- Corporation returns to profitability in Q4 2019 following
successful restructuring actions
- First positive income from continuing operations in 16
quarters
- GAAP EPS of $0.24 for quarter ended December 31, 2019 versus
GAAP net loss per share of $(4.82) in the year ago quarter
Ampco-Pittsburgh Corporation (NYSE: AP) reports sales from
continuing operations for the three and twelve months ended
December 31, 2019, of $97.0 million and $397.9 million,
respectively, compared to $95.8 million and $419.4 million for the
comparable prior year periods. For the quarter, sales benefitted
from higher sales of mill rolls and heat exchange coils offset by
lower sales of forged engineered products for the oil and gas
industry. For the year, sales declined principally due to the lower
demand of forged engineered products for the oil and gas industry,
which more than offset stronger sales of mill rolls.
Income (loss) from continuing operations for the three and
twelve months ended December 31, 2019, was income of $3.0 million
and loss of $(10.9) million, respectively, compared to losses of
$(40.1) million and $(44.9) million for the three and twelve months
ended December 31, 2018, respectively. Unusual items affecting
comparability are disclosed in the attached non-GAAP financial
measures reconciliation schedule.
Excluding these unusual items, adjusted income (loss) from
continuing operations (non-GAAP measure) was income of $1.9 million
and $5.7 million, respectively, for the three and twelve months
ended December 31, 2019, compared to losses of $(2.9) million and
$(1.7) million for the same periods of the prior year. The
improvement is principally attributable to higher sales of mill
rolls, improved manufacturing and operating efficiencies for the
domestic forged operations, partially offset by the impact of lower
forged engineered products sales to the oil and gas industry.
Other income (expense) for the three months ended December 31,
2019, improved compared to the prior year primarily as a result of
foreign exchange gains this year versus losses last year, and
higher pension income.
Net income (loss) attributable to Ampco-Pittsburgh for the three
and twelve months ended December 31, 2019, was income of $3.1
million, or $0.24 per common share, and loss of $(21.0) million, or
$(1.67) per common share, respectively. For the full year 2019,
this includes a loss from discontinued operations, net of tax, of
$(9.1) million or $(0.72) per common share.
Segment Results
Sales from continuing operations for the Forged and Cast
Engineered Products segment declined 2% and 7% for the three and
twelve months ended December 31, 2019, compared to prior year, as
weaker forged engineered products sales to the oil and gas industry
outweighed stronger sales of mill rolls. Despite the declines in
forged engineered products sales, the segment’s operating results
from continuing operations improved primarily due to elimination of
excess costs associated with the Avonmore cast roll facility which
was divested in Q3 2019, higher sales of mill rolls, improved
manufacturing and operating efficiencies for the domestic forged
operations, and a $1.8 million benefit in the current quarter for
business interruption insurance proceeds.
Sales for the Air and Liquid Processing segment for the three
and twelve months ended December 31, 2019, increased 13% and 3%,
respectively compared to prior year. Sales improved for the quarter
driven primarily by higher sales of heat exchange coils, and for
the full year by higher sales of heat exchange coils and air
handling units. Operating results for the segment improved for the
three and twelve months ended December 31, 2019, given the $32.9
million asbestos-related charge recorded in Q4 2018. Additionally,
operating income for the quarter and year benefitted from higher
sales contribution but, for the full year, offset slightly by a
weaker product mix.
CEO Commentary
Commenting on the quarter’s results, Brett McBrayer,
Ampco-Pittsburgh’s Chief Executive Officer, said, “Following a
series of strategic restructuring actions to right-size our
businesses, improve manufacturing efficiency and reduce operating
costs, we are now seeing the benefit to our P&L with a return
to profitability in Q4. This result was achieved despite continued
weak demand for oil and gas forged products. We took additional
cost reduction steps in Q4 and have implemented new initiatives in
our European operations which are expected to improve profitability
further in 2020.”
McBrayer concluded, “With this phase of major restructuring
behind us, we strongly believe we are on the right path for
improved performance. We are resourcing for growth and
diversification in the forged engineered products business while
implementing actions which will further reduce our overall cost
structure in 2020. We are focused on streamlining our manufacturing
footprint while building on our commercial relationships to help
our customers succeed.”
Teleconference Access
Ampco-Pittsburgh Corporation (NYSE: AP) will hold a conference
call on Thursday, March 12, 2020, at 10:30 a.m. Eastern Time (ET)
to discuss its financial results for the fourth quarter ended
December 31, 2019. The Corporation encourages participants to
pre-register at any time, including up to and after the call start
time via this link: http://dpregister.com/10139434. Those without
internet access or unable to pre-register should dial in at least
five minutes before the start time using:
- Participant Dial-in (Toll Free): 1-844-308-3408
- Participant International Dial-in: 1-412-317-5408
For those unable to listen to the live broadcast, a replay will
be available one hour after the event concludes on the
Corporation’s website under the Investors menu at
www.ampcopgh.com.
Non-GAAP Financial
Measures
The Corporation presents non-GAAP adjusted income (loss) from
continuing operations as a supplemental financial measure to GAAP
financial measures regarding the Corporation’s operational
performance. This non-GAAP financial measure excludes unusual items
affecting comparability, as described more fully in the footnotes
to the attached “Non-GAAP Financial Measures Reconciliation
Schedule,” including the Impairment Charge, the
Restructuring-Related Costs, the Excess Costs of Avonmore, the Bad
Debt Expense, the Proceeds from Business Interruption Insurance
Claim, and the Asbestos-Related Charge, which the Corporation
believes are not indicative of its core operating results. A
reconciliation of this non-GAAP financial measure to income (loss)
from continuing operations, the most directly comparable GAAP
financial measure, is provided below under “Non-GAAP Financial
Measures Reconciliation Schedule.”
The Corporation has presented non-GAAP adjusted income (loss)
from continuing operations because it is a key measure used by the
Corporation’s management and Board of Directors to understand and
evaluate the Corporation’s operating performance and to develop
operational goals for managing the business. Management believes
this non-GAAP financial measure provides useful information to
investors and others in understanding and evaluating the operating
results of the Corporation, enhancing the overall understanding of
the Corporation’s past performance and future prospects, and
allowing for greater transparency with respect to key financial
metrics used by management in its financial and operational
decision-making. Non-GAAP adjusted income (loss) from continuing
operations should be used only as a supplement to GAAP information,
in conjunction with the Corporation’s consolidated financial
statements prepared in accordance with GAAP, and should not be
considered in isolation of, or as an alternative to, measures
prepared in accordance with GAAP. There are limitations related to
the use of non-GAAP adjusted income (loss) from continuing
operations rather than GAAP loss from continuing operations. Among
other things, the Excess Costs of Avonmore, which are excluded from
the non-GAAP financial measure, necessarily reflect judgments made
by management in allocating manufacturing and operating costs
between Avonmore and the Corporation’s other operations and in
anticipating how the Corporation will conduct business following
the sale of Avonmore, which was completed on September 30,
2019.
Forward-Looking
Statements
Information presented under the heading “CEO Commentary” above
contains forward-looking statements for purposes of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Actual results may vary significantly from the Corporation’s
expectations based on a number of risks and uncertainties,
including but not limited to the following: cyclical demand for
products and economic downturns may reduce demand for the
Corporation’s products; excess global capacity in the steel
industry could lower prices for the Corporation’s products;
economic or other factors may reduce the level of the Corporation’s
export sales; the Corporation’s profitability could be reduced by
increases in commodity prices or shortages of key production
materials; a work stoppage or similar industrial action could
disrupt the Corporation’s operations; restructuring activities of
the Corporation may generate greater expenses or losses than
currently anticipated; and the other risks described under the
heading “Risk Factors” in the Corporation’s Annual Report on Form
10-K and other reports required to be filed by the Corporation
under the Securities Exchange Act of 1934, as amended.
Forward-looking statements speak only as of the date on which such
statements are made, are not guarantees of future performance or
expectations, and involve risks and uncertainties. The Corporation
cannot guarantee any future results, levels of activity,
performance or achievements. Except as required by applicable law,
the Corporation assumes no obligation, and disclaims any
obligation, to update forward-looking statements whether as a
result of new information, events or otherwise.
AMPCO-PITTSBURGH
CORPORATION
FINANCIAL SUMMARY
(in thousands except per share
amounts)
Three
Months Ended December 31,
Twelve
Months Ended December 31,
2019
2018
2019
2018
Sales
$
97,019
$
95,822
$
397,904
$
419,432
Cost of products sold
(excl. depreciation and amortization)
75,925
83,340
326,157
351,839
Selling and administrative
13,464
14,939
53,643
58,068
Depreciation and amortization
4,556
4,971
18,967
21,379
Impairment charge
-
-
10,082
-
Charge for asbestos litigation
-
32,910
-
32,910
Loss (gain) on disposal of assets
30
(260
)
(37
)
128
Total operating expenses
93,975
135,900
408,812
464,324
Income (loss) from continuing
operations
3,044
(40,078
)
(10,908
)
(44,892
)
Other income (expense) – net
868
(2,067
)
2,541
1,085
Income (loss) from continuing operations
before income taxes
3,912
(42,145
)
(8,367
)
(43,807
)
Income tax (provision) benefit
(392
)
615
(2,108
)
(268
)
Gain on sale of joint venture
-
500
-
500
Net income (loss) from continuing
operations
3,520
(41,030
)
(10,475
)
(43,575
)
Loss from discontinued operations, net of
tax
(54
)
(18,679
)
(9,085
)
(23,901
)
Net income (loss)
3,466
(59,709
)
(19,560
)
(67,476
)
Less: Net income attributable to
noncontrolling interest
391
534
1,426
1,859
Net income (loss) attributable to
Ampco-Pittsburgh
$
3,075
$
(60,243
)
$
(20,986
)
$
(69,335
)
Net income (loss) from continuing
operations per common share attributable to Ampco-Pittsburgh:
Basic
$
0.25
$
(3.33
)
$
(0.95
)
$
(3.65
)
Diluted
$
0.25
$
(3.33
)
$
(0.95
)
$
(3.65
)
Loss from discontinued operations, net of
tax, per common share attributable to Ampco-Pittsburgh:
Basic
$
(0.00
)
$
(1.49
)
$
(0.72
)
$
(1.92
)
Diluted
$
(0.00
)
$
(1.49
)
$
(0.72
)
$
(1.92
)
Net income (loss) per common share
attributable to Ampco-Pittsburgh:
Basic
$
0.24
$
(4.82
)
$
(1.67
)
$
(5.57
)
Diluted
$
0.24
$
(4.82
)
$
(1.67
)
$
(5.57
)
Weighted-average number of common shares
outstanding:
Basic
12,646
12,495
12,590
12,448
Diluted
12,692
12,495
12,590
12,448
AMPCO-PITTSBURGH CORPORATION NON-GAAP
FINANCIAL MEASURES RECONCILIATION SCHEDULE (in thousands)
As described under “Non-GAAP Financial Measures” above, the
Corporation presents non-GAAP adjusted income (loss) from
continuing operations as a supplemental financial measure to GAAP
financial measures. The following is a reconciliation of income
(loss) from continuing operations, the most directly comparable
GAAP financial measure, to this non-GAAP financial measure for the
three and twelve months ended December 31, 2019, and 2018:
Three
Months Ended December 31,
Twelve
Months Ended December 31,
2019
2018
2019
2018
Income (loss) from continuing operations,
as reported (GAAP)
$
3,044
$
(40,078
)
$
(10,908
)
$
(44,892
)
Impairment Charge (1)
-
-
10,082
-
Restructuring-Related Costs (2)
697
602
2,350
981
Excess Costs of Avonmore (3)
-
3,689
4,572
9,349
Bad Debt Expense (4)
-
-
1,366
-
Proceeds from Business Interruption
Insurance Claim (5)
(1,803
)
-
(1,803
)
-
Asbestos-Related Charge (6)
-
32,910
-
32,910
Income (loss) from continuing operations,
as adjusted (Non-GAAP)
$
1,938
$
(2,877
)
$
5,659
$
(1,652
)
(1)
Represents an impairment charge
recognized in the first quarter of 2019 to record certain assets of
Avonmore to their estimated net realizable value less costs to sell
in anticipation of their sale, which was completed in September
2019.
(2)
Represents professional fees
associated with the Corporation’s overall restructuring plan and
employee severance costs due to reductions in force.
(3)
Represents estimated net
operating costs not expected to continue after the sale of certain
assets of Avonmore, which was completed in September 2019. The
estimated excess costs include judgments made by management in
allocating manufacturing and operating costs between Avonmore and
the Corporation’s other operations and in anticipating how it will
conduct business following the sale of Avonmore.
(4)
Represents bad debt expense for a
British cast roll customer who filed for bankruptcy in 2019.
(5)
Represents business interruption
insurance proceeds received in 2019 for equipment outages that
occurred in 2018.
(6)
Represents an asbestos-related
charge taken in 2018 to extend the estimated costs of pending and
future asbestos claims, net of additional insurance recoveries,
from 2026 through 2052, the estimated final date by which we expect
to have settled all asbestos-related claims.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200311005778/en/
Michael G. McAuley Senior Vice President, Chief Financial
Officer and Treasurer (412) 429-2472 mmcauley@ampcopgh.com
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