Ampco-Pittsburgh Corporation (NYSE: AP) today reports sales from
continuing operations for the three months ended March 31, 2019, of
$107.5 million compared to $106.4 million for the three months
ended March 31, 2018. The improvement is principally attributable
to the Air and Liquid Processing segment, led by higher sales of
air handling units and centrifugal pumps. For the Forged and Cast
Engineered Products segment, forged and cast roll sales improved,
however, sales of forged engineered products to the oil and gas
industry decreased.
U.S. Cast Roll
Divestiture
The Corporation is also announcing today a plan to sell its
Avonmore, PA cast roll manufacturing facility to an affiliate of
WHEMCO, Inc. The purchase agreement has been executed, and the
transaction is expected to close in the second half of 2019,
following cessation of roll finishing operations once remaining
customer commitments are fulfilled. In connection with the
anticipated divestiture, the Corporation recorded an impairment
loss (“Impairment Charge”) of $10.1 million, or $0.81 per common
share, to record the assets at their expected recovery value. The
annualized impact on operating results following the sale is
currently expected to improve income from continuing operations by
approximately $9.0 to $10.0 million.
Consolidated Results
Loss from continuing operations for the three months ended March
31, 2019, was $12.0 million, including the Impairment Charge and
$0.9 million in professional fees associated with the Corporation’s
overall restructuring plan and employee severance due to a
reduction in force (“Restructuring-Related Costs”). This compares
to a loss from continuing operations of $1.8 million for the three
months ended March 31, 2018. Adjusted income from continuing
operations, which is not based on U.S. generally accepted
accounting principles (“GAAP”) and excludes the Impairment Charge,
the Restructuring-Related Costs and estimated excess costs of the
Avonmore facility, was positive at approximately $1.2 million, an
improvement of $0.7 million compared to the prior-year quarter on
the same basis. A reconciliation of these GAAP to non-GAAP results
is provided below under “Non-GAAP Financial Measures Reconciliation
Schedule.”
Other income for the three months ended March 31, 2019,
decreased compared to the prior year primarily due to a $2.4
million benefit in the prior year quarter related to a contractual
settlement with a third party.
Net loss from continuing operations for the three months ended
March 31, 2019, was $12.6 million, or $1.00 per common share,
including approximately $0.88 per common share for the Impairment
Charge and Restructuring-Related Costs recorded in the quarter. By
comparison, net income from continuing operations for the three
months ended March 31, 2018, was $1.5 million, or $0.12 per common
share, but included $2.4 million, or $0.19 per common share, for a
contractual settlement benefit.
Discontinued Operations
Loss from discontinued operations, net of tax, for the three
months ended March 31, 2019, was $2.2 million, or $0.18 per common
share, compared to $0.1 million, or $0.01 per common share, for the
prior year period. The loss reflects the operations of the
Corporation’s Canadian subsidiary, ASW Steel Inc., which is held
for sale. The higher loss compared to prior year is due to a
reduction in sales driven by tariffs imposed by the U.S. on imports
of primary steel and lower demand of ingot feedstock for the
production of forged engineered products for the oil and gas
industry.
Segment Results
Sales from continuing operations for the Forged and Cast
Engineered Products segment for the three months ended March 31,
2019, were flat compared to the prior year as a higher volume of
both forged and cast roll shipments was offset by a decline in
shipments of forged engineered products for the oil and gas
industry. Operating results from continuing operations for the
three months ended March 31, 2019, declined principally due to the
Impairment Charge.
Sales for the Air and Liquid Processing segment for the three
months ended March 31, 2019, increased approximately 5% compared to
prior year due to higher shipment volumes of custom air handling
units and centrifugal pumps. Operating results for the three months
ended March 31, 2019, were approximately flat with prior year as
the higher shipment volumes were offset by unfavorable product
mix.
CEO Commentary
Commenting on the quarter’s results, Brett McBrayer,
Ampco-Pittsburgh’s Chief Executive Officer said, “The anticipated
divestiture of our U.S. cast roll facility and reduction in force
action implemented during the quarter are further key steps in the
Corporation’s overall restructuring. Excess capacity and high
operating costs in our cast roll system have made operation of the
Avonmore facility untenable. We expect both actions to improve our
operating results from continuing operations by approximately $1.0
million per month on a full run-rate basis, once the sale is
complete. Although the Corporation incurred a GAAP loss from
continuing operations of $12.0 million in the first quarter, we
generated positive non-GAAP adjusted income from continuing
operations before the Impairment Charge, the Restructuring-Related
Costs and the excess costs of the Avonmore facility. The quarter’s
results also reflected an improvement year-over-year as we are
beginning to show the benefits of our operational improvement
initiatives. These improvements were achieved despite the demand
contraction in our frac block business. We are currently engaged in
additional asset restructuring opportunities which should
facilitate further overhead reduction actions and increase
efficiencies in our business. We will continue our restructuring
plan with a pace and urgency to fully demonstrate our earnings
power.”
Teleconference Access
Ampco-Pittsburgh Corporation (NYSE: AP) will hold a conference
call on Friday, May 10, 2019, at 10:30 a.m. Eastern Time (ET) to
discuss its financial results for the first quarter ended March 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/10130433.
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 from
continuing operations as a supplemental financial measure to GAAP
financial measures regarding the Corporation’s operational
performance. This non-GAAP financial measure excludes the
Impairment Charge, the Restructuring-Related Costs and estimated
excess costs associated with the Avonmore facility, which the
Corporation believes are not indicative of its core operating
results. A reconciliation of this non-GAAP financial measure to
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 adjusted income 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.
Adjusted income 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 from continuing operations rather than GAAP loss from
continuing operations. Among other things, estimated excess costs
of the Avonmore facility, which are excluded from the non-GAAP
financial measure, necessarily reflect judgments made by management
in allocating manufacturing and operating costs between the
Avonmore facility and the Corporation’s other operations and in
anticipating how the Corporation will conduct business following
the sale of the Avonmore facility.
Forward-Looking
Statements
Information presented under the headings “U.S. Cast Roll
Divestiture” and “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; and
proposed divestitures and restructuring activities of the
Corporation may generate greater expenses or losses than currently
anticipated. 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 March 31,
2019
2018 Sales
$ 107,494 $
106,415 Cost of products sold (excluding
depreciation and amortization) 90,221 87,653 Selling and
administrative 13,885 14,856 Depreciation and amortization 5,259
5,600 Impairment charge 10,082 0 Loss on disposal of assets
6 83 Total operating
expense
119,453
108,192 Loss from continuing operations
(11,959 ) (1,777 ) Other income – net
51
2,772 (Loss) income from
continuing operations before income taxes (11,908 ) 995 Income tax
(provision) benefit
(643 )
463 Net (loss) income from continuing
operations (12,551 ) 1,458 Loss from discontinued operations, net
of tax
(2,242 )
(69
) Net (loss) income (14,793 ) 1,389 Net
income attributable to noncontrolling interest
355 448 Net
(loss) income attributable to Ampco-Pittsburgh
$
(15,148 ) $ 941
Net (loss) income from continuing operations per
common share: Basic
$ (1.00 )
$ 0.12 Diluted
$
(1.00 )
$ 0.12
Loss from discontinued operations, net of tax, per common share:
Basic
$ (0.18 )
$
(0.01 ) Diluted
$
(0.18 )
$ (0.01
) Net (loss) income per common share
attributable to
Ampco-Pittsburgh:
Basic
$ (1.21 )
$
0.08 Diluted
$ (1.21
)
$ 0.08 Weighted-average
number of
common shares outstanding:
Basic
12,497 12,362
Diluted
12,497
12,379
AMPCO-PITTSBURGH CORPORATIONNON-GAAP
FINANCIAL MEASURES RECONCILIATION SCHEDULE(in
thousands)
As described under “Non-GAAP Financial Measures” above, the
Corporation presents non-GAAP adjusted income from continuing
operations as a supplemental financial measure to GAAP financial
measures. The following is a reconciliation of loss from continuing
operations, the most directly comparable GAAP financial measure, to
this non-GAAP financial measure for the three-month periods ended
March 31, 2019, and 2018:
Three Months Ended March 31,
2019
2018 Loss
from Continuing Operations, as reported (GAAP) $ (11,959 ) $ (1,777
) Impairment Charge (1) 10,082 0 Restructuring-Related Costs (2)
921 0 Estimated excess costs of Avonmore facility (3)
2,202 2,308 Income
from Continuing Operations, as adjusted (Non-GAAP)
$
1,246 $ 531
(1) Represents an impairment charge to record certain assets of
the Avonmore facility to their estimated net realizable value in
connection with their anticipated sale.
(2) Represents professional fees associated with the
Corporation’s overall restructuring plan and employee severance
costs due to a reduction in force.
(3) Represents estimated net operating costs which are not
expected to continue after the sale of the Avonmore facility. The
estimated excess costs include judgments made by management in
allocating manufacturing and operating costs between the Avonmore
facility and the Corporation’s other operations and in anticipating
how it will conduct business following the sale of the Avonmore
facility. Estimated excess costs of the Avonmore facility will
continue until the Avonmore facility is sold and additional costs
could be incurred in conjunction with the sale.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190510005222/en/
Michael G. McAuleySenior Vice President, Chief Financial Officer
and Treasurer(412) 429-2472mmcauley@ampcopgh.com
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