply Chain and Order Activity

It involves changes in order activity and supply chain dynamics, which can impact the company's revenue projections and operational efficiency.

What role do you play in the nuclear power supply chain? - David Wright (Henry Investment Trust, L.P)

2025Q3: There has been a slight uptick in order activity from some large customers. - [Samuel Lyon](CMO)

Sam, can you provide more insight into the roll market? Are you seeing actual July orders or commitments for later-year orders? Is this trend occurring in both the U.S. and Europe, or primarily the U.S.? How might these factors affect your business in the back half of the year? - Dennis J. Scannell (Rutabaga Capital Management LLC)

2025Q2: There has been a slight pause in order activity from some of our large customers. - [Samuel Lyon](CMO)

Contradiction Point 3

European Operations and Supply Chain Strategy

It highlights a shift in strategy regarding European operations and supply chain management, which could impact product availability and market penetration.

Will you supply existing customers from other European operations? - John Bair (Ascend Wealth Advisors, LLC)

2025Q3: We'll maximize capacity at the Sweden plant and increase its utilization. Some rolls are being converted to forged rolls due to production limitations. Revenue will slightly decrease, but profitability will improve. - [Samuel Lyon](President of Union Electric Steel Corporation)

Could you elaborate on international issues' potential impact on Union Electric's European operations? - Unknown

2025Q1: We will maintain operations in the UK for the near future as it provides a significant advantage for local nuclear market penetration and for servicing non-UK offshore customers. - [Michael McAuley](CFO)

Contradiction Point 4

Asbestos Liability Evaluation Timing

It involves a difference in the timing of asbestos liability evaluations, which has implications for financial planning and risk management.

Are you evaluating the asbestos liability this year? - David Wright (Henry Investment Trust, L.P)

2025Q3: Yes, we will. We have evolved to an annual evaluation of the asbestos liability, which we will conduct again in Q4. - [Michael McAuley](CFO)

Has the asbestos liability been updated this year? - George Pittenger (Fifth Third Securities)

2025Q1: We have conducted our evaluation of the ampco environment class claims asbestos liabilities, and our best estimate of the current liabilities related to asbestos claims have not changed materially from the prior year. - [Michael McAuley](CFO)

Contradiction Point 5

Supply Chain for Nuclear Plants

It concerns the company's position in the supply chain for nuclear plants, which could impact business strategy and growth prospects.

Where in the nuclear plant supply chain are you positioned? - David Wright (Henry Investment Trust, L.P)

2025Q3: We're early in the supply chain. Often, we supply heat exchangers well before plant openings, having already been involved in multiple plant restarts and new builds. - [David Anderson](President of Air & Liquid Systems Corporation)

Are there additional markets to enter within the Air & Liquid division, or is the market expansion due to increased exposure to the Navy program and nuclear activities? - John Bair (Ascend Wealth Advisors)

2024Q4: The Air & Liquid division sees opportunities within current markets, including increased demand from the Navy and nuclear activities. - [Dave Anderson](President, Air & Liquid Systems Corporation)