Ampco-Pittsburgh Corp (AP) 2016 Q4 法說會逐字稿

Hello and welcome to the Ampco-Pittsburgh Corporation fourth-quarter 2016 results conference call.

您好，歡迎參加 Ampco-Pittsburgh Corporation 2016 年第四季業績電話會議。

(Operator Instructions)

（操作員說明）

Please also note today's event is being recorded. I would like to now to the conference call over to Melanie Sprowson, Director of Investor Relations and Corporate Communications. Ma'am, please go ahead.

另請注意今天的活動正在錄製中。我現在想請投資者關係和企業傳播總監 Melanie Sprowson 參加電話會議。女士，請繼續。

Thank you, Jamie. Good morning to everyone joining us on today's fourth-quarter conference call. I am joined by John Stanik, our Chief Executive Officer; Rose Hoover, President and Chief Administrative Officer; and Mike McAuley, Vice President, Chief Financial Officer and Treasurer.

謝謝你，傑米。大家早安，參加今天的第四季電話會議。我們的執行長約翰·斯坦尼克 (John Stanik) 也加入了我的行列；羅絲‧胡佛，總裁兼首席行政官；副總裁、財務長兼財務長 Mike McAuley。

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 Corporation's plans, objectives, expectations or intentions. These matters involve certain risks and uncertainties, many of which are outside of the Corporation's control.

在我們開始之前，我想提醒大家，本次電話會議的參與者可能會發表前瞻性的聲明或評論，其中可能包括財務預測或有關公司計劃、目標、期望或意圖的其他聲明。這些事項涉及某些風險和不確定性，其中許多風險和不確定性超出了公司的控制範圍。

The Corporation's actual results may differ significantly from those projected or suggested in any forward-looking statement due to a variety of factors including those discussed in the Corporation's most recently filed Form 10-K and 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.

由於多種因素，包括公司最近提交的 10-K 表格以及隨後向美國證券交易委員會提交的文件中討論的因素，公司的實際結果可能與任何前瞻性聲明中預測或建議的結果存在顯著差異。我們不承擔更新或以其他方式公開發布對我們的前瞻性陳述的任何修訂的義務。

A replay of this call will be posted on our website later today and remain available for two weeks following the conclusion of the call. To access the earnings release or the webcast replay, please consult the investor section of our website at Ampcopgh.com.

本次電話會議的重播將於今天稍晚發佈在我們的網站上，並在電話會議結束後兩週內保留。若要存取收益發布或網路廣播重播，請諮詢我們網站 Ampcopgh.com 的投資者部分。

Now let me turn this call over to Mike who will provide an overview of the Company's financial performance for the fourth quarter.

現在讓我把這個電話轉給麥克，他將概述公司第四季的財務表現。

Thank you, Melanie, and good morning everyone. Before I begin my review of our fourth-quarter financial results, let me remind our listeners today that the results for the fourth-quarter and full-year 2016 in comparison to prior year in our press release are significantly affected by acquisitions made this year of Akers AB and certain of its affiliated companies completed in March 2016 and ASW Steel acquired in early November 2016. In addition, we recorded two significant charges in the quarter which I will highlight in detail shortly.

謝謝你，梅蘭妮，大家早安。在開始回顧我們第四季度的財務業績之前，讓我今天提醒我們的聽眾，與我們新聞稿中的上一年相比，2016 年第四季度和全年的業績受到今年的收購的顯著影響。此外，我們在本季度記錄了兩項重大費用，我將很快詳細強調。

While our press release this morning provides commentary on both the quarter and year to date, I will focus my remarks today primarily on our Q4 2016 results. Sales for the Corporation for the fourth quarter of 2016 were $92.1 million. This compares to sales for the fourth quarter of 2015 of $55.3 million.

雖然我們今天早上的新聞稿提供了對本季和年初至今的評論，但我今天的演講將主要集中於我們 2016 年第四季的業績。該公司 2016 年第四季的銷售額為 9,210 萬美元。相比之下，2015 年第四季的銷售額為 5,530 萬美元。

Sales in the Forged and Cast Engineered Products segment doubled compared to prior year, driven primarily by the inclusion of the acquired Akers and ASW businesses. Sales for the Air and Liquid Processing segment for the fourth quarter of 2016 increased nearly 5% versus prior year. I will comment more on the business segment results in a moment.

鍛造和鑄造工程產品部門的銷售額與前一年相比翻了一番，這主要是由於收購了 Akers 和 ASW 業務。2016 年第四季空氣和液體處理部門的銷售額比去年同期成長了近 5%。我稍後將進一步評論業務部門的業績。

Selling and administrative expenses were $14.4 million for the fourth quarter of 2016 in comparison to $11.9 million for the fourth quarter of 2015. The increase is primarily related to the addition of selling and administrative costs for the acquired businesses including a reserve of $1.5 million for accounts receivable from a customer who filed for Chapter 11 bankruptcy protection in the fourth quarter of 2016 but offset in part by acquisition related costs in Q4 2015 of $3 million, which were higher than those incurred in Q4 of 2016.

2016 年第四季的銷售和管理費用為 1,440 萬美元，而 2015 年第四季為 1,190 萬美元。此成長主要與所收購業務的銷售和管理成本增加有關，其中包括針對2016 年第四季根據第11 章申請破產保護的客戶的應收帳款準備金150 萬美元，但部分被收購相關成本抵銷2015 年第四季的支出為 300 萬美元，高於 2016 年第四季的支出。

Depreciation and amortization expense of $5.5 million for the fourth quarter of 2016 is up to $3 million versus the prior year, primarily due to the inclusion of the acquired companies. Our new heat treat facility at the Harmon Creek plant was also recently brought online.

2016 年第四季的折舊和攤銷費用為 550 萬美元，比前一年增加了 300 萬美元，這主要是由於納入了被收購的公司。我們位於 Harmon Creek 工廠的新熱處理設施最近也已上線。

Now let me get to the charges recorded in the quarter which investors will note on our P&L. First, during the fourth quarter of 2016 the Company undertook a revaluation of the estimated costs of pending and future asbestos-related claims net of additional estimated insurance recoveries including extending the period for those measurements from 2024 until the end of 2026. The result was an increase in our net asbestos liability.

現在讓我來談談本季記錄的費用，投資人將在我們的損益表上註明這些費用。首先，在 2016 年第四季度，公司對未決和未來石棉相關索賠的估計成本（扣除額外估計的保險賠償）進行了重新評估，包括將這些測量的期限從 2024 年延長至 2026 年底。結果是我們的石棉淨負債增加。

This impact was partly offset by asbestos-related proceeds received from a settlement with an insurance carrier in excess of the receivable estimated. The net of these two items resulted in a P&L charge of $4.6 million in the fourth quarter of 2016. In contrast, in the prior-year quarter we recorded a $14 million gain on asbestos-related proceeds received from an insurance carrier in rehabilitation.

這一影響被與保險公司達成的和解中超過應收帳款估計的石棉相關收益部分抵消。這兩項費用相加後，2016 年第四季的損益費用為 460 萬美元。相比之下，去年同期，我們從一家康復保險公司收到的石棉相關收益中獲得了 1,400 萬美元的收益。

Second, during the fourth quarter of 2016, the Company recorded impairment losses of $26.7 million primarily related to the Company's conclusion that the goodwill in its Forged and Cast Engineered Products reporting unit was fully impaired. This goodwill was attributable to the Akers acquisition. The opening balance sheet of ASW Steel acquired in Q4 2016 had no goodwill or any other intangible assets.

其次，在 2016 年第四季度，公司記錄了 2,670 萬美元的減損損失，主要與公司得出的鍛造和鑄造工程產品報告部門的商譽已完全減損的結論有關。該商譽歸因於 Akers 收購。2016 年第四季收購的 ASW Steel 期初資產負債表中沒有商譽或任何其他無形資產。

The resulting operating loss for the fourth quarter of 2016 was $39.8 million. This compares to operating income of $7.7 million in the fourth quarter of 2015 which included that $14 million asbestos insurance credit I mentioned a moment ago as well as approximately $3 million in acquisition-related costs. The current-quarter operating loss also reflects continued weak market conditions in the roll business and in our other Forged Engineered Products business.

由此產生的 2016 年第四季營運虧損為 3,980 萬美元。相較之下，2015 年第四季的營業收入為 770 萬美元，其中包括我剛才提到的 1,400 萬美元的石棉保險信貸以及約 300 萬美元的收購相關成本。本季的經營虧損也反映出軋輥業務和我們其他鍛造工程產品業務的市場狀況持續疲軟。

Compared to the fourth quarter of 2015 other expense net for the fourth quarter of 2016 exceeded prior year due primarily to higher interest expense of approximately $0.8 million related to the acquisitions of Akers and ASW as well as higher foreign exchange losses of $1.3 million linked to the stronger US dollar. Despite the large loss before income taxes the Company recorded a small tax provision rather than a benefit due to the full valuation allowances still in place for most of the Corporation's entities having triggered a three-year cumulative loss position last quarter. We described this issue in detail on last quarter's call and press release.

與2015 年第四季相比，2016 年第四季的其他費用淨額超過了去年同期，主要是因為與收購Akers 和ASW 相關的利息費用增加了約80 萬美元，以及與收購Akers 和ASW 相關的外匯損失增加了130 萬美元。儘管所得稅前出現巨額虧損，但由於公司大多數實體仍在上季度引發三年累計虧損，因此仍保留全額估值津貼，因此公司記錄了少量稅收準備金，而不是收益。我們在上個季度的電話會議和新聞稿中詳細描述了這個問題。

As a result, the Corporation incurred a net loss of $43.1 million, or $3.51 per common share, for the fourth quarter of 2016 which includes per share amounts of $2.17 for the impairment charge and $0.37 for the net asbestos charge. By comparison, the Corporation's net income for the fourth quarter of 2015 was $3.3 million, or $0.32 per share, but included $0.59 per share in the net benefit of last year's asbestos-related insurance recovery offset in part by the higher acquisition related costs.

因此，該公司在 2016 年第四季產生了 4,310 萬美元的淨虧損，即每股普通股 3.51 美元，其中包括每股 2.17 美元的減損費用和 0.37 美元的淨石棉費用。相較之下，該公司2015 年第四季的淨利為330 萬美元，即每股0.32 美元，但包括每股0.59 美元的去年石棉相關保險追償淨收益，部分被較高的收購相關成本所抵消。

Now looking at the details of our operating segments, sales for the Forged and Cast Engineered Products segment for the three months ended December 31, 2016 doubled compared to the prior year level driven predominantly by the inclusion of the acquired businesses, which added sales of $41.9 million for the current-year quarter. This was partly offset by a decline in the volume of legacy cast roll shipments. The segment recorded an operating loss for the quarter which was higher than the operating loss in the prior year, driven by the goodwill impairment, the current-year operating losses related to excess capacity in the cast roll market including the acquired Akers businesses and the previously mentioned $1.5 million reserve against a receivable from a customer who filed for bankruptcy protection in Q4. John will comment more on the cast roll market and our capacity plans there in a moment.

現在看看我們營運部門的詳細信息，截至2016 年12 月31 日的三個月，鍛造和鑄造工程產品部門的銷售額比上一年水平翻了一番，這主要是由於收購業務的納入，增加了41.9 美元的銷售額本季為 100 萬美元。這在一定程度上被傳統鑄卷出貨量的下降所抵消。該部門本季營業虧損高於上年營業虧損，原因是商譽減損、與鑄輥市場產能過剩相關的本年度營業虧損（包括收購的 Akers 業務和之前的業務）提到針對第四季度申請破產保護的客戶的應收帳款準備金為150 萬美元。約翰稍後將對鑄卷市場和我們的產能計劃進行更多評論。

Sales for the Air and Liquid Processing segment for the three months ended December 31, 2016 rose nearly 5% compared to the prior-year quarter. The change is driven primarily by higher shipments of centrifugal pumps which more than offset softer shipments of custom air handlers as well as lower sales of heat exchange coils to the coal-fired power generation market.

截至 2016 年 12 月 31 日止三個月，空氣和液體處理部門的銷售額與去年同期相比成長了近 5%。這項變化主要是由於離心泵出貨量的增加抵消了定制空氣處理器出貨量的疲軟以及燃煤發電市場熱交換盤管銷量的下降。

This segment recorded an operating loss for Q4 2016 driven by the $4.6 million net asbestos charge I discussed earlier. This compares to operating income in Q4 2015 led by a $14 million credit for asbestos-related proceeds received from an insurance carrier in rehabilitation which because of its potential insolvency were not included in the insurance receivable previously recorded.

由於我之前討論過的 460 萬美元淨石棉費用，該部門在 2016 年第四季錄得營運虧損。相較之下，2015 年第四季的營業收入主要是從一家正在康復的保險公司收到的1,400 萬美元的石棉相關收益信貸，由於該保險公司可能破產，因此未包含在先前記錄的保險應收帳款中。

Beneath these asbestos items higher centrifugal pump shipment volumes, improved productivity, and cost reductions across the segment more than offset the impact of the lower heat exchange coil volumes in underlying operations. Backlog at December 31, 2016 was approximately $234 million, a 65% increase from the $142 million in backlog at December 31, 2015, primarily driven by the acquisition of Akers and ASW which added about $89 million.

在這些石棉產品的背後，整個細分市場的離心泵出貨量提高、生產率提高以及成本降低，足以抵消基礎運營中熱交換盤管容量減少的影響。截至 2016 年 12 月 31 日的積壓訂單約為 2.34 億美元，比 2015 年 12 月 31 日的積壓訂單 1.42 億美元增加了 65%，這主要是由於收購 Akers 和 ASW 增加了約 8,900 萬美元。

Order intake improved for both our legacy forged and cast roll businesses during Q4 2016 that was partly offset by unfavorable FX translation. Backlog for pumps and air handlers increased, but was partly offset by decreases in backlog for heat exchange coils.

2016 年第四季度，我們傳統的鍛造和鑄軋業務的訂單量有所增加，但部分被不利的外匯匯率所抵銷。泵浦和空氣處理器的積壓訂單增加，但部分被熱交換盤管積壓訂單的減少所抵消。

Now turning to the balance sheet, accounts receivable increased approximately $27 million at December 31, 2016 from December 31, 2015. The increase represents the inclusion of accounts receivables for the acquired Akers group and ASW Steel offset in part by lower legacy sales in Q4 2016 versus Q4 2015, improved collections as well as a reduction from foreign exchange translation effects.

現在轉向資產負債表，截至2016年12月31日的應收帳款較2015年12月31日增加了約2,700萬美元。這一增長包括了收購的 Akers 集團和 ASW Steel 的應收帳款，部分抵消了 2016 年第四季度傳統銷售額較 2015 年第四季度的下降、收款情況的改善以及外匯換算影響的減少。

Inventories increased approximately $24 million at December 31, 2016 from year-end 2015. Inventory added from the acquired companies was partly offset by reductions in inventory in legacy roll operations due to lower business activity, successful efforts aimed at reducing inventory levels and a reduction from foreign exchange translation. Accounts payable at December 31, 2016 increased approximately $23 million from the balance as of December 31, 2015, primarily reflecting the balance of payables added from the acquired companies.

截至 2016 年 12 月 31 日，庫存較 2015 年底增加約 2,400 萬美元。由於業務活動減少、旨在降低庫存水準的成功努力以及外匯換算的減少，傳統捲材業務的庫存減少部分抵消了收購公司增加的庫存。截至2016年12月31日的應付帳款較截至2015年12月31日的餘額增加約2,300萬美元，主要反映了被收購公司增加的應付帳款餘額。

Cash and cash equivalents of $38.6 million at December 31, 2016 declined $56.5 million compared to the balance of $95.1 million at December 31, 2015. Some selected significant cash flows for the year included the cash portion of the Akers acquisition purchase price which was approximately $29 million, the cash portion of the ASW acquisition purchase price which was $3.5 million, payment of dividends of $5.2 million, payment of asbestos-related liabilities of about $4.4 million, receipt of approximately $10.9 million from the settlement with an insurance carrier and capital expenditures year to date of approximately $11 million. CapEx for Q4 of 2016 was approximately $6 million to $7 million.

截至 2016 年 12 月 31 日，現金及現金等價物為 3,860 萬美元，與 2015 年 12 月 31 日的餘額 9,510 萬美元相比，減少了 5,650 萬美元。本年度一些選定的重要現金流量包括 Akers 收購購買價格的現金部分（約 2,900 萬美元）、ASW 收購購買價格的現金部分（350 萬美元）、支付股息 520 萬美元、支付石棉相關費用負債約440萬美元，從與保險公司的和解中收到約1,090 萬美元，年初至今資本支出約1,100 萬美元。2016 年第四季的資本支出約為 600 萬至 700 萬美元。

I will now turn the call over to John.

我現在將把電話轉給約翰。

Thank you, Mike. Good morning. Although Mike has provided a thorough explanation of our financial results I want to add some of my comments and perspectives.

謝謝你，麥克。早安.儘管麥克對我們的財務表現進行了詳盡的解釋，但我想補充一些我的評論和觀點。

When evaluating the Company's performance I look at GAAP and non-GAAP results very closely. GAAP results, of course, are the reported numbers, but non-GAAP results remove all adjustments, write-offs, etc. What's left is very important because what I'm looking for is has the Company moved forward and is it improving?

在評估公司業績時，我會非常仔細地查看 GAAP 和非 GAAP 業績。當然，公認會計原則結果是報告的數字，但非公認會計原則結果刪除了所有調整、沖銷等。剩下的非常重要，因為我正在尋找的是公司是否向前發展以及是否有所改善？

The most significant impact for the Corporation for the last five years has been the roll market decline. That is how long demand has been in this decline and our products' price compressed, five years.

過去五年對公司最重大的影響是卷材市場的下滑。這就是需求下降和我們產品價格壓縮的持續時間，五年。

And there was further deterioration in 2016. Cast roll demand, particularly in Europe, diminished significantly. This has had a big negative impact on newly acquired Akers performance and was a large part of the story which necessitated the goodwill write-off.

2016年情況進一步惡化。鑄輥需求，尤其是歐洲的需求，顯著下降。這對新收購的 Akers 業績產生了巨大的負面影響，也是商譽沖銷的主要原因。

When studying the underlying results we also see volume decrease in 2016 for our legacy forged roll business. There was lower-than-expected volume, some of which was due to lost business from price increase attempts.

在研究基本結果時，我們也發現 2016 年我們傳統的鍛輥業務的銷量有所下降。成交量低於預期，部分原因是漲價嘗試導致業務損失。

Air and liquid systems had their challenges also. However, they were able to overcome these challenges for the most part and continue their consistent profitable performance.

空氣和液體系統也面臨挑戰。然而，他們能夠在很大程度上克服這些挑戰並繼續保持穩定的獲利表現。

So what underlying positives exist and what improvements did we make in 2016? Well, I have to begin with the acquisitions. I'm convinced and remain convinced that both Akers and ASW provide a strong growth platform that should provide increasing profits beginning in the near future.

那麼 2016 年存在哪些潛在的正面因素以及我們做出了哪些改進呢？好吧，我必須從收購開始。我相信並且仍然相信 Akers 和 ASW 提供了一個強大的成長平台，應該在不久的將來開始提供不斷增長的利潤。

I see further cost-reduction accomplished, significant manufacturing efficiency improvements achieved and for the last six months a growing order intake with increasing roll prices. And I see ASW and Union Electric Steel already working closely together to optimize short-term financial results and strategically develop our diversification program.

我看到成本進一步降低，製造效率顯著提高，過去六個月訂單量不斷增加，捲材價格不斷上漲。我看到 ASW 和 Union Electric Steel 已經密切合作，以優化短期財務表現並策略性地發展我們的多元化計劃。

Allow me to get a little more granular. The decline in cast roll business availability reduced our operating income expectations by nearly $10 million. That's a big number for us. This problem was most pronounced in Europe.

請允許我說得更細一點。鑄軋業務可用性的下降使我們的營業收入預期減少了近 1000 萬美元。這對我們來說是一個很大的數字。這個問題在歐洲最為明顯。

On the positive side, from a cost-reduction and efficiency standpoint, there were numerous improvements. In our legacy business for both segments cost-reduction programs and efficiency improvements yielded more than $6 million in savings that should continue into the future. During 2016 ASW reduced their costs by improving their melting efficiency by nearly 25%.

從積極的一面來看，從降低成本和效率的角度來看，有很多改進。在我們這兩個部門的傳統業務中，成本削減計劃和效率改進節省了超過 600 萬美元，而這種節省應該會持續到未來。2016 年，ASW 將熔化效率提高了近 25%，降低了成本。

For Akers the capture of the existing synergies of the acquisition totaled a gross level of $8 million with only $3 million hitting P&L after the costs involved obtaining those synergies. But that $8 million will continue into the future. Additionally, we expect to get at least $5 million more in synergies from that acquisition in 2017.

對 Akers 來說，收購帶來的現有綜效總計達 800 萬美元，扣除獲得這些綜效所需的成本後，損益表僅達到 300 萬美元。但這 800 萬美元將持續到未來。此外，我們預計 2017 年將從此次收購中獲得至少 500 萬美元的綜效。

However, of course, there will be some costs associated with that new capture. As I mentioned in my Q3 presentation, we have plans to increase our manufacturing utilization, thereby optimizing our overhead absorption and maximizing the operating efficiency of all of our operating roll manufacturing plants. In my opinion, this is real progress and I am very pleased with these accomplishments.

然而，當然，新的捕獲會產生一些相關成本。正如我在第三季的演講中提到的，我們計劃提高製造利用率，從而優化我們的間接費用吸收並最大限度地提高我們所有營運輥製造廠的營運效率。在我看來，這是真正的進步，我對這些成就感到非常高興。

Let's talk a little bit about roll pricing. We announced a price increase early in the second quarter. For a period of time our competition utilized that period as an opportunity to take share.

我們來談談滾動定價。我們在第二季初宣布漲價。有一段時間，我們的競爭對手利用這段時間作為爭奪市場份額的機會。

Lost business impacted both the legacy forged and the new cast roll businesses. However, this announcement did serve notice that additional price decreases for our rolls were at an end.

業務的損失影響了傳統鑄造業務和新鑄輥業務。然而，這項公告確實表明我們的捲的額外降價已經結束。

As time went on during the second quarter and early into the third, we received spotty improvements in price. However, in the fourth quarter there was more significant traction. Therefore, once fourth-quarter contracts are fulfilled, which should begin midyear 2017, we should see positive gross margin impact from price increases.

隨著第二季和第三季初的時間推移，我們的價格出現了不穩定的改善。然而，第四季出現了更顯著的牽引力。因此，一旦第四季合約履行完畢（應於 2017 年年中開始），我們應該會看到價格上漲對毛利率產生正面影響。

Before I move on to other topics, I think it's a good idea to have Mike explain to you our goodwill write-off to give you not so much an understanding of GAAP accounting practice but why the write-off occurred. Mike?

在我繼續討論其他主題之前，我認為最好讓 Mike 向您解釋我們的商譽沖銷，這樣您不僅可以了解 GAAP 會計實踐，還可以了解沖銷發生的原因。麥克風？

Sure, John. Let me add a little more color on the impairment charge we've recorded this quarter.

當然，約翰。讓我對本季記錄的減損費用進行更多說明。

First, like the asbestos charge in the quarter, this is also a non-cash charge. It represents primarily the write-off of goodwill in the Forged and Cast Engineered Products reporting unit resulting from the Akers acquisition.

首先，與本季的石棉費用一樣，這也是非現金費用。它主要代表因收購 Akers 而沖銷鍛造和鑄造工程產品報告單位的商譽。

In connection with our strategic planning process, the goodwill impairment test completed in the fourth quarter of 2016 we determined that the goodwill in the Forged and Cast Engineered Products reporting unit was fully impaired primarily as a result of further depressed market conditions. Despite no fundamental changes in the steel industry production generally, no fundamental change in the regulatory environment, no loss of major customers and having seen actually favorable changes in tariff regimes aiding Western steelmakers, the decline in the cast roll market since the acquisition as well as lower margins than we expected in the acquired Akers businesses and slower demand in other forged engineered products were key factors in our assessment that the fair value of the Forged and Cast Engineered Products reporting unit was less than the carrying value and enough so that the goodwill was fully impaired.

根據我們的策略規劃流程，在 2016 年第四季完成的商譽減損測試中，我們確定鍛造和鑄造工程產品報告部門的商譽完全減損，主要是由於市場狀況進一步低迷。儘管鋼鐵業生產總體上沒有發生根本性變化，監管環境沒有發生根本性變化，主要客戶沒有流失，而且關稅制度實際上有利於西方鋼鐵製造商的有利變化，但自收購以來鑄輥市場的下滑以及所收購的Akers 業務的利潤率低於我們的預期，以及其他鍛造工程產品的需求放緩，是我們評估鍛造和鑄造工程產品報告單位的公允價值低於帳面價值且足以使商譽得以恢復的關鍵因素。

Back to you, John.

回到你身上，約翰。

Thank you, Mike. As Mike mentioned briefly in his presentation, there was also an increase in our asbestos balance sheet liability posted in the fourth quarter. And that may cause some of you pause.

謝謝你，麥克。正如麥克在演講中簡要提到的那樣，第四季度我們的石棉資產負債表負債也有所增加。這可能會讓你們中的一些人停下來。

There is actually embedded some good news in that situation. So I'm going to ask Rose Hoover, Ampco-Pittsburgh's President and CAO who is also our resident expert on this topic, to provide some clarity and further explanation on what this means. And she will also be here to take questions about this topic at the end of the call. Rose?

在這種情況下其實蘊藏著一些好消息。因此，我將請 Ampco-Pittsburgh 總裁兼首席行政官 Rose Hoover（也是我們該主題的常駐專家）就這意味著什麼提供一些清晰和進一步的解釋。她還將在電話會議結束時回答有關該主題的問題。玫瑰？

Thank you, John. Beginning in 2006 in an effort to provide total transparency for our investors we hired experts and began to include valuations in our financial statements of our projected asbestos liability and insurance recovery for that liability. Those valuations are performed every year, but every other year we have updated them to run for a new 10-year period.

謝謝你，約翰。從 2006 年開始，為了為投資者提供完全的透明度，我們聘請了專家，並開始在我們的財務報表中納入預計石棉責任和該責任保險賠償的估值。這些估值每年都會進行一次，但每隔一年我們都會更新一次，以適應新的 10 年期。

In 2016 those valuations were updated for the 10-year period 2016 to 2026. This means that two years were added to that valuation from the previous one done in 2014 to 2024.

2016 年，這些估值針對 2016 年至 2026 年這 10 年期間進行了更新。這意味著該估值比 2014 年至 2024 年的估值增加了兩年。

In addition, in fourth quarter of 2016 we entered into a settlement agreement with one of our excess insurers for an amount in excess of the estimated insurance receivable for that carrier and it resulted in a gain. The net of the two impacts, the valuation of the liability and the update of the insurance receivable, was a $4.6 million charge during the quarter.

此外，2016 年第四季度，我們與一家超額保險公司簽訂了和解協議，金額超出了該承運人的預計應收保險金額，並產生了收益。扣除負債估值和保險應收帳款更新這兩項影響後，該季度的費用為 460 萬美元。

Actual settlement and defense costs paid for the past five years show a 23% decline in those costs over that five-year period. The Corporation paid an average of $4 million a year over that same five-year period for costs not covered by insurance.

過去五年實際支付的和解和辯護費用顯示，這些費用在這五年期間下降了 23%。在同一五年期間，公司平均每年支付 400 萬美元的保險未涵蓋的費用。

We retain experts who use accepted market studies and are able to estimate our share of the market for the continued filing of these claims. Based on that analysis we are told to expect a continuation of a downward trend in the number of malignancies filed through the 10-year period.

我們聘請了使用公認的市場研究的專家，並且能夠估計我們繼續提出這些索賠的市場份額。根據該分析，我們預計在這 10 年期間，提交的惡性腫瘤數量將繼續呈下降趨勢。

Thank you, Rose. So just to reiterate what Rose just said we are seeing a decline in the costs. And if you looked at those five years you would see that continuous consistent decline.

謝謝你，羅斯。因此，重申一下羅斯剛才所說的，我們看到成本正在下降。如果你看看這五年，你會發現持續的下降。

Let's now move over to a discussion about ASW's acquisition. A very positive and strategic move for us in November was our acquisition of a specialty steel producer located in Welland, Ontario named ASW Steel. ASW was acquired for a total of approximately $13 million including debt assumed.

現在讓我們來討論一下 ASW 的收購。11 月對我們來說非常積極的策略舉措是收購了位於安大略省韋蘭的一家名為 ASW Steel 的特殊鋼生產商。ASW 的收購總價約為 1,300 萬美元，其中包括承擔的債務。

With annual revenue of approximately CAD65 million, ASW is a relatively small company having approximately 130 employees. It's located just across the Canadian border due north of Buffalo. The company provides us with a broad cross-section of metals chemistries that we need to expand our penetration into the open die market.

ASW 是一家規模相對較小的公司，年收入約 6,500 萬加元，約有 130 名員工。它位於布法羅以北的加拿大邊境對面。該公司為我們提供了廣泛的金屬化學產品，我們需要這些來擴大我們對開放式模具市場的滲透。

This is a bolt-on acquisition, meaning that we don't expect any significant cost reduction synergies. However, and much more importantly, this capability positions Union Electric Steel to forge different materials and attack new, different verticals in the open die industry.

這是一次補強收購，這意味著我們預計不會產生任何顯著的成本降低綜效。然而，更重要的是，這種能力使聯合電工鋼鐵公司能夠鍛造不同的材料，並進入開放式模具行業中新的、不同的垂直領域。

An example regards the recent strong resurgence in fracking block orders in the first quarter of 2017 that specifies stainless steel material. ASW makes various grades of stainless. Along with our new heat treat capital project that was completed in October, ASW is the last missing resource that we needed for our diversification plan.

一個例子是最近 2017 年第一季水力壓裂訂單的強勁復甦，其中指定了不銹鋼材料。ASW 生產各種等級的不銹鋼。連同 10 月完成的新熱處理資本項目一樣，ASW 是我們多元化計劃所需的最後一個缺失的資源。

We had been looking at ASW for almost a year and a half and liked their metals capability. So we initiated serious discussions a few months prior and closed the deal in November.

我們已經關注 ASW 近一年半了，並且喜歡他們的金屬能力。因此，我們在幾個月前就開始了認真的討論，並在 11 月完成了交易。

And the timing couldn't have been better. Already Union Electric Steel and ASW are working on our growth strategy. In the few months since the acquisition ASW has generated positive operating income for the Company with the exception of December when they absorbed a $1.5 million reserve against receivables due to the declaration of Chapter 11 bankruptcy by a customer.

而且時機再好不過了。Union Electric Steel 和 ASW 已經在製定我們的成長策略。在收購後的幾個月裡，ASW 為公司帶來了正的營業收入，但12 月除外，當時他們因客戶宣布《破產法》第11 章破產而吸收了150 萬美元的應收帳款準備金。

Roll market trends. A lot of positive change has occurred over the past few months. Steel pricing around most of the world is up significantly and in some cases up hundreds of dollars per ton. Most of our large steel producing customers are reporting a return to profitability. Roll purchases are up.

捲筒市場趨勢。過去幾個月發生了很多積極的變化。全球大部分地區的鋼材價格大幅上漲，在某些情況下每噸上漲數百美元。我們的大多數大型鋼鐵生產客戶都報告已恢復盈利。卷材採購量上升。

Now that's the first time you have ever heard me say that. Orders for cast roll, which were so depressed in 2016, are up significantly, so much so that we have been compelled to delay the idling of our Avonmore, Pennsylvania manufacturing plant in order to meet delivery deadlines. But because we are not yet convinced that this is not a bubble as a result of the cast roll inactivity of last year, we are proceeding with the idling of the melt shop on April 1.

這是你第一次聽我這麼說。鑄輥訂單在 2016 年非常低迷，但現在大幅增加，以至於我們不得不推遲賓夕法尼亞州埃文莫爾製造工廠的閒置，以趕上交貨期限。但由於我們尚未確信這不是去年鑄輥閒置造成的泡沫，因此我們將於 4 月 1 日繼續進行熔煉車間的閒置。

As a reminder, this plant was selected for idling due to its high cost, lower efficiency and noncompetitive nature. At this time it is unknown how long the idling may last, but we are still projecting months. Once we are convinced that the market demand for cast rolls is not a bubble and will be sustained, we will reevaluate the idling of Avonmore.

提醒一下，該工廠因其成本高、效率低且不具競爭力而被選擇閒置。目前尚不清楚空轉會持續多久，但我們仍在預測幾個月。一旦我們確信鑄卷的市場需求不是泡沫並將持續下去，我們將重新評估雅芳莫爾的閒置情況。

With the stronger cast roll presence internationally that the Akers acquisition provides us, we've been doing very well in increasing backlog of both forged and cast roll orders. As I mentioned previously, we are also getting price increases. While I hope there is more price to be obtained in time, I don't want to disclose our future pricing strategy. But I will say that I am quite encouraged by the progress that our salesforce has made.

收購 Akers 後，我們在國際上擁有了更強大的鑄軋輥業務，因此我們在增加鍛造和鑄軋輥訂單積壓方面做得非常好。正如我之前提到的，我們的價格也在上漲。雖然我希望及時獲得更多的價格，但我不想透露我們未來的定價策略。但我要說的是，我們的銷售團隊的進步讓我深受鼓舞。

Now I want to caution everyone to understand certain realities of the roll business. The majority of the rolls that we are manufacturing and shipping in the first quarter are from orders we received late in the second quarter of 2016 and, therefore, don't reflect an increase in margin due to price increase. Any improvement in gross margin in the first quarter will primarily stem from last year's synergy capture and cost reductions.

現在我想提醒大家了解軋輥行業的某些現實情況。我們第一季生產和出貨的大部分捲材來自 2016 年第二季末收到的訂單，因此，並未反映出因價格上漲而導致的利潤增加。第一季毛利率的任何改善將主要源自於去年的綜效和成本削減。

We expect margin improvement due to price increases to begin to occur late in the second quarter. Additionally, volumes are up in Q1 year over year. Therefore, our fixed cost absorption should be higher.

我們預計，由於價格上漲，利潤率將在第二季末開始出現改善。此外，第一季的銷量較去年同期有所增加。因此，我們的固定成本吸收應該會更高。

I'll talk a little bit about the frac block business. Fracking block inquiries have been much stronger than expected so far this year, and we have been quite successful receiving orders. As the vast majority of these block orders are for stainless steel, as opposed to the historical prevalence of alloy steel, the ASW acquisition has dramatically improved our competitive positioning. If this level of activity continues, we could manufacture volumes well in excess of our strong performance in 2015.

我將談談壓裂塊業務。今年到目前為止，水力壓裂區塊的詢價比預期要強得多，我們非常成功地收到了訂單。由於這些大宗訂單中的絕大多數都是不銹鋼，而不是歷史上盛行的合金鋼，因此收購 ASW 大大提高了我們的競爭地位。如果這種活動水準持續下去，我們的產量可能會遠遠超過 2015 年的強勁表現。

Air and Liquid Systems. Once again our Air and Liquid Systems segment performed well in the fourth quarter and for 2016, achieving their operating income plan. The only issue in this segment was limited progress on the top line by Aerofin, our heat exchanger business, offsetting the coal-fired power industry market decline.

空氣和液體系統。我們的空氣和液體系統部門在第四季和 2016 年再次表現出色，實現了營業收入計畫。該細分市場的唯一問題是我們的熱交換器業務 Aerofin 的營收進展有限，抵消了燃煤發電行業市場的下滑。

Consequently, year-over-year sales for the entire segment were down slightly. However, I'm convinced that our current marketing strategies to replace the slowness in that market are taking hold and should show improvement in the second half of 2017. Meanwhile, the two other businesses in the segment are off to a strong start.

因此，整個細分市場的銷售額較去年同期略有下降。然而，我相信我們目前的行銷策略正在紮根，以取代該市場的緩慢發展，並應在 2017 年下半年有所改善。同時，該領域的另外兩項業務也取得了良好的開端。

China Masteel joint venture restructuring. The restructuring of our historically poor performing Chinese joint venture, Union Electric Steel MG Roll Company, was completed in November. The joint venture added a third partner, another Chinese roll manufacturer named Jiangsu Gongchang Roll Company.

中國馬鋼合資重組。我們歷史上業績不佳的中國合資企業聯合電鋼MG軋輥公司的重組已於11月完成。該合資企業增加了第三個合作夥伴，另一家中國軋輥製造商，名為江蘇工昌軋輥有限公司。

Now the three owners, Masteel Group Holding Company, Union Electric Steel Hong Kong and Gongchang, have ownership positions of 34%, 33% and 33% respectively. We sold a portion of our equity and expect payments of approximately $2.5 million in installments to be completed over three years.

目前，馬鋼集團控股公司、聯合電鋼香港公司和共昌公司三個所有者的持股比例分別為34%、33%和33%。我們出售了部分股權，預計三年內分期付款約 250 萬美元。

We are very familiar with Gongchang. They have become the day-to-day operator of the restructured joint venture. In fact, Ampco-Pittsburgh has a 24% indirect interest in Gongchang through another joint venture.

公場我們都很熟悉。他們已成為重組後合資企業的日常營運商。事實上，Ampco-Pittsburgh 透過另一家合資企業間接持有共昌 24% 的權益。

The Company has been profitable recently and is very competitive within China and beyond. I believe that the new structure will result in lower costs and increased competitiveness, ultimately providing profit and dividends for the three shareholders. As you know, we have been working on the restructuring for a long time and I am very pleased that it is now complete.

公司近期已實現獲利，在國內外具有很強的競爭力。我相信新的架構將降低成本並提高競爭力，最終為三大股東帶來利潤和股利。如您所知，我們長期以來一直致力於重組工作，我很高興重組工作現已完成。

New product delivery. Behind the scenes, the Union Electric Steel Akers combination has been working on delivering new high-tech products for the roll industry. Prototype test rolls have been installed for several months at a few steel manufacturers in the Western world and they have had great performance success.

新產品交付。在幕後，Union Electric Steel Akers 組合一直致力於為軋輥產業提供新型高科技產品。原型測試輥已經在西方世界的一些鋼鐵製造商安裝了幾個月，並且取得了巨大的性能成功。

We expect that a technical presentation of the performance results to the industry will be made in the second quarter with commercialization of one early in the third quarter, another product in the fourth quarter and a third product in the first half of 2018. Perhaps I will have an update on our May call or if not during our second-quarter call.

我們預計，將在第二季度向業界進行性能結果的技術演示，其中一個產品將在第三季度初商業化，另一個產品將在第四季度商業化，第三個產品將在2018 年上半年商業化。也許我會在五月的電話會議上或在第二季的電話會議上了解最新情況。

So let's now look ahead. Before we look ahead to the first quarter of 2017 and the remainder of the year, I'd like to point out that for those of you who have been owners of our stock since the beginning of my term, we have been on a two-year journey to turn around Ampco-Pittsburgh, to put a growth platform in place, to restructure the Company, to make it more competitive and more efficient and to strengthen its overall capability within its markets while being introduced into new markets.

現在讓我們展望未來。在我們展望 2017 年第一季和今年剩餘時間之前，我想指出，對於那些自我任期開始以來一直持有我們股票的人來說，我們一直處於兩個-扭轉Ampco-匹茲堡的一年旅程，建立成長平台，重組公司，使其更具競爭力和效率，並在引入新市場的同時增強其在市場中的整體能力。

2016 was a very important year for the Company. We truly became a stronger international roll producer. We secured the potential for penetration into a very large open die forge market through the second acquisition, ASW.

2016年對公司來說是非常重要的一年。我們真正成為更強大的國際卷材生產商。透過第二次收購 ASW，我們獲得了進入非常大的開放式模鍛市場的潛力。

For two years we have worked on lowering our costs, restructuring what we do and how we do it, bringing on new talent and developing new technology. At this time, I am convinced that we have made major progress in all of these areas. Now with the potential for a cooperative market in both volume and price and with an effective diversification strategy to implement, a new Ampco-Pittsburgh should be on the verge of delivering positive performance.

兩年來，我們致力於降低成本、重組我們的業務和工作方式、引進新人才和開發新技術。此時此刻，我確信我們在所有這些領域都取得了重大進展。現在，憑藉數量和價格的合作市場潛力，以及實施有效的多元化策略，新的 Ampco-匹茲堡應該即將取得積極的業績。

Obviously, I am optimistic about the short-term future of the Company as well as the long-term. What can we expect in 2017? Well, as long as the market continues to provide optimism in both metals and oil and gas, we expect to improve our performance over the year progressively.

顯然，我對公司的短期未來和長期未來都持樂觀態度。2017年我們可以期待什麼？只要市場繼續對金屬、石油和天然氣市場保持樂觀態度，我們預計今年的業績將逐步改善。

At this time, I do not expect a profitable first quarter, primarily because we are dealing with older orders that haven't included any price increase and low frac block shipments in January and February. The second-quarter idling of Avonmore will have negative costs associated with lower fixed cost absorption and with the reduction in force due to various benefits that will be paid to the workers via the collective bargaining agreement that's in place.

目前，我預計第一季不會獲利，主要是因為我們正在處理較舊的訂單，其中不包括任何價格上漲以及一月和二月的低壓裂塊出貨。埃文莫爾第二季的閒置將產生負成本，這與固定成本吸收降低以及由於透過現有集體談判協議向工人支付的各種福利而導致的勞動力減少有關。

However, block shipments are expected to increase significantly from the first quarter. Heavy roll production is projected for all plants throughout the Company. But it's too early to project financial performance for the quarter.

然而，預計批量出貨量將較第一季大幅增加。預計公司所有工廠都將生產重型捲材。但現在預測本季的財務表現還為時過早。

Summarizing, I expect that our financial performance in 2017 should show progress, much progress, over the 2016 story that I talked about at the beginning of this call. We will now take your questions.

總而言之，我預計我們 2017 年的財務表現應該比我在本次電話會議開始時談到的 2016 年的故事顯示出進步，很大的進步。我們現在將回答您的問題。

(Operator Instructions) Albert Sebastian, Prospect Advisors.

（操作員說明）Albert Sebastian，Prospect Advisors。

Good morning, ladies and gentlemen. First question is just I'm trying to understand the pricing. It seems as though you have initiated price increases and they have not been followed by your competitors.

早安，女士們，先生們。第一個問題是我想了解定價。似乎您已經開始漲價，而您的競爭對手卻沒有跟進。

So I'm trying to understand the industry dynamics here, why your competitors seem to be able to underprice you. In the roll business is it strictly a commodity business or is there something that exists in the nature of the business that would allow one to charge a premium price due to the quality of the product, the service or something else?

所以我試著去了解這裡的產業動態，為什麼你的競爭對手似乎能夠壓低你的價格。在卷材業務中，它是嚴格意義上的商品業務，還是業務性質中存在某些因素，允許人們因產品品質、服務或其他原因收取溢價？

Well, I think that to address the second half of the question first, I think that the market conditions for our customers allowed them because of their reduced utilization of their manufacturing facilities to pursue commodity or low performance, low performing roll purchases because they simply didn't need to run continuously and at a high level of utilization. So a Company such as ours who can provide and has historically provided high-performing rolls is at a somewhat disadvantaged position from getting price increases. So that's the first point.

好吧，我認為首先要解決問題的後半部分，我認為我們的客戶的市場條件允許他們，因為他們減少了生產設施的利用率來追求商品或低性能、低性能的捲採購，因為他們根本沒有不需要以高利用率連續運作。因此，像我們這樣能夠提供並且歷史上一直提供高性能軋輥的公司在價格上漲方面處於某種不利地位。這是第一點。

However, there are still customers who, of course, do prefer higher performing rolls for less maintenance costs and longer performance. What happened last year was we felt being such a large producer, especially in the Western part of the world, that it was appropriate for us to take the lead when we announced the price increase early in the second quarter last year. We felt that it was very important to serve notice that we were not in a position because of the performance of the Company to continue to offer price decreases.

然而，當然，仍然有一些客戶更喜歡性能更高的輥，以減少維護成本並獲得更長的性能。去年發生的事情是，我們覺得作為一個如此大的生產商，特別是在世界西部地區，當我們在去年第二季度初宣布提價時，我們帶頭是合適的。我們認為，通知我們由於公司的業績而無法繼續降低報價是非常重要的。

If you remember some of the things I said during the call when we announced that last year, we knew there were risks. And when you consider how depressed the market was in 2016 and how the cast roll business in particular took another step change downward in decline, our competitors were all struggling for volume. And I suppose early in that period of time they used that opportunity to get more fixed cost absorption and to take that business.

如果你還記得去年我們宣布這項消息時我在電話中所說的一些話，我們就知道有風險。當你考慮到 2016 年市場有多麼低迷，尤其是鑄輥業務如何進一步下滑時，我們的競爭對手都在為銷量而苦苦掙扎。我想在那段時間的早期，他們利用這個機會來吸收更多的固定成本並獲得這項業務。

But it began to change in the third quarter and I think it began to change for a couple of reasons. I think that the most important reason was that the steel companies in the third quarter began to raise prices, the tariffs were put in place and prices began to increase everywhere, especially in North America, less so in Europe but and this is very important, also in Europe including China. And that trend, by the way, has continued.

但它在第三季開始發生變化，我認為它開始發生變化有幾個原因。我認為最重要的原因是鋼鐵企業在第三季開始漲價，關稅到位，各地價格開始上漲，尤其是北美，歐洲較少，但這點非常重要，也包括中國在內的歐洲。順便說一句，這種趨勢仍在繼續。

So once our customers began to show profits and report profits, and I think that began in the third quarter for some of them, I think our competition began to understand that they too could improve the situation for themselves and increase price. At that time we were already beginning to see, as I said in the presentation, spotty price increases. In the fourth quarter, that began to change and the price increases began to get more steady.

因此，一旦我們的客戶開始顯示利潤並報告利潤，我認為其中一些客戶從第三季開始，我認為我們的競爭對手開始明白他們也可以改善自己的情況並提高價格。正如我在演示中所說，當時我們已經開始看到價格不穩定的上漲。第四季度，這種情況開始發生變化，價格上漲開始變得更加穩定。

In fact, price decreases in the fourth quarter were no longer requested which was the first time in five years. So I think it's a complicated story that took a period of time, but I think that now we are in a different situation than we were three-quarters of a year ago and we can expect perhaps even more price increases as time goes on.

事實上，第四季不再要求降價，這是五年來的第一次。所以我認為這是一個複雜的故事，花了一段時間，但我認為現在我們的情況與四分之三年前不同，隨著時間的推移，我們可以預期價格可能會上漲更多。

Okay, let me ask one other quick question. On the ASW acquisition, what's the historical EBITDA or operating profits associated with that Company?

好吧，讓我再問一個簡單的問題。在 ASW 收購中，與該公司相關的歷史 EBITDA 或營業利潤是多少？

Yes, Albert, this is Mike. You know, we don't, we are not going to really want to disclose much below the segment level. But just to give you a feel, the company ASW when we made the acquisition they were profitable at the EBITDA level.

是的，阿爾伯特，這是麥克。你知道，我們不知道，我們不會真正想在細分級別以下披露太多資訊。但只是為了讓你感覺一下，當我們收購 ASW 公司時，他們的 EBITDA 水平是盈利的。

I think we said that on the original disclosure. And we are seeing that, as well, currently a couple of months in here. With the exception of that receivable reserve that we took on an underlying basis the Company is still profitable at the EBITDA level.

我想我們在最初的披露中是這麼說的。我們在這裡也看到了幾個月的情況。除了我們作為基礎的應收帳款準備金外，公司在 EBITDA 水平上仍然盈利。

Yes, but let me disclose a little bit more about that, Albert. ASW was in a very difficult financial position when we acquired them. They were owned by a couple of investors and their business was suffering from the same market depressed conditions that the roll industry was suffering from.

是的，但讓我透露更多一點，艾伯特。當我們收購 ASW 時，他們的財務狀況非常困難。他們由幾個投資者擁有，他們的業務正遭受與軋輥行業相同的市場低迷狀況的困擾。

And because of that sustained period of time they were beginning to get into a debt position that was limiting them in getting working capital to grow and improve the business. That's why we were able to purchase them basically for $3.5 million plus assume their debt and provide them with working capital that has allowed them to grow.

由於這段時間的持續，他們開始陷入債務狀況，這限制了他們獲得營運資金來發展和改善業務。這就是為什麼我們能夠以 350 萬美元的價格收購他們，並承擔他們的債務，並為他們提供營運資金，使他們能夠成長。

Since that time, since we have made the acquisition, we are seeing ASW surpass the business plan that we put together for them already and we expect that to get even better, probably mostly due to the stainless steel fracking block business that they are providing for us. They have a very attractive cost structure in terms of competition, and we expect them to begin to grow now that they have some working capital backing for that position.

從那時起，自從我們進行收購以來，我們看到 ASW 超越了我們已經為他們制定的業務計劃，我們預計情況會變得更好，這可能主要歸功於他們提供的不銹鋼壓裂塊業務我們。就競爭而言，它們的成本結構非常有吸引力，我們預計它們將開始成長，因為它們有一些營運資金支持這一地位。

Okay, that's very good. Thank you so much, John and Mike. Thank you.

好的，那很好。非常感謝你們，約翰和麥克。謝謝。

Michael Gaugler, Janney Montgomery Scott.

麥可高格勒，珍妮蒙哥馬利史考特。

Good morning, everyone. John, you had mentioned some -- had some positive comments on open die forge market as it pertains to fracking.

大家，早安。約翰，您曾提到一些關於開放式模鍛市場的正面評論，因為它與水力壓裂有關。

I'm just wondering when you look at where your shipments are headed in that market, are they primarily to oil and gas basins or are they primarily to gas such as Marcellus? The reason I am asking is the outlook for gas pricing looks relatively good and the rig counts have been improving across the board for both oil and gas. But the oil market is looking a little week at the moment, so I'm wondering what your mix, if you can share that, is like.

我只是想知道，當您查看該市場的發貨方向時，它們主要是運往石油和天然氣盆地還是主要運往馬塞勒斯等天然氣？我問的原因是天然氣定價前景看起來相對較好，而且石油和天然氣的鑽機數量一直在全面改善。但石油市場目前看起來有點週，所以我想知道你的組合（如果你能分享的話）是什麼樣的。

Honestly, Mike, I don't know and can't give you a really good definitive answer on that. I can tell you that our orders are from a broad number of customers. I know that many of those, if not all of those, customers are selling to the drillers in shale deposits.

老實說，麥克，我不知道，也無法就此給你一個非常好的明確答案。我可以告訴你，我們的訂單來自廣大客戶。我知道，其中許多（如果不是全部）客戶都在向鑽探商出售頁岩礦藏。

So I will have an answer for you on the next call. But I can tell you that the speed with which this has happened and the fact that fracking has been going on over the past couple of years at a much reduced level, but it has still been going on, and there hasn't been a significant amount of block inventory replacement provided to these drillers.

所以我會在下次電話中回覆你。但我可以告訴你，這種情況發生的速度以及過去幾年中水力壓裂的水平大大降低的事實，但它仍然在進行，並且沒有發生重大的變化。 。

So we are a little bit concerned that there may be a bubble here too where people are replenishing their inventory so that in the event that oil would continue to drop, as it did last week, that we expect that some of these ongoing and future shipments and orders would still occur. I think it's just too early, Mike.

因此，我們有點擔心這裡也可能存在泡沫，人們正在補充庫存，因此，如果石油像上週那樣繼續下跌，我們預計其中一些正在進行的和未來的發貨並且訂單仍然會發生。我認為現在還為時過早，麥克。

Understood. I'm not very --

明白了。我不太——

But I'll get that answer for you.

但我會為你找到答案。

I'm not very concerned about a tail-off in oil because, as you know, John, in your back market there is a lot of pipeline capacity coming online in Marcellus. It's going to take many, many Bcfs of gas to fill those pipes and they have been moving forward on those projects. So that should be a net benefit even if oil weakens a bit as long as you are selling into that Marcellus market.

我不太擔心石油的減少，因為約翰，如你所知，在你的後市場，馬塞勒斯有大量的管道產能上線。需要很多很多的天然氣來填充這些管道，他們一直在推進這些計畫。因此，即使石油價格略有走軟，只要您向馬塞勒斯市場出售，這也應該是淨收益。

And then one other one. You also mentioned you were expecting gross margin improvement in the back half of the year, and I'm wondering if there's a way you can quantify it without giving formal guidance? And when I look at your historical cost of sales they're somewhere around the 80% level, and I'm just wondering do they come down into the 75% or 70% level or what kind of a -- maybe on a basis point perspective what you are thinking the improvement could be in the back half of the year versus the first half?

然後是另外一張。您還提到您預計下半年毛利率會有所改善，我想知道是否有一種方法可以在不提供正式指導的情況下對其進行量化？當我查看你們的歷史銷售成本時，它們大約在 80% 的水平左右，我只是想知道它們是否會下降到 75% 或 70% 的水平，或者是什麼樣的——也許是在一個基點上你認為下半年與上半年相比會有哪些改進？

That's a good question. I think that the fourth quarter, except for all the noise that had to occur in December with the miscellaneous adjustments and write-offs that occurred, that we were seeing an improvement over 2016 -- excuse me, 2015 of about a little more than 200 basis points. So our cost reduction programs from 2015 and the early ones in 2016 were starting to take hold but that was all cost.

這是個好問題。我認為第四季度，除了 12 月發生的各種調整和沖銷所帶來的噪音之外，我們看到比 2016 年有所改善——對不起，2015 年大約有 200 多一點基點。因此，我們從 2015 年開始實施的成本削減計劃以及 2016 年早期的成本削減計劃開始生效，但這只是成本。

If you consider the $6 million that I talked about that -- of cost reduction, further cost reductions in the two segments and the potential for $8 million from the 2016 synergies that's another $14 million, spread across the sales amount that's another $14 million divided by, pick a number, 350, 400 just to be round numbers, that's another 3 percentage points. And then we are looking for price increase, and I really don't think I should talk about that, but it would be additional. So if you add all those things together over the course of, let's say, 18 months beginning at the early 2015 we should be talking about something that's considerably north of 500 basis points by the second half of the year from 2015.

如果你考慮到我談到的600 萬美元——成本削減、兩個細分市場的進一步成本削減以及2016 年協同效應帶來的800 萬美元的潛力，那麼這就是另外1,400 萬美元，分攤在另外1,400 萬美元的銷售額中除以，選一個數字，350、400只是四捨五入，那就是另外3個百分點。然後我們正在尋求價格上漲，我真的不認為我應該談論這個，但這將是額外的。因此，如果將所有這些因素加在一起，假設從 2015 年初開始的 18 個月內，我們所討論的情況應該是從 2015 年下半年開始大幅上漲 500 個基點。

That's sizable. That's all I had.

那是相當大的。這就是我所擁有的一切。

Yes, well, we have been working hard.

是的，好的，我們一直在努力。

All right, thank you.

好吧。

John Walthausen, Walthausen & Co.

約翰‧沃爾索森 (John Walthausen)，沃爾索森公司

Yes, good morning. My question is about ASW integration. You have articulated well how it's working well with Union Electric.

是的，早安。我的問題是關於反潛戰整合。您已經很好地闡述了它如何與聯合電力公司良好合作。

I guess the two questions I have are how big a customer of ASW is Union? And I take it that that was a relationship that predated the acquisition, but you talked about significant cost savings at Union post the acquisition. Can you explain a little bit how that works?

我想我有兩個問題是 ASW 的客戶有多大？我認為這是在收購之前就存在的關係，但您談到了收購後聯盟的顯著成本節省。您能解釋一下它是如何工作的嗎？

Yes, I think I understand the question. We were previously a customer of ASW, and we would get certain heats done by them for us primarily for the alloys that we were supplying into the fracking industry in 2015 and some of the products that we were trying to sell through Alloys Unlimited, our small business that we have in Ohio. So there's been a fairly long-standing relationship.

是的，我想我理解這個問題。我們以前是 ASW 的客戶，我們會由他們為我們完成某些加熱，主要是我們在 2015 年向水力壓裂行業供應的合金，以及我們試圖透過 Alloys Unlimited（我們的小型公司）銷售的一些產品。我們在俄亥俄州的業務。所以，雙方的關係已經相當長久了。

But the volumes that we were buying at those periods of time were relatively small. Once we turned the corner for fracking this year and once the materials of construction for those blocks changed from an alloy steel to a stainless steel, we began to require a consistent weekly production of heats from ASW. ASW is also providing some of that same material for other people in the industry.

但我們當時購買的數量相對較小。一旦我們今年扭轉了水力壓裂的困境，一旦這些區塊的建造材料從合金鋼變為不銹鋼，我們就開始要求 ASW 每週持續生產熱能。ASW 也為業內其他人員提供一些相同的材料。

In fact, they are a very solid, very good stainless steel provider in North America in general. So I would say that from 2016 prior to the acquisition to where we are now there's almost no comparison. We were probably, I can't give you a number of tons, but we are a significant purchaser of material.

事實上，總的來說，他們是北美非常可靠、非常好的不銹鋼供應商。所以我想說，從 2016 年收購之前到我們現在的情況幾乎沒有可比性。我們可能無法提供具體數量，但我們是材料的重要購買者。

But where we expect to go in the future, and for the near future we -- as we penetrate other verticals in the open die industry hoping to be somewhat successful, we will still be a very small player in that business. But what we lacked was a competitive supply of metal. In other words, for anything that we were going to try to accomplish in the open die business we were going to have to buy that metal and pay a profit to somebody else who was manufacturing it.

但我們期望未來的發展方向，在不久的將來，當我們滲透到開放式模具行業的其他垂直領域並希望取得一定成功時，我們仍然是該行業的一個非常小的參與者。但我們缺乏的是有競爭力的金屬供應。換句話說，對於我們想要在開模業務中實現的任何目標，我們都必須購買這種金屬並向製造它的其他人支付利潤。

We liked ASW because we liked their cost structure and their competitive nature and as you point out, we had a fairly long-standing relationship and knew the people well. We looked at a bunch of metals providers both in North America and internationally and ASW is the one we chose. We think we got it for an incredible bargain price and we expect to continue increasing the purchases that we at Union Electric Steel make from them.

我們喜歡 ASW，因為我們喜歡他們的成本結構和競爭本質，正如您所指出的，我們有著相當長期的合作關係，並且對員工很了解。我們考察了北美和國際上的眾多金屬供應商，ASW 是我們選擇的供應商。我們認為我們以令人難以置信的便宜價格獲得了它，我們預計將繼續增加我們聯合電力鋼鐵公司從他們那裡的採購量。

I hope that answered your question, John.

我希望這回答了你的問題，約翰。

It kind of does. I guess the other part of the question, of course, from your filings there is the snapshot of how they looked when you acquired them which is kind of discouraging. But if I'm understanding it correctly, in spite of the fact that most small steel mills struggle and ASW seems to have had an on and off type of history, it's like technically their ability to produce the grades of steel that you and other people want is at a good cost, is very good, so that while the availability of the steel to you helps Union if we just looked at it as a separate segment it would also be earning its cost of capital plus?

確實如此。當然，我想問題的另一部分是，從您的文件中可以看到您購買它們時它們的外觀快照，這有點令人沮喪。但如果我理解正確的話，儘管事實上大多數小型鋼廠都在苦苦掙扎，而且 ASW 似乎有一段斷斷續續的歷史，但從技術上講，他們有能力生產你和其他人所需要的鋼種想要的成本很高，非常好，因此，雖然鋼材的可用性對聯盟有幫助，但如果我們只是將其視為一個單獨的細分市場，那麼它也會賺取資本成本加嗎？

Yes, yes, I think there was a -- to run a mini-mill, to make steel like ASW does there's quite a bit of capital that's required. There's a fairly significant amount of maintenance. The price of scrap even though it's low or has in recent history been quite low there's still a lot of it required.

是的，是的，我認為經營一家小型鋼廠，像 ASW 那樣生產鋼鐵，需要相當多的資本。維護工作量相當大。儘管廢鋼的價格很低或在最近的歷史中相當低，但仍需要大量廢鋼。

So there is a substantial amount of working capital that's necessary. The owners of the Company since it restarted, and it restarted in approximately 2009, have been suffering through this long period of weak market, of a weak market situation. So I'm sure that there was a fatigue issue and these investors no longer wanted to provide more capital and as a result of that, ASW was constantly near their debt limit.

因此，需要大量的營運資金。公司業主自2009年左右重啟以來，一直在經歷這段長期的市場疲軟、市場疲軟的局面。因此，我確信存在疲勞問題，這些投資者不再想提供更多資本，因此，ASW 一直接近其債務上限。

They had a credit arrangement but they were bumping against it and they weren't producing the financial results that would encourage the banks to increase that limit. So it was a Catch-22 for them. And I think their business model was solid.

他們有信貸安排，但他們遇到了困難，而且他們沒有產生鼓勵銀行提高限額的財務表現。所以這對他們來說是第二十二條軍規。我認為他們的商業模式是可靠的。

I think we are going to prove that instantly or immediately. And with a little bit of help from metals, the metals industry in general in North America I think that they have a real opportunity to grow and provide very positive results in and of themselves without the help of Union Electric Steel's frac block orders.

我認為我們將立即證明這一點。在金屬的一點幫助下，我認為北美的整個金屬產業在沒有聯合電力鋼鐵公司壓裂塊訂單的幫助下，有真正的發展機會並提供非常積極的成果。

So if the fracking industry suddenly began to deteriorate, it would have a negative, a sizable negative impact, of course, on ASW. But I do not think that it would necessarily mean that they would produce losses.

因此，如果水力壓裂產業突然開始惡化，當然會對 ASW 產生負面影響，相當大的負面影響。但我並不認為這一定意味著他們會產生損失。

Okay, that's helpful. And then I guess the last question, if I may, was you mentioned in the roll business I believe three new product lines that you are introducing over the next couple of quarters. Can you give us a little bit more of an understanding of whether this is just new products in the normal rate that Union, etc., has been introducing them or whether this is something that can meaningfully improve your competitive position?

好的，這很有幫助。然後我想最後一個問題，如果可以的話，是您在卷材業務中提到的，我相信您將在接下來的幾個季度推出三個新產品線。您能否讓我們更了解這是否只是 Union 等公司以正常速度推出的新產品，或者這是否可以有意義地提高您的競爭地位？

Well, I think the latter part of the question remains to be seen. I will characterize these new products as being products that have longer longevity than anything that is out in the market, so based on the test results that we've been seeing.

嗯，我認為問題的後半部分還有待觀察。根據我們所看到的測試結果，我將這些新產品描述為比市場上任何產品壽命更長的產品。

The Company, Ampco-Pittsburgh and Akers, have not really released new products that have had much of an impact in at least two years. Actually for Ampco-Pittsburgh in my entire term of 2.25 years we haven't really released anything new.

Ampco-Pittsburgh 和 Akers 公司至少在兩年內還沒有真正發布過產生很大影響的新產品。事實上，在我 2.25 年的任期內，Ampco-Pittsburgh 並沒有真正發布任何新內容。

The importance of new products, of course, is that they have sufficient performance improvement that we can charge a premium. And that's always been the criteria of success that I've set for Union Electric Steel and its R&D organization.

當然，新產品的重要性在於它們有足夠的性能改進，我們可以收取溢價。這一直是我為聯合電力鋼鐵公司及其研發組織設定的成功標準。

Now that we've doubled the size of that organization and we've doubled the amount of money that we allow them to spend since the acquisition, these guys have been putting out some good work. These test rolls have been in place for, I believe, more than six months. So this is an area where we expect positive benefits.

現在我們已經將該組織的規模擴大了一倍，並且自收購以來我們允許他們花費的資金也增加了一倍，這些人已經做出了一些出色的工作。我相信這些測驗卷已經使用了六個多月。因此，這是一個我們期望獲得正面效益的領域。

Okay, good. That's very helpful. Thank you.

好的。這非常有幫助。謝謝。

(Operator Instructions) Justin Bergner, Gabelli & Co.

（操作員說明）Justin Bergner, Gabelli & Co.

Good morning, John. Most of my questions have been asked. Just one last question.

早安，約翰。我的大部分問題都被問到了。只是最後一個問題。

You talked about increasing price but clearly as a consumer of steel your costs are going up, as well. Are these price increases that are going through merely the reflection of increasing steel costs on the input side or are they more than that?

您談到了價格上漲，但顯然作為鋼鐵消費者，您的成本也在上漲。這些價格上漲只是反映了投入方面鋼鐵成本的增加還是更多？

Well, let me think about that for a second. For input, things like scrap, transportation, if oil prices go up, etc., there is a standard practice in our industry which involves automatic surcharges.

好吧，讓我想一下。對於投入，如廢料、運輸、油價上漲等，我們產業有一個標準做法，涉及自動附加費。

So I think that -- and those surcharges while they may lag reality by three to six months and these surcharges are becoming real I guess at this point in time for alloys and for metals or for scrap and not yet for transportation. But I think the answer to your question is they are real. The surcharges will cover the things you're talking about and we should net the increases that we're getting.

因此，我認為，這些附加費雖然可能滯後於現實三到六個月，但我想這些附加費正在成為現實，目前對於合金、金屬或廢料，但尚未針對運輸。但我認為你的問題的答案是它們是真實的。附加費將涵蓋您所談論的內容，我們應該扣除我們獲得的增加費用。

Okay, that's great. And are you also seeing price increases in Europe or is it mainly in North America that price increases are sticking?

好的，太好了。您是否也看到歐洲價格上漲，或者價格上漲主要在北美持續？

We are seeing price increases everywhere, including Asia.

我們看到世界各地的價格上漲，包括亞洲。

Okay.

好的。

And Europe.

還有歐洲。

John, that was it for me. I appreciate the call.

約翰，這就是我的目的。我很感謝您的來電。

And ladies and gentlemen, at this time I am showing no additional questions. I'd like to turn the conference call back over to management for any closing remarks.

女士們、先生們，目前我沒有提出其他問題。我想將電話會議轉回給管理階層，讓他們發表結束語。

Yes, thank you. I do have a closing comment. It's been a long two years for you, the shareholder, as well as for us.

是的，謝謝。我確實有一個結束語。對您、股東以及我們來說，這是漫長的兩年。

I've stretched the people here at Ampco-Pittsburgh to complete all the challenges that were set before them: strategic plans, multiple due diligences for real acquisitions and potential acquisitions, credit agreements, countless action plans to attack costs and efficiencies and new training. With much regret I have to say there was a need for some loyal employees to leave the Company during the restructuring.

我讓 Ampco-Pittsburgh 的員工完成擺在他們面前的所有挑戰：戰略計劃、對實際收購和潛在收購的多重盡職調查、信貸協議、無數旨在降低成本和效率的行動計劃以及新的培訓。非常遺憾的是，在重組過程中，需要一些忠誠的員工離開公司。

When one tries to accomplish a turnaround it usually occurs in a down period. That's when turnarounds are needed. However, in my 13 years as a CEO I have never seen a down market situation that seemingly introduced a new decline every year that had to be overcome.

當一個人試圖扭轉局面時，通常會發生在經濟低迷時期。這時候就需要扭轉局面。然而，在我擔任執行長的 13 年裡，我從未見過市場低迷的情況，似乎每年都會出現新的下滑，必須克服。

But I believe that we are very, very close to our goal of turning around the Company. If we can enjoy just some sustained period of the current market activity I have high hopes for the financial performance of today's Ampco-Pittsburgh Corporation. Thank you very much for your patience and for listening today.

但我相信我們非常非常接近扭轉公司局面的目標。如果我們能夠享受當前市場活動的一段持續時間，我對今天 Ampco-Pittsburgh Corporation 的財務業績寄予厚望。非常感謝您今天的耐心聆聽。

Ladies and gentlemen, that does conclude today's conference call. We do thank you for attending today's presentation. You may now disconnect your lines.

女士們先生們，今天的電話會議到此結束。我們非常感謝您參加今天的演講。現在您可以斷開線路。