10-K: Ampco-Pittsburgh Reports $66M Loss Amid UK Exit, Asbestos Costs

Ampco-Pittsburgh Corporation reported a significant net loss of $66.1 million for 2025, primarily driven by the deconsolidation of its UK subsidiary and increased asbestos-related liabilities, despite some revenue growth.

Summary

• Ampco-Pittsburgh Corporation reported a net loss attributable to Ampco-Pittsburgh of $66.067 million, or $3.28 per common share, for the fiscal year ended December 31, 2025, a significant decline from a net income of $0.438 million, or $0.02 per common share, in 2024.
• Total net sales increased by $15.861 million to $434.166 million in 2025 from $418.305 million in 2024, with both segments contributing to the increase, primarily the ALP segment.
• Operating loss was $54.479 million in 2025, compared to an operating income of $12.169 million in 2024. This loss includes a $41.424 million Deconsolidation Charge for UES-UK and $10.790 million in Exit Charges.
• The Forged and Cast Engineered Products (FCEP) segment experienced an operating loss of $44.679 million in 2025, down from an income of $10.494 million in 2024, largely due to the UES-UK deconsolidation and exit charges.
• The Air and Liquid Processing (ALP) segment's operating income decreased to $2.145 million in 2025 from $15.858 million in 2024, primarily due to a $12.352 million Asbestos-Related Charge.
• Backlog decreased to $328.937 million at December 31, 2025, from $378.884 million at December 31, 2024, mainly due to lower roll orders in FCEP and the termination of the U.S. Navy's Constellation Frigate program in ALP.
• The company completed the structured insolvency of Union Electric Steel UK Limited (UES-UK) and closed its non-core steel distribution facility in Ohio (AUP) in 2025.
• Net cash flows provided by operating activities decreased significantly to $1.344 million in 2025 from $18.028 million in 2024.
• The company secured $13.5 million from new Equipment Term Notes in June 2025, used to pay down its revolving credit facility.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a challenging period marked by significant one-time charges and a substantial net loss, despite some underlying revenue growth and strategic adjustments. The financial metrics indicate a weakening position, though management is addressing operational inefficiencies and market shifts.

Positives

• Net sales increased by $15.861 million to $434.166 million in 2025, with both FCEP and ALP segments showing improvement.
• The ALP segment is benefiting from increased demand in power generation and U.S. military markets and has successfully increased market share.
• The ALP segment has been implementing price increases to mitigate inflationary effects, and costs associated with tariffs on raw materials are expected to be passed on to customers.
• Tariffs on steel products have been a tailwind for the FCEP segment's Forged Engineered Products (FEP), resulting in increased order volumes.
• Negotiations with customers have been successful in passing on the vast majority of incremental tariff expenses.
• The FCEP segment's remaining European cast operations are considered to be on equal footing with competition regarding tariffs, as the U.S. cast roll market is currently underserved.
• Corporate costs decreased by $2.238 million in 2025, primarily due to lower employee incentive-related costs.
• The company received $735,000 in Employee-Retention Credits from the IRS in 2025.
• The Chinese joint venture qualified as a high-tech enterprise (HTE), reducing its statutory income tax rate from 25% to 15%, resulting in a $1.0 million benefit to the income tax provision in 2025.
• The UES-UK pension plan was fully funded as of the filing date and is no longer an obligation of the Corporation.
• The company maintains a comprehensive cybersecurity risk management program aligned with NIST Cybersecurity Framework, including regular training, vulnerability testing, and external expert engagement.

Negatives

• Reported a net loss attributable to Ampco-Pittsburgh of $66.067 million in 2025, a significant decline from net income of $0.438 million in 2024.
• Operating loss of $54.479 million in 2025, compared to an operating income of $12.169 million in 2024.
• The FCEP segment recorded a $44.679 million operating loss in 2025, primarily due to the $41.424 million Deconsolidation Charge for UES-UK and $10.790 million in Exit Charges.
• The ALP segment's operating income decreased significantly to $2.145 million in 2025 from $15.858 million in 2024, mainly due to a $12.352 million Asbestos-Related Charge.
• Backlog decreased by $41.926 million to $328.937 million at December 31, 2025, driven by lower roll orders in FCEP and the termination of the U.S. Navy's Constellation Frigate program in ALP.
• Net cash flows provided by operating activities decreased substantially to $1.344 million in 2025 from $18.028 million in 2024, primarily due to a $14.160 million change in customer-related liabilities.
• The U.S. Navy's decision to terminate the Constellation Frigate program resulted in $7.1 million of orders being removed from the ALP segment's backlog.
• The FCEP segment was adversely affected by global foreign currency exchange market movements, resulting in lower functional (local) currency sales and operating results, particularly for its Swedish operations.
• The company incurred $891,000 in debt issuance costs in connection with amending its revolving credit facility.
• The company has a retained deficit of $138.626 million at December 31, 2025, worsening from $72.559 million in 2024.
• Total Ampco-Pittsburgh shareholders' equity decreased to $32.639 million in 2025 from $58.883 million in 2024.
• The company's total assets decreased to $495.355 million in 2025 from $530.896 million in 2024.
• Cash and cash equivalents decreased by $4.724 million to $10.703 million at December 31, 2025.
• The company's average global market capitalization over the 30-day trading period ended December 31, 2025, was $69.5 million, and total shareholders' equity was $32.6 million, both approaching the NYSE continued listing criteria of $50 million.

Risks

• Inability to maintain adequate liquidity to meet operating cash flow requirements, debt service costs, net asbestos payments, and other financial obligations.
• Cyclical demand for products and economic downturns could reduce demand and sales, adversely affecting margins and profitability, especially for the FCEP segment's mill rolls and FEP for the oil and gas industry.
• Excess global capacity in the steel industry could lower product prices, adversely affecting sales, margins, profitability, and collectability of receivables, as well as salability of in-process inventory.
• Failure to realize expected benefits from restructuring or realignment initiatives, or incurring additional/unexpected costs, leading to unintended consequences like management distraction, business disruption, reduced morale, and employee attrition.
• Internal corporate reorganizations (including legal insolvency proceedings) could be disruptive, costly, require regulatory approvals, or fail to yield intended benefits.
• Inability to scale operational capacity (facilities, third-party contracts, equipment) in line with demand, especially in the ALP segment, leading to lost sales opportunities.
• Ultimate liability for claims alleging personal injury from asbestos exposure could have a material adverse effect on financial condition, results of operations, or liquidity, due to uncertainties in future claims, settlement/defense costs, insurance recoveries, and legal/regulatory changes.
• Limitations in availability of capital to fund strategic plans, and deterioration in credit profile or increased interest rates could raise borrowing costs and limit access to capital markets.
• Reduction in export sales, changes in foreign currency exchange rates (USD, GBP, SEK, EUR), and other economic factors in foreign countries could adversely impact financial results and competitive position.
• Imposition of new tariffs or changes in existing tariffs by the U.S. and other governments could negatively affect operations, financial performance, and liquidity, potentially slowing customer orders or triggering retaliatory actions.
• Increases in energy and commodity prices (steel scrap, ferroalloys, electricity, natural gas, aluminum, copper), reductions in supply, or shortages of key production materials could adversely impact production, profitability, or lead to higher losses.
• Global increases in transportation costs and limited availability of freight carriers may impact timely delivery of supplies and products, negatively affecting sales, production, and profitability.
• Failure to comply with covenants, representations, or warranties of various debt agreements (e.g., revolving credit facility, sale-leaseback transactions) could adversely affect liquidity, results of operations, and financial condition, potentially leading to loss of access to properties or higher borrowing costs.
• Dependence on unique equipment (electric arc furnace, spin cast work roll machine) means extended downtime could result in significant reductions in sales and earnings, with potentially high, uninsured repair costs.
• Disruptions to business, customers, and suppliers from pandemics and geopolitical conflicts (e.g., Middle East conflicts), leading to economic uncertainty, sustained recession, operational disruptions, liquidity issues, and increased litigation.
• Work stoppage or other industrial action from unions could disrupt manufacturing processes and impact results of operations.
• Changes in complex domestic and foreign laws, rules, and regulations (trade policies, tax regimes, environmental regulations) could negatively affect operational practices, cost structure, revenue streams, and future tax obligations.
• Changes in U.S. government priorities, delays, or reductions in spending (especially for the U.S. Navy) could materially adversely affect the ALP segment's customers and, in turn, the company's business.
• Failure of financial institutions or their need for liquidity could limit access to short-term financing or result in higher interest rates for the company or its customers.
• Loss of, or significant reduction in orders from, individual customers accounting for approximately 10% or more of a segment's net sales could have a material adverse effect on that segment's financial results.
• Increased environmental regulation, industry standards, or physical risks of climate change could impact manufacturing processes, material costs, energy supply, product demand, and operating costs.
• Inability to satisfy continued listing requirements of the New York Stock Exchange (e.g., average global market capitalization, shareholders' equity, share price) could lead to de-listing and impact share liquidity.
• Failure to maintain an effective system of internal control could lead to inaccurate financial results or fraud, harming the business and security value.
• Actions by activist shareholders could be disruptive, costly, divert management attention, create uncertainty about strategic direction, and cause stock price fluctuations.
• Potential attacks on information technology infrastructure and other cyber-based business disruptions could have a material adverse effect on financial condition, results of operations, and liquidity.
• By-laws designating Pennsylvania courts as exclusive forum for Internal Governance Claims and federal courts for Securities Act claims could discourage lawsuits but may be found inapplicable or unenforceable, leading to additional costs.

Future Outlook

The FCEP segment's primary focus for 2026 is to improve profitability by maintaining a strong position in the roll market and continuing to improve operational efficiency and equipment reliability. The ALP segment aims to grow revenues, monitor and minimize inflationary and tariff effects, strengthen engineering and manufacturing capabilities, and enhance its sales distribution network in 2026. The Corporation anticipates sufficient liquidity from funds on hand, future operations, and its revolving credit facility to finance operational requirements, debt service, asbestos payments, and capital expenditures. There is a reasonable possibility within the next 12 months that some portion of the valuation allowance against deferred income tax assets may no longer be needed, potentially decreasing income tax expense. Inflationary and market pressures on costs are expected to continue, but the company plans to mitigate these through product pricing and fixed-price contracts. Net asbestos-related payments are projected to be $9.0 million in 2026 and continue thereafter, with capital expenditure commitments of $7.5 million over the next 12-24 months.

Management Comments

• "The primary focus for the FCEP segment for 2026 is to improve its profitability by maintaining a strong position in the roll market and continuing to improve operational efficiency and equipment reliability."
• "The primary focus for the ALP segment for 2026 is to grow revenues, monitor and minimize inflationary and tariff effects, strengthen engineering and manufacturing capabilities to keep pace with growth opportunities, and continue to improve its sales distribution network."
• "The Corporation is actively monitoring, and will continue to actively monitor, changes prompted by the U.S. government, repercussions from the Middle East conflicts and similar geopolitical matters, economic conditions, and other developments relevant to its business, including the potential impact on its operations, financial condition, liquidity, suppliers, industry, and workforce."
• "We believe our liquidity (including operating and other cash flows that we expect to generate and advances under our revolving credit availability) should be sufficient to meet our operating cash flow requirements, debt service costs, net asbestos payments, and other financial obligations as they occur."
• "Given the Corporations anticipated future earnings from operations in Sweden, due in part to the movement of cast roll production from the U.K. to Sweden, and in the United States, the Corporation believes there is a reasonable possibility within the next 12 months, sufficient positive evidence may become available to allow the Corporation to conclude some portion of the valuation allowance will no longer be needed."
• "As is consistent with past practice, the Corporation will negotiate with the intent to secure mutually beneficial arrangements covering multiple years."

Industry Context

StockSavvy.ai notes that Ampco-Pittsburgh's FCEP segment operates within a global steel industry still characterized by excess manufacturing capacity, leading to competitive pricing pressures, especially from low-priced imports. The company's strategic exit from UES-UK and closure of AUP reflect a broader industry trend of rationalizing less profitable operations in response to these global dynamics and high energy costs in certain regions. Conversely, the ALP segment's growth in power generation and U.S. military markets aligns with increased government spending and infrastructure focus, providing a more stable demand environment compared to the cyclical steel sector. The company's efforts to pass on inflationary costs and tariffs are a common response across manufacturing industries facing supply chain disruptions and rising input prices.

Comparison to Industry Standards

• The global steel manufacturing capacity continues to exceed global consumption of steel products, indicating a challenging market environment for Ampco-Pittsburgh's FCEP segment, consistent with broader industry oversupply issues.
• The U.S. cast roll market is currently underserved, which positions Ampco-Pittsburgh's remaining European cast operations on approximately equal footing with competition regarding tariffs, suggesting a niche advantage compared to general steel product imports.
• The company's ability to pass on incremental tariff expenses to the vast majority of its customers in the FCEP segment is a positive indicator of its market position and pricing power, which may exceed that of smaller, less specialized competitors.
• The U.S. Navy's termination of the Constellation Frigate program, impacting the ALP segment's backlog by $7.1 million, highlights the inherent volatility and program-specific risks associated with defense contracting, a common challenge for suppliers in this sector.

Management Changes

Corporate Governance

Legal Proceedings

• The Corporation and its subsidiaries are involved in various claims and lawsuits incidental to their businesses.
• Claims alleging personal injury from exposure to asbestos-containing components historically used in products manufactured by predecessors of Air & Liquid (Asbestos Liability) are ongoing, with Air & Liquid and, in some cases, the Corporation, as defendants in numerous state and federal cases.
• The company believes appropriate reserves have been established for asbestos liabilities and environmental matters.
• Union Electric Steel UK Limited (UES-UK) entered into a structured insolvency process on October 14, 2025, with administrators managing its affairs, business, and property, including an orderly wind-down and asset sale. This action was confined to UES-UK and did not affect the Corporation or its other subsidiaries.
• The Corporation is performing certain remedial actions related to the sale of previously owned real estate and incurs costs to maintain environmental compliance.

Related Party Transactions

• Shanxi Akers TISCO Roll Co., Ltd. (ATR), a 59.88% indirectly owned joint venture, periodically has loans outstanding with its minority shareholder. No loans were outstanding at December 31, 2025 or 2024.
• ATR had sales to and purchases from its minority shareholder and its affiliates, and sales to a shareholder of one of the Corporation's other joint ventures in China and its affiliates. Purchases from related parties were $8.832 million (2025) and $6.388 million (2024). Sales to related parties were $17.626 million (2025) and $15.506 million (2024).
• Balances outstanding with ATR's minority shareholder and other joint venture's shareholder and affiliates: Accounts receivable from related parties were $2.390 million (2025) and $1.839 million (2024). Accounts payable to related parties were $0.069 million (2025) and $0.411 million (2024).
• ATR leases its manufacturing facilities from its other partner, with rent paid approximating $0.122 million for both 2025 and 2024.
• Subsequent to the deconsolidation of UES-UK (October 14, 2025), the Corporation had sales to UES-UK of $0.260 million and purchases from UES-UK of $4.316 million for the period ended December 31, 2025.
• Accounts payable to UES-UK as of December 31, 2025, was $1.758 million.

Stakeholder Impact

• Shareholders: Experienced a significant net loss of $66.067 million in 2025, leading to a substantial decrease in shareholders' equity. The stock's continued listing on the NYSE is subject to maintaining certain financial criteria (market capitalization, shareholders' equity), which are currently near the minimum thresholds. Activist shareholder actions could cause uncertainty and stock price fluctuations.
• Employees: UES-UK employees were impacted by the structured insolvency, leading to severance charges. The company's focus on maintaining a positive work environment and minimizing turnover/absenteeism indicates ongoing attention to employee welfare. Approximately 24% of employees are covered by collective bargaining agreements, with some expiring in 2026, requiring negotiations.
• Customers: Demand for products in the FCEP segment is soft but stable, while the ALP segment benefits from increased demand in power generation and U.S. military markets. Customers face potential price increases due to inflation and tariffs, though the company has largely been successful in passing these costs on. The termination of the U.S. Navy's Constellation Frigate program impacted ALP's backlog.
• Suppliers: Global increases in transportation costs and limited availability of freight carriers may impact timely delivery of supplies. Changes in the company's credit profile could lead to less favorable commercial terms for material procurement.
• Creditors: The company has various debt agreements, including a revolving credit facility and Equipment Term Notes. The structured insolvency of UES-UK involved an estimated recovery for lenders under the Credit Agreement. The company's ability to maintain compliance with debt covenants is crucial.
• Communities: Directors may consider the effects of actions on communities where company establishments are located, as part of their fiduciary duty under PBCL.

Next Steps

• FCEP segment to improve profitability by maintaining a strong position in the roll market and continuing to improve operational efficiency and equipment reliability in 2026.
• ALP segment to grow revenues, monitor and minimize inflationary and tariff effects, strengthen engineering and manufacturing capabilities, and continue to improve its sales distribution network in 2026.
• Actively monitor changes prompted by the U.S. government, repercussions from Middle East conflicts, geopolitical matters, economic conditions, and other relevant developments.
• Evaluate the continued appropriateness of the estimated recovery from UES-UK insolvency proceedings.
• Negotiate collective bargaining agreements expiring in 2026 with the intent to secure mutually beneficial arrangements.
• Spend approximately $7.5 million on capital expenditures over the next 12-24 months.
• Continue to evaluate the impact of OBBBA provisions with effective dates after December 31, 2025, on future consolidated financial statements.
• Adopt ASU 2025-6 (Internal-Use Software) on January 1, 2026.
• Evaluate the impact of ASU 2025-10 (Government Grants) on consolidated financial statements for the annual period beginning January 1, 2029.
• Evaluate the impact of ASU 2024-03 (Disaggregation of Income Statement Expenses) on annual disclosures for the year ending December 31, 2027, and interim disclosures thereafter.
• Continue to evaluate the Asbestos Liability, related insurance receivable, and allowance for expected credit losses on a regular basis.

Key Dates

Recommendation

The company reported a substantial net loss of $66.067 million for 2025, a significant reversal from a modest profit in 2024. This loss is primarily driven by large one-time charges related to the deconsolidation of its UK subsidiary ($41.424 million) and increased asbestos liabilities ($12.352 million). While net sales saw a slight increase, operating income turned into a significant loss. The backlog also decreased, indicating weaker future revenue. The company's shareholders' equity has significantly declined, and its market capitalization is approaching NYSE listing thresholds, signaling financial instability. Although management is taking steps to improve efficiency and mitigate inflationary pressures, the magnitude of the losses and the ongoing nature of asbestos liabilities present considerable headwinds. The overall financial health and outlook appear weak, warranting a "sell" recommendation for seasoned investors.

Keywords

Specialty metals, Forged products, Cast rolls, Air handling systems, Heat exchange coils, Centrifugal pumps, Steel industry, Aluminum industry, Power generation, U.S. military markets, SEC filing, 10-K, Financial results, Operating loss, Net loss, Asbestos liability, UES-UK insolvency, Tariffs, Inflation, Backlog, Liquidity, Corporate governance, Risk factors, AMPCO-PITTSBURGH CORPORATION