Ampco-Pittsburgh Corporation Announces Fourth Quarter 2017 Results

March 14, 2018

CARNEGIE, Pa.–(BUSINESS WIRE)–Ampco-Pittsburgh Corporation (NYSE: AP) reported sales for the three and
twelve months ended December 31, 2017, of $114.4 million and $432.4
million, respectively, compared to $92.1 million and $331.9 million,
respectively, for the three and twelve months ended December 31, 2016.
The current year periods include sales of $10.9 million and $47.2
million, respectively, associated with the November 2016 acquisition of
ASW Steel Inc. (“ASW”), compared to $7.5 million in the prior year
periods. In addition, the Corporation experienced higher sales of forged
engineered products for the oil and gas industry and, to a lesser
extent, higher sales of forged and cast mill rolls for both the three
and twelve months ended December 31, 2017. Sales in the Air and Liquid
Processing segment also rose modestly compared to the respective prior
year periods.

Loss from operations for the three and twelve months ended December 31,
2017, was $1.8 million and $9.4 million, respectively, compared to loss
from operations of $39.8 million and $54.5 million for the respective
prior year periods. The 2016 periods included charges for impairment of
$26.7 million, primarily from the impairment of goodwill in the Forged
and Cast Engineered Products reporting unit (“Impairment Charge”), a
$4.6 million net charge associated primarily with revaluing the
estimated liabilities and insurance receivables for asbestos litigation
through 2026 (“Asbestos Charge”), and a $1.5 million reserve against a
receivable from a customer who filed for Chapter 11 bankruptcy
protection. The full year 2016 also included significant
acquisition-related expenses and integration costs. The full year 2017
includes a $1.3 million recovery associated with a customer Chapter 11
receivable.

Other expense – net for the three months ended December 31, 2017,
declined compared to the prior year, primarily due to a small foreign
exchange gain in the current year versus losses in the prior year
quarter. For the full year, other expense – net increased against the
prior year primarily as a result of higher interest expense.

The income tax (provision) benefit for the three and twelve months ended
December 31, 2017, reflects an unfavorable net impact of approximately
$1.6 million related to the new U.S. Tax Cuts and Jobs Act legislation.

Net loss for the three and twelve months ended December 31, 2017, was
$3.2 million, or $0.26 per common share, and $12.1 million, or $0.98 per
common share, respectively, compared to net loss for the three and
twelve months ended December 31, 2016, of $43.1 million, or $3.51 per
common share, and $79.8 million, or $6.68 per common share,
respectively. In addition to the Impairment Charge and Asbestos Charge,
which impacted the full year 2016 net loss per share by $2.23 and $0.38,
respectively, the full year 2016 net loss also included valuation
allowances of $30.4 million against the majority of the Corporation’s
deferred income tax assets, which impacted net loss per share by $2.54.

Sales for the Forged and Cast Engineered Products segment for the three
and twelve months ended December 31, 2017 increased 30% and 39%,
respectively, versus prior year, reflecting the full period effect of
the ASW acquisition, significantly higher sales of forged engineered
products for the oil and gas industry, and higher sales of mill rolls to
the global steel industry, primarily for hot strip mills. The segment
recorded a small operating income for the quarter and an operating loss
for the full year of less than $2 million. Even after considering the
non-recurring Impairment Charge, acquisition-related expenses and
integration costs, and a customer’s Chapter 11 receivable reserve
recorded in the prior year periods, the segment’s operating performance
improved significantly. This was driven by the higher sales volumes and
pricing, offset in part by higher operating and raw material costs and
an unfavorable absorption effect from the idling of a cast roll foundry.

Sales for the Air and Liquid Processing segment increased 5% for the
three months ended December 31, 2017 and 4% for full year 2017 compared
to the prior year periods as higher shipment volumes of custom air
handlers and heat exchange coils more than offset lower shipment volumes
of centrifugal pumps. The segment’s operating income rose significantly
for the quarter and full year compared to prior year, given the $4.6
million Asbestos Charge recorded last year, but improved further on an
operating basis from the higher shipment volumes.

Corporate costs for the three and twelve months ended December 31, 2017
increased $0.8 million and $1.2 million, respectively, compared to the
comparable prior year periods as higher staffing costs associated with
the Corporation’s increased scale, higher fringe benefits and higher
professional fees more than offset the reduction in acquisition-related
costs incurred in the prior year.

Commenting on the quarter and full year results, John Stanik,
Ampco-Pittsburgh’s Chief Executive Officer said, “Although we missed our
objective of returning to operating profitability by the end of 2017, we
made significant year-over-year improvement on an operational basis. We
saw recovery in both the steel and fracking businesses after periods of
decline, and we are addressing our process and equipment bottlenecks to
meet a solid ramp-up and robust order book. I am very encouraged by our
progress in Q4 and I am excited about 2018.”

Teleconference Access

Ampco-Pittsburgh Corporation (NYSE: AP) will hold a conference call on
Wednesday, March 14, at 10:30 a.m. Eastern Time (ET) to discuss its
financial results for the fourth quarter ended December 31, 2017. If you
would like to participate in the conference call, please register using
the link below or by dialing 1-844-308-3408 at least five minutes before
the 10:30 a.m. ET start time.

We encourage participants to pre-register for the conference call using
the following link. Callers who pre-register will be given a conference
passcode and unique PIN to gain immediate access to the call and bypass
the live operator. Participants may pre-register at any time, including
up to and after the call start time.

To pre-register, please go to: http://dpregister.com/10117118

Those without internet access or unable to pre-register may dial in by
calling:

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 our website under the
Investors menu at www.ampcopgh.com.

The Private Securities Litigation Reform Act of 1995 (the “Act”)
provides a safe harbor for forward-looking statements made by or on our
behalf. This news release may contain forward-looking statements that
reflect our current views with respect to future events and financial
performance. 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. In this
document, statements regarding future financial position, sales, costs,
earnings, cash flows, other measures of results of operations, capital
expenditures or debt levels and plans, objectives, outlook, targets,
guidance or goals are forward-looking statements. Words such as “may,”
“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
Ampco-Pittsburgh, these risks and uncertainties include, but are not
limited to, those described under Item 1A, Risk Factors, of
Ampco-Pittsburgh’s Annual Report on Form 10-K. In addition, there may be
events in the future that we are not 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, we assume no obligation, and disclaim any
obligation, to update forward-looking statements whether as a result of
new information, events or otherwise.

AMPCO-PITTSBURGH CORPORATION
FINANCIAL SUMMARY
(Dollars in thousands except per share amounts; shares outstanding in thousands)
Three Months Ended	Twelve Months Ended
December 31	December 31
2017	2016	2017	2016
Sales	$ 114,449	$ 92,126	$ 432,401	$	331,866
Cost of products sold
(excl. depreciation and amortization)	93,697	80,672	357,672	276,496
Selling and administrative	16,866	14,435	61,310	58,175
Depreciation and amortization	5,368	5,518	22,387	20,463
Charge (credit) for asbestos litigation	–	4,565	–	4,565
Charges for impairment	–	26,676	–	26,676
Loss on disposition of assets	292	30	401	21
Total operating expense	116,223	131,896	441,770	386,396
Loss from operations (1)	(1,774	)	(39,770	)	(9,369	)	(54,530	)
Other expense – net	(1,299	)	(2,355	)	(4,324	)	(2,990	)
Loss before income taxes	(3,073	)	(42,125	)	(13,693	)	(57,520	)
Income tax (provision) benefit	(416	)	(1,085	)	1,355	(22,712	)
Equity gains in joint venture	501	308	1,036	423
Net loss before noncontrolling interest	(2,988	)	(42,902	)	(11,302	)	(79,809	)
Net income attributable to
noncontrolling interest	203	160	787	11
Net loss attributable to Ampco-Pittsburgh (2)	$ (3,191	)	$ (43,062	)	$ (12,089	)	$	(79,820	)
Net loss per common share attributable
to Ampco-Pittsburgh:
Basic (2)	$ (0.26	)	$ (3.51	)	$ (0.98	)	$	(6.68	)
Diluted (2)	$ (0.26	)	$ (3.51	)	$ (0.98	)	$	(6.68	)
Weighted-average number of
common shares outstanding:
Basic	12,361	12,271	12,330	11,951
Diluted	12,361	12,271	12,330	11,951

(1)

For the three and twelve months ended December 31, 2016,
includes charges of $26,676 principally for the write-off of
goodwill in the Forged and Cast Engineered Products reporting unit
deemed to be impaired and, for our Air and Liquid Processing
segment, a net pre-tax charge of $4,565 for estimated costs of
asbestos-related litigation through 2026, net of estimated
insurance recoveries, and a settlement with an insurance carrier
for an amount in excess of the receivable estimated. For the
twelve months ended December 31, 2016, also includes approximately
$7,500 in acquisition-related costs and purchase accounting
impacts.

(2)

For the three months ended December 31, 2016, includes charges
of $26,676 or $2.17 per common share principally for the write-off
of goodwill in the Forged and Cast Engineered Products reporting
unit deemed to be impaired and, for our Air and Liquid Processing
segment, a net pre-tax charge of $4,565 or $0.37 per common share
for estimated costs of asbestos litigation through 2026, net of
estimated insurance recoveries, and a settlement with an insurance
carrier for an amount in excess of the receivable estimated. For
the twelve months ended December 31, 2016, includes charges of
$26,676 or $2.23 per common share principally for the write-off of
goodwill in the Forged and Cast Engineered Products reporting unit
deemed to be impaired, $30,405 or $2.54 per common share to
recognize a valuation allowance against certain deferred income
tax assets, approximately $7,500 or $0.63 per common share in
acquisition-related costs and purchase accounting impacts, and
$4,565 or $0.38 per common share for estimated costs of
asbestos-related litigation through 2026, net of estimated
insurance recoveries, and a settlement with an insurance carrier
for an amount in excess of the receivable estimated.