Q4 2023 Ampco-Pittsburgh Corp Earnings Call

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Speaker Change: Welcome to the Ampco Pittsburgh Corporation fourth quarter 2023 earnings results Conference call.

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Kimberly P. Knox: Thank you, Rocco, and good morning to everyone joining us on today's fourth quarter 2023 conference call. Joining me today are Brett McBrayer, our Chief Executive Officer, and Mike McAuley, Senior Vice President, Chief Financial Officer, and Treasurer. Also joining us on the call today are Sam Lyon, President of Union Electric Steel Corporation, and Dave Anderson, President of Air and Liquid Systems Corporation. Before we begin, I would like to remind everyone that participants on this call may make statements or comments that are forward-looking and may include financial projections or other statements of the company's plans, objectives, expectations, or intentions. These matters involve certain risks and uncertainties, many of which are outside the corporation's control.

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Speaker Change: I'd now like to turn the conference over to Tim Knox Corporate Secretary. Please go ahead.

Tim Knox: Thank you Rocco and good morning to everyone joining us on todays fourth quarter 2023 conference call. Joining me today are Brett Mcbrayer, our Chief Executive Officer, and Mike Mcauley, Senior Vice President Chief Financial Officer, and Treasurer also joining us on the call today are Sam Lyon President of Union Electric.

Samuel C. Lyon: Steel Corporation, and Dave Anderson, President of Air and liquid Systems Corporation.

Samuel C. Lyon: Before we begin I would like to remind everyone that participants on this call may make finance may make statements or comments that are forward looking and may include financial projections or other statements of the corporations plans objectives expectations or intentions.

Samuel C. Lyon: These matters involve certain risks and uncertainties many of which are outside of the corporation's control.

Kimberly P. Knox: Corporations' actual results may differ significantly from those projected or suggested in any forward-looking statements due to various risk factors, including those discussed in the corporation's most recently filed Form 10-K and its subsequent filings with the Securities and Exchange Commission. We do not undertake any obligation to update or otherwise release publicly any revision to our forward-looking statements. A replay of this call will be posted on our website.

Samuel C. Lyon: Corporations actual results may differ significantly from those projected or suggested in any forward looking statements due to various risk factors, including those discussed in the Corporation's most recently filed Form 10-K, and its subsequent filings with the Securities and Exchange Commission.

Samuel C. Lyon: We do not undertake any obligation to update or otherwise release publicly any revision to our forward looking statements.

Samuel C. Lyon: A replay of this call will be posted on our website to access the earnings release or the webcast replay. Please consult the investors section of our website at Ampco P. G. H dot com with that I'd like to now turn the call over to Brett Mcbrayer Ampco, Pittsburgh's CEO, Brett. Thank you Cam and good morning, and thank you for Joy.

Brett Mcbrayer: To access the earnings release or the webcast replay, please consult the investor section of our website at AmpcoPGH.com. With that, I'd like to now turn the call over to Brett McBrayer, Ampco-Pittsburgh CEO.

Brett Mcbrayer: Thank you, Kim. Good morning, and thank you for joining our call. As reported in our press release and 10-K filing, Ampco-Pittsburgh saw top-line growth versus the prior year quarter and prior year, with air and liquid processing segment sales improving 35% and 31%, respectively. Our underlying business has improved on a non-GAAP adjusted basis compared to prior years. Although our U.S.

Brett Mcbrayer: During our call as reported in our press release, and 10-K filing Ampco, Pittsburgh Salt topline growth versus the prior year quarter and prior year with air and liquid processing segment sells improving 35% and 31% respectively.

Brett Mcbrayer: Our underlying business has improved on a non-GAAP adjusted basis compared to prior year.

Brett Mcbrayer: Although our U S forged roll business performed well in our air and liquid processing segment saw record backlog record sales and record adjusted operating income during the year excess plant capacity, coupled with high energy costs in our European cast roll businesses weighed heavily on our 2023 results.

Brett Mcbrayer: Although the Forge Roll business performed well, and our Air and Liquid Processing segment saw record backlog, record sales, and record adjusted operating income during the year, excess plant capacity coupled with high energy costs in our European Cast Roll businesses weighed heavily on our 2023 results. With the conclusion of our equipment modernization in our U.S. Forged Rail business and the expansion of capacity in our air and liquid processing segment, we are better positioned to selectively capture market opportunity. A 2023 full-year loss of $34.6 million included a $40.9 million non-cash and undiscounted asbestos-related revaluation charge recorded in Q4 of 2020. I'm now going to turn the call over to Sam Lyon, President of our Forged and Cast Engineer Products segment, for further comments on his segment's performance.

With the conclusion of our equipment modernization of our U S forged roll business and the expansion of capacity in our air and liquid processing segment, we are better positioned to selectively capture market opportunities.

Brett Mcbrayer: In 2023 full year loss of $34.6 million included a $49 million noncash an undisclosed asbestos related revaluation charge recorded in Q4 of 2023.

Brett Mcbrayer: I'm now going to turn the call over to Sam Lyon, President of our forged and cast engineered products segment for further comments on his segment's performance Sam Thank.

Samuel C. Lyon: Thank you, Brett, and good morning. Q4 of 2023 operating income was about break-even versus a loss of $1.6 million in Q4 of 2022 on revenues of $75.8 million and 69.6 million, respectively. We focused on reducing working capital across all operations, and ended the year with 18% lower inventory on flat cog. These production outages affected our operating income negatively but improved our working capital.

Thank you Brett and good morning.

Samuel C. Lyon: Q4 of 2023 operating income was about breakeven versus a loss of $1 6 million in Q4 of 2022 on revenues of $75 8 million and $69 6 million respectively.

Samuel C. Lyon: We focused on reducing working capital across all operations in Q4 and ended the year with 18% lower inventory on blackhawk's. These production outages affected our operating income negatively but improved our working capital in the quarter.

Samuel C. Lyon: In 2023, operating income was $7.6 million versus $0.4 million in 2022. 2023 revenue was $303.8 million versus 2022 revenue of $299.5 million. Board's roll revenues increased 20% yearly, driven by North American manufacturers' reliance on domestic production to ensure stable supply reliability.

Samuel C. Lyon: In 2023 operating income was $7 6 million versus <unk> 4 million in 2020 to.

Samuel C. Lyon: 2023 revenue was $303 8 million versus 2022 revenue of $299 5 million.

Samuel C. Lyon: Four drill revenues increased 20% yearly driven by North American manufacturers reliance on domestic production to ensure stable supply reliability.

Samuel C. Lyon: Castrol revenues were lower than in 2022, and softness in this market is expected to continue throughout 2024, and the current steel production levels in Europe and the rest of the industry and customers of lower energy and raw material costs through surcharge combined with a decrease in FEP. FEP revenues decreased in 2023 due to excess distributor inventories at year-end 2022 and lower domestic oil and gas drilling in 2021. In 2023, escalating energy prices resulting from the Russia-Ukraine conflict contracted and stabilized due to government control. Lower activity in Europe and a mild one.

Samuel C. Lyon: Castro revenues were lower than in 2022 and softness in this market is expected to continue throughout 2024 due to the current steel production levels in Europe.

Samuel C. Lyon: Despite base price increases revenues were negatively impacted by a pass through to customers of lower energy and raw material costs through surcharges combined with a decrease in M. P. P demand.

Samuel C. Lyon: P. P revenues decreased in 2023 due to excess distributor inventories at year end, 2022, and lower domestic oil and gas drilling in 2023.

Samuel C. Lyon: In 2023, escalating energy prices, resulting from the Russia, Ukraine conflict.

Samuel C. Lyon: Retracted and stabilized due to government controls lower activity in Europe, and a mild winter. In addition, as opposed to Covid supply chain issues experienced in 2022 stabilized so did inflation.

Samuel C. Lyon: In addition, the Post-COVID supply chain issues experienced in 2022 stabilized, and so did inflation. Core inflation for 2023 was approximately 4% versus 6% in 2022, and this was partially offset by higher medical costs. Thank you, and a veteran, Market. Q1 of 2024 will be adversely affected by an unplanned three-week outage at our Swedencast plant, resulting in an unfavorable $1.3 to $1.6 million operating income impact. All but $500,000 of this will be recovered in the coming quarter.

Samuel C. Lyon: Core inflation for 2023 was approximately 4% versus 6% in 2020 to.

Samuel C. Lyon: 2023 operating results benefited from the tailwind associated with deflation positive surcharge recovery as higher cost inventory was sold through and a onetime foreign governments review reimbursements of $1 9 million, partially offset by higher medical costs.

Samuel C. Lyon: 2020 for revenues to be roughly in line with 2023 as Europe is still depressed we are starting commercial discussions for the 2025 business and we'll get a better look at forward market in the coming months.

Samuel C. Lyon: Do you want a 'twenty 'twenty four will be adversely affected by an unplanned three week outage at our Sweden cast plant, resulting in an unfavorable one three to $1 6 million operating income impact in the quarter.

Samuel C. Lyon: All but $500000 of this will be recovered in the coming quarters.

Samuel C. Lyon: As stated on the last earnings call, the intermediate to long-term demand picture for flat-ruled steel and aluminum remains strong, and we are well-positioned to supply our customers as this demand increases. Our North American customers are all bullish on the next decade and are investing in new capacity. For the next decade, the global aluminum market is expected to grow with estimates of approximately a 5.8% compounded annual growth rate through 2031, according to Allied Market Research, Next Market Research, Future Market Insights, and Scott Cunningham, and the Strategic Capital Project for the FCEP segment is essentially complete, and we are ramping up the news. The equipment is expected to be in full-rate production in the third quarter of 2025, and David Dave Anderson, President of Air and Liquid Systems, will now cover his segment's results.

Samuel C. Lyon: As stated on the last earnings call the intermediate to long term demand picture for flat rolled steel and aluminum remains strong and we are well positioned to supply our customers as this demand increases.

Samuel C. Lyon: Our north American customers are all bullish on the next decade and are investing in new capacity over the next decade. The global aluminum market is expected to grow with estimates of approximately five 8% compounded annual growth rate through 2031.

Samuel C. Lyon: Turning to Allied market research next market research future market insights in Skywest.

Samuel C. Lyon: Our strategic capital projects for the F. C. P segment is essentially complete and we are ramping up the new equipment the equipment.

Samuel C. Lyon: As expected to be in full rate production in the third quarter of 2024.

Samuel C. Lyon: Stated in previous calls this investment provide many years of increased productivity capacity and reduced maintenance spending.

David G. Anderson: Thank you Sam Dave Anderson, President of Air and liquid systems will now cover his segment's results Dave.

David G. Anderson: Thank you, Brett. Good morning. 2023 was a record year for Air and Liquid as sales increased 31% to a record high of 119 million. Even with the record sales, our backlog grew 12% in 2023 as we continue to see growth opportunities. All three businesses achieved at least 20% sales growth compared to the prior year. I would like to thank all the Air and Liquid employees for their hard work and dedication to drive the business forward. Operating income for air and liquid declined in the fourth quarter and for the full year due to the non-cash asbestos-related charge in the fourth quarter, and the. The additive manufacturing project we are working on with the U.S. Navy at Oak Ridge National Laboratory continues to make progress towards the goal of using additive technology to make parts for the pumps we provide to the U.S. Navy. This research and design work will allow us to manufacture parts that do not need to go through traditional foundries that continue to have long lead times and quality issues.

Yeah.

David G. Anderson: Thank you Brett Good morning, 2023 was a record year for air and liquid as sales increased 31% to a record high of $119 million.

David G. Anderson: Even with the record sales our backlog grew 12% in 2023 as we continue to see growth opportunities. All three businesses achieved at least 20% sales growth compared to prior year I would like to thank all of the air and liquid employees for their hard work and dedication to drive the business forward.

David G. Anderson: Operating income for air and liquid declined in the fourth quarter and for the full year due to the noncash asbestos related charge in the fourth quarter.

David G. Anderson: Excluding the asbestos impact operating income in 2023 improved versus prior year due to the higher volume of shipments offset in part by higher operating costs, including those associated with the sales growth and plant expansions as well as unfavorable product mix.

David G. Anderson: The additive manufacturing project, we're working on with the U S. Navy at Oak Ridge National Laboratory continues to make progress towards the goal of using additive technology can make parts for the pumps, we provided to the U S. Navy.

This research and design work will allow us to manufacture parts that do not need to go through the traditional foundries that continue to have long lead times and quality issues.

David G. Anderson: While this project is focused on parts for U.S. Navy pumps, the technology will also be applied to other pumps we sell. We expect to begin using additive parts in the second half of 2024. As I discussed on the last earnings call, Air and Liquid received a $1.6 million funding grant from the U.S. Navy for the purchase of new manufacturing equipment. The new equipment is expected to arrive at our facility in the second quarter of this year and will be operational in the third quarter of this year. The equipment will increase manufacturing capacity in our Buffalo Pumps facility. Aaron Liquid began our strategic growth plan in 2022. The first year of the plan saw our backlog grow substantially as our expanded sales force made an immediate impact on incoming orders.

David G. Anderson: While this project is focused on parts for U S. Navy pumps. The technology will also be applied to other pumps, we sell.

David G. Anderson: We expect to begin using additive parts in the second half of 2024.

David G. Anderson: As I discussed on the last earnings call Erin liquid has received a $1 6 million dollar funding grant from the U S. Navy for the purchase of new manufacturing equipment.

David G. Anderson: The new equipment is expected to arrive at our facility in the second quarter of this year and will be operational in the third quarter of this year.

David G. Anderson: Equipment will increase manufacturing capacity at our Buffalo pumps facility.

David G. Anderson: Air and liquid began our strategic growth plan in 2020 to.

David G. Anderson: The first year of the play and saw our backlog grow substantially as our expanded salesforce made an immediate impact on incoming orders.

David G. Anderson: In 2023, we saw those orders turn into shipments as sales surged by more than 30%. We also increased our manufacturing capacity by adding an additional manufacturing location in Virginia and expanding our production workforce. Aaron Liquid entered 2024 with an even higher backlog than a year ago, along with more production capacity than we have ever had in our history. We have seen much success in the last two years, and it is just the beginning of what we are capable of doing. Thank you, David. At this time, Mike McAuley, our Chief Financial Officer, will now share more detail regarding our financial performance for the quarter. Mike.

David G. Anderson: In 2023, we saw those orders turn into shipments as sales surged by more than 30%.

David G. Anderson: We also increased our manufacturing capacity by adding an additional manufacturing location in Virginia, and expanding our production workforce.

David G. Anderson: Air and liquid entered 2024 with an even higher backlog than a year ago, along with more production capacity than we have ever had in our history.

David G. Anderson: We've seen much success in the last two years and it is just the beginning of what we're capable of doing.

David G. Anderson: Thank you David at this time, Mike Mcauley, our Chief Financial Officer will now share more detail regarding our phone natural performance for the quarter Mike.

Michael G. McAuley: Thank you, Brett. As indicated in our press release and in the corporation's Form 10-K filed yesterday, Ampco's net sales for the fourth quarter of 2023 were $108.1 million, an increase of approximately 16%, and David Anderson. Full-year sales of $422.3 million rose approximately 8%. The air and liquid processing segment led the growth, increasing their sales by 35% for Q4 and 31% for the full year compared to the prior year. Orson Cass Engineer product segment sales grew nearly 9% for the quarter versus the prior year due mainly to higher mill roll shipment volumes. However, segment sales were approximately flat for the full year as higher forged roll shipment volumes and higher net roll pricing were offset by lower forged engineered products and cast roll shipments.

Michael G. McAuley: Thank you Brett as indicated in our press release and in the Corporation's Form 10-K filed yesterday.

Michael G. McAuley: Net sales for the fourth quarter of 2023 were $108 $1 million, an increase of approximately 16%.

Michael G. McAuley: Compared to net sales for the fourth quarter of 2022.

Michael G. McAuley: Full year sales of $422 $3 million rose approximately 8%.

Michael G. McAuley: Air and liquid processing segment led the growth increasing their sales by 35% for Q4, and 31% for full year compared to prior year.

Michael G. McAuley: Worst and cast engineered products segment sales grew nearly 9% for the quarter versus prior year due mainly to higher mill Raul shipment volumes.

Michael G. McAuley: Segment sales were approximately flat for the full year as higher forged roll shipment volumes and higher net roll pricing was offset by lower forged engineered engineered products and cast roll shipments.

The Corporation reported a loss from operations for the fourth quarter of 2023 of $41.6 million, which was heavily impacted by a $49 million noncash charge associated with a revaluation of the asbestos liability and related insurance receivables.

Michael G. McAuley: The corporation reported a loss from operations for the fourth quarter of 2023 of $41.6 million, which was heavily impacted by a $40.9 million non-cash charge associated with a revaluation of the asbestos liability and related insurance receivable. This charge reflects the net difference between the change in the undiscounted asbestos liability, including estimated defense costs, and the change in undiscounted related insurance receivables, which both The main drivers behind the higher valuations are unfavorable recent trends in claims experience, including higher average settlement values and a higher proportion of mesothelioma claims in the case mix, which typically have higher settlement values. As disclosed in the Non-GAAP Financial Measures Reconciliation Tables presented in the press release and in our Form 10-K for 2023, our Non-GAAP adjusted loss from operations was $0.7 million.

Michael G. McAuley: This charge reflects the net difference between the change in the undiscovered asbestos liability, including estimated defense costs and the change in on discounted related insurance receivables.

Michael G. McAuley: Which both increased with the new valuation.

Michael G. McAuley: The main drivers behind the higher valuations are unfavorable recent trends in claims experience, including higher average settlement values and a higher proportion of mesothelioma claims and the case mix, which typically have higher settlement values.

Michael G. McAuley: As disclosed in the non-GAAP financial measures reconciliation tables presented in the press release and in our Form 10-K for 2023.

Michael G. McAuley: non-GAAP adjusted loss from operations was $7 million.

Michael G. McAuley: Q4 2023, as the Forge and Cass engineered product segment experienced unfavorable cost absorption from the plant downtime that Sam described during the quarter, and the air and liquid sales volume growth impact was more than offset by higher operating costs and an unfavorable sales margin mix in the quarter. Full year 2023 adjusted income from operations of $4.2 million improved by $4.5 million over full year 2022. The Forged and Cast Engineered product segment led this improvement primarily as a result of improved net pricing and a better product mix, overcoming lower shipment volumes of Forged Engineered products and lower manufacturing cost absorption. Full-year selling and administrative expenses were approximately 12% of net sales for 2023, compared to 11.2% for 2022. The increase in selling at administrative expense is primarily due to higher employee-related costs, inclusive of short- and long-term incentives.

Michael G. McAuley: For Q4, 2023 is the forged and cast engineered products segment experienced unfavorable cost absorption from the plant downtime that Sam described during the quarter.

Michael G. McAuley: In the air and liquid sales volume growth impact was more than offset by higher operating costs and unfavorable sales margin mix in the quarter.

Michael G. McAuley: Full year of 2023 adjusted income from operations of $4 $2 million improved by $4 $5 million over a full year of 2022.

Michael G. McAuley: The forged and cast engineered products segment led this improvement primarily as a result of improved net pricing and better product mix overcoming lower shipment volumes of forged engineered products and lower manufacturing cost absorption.

Michael G. McAuley: Full year, selling and administrative expenses were approximately 12% of net sales for 2023 compared to 11, 2% for 2022.

Michael G. McAuley: The increase in selling and administrative expense is primarily due to higher employee related costs inclusive of short and long term incentives.

Michael G. McAuley: Arisen Medical Insurance, and includes the full year effect of staff added last year to support Aeroliquids commercial growth. In addition, the prior year benefited from a change in an employee benefit policy, which reduced 2022 selling administrative expense by $1.1 million. Interest expense for the quarter increased compared to the prior year due to a rise in both interest rates and in total debt.

Michael G. McAuley: Horizon Medical insurance.

Michael G. McAuley: And includes the full year effect of staff added last year to support air and liquids commercial growth.

Michael G. McAuley: In addition, the prior year benefited from a change in an import ploy benefit policy, which reduced 2020 to sell and they get a minute administrative expense by $1 $1 million.

Michael G. McAuley: Interest expense for the quarter increased compared to prior year due to a rise in both interest rates and in total debt.

Michael G. McAuley: This reflects interest on the sale and leaseback financing transaction and the equipment financing arrangement completed during the second half of 2022, the latter of which has been funding the equipment modernization project in the U.S. forged business. It also reflects higher average borrowings under the revolving credit facility to support growth in working capital and other cash needs in 2023. Other net improved for Q4 2023 primarily due to lower foreign exchange losses. Partly offset by lower pension and other income, However, other net declined for the full year primarily due to fluctuations in foreign exchange and lower pension income, partly offset by unrealized gains in rabbi trust investments compared to prior year unrealized losses.

Michael G. McAuley: This reflects interest on the sale and leaseback financing transaction and the equipment financing arrangement completed during the second half of 2022.

Michael G. McAuley: The latter of which has been funding the equipment modern modernization project in the U S forged business.

Michael G. McAuley: It also reflects higher average borrowings under the revolving credit facility to support growth in working capital and other cash needs in 2023.

Other net improved for Q4 of 2023, primarily due to lower foreign exchange losses.

Michael G. McAuley: Offset by lower pension income however, other net decline for the full year, primarily due to fluctuations in foreign exchange and lower pension income, partly offset by unrealized gains in the Rabbi trust investments compared to prior year unrealized losses.

Michael G. McAuley: The income tax provision for Q4 and full year 2023 includes a $1.3 million income tax benefit related to the asbestos-related charge, as well as a $.3 million valuation allowance against the net deferred income tax assets of the corporation's U.K. operations, which entered into a three-year cumulative loss position during the quarter. Given the higher energy costs it experienced during that time frame in the wake of the Russia-Ukraine conflict and the resulting shift in the majority of its production load to another facility, net income attributable to non-controlling interests rose for the quarter and full year due to higher operating results for our majority-owned Chinese joint venture. As a result, the net loss attributable to Ampco-Pittsburgh for the three and 12 months ended December 31st, 2023 was $41.8 million or $2.12 per share, and $39.9 million or $2.04 per share, respectively, which include approximately $2 per share and $2.02 per share, respectively, for the after-tax impact of the asbestos-related charge recorded in Q4 2023.

Michael G. McAuley: The income tax provision for Q4 and full year of 2023 includes a $1.3 million income tax benefit related to the asbestos related charge as well as a point 3 million dollar allowance against valuation allowance against our net deferred income tax.

Michael G. McAuley: Assets of the corporations U K operations.

Michael G. McAuley: Which entered into a three year cumulative loss position during the quarter.

Michael G. McAuley: Given the higher energy costs experienced during that time frame in the wake of the Russia, Ukraine conflict and the resulting shift in the majority of its production load to another facility.

Michael G. McAuley: Net income attributable to Noncontrolling interest rose for the quarter and full year due to a higher our higher operating results for our majority owned Chinese joint venture.

Michael G. McAuley: As a result net loss attributable to ampco Pittsburgh for the three and 12 months ended December 31, 2023 was $41.8 million or $2 12 per share.

Michael G. McAuley: And $39 $9 million or $2.04 per share, respectively, which include approximately $2 per share and $2.02 per share respectively for the after tax impact of the asbestos related charge recorded in Q4 2023.

Michael G. McAuley: Total backlog at December 31, 2023 of $378 $9 million rose approximately 3% from December 31 2022.

Michael G. McAuley: With the air and liquid segment backlog up by $14.5 million or 12% based on record order intake for the year and the forged and cast engineered products segment backlog was down by $4.6 million or approximately 2%.

Michael G. McAuley: Total backlog at December 31, 2023 of $378.9 million rose approximately 3% from December 31, 2022 and due to the impact of foreign exchange. Net cash flows provided by operating activities was a positive $6.6 million for Q4 2023 and was a use of $3.7 million for full year 2023. Investment in trade, work, and capital stabilized in 2023 after a significant increase in 2022 in response to a higher level of business activity and higher costs associated with inflation and the impact of supply chain disruptions. Asbestos-related settlements funded by the company in 2023 were $10.6 million. We expect asbestos-related payments to approximate $9 million in 2024.

Lower F E P product demand and lower cast roll orders, partly offset by higher forged rolls backlog and the impact of foreign exchange.

Net cash flows provided by operating activities <unk> activities was a positive $6.6 million for Q4, 2023, and it was a use of $3 $7 million for full year 2023.

Michael G. McAuley: Investment in trade working capital has stabilized in 2023 after a significant increase in 2022 in response to a higher level of business activity and higher costs associated with inflation and the impact of supply chain disruptions.

Michael G. McAuley: As best dose related settlements funded by the company in 2023 were $10 $6 million we.

Michael G. McAuley: We expect asbestos related payments to approximately approximate $9 million in 2024.

Michael G. McAuley: Capital expenditures for the fourth quarter of 2023 were $6.3 million, primarily for the Forged and Cast Engineered product segment, inclusive of the Forged business's modernization capital program. Full-year CapEx of $20.4 million compared to $16.7 million in 2022. At December 31, 2023, the corporation's liquidity position included cash on hand of $7.3 million, and undrawn availability on a revolving credit facility of $25.1 million

Michael G. McAuley: Capital expenditures for the fourth quarter of 2023 were $6 $3 million, primarily for the forest and cast engineered products segment inclusive of the forged businesses modernization capital program.

Michael G. McAuley: Full year capex of $24 million compared to $16 $7 million in 2022.

Michael G. McAuley: At December 31, 2023, the corporation's liquidity position included cash on hand of $7 $3 million.

Michael G. McAuley: And undrawn availability on our revolving credit facility of $25 $1 million. In addition.

Unknown Executive: In addition, the equipment financing facility has a remaining capacity of $3.3 million as of December 31, 2023 and is sufficient to finance the remaining expenditures of the modernization program, spending on which is expected to be completed approximately by the end of Q1 2024. At this time, we would now like to open the line for questions. Thank you. If you would like to ask a question, please press star then 1 on your telephone keypad. If your question has already been addressed and you would like to withdraw your question, please press star then 2.

Michael G. McAuley: The equipment financing facility has remaining capacity of $3 $3 million as of December 31, 2023, and is sufficient to finance the remaining expenditures of the modernization program.

Michael G. McAuley: Spending on which is expected to completed be completed approximately by the end of Q1 2024.

Michael G. McAuley: Yeah.

Speaker Change: Operator at this time, we would now like to open the line for questions.

Speaker Change: Thank you.

Speaker Change: Ask a question. Please press Star then one on your telephone keypad.

If your question has already been addressed personally I like to enjoy your question. Please press Star then two.

Unknown Executive: Once again, that's star, then 1 if you have a question. And today's first question comes from Justin Bergner with Gabelli Funds. Please go ahead. Good morning, Brad. Good morning, Mike.

Speaker Change: Once again Thats Star then one of you have a question.

Speaker Change: And today's first question comes from Justin Bergner with Gabelli funds. Please go ahead.

Justin Laurence Bergner: Good morning, Brad Good morning, Mike Good morning.

Unknown Executive: Good morning, and to everyone else that's on the call. This morning, Um, my first question relates to CapEx. You know, given the modernization program coming to an end, what's a reasonable number for CapEx and Unknown, and should we kind of expect a further step down in 2025? Ampco-Pittsburgh Corp. Yeah, Justin, we're going to spend a little bit more just to finish it out in Q1, but I mean, outside of that, when we think about the forward look for CapEx, we think that we're going to be in the $20-type million range for the foreseeable future. And I think, you know, if you think about that, we've been saying, and I think it's pretty consistent that for our business, the maintenance level of CapEx is somewhere in that 15 to $20 million range.

Justin Laurence Bergner: Everyone else that's on the call.

Justin Laurence Bergner: Good morning.

Justin Laurence Bergner: My first question relates to Capex.

Justin Laurence Bergner: Given the modernization program coming to an end, what what's a reasonable number for capex.

Justin Laurence Bergner: 2024.

Justin Laurence Bergner: Should we kind of expect a further step down to those 25 when the modernization program is fully complete.

Justin Laurence Bergner: Yeah.

Speaker Change: Yeah, Justin we're not going to spend a little bit more just to finish it out in Q1, but I mean outside of that when we think about the forward look for Capex.

Speaker Change: We think that we're gonna be into 'twenty type million dollar range.

Speaker Change: For the foreseeable future.

Speaker Change: And I think if you think about that we've been saying and I think it's pretty consistent that for our business like maintenance level of Capex is somewhere in that $15 million to $20 million range. So that kind of is representative of.

Unknown Executive: So that kind of is representative of, pretty much, you know, maintenance capex going forward. Okay, a follow-up there. I mean... You did $20 million in the year just completed with a fair amount of modernization. What is going to offset the modernization capex going away? Jason, I misspoke. I was referring to projected depreciation expense. Excuse me. We're more in the line of $10, $11 million over the next couple of years for CapEx. Sorry about that.

Speaker Change: Pretty much maintenance capex going forward.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Okay as a follow up there I mean.

Speaker Change: You did 20 million. This in the year, just completed with a fair amount of modernization.

Speaker Change: What is going to offset didn't modernization capex going away on the upside Jason.

Speaker Change: Jason I misspoke.

I was referring to our projected depreciation expense excuse me, we're more in the line of of $10 million to $11 million over the next couple of years for Capex, sorry about that.

Unknown Executive: Okay, that's helpful. So is that the maintenance capex, or is that the total capex? That's the total capex, and it's also reflective of a step down in reflecting primarily maintenance capex. Okay, so there are a few million above that 10 to 11 million this year with the completion of the modernization program. Right. A full step down the level. Okay. Secondly, the mix in air and liquid processing. What drove the weaker mix in the fourth quarter and is the full year 2023, as a whole, reflective of a normalized mix for that business? Dave, do you want to take that one?

Jason: Okay. That's helpful. So is that the maintenance capex or is that is that the total capex. Just said that's that's the total capex and it's also reflective of a step down reflecting primarily maintenance capex.

Jason: Okay. So there's a few million above that $10 million to $11 million. This year with the completion of the modernization program and then right a full stepped down the level okay.

Jason: Secondly, the mix in air and liquid processing.

Jason: What drove the weaker mix in the fourth quarter and as you know the full year 2023.

Jason: As a whole reflective of a normalized mix for that business.

Speaker Change: Dave you have anything like that.

David G. Anderson: Yeah, I can do that.

David G. Anderson: Yeah, I can do that. Primarily in the fourth quarter, Justin, it was related to some older orders going to shipyards. Those orders were taken a couple years ago, and inflation eroded some of the margin there. So our mix was not so great on that.

David G. Anderson: Primarily in the fourth quarter adjustment it was related to some older orders going to ship yards.

David G. Anderson: The orders were taken a couple of years ago and inflation eroding some of the margin there. So our mix was not so great on that.

David G. Anderson: Same thing during the year. But I would say overall, yeah, the year's Mix was about correct, slightly unfavorable due to the issue at Pumps that I just described. Gotcha. And then as we look at 2024, I mean, does that... Issue of kind of older Backlog Dissipate, and does that have the potential to allow for Margin Expansion in that business? In 2024, we'll still have some of it, but my expectation is that 2024 will be the last of it.

David G. Anderson: Same thing during the year, but I would say overall the years.

David G. Anderson: Mix was about correct slightly unfavorable due to the issue of pumps that I just described.

Speaker Change: Gotcha, and then as I as we look at 2024, I mean does that.

Speaker Change: Issue of kind of older <unk>.

Speaker Change: Backlog dissipate and as you know that have the potential to allow for some.

Speaker Change: Margin expansion in that business.

Speaker Change: In 2024, we'll still have some of it but my expectation is 2024 is the last of it. So yes, I think going forward, you'll begin to see that issue will be gone.

David G. Anderson: So yes, going forward, you'll begin to see that issue will be gone. Okay, and I don't know if you guys are able to share, but any idea how much your margins might have been weighed down in air liquid processing by that old backlog in 2023 or and Unknown Shareholder, Kimberly Knox, Ampco-Pittsburgh Corp. I don't have those particular numbers, Justin, but I can look Okay. Thank you.

Speaker Change: Okay, and then I don't know if you guys are able to share, but any idea you know how much your margins.

Speaker Change: Might've been weighed down in air and liquid processing by that old backlog and into 'twenty. Three are you know looking into 'twenty four.

I don't have those particular numbers, Justin but I can look and see.

Speaker Change: Okay.

Speaker Change: Thank you and then lastly.

Samuel C. Lyon: With respect to, you know, forged and cast engineered products, the modernization program coming to an end, and in terms of the CAPEX. I mean, should we expect a meaningful margin step up in that segment, 24 as things ramp up and come 25 as the ramp, Yeah, Justin, and this is Sam.

Speaker Change: With respect to forged and cast engineered products. The modernization program coming to an end in terms of the Capex I mean should we expect.

Speaker Change: Meaningful margin step up in that segment.

Speaker Change: <unk> 24 as things ramp in you know come 25 is the ramp is complete.

Speaker Change: Yes, Justin this is Sam in the second half of 'twenty four.

Samuel C. Lyon: In the second half of 24, as we're completing training and getting people, really employee costs come out, and some transportation costs go away between plants. So the total savings was in the neighborhood of $3 million. So in the second half of the year, we would expect to start seeing that fully in 2025. The remaining... and the remaining savings that was quoted earlier are really an expansion of business. So that will yet be seen.

Samuel C. Lyon: We're completing training and the people are really employee costs come out and some transportation costs go away between plants.

Samuel C. Lyon: So the total savings was in the neighborhood of $3 million. So in the second half of the year, we would expect to start seeing that in 2025 fully.

Samuel C. Lyon: The remaining AR.

Samuel C. Lyon: The remaining savings that was quoted earlier is really a expansion of business. So that'll yet to be seen so we have more capacity available to expand our business in the 25 time frame.

Samuel C. Lyon: So we have more capacity available to expand our and the rest of the team. Gotcha. And is $3 million a full year number?

Speaker Change: Gotcha and does the $3 million of full year number just to make sure I'm on the same page.

Samuel C. Lyon: Just to make sure I'm on the same page. Yeah, it's actually 2-9, I think is what we've been quoting, but yes, that's a full year. Okay, great. Thank you so much.

Speaker Change: Essentially.

Speaker Change: But yes, it's a full year number.

Speaker Change: Okay, great. Thank you so much.

Speaker Change: Yes.

Unknown Executive: And as a reminder, ladies and gentlemen, if you'd like to ask a question, please press star then 1. Our next question comes from David Wright with Henry Investment Trust. Please go ahead.

Speaker Change: As a reminder, ladies and gentlemen, if you'd like to ask a question. Please press Star then one.

Our next question comes from David Wright with Henry Investment Trust. Please go ahead.

Unknown Executive: Yeah, hi, good morning, everyone. Hey, Dave, follow-up on Justin's question. You know, what kind of an overall operating margin is it's kind of, you find in the segment breakdown in the footnotes, are you looking at for 24? Is it kind of in the 11% to 12% range that we saw in the second and third quarter? Like, what's the overall...

Yeah, Hi, good morning, everyone, Hey, I'm a follow.

David W. Wright: Oh, hi, there on the on Justin's question.

David W. Wright: <unk>.

David W. Wright: You know, what what kind of a of an overall operating margin is kind of the.

David W. Wright: You find in the segment.

Down in the footnotes.

David W. Wright: Are you looking at through 'twenty four is it kind of in the ER.

David W. Wright: 11%, 12% range that we saw in the second and third quarter like what's the overall.

Unknown Executive: Unknown Shareholder, Kimberly Knox, Ampco-Pittsburgh Corp. I think it'll be similar, David, to what we saw in 23 as we continue to work through some of the older backlog, and then we'll start seeing that number move up as we get into the more recent years in the backlog. So it will move up from 11 to 12. Yes, it'll stay; it'll be in that neighborhood in the first part of the year, and then we'll start edging our way upward from there. There had been some number of product issues for the Navy that were delayed because of delays in the whole submarine program. Are these the pumps that you're referring to currently?

David W. Wright: Target.

Speaker Change: I think it'll be similar David to what we saw in 'twenty three as we continue to work through some of the older backlog and then we'll start seeing that number move up as we get into the more recent years in the backlog.

Speaker Change: So move up from 11 to 12.

Speaker Change: Yes, it'll stay it'll be in that neighborhood in the first part of the year and then we'll start edging our way upward from there.

There had been some number of Oh.

Speaker Change: All of our product.

David: For the Navy that was delayed because of delays in the whole submarine program are these the pumps that you're referring to presently.

Unknown Executive: These would be delayed more for the surface ships, but yes, that's what we're talking about; there have been a lot of delays, and it's pretty common in any of the work that you see the Navy releasing that they are quite a bit behind on their build schedule. So this is the list of stuff that you've had finished, and now as you're shipping it, it is how it's hitting the P&L. And you've got more of that to ship this year, correct? Yes, sir. That's correct.

David: These will be delayed more for the surface ships, but yes. That's what we're talking about is theres been a lot of delays and it's pretty common in any of the work that you see the navy releasing that they are quite a bit behind on their build schedule.

David: Right. So this is the list up.

David: That you've had finished and now.

David: As you're shipping yet.

David: Is how it's hitting the P&L and.

David: And you've got more to ship this year correct.

Speaker Change: Yes, Sir that's correct.

Unknown Executive: Okay, we expect that'll be over this year. Your backlog in your segment was down around $11 million from Q3 to Q4. You booked a lot of good business last year, I know. What's the booking environment like?

Speaker Change: Okay. Thank.

Speaker Change: Thank you that'll be over this year.

Speaker Change: Your backlog in your segment was was down around $11 million from Q3 to Q4.

Speaker Change: You booked a lot of good business last year I know.

Speaker Change: What's the booking environment Brent environment been here in the first quarter for your business.

Unknown Executive: and Byron Van Ben here again with the first quarter for your business. For Buffalo Pumps and for Aerofit, really good, solid bookings. For Buffalo Air, a lower number just because we have booked so much that we're pretty far out now as far as using our capacity. Even with the expansion that we did last year, we've been able to sell that capacity quickly. Okay, well, that's encouraging. Sam, help me out.

Speaker Change: For Buffalo pumps and for Aero finished has been really good.

Speaker Change: Solid bookings for Buffalo Air are lower just because we have booked so much that.

Speaker Change: We're pretty far out now as far as using our capacity even with the expansion that we did last year, we've been able to sell that capacity quickly.

Speaker Change: Okay, well, that's well that's encouraging.

Speaker Change: Dan help me out there.

Unknown Executive: Yes. The equipment... I guess it was all going to be in by the fourth quarter, and then it was all going to be in by the first quarter, and then you said something here on the call about you won't be getting the full benefit of it until the third quarter. I know that most things take longer than one thinks they're going to, but just help me understand a little better, kind of like when and what's happening between now and when the company's going to There's really only one of two things that's going to happen.

Dan: The equipment.

Dan: I guess it was there was all going to be in by the fourth quarter and then it was all going to be in by the first quarter and then you said something here on the call about you won't be getting the full benefit of it until the third quarter I know that most things take longer than one thinks they're going to but just help me understand a little better.

Dan: Kind of like when what's happening between now and when the company is going to start getting the full benefit from the equipment.

Dan: So it's really one of two things is going to happen. So we have extra as we were training people on the new equipment, we were carrying extra people across the business and I'm hesitant to to make a change.

Samuel C. Lyon: So we have extra – as we were training people on the new equipment, we were carrying extra people across the business, and I'm hesitant and Unknown Shareholder, Kimberly Knox, Ampco-Pittsburgh Corp. pending what we see happening in 2025, just because of the time it takes to train and get people up to speed and disruption to the business. So that's really – either A, we'll have a Savings will flow through that way, or B, we'll have to make an adjustment, and we'll get it that way.

Dan: Change in employment levels.

Dan: Depending what we see happening in 2025 kind of business levels, just because of the time it takes to train and.

Dan: Get people up to speed and disruption to the business. So that's really so either a we'll have a pickup in business and the savings will flow through that way or be we'll have to make an adjustment.

Dan: Staffing and we will get it that way. So that's that's really what's happening everything everything's in with the exception of one last furnace being qualified so all the machine tools are in they're all running they're all meeting expectation, but that's the main issue.

Samuel C. Lyon: So that's really what's happening. Everything's in with the exception of one last furnace being qualified. So all the machine tools are in, and they're all running.

Samuel C. Lyon: They're all meeting expectations. So it's basically employee training, getting people up to speed to a level that you're comfortable with is what's determining when the equipment's going to be kind of all fully available and funded. Correct. Okay, and then one more thing will be my last. A company for mill rolls put in surcharges because of inflation, but it took time for them to get into the system.

So it's basically employee training.

<unk> is as you know.

Dan: Getting people up to speed to a level that youre comfortable with.

Dan: Is what's determining when.

Dan: The equipment is going to be kind of all fully available and functioning.

Dan: Correct.

Dan: And then.

Speaker Change: One more thing will be my last.

Speaker Change: Company for mill Rolls put in surcharges because of inflation.

Speaker Change: But it took time for them to get into the system. The company raised millwall prices last year, they were supposed to be good.

Samuel C. Lyon: The company raised mill roll prices last year that were supposed to be good and that were going to help hit in 2015. So now the surcharges are rolling off the price, increases are rolling in, is the net effect going to be better? Or is it going to be, are things going to be the same as they were?

Speaker Change: We're gonna help help help.

Speaker Change: To help you know hit hit in 'twenty four.

Speaker Change: So now the surcharges are rolling off the price increases are rolling in.

Is the net effect then it would be better.

Speaker Change: Or is it going to be.

Speaker Change: Things are going to be the same that they work.

Samuel C. Lyon: We will see. In the first quarter, the price increases are delayed probably about half because of the backlog. So we're shipping 2023 orders out in 2024, and the full effect of the price increases we'll see in Q2, so about half in Q1. The surcharge, you know, it is what it is. It's a pass-through or not, so that is covered on, and the majority of our shipments are all surcharge protected.

Well, we will see.

Speaker Change: In the first quarter.

Speaker Change: The price increases are delayed probably about half just because of backlog. So were shipped in 2023 orders out in.

Speaker Change: In 2024, and then the full effect of the price increases we will see in Q2, so about half of Q1 half in Q2.

Speaker Change: The surcharge it is what it is it's a pass through or not so that is covered.

The majority of our shipments as are all surcharge protected.

Samuel C. Lyon: So it's really just a price increase offset by either the volume being up or down. We will see it pass through or come through. And so are you still feeling that you're going to get the sequential quarterly improvement that you had been looking for previously, that it's just going to be a little delayed? The answer is yes, except as I did mention we did have an outage in our Sweden facility that affected shipments and that, again, will recover the majority of that and the rest of the team. There was a lot of information on the call today. Thanks very much. Talk to you later.

Speaker Change: So it's really just the price increase offset by either the volume being up or down. So we will see it pass through come through this year David.

And so so are you still feeling that youre going to get the sequential quarterly improvement.

David: That you had been looking for previously.

David: It's just going to be a little delayed.

David: Yeah. The answer is yes, except for I did mention we did have an outage in our Sweden facility that affected shipments in absorption that are.

Again, we'll recover the majority of that in Q2 Q3, but it will impact Q1.

David: Okay.

Information in the call today.

Thanks, very much talk to you later thanks.

Unknown Executive: Thanks, David. Thank you. And our next question comes from Dennis Cannell with Rutabaga Capital. Please go ahead.

Speaker Change: Thanks, David.

Speaker Change: Thank you and our next question comes from Dennis Scannell with Richard.

Dennis Scannell: Capital. Please go ahead.

Dennis Scannell: Yeah, good morning, gentlemen.

Unknown Executive: Yeah, good morning, gentlemen. Sam, I was wondering if we could give a little bit more color about Forge Engineered Products. I understand the service centers were, I guess, looking to reduce their inventory, and I guess that practice business has kind of evaporated. I'm just kind of wondering, how much visibility do you have on that business? What is the outlook? It does look like sales really are pretty darn volatile, both on the upside and the downside. And obviously, recently, we've experienced on the downside. Just, yeah, if you can give a little more color and kind of where you think we are in that business and the outlook for, say, 24 and 25. Yeah, we, it is very volatile, and we don't have a lot of visibility. It's more transactional, and on the frack side of it, and the other two.

Dennis Scannell: Sam I was wondering if we could if it if you could give a little bit more color about forged engineered products I understand.

Dennis Scannell: The service centers were I guess looking to reduce their inventory and not getting that practice.

Dennis Scannell:

Dennis Scannell: Kind of evaporated.

Dennis Scannell: You know I'm, just kind of wondering like how much visibility do you have.

Dennis Scannell: On that business kind of what is the outlook.

Dennis Scannell: Does it looked like the sales really do.

Dennis Scannell: Are pretty darn volatile both on the upside and the downside obviously recently we've experienced on the downside just yeah. If you can give a little more color on kind of where you think we are in that business and outlook for lets say 24 and 'twenty five.

Dennis Scannell: Yeah.

Speaker Change: It is very volatile and we don't have a lot of visibility it's more transactional business.

Speaker Change: On the on the Frac side of it.

We we really are in a we're selling to tier ones, but the smaller tier ones. So halliburton Schlumberger, we don't sell too so we're selling to occur in Gardner Denver and people like that.

Samuel C. Lyon: Unknown Shareholder, Kimberly Knox, Ampco-Pittsburgh Corp., to not have that business based on working capital requirements, on the distribution bar, and the normal open die forge kind of other side of that business. We've been really finding where the market is from a pricing perspective. We have seen a recent uptick in order volumes for that kind of business, and that's really a function of finding where the import pricing is and what we have to do at that particular price. And did I hear you say that the pricing is such that it is at a level that you are looking at to participate more in the service centers in the near term? Yes, it's definitely positive from a contribution margin perspective. If we were 100% full, then probably not, but where we're at, it's positivity.

Speaker Change: And in the short term, we've kind of chosen to.

Speaker Change: To to not have that business based on working capital capital requirements on the distribution bar a normal open die forged kind of other side of that business. We've been really finding where the market is from a pricing perspective, we have seen a recent uptick in order.

Speaker Change: Volumes for that kind of that kind of business and that's really a function of finding where the.

Speaker Change: Where the import pricing.

Speaker Change: And what we have to do to.

Speaker Change: And whether we want to participate at that particular price.

Speaker Change: And.

Speaker Change: And did I hear you that the pricing is such that it is it is that a level that you do are looking at to participate more in the in the service centers in the near term.

Speaker Change: Okay, Yes, it's definitely positive from a contribution margin perspective.

Speaker Change: If we were 100% full than they probably know but where.

Speaker Change: Where we're at it's positive business for us.

Samuel C. Lyon: Yeah, okay. And I think you said that, you know, with rolls being up and, and, and forge rolls being up and cash rolls, you know, down, I guess, particularly in Europe, thinking overall flattest sales. So we should be seeing margin improvement, though, in 2024 with, and I'm thinking particularly in the second half, with the investments we've made. Is that a fair kind of assumption?

Speaker Change: Okay.

Speaker Change: And I think he said that with roles being up in and.

Speaker Change: And.

Speaker Change: Affords roles being up and capsules.

Speaker Change: You know down I guess, particularly in Europe.

Speaker Change: Thinking overall flat at scale.

Speaker Change: So we shouldn't be seen margin improvement, though in 2024 with.

Speaker Change: Particularly in the second half with the investments. We've made is that is that a fair kind of assumption.

Samuel C. Lyon: Yeah, it's fair. The only offset would be, you know, revenue's flat, and volume's down, so we have an offset in activity in the second half with higher margins on what's going out the door. So, yes, we'll see better results. Okay, yeah. And then, you know, Dave, obviously, Air and Liquid Products has been just a really, really nice success story here. But following up on the other question, as the previous questioners' comments suggested, the fourth quarter orders did look really light relative to where we've been. Was that all Buffalo air, or was there other things going on?

Speaker Change: Yes, its fair the only offset would be revenues flat volumes down. So we have an offset in activity in the second half.

Speaker Change: Higher margins on what's going out the door. So yes, we will see better better margin in the second half Okay, Yeah and then.

Speaker Change: Good.

Speaker Change: Dave Obviously air and liquid products has been just a really really nice success story here.

Speaker Change: But following up on the other.

Speaker Change: The previous questioners comments, the fourth quarter orders did look really light relative to where we've been.

Speaker Change: Was that all Buffalo Air was there.

Speaker Change: You know other things going on are.

David G. Anderson: It doesn't look like there's a whole lot of seasonality in the business because last year's fourth quarter, I'm talking fourth quarter of 2022, was pretty strong. So any more color on the lightness in orders in the fourth quarter of 2023? Yeah, I can do that.

It doesn't look like there's a whole lot of seasonality in the business because last years fourth quarter I'm talking 2024th quarter of 2022 was pretty strong. So just just any more color on the on the likeness in orders in the in the fourth quarter of 'twenty three.

David G. Anderson: The Buffalo Air, certainly, as I talked about, was one of the impacts. The other one, Buffalo Pumps, was light in the fourth quarter, which happens sometimes when you're dealing with government contracts. Sometimes they want to get them placed, or they don't.

Speaker Change: Yes, I can do that the Buffalo Air certainly as I talked about was one of the impacts the other one Buffalo pumps was light in the fourth quarter, which happens sometimes when you're dealing with government contract, sometimes they want to get them placed or don't while that was slower in the fourth quarter, we saw it.

David G. Anderson: While that was slower in the fourth quarter, we saw it pick right back up in January and February. So I think that for pumps, it was just a timing issue. For Buffalo Air, it's an issue of a bit of a and the result of our success in bookings that we have simply sold out a lot of our capacity.

Speaker Change: Right back up in January and February So I think that for pumps. It was just a timing issue for Buffalo Air It's an issue of a bit of a <unk>.

Speaker Change: Product of our success in bookings that we had simply sold out a lot of our capacity Yep Yep, Okay, Great and then just for clarity, but the.

David G. Anderson: Yeah. Yeah. Okay, great. And then just for clarification, the, the, um, grant from the U.S. Navy for manufacturing equipment, is that for additive manufacturing, or is it for a different process? It's for a different process. These are CNC machines.

The grant from the U S Navy for manufacturing equipment for additive manufacturing or zipper a different process.

It's for a different process. These are CNC machines. This is separate from the funding they provided for the additive work, we're doing with them.

David G. Anderson: This is separate from the funding they provided for the additive work we're doing with them. Got it. Okay, great. Thank you. And then just, Mike, thinking about cash flow for 2024, it was very helpful, that first questioner, to kind of separate out the maintenance cap spending because that 15 to 20 was a lot higher than I had been penciling in. Sorry about that.

Okay, great. Thank you and then just Mike thinking about cash flow for.

Speaker Change: For 2024 it.

Speaker Change: It was very helpful, but that first questioner on kind of separating out the maintenance cap spending because that 15 to 20 was a lot higher than I had.

Unknown Executive: Yeah. No worries, no worries. It's a sharp and draw a breath, but I feel better now.

He'd been pencil im sorry about that yeah.

Speaker Change: Sharpening draw breath, but I feel better now, but for 2024, it's going to be higher than that 10 to 11.

Michael G. McAuley: But for 2024, it's going to be higher than that 10 to 11. I'm guessing we have $4 million left in the, you know, forged businesses capital program. So would we expect it closer to 15 or 16? Or am I being too pessimistic there? Well, first of all, we're probably going to spend about $18.5 million on the Forest and Cast Modernization Program, not the full $20 million. That's one piece.

Speaker Change: I guess, when we have $4 million left in the in the.

Speaker Change:

Speaker Change: Forge businesses capital program. So we expect that closer to 15 or 16 or might it might be too pessimistic there.

Well first of all we were probably going to spend about $18 5 million on that on the forest and cast a modernization program not the full 20.

Speaker Change: Oh, that's one piece, okay on that we're going to that's how much we're going to use on the on.

Michael G. McAuley: That's how much we're going to use on the equipment financing facility. So that's one piece. And it's funded. So yeah, we will have a CapEx original business plan with something in the range of $10-11 million. It might creep a little higher than that, but it's not going to be much higher than that, and it's definitely a big step down from 2023, where we had a lot of spending going on for the major program. Absolutely. No, that's great. And working capital, would you think that would be a source of cash in 24, particularly with the kind of no growth on the role business?

Speaker Change: On the equipment.

Speaker Change: The equipment financing facility. So that's one piece.

Speaker Change: And it's funded so so yeah, we will.

Speaker Change: We'll have capex, our original business plan with something in the range of $10 million to $11 million it might it might creep a little higher than that but it's going to be it's not going to be much higher than that and it's definitely a big step down from.

Speaker Change: Our 2023, where we had you know.

Speaker Change: A lot of the spending going on for the <unk>.

Speaker Change: Our program.

Speaker Change: Absolutely no that's great.

Speaker Change: Working capital what do you think that would be a source of cash in.

Speaker Change: In 24, particularly kind of.

Speaker Change: No growth on the on the on the roll business.

Michael G. McAuley: Yes, that's kind of the thought process for the construction of our 2024 outlook, and we're expecting that working capital doesn't at least provide additional pressure in terms of cash flow from operating equity. Great, great. And then just one last thing. And I know about the asbestos issue, and I know these calculations are really very complicated.

Speaker Change: That's kind of just guess that's kind of the thought process for the construction of our 2024 outlook is that we're expecting that working capital doesn't doesn't doesn't at least provide additional pressure in terms of cash flow from operating.

Speaker Change: Great Great and then just one last thing.

Speaker Change: And I know on the asbestos issue and.

Speaker Change: And I know these calculations are really are very complicated, but just looking at your reported results. When you talk about the cost per case settled it's actually gone down you know it was like 22000 in 2020 in 2021 and in 2023 was under 19000, just kind of curious so the.

Michael G. McAuley: But just looking at your reported results, when you talk about the cost per case settled, it's actually gone down, you know, it was like 22,000 in 2020 and 2021. And in 2023, it was under 19,000. Just kind of curious, but the actuaries or whomever is doing these calculations are saying, no, we're expecting that to go higher going forward. Yeah, usually, Dennis. That's a very good question, Dennis, but usually we don't do revaluations every year. We do them every couple, several years because, you know, you hate to jump and do a whole revaluation, and then suddenly things change, and variables, and some of the most sensitive things. The most sensitive variables in the entire evaluation are average settlement values and the claim mix.

Speaker Change: But you're the actuaries remember doing these calculations are saying now we're expecting that to go higher going forward.

Speaker Change: Yeah, you should have done a good very good question, Dennis but usually we don't do revaluations every year, we do them every every couple of several years.

Speaker Change: Because you hate to jump and do a whole revaluation, and then suddenly things change and variables and some of the most sensitive the most sensitive variables in the entire evaluation.

Speaker Change: Our average settlement values.

Speaker Change: And and the claim mix.

Michael G. McAuley: And those are the two things that have caused the increase here. If you think about when we did the last valuation a few years ago, we were looking at a rolling average that pulled in multiple years prior to the current data. Yeah. And, you know, those values were more in the range of 14, 15-ish kind of numbers. And now that they've stepped up, that's kind of the rationale.

Speaker Change: And those are the two things that have caused the increase here.

Speaker Change: If you think about when we did the last valuation.

Speaker Change: A few years ago, we were looking at a a rolling average that pulled in multiple years prior to the current data.

Speaker Change: Yep.

Speaker Change: And you know those values were more in the range of 14, 15 ish kind of a numbers and now that they've stepped up.

Speaker Change: Well, that's kind of the rationale.

Michael G. McAuley: Yep, I got it. Okay, I think I understand. Great. That's all for me.

Speaker Change: Got it okay. Okay, I think I understand great. That's all for me good luck for a strong 2024. Thank you.

Brett Mcbrayer: Good luck for a strong 2024. Thank you. Thanks, Dennis. Thanks. Thank you, and this concludes our question and answer session. I'd like to turn the conference back over to Brett McBrayer for any closing remarks. I continue to be encouraged by our strengthening operational performance. As we work to mitigate the headwinds in our European casserole business, we are very optimistic about the opportunities we see for stronger financial performance moving forward. I want to thank our employees for their tremendous hard work and dedication to the business. They've done an outstanding job and will continue to do so.

Thanks, Dennis Thanks.

Speaker Change: And this concludes our question and answer session I would like to turn the conference back over to Brian <unk> for any closing remarks.

Brian: I continue to be encouraged by our strengthening operational performance and as we work to mitigate the headwinds in our European cast roll business.

Brian: We were very optimistic with the opportunities we see for stronger financial performance moving forward I want to thank our employees for their tremendous hard work and dedication to the business and they've done an outstanding job and continue to do so also want to thank our shareholders. Thank you for joining our call. This morning.

Unknown Executive: I also want to thank our shareholders. Thank you for joining our call this morning. Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Brian: Yeah.

Speaker Change: Thank you. This concludes today's conference call.

Speaker Change: Thank you all for attending today's presentation.

Speaker Change: Now disconnect your lines and have a wonderful day.

Speaker Change: Hum.

Speaker Change: [music].