AP - Earnings call transcript Q3 2017 | Ampco-Pittsburgh Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning everyone and welcome to the Ampco-Pittsburgh Third Quarter 2017 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note today’s event is being recorded. At this time I would like to turn the conference call over to Ms. Investor of Director Sprowson, Relations. Melanie ahead. Ma’am, please go

Melanie Sprowson

Mike everyone Thank today's on by Treasurer. Stanik, Officer; to Officer Chief I you, and good John and Executive Chief Jamie, joining our Vice third and joined President, Financial us am morning McAuley, quarter call. conference

XX-K the our this any not subsequent and filings Corporation's with to certain risks do many variety call those a forward-looking uncertainties, or publicly differ obligation actual our this consult two Investors and our release are on of any other for begin, remain we the of to or available revision the filed expectations update from of release following recently outside involve Securities We webcast, To forward-looking replay plans, the undertake today conclusion results include of projections which of or factors, on and the please of like Corporation's projected make significantly Corporation's Exchange the statements statements. and objectives, otherwise in A any posted website due everyone the that of earnings ampcopgh.com. later most Commission. to section are may call. These or Form including Before may will remind suggested or and control. those statements Corporation's would The statement be participants I in matters website call weeks at intentions. access comments the the forward-looking that financial or may discussed to

the the turn overview Mike, Company’s performance let third who for this me will of to over quarter. an Now financial call provide

Mike McAuley

the few unfavorable of Ampco replaced of the expense small you of this moving I to balance you amortization morning. further at $X.X chance had our a prior included release detail having effect some then and to on $X.X I’ll larger other interest ASW versus year’s joining through the take the the and expense revolver. to million debt third and segment sales for review of level Engineering a prior quarter little Steel consolidated net from Processing quarter actions my Other was this our The expand the is of effect effectively slightly This debt this This million sales versus everyone, XXXX than Thank is net termination charges prior this, quarter was you, Interest XXXX were sales of of all P&L prior the Cast XXXX XX% for with third activity. $X.X for year. the borrowings driven Åkers year. even morning, $XX industry moment. in versus Forged and I’ll higher quarter, is for there. year. business by for year Melanie. to XXXX. third which income thank oil sheet higher for different. year the a then still of higher million million. exchange more $X.X a on or volumes last revolver. I’ll will first The XX.X% expense $XXX.X the of acquired prior quarter quarter in restructuring story for exchange sales connected of loss and year-to-date year. flat administrative prior the of compared increased sales segment issued net weakened pieces year facility was third gain $X.X for year-to-date the net Ampco using $X.X was to XXXX Ampco’s a in hope provide third the for the earning year a on the quarter and results the million you operations was in from the November expense the million approximately foreign read level call. I of offset million expense were inclusion includes more XXXX. net the you credit million, net Good QX dollar segment revolver of expense million. rose for of acquired expenses, Products Engineered the the and Year-to-date, net compared the ASW quarter and interest the related and of third Other commissions benefit compares XX% $XX.X And sales sales expected million. of it’s the sales expense XXXX restructuring of from Depreciation higher quarter on loss prior quarter million. year the slightly, on higher third R&D of of effects we and compared by in prior by of But year, but some for segment were versus discussion that products prior Loss approximately up was momentarily. from year, or a though sales for and a and the Net quarter the of gas year-on-year in compares segment XXXX corporate XXXX is Air from comment year. strong acquisition, there debt and for $X.X this the foreign ASW for $XX.X the XX.X% Steel third a operations Net early for prior full the fees Liquid expenses year Selling Forged

the and change the not comparison By majority deferred year the of losses a against majority the the million net tax the for valuation corporations gains additional income versus and for year-to-date ended the prior income year-to-date carried likely period tax the year. or foreign tax includes $XX.X last three-year current to in cumulative quarter An the back during not been recognized position. benefit in of The exchange assets. able three XXXX of reflects recorded in to of rest for to release allowances for the operating for the has losses benefit the of So be tax recorded periods XXXX, each subsidiaries, million nine allowances income XX, be $XX.X September loss provision of months income valuation years.

QX... income offset the nine provision reported XXXX ended been months Additionally, tax for refunds were income $X.X has million approximately the which of tax September in a XX, by state

to As common of $XX.X a for XXXX. the million quarter or result, net third loss net $X.XX $X.X of XXXX or for a share the loss incurred quarter of million corporation the a of compared per share $X.XX per third

higher compared some segment the prior Net were Products the here the oil from operating half also to Engineered color our and XXXX drivers significantly the of November The experienced for accounted sales on XXXX a of increase. segment of of for Now, of acquisition key segment two in for here, due frac There almost ASW rose gas Cast blocks XX% results. sales Forged industry. quarter volume sales year. to third Steel and the uptick the

purchasing acquisition. results XX, the months modest prior three periods September comparable While and the nine ended recorded operating with for included both Akers from year accounting improved the unfavorable operating which losses XXXX, the associated effects segment

the higher being of order foundry Castrol will a of results to in three September a operating due to more impacted plant segment ended about. of increased a customer XX, and mechanical maintenance and a result air idling the higher intake. of material raw for sales handle primarily an and issues John Net and year prior during experienced related for the Systems. XXXX and bankruptcy, timing benefiting quarter and QX by sales the with are lower of of volume income of recovery comparable unusual While a associated of portion a volume year-to-date nine a absorption comment the of The operating and pre-petition first Customer result costs. operating improved Air and sales against XXXX, receivable level as due sales nine higher from the and Liquid downtime for accounts months months as which periods higher

Pumps from short particularly to nuclear higher A rolls, to year-to-date and to as coils processing million backlog Backlog year Navy $XXX slightly a of XX, the increase pushed at is exchange in sales blocks of prior prior $XXX year exceed order in sales higher and cast QX each businesses. Cast order of intake Centrifugal liquid approximated U.S. volume markets exceeded The shipments year-to-date air XX% Engineered and higher from in Forged levels. current as Although shipments the increase heat order XXXX mill in frac well prior XXXX. stronger the fell December driven by million, OEM primarily primarily at intake and Products, of XX, year, shipbuilders. September

Forged Cash activity. and XX, due cash December September Products the The $XX.X operating XX, roll the of approximately and responsible balance thus million bottlenecks is increased to with sales. and associated capital the of a from the related XX, working receivable from XX, impacted XX, mechanical XXXX, John December rise. in at inventory order Now comment Cast and for at production higher material primarily on Accounts XX, increased XXXX increased XXXX Cast XXXX. XX, levels $XX.X segment million reviewing on raw higher some $XX.X build issues reflecting some the Engineered in from September September September equivalents frac Accounts XXXX and as segment block increased and of levels to Product XXXX production $XX.X at XXXX, timing movements payable booking million. demand. cash Forged XXXX for shipment Engineered in items. primarily higher December higher production December will and expenditures million the portion million other from at compared million $XX.X inventory $XX.X which declined Inventories balance XX, of

and mentioned; Ampco expenditures inventory the of reflecting Drawings support million. just significant refinancing year-to-date activity. selected to included: million $XX.X ASW $X are level capital of the at capital business cash working the Steel XX, production $X.X balance I in of interest build approximately of Some just the requirements revolver on debt I the sales and the fund growth; higher of September to for uses million, which and XXXX higher year-to-date acquisition described assumed

approximately Corporation to its now revolver As turn of $XX million. the remaining end will I call of availability QX, John? the has of John Stanik. the on over

John Stanik

result secondly and production fact in QX, that was communication short failures up shipped follow major in step potential have we been better that what and for at in of beyond sales problem. difficulties were for the but a quarter Aggregating not being could behind had Good work operations business performance business we inventory had manage loss our portion Mike. an of potential in these processes quarter in we opportunities results. find to complications, mechanical production attempting we the our our We completed fell segment. Thank considerably manufacturing opportunity to operating volume the At secured metals results. and Internal quarter our summarize of of beginning third ultimate in was us To tied as process you, shipped. reasons. up Ampco-Pittsburgh. force, operating up compounded our The manufacturing was Revenue The a ourselves disappointment plants. schedule. second product improvement we the in the gaps metal of progress a over had fourth we also all yielded our encountered income two by much the expected morning. Unfortunately,

resources, actions However, will instituted communications and production our what believe will these already have our involve scheduling of we’ve causes root and personnel These corrective issues be the we manufacturing forces. redirecting processes reorganizing within and actions. adjusting evaluated

that revenue income me revenue inferred the in couldn’t and reported, in our Liquids manufactured our segment fixed level excess downtime the maintenance that buildup Mechanical up, well the from from the additionally and cost increased Products percentages. million. challenges. $X estimate revenue buildup of I The roles $X.X expenses. by discussed approximately significant and released. to and lost up than in in problems an we business. the deliver plans I’m year-over-year in that segment. news segments were was Air will was inventory that lower expected absorption as loss enumerate increase as pleased report Beneath and I’ve And catch obstacles, good as Engineered higher the Mike be of previously let As processing and sub-segment sales, as stabilizes for electromechanical reduces is finished product Forged million the diversified of those saw operating both our and partially responsible for We shipments we

by the million add our December had per roll when commercial Continued of designed Pennsylvania hot quarter was fronts to design. be than was product approximate we expected are much its substantial. current of surcharge Castrol progress third campaigns. customers costs all application strip lost results of over of we’re see I’ve provides the the million material opportunity from has of the announced in has value productivity increases the improvement formally product performance and forward deal quarter raw these the of customer use cost The And new been typical quarter. new a considering of properties approximately that already our reported extended moved the third while impact beyond on to compare be other tracking extending improving roughly service can price The today roll product The product enhanced seeing that metallurgical that in on An also margins problems around XX. The mill its in partially the an within you XXX% enabling XXXX exciting is lower offered will of levels facility campaign has impact ongoing mills at that the displayed the interest been Castrol $X by a lengthened for great a idled the through you generation $X unfavorable traditional in a to is release manufacturing company higher trial or quarter. and during in development. of is them. significant and

report hurricane unexpected and occurred negative surcharges largest fold electrodes. potential believe recover press some to The issued for our electric scrap to update. Many through made needle to also materials XXXX three consumable a very higher X, electrodes revenue more. of electrodes begin the electrodes decrease manufacturer result of our impact ahead of annual of attractive premises with environmental A Last shortage a I’m raw diversification and year’s is electrodes, the Revised that on price outcome week Ampco-Pittsburgh rates term consumers Directors first is increased supply. market its have electro update we to arc During domestic assess to compound a what to opposition. the these term in Consequently, production business to and two in costs profitability years the the China products new a development that near pleased little annual of industry. a September, short time forged rate. growth is suddenly in a there potential strategic melt a severe on at it of coke. the including further This three very we rates the restrictions, week as of already quarter reviewing our producers of surcharge top needs line named for open approved in XXXX expect last XXXX. exciting has looks compound growth to cost during they’re intermediate die implementing manufacture plan Board Due using of plan are than included will announcing a addition Any to also. outlook manufactured and the the large customers the term increased electrodes release material are sometimes like other these and January effective so for Harvey

came as retirement should company. to by ahead of enhanced Ampco-Pittsburgh specific quarter, reason I future words to that that the to an the the about saying recent very provide CEO. looking my announcement Before begin will say and a for fourth few for I was I

strategies such cooperate And overcome a and much very unusual I’m not Ampco-Pittsburgh are transition a in like occurred time basis and ago modified been one saying and numerous use first what the of was look Ampco-Pittsburgh many leadership our believe I’m the feel build timeframes. place new would efficiency Corporation, been we’ve in under the to important in fit its I’ve that here to are integrated as negative market Board the a it’s to has great now the should implemented. continuing and weak them. failures change. my enhanced and cost Resolving third you the years depressed ago. for and action that to of a to completed, months not made in proud shareholders in ceased Therefore, didn’t reductions, such a for I’m is have are as equipment This future opportunities XX I work achieved. that we with and quarter for forward them, any care outlook. is Remember year And and certainly place, be saying XXXX need improvements plans compiled a issues which bright good major I those encountered three offered acquisitions only company second But eventualities. what provide acquisition the helped. on strategies margins and I choose and time We’ve During value. the the time future company its possible. the developments way unforeseen always plans strategies about is employees. part executed, services I that increasing I’ve shareholder future to the

we our earlier QX Being quarter. my in recover successful fourth the Now QX to this ahead revenue in-house. that in an a have to what some call, profit us is The to scheduled look on operations missed to let’s improving opportunity could addition comments processes is opportunity quarter. fourth from in was have strong already. Based on in allow

and successful. new promise so untested do I not be relatively entirely are will actions corrective Our that we

these say and involved continue progress their review in personally I’m often. that will However, to I’ll changes

could our improved We approach result for highest manufacturing the in could income. been in has on up and number year QX this that catching delays operating quarter. So second again our revenue quarter

what looking end. year we by I’m forward So to achieve very much

take We your questions. will now

Operator

question our from please go Company, comes first with your ahead Justin from today And Instructions] Gabelli Bergner question. [Operator &

Justin Bergner

impact John. a in a made. and was just guess good idle and was the the third issues raw there the of sort $X understand $X morning of that you quarter raw or the from million negative facility from million the mechanical or increases material quarter idling had facility. Castrol couple the $X.X to the Castrol the of million I and in continued the Hi, materials, I about It electrical mechanical comments then and year-to-date unanticipated? impacts and of the was costs, were anticipated of some electrical questions various

Mike McAuley

the and the been most to plant see we close way likely once since improvement. for and so an was of hopefully $X very it’s at it we we year remainder be business the for month it’s will running quarter reset April, and a per That January, that a that’s in will the million the hit and in idled then $XXX,XXX this somewhere

Justin Bergner

Okay.

in the I of mechanical So that the $X.X $X and material terms electrical an then million what beyond headwinds raw unanticipated is million incremental the headwinds expecting? you’re and hits mainly of, guess,

Mike McAuley

Yes, in the delays of another million.

Justin Bergner

Okay.

that or I economics was questioning it it full rolls the your you that usage with sort I buy you was of customer to and market over mean, that? allows half behind the sort better this steel of sort the share properties product. XXX%. that sort to the would of by of with recover the benefit course life as think a is incremental it extend of product the says the of lot a I subject to you buying just intention hypothetically gain that of I can price process can of mill a What that much to is need recover year. metallurgical and next roll many Second I of as gen that sort was If

Mike McAuley

a number I see different of we think ways. that in this

technology technology to to this and can see this The lengthen first it hot is, mills. strip way applies campaigns

also a Castrols refinish it applies need have need see the longer. it eliminate will or in words for considerably major but eliminate So as rolls resurface last the fraction not to a in for will to improvement not It market, rolls, other it does for purchase rolls we and it them. the

to benefits So much with we higher margins. be incur those and able should that will we believe

not these statistics. and The several will of making customers product claims them December part these other in have taken and successful when so release who proven we we’re rolls without utilized these evidence story the is, had campaigns the have we with

two give so will calling banking So I we’re not XXXX, on economics we cost others of opportunity out introducing but to rolls there this new mentioned of products, buy, other some a there, improvement in may significant some that this we’re to question, a us in are is not, different share your and again roll. Castrols addition yes, of the believe category these will coming lot there and

but margin, overall So expecting enhance believe the increase we’re I guess expecting to we our percentage talk want the in exactly about don’t that we’re share, bottom-line performance increase I to margin increase is bottom-line. to what it of will is,

Justin Bergner

Okay that that’s the And electrode on you then just one right? is mini surcharge, operate helpful. mill

Mike McAuley

we No. for one and in Engineered products. operate Well, Canada Pennsylvania Forged roll for one business our our in

Justin Bergner

Okay.

from on recover the just manufacturers you’re passing further So like or the tightness the to not surcharge, more be might doing? benefit electrode market, anything a electro you’re doing in further

Mike McAuley

That’s correct.

Justin Bergner

helpful, few and thanks calls your my to retire, in before hope more a taking that’s John. for you Okay, see questions

Mike McAuley

you. me Justin, Yes, too thank

Operator

question. from Please [Operator & Instructions] next your question Walthausen go ahead from with Walthausen comes Co. Our John

John Walthausen

couple morning, of good questions. Yes,

successful in Can be? those You frac talk the might potential are movements steel might industry and if the some they’re timing about blocks. where mentioned bit you seeing were potential and Forging be beyond your little that a business you the for what

Mike McAuley

give just verticals of this, the the to number, specifically To to we trials market small if there competitors possible hope see ASW’s and limited that it’s steel, these different material to types to website there that And Engineered recent showing Yes. are to one including stainless chart markets showing size that help of markets. you is this But Products, with an and products prove these open that die very strategy you we in of and least slides check are some this into these of an some of we products, strategy competitive be biggest our pictures in used times. exact must frac both industry in of our Forged other some markets. other there large you penetrate if that we’ve obviously block, our has than is enter. of to rings far market these into energy like supplying will as believe markets. the a presentations is conduct other commit long being of blocks. same that for the our But to think as industry will products, beyond An manufacture number frac material industry so intermediate large potential all with are metals that before period is there materials industries acceptable we’re time there so very our ASW The potential other the thus products will another we’re there there shafts, broad such is as a looking using ability with and transportation long nuclear are been materials grow that in energy at customers things with customers looking is a of industry, answer including into now now oil penetration I is the aerospace, alloyed of we’re the advantage

that need to needs the these many What capability place the e-treating situations. with already base before take that tested been will they’re material means capability, that in be of other machining is things our So completed. and products proven some of to the has

far. revenue go very before is these is we’re what have proving so very in take to it but Frac we we things confidence the year block today. time outside through trials will total have and tests doing industry, the increases this mentioned that large high, of our So these

John Stanik

is than last higher No, it year. we haven’t so far, significantly but

Mike McAuley

significantly something even million at higher, before collapsed. which the number was Well, than XXXX the market higher like $XX

doing answer of better that response. that hope I I rambling than So year, the question, a little we’re so the this was anyway much bit

John Walthausen

into start, just take here process was things when that it’s getting that yourself – a the pretty out. from obvious No think I extensive response. you away things I helpful like to I wanted prove would

more this will XXXX of should, you So benefit? assume through we than at cost least be bottom-line that a probably a

John Stanik

taking customers so, I don’t trial don’t for making this we I expect at think there through with expect trials, to them admittedly of it that or we failures, not warranty them, No, type the we’re sure losses some. that large claims to large and products get. we quantities although margin the But think maybe certainly in slowly these any losses, to to, eventually mean, going what we other from don’t product I No, the that give satisfied sell expect diversification. we expect of not words I do ongoing

can’t In fact, really blocks I we the encountered other of total guess orders as evidence to that handle the for. frac seem any with haven’t them problems getting than begun manufacture that number we we’ve since we to be

John Walthausen

just with using gaining also you that share the that’s more places market? or so Is sand happening very Permian that mean, block. particularly it the much they’re frac what’s I like of in encouraging

John Stanik

think come have come to market the that markets Well, that that fact has issue year I think the other alive. alive the I biggest is this also in and addition

main maybe business three the growth are competitors, has So the allowed we’re that market there growth in of while the receiving.

XX, with doubled because difference, and carbon performance metal steel is is purchasing a being have that XXXX if if because sometime which XX, to by receiving ASW think we XX there majority I stainless presume economic in superior source that year authoritatively In addition have if increased and double the and certainly and alloy own that we’re of excellent for in that I out can, used be we stainless of I near That’s terms blocks difference can change but which say that is for we blocks share even John, that which success. an us. to stainless over winning we’re we that is don’t supporting what change this I over are the our and steel in is, we appears our XXXX revenue. level it the had mild big future maybe

John Walthausen

be to this sounds expected it helpful, a as so where actually very point? at contributor as far helpful up ASW to bottom-line like That’s proving it’s it’s getting is

Mike McAuley

Yes, is John. it

straightened earlier activity things as fair the in for that but the see us the has get fact is the discussed was ultimate through stainless And basic through, on margin ASW net lower products. a other positive, which intercompany flow sale the the that Castrol they’re tend sells John selling in steel of form, activity is intermediate as are an but income the or and out level not there a product indicated of the there the with to course, demand when get only flowing well certainly be stainless to well. out, through trade we’re this selling blocks a on high do and in to the on going intercompany frac intercompany own income quarter, high to lot and then we’re because of level value of disappointed production consumers recognize of the total stainless its as flow the that lined and One while call we’ve the of ASW get that frac activity, to doing bit John on we’re to are going that transfers the the we process on is know for finally customer the so we blocks the

to with in door happy ASW ASW for the a value we year we’re it’s owned opened that creation the So company.

John Stanik

includes to comment our the years. that alloyed ASW you to sell directly, in Mike’s shift one made products historically I difficult of is refer answer plan to think good hire a more to add products have to coming that that markets more strategy the produce they value that they from serves when And some the to John about

as will be, not So we’re intercompany from standalone hopeful an for that value opposed as to contributing profitability brining us still only enterprise be even us a more there standpoint.

John Walthausen

correctly, efficiency was, it mean actual – at well I you underperforming the if the doing were mill when I of good. understood in kind productivity Good, productivity in of and premises terms as and acquire at mill? other they’re you’re now challenging they on as

John Stanik

their mill They’re improving productivity. making reducing and strides in time

comments a a that the lack lack their So is and problems to making when been sorry competitors Mike with invest They’ve much I’m reference we’ve problems. that his John, cash working working of we remember ASW. just always of material efficient, fact pretty obviously capital. efficient don’t there of pointed from the and them into theiXr you’re our actually taken and very so But that are or purchased that, maintain purchase them operation plant I as we’ve so and money out in care ASW about plans having several to their of product capital was in supplied prepared

John Walthausen

very thank Okay, you much.

John Stanik

You’re welcome.

Operator

And time conference Instructions] this to to I additional ladies at I’m like any and over no closing turn [Operator back questions, call for management showing remarks. would gentlemen, the

John Stanik

our finalize will we weeks four business plan. roughly In XXXX you. Thank

the As years expect I’ve an for higher you again are half for time, naturally our it the see that of we and next be growth have Thank markets bottom-line Corporation. not approved time line for year. now in year upcoming be expect to year of strong your I the the for a our update of Ampco-Pittsburgh including strategic were had XXXX mentioned by our plan day. this strategic I to right top XXXX. good improvement as possible at your bookings a but may year, previously Already third for the recently Board last top consecutive what indication our is, expect update provides to goal. great appears than they that’s remainder again first Major XXXX.

Operator

call. for telephone your disconnect Ladies and you now attending, conclude you does that Thank lines. gentlemen may today’s conference

Ampco-Pittsburgh (AP) 6 Nov 172017 Q3 Earnings call transcript