SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-898

AMPCO-PITTSBURGH CORPORATION

Pennsylvania	25-1117717
(State of Incorporation)	(I.R.S. Employer Identification No.)

726 Bell Avenue, Suite 301

Carnegie, Pennsylvania 15106

(Address of principal executive offices)

(412) 456-4400

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒	Emerging growth company	☐
Non-accelerated filer	☐	Smaller reporting company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1 par value	AP	New York Stock Exchange

On August 2, 2019, 12,640,526 common shares were outstanding.

AMPCO-PITTSBURGH CORPORATION

INDEX

			Page No.
Part I –	Financial Information:
	Item 1 –	Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets – June 30, 2019 and December 31, 2018	3
		Condensed Consolidated Statements of Operations – Three and Six Months Ended June 30, 2019 and 2018	4
		Condensed Consolidated Statements of Comprehensive Income (Loss) – Three and Six Months Ended June 30, 2019 and 2018	5
		Condensed Consolidated Statements of Shareholders’ Equity – Three and Six Months Ended June 30, 2019 and 2018	6
		Condensed Consolidated Statements of Cash Flows – Six Months Ended June 30, 2019 and 2018	7
		Notes to Condensed Consolidated Financial Statements	8
	Item 2 –	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
	Item 3 –	Quantitative and Qualitative Disclosures About Market Risk	26
	Item 4 –	Controls and Procedures	26
Part II –	Other Information:
	Item 1 –	Legal Proceedings	27
	Item 1A –	Risk Factors	27
	Item 6 –	Exhibits	27
Signatures			28

2

PART I – FINANCIAL INFORMATION

AMPCO-PITTSBURGH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except par value)

	June 30, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	6,456		$	19,713
Receivables, less allowance for doubtful accounts of $2,801 in 2019 and $978 in 2018		85,232			69,448
Inventories		93,609			94,196
Insurance receivable – asbestos		17,000			17,000
Other current assets		5,301			7,271
Current assets of discontinued operations		14,047			20,238
Total current assets		221,645			227,866
Property, plant and equipment, net		171,379			185,661
Operating lease right-of-use assets		5,614			0
Insurance receivable – asbestos		127,934			135,508
Deferred income tax assets		2,889			3,188
Intangible assets, net		8,241			9,225
Investments in joint ventures		2,175			2,175
Other noncurrent assets		8,693			7,496
Total assets	$	548,570		$	571,119
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	41,854		$	38,900
Accrued payrolls and employee benefits		19,918			20,380
Debt – current portion		21,337			45,728
Operating lease liabilities – current portion		899			0
Asbestos liability – current portion		24,000			24,000
Other current liabilities		29,640			28,987
Current liabilities of discontinued operations		8,342			9,458
Total current liabilities		145,990			167,453
Employee benefit obligations		65,479			72,658
Asbestos liability		194,345			203,922
Deferred income tax liabilities		469			164
Long-term debt		56,806			31,881
Noncurrent operating lease liabilities		4,715			0
Other noncurrent liabilities		2,014			2,072
Total liabilities		469,818			478,150
Commitments and contingent liabilities (Note 9)
Shareholders’ equity:
Common stock – par value $1; authorized 40,000 shares in 2019 and 20,000 shares in      2018; issued and outstanding 12,624 shares in 2019 and 12,495 shares in 2018		12,624			12,495
Additional paid-in capital		155,644			154,889
Retained deficit		(49,361	)		(30,355	)
Accumulated other comprehensive loss		(46,128	)		(49,434	)
Total Ampco-Pittsburgh shareholders’ equity		72,779			87,595
Noncontrolling interest		5,973			5,374
Total shareholders’ equity		78,752			92,969
Total liabilities and shareholders’ equity	$	548,570		$	571,119

See Notes to Condensed Consolidated Financial Statements.

3

AMPCO-PITTSBURGH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net sales	$	102,519		$	118,371		$	210,013		$	224,786
Operating costs and expenses:
Costs of products sold (excluding depreciation and amortization)		84,536			98,840			174,757			186,493
Selling and administrative		13,929			14,273			27,814			29,129
Depreciation and amortization		4,650			5,448			9,909			11,048
Impairment charge		0			0			10,082			0
Loss (gain) on disposal of assets		57			(1	)		63			82
Total operating expenses		103,172			118,560			222,625			226,752
Loss from continuing operations		(653	)		(189	)		(12,612	)		(1,966	)
Other income (expense):
Investment-related income		1,360			43			1,400			67
Interest expense		(1,209	)		(1,020	)		(2,494	)		(1,893	)
Other – net		925			721			2,221			4,342
		1,076			(256	)		1,127			2,516
Income (loss) from continuing operations before income taxes		423			(445	)		(11,485	)		550
Income tax provision		(644	)		(546	)		(1,287	)		(83	)
Net (loss) income from continuing operations		(221	)		(991	)		(12,772	)		467
Loss from discontinued operations, net of tax		(3,391	)		(1,709	)		(5,633	)		(1,778	)
Net loss		(3,612	)		(2,700	)		(18,405	)		(1,311	)
Less: Net income attributable to noncontrolling interest		246			294			601			742
Net loss attributable to Ampco-Pittsburgh	$	(3,858	)	$	(2,994	)	$	(19,006	)	$	(2,053	)
Net (loss) income from continuing operations per common share:
Basic	$	(0.02	)	$	(0.08	)	$	(1.02	)	$	0.04
Diluted	$	(0.02	)	$	(0.08	)	$	(1.02	)	$	0.04
Loss from discontinued operations, net of tax, per common share:
Basic	$	(0.27	)	$	(0.14	)	$	(0.45	)	$	(0.14	)
Diluted	$	(0.27	)	$	(0.14	)	$	(0.45	)	$	(0.14	)
Net loss per common share attributable to Ampco-Pittsburgh:
Basic	$	(0.31	)	$	(0.24	)	$	(1.52	)	$	(0.17	)
Diluted	$	(0.31	)	$	(0.24	)	$	(1.52	)	$	(0.17	)
Weighted average number of common shares outstanding:
Basic		12,576			12,439			12,537			12,401
Diluted		12,576			12,439			12,537			12,401

See Notes to Condensed Consolidated Financial Statements.

4

AMPCO-PITTSBURGH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net loss	$	(3,612	)	$	(2,700	)	$	(18,405	)	$	(1,311	)
Other comprehensive (loss) income, net of income tax where applicable:
Adjustments for changes in:
Foreign currency translation		(1,573	)		(6,197	)		(1,124	)		(3,699	)
Unrecognized employee benefit costs (including effects of foreign currency translation)		230			692			4,701			279
Fair value of cash flow hedges		(221	)		(6	)		47			(321	)
Reclassification adjustments for items included in net loss:
Amortization of unrecognized employee benefit costs		(282	)		64			(443	)		194
Realized losses (gains) from settlement of cash flow hedges		4			(92	)		123			(301	)
Other comprehensive (loss) income		(1,842	)		(5,539	)		3,304			(3,848	)
Comprehensive loss		(5,454	)		(8,239	)		(15,101	)		(5,159	)
Less: Comprehensive income attributable to noncontrolling interest		111			109			599			708
Comprehensive loss attributable to Ampco-Pittsburgh	$	(5,565	)	$	(8,348	)	$	(15,700	)	$	(5,867	)

See Notes to Condensed Consolidated Financial Statements.

5

AMPCO-PITTSBURGH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(in thousands)

For the six months ended June 30, 2018	Common Stock			Additional Paid-in Capital		Retained Earnings (Deficit)			Accumulated Other Comprehensive Loss			Noncontrolling Interest			Total
Balance January 1, 2018	$	12,361		$	152,992	$	38,980		$	(45,392	)	$	2,820		$	161,761
Stock-based compensation					839											839
Comprehensive income (loss):
Net (loss) income							(2,053	)					742			(1,311	)
Other comprehensive loss										(3,814	)		(34	)		(3,848	)
Comprehensive income (loss)													708			(5,159	)
Issuance of common stock excluding excess tax benefits of $0		130			354											484
Other							(1	)		3						2
Balance June 30, 2018	$	12,491		$	154,185	$	36,926		$	(49,203	)	$	3,528		$	157,927
For the three months ended June 30, 2018
Balance April 1, 2018	$	12,362		$	153,435	$	39,921		$	(43,851	)	$	3,419		$	165,286
Stock-based compensation					395											395
Comprehensive income (loss):
Net (loss) income							(2,994	)					294			(2,700	)
Other comprehensive loss										(5,354	)		(185	)		(5,539	)
Comprehensive income (loss)													109			(8,239	)
Issuance of common stock excluding excess tax benefits of $0		130			354											484
Other		(1	)		1		(1	)		2						1
Balance June 30, 2018	$	12,491		$	154,185	$	36,926		$	(49,203	)	$	3,528		$	157,927
For the six months ended June 30, 2019
Balance January 1, 2019	$	12,495		$	154,889	$	(30,355	)	$	(49,434	)	$	5,374		$	92,969
Stock-based compensation					660											660
Comprehensive income (loss):
Net (loss) income							(19,006	)					601			(18,405	)
Other comprehensive income (loss)										3,306			(2	)		3,304
Comprehensive income (loss)													599			(15,101	)
Issuance of common stock excluding excess tax benefits of $0		129			95											224
Balance June 30, 2019	$	12,624		$	155,644	$	(49,361	)	$	(46,128	)	$	5,973		$	78,752
For the three months ended June 30, 2019
Balance April 1, 2019	$	12,513		$	155,283	$	(45,503	)	$	(44,421	)	$	5,862		$	83,734
Stock-based compensation					320											320
Comprehensive income (loss):
Net (loss) income							(3,858	)					246			(3,612	)
Other comprehensive loss										(1,707	)		(135	)		(1,842	)
Comprehensive income (loss)													111			(5,454	)
Issuance of common stock excluding excess tax benefits of $0		111			41											152
Balance June 30, 2019	$	12,624		$	155,644	$	(49,361	)	$	(46,128	)	$	5,973		$	78,752

See Notes to Condensed Consolidated Financial Statements.

6

S

AMPCO-PITTSBURGH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Six Months Ended June 30,
	2019			2018
Net cash flows used in operating activities - continuing operations	$	(8,165	)	$	(5,206	)
Cash flows from investing activities:
Purchases of property, plant and equipment		(3,761	)		(4,321	)
Purchases of long-term marketable securities		(47	)		(91	)
Proceeds from sale of long-term marketable securities		169			186
Net cash flows used in investing activities - continuing operations		(3,639	)		(4,226	)
Cash flows from financing activities:
Repayment of debt		(27,627	)		(496	)
Proceeds from Revolving Credit and Security Agreement		32,956			19,971
Payments on Revolving Credit and Security Agreement		(6,000	)		0
Dividends paid		(7	)		(35	)
Funding of discontinued operations		(567	)		(6,946	)
Net cash flows (used in) provided by financing activities - continuing operations		(1,245	)		12,494
Effect of exchange rate changes on cash and cash equivalents		(208	)		(803	)
Cash flows from discontinued operations: