8-K: Ampco-Pittsburgh Corp. Announces Preliminary Q2 2024 Results, Expects Strong Earnings Improvement

Ampco-Pittsburgh Corporation anticipates a significant sequential improvement in earnings for the second quarter of 2024 compared to the first quarter, with net sales expected to be between $107 million and $112 million.

Summary

• Ampco-Pittsburgh Corporation has released preliminary financial results for the second quarter of 2024.
• Net sales are expected to be in the range of $107 million to $112 million, compared to $107.2 million in Q2 2023 and $110.0 million in Q1 2024.
• Income from operations is projected to be between $3.8 million and $4.8 million, a significant increase from $3.3 million in Q2 2023 (which included a $1.9 million foreign energy credit) and $0.1 million in Q1 2024.
• Net income is estimated to be between $1.1 million and $2.1 million, or $0.05 to $0.10 per diluted share, compared to $0.4 million, or $0.02 per diluted share in Q2 2023 (which included a $1.9 million benefit) and a net loss of $(2.7) million, or $(0.14) per diluted share in Q1 2024.
• The company's liquidity position has modestly improved since March 31, 2024, with approximately $8.6 million in cash and $27.2 million available on its revolving credit facility as of July 9, 2024.
• The company expects to file its full quarterly report on Form 10-Q around August 12, 2024.

Sentiment

Score: 7

Explanation: The document conveys a positive sentiment due to the expected improvement in earnings and liquidity. However, there are still some challenges, such as excess capacity in the European cast roll business, which temper the overall optimism.

Positives

• The company anticipates a significant improvement in earnings for Q2 2024 compared to Q1 2024.
• The company's liquidity position has improved since the end of Q1 2024.
• The impact of the Q1 foundry fire in Sweden is largely resolved.
• The new machinery in the U.S. forged operation is contributing positively to results.
• Air & Liquid Processing segment margins have improved sequentially.

Negatives

• The European cast roll business is still experiencing excess capacity relative to demand.
• The preliminary results are subject to change as the company's financial closing procedures are not yet complete.
• The company has provided ranges rather than specific amounts for the preliminary estimates.

Risks

• The company faces risks related to economic downturns and cyclical demand for its products.
• There is a risk of excess global capacity in the steel industry.
• The company may face limitations in the availability of capital to fund its strategic plan.
• There are risks associated with fluctuations in currency values and commodity prices.
• The company could be impacted by reductions in electricity and natural gas supply or shortages of key production materials.
• The company faces risks related to the inoperability of equipment and the inability to execute its capital expenditure plan.
• There are risks related to potential cyber-based business disruptions and the failure to maintain an effective system of internal control.
• The company is subject to risks related to legal claims, regulatory changes, and the consequences of pandemics and geopolitical conflicts.

Future Outlook

The company expects to file its Quarterly Report on Form 10-Q for the second quarter on approximately August 12, 2024 and does not plan to update this outlook prior to the release of its Quarterly Report.

Management Comments

• Brett McBrayer, Ampco-Pittsburgh's Chief Executive Officer, stated that Q2 2024 earnings should improve sequentially versus Q1 2024.
• He noted that the impact of the Q1 foundry fire in Sweden is largely behind them.
• He also mentioned sequential improvement in Air & Liquid Processing segment margins.
• He highlighted the full-quarter benefit of the new machinery in the U.S. forged operation in Q2.
• He acknowledged the excess capacity in the European cast roll business.
• He stated that the company is committed to delivering returns on recent investments.
• He believes there are no new significant headwinds outside of typical operating variations.

Industry Context

This announcement reflects the company's efforts to recover from previous challenges, such as the foundry fire, and to capitalize on recent investments. The excess capacity in the European cast roll business highlights ongoing challenges in that market segment. The company's focus on improving margins and delivering returns on investments is consistent with industry trends.

Comparison to Industry Standards

• Ampco-Pittsburgh's expected Q2 2024 net sales of $107 million to $112 million are relatively stable compared to the previous quarter and the same quarter last year, indicating a consistent demand for their products.
• The projected income from operations of $3.8 million to $4.8 million shows a significant improvement from the previous quarter, suggesting successful cost management or increased efficiency.
• The net income range of $1.1 million to $2.1 million, or $0.05 to $0.10 per diluted share, is a substantial recovery from the net loss in Q1 2024, indicating a positive turnaround.
• Companies like Carpenter Technology Corporation (CRS) and Allegheny Technologies Incorporated (ATI), which also produce specialty metals, have reported similar fluctuations in quarterly results, highlighting the cyclical nature of the industry.
• The improvement in liquidity, with $8.6 million in cash and $27.2 million available on its credit facility, is a positive sign compared to companies that have faced liquidity issues in the same sector.

Stakeholder Impact

• Shareholders will likely react positively to the expected improvement in earnings and liquidity.
• Employees may be encouraged by the company's positive outlook and recovery.
• Customers may benefit from the company's improved financial stability and operational efficiency.
• Suppliers may have increased confidence in the company's ability to meet its obligations.
• Creditors may view the improved liquidity position favorably.

Next Steps

• The company will complete its financial closing procedures for the quarter ended June 30, 2024.
• The company expects to file its Quarterly Report on Form 10-Q for the second quarter on approximately August 12, 2024.

Key Dates

Keywords

earnings, financial results, net sales, income from operations, net income, liquidity, forged rolls, cast rolls, metal products, heat exchange coils