AMPCO PITTSBURGH CORP Q3 FY2024 earnings call

• Brett McBrayer noted operating income for 3 and 9 months of 2024 was $1.9M and $7M, with improved margins from capital investments offsetting weaker cast roll demand, and backlog increase.
• David Anderson discussed Air & Liquid Q3 revenue, YTD growth, backlog, and Navy funding updates.
• Sam Lyon provided details on FCEP sales, income, backlog, market conditions, and the impact of pricing strategy and capital upgrades.
• Mike McAuley reviewed consolidated net sales, income from operations, cash flows, CapEx, and income tax provisions.

Air & Liquid Systems Corporation

• Q3 revenue consistent with prior year; YTD revenue increased 13% vs prior year, primarily due to increased shipments of custom air handling units from the Virginia facility opened mid-2023.
• Backlog increased in Q3 due to a significant order from the pharmaceutical market.
• Operating income slightly lower in Q3 vs prior year mainly due to a prior year $0.2 million credit; production equipment purchased with U.S. Navy funding installed in Q3, and Air & Liquid approved for additional $4M funding for equipment modernization.

Forged and Cast Engineered Products

• Q3 net sales $67.2 million (down from $73.6 million in prior year), segment income from operations $2.5 million (up from $1.4 million in prior year).
• Backlog increased by ~$4.5 million from Dec 2023, positioning for low to mid-single-digit volume growth in 2025.
• Rural market in North America and Europe flat; forged rolls volume lighter in next 2 quarters but improved demand in cast roll facilities; European and North American steel producers operate below pre-pandemic levels due to economic uncertainties and Chinese imports.

• Full year 2024 CapEx net of grant funding expected in the range of $9 million to $10 million.
• Forged and Cast Engineered Products expects low to mid-single-digit volume growth in 2025.

• Competitive pressures in Europe and muted customer demand.
• Economic uncertainties and increased imports of low-priced products from China affecting European and North American steel producers.
• Valuation allowance on the net deferred tax assets of U.K. operations due to cumulative 3-year loss history and cast roll market weakness.

Q: David Wright asked about restructuring and debt reduction, Brett McBrayer responded on focus on debt reduction.

A: Brett McBrayer stated debt reduction is in focus within 12-24 months.

Q: David Wright asked Sam Lyon about FCEP segment and major markets, Sam Lyon replied on fracking and distribution markets.

A: Sam Lyon said fracking and distribution markets are key, with first small frac block order received.

Q: David Wright asked Dave Anderson about heat exchanger on SMR, Dave Anderson replied it's significantly more than low figures, at least six-figure.

A: Dave Anderson mentioned heat exchangers in nuclear market are not inexpensive.

Q: Justin Bergner asked about cash flow and working capital, Mike McAuley responded on working capital release and cash flow from operating activities.

A: Mike McAuley said there was a release of working capital and cash flow from operating activities was $10.6M YTD.

Q: Justin Bergner asked about FCEP volume growth, Sam Lyon replied on market recovery and increased share with customers.

A: Sam Lyon mentioned recovery in business, increased share with U.S. customers, and growth from aluminum rolling mills.

Q: John Bair asked about energy space and onshoring, Sam Lyon responded on trade actions and onshoring benefits.

A: Sam Lyon said onshoring already benefited market share with U.S. customers and will continue to help protect share.