- Earnings call transcript Q3 2022

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Operator

Good day and welcome to the Ampco-Pittsburgh Corporation Third Quarter 2022 Earnings Results Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Michael McAuley, CFO. ahead. go Please

Michael McAuley

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

Brett McBrayer

for joining thank you, Thank call. our you and morning, Mike. Good

XX% $X.X in $X.XX. of third an quarter per XXXX, net of a release, receive our & In Systems with first U.S. for income year-to-date of press modernization. our XX% will As shared versus our the equipment new quarter recent in were December, in no Ampco-Pittsburgh record site. weakness experienced growth and share million earnings Air of broke sales year. for delivering quarter for backlog of We recorded our another we prior asset Liquid up a The this piece

positive Sweden, negative headwinds Our in and they despite for from Slovenia. the facilities impacted achieved European prices, in U.K. was volume our quarter performance energy significant the

softening From for European North market, quarter the that which Cast remain continues both to on We report at a and see as and as high market, The continue a energy in I'm trajectory. Forged perspective, long to however, Air for continue safety pleased the historically strong remains will Engineered Liquid positive performance levels. American Systems. & Products our prices

will at this to Systems Air performance. comments this turn Liquid on David of segment's Anderson, Now I time, for over the & call President

Dave Anderson

Thank This At has third & the backlog have XX% you, Air the past over increased high the Brett. a months. Systems reached in morning. historic is quarter, of another our the X achieved XX% our the Liquid over XX end backlog. months record. and quarter consecutive new Good third levels past Backlog

Sales in made continue our . air increased compared year, and exchangers show to the QX significant continue primarily order custom due we as handling We to positive shipments activity prior sales of to changes XX% units. to force to higher have heat results. see

offset prior X requested XX.X% supply and short-term operating above year. income continue quarter. multiple already on we ahead, plan. momentum XX% to QX sales forward times growth year materials QX Year-to-date chain-related positive build we the as mix. quarters Liquid In Air income is record unfavorable consistent growth this including now & and deferrals. have with extended was into on issues, were with multiyear higher by manage QX higher was our as to year, will continue we Systems lead than achieve of customer continued our each for the backlog were product strategic We months Operating has prior achieved. shipments highs initiatives the

Brett McBrayer

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

Sam Lyon

Thank for We very has in million The third in the and unfavorable booking X% This business currency our currency October, reduced XXXX month strong and approximately in of to activity backlog decreased beginning year-to-date of sequentially increased our you, of of of and million. the translation backlog the the foreign Forged oil XX% Cast X%. QX was choppy had patterns backlogs. a translation up and a XX% quarter mainly segment's Brett. sequentially the decline by $XX which backlog our accounted $XX year. in ordering and reduction is of due since The gas

We a more are been costs towards to is the Europe strong shift U.S. high activity in market local has rural energy a there. due there seeing chain. soft supply as

new low Steel, begun strong XXX electricity in mill. to is a River has and customers. to lowered high of our has has footprint the very flex producing producing intermediate and roughly non-COX due to QX aluminum most flat their inputs which has projects by as XXX% This the and to the in continue installed XXXX. already and footprint traditionally has the in products cap U.K., cases, transfer stubbornly deliver remained this We're more supply billion targeting has and recently, where and with cost XXXX. have announced value deflationary effect We The to Sweden as to that supplied outlook energy-intensive carbon -- the Ferrochrome very oxide mills. carbon a material. XXXX. locations can and a recently The in has of are Transportation of end Nucor, some with plant the compared location to deflationary. Inflation in aluminum Steel position headwinds. costs by to Energy moderate $X.X compared our January We XXXX. certification by zero had for toward XX%, Big become is has an the being is largest generation. most of U.S. also Dynamics of U.K. last this Novelis of strong working extremely for in announced the will is and have a the U.S. well to we when such moderated than when gas and in experienced are scrap as government natural price electricity, Key which moderated nature moly end term position

incorporated results previously, business get swings. stated we As types to insulate worked of from tirelessly these costs volatile our to a into and surcharge these

in this We have successful been arena.

increase have XXXX XXXX, addition, been we able a inflation. not In at pricing and base general but level of in to

improve operating pricing recover to focused be base future costs supplies contracts profitability. increasing to and We will on as such general

programs stated, modernization plant assets expansion continue our for our and U.S. forward. Brett As

The to December in QX be will of with in first machine arrive commissioning XXXX. scheduled completed

quarter. machines X to We will testing acceptance are be completing in QX operational XXXX. scheduled Machine the X and on of X be and fully next this QX

as lower back rule excited cost our structure they growth about and investments over I will in are to business. these provide in further turn business nonroll now Brett. it the a We will

Brett McBrayer

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

Michael McAuley

including million, Engineered sales the a the operations and million of the Thank $X.XX diluted our expenditures just shipment of driven timing to compared increase of segment included income $XX.X so higher higher QX of the the sheet XX% on ventures. higher for third for bottom Ampco's loss $X.X XXXX, of third sales hand segment's for $XX.X $X.X The the quarter and this third despite quarter you, $XX less $X.X due due to third third year for of million. to quarter were expense than or which per exchange XXXX air operating recovery higher some loss quarter borrowings of the will XXXX, $X.X for corporation operating of summarize approximately costs of issues. million results custom diluted $X.X and were given facility the our for million million, liquidity Force Forged dividend exchanger We due per $XX.X net position the due and Brett. XXXX to XXXX and XX% increase Loss higher an or XXXX on approximately here. XXXX Form highlights Other shipments. quarter Ampco-Pittsburgh I a in XX% to to XXXX foreign prior attributable net of Air the yesterday, addition transaction Products growth XX-Q for balance from Capital issued improved Net availability net Chinese year At XXXX volumes which the pricing, segment net Engineered of quarter and of At primarily & and revenues corporation's quarter Cast sales Liquid $X.XX sales compares segment. both was Engineered This businesses. was in improved third corporation's to period supply of income favorable of the prior Products September primarily the XXXX. sales higher in mix, compared of share the for Products to prior third quarter are Forged the the by and segment led than the chain Cast the third operations year-to-date, the & of quarter joint the Liquid revolving higher for the were year the results to income to heat third by of net for rates. the period and were improved XXXX, year Cast prior to in in XX, by more the higher quarter from Air share Processing gains comparable million. was cash undrawn sales expense compared Processing handling primarily overall interest million higher surcharge credit interest million driven for line, of reported and shipments. quarter of third from offset in one

our financing the the our key During transactions and CapEx modernization in closed provide financing strategic significantly that the position to some future liquidity on U.S. corporation plan for quarter, improved

trust. transaction Forged deal upgrades to for at the investment operations. finishing to X included with plants PA a real in XX, Store estate and & UES plant segment also Liquid valued be of for real associated up its a agreement disbursement This $XX.X subsidiary with On of a major sale August a the leaseback for million, Carnegie our with million Air completed Capital, at program. Virginia estate completed improvements XXXX, modernization building supplemental UES at $X.X

September entered master equipment a UES million which program. for agreement addition, for loan XX, and UES to $XX up borrow leading in XXXX, can lender its into a equipment with CapEx security on modernization finance In specified

transaction the drew leaseback credit air total we to pay used and not the line. availability on more this liquid plus did proceeds, creating were down supplier million reimburse from and These $X proceeds quarter, on the substantially the facility payments. Hence, the past During progress increase the debt. to sale line

and As our important Store sale North transactions a Air as our initiatives plan & now Liquid would position us property a to for event, completed Capital. execute subsequent this also Tonawanda, in like at liquidity strategic financing of to open significantly line and looking New support These we reinvestment forward ahead. our enhanced its to October, the Operator, result, leaseback to sales the questions. time, and growth York on capital

Operator

Gabelli Justin [Operator from Instructions] Bergner Our first question comes from Funds.

Justin Bergner

some didn't to be want just million, That first. that transaction. fully understand The better quarter related quick I clarification financing in Maybe of the the the I quarter. the a what financing would questions and transactions there. X after capture as to $X.X

that equipment facility, million past handling our you And the Air would $X be transaction the for mentioned a but some third, facility sure the more on not you amount. reimburse mentioned drawn York The clarity for New just second October in payments. was the financing then I'm Liquid sale-leaseback little to & on

Michael McAuley

the fund the U.S. properties million from element September. The our building completed finishing of Union included XXXX, for company sale start Carnegie up Steel in at leaseback transaction was lease Capital. -- did The in its PA is improvements facility. Store Electric transaction to of had in to $X.X as a top. that an plant the link that transaction to here roll So -- sale-leaseback we the We sale part in additional deal

to perhaps it make to that that seemed upgrading be So that -- baked we the us. the Capital Store we if had -- into CapEx we landlord total the for $XX fund Capital all CapEx opportunity to Electric, million do plant. is of that improvement in that only Union and Store improved And could with our program the building at a upgrade had It's that -- that. were could we the sense into going leasehold part

So that's million $X.X for. what that is

Carnegie it's building and But -- in We and project install for been other reinforce that previously of from haven't hadn't facility yet. machining portion the received a day the work. any use process. reimbursements to of heavy open The the used about new equipment is some other it such expanding still a

clear? So first that's the Is that thing.

Justin Bergner

Yes.

facility, that is you reimbursed it? is money said the of part for that been haven't and So equipment financing you

Michael McAuley

let's Capital and get now. to right leaseback finance that No, was on a sale-leaseback, do separate. to leasehold million. $X.X only part into an separate financing It's Store sale that equipment focusing improvement next. it's This sold. I'm things. previously to is a piece I'll are And of extra property get and

We it haven't received yet. any what's coming. cash for for It's

Justin Bergner

Okay. Got it.

Michael McAuley

Okay.

that we Liquid was on some sale before York transaction moving our just to for into we getting with was Store North equipment and Tonawanda, leaseback Now in at a do took which Air relationship got intended -- into that facility, second just -- it and financing. by were it segment, into desired we'll We to it testing be There a no maybe originally stay findings, million total There a elected environmental broke X the New separated while. transaction little over was so pieces. the & $XX the a time. expanded

So facilities. we Virginia on the closed

Virginia did $X.X $XX.X a sale-leaseback here, quarter First, close million. outside inflow. North finish And million we thread was the in event that October, facilities on subsequent then to as the for the X Tonawanda in the of facility just a the

to sheet down makes the up new term, proceeds for book the line will pay $XX So us the on be were but used total instances. in balance that credit all now debt that million the long

you'll you no total But Form as that our for balance there's on larger or debt. was. see footnote you So in yesterday, and from note in will see the will increase spiked than grow it debt sale or XX-Q that leaseback be out

Justin Bergner

the the in the third financing. guess of portion was I piece equipment

Michael McAuley

longer-term permanent place to have or a a We important kind put of financing Yes. that wanted more in for of equipment. high-cost and

for rather get doing, credit for thinking payments for been than time as that. financing tools, support these was to been us line we have it we've progress permanent So to large machine use about our some

but we funding entered So each provide agreement only to progress for machine. the portion of not for term an into payments,

to but have eventually, an way place machine collateral access payments, line depending and the And we've to at then progress And term the incurred goes total machine cost -- we'll for installed the for that turn million we've actually we incurred term drew forward because more the the trying payments notes than manage we're So or And line on a nice equipment kind we in on then to $X X%. when loan. individual online, when seek got reimbursements those term it even loan progress -- for each to past is loans that, manage going of the maintain be the because each that machine to into it's interest us using for term. finance on long our liquidity liquidity. we

Justin Bergner

$X the machine? was on for the million first payment So the progress

Michael McAuley

the It's several of but was of couple machines. yes. machines bunch, not a on It

Justin Bergner

credit of revolving working And right, longer line, none these the and is transactions limit this the tied because there, then that's term? you to line, capital tied credit to financing more on

Michael McAuley

getting It's heavy actually a line availability CapEx. the and on to using including line -- CapEx, to line fund were it a boost credit because credit great we've the on was to everything, using been we the credit

that the the these say released all borrowings. new credit that But line So and of because increased credit in that we again, have total on we brought debt. place have lots agreements line these our now credit has not line pressure have just have the space. in been reduced with proceeds I'll

Justin Bergner

that financing these trying based just other was to the transactions on availability limited nothing clarify that Yes, there your credit was line? under I

Michael McAuley

no. Oh,

Justin Bergner

then Did then the and on Products? materially Brett, And quarter clarity sales maybe tapered gas bit oil And talked maybe Engineered Cast sequential you the planned lastly, and third you about in piece in prepared and sales. the some -- remarks, for impact a downtime Forged why headwinds the the sequentially. the profit

Brett McBrayer

all to significant did to outages assets took again, maintain the our the Yes. we proactive we The impact from a We businesses. make quarter. across for bit have oil about planned let have some speak sure a of color perform I'll downtime bit moving that on little gas in give perspective material place a And Sam, the and and more be industry and Justin, forward. a able just little topic.

Sam Lyon

Justin. Yes,

the won't the On into of the oil business. we frac and some side, block gas first-tier customers names. customers, on I some from get any side moved second-tier

One of them overseas started has procuring again.

we're in protections we're last There other tariff won't very in diversifying people. protections some that so in place, are And anticipating that, long. some place.

that's think QX as a particular have an will bit QX that backfill but I and it thing, in customer. impact that So we with a volume had a a little we temporary that into

Operator

Wright Please And question from our comes next Henry Trust. from Investment David go ahead.

David Wright

Dave. with out Start

So you mentioned that gangbusters. going business is

the X-year year in You break strengthen to plan. efforts of things just new expand down and of this the as new you result seen customers the new much how economy, maybe versus a you've can much what producing mentioned How closing markets strategic -- to orders? pipeline, existing

Dave Anderson

David, sales predominantly the say the it's first third I It's part predominantly expanding is our force. would one.

our and some us. for of a lot that internally And paid we network. have year in year has dedicated spent We independent people this of off sales this adding QX to rep resources hiring

have We considerably. that expanded

of closing really one. say the So point it's would orders. and that's much our the number But economy not then of the there of so things. force, dominant sales closing older I somewhat first some your expansion the is third of second two, order, It's the Certainly, in answer one, not on the economy. the really

David Wright

are well-known thought on names quick been into just Is the the still Or then so not brand function word success. pretty right and well new getting more to of new reps that for the as a just of good And in it's it's there's easy helpful been to that some markets? airs. the -- that is that, stay getting

Dave Anderson

really both. in that level And of geographically into We in. our been been Some of do also the markets. compete have out a new combination, pushing particularly wanted. the And some we at helpful. have new some we reputations It's in weren't performing swapping ones markets good reps cases, out

have those reps made. dozen the significant added independent combination a things. we changes of And sales it's more we So that this year, have than

our addition So that a to is significant force.

David Wright

Okay. Well, Sam. continued and efforts talking there about great. good your luck. Thanks for

X December, QX. in comprise X X and those and X, You mentioned equipment machines the in X QX basically X, in Do program?

Sam Lyon

There's -- -- X X there we're that X machines. so will there's more sorry, machines X, be X, X buying --

there's So then that's help and X to X in furnaces the melt of putting that that more. we're will also X, us

the is this be it, machines first, X to probably first . the of the those third total. So of I'll third say,

David Wright

confident And going that I machines, feel you these delivery a to taken to know the time pretty hold? get schedule it's long do is

Sam Lyon

States Yes, the the or because here machine, containers so week -- in X ago. we're actually arrived a the United

getting And install. to so be that we'll

are going The and machines to fabricated actually are other there X witness. we

build do So and it machine, they then sure here. ship make it fly specifications, and over and the performs what we disassemble is they they the right runs

that So the Europe witness to or there assembled we'll now, going to make specification. machines and sure in right be are actually perform according they and

David Wright

by The that Okay. then of and those what new them. the like the of periods? over you projects, X built, facilities felt you strong mills will I aggregate effect be the think company being And new new mentioned bookings cited the

Sam Lyon

they'll 'XX, the and and then 'XX fills and them 'XX, Like bear up. early of happen in, say, mill will them 'XX ramp end

have and United work, the in future the is strong it's where and but good strong news it's So presence. a it's States, we're

David Wright

latter would part shipments So the in 'XX? of start

Sam Lyon

the 'XX. of them building, . mill Steel Yes, like already along, but initial further into 'XX. much until is with built Dynamics Big aluminum River That discussions won't Steel they we're in the requirements be is about 'XX and all

David Wright

Okay.

had So moving that input tough with costs. parts, different supply hasn't increased COVID, been it's quarters. any chain, then all say just, company Brett, time a I'd And really bad the the

had kind quarters. a -- lot small some of You've of loss

good. makes feel got that's feel It make everybody good. me to so And

equipment really to new moving of from the need is Aside profitability. other once all it's the turn to part what, in, your to in savings get will sustained anticipated produce that the largest that mind, large kind you

Brett McBrayer

really Well, and I say, the your David, piece, you for comments. thank big would

in seeing It's believe top take is U.S. in our that capital money on And assets to and going to costs the line. standpoint. continue noted line to Dave it's & Sam the And huge products back prices market. in Systems as pricing. are in the we about continuing to the has we growth demand got investment opportunity cover and side. just further we the for talked what's perspective the in really that something a that that Beyond opening the right more a We're increases make in UES, remarks able Air cusp the from UES bigger much customers really profitability Liquid here his happening the push to a us. sure we of accelerating a the and bottom we've of to value from want the now,

David Wright

don't to at financing your Mike right. I of out want ability out consistently pull the hat. rabbits amazed to All leave

at available today. with so done job market imagine there, lower than sale leasebacks great all in much would I And the rates are capitalization the particularly

Operator

Justin from ahead. from next go Bergner a follow-up is Funds. Please Gabelli Our question

Justin Bergner

follow-ups. of couple A

for For you Steel and aluminum the the would revenue suggesting event I mill, thinking? the be end timing aluminum River and River Dynamics were, Dynamics end Big you're of the of steel think, mill. XXXX that that mill an Big the Is event for and XXXX Steel orders Steel

Sam Lyon

the customer I We're or Yes, reviewing negotiations We're actual in just go right the the negotiations. not back I mill rules. in just rules, sure clear. builder buys now. We're We're buys not even that. discussions. the to just want need on to sometimes timing and sometimes the specifications check be

build. of quote ramp want don't they're to to going really going to to And going be. how when So that's timing the up and I they're how

develop and point in only that significant was mills expansion it's States aluminum the Steel my United X in the capacity Dynamics. So

X in United new the XX here built So mills States. over in years first the

our So to is but I this -- market to that was at and timing we're say just time of my strong that a only is the quote kind point point. growing, don't want

Justin Bergner

Okay. strong comments, what with I position aluminum X, mean, And mills? from hopefully to in Novalis have like characterized the has it seems expect you your business Mill your

Sam Lyon

It's just it's performance.

that roles of So buy. get that for the they cost they the the tons of amount

we've had, Kaiser whether market So or good or that just in it of the years X, Novelis be Alcoa strong with past share and performance or XX more. them all had we've

Justin Bergner

on the side, Air And aided by business perhaps are & who Liquid what improved Processing force? then taking you of parts share the taking you sales share And the from? are

Brett McBrayer

I not and customer, would all say, businesses. X it's of Justin, particular it's one really across our

out backlog X of is of them. Part reps. into competitor, one all independent seeing new is particular moving -- think board. And don't customer it we're one across the as we've there's -- it added I Our at markets but geographic up

Justin Bergner

better is Okay. orders, favorable is think where and you But you not cycle it's seeing do share? and you It's a a . think others activity dynamic for late are a market this like environment dynamic. share all mainly

Brett McBrayer

think majority certainly the of I share. There's share, dominant yes. think it's is I but part the other, some

Operator

queue. There turn the are would closing any to conference our for like session. back McBrayer over no Brett This more questions remarks. concludes to in the I question-and-answer

Brett McBrayer

Thank you, Jason.

of Europe. war the excited we negative facing has Ukraine. will businesses position hard are I'm want profitability. is actions continue to focus in employees and we to taking again for we to in see to work, the and our I this our have for steps thank to the improvements headwinds improved positive Thank joining ourselves to the across commitment for have our impact made We unfortunately success. you mitigate been the overshadowed their call organization morning. our The from take

Operator

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

You disconnect. now may

Ampco-Pittsburgh (AP) 15 Nov 222022 Q3 Earnings call transcript