- Full-year backlog growth of 19% with Forged Engineered
Products backlog up 319%
- Full-year sales growth of 5%
- Price increase actions completed to address inflationary
cost pressures
- Non-cash asbestos-related revaluation charge of $6.7 million
pre-tax
Ampco-Pittsburgh Corporation (NYSE: AP) reported net sales of
$84.5 million and $344.9 million for the three and twelve months
ended December 31, 2021, compared to $87.0 million and $328.5
million for the three and twelve months ended December 31, 2020,
respectively. Full year 2021 sales exceeded the prior year by 5%,
principally due to higher demand from the steel distribution and
oil and gas markets for forged engineered products. The decrease in
sales for the three months ended December 31, 2021, compared to
prior year is attributable to the Air and Liquid Processing
segment, which was impacted by customer-requested deferrals and
delays in receiving required components.
CEO Brett McBrayer commented, “We are pleased with the
continuing improvement in our backlog, a 19% increase from a year
ago. Inflationary cost pressures, however, contributed
significantly to our disappointing fourth quarter results. In
October and November, we announced major price increase actions for
rolls and forged engineered products which are now implemented. We
raised base prices and expanded surcharge coverage beyond raw
materials to include relevant energy and transportation costs. We
expect these actions will begin to restore margins during Q1 2022
with a full benefit expected by Q2 2022. During the quarter, we
also took additional steps to reduce our long-term cost structure
which will contribute further to improving our operating
results.”
The Corporation reported a loss from operations for the three
and twelve months ended December 31, 2021, of $12.6 million and
$13.6 million, respectively, which included a $6.7 million
Asbestos-Related Charge resulting from a revaluation of the
asbestos liabilities and the asbestos-related insurance receivables
and Reorganization-Related Costs of $1.4 million and $1.6 million,
respectively, for the quarter and full year, to reduce the
Corporation’s long-term cost structure. By comparison, the
Corporation reported income from operations of $2.0 million and
$6.4 million for the three and twelve months ended December 31,
2020, respectively.
The current year operating results, when compared to the same
periods of the prior year, were negatively impacted primarily by
significantly higher costs of raw materials, energy and other
operating costs and higher maintenance spending associated with
extended machine outages offset, in part, by improved cost
absorption resulting from higher production levels. Additionally,
the 2020 full-year operating results included $0.8 million of
proceeds received from a previous-year insurance claim (the
“Proceeds from Business Interruption Insurance Claim”) and a
smaller Asbestos-Related Charge of $0.3 million associated with the
potential insolvency of an asbestos-related insurance carrier.
Excluding the Asbestos-Related Charge for each of the years, the
Reorganization-Related Costs and the Proceeds from Business
Interruption Insurance Claim, the adjusted loss from operations,
which is not based on U.S. generally accepted accounting principles
(“GAAP”), was $4.6 million and $5.4 million for the three and
twelve months ended December 31, 2021, respectively, in comparison
to adjusted income from operations of $2.3 million and $6.0 million
for the three and twelve months ended December 31, 2020,
respectively. A reconciliation of these GAAP to non-GAAP results is
provided below under “Non-GAAP Financial Measures Reconciliation
Schedule.”
Net loss for the three and twelve months ended December 31,
2021, was $12.3 million, or $0.65 per common share, and $12.7
million, or $0.67 per common share, respectively. By comparison,
the Corporation reported net income for the three and twelve months
ended December 31, 2020, of $2.2 million, or $0.12 per common
share, and $8.0 million, or $0.56 per common share, respectively.
Results for 2021 included the Asbestos-Related Charge and the
Reorganization-Related Charge which combined to increase net loss
by $8.1 million, or $0.42 per common share, and $8.3 million, or
$0.44 per common share, for the three and twelve months ended
December 31, 2021, respectively. The income tax benefit for the
twelve months ended December 31, 2020, included a benefit of $3.5
million for the additional tax loss carryback provisions included
in the CARES Act.
Segment Results
Forged and Cast Engineered
Products
Sales for the three months ended December 31, 2021, were
comparable to the same quarter of the prior year as higher sales of
forged engineered products offset lower sales of mill rolls. Sales
for the year improved 9% from the prior year primarily due to
higher shipments of forged engineered products resulting from
improved demand in the steel distribution and oil and gas markets,
a higher volume of mill roll shipments, higher net pricing
including pass-through surcharges, and a favorable effect from
exchange rates. These positive impacts for the year were offset, in
part, by a less favorable product sales mix.
Operating results for the three and twelve months ended December
31, 2021, declined compared to the prior year periods primarily due
to higher raw materials, energy and other operating costs, net of
surcharges passed through to customers, higher maintenance spending
associated with extended machine outages, and less favorable
product mix. These negative impacts for the quarter and full year
were offset, in part, by improved cost absorption resulting from
higher production levels.
Air and Liquid Processing
Sales for the three and twelve months ended December 31, 2021,
declined when compared to the prior year periods. Sales of
centrifugal pumps were affected by a lower volume of commercial
pump shipments but benefited from a higher volume of shipments to
the U.S. Navy. Sales of custom air handling units decreased for
each of the periods when compared to the prior year because of
timing. Shipments were temporarily delayed as a result of customer
requests, and in-process orders were postponed due to delays in
receiving required components as a result of supply chain issues.
Operating income for the quarter and full year declined primarily
due to the Asbestos-Related Charge in the current year. In
addition, operating income for the current year periods were
negatively impacted by the lower volume of shipments but benefited
from changes in product mix and savings generated from process
improvements.
Teleconference Access
Ampco-Pittsburgh Corporation will hold a conference call on
Wednesday, March 16, 2022, at 10:30 a.m. Eastern Time (ET) to
discuss its financial results for the fourth quarter and fiscal
year ended December 31, 2021. The Corporation encourages
participants to pre-register at any time, including up to and after
the call start time via this link:
https://dpregister.com/sreg/10164108/f19b689aa8. Those without
internet access or unable to pre-register should dial in at least
five minutes before the start time using:
- Participant Dial-in (Toll Free): 1-844-308-3408
- Participant International Dial-in: 1-412-317-5408
For those unable to listen to the live broadcast, a replay will
be available one hour after the event concludes on the
Corporation’s website under the Investors menu at
www.ampcopgh.com.
About Ampco-Pittsburgh Corporation
Ampco-Pittsburgh Corporation manufactures and sells highly
engineered, high-performance specialty metal products and
customized equipment utilized by industry throughout the world.
Through its operating subsidiary, Union Electric Steel Corporation,
it is a leading producer of forged and cast rolls for the global
steel and aluminum industries. It also manufactures open-die forged
products that are sold principally to customers in the steel
distribution market, oil and gas industry, and the aluminum and
plastic extrusion industries. The Corporation 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. It operates manufacturing facilities in the
United States, England, Sweden, and Slovenia and participates in
three operating joint ventures located in China. It has sales
offices in North America, Asia, Europe, and the Middle East.
Corporate headquarters is located in Carnegie, Pennsylvania.
Non-GAAP Financial
Measures
The Corporation presents non-GAAP adjusted (loss) income from
operations as a supplemental financial measure to GAAP financial
measures regarding the Corporation’s operational performance. This
non-GAAP financial measure excludes unusual items affecting
comparability, as described more fully in the footnotes to the
attached “Non-GAAP Financial Measures Reconciliation Schedule.”
Non-GAAP adjusted (loss) income from operations is calculated as
(loss) income from operations excluding the Asbestos-Related
Charge, the Reorganization-Related Costs and the Proceeds from
Business Interruption Insurance Claim for each of the years, as
applicable. This non-GAAP financial measure is not based on any
standardized methodology prescribed by accounting principles
generally accepted in the United States of America and may not be
comparable to similarly-titled measures presented by other
companies.
The Corporation has presented non-GAAP adjusted (loss) income
from operations because it is a key measure used by the
Corporation’s management and Board of Directors to understand and
evaluate the Corporation’s operating performance and to develop
operational goals for managing its business. This non-GAAP
financial measure excludes significant charges or credits, that are
one-time charges or credits, unrelated to the Corporation’s ongoing
results of operations or beyond its control. Additionally, a
portion of the incentive and compensation arrangements for certain
employees is based on the Corporation’s business performance. The
Corporation believes this non-GAAP financial measure helps identify
underlying trends in its business that could otherwise be masked by
the effect of the items that it excludes from adjusted (loss)
income from operations. In particular, the Corporation believes
that the exclusion of the Asbestos-Related Charge, the
Reorganization-Related Costs and the Proceeds from Business
Interruption Insurance Claim can provide a useful measure for
period-to-period comparisons of the Corporation’s core business
performance. The Corporation also believes this non-GAAP financial
measure provides useful information to management, shareholders and
investors, and others in understanding and evaluating its operating
results, enhancing the overall understanding of its past
performance and future prospects and allowing for greater
transparency with respect to key financial metrics used by the
Corporation’s management in its financial and operational
decision-making.
Adjusted (loss) income from operations is not prepared in
accordance with GAAP and should not be considered in isolation of,
or as an alternative to, measures prepared in accordance with GAAP.
There are limitations related to the use of adjusted (loss) income
from operations rather than (loss) income from operations, which is
the nearest GAAP equivalent. Among other things, there can be no
assurance that additional expenses similar to the Asbestos-Related
Charge and the Reorganization-Related Costs or additional benefits
similar to the Proceeds from Business Interruption Insurance Claim
will not occur in future periods. The adjustments reflected in
adjusted (loss) income from operations are pre-tax.
Forward-Looking
Statements
The Private Securities Litigation Reform Act of 1995 (the “Act”)
provides a safe harbor for forward-looking statements made by us or
on behalf of the Corporation. This press release may include, but
is not limited to, statements about operating performance, trends
and events that the Corporation expects or anticipates will occur
in the future, statements about sales and production levels,
restructurings, the impact from global pandemics (including
COVID-19), profitability and anticipated expenses, inflation, the
global supply chain, future proceeds from the exercise of
outstanding warrants, and cash outflows. All statements in this
document other than statements of historical fact are statements
that are, or could be, deemed “forward-looking statements” within
the meaning of the Act and words such as “may,” “will,” “intend,”
“believe,” “expect,” “anticipate,” “estimate,” “project,”
“forecast” and other terms of similar meaning that indicate future
events and trends are also generally intended to identify
forward-looking statements. Forward-looking statements speak only
as of the date on which such statements are made, are not
guarantees of future performance or expectations, and involve risks
and uncertainties. For the Corporation, these risks and
uncertainties include, but are not limited to cyclical demand for
products and economic downturns; excess global capacity in the
steel industry; fluctuations of the value of the U.S. dollar
relative to other currencies; increases in commodity prices,
reductions in electricity and natural gas supply or shortages of
key production materials; limitations in availability of capital to
fund our operations and strategic plan; inability to maintain
adequate liquidity in order to meet our operating cash flow
requirements, repay maturing debt and meet other financial
obligations; inability to obtain necessary capital or financing on
satisfactory terms in order to acquire capital expenditures that
may be required to support our growth strategy; inoperability of
certain equipment on which we rely; liability of our subsidiaries
for claims alleging personal injury from exposure to
asbestos-containing components historically used in certain
products of our subsidiaries; changes in the existing regulatory
environment; inability to successfully restructure our operations;
consequences of global pandemics (including COVID-19); work
stoppage or another industrial action on the part of any of our
unions; inability to satisfy the continued listing requirements of
the New York Stock Exchange or the NYSE American Exchange;
potential attacks on information technology infrastructure and
other cyber-based business disruptions; failure to maintain an
effective system of internal controls; and those discussed more
fully elsewhere in this report and in documents filed with the
Securities and Exchange Commission by the Corporation, particularly
in Item 1A, Risk Factors, in Part I of the Corporation’s latest
Annual Report on Form 10-K, and Part II of the latest Quarterly
Report on Form 10-Q. The Corporation cannot guarantee any future
results, levels of activity, performance or achievements. In
addition, there may be events in the future that the Corporation
may not be able to predict accurately or control which may cause
actual results to differ materially from expectations expressed or
implied by forward-looking statements. Except as required by
applicable law, the Corporation assumes no obligation, and
disclaims any obligation, to update forward-looking statements
whether as a result of new information, events or otherwise.
AMPCO-PITTSBURGH
CORPORATION
FINANCIAL SUMMARY
(in thousands, except per
share amounts)
Three
Months Ended
Twelve
Months Ended
December
31,
December
31,
2021
2020
2021
2020
Net sales
$
84,507
$
87,029
$
344,920
$
328,544
Costs of products sold (excl. depreciation and amortization)
74,628
67,909
287,639
257,513
Selling and administrative
11,460
12,068
45,998
45,542
Depreciation and amortization
4,362
4,712
17,877
18,575
Charge for asbestos-related costs
6,661
283
6,661
283
Loss on disposal of assets
27
54
361
185
Total operating expenses
97,138
85,026
358,536
322,098
(Loss) income from operations
(12,631
)
2,003
(13,616
)
6,446
Other income (expense): Investment-related income
5
69
1,084
1,396
Interest expense
(927
)
(886
)
(3,599
)
(4,114
)
Other — net
1,608
2,462
6,302
4,972
Total other income (expense) — net
686
1,645
3,787
2,254
(Loss) income before income taxes
(11,945
)
3,648
(9,829
)
8,700
Income tax (provision) benefit
(261
)
(1,179
)
(2,305
)
470
Net (loss) income
(12,206
)
2,469
(12,134
)
9,170
Less: Net income attributable to noncontrolling interest
130
277
561
1,200
Net (loss) income attributable to Ampco-Pittsburgh
$
(12,336
)
$
2,192
$
(12,695
)
$
7,970
Net (loss) income per share attributable to Ampco-Pittsburgh
common shareholders: Basic
$
(0.65
)
$
0.12
$
(0.67
)
$
0.56
Diluted
$
(0.65
)
$
0.12
$
(0.67
)
$
0.54
Weighted-average number of common shares outstanding: Basic
19,095
18,312
18,953
14,272
Diluted
19,095
18,752
18,953
14,636
AMPCO-PITTSBURGH
CORPORATION
SEGMENT INFORMATION
(in thousands)
Three
Months Ended
Twelve
Months Ended
December
31,
December
31,
2021
2020
2021
2020
Net sales: Forged and Cast Engineered Products
$
64,646
$
64,166
$
260,204
$
237,889
Air and Liquid Processing
$
19,861
22,863
84,716
90,655
Consolidated
$
84,507
$
87,029
$
344,920
$
328,544
(Loss) income from operations: Forged and Cast
Engineered Products
$
(3,753
)
$
3,187
$
(3,065
)
$
8,621
Air and Liquid Processing
(5,360
)
2,442
1,905
10,133
Corporate costs
(3,518
)
(3,626
)
(12,456
)
(12,308
)
Consolidated
$
(12,631
)
$
2,003
$
(13,616
)
$
6,446
AMPCO-PITTSBURGH CORPORATION NON-GAAP
FINANCIAL MEASURES RECONCILIATION SCHEDULE (in thousands)
As described under “Non-GAAP Financial Measures” above, the
Corporation presents non-GAAP adjusted (loss) income from
operations as a supplemental financial measure to GAAP financial
measures. The following is a reconciliation of (loss) income from
operations, the most directly comparable GAAP financial measure, to
this non-GAAP financial measure for the three and twelve months
ended December 31, 2021, and 2020:
Three
Months Ended
Twelve
Months Ended
December
31,
December
31,
2021
2020
2021
2020
(Loss) income from operations, as reported (GAAP)
$
(12,631
)
$
2,003
$
(13,616
)
$
6,446
Asbestos-Related Charge (1)
6,661
283
6,661
283
Reorganization-Related Costs (2)
1,389
-
1,600
-
Proceeds from Business Interruption Insurance Claim (3)
-
-
-
(769
)
(Loss) income from operations, as adjusted (Non-GAAP)
$
(4,581
)
$
2,286
$
(5,355
)
$
5,960
(1)
For 2021, represents a charge for changes in the estimated costs
of pending and future asbestos claims, net of additional insurance
recoveries. For 2020, represents a charge for the potential
insolvency of an asbestos-related insurance carrier.
(2)
Represents severance costs associated with early-retirement
incentives for two executive officers, employee terminations at one
of the Corporation’s cast roll facilities and costs associated with
the closing of a foreign sales office.
(3)
Represents business interruption insurance proceeds received for
equipment outages that occurred in 2018.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220316005604/en/
Michael G. McAuley Senior Vice President, Chief Financial
Officer and Treasurer (412) 429-2472 mmcauley@ampcopgh.com
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