Ampco-pittsburgh Corporation · NYSE:AP
Ampco-pittsburgh — Investor Day (November 2015)
61 slides from Ampco-pittsburgh's investor day presentation, Nov 9, 2015
Slide 1: 2016-2018 Strategic Plan Summary
2016-2018 Strategic Plan Summary November 10, 2015 Ampco-Pittsburgh Corporation Exhibit 99.1
Slide 2: Forward-looking statements safe harbor
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 statem
Slide 3: Presentation Outline
Presentation Outline Welcome, IntroductionJohn Stanik Forged and Cast Engineered ProductsRodney Scagline Air and Liquid ProcessingTerry Kenny SummaryDee Ann Johnson Questions
Slide 4: Who is Ampco-Pittsburgh Corporation?
Who is Ampco-Pittsburgh Corporation? Ampco-Pittsburgh Corporation manufactures and sells highly engineered, high performance specialty metal products and customized equipment utilized by industry throughout the world. Two segments are reported: Forged and Cast Engineered Products (known as UES) Air
Slide 5: Today's speakers
Today’s speakers John Stanik, CEO Dee Ann Johnson, CFO Rodney Scagline, President, Forged and Cast Engineered Products (Union Electric Steel) Terry Kenny, President, Air & Liquid Systems
Slide 6: State of Ampco-Pittsburgh: Forged and Cast Engineered Products
State of Ampco-Pittsburgh Forged and Cast Engineered Products or Union Electric Steel (UES) Historically served steel and aluminum industry primarily Current steel industry market conditions: Excess global steelmaking capacity impacting customer financial performance Cost control extended to vendors
Slide 7: State of Ampco-Pittsburgh cont'd
State of Ampco-Pittsburgh cont’d Good news: Flexible manufacturing assets: open-die forging Market pull into fracking industry Opportunity to diversify into broader markets Added Alloys Unlimited & Processing company (forged and cast product distribution center including short turnaround, emergency
Slide 8: State of Ampco-Pittsburgh: Air and Liquid Processing
State of Ampco-Pittsburgh cont’d Air and Liquid Processing Comprised of three businesses: Aerofin – Heat exchangers Buffalo Air Handling – Custom air handling systems Buffalo Pumps – Specialty centrifugal pumps Profitable, consistent performer Buffalo Air performance improvement in 2015 Lack of grow
Slide 9: Key strategies to improve performance
Key strategies to improve performance Union Electric Steel – stabilize business and return to profitability Roll Business Reduce costs (lean techniques) Invest in technical development Position as global player Other actions
Slide 10: Key strategies to improve performance cont'd
Key strategies to improve performance cont’d Diversify – open-die forged products Fracking industry Broaden capabilities Sales Logistics Manufacturing Geography Products
Slide 11: Key strategies: Air and Liquid Processing
Key strategies to improve performance cont’d Air and Liquid Processing Grow revenue Reduce costs, increase margins Strengthen engineering and manufacturing capabilities Revise sales and marketing approach
Slide 12: How will we be successful?
How will we be successful? A Process Action plans have been assigned and will be measured and tracked. Clear delineation of responsibilities Annual strategy update Incorporate action plan results into compensation and annual internal business plans Monitor risks and mitigate in timely fashion; ERM i
Slide 13: 2016-2018 Strategic Plan Union Electric Steel
2016 – 2018 Strategic Plan Union Electric Steel
Slide 14: Union Electric Steel Strategic Plan Summary
Union Electric Steel Strategic Plan Summary Union Electric Steel has historically represented 66% of total revenue of Ampco-Pittsburgh. Revenue
Slide 15: Forged and Cast Engineered Products
Forged and Cast Engineered Products
Slide 16: Roll Products
Roll Products Pittsburgh
Slide 17: Manufacturing Process for Strip
3C(1) Manufacturing Process for Strip \i Slab Roughing mil =— Continuous reheating Scale breaker Finishing mill Coiler + Hot rolled coil L. @as ee = nat > Continuous pickling line Tandem cold mill ha) Oa Electrolytic cleaning line Cold rolled coil Batch annealing Tempering mill furnace of. Tetsu ga
Slide 18: Rolls Staged in Hot Strip Mill
Rolls Staged in Hot Strip Mill (HSM)
Slide 19: UES Locations
UES Locations Manufacturing Sales Office Current Sales and Manufacturing Footprint
Slide 20: Global Steel Industry Performance
Global Steel Industry Performance Steel companies’ profitability declining due to continued overcapacity. 2015 world capacity utilization ranging between 65 – 76%.
Slide 21: Market Share by Region (2014)
Market Share by Region (2014 pcs) CAST FORGED
Slide 22: Main Competitors: Cast Rolls and Forged Rolls
Region Company Name Estimated Global Market Share EUR Akers Group 5% Coswig <2,5% ESW <2,5% GP <2,5% Innse <2% North America Akers National Roll <2% United <2% Whemco <2,5% S-AM Villares <2,5% Asia-Pacific Hitachi <2,5% Nippon Steel <2% China Gong Chang 5% Xingtai 10% Region Company Name Estimated G
Slide 23: Forged Engineered Products - Fluid Ends
Forged Engineered Products (FEP) - Fluid Ends Fracking pump unit Mud Pump Fluid end Multiple fracking pump units on-site
Slide 24: FEP Products - Bars
FEP Products - Bars Pittsburgh
Slide 25: N.A. Open Dies Sales
N.A. Open Dies Sales Source: FIA
Slide 26: Fracking Block Market ($200-300M)
Fracking Block Market ($200-300M) Lowered in September $200-300M/ year market - CONSUMABLE Integrated shop = supply chain advantage
Slide 27: Additional FEP Potential Products
Additional FEP Potential Products New Target Products Blow-Out-Preventers (BOPs) Gears (e.g. pinion gears) Mining bits/steps Mud pump blocks Mud pump crankshafts Quills (on drilling rig) Reamers/stabilizers Shafts Wellhead forgings/valve bodies Wye blocks
Slide 28: Strategic Actions to Improve Performance
Strategic Actions to Improve Performance Commercial Strategic sales Marketing New products Operational Lean implementation Cost reduction Tactical Establish low cost manufacturing Strategic acquisitions
Slide 29: 2016-2018 Strategic Plan Air and Liquid Processing Segment
2016-2018 Strategic Plan Air and Liquid Processing Segment
Slide 30: Air and Liquid Processing Segment Information
Air and Liquid Processing Segment Information The Air and Liquid Processing Segment is comprised of three divisions: Aerofin Buffalo Air Handling Buffalo Pumps These divisions represent approximately 34% of Ampco- Pittsburgh’s total annual revenue.
Slide 31: Air and Liquid Processing Segment Strategic Plan Summary
Air and Liquid Processing Segment Strategic Plan Summary
Slide 32: Aerofin 2016-2018 Strategic Plan
Aerofin 2016 – 2018 Strategic Plan
Slide 33: Aerofin Products
Aerofin Products Copper spiral finned nuclear stamped coil Split-Fit® Steam heating coils
Slide 34: Aerofin Sales by Segment
Aerofin Sales by Segment Aerofin sales by market: Fossil fuel power generation Industrial Nuclear power generation OEM/Commercial
Slide 35: Aerofin Market Share
Aerofin Market Share 16.6% 83.4% 22.8% 77.2% 30.5%
Slide 36: Aerofin Market Strategies
Aerofin Market Strategies Increase market share Introduce new products Expand markets and territory Improve manufacturing efficiencies/productivity by a minimum of 10% Explore acquisitions that complement Aerofin’s products and geography
Slide 37: Aerofin Summary of Strategic Plan
Aerofin Summary of Strategic Plan Revenue Average CAGR approximately 8.0%
Slide 38: Buffalo Air Handling 2016-2018 Strategic Plan
Buffalo Air Handling 2016 – 2018 Strategic Plan
Slide 39: Buffalo Air Handling Products
Buffalo Air Handling Products Rooftop unit at a pharmaceutical manufacturing facility Triple stacked units being installed at a research facility in Illinois Air handling unit in our manufacturing plant for a medical center in New York
Slide 40: Why use a custom air handling unit?
Buffalo Air Handling Why use a custom air handling unit? Reliability requirements Performance requirements Unique features such as special filtration or humidity control Air pressure requirements Air leakage control Energy recovery requirements Specific size limitations End user or engineer preferen
Slide 41: Buffalo Air Handling Sales by Segment
Buffalo Air Handling Sales by Segment Buffalo Air Handling serves four primary markets Each unit is designed and manufactured to precise specifications
Slide 42: Buffalo Air Handling Market Share
Buffalo Air Handling Market Share Buffalo Air Handling has 12.2% of the available custom air handling market
Slide 43: Buffalo Air Handling Market Strategies
Buffalo Air Handling Market Strategies Grow targeted markets Enhance opportunities for design basis Broaden product offering Reduce manufacturing costs Explore acquisitions with complementary products
Slide 44: Buffalo Air Handling Summary of Strategic Plan
Buffalo Air Handling Summary of Strategic Plan Revenue Average CAGR approximately 10.0%
Slide 45: Buffalo Pumps 2016-2018 Strategic Plan
Buffalo Pumps 2016 – 2018 Strategic Plan
Slide 46: Buffalo Pumps Products
Buffalo Pumps Products Specialized Centrifugal Pumps Vertical double suction pump for a United States Navy surface vessel Vertical submerged lube oil pump Seal-less pump
Slide 47: Buffalo Pumps Market Segments
Buffalo Pumps Market Segments Fossil fuel power generation Military use Industrial refrigeration
Slide 48: Buffalo Pumps Market Strategies
Buffalo Pumps Market Strategies Focus on customer service enhancements Improve after market support Grow OEM market share Broaden product offerings Reduce manufacturing costs Explore acquisitions that complement Buffalo Pump’s products and markets served
Slide 49: Buffalo Pumps Summary of Strategic Plan
Buffalo Pumps Summary of Strategic Plan Revenue Average CAGR approximately 5.0%
Slide 50: Air and Liquid Processing Segment Strategic Plan Summary
Air and Liquid Processing Segment Strategic Plan Summary
Slide 51: 2016-2018 Strategic Plan Financials
2016-2018 Strategic Plan Financials Ampco-Pittsburgh Corporation
Slide 52: Ampco-Pittsburgh Financial Assumptions
Ampco-Pittsburgh Corporation Financial Assumptions Growth: Organic, no impact from potential acquisitions Markets: Forged and Cast Engineered Products (FCEP) Steel – no recovery in 2016. Slow and steady growth in 2017 and 2018 Oil and gas – improving in latter half of 2016 Air and Liquid Processing
Slide 53: Ampco-Pittsburgh Revenue (2013-2018)
Ampco-Pittsburgh Corporation Revenue (2013-2018) Average CAGR > 10%
Slide 54: Revenue Drivers (2014-2018)
Ampco-Pittsburgh Corporation Revenue Drivers (2014-2018)
Slide 55: Revenue By Segment
Ampco-Pittsburgh Corporation Revenue By Segment Historical Target 2018
Slide 56: Operating Income (2013-2018)
Ampco-Pittsburgh Corporation Operating Income (2013-2018)
Slide 57: Financial Performance Drivers
Ampco-Pittsburgh Corporation Financial Performance Drivers Reduced workforce Centralized back office functions Relocated corporate headquarters Froze significant portion of U.S. defined benefit plan Ongoing…. Implement company-wide “lean manufacturing” strategies Focus on cash flow and working capit
Slide 58: Capital Expenditures (2013-2018)
Ampco-Pittsburgh Corporation Capital Expenditures (2013-2018)
Slide 59: Financial Performance Metrics
Ampco-Pittsburgh Corporation Financial Performance Metrics
Slide 60: Key Takeaways
Key Takeaways Grow top line and reduce cost. Increase margin. Diversify. Use balance sheet to strengthen Ampco via investments based on ROIC Deploy a “system” that assigns responsibilities, tracks progress, mitigates risk and rewards success. Update strategy annually.
Slide 61: Thank you / Questions
Thank you Questions Ampco-Pittsburgh Corporation