Ampco-Pittsburgh Corporation (AP) Earnings

Management highlights

### Overall Corporate Performance • Reported consolidated adjusted EBITDA of $8 million, with the YoY decline driven by temporary ramp-up costs in the new Sweden facility and unfavorable product mix in the FCEP segment. These temporary impacts are expected to reverse in subsequent quarters. • The U.S. defined benefit pension plan reached fully funded status in early 2026, leading to a shift to a more conservative investment strategy. Liquidity totaled $9.2 million in cash on hand plus $30.8 million in undrawn revolving credit facility availability as of March 31, 2026. • Total selling and administrative expenses were flat YoY, as cost savings from the 2025 closure of the U.K. facility and U.S. steel distribution business offset higher sales commissions from increased revenue. Depreciation and amortization was ~$400,000 lower YoY due to the closed operations. ### ALP Segment Operational Updates • Strong broad-based demand across all product lines, driven by growing data center activity boosting demand for commercial pumps (for gas turbines) and nuclear heat exchangers; ALP is the dominant supplier to the expanding global nuclear market. • Sustained strong demand from the U.S. Navy tied to long-term fleet expansion plans. Additional manufacturing equipment funded by the Navy arrived in early 2026 and will come online in Q2 2026, with more equipment arriving in H2 2026 to expand long-term capacity. • Strong demand for custom air handlers from the pharmaceutical market; the segment is actively adding equipment, increasing headcount, and improving efficiencies to meet growing backlog. ### FCEP Segment Operational Updates • Three temporary timing factors depressed Q1 2026 results: uneven shipments of blended Swedish/Chinese joint venture rolls for European customers (leading to a less profitable mix), delayed shipments of high-margin large U.S. rolls due to tariff uncertainty, and higher-cost inventory from Q4 2025 production downtime flowing through the P&L. • Two major competitors have exited the roll market: a European cast roll manufacturer (Marichal Ketin MKB) entered receivership at the end of 2025, and a South American competitor exited the cast roll market and is exiting the forged roll market, creating significant market share opportunities. • The Sweden operation is improving as utilization increases, and sales from the closed U.K. facility are being partially absorbed by Sweden, offsetting the lost revenue from the exit.

Guidance

- Management expects underlying performance to improve through the remainder of 2026, with FCEP demand and margins increasing after the temporary Q1 headwinds reverse in upcoming quarters. - Debt reduction is a top corporate priority for 2026, with management targeting $8 million to $10 million in debt paydown over the remaining three quarters of 2026. - Annual adjusted EBITDA is expected to improve by $7 million to $8 million on an ongoing basis following the 2025 restructuring actions in the FCEP segment. - The company remains on track to capture $7 million to $8 million in annual cost savings from the closure of the U.K. facility. - Management is optimistic about FCEP performance for both the remainder of 2026 and 2027, supported by market consolidation, reshoring, infrastructure growth, and normalized tariff conditions.

Segment performance

Consolidated Q1 2026 net sales for Ampco-Pittsburgh totaled $108.3 million, a 3.9% increase year-over-year (YoY). Consolidated adjusted EBITDA was $8 million, a $0.8 million decrease YoY. 1. **Air and Liquid Processing (ALP) Segment**: Revenue grew 17% YoY, driving adjusted EBITDA to a record high, up 52% YoY. Customer orders hit a quarterly record 40% higher than any prior quarter, growing segment backlog by $23.5 million (19%) sequentially. ALP contributed ~34.6% of total consolidated net sales in Q1 2026. 2. **Forged and Cast Engineered Products (FCEP) Segment**: Q1 2026 net sales were $70.8 million, a slight decrease from $72.3 million YoY. Segment adjusted EBITDA was $5.7 million, down from $8.3 million YoY but up from $2.3 million in Q4 2025. FCEP contributed ~65.4% of total consolidated net sales in Q1 2026.

Risks & headwinds

- Uncertainty around trade tariffs previously caused customers to defer purchases of high-margin large rolls in Q4 2025 and Q1 2026, negatively impacting FCEP segment profitability in the first quarter. - Ramp-up costs for the new Sweden facility pressured consolidated adjusted EBITDA in Q1 2026. - General macroeconomic uncertainty can cause industrial customers to delay capital purchases like large rolls, leading to uneven quarterly results and profitability volatility. - Overcapacity in the European roll market has historically pressured segment profitability, which led to Ampco's own exit from the U.K. market, though recent competitor exits have reduced this oversupply.

Analyst Q&A

• Q: The prior order growth update showed a 38% total order increase and 73% ALP order increase, but the current quarter backlog growth was just 5%. Can you explain this discrepancy, and how much do temporary Q1 headwinds impact adjusted EBITDA? /

  A: The different growth figures reflect different comparison periods: the earlier update compared orders to the prior year, while the quarter-over-quarter backlog change cited on the call compares sequentially to Q4 2025; all order trends remain positive. Management confirmed the temporary timing and mix headwinds in FCEP reduced adjusted EBITDA by approximately $3 million, meaning normalized adjusted EBITDA for the quarter was ~$11 million for the segment and ~$8 million consolidated. These headwinds are purely temporary and will reverse in coming quarters.

• Q: Now that the business has hit an inflection point, what are the company's plans for debt reduction, and what target do you have for 2026? /

  A: Debt reduction is a primary corporate focus as the company expects to generate positive free cash flow in 2026. Management targets $8 million to $10 million in debt paydown over the remainder of 2026 to strengthen the balance sheet. While the company periodically evaluates refinancing opportunities to lower interest costs, no near-term refinancing is expected at this time.

• Q: Two competitors have exited the global roll market. Why did they exit, and how successful do you expect to be capturing the vacated market share? /

  A: The European competitor exited because the European roll market was chronically oversupplied, the same dynamic that led Ampco to close its own U.K. facility. The South American competitor exited because roll manufacturing was a non-core business for the parent company. Management confirmed they are already receiving direct inquiries from former customers of the exiting competitors and have secured new orders that had not been held by Ampco in years, and expect to compete successfully for additional share in Europe as well.