Ampco-Pittsburgh Corporation (NYSE:AP) reported consolidated sales for the three and nine months ended September 30, 2016 of $82,861,000 and $239,740,000, respectively, compared to $58,094,000 and $183,154,000, respectively, for the three and nine months ended September 30, 2015. The current year periods include sales of $33,679,000 and $86,703,000 attributable to the March 3, 2016 acquisition of Åkers AB and certain of its affiliated companies (“Åkers”). The Corporation reported a loss from operations of $4,941,000 and $14,760,000 for the three and nine months ended September 30, 2016, respectively, compared to a loss from operations of $2,357,000 and $2,661,000 for the same periods of the prior year. The year-to-date operating loss includes certain purchase accounting adjustments and acquisition-related costs of approximately $6,500,000.
During the three and nine month periods ended September 30, 2016, the Corporation established valuation allowances of $22,620,000 and $24,039,000, respectively, against certain of its deferred income tax assets which impacted net loss per common share by $1.84 and $2.03, respectively. The valuation allowances resulted from the Corporation having incurred three years of cumulative losses, inclusive of the acquired Åkers businesses, limiting our ability to consider other subjective evidence to recognize the existing deferred tax assets. If and when the Corporation returns to a sustained level of profitability sufficient to conclude that it is more likely than not that deferred tax assets are realizable, we will reduce the valuation allowance accordingly.
Net loss for the three and nine months ended September 30, 2016 was $23,099,000 and $32,475,000, respectively, compared to a net loss for the three and nine months ended September 30, 2015 of $1,511,000 and $1,959,000. Loss per common share for the three months ended September 30, 2016 was $1.88, which includes the $1.84 non-cash tax valuation allowance impact.
Sales for the Forged and Cast Engineered Products segment for the three and nine months ended September 30, 2016 increased 74% and 51%, respectively, from the same periods of the prior year principally from the inclusion of the acquired Åkers businesses, offset in part by a decline in legacy roll and other forged engineered product sales volumes. The operating loss for the three and nine months ended September 30, 2016 increased when compared to the three and nine months ended September 30, 2015 primarily due to the impact of the addition of Åkers, including restructuring costs, and lower legacy cast roll business volumes. The operating loss for the nine months ended September 30, 2016 also includes the effect of purchase accounting for Åkers.
Third quarter sales for the Air and Liquid Processing segment declined approximately 9% from prior year driven principally by lower heat exchanger coil shipments to the coal-fired power generation market. Operating income declined slightly on lower volumes. For the nine months ended September 30, 2016, sales declined approximately 4% compared to prior year levels but operating income was approximately flat as the current year sales volume decline was offset by higher margins from productivity and sales mix improvements.
Other expense for the third quarter of 2016 included higher interest expense and a foreign exchange loss when compared to the third quarter of 2015. Other expense for year-to-date 2016 exceeded the prior year driven by higher interest expense offset in part by foreign exchange gains versus foreign exchange losses in the prior year.
Commenting on the quarter, John Stanik, Ampco-Pittsburgh’s Chief Executive Officer said, “Our third quarter operating results were dominated by weak volumes in the cast roll market. As we continue with our integration and restructuring efforts, we are announcing the idling of our Avonmore, PA cast roll plant.”
Ampco-Pittsburgh will conduct a teleconference to discuss its third quarter earnings, as described in this News Release, on Tuesday, November 1, 2016, at 10:30 a.m. Eastern Time (ET). The Corporation also plans to discuss on the call an agreement in principle relating to a pending acquisition. The call will be broadcast live over the internet and can be accessed from the Investors menu on the Corporation’s
website, www.ampcopgh.com. Those wishing to participate in the call can register at www.ampcopgh.com, or by phone at 1-877-267-7197 at least five minutes before the scheduled start time. The conference ID is: 98671917.
For those unable to listen to the live broadcast, a replay will be available four hours after the event concludes on our website under the Investors menu at www.ampcopgh.com.