Release Date: May 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ampco-Pittsburgh Corp (AP, Financial) reported earnings per share of $0.06 for Q1 2025, an improvement of $0.20 compared to the prior year quarter.
- Adjusted EBITDA for the quarter was $8.8 million, up from $5.1 million in Q1 2024, indicating significant financial improvement.
- The Air and Liquid Systems segment achieved the highest order intake in its history, driven by strong demand from the nuclear, military, and pharmaceutical markets.
- The company experienced a significant improvement in product mix, particularly in the Air and Liquid Systems segment, contributing to increased operating income.
- Total backlog increased by 6% year-over-year, reflecting strong demand across both business segments.
Negative Points
- Net sales for Q1 2025 declined by approximately 5% compared to the same quarter in 2024, primarily due to lower shipments and changes in product mix.
- The Forged and Cast Engineered Products segment reported a decrease in net sales from $77.2 million in Q1 2024 to $72.3 million in Q1 2025, driven by lower roll volume and unfavorable exchange rates.
- Selling and administrative expenses increased by 5% year-over-year due to inflationary pressures, higher employee-related costs, and professional fees.
- Net cash flows used by operating activities were $5.3 million for Q1 2025, reflecting a rise in net working capital.
- Despite record order intake, total backlog declined sequentially due to the timing of new orders from larger roll customers.
Q & A Highlights
Q: Can you provide more details on the financial performance for the first quarter of 2025?
A: Mike McCauley, CFO, explained that Ampco-Pittsburgh's consolidated net sales for Q1 2025 were $104.3 million, a decline of approximately 5% compared to Q1 2024. However, there was a 3% increase sequentially from Q4 2024. The decline was mainly due to lower shipments of mill rolls and changes in roll product mix, despite higher net pricing in the forged and cast engineered product segment. Adjusted EBITDA improved by $3.7 million to $8.8 million, driven by higher pricing and improved manufacturing efficiency.
Q: How did the Air and Liquid Systems segment perform in Q1 2025?
A: Dave Anderson, President of Air and Liquid Systems, reported that the segment had the highest order intake in its history, driven by strong demand from the nuclear, military, and pharmaceutical markets. Although revenue was slightly below last year, the product mix improved significantly. Adjusted EBITDA increased to $3.8 million from $2.2 million in the prior year, primarily due to a better product mix.
Q: What impact have tariffs had on the company's operations?
A: Brett McBrayer, CEO, mentioned that the company expects some near-term impacts in Q2 due to market and supply chain reactions to recent tariffs. However, they plan to protect margins by passing on costs to customers. Sam Lyon, President of Union Electric Steel Corporation, added that US tariffs on rolls are currently at 10%, and they have worked with US customers to cover these costs. The reduction of tariffs on US-produced rolls shipped to China from 125% to 10% will also relieve pressure.
Q: What are the expectations for the forged and cast engineered product segment?
A: Sam Lyon stated that the segment reported net sales of $72.3 million, down from $77.2 million in Q1 2024, due to lower roll volume and unfavorable exchange rates. However, EBITDA improved significantly to $8.27 million from $6 million, thanks to higher pricing and better manufacturing absorption. The segment is closely monitoring the evolving tariff environment and expects to conclude the collective consultation process at the UK facility by the end of May.
Q: How is the company addressing potential supply chain disruptions due to tariffs?
A: Dave Anderson noted that while the tariff situation remains fluid, most raw materials and components are either produced in the US or exempted from tariffs. For components subject to tariffs, the company plans to pass on the majority of costs to maintain margins. They have also taken steps to mitigate potential supply chain disruptions that could occur later in the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
