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AP

AMPCO PITTSBURGH CORP (AP)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 delivered positive EPS of $0.16 on $100.9M revenue, aided by a $4.2M net asbestos revaluation credit; Air & Liquid posted one of its best quarters ever while forged rolls improved on pricing/efficiency despite soft cast roll demand .
  • Non-GAAP operations show ongoing improvement: FY24 adjusted operating income rose to $8.0M (+$3.7M YoY) despite lower sales; Q4 adjusted operating income was $1.0M as pricing and productivity offset volume softness .
  • Strategic actions are underway to address persistent losses at the U.K. cast roll plant (>$5M annual losses); management entered a formal collective consultation and is evaluating all options including potential closure or sale to stem losses .
  • Near-term catalysts: 6–8% base price increase on forged/cast products (effective immediately), strong Air & Liquid demand from U.S. Navy, nuclear, and pharma, and clarity on U.K. plant path (6–8 weeks) which could lift earnings power by “at least $5M annually” if resolved .

What Went Well and What Went Wrong

What Went Well

  • Record performance at Air & Liquid: Q4 was “one of … best quarters” with revenue +6.5% YoY; operating income of $7.6M (GAAP), or $3.5M ex-asbestos, on strong pumps mix/efficiency and robust demand across Navy/nuclear/pharma .
  • Pricing and productivity drove margin resilience in Forged & Cast Engineered Products (FCEP): Q4 operating income rose to $1.1M despite lower shipment volumes as improved net pricing and manufacturing cost absorption offset volume declines .
  • Cash generation and liquidity improved: FY24 operating cash flow was $18.0M (vs. use of cash in FY23), with Q4 OCF of $7.5M; YE cash $15.4M and revolver availability $20.6M; backlog ended flat YoY at $378.9M (FCEP $250.5M; Air & Liquid $128.4M) .

What Went Wrong

  • Revenue contracted YoY on softer end-market demand for mill rolls; Q4 net sales fell 6.6% YoY to $100.9M, mainly due to lower mill roll volumes and reduced surcharge pass-throughs .
  • U.K. cast roll plant remains a drag with structurally high energy costs and underutilization; management cited losses “in excess of $5 million per year,” roughly double Sweden’s energy cost per roll, prompting a formal consultation process .
  • Higher interest expense pressured results due to equipment financing, working capital needs, and higher rates; income tax provision remained elevated given a valuation allowance on U.K. deferred tax assets, providing no tax benefit on U.K. losses in 2024 .

Financial Results

Note: Dollars in $USD millions except per share; margins computed from cited figures.

MetricQ2 2024Q3 2024Q4 2024Q4 2023
Revenue ($M)$111.0 $96.2 $100.9 $108.1
GAAP Operating Income ($M)$5.04 $1.87 $5.17 $(41.58)
GAAP Diluted EPS ($)$0.10 $(0.10) $0.16 $(2.12)
Asbestos (Credit)/Charge in Operating Costs ($M)—$(0.19) $(4.18) $40.89
Operating Margin (%)4.5% (calc) 1.9% (calc) 5.1% (calc) (38.5%) (calc)

Segment performance (sales and operating income):

SegmentQ2 2024 Sales ($M)Q2 2024 Op Inc ($M)Q3 2024 Sales ($M)Q3 2024 Op Inc ($M)Q4 2024 Sales ($M)Q4 2024 Op Inc ($M)
Forged & Cast Engineered Products$75.7 $5.36 $67.2 $2.46 $66.5 $1.10
Air & Liquid Processing$35.3 $3.17 $29.0 $3.13 $34.5 $7.57
Corporate Costs—$(3.49) —$(3.72) —$(3.50)

Key KPIs and balance sheet items:

KPIQ2 2024Q3 2024Q4 2024
Backlog (Total)$360.4M (6/30/24) $383.6M (9/30/24) $378.9M (12/31/24)
Backlog by Segment (YE)——FCEP $250.5M; Air & Liquid $128.4M
Cash from Operations$(5.3)M (Q2) $10.6M (9M) $7.5M (Q4); $18.0M (FY)
Capex$2.7M (Q2) $2.9M (Q3) $12.2M (FY)
Liquidity (YE)——Cash $15.4M; Revolver availability $20.6M

Non-GAAP (company-defined):

Non-GAAP MetricQ4 2024FY 2024
Adjusted Operating Income ($M)$0.99 $7.99

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Base pricing (forged & cast products)New orders effective Mar 11, 2025—+6–8% base price increase; surcharges remain in effectRaised
2025 CapexFY 2025—“Flattish” vs 2024, mitigated by grant fundingMaintained/Qualitative
Revenue/EPS/TaxFY 2025—No formal quantitative guidance provided—
U.K. cast roll operations6–8 week consultation window—Formal consultation underway; all options (support, restructuring, sale, closure) under evaluationStrategic review initiated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
U.K. cast roll restructuringEurope softness; energy credit benefitted 2023 comps; rising imports; exploring restructuring; energy costs high in U.K. Formal collective consultation; >$5M annual losses; options include government support, sale, or closure; energy per roll ~2x Sweden Escalating toward decision
Pricing actionsPricing aided FCEP margins; higher net roll pricing driving Q2/Q3 improvement Post-quarter announcement: +6–8% base pricing increase on all forged/cast products Further price support
Air & Liquid demand (Navy/nuclear/pharma)Record bookings; Navy funding $1.6M installed; additional $4M approved; pharma/nuclear demand rising Q4 among best quarters; demand strong; Navy equipment on order arriving late 2025; continued nuclear/pharma momentum Strengthening
Backlog and ordersQ2 backlog $360.4M; Q3 $383.6M; roll order intake improved YE backlog flat YoY at $378.9M; segment split disclosed Stable aggregate; mix shifting
Tariffs/macroPetition activity; imports pressuring Europe/US; SMR and onshoring tailwinds discussed Minimal direct tariff impact on rolls classification; possible indirect demand shift; bullish NA roll demand Neutral-to-positive U.S.
Asbestos liability revaluationNo 2024H1 event; 2023 had $1.9M energy credit; minor insurance credit in Q3 Q4 net $4.2M credit; plan to revalue annually going forward Reduced volatility; annual cadence
Debt/liquidityAvailability improved post Q2; focus on debt reduction over 12–24 months YE cash $15.4M; availability $20.6M; debt flat YoY; customer deposits helped OCF Improving liquidity drivers

Management Commentary

  • CEO Brett McBrayer: “Our 2024 non-GAAP adjusted income from operations of $8.0 million in 2024 is at the highest level we’ve experienced in years… The Air and Liquid segment delivered record sales in 2024… However, excess plant capacity in our cast roll system continues to weigh heavily… we have entered into a formal collective consultation process with the represented workforce of our U.K. facility” .
  • Air & Liquid President Dave Anderson: “Q4 revenue increased 6.5% versus prior year… Operating income in Q4 was $7.6 million… eliminating asbestos items, Q4 operating income would be $3.5 million… We continue to see positive activity in the nuclear market… additional [Navy] funding of $4 million… equipment is now on order and is expected to arrive in late 2025” .
  • FCEP President Sam Lyon: “Segment operating income improved to $1.1 million… [underutilization] due to market overcapacity, high energy costs and increased pressure from low-priced imports… formal collective consultation process with the employees at our U.K. plant… losses of over $5 million… do not see much improvement” .
  • CFO Mike McAuley: “Total debt balance of $128.6 million at December 31, 2024, was flat… backlog… $378.9 million… cash on hand of $15.4 million and undrawn availability… $20.6 million… income tax provision… does not include any… benefit on the operating losses of the U.K.” .

Q&A Highlights

  • U.K. cast roll strategy: All options on the table—government support, restructuring, sale, or closure; management does not expect broader European spending to change the plant’s economics; energy costs per roll roughly double Sweden’s .
  • Air & Liquid expansion: Strong markets in Navy and nuclear; potential international expansion beyond North America; modular reactor opportunity emerging; capacity investments underway .
  • Debt and working capital: Revolver balances driven by working capital; customer deposits (mainly at Air & Liquid) improved operating cash flow in 2024 .
  • Backlog disclosure: FY24 YE total backlog $378.9M; FCEP $250.5M; Air & Liquid $128.4M .
  • Asbestos revaluation cadence: Likely to be performed annually to reduce volatility from trend changes .
  • 2025 Capex: Expected to be “flattish,” partly offset by grant funding .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 revenue and EPS was unavailable due to data access limits during retrieval. As a result, this recap does not include vs-consensus comparisons for Q4 2024. Values would ordinarily be sourced from S&P Global.

Key Takeaways for Investors

  • Air & Liquid is the growth/margin engine with multi-year Navy/nuclear/pharma tailwinds; continued equipment upgrades and Navy funding should sustain mix and profitability into 2025–2026 .
  • FCEP profitability improved on pricing and efficiency; the announced 6–8% base price increase for forged/cast products supports 2025 pricing power amid inflationary inputs .
  • A decisive U.K. cast roll outcome is a major earnings lever; management indicates at least ~$5M annual operating improvement potential from addressing the underutilized plant .
  • Liquidity improved with stronger operating cash flow and customer deposits; total debt flat YoY; backlog stable at ~$379M, positioning 2025 visibility, especially in Air & Liquid .
  • Asbestos revaluation produced a Q4 credit; moving to annual revaluations may reduce result volatility and improve transparency .
  • Near-term stock catalysts: final decision on U.K. facility; execution of pricing increases; sustained Air & Liquid order momentum; backlog conversion and mix .

Supporting details and additional disclosures:

  • Q4 revenue $100.9M; GAAP operating income $5.17M; GAAP EPS $0.16; asbestos credit $(4.18)M; Air & Liquid sales $34.48M/operating income $7.57M; FCEP sales $66.46M/operating income $1.10M .
  • FY24 operating cash flow $18.0M; Q4 OCF $7.5M; FY24 capex $12.2M; YE cash $15.4M; revolver availability $20.6M .
  • Q3 revenue $96.2M; operating income $1.87M; EPS $(0.10); minor asbestos insurance credit benefited prior-year comps .
  • Q2 revenue $111.0M; operating income $5.04M; EPS $0.10; improvement driven by higher net roll pricing and Air & Liquid growth .