AP - Earnings call transcript Q2 2022 | Ampco-Pittsburgh Corporation

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Operator

Welcome to the Ampco-Pittsburgh Corporation Second Quarter 2022 Earnings Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I'd now like to turn the conference over to Michael McAuley, Chief Financial Officer. ahead. go Please

Michael McAuley

and today’s Anthony, to joining everyone Thank quarter good XXXX on second conference us you, morning call.

Lyon, call Joining me Also are Steel the Officer. Systems Dave & Anderson, Chief our Union President Sam Corporation; today of and today are joining Brett us McBrayer, President Electric of Liquid Air Executive Corporation. on

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

Brett McBrayer

Mike. Good Thank morning. you

in release of quarter press our second recent Ampco-Pittsburgh recorded of our million income in XXXX. a $X.X shared net As

Cast we impacted segment. Air positive delays Products Liquid in again Engineered in chain net the and our segment coverage in earnings Although, lag a our well recorded supply as were Forged negatively as quarter, product surcharge & by we Systems

help which cost seen have in decline, recently commodity prices recovery. will We

challenges prices in X% from a prior Europe operations, approximately customers' energy for our of sequentially and volatility the sales grown customers quarter headwind backlog XX% these year-to-date. and be X% continues the has However, net to improved Despite our markets. and the end

businesses. Cast first our call equipment is fixed in injury in segment's of improvements The our David safety Completion members Systems health on drive of American and XXXX. this segment quarter. Forged conclude track on the rates safety perspective, and capital saw of new Liquid as of occur Products will performance. positive we in our in will a and fourth I progress our in during will Engineered The now & again team Anderson, will for we his turn our comments asset a installation quarter of From priority and health year. transformation Air the President the North to remain over

Dave Anderson

XX% over morning. Good we the a of in XX was Brett. high. quarter Liquid have end historic the that & further backlog you, At report Backlog the I new Systems XX% increased backlog QX six levels the at and high. pleased to Thank first am our record over Air to months. of increased months have past XXXX a past

Sales first of We Air first primarily year to X.X% exchangers. the this orders compared Liquid in in of due sales prior year are activity seeing increased any shipments months for heat received the history exceed orders order year, QX in significant six higher as the the months to received & of six Systems. of

materials lead extended chain times continue requested to We including related issues on customer deferrals. supply and manage

began beginning to year prior impact income of the of long-term implement these to in XX% mix. the chain new do issues increased the favorable While our have and short-term growth Operating Liquid At QX direction improved our business. impacted Systems nature and business plan. efficiencies compared due supply they product strategic for multiyear are & sales higher the strategic not XXXX, to Air

six months and the already momentum very our received have now plan as initiatives. experienced success and are we we early We forward orders provide into backlog we Record that just with and see show levels positive for positive indicators. move growth

Brett McBrayer

Thank you, Sam turn over now Dave. our of the Lyon, to Forged Engineered Products call and Cast I'll President segment.

Sam Lyon

sequentially good second the is XX% year. Cast up increased Forged nearly and Thanks and and backlog Brett The of in XXXX morning. segment's quarter another this X.X%

shift remained very has prices. it our as impact there book operating elevated, as materials cash our UK We continues If of this this to of should Energy a strong pass-through volatility, Inflation in certain continues, tailwind last energy see the increases where half and activity supply in begun we to for trend provide revenue and prices it's second but Materials catch income we operate have the the a order are volatile. of seeing will have coverage year, in but Much a a local be few decrease to more toward prices has costs US surcharge raw costs. driving continued over the the been operations. in cast plants chain. and key our roll to significant for up in one months.

about Sweden plant, only have our at is energy overall of there power we an costs in seen increase the While costs in XX% the plant. cost UK still our

work more to Sweden working are to shift our operation. We

costs daily on monitor effect and We business. and our to react continue to where possible the developments minimize

time week need US quarter down presses our maintenance working some on some equipment. We We took plants forge the kept normal We maintenance third system. from do seasonal associated are capital of and into an shutdowns. well of additional for our to additional reduce our this to advantage

last the plant we modernization built schedule. our stated, for positive Brett month, on for Spain expansion one assets our continue As the In in testing programs new US being on-site tools completed acceptance and machine results. with of

our milestone Burgettstown of utilization forge of our us in a and furnaces facility. from melt approval our Environmental full allow also Protection increase Pennsylvania throughput of furnaces and received as achieved installation assets. the will These We increase we four the for key to Department

further are they in growth investments provide will about which We non-roll currently business excited business, structure capacity. roll the lower these cost at and in as a is the

We turn are XXXX. now it CapEx this Brett. to still complete target back over program in to I on will

Brett McBrayer

you will Financial regarding Thank share more our At Chief for McAuley, this Officer financial details quarter. Sam. time, performance our Mike the

Michael McAuley

sales the segment's impact distribution the due Thank for product to of to segment, steel you Liquid improved received XXXX. Air be Forged costs shipments was volumes Loss in XXXX Brett. the second were The markets. Net of quarter the Air prior in were heat million. Engineered quarter The inflationary for and Products of including revenues in the Ampco's oil quarter the year XXXX exchange and reserve results $X.X higher impact year led an higher Processing returned costs. from the $X.X than XXXX the refund mix XX% improved XXXX, surcharge of forged $X.X second This operating of subsidies $XXX.X in second of lower a for due and in the Cast of higher prior COVID-XX XXXX prior by million Processing shipment and sales net and year, Engineered decrease the but for Liquid and to sales the operating of higher results engineered higher second driven XXXX increase quarter for compared to net second million. gas million, the and of quarter Forged products period by quarter sales segment's recorded for through pricing, XX% primarily prior Products pricing growth quarter year. declined the compared coils. X% excess XXXX, operations of from primarily to reflects and the operations to segment for of to compares for income recovery of operating and second surcharges, of excess employee-related of and Cast certain compared to

would and of XXXX costs corporation's cash principally to from on joint was improved approximately million but prior credit flat-rolled That compared income segment year liquidity Ampco-Pittsburgh Air with the increased subsidies, XXXX, inventories, X% trade operating when associated now the the and quarter. or of quarter and quarter Forged XXXX due rose XXXX, adjusted the is year-to-date, now second the the from for of at demand for we Backlog income for the XX, attributable dividend compared the flows segment non-GAAP quarter. an year the the At Excluding income to business improved of Forged position for used increased million At Capital per year $X.X X% positive aluminum Processing in pricing. the higher to higher share inflation at activities net undrawn second Chinese a and second XXXX. June sheet balance and XXXX of for sequentially. in from associated time, is for and dividend segment's Other year-to-date the primarily and and level increased $XXX.X transaction approximately facility the quarter, income and expense $X.X to Products and the quarter declined gains, exchange ago. Backlog this for availability cash XXXX the COVID-XX timing of was diluted share with XXth, Operator, like prior nearly $X.X X% line XX% hand and in a income $X in of $X.X record in were Net $X.X increase June questions. bottom sequentially line, for approximately and to million. quarter chain the from at Products orders million, QX Engineered million one XX% million on to for capital disruptions. a from corporation $XX.X sequentially. to due revolving net rolls $X.X of reported for result prior Cast an primarily per operations the of due the and expenditures million, the improved year for higher overall of of high the segment. are excess million of second forged the of million diluted quarter included net to comparable of The in working of increase ventures. benefited XXXX, or $X.XX and the was customers reserve Engineered foreign income Ampco's $X.XX activity our case second increase Cast supply open steel second corporation's a Backlog Liquid

Operator

Trust. Our question will We from Wright [Operator begin the will session. now Investment first David with question-and-answer Instructions] Henry come

You may now go ahead.

David Wright

Good morning everyone.

Brett McBrayer

Good morning David.

David Wright

Dave. a have for question I

pay to B You any -- of are delivery products And can demand then or is question you from? it's health for Air & you kind coming the characterize if the where and part tension care areas for demand all willingness seeing or not more? is additional a areas of Liquid whether Systems what between

Dave Anderson

thank David. Well, you,

health health We are not care. in it just is sure, seeing demand but care for

are across We demand the of seeing really most we serve. industries

in out far to that the we knows Everyone pricing. as market pass pay we're in and willingness As there generally pretty more, pretty passing getting are successful successful through. inflationary along is usually

David Wright

is it's like economy from if that this I'm problems, curious you think nothing little slowing things you of because in you ahead the on pockets down sounds while hear demand those but and this pockets? of it being but can one you're counterintuitive benefiting a find forging and and and

Dave Anderson

are we definitely seeing Yes demand. strong

Sam Lyon

our Sam. US is strong. thing very that customers' is repeatedly heard on remains on -- this One the construction earnings in that calls nonresidential the David we

call So, I'll the of it in it demand for is US higher pocket sure. a

David Wright

Buffalo have you just wondering, been delays Pumps' Navy? many programs. And in I'm any of Dave the shipbuilding trends various And business what interest last do over maybe lot to you're There's in with comment about months the then a there? respect seeing on

Dave Anderson

to good from been coming out. little due chain us a not, think, still It's if push-outs. And anything the stronger Navy. get but see to supply actually. we delays some the some short-term with certainly are But shipyards for started US I in there's significant issues customer it's term, problem There long a pushing demand

David Wright

the sector the the I MD&A, pluses and Great. that's results breakout and disclosure over from much affecting in thanks and And balance So, of then good appreciate comment kind the very your Mike. the some for have good year. I of the a just appreciated? luck minuses of

Brett McBrayer

Thank you, David.

Dave Anderson

David. Thanks,

Operator

Funds. [Operator Instructions] with question Our will from Gabelli next come Justin Bergner

ahead. go now may You

Justin Bergner

Good morning, Brett. morning, Good Mike.

Brett McBrayer

Justin. morning, Good

Michael McAuley

Hi, Justin.

Justin Bergner

were major products would Engineered a much And latter new the additional year question products of line? hard will how capacity. and engineered of be on And of engineered at mentioned, in side? equipment of add forged Forged that First part Is this on you first Cast sort the capacity the sort the forged you Products. in installment

Sam Lyon

furnace Yes. The – really Justin. we're constrained

nine to for approval the – take to months will DP which And four the so furnaces, install. there six

So, mid that roughly to increase And our the go product. is XX% on a would when little would bit year next non-rolled capacity year later in. in those

Michael McAuley

Right.

products than rolls. other forged So

Sam Lyon

Yes.

Michael McAuley

capacity not other Rolls products. forged are the constrained it's

Sam Lyon

Correct.

Justin Bergner

at sort Okay. And you point checkpoints current part sort XX%? the the you'll of there's – of until where intermediate of capacity capacity constrained that get that not any

Sam Lyon

Well, won't time. go all the furnaces the same in at

furnaces in another two and then put other you'll you put pick we'll and two up So pick in and XX%. up the XX%

Justin Bergner

Okay. Got it.

sheet. your does availability cash impact just commodity versus flow actively still rolling exploring little alternatives? give wiggle that – I the more a indirectly question I under mean, half? facility, And bit you projected commodity over Second does are to prices additional free how balance you or needs relates over the do your in second mean, prices rolling financing asset-backed with room

Michael McAuley

post in we've seeing June Yeah, should working that capital recent the to the guess, provide commodity some cost been seeing? prices been demand, of quarter be raw you're I of that materials we've relief coming should that on because XX down. referring end Justin decline

catch So would to – help us, the the period mechanisms that able that's finally will change cash generated business, in news. that It occur. to and be up will prices good on our exceed earnings potentially and surcharge would also inflation because from current the side hence

that reduced So should borrowings. some provide relief in

So base way. the go order continued are though would seeing in which other the we growth

extent think first second at I to if we a in prices and demand capital of So kind are but are grow expecting a even the we've in for seen the its of from the that lesser still demand working and the abate down. is coming half, use line growth half factor credit that it

Justin Bergner

for know I want if lag, don't relates tabs headwind keep it specifically you you on Understood, mechanism to the something you to but to sort of Okay. that's assume you've the this do have I price spoken the surcharge -- before, quantify as internally? from or investors? that cost

Michael McAuley

do. We

the In raw Engineered fact filed for inflation to in was quarter Monday we've operating price other under disclosed be Cast under the energy of to in to XX-Q disclose of materials that MD&A recovery for did that measured We relative evening, segment. million the we quarter Products the range QX it costs. for -- $X the and -- Forged estimate and

Justin Bergner

does related or recovered? And that of Okay. to, specific of up, by commodities get only recovered the surcharge mechanism portion all it is get catching the

Michael McAuley

material we abate be A portion recapture prices it. portion we'll when start portion come prices down, material a and business have the to surcharge recovered start where will of a not then the But inflation and is full protection -- that -- to don't and mechanism. there of our we're

Justin Bergner

realm? business about you and like of they surcharge surcharge Are mechanism that part such? a of is mechanism, that But Okay. or how of part for energy outside the where costs that the have

Michael McAuley

It's part of mechanism. the surcharge

most in our them. for, of fair but a We single contracts. of say have spent the I surcharge adding It's that for agreement, in of it's majority every the for bit time formulas to not would

Justin Bergner

Okay. Thanks. That detail is very helpful.

Michael McAuley

Thanks.

Operator

Brett remarks. session. now Chief turn any would for like our to Executive question-and-answer closing it This Officer over McBrayer, to concludes I

Brett McBrayer

you. Thank

Just each difference global taking a by faced from employees face want profitability improve cost pandemic. headwinds hard this recently of inflation encouraged our our the obstacles, the Despite call Thank you for these steps the making work in and our significant exacerbated we day. thank and Ukraine. positive now well We the headwinds I joining as from to I'm to just for war significant by further as employees. resiliency proactive morning. we're as every input

Operator

today's you presentation. Thank concluded. for now has conference attending The

You disconnect. may now

Ampco-Pittsburgh (AP) 11 Aug 222022 Q2 Earnings call transcript