Ampco-Pittsburgh Corp. Announces Closing of a Real Estate Sale & Leaseback Transaction & Provides Outlook for Its Third Quart...
28 September 2018 - 10:41PM
Business Wire
Ampco-Pittsburgh Corporation (NYSE: AP) today announced that it
has closed on a sale and leaseback transaction, which provided
gross proceeds of $19.0 million, and is providing preliminary
estimates of selected operating results for its third fiscal
quarter ending September 30, 2018.
Sale and Leaseback
Transaction
The Corporation closed today on a key financing transaction with
a leading institutional real estate investor for the sale and
leaseback of certain properties of its subsidiary, Union Electric
Steel Corporation (“Union Electric”), for gross proceeds of $19.0
million. In connection with the sale, Union Electric entered into a
long-term lease agreement under which it will lease the sold
properties for an initial term of 20 years, with renewal options
totaling another 20 years and a repurchase option. The proceeds of
the transaction will be used to reduce debt under
Ampco-Pittsburgh’s revolving credit and security agreement and to
repay a portion of the amounts outstanding under promissory notes
maturing on March 3, 2019.
Third Quarter 2018 Earnings
Estimates
The Corporation also announced today preliminary estimates of
net sales and loss from operations for the current fiscal quarter
ending September 30, 2018. The Corporation is expecting net
sales for the quarter ending September 30, 2018, to be in the
range of $106 million to $112 million, compared to net sales of
$104 million in the fiscal quarter ended September 30, 2017, and
$127 million in the fiscal quarter ended June 30, 2018. Loss from
operations is expected to be in the range of $5.5 to $7.2 million,
compared to a loss from operations of $3.2 million in the fiscal
quarter ended September 30, 2017 and $1.6 million in the fiscal
quarter ended June 30, 2018. The larger net loss in the third
quarter of 2018 is being driven primarily by the full-quarter
effect of the tariffs imposed by the United States, effective June
1, 2018, on U.S. imports of steel products from Canada, which has
had a significant negative impact on the Corporation’s Canadian
subsidiary, ASW Steel Inc. In addition, results have been
negatively impacted by continued equipment reliability issues
caused by a limitation of available maintenance capital, which have
resulted in sales delays, higher maintenance costs and lack of
labor and fixed cost absorption. Further, a decline in frac block
sales and production due to inventory adjustments in the supply
chain, as well as continued cost increases for key production
materials and transportation, have also negatively impacted
results.
The ranges for net sales and loss from operations for the third
fiscal quarter of 2018 are preliminary estimates because the
quarter has not been completed, the Corporation’s financial closing
procedures for the quarter remain to be performed, and other
developments may arise by the time the financial results for the
quarter are completed. As a result, there is a possibility that
final results will not be within the ranges the Corporation
currently estimates. The Corporation expects to release its fiscal
third quarter operating results on November 8, 2018 and file
its Form 10-Q for the quarter on November 9, 2018. The Corporation
undertakes no responsibility to update this outlook in the
interim.
Improved Liquidity Position and
Operational Improvement
Remarking on these developments, Brett McBrayer,
Ampco-Pittsburgh’s Chief Executive Officer, said, “The sale and
leaseback transaction is a significant positive step forward in
building our liquidity position. This action helps prepare us for
the retirement of the promissory notes due March 2019 and supports
our current capital maintenance needs. The investment in key assets
is a critical component of our operational improvement strategy and
one of many steps our team is taking to strengthen our business and
meet the current and future needs of our customers.”
About Ampco-Pittsburgh Corporation
Ampco-Pittsburgh Corporation, through its operating subsidiary,
Union Electric Steel Corporation, is a leading producer of forged
and cast rolls for the worldwide steel and aluminum industries, as
well as ingot and open die forged products for the oil and gas,
aluminum, and plastic extrusion industries. Ampco-Pittsburgh is
also a producer of air and liquid processing equipment, primarily
custom-engineered finned tube heat exchange coils, large custom air
handling systems and centrifugal pumps. The Corporation operates
manufacturing facilities in the United States, Canada, United
Kingdom, Sweden, Slovenia, and China. Sales offices are located in
North and South America, Asia, Europe, and the Middle East.
Corporate headquarters is located in Carnegie, Pennsylvania.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 that are not
historical facts, and involve risks and uncertainties that could
cause actual results to differ materially from those expected and
projected. Words such as “expects”, “believes”, “anticipates”,
“intends”, “estimates”, “seeks” and variations and similar words
and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events
or future performance, but reflect Ampco-Pittsburgh’s management's
current beliefs, based on information currently available. A number
of factors could cause actual events, performance or results to
differ materially from the events, performance and results
discussed in the forward-looking statements, including, without
limitation, our potential inability to complete the proposed rights
offering. For more information identifying important factors that
could cause actual results to differ materially from those
anticipated in the forward-looking statements, please refer to the
applicable offering document related to the proposed rights
offering filed by the Company and, in the case of the registration
statement, the documents incorporated by reference therein. Except
as expressly required by applicable securities law, the Company
disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information,
future events or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20180928005621/en/
Ampco-Pittsburgh CorporationMichael G. McAuley,
412-429-2472Senior Vice President, Chief Financial Officer and
Treasurermmcauley@ampcopgh.com
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