Masha Trainor - VP, General Counsel and Corporate Secretary John Stanik - CEO Dee Ann Johnson - CFO and Treasurer Rhodes Hoover - President and Chief Administrative Officer Kerri Kenney - President, Air and Liquid Systems Corporation

Good morning. My name is Blair and I will be your conference operator today. At this time, I would like to welcome everyone to the Ampco-Pittsburgh Corporate Third Quarter 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Masha Trainor, Vice President, General Counsel and Corporate Secretary, may begin the conference.

Good morning everyone and welcome to our third quarter earnings call. With me today are John Stanik our Chief Executive Officer; Dee Ann Johnson, Chief Financial Officer and Treasurer; Rhodes Hoover, President and Chief Administrative Officer and Kerri Kenney, President of the Air and Liquid Systems Corporation. Before we begin, I need to make the following reminder regarding forward-looking information. Statements or comments made on this call may be forward-looking and may include financial projections or other statements of the Corporation's plans, objectives, expectations, or intention. 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. We do not undertake any obligation to update or otherwise release publicly any revision to our forward-looking statements. I will now turn this call over to our Chief Financial Officer, Dee Ann Johnson.

Thank you, Masha. Good morning everyone. Sales for the third quarter of 2015 were $58 million versus $65 million for the third quarter of 2014, a decrease of $7 million or 10.8%. The decrease is primarily attributable to our Forged and Cast Engineered Products Group. Gross profit as a percentage of net sales was 16.2% for the third quarter of 2015 versus 18.6% for the third quarter of 2014. The decrease is due to lower production levels resulting in an under absorption of fixed costs and lower margins. Selling and administrative expenses were $8.7 million for the third quarter of 2015 in comparison to $9 million for the third quarter of 2014, a decrease of roughly $300,000 or 3%. Other expense fluctuated primarily as a result of changes in foreign exchange gains and losses and lower cost associated with operations previously discontinued. While insignificant for the current year quarter, these combined costs approximated $400,000 for the prior year quarter. As of September 30, 2015 our estimated annual effective income tax rate is expected to approximate 40.1% compared to 31.6% for 2014. The increase is primarily due to favorable adjustments indentified with filing our tax returns. In summary, the Corporation incurred a net loss for the quarter of approximately $1.5 million or $0.14 per common share versus a net loss of $343,000 or $0.03 per common share for the third quarter of 2014. From a segment perspective, sales for our Forged and Cast Engineered Products segment decreased approximately $6.1 million or roughly 14% for the third quarter of 2015 compared to the third quarter of 2014. The decrease is primarily attributable to a lower volume of traditional roll shipments offset by a slight increase of other forging products. An operating loss was incurred for the quarter due to the lower volume of shipments and under recovery of cost resulting from the lower production levels and weaker margins. Additionally weighted average exchange rates used to translate sales of our U.K. operations from the British pound sterling to the U.S. dollar were lower for the third quarter of 2015 than a year ago, which reduced sales by approximately $1.1 million. The change in the weighted average exchange rates did not have a significant impact on operating results for the current quarter. Sales for our Air and Liquid Processing segment for the third quarter decreased by approximately $1.2 million or 5% primarily from a decline in sales of heat exchange coils due to a lower volume of shipments to the fossil fueled utility and industrial markets. Sales of air handling units decreased as a result of low order intake in the later part of 2014 and first quarter of 2015. Sales of pumps increased due to a higher volume of shipments of commercial pumps to the power generation market. Operating income for the third quarter of 2015 for the segment increased however, primarily due to product mix and cost containment. Backlog at September 30, 2015 approximated $143 million in comparison to $168 million at December 31, 2014, a decrease of $25 million or 15%. Backlog for the Forged and Cast Engineered Products Group decreased $30 million as a result of lower demand from roll customers to continue to operate below capacity causing shipments to outpace new orders. Further impacting the roll business is the strong U.S. dollar and British pound sterling against most major international currencies especially the Euro. Backlog for the Air and Liquid Processing Group increased $5 million and benefited from higher order intake for pumps and air handling units while orders for heat exchange coils decreased principally due to reduced activity in the fossil fuel utility in industrial markets. Regarding our balance sheet, cash and cash equivalent equaled $87.4 million at September 30 2015, in comparison to $97.1 million at December 31, 2014, a decrease of $9.7 million. Accounts receivable decreased $8.2 million from year end primarily due to lower revenue in the third quarter of 2015 versus the fourth quarter of 2014 coupled with an increase in days outstanding due to the mix of customers, slower payments by customers, and longer payment terms granted to customers. Inventories increased approximately $7.6 million at September 30 2015 from December 31 2014, primarily due to higher inventory levels for the Forged and Cast Engineered Product segment including higher raw material levels to take advantage of reduced pricing and to a lesser extent delays in the delivery of rolls. Employee benefit obligations decreased at September 30 2015, from year end by approximately $8 million primarily as a result of the partial freezing of the U.S. defined benefit pension plan in the first quarter of the year. Moving on to cash flows. The Corporation generated net cash flows from operating activities of approximately $8.5 million for the current year period in comparison to $9.7 million for the comparable prior year period. The majority of the deterioration is associated with lower earnings. Net cash flows used in investing activities approximated $12.1 million for the nine months ended September 30, 2015 versus $10.1 million for the nine months ended September 30, 2014. And included capital expenditures for our Forged and Cast Engineered Products segment and the purchase of certain assets of Alloys Unlimited & Processing at the end of July for approximately $5 million. As of September 30 2015, we have commitments for future capital expenditures of less than $10 million with about half expected to be carried over into 2016. I will now turn it over to John.

Thank you Dee Ann. Good morning. The third quarter was difficult for Ampco-Pittsburgh. Financial results were in line with the expectations that I communicated to you during our second quarter call. Revenue for UES or the Forged and Cast Engineered Products segment did not reach the level required to generate positive income despite the partial benefit derived from our cost reduction programs. Orders from our two primary markets the steel industry and fracking industry continued to be week in Q2 and at the end of Q1. July was particularly disappointing resulting in a $1.2 million or $0.12 per share loss. There were two expense items that also contributed to the third quarter's loss. Acquisition related due diligence costs and an inventory write-down. These two charges resulted in a $0.05 per share loss in the quarter. So if one does the math, the financial performance for August and September was positive despite the low sales. As has been the case all year long, our Air and Liquid Processing Segments performed well and even exceeded our expectations for the third quarter by a small margin. To review, the majority of the revenue for our Forged and Cast Engineered Products occurs three or more months after receipt of an order. Orders from steel manufactures were very light beginning in March and continuing through part of July. Also, we tried to hold price but this proved difficult to do and as you can see our margins deteriorated by approximately 300 basis points from Q2. Similarly, orders for equipment that we began providing to the fracking industry dropped off significantly in Q2 as oil prices fell resulting in lower demand for our products. Since improvement or recovery in both of these industries is not expected for months. More restructuring must be completed in order for us to generate profit at the level of the business that is available and at current market pricing. There will be more news about this in my fourth quarter call. You'll note that this is the first time, I have mentioned our role in the fracking industry. Fracking operations consume certain forged equipment that we have begun to supply. In fact, fracking opened our forged products comprise a significant part of our market diversification strategy as we plan to utilize our Forging manufacturing assets to participate in this sizable market. Valve Blocks alone are estimated to be as much as $300 million in a typical year. Of course we will continue to supply forged and cast roles globally, little capital expense will be needed to branch out into these new opportunities. The third quarter was an important one for the Corporation as we continue to progress in the turnaround of Ampco-Pittsburg Corporation and there were significant achievements made. Most importantly, we completed our three-year strategic plan and received approval of it by our Board of Directors. The plan, which currently is based entirely on our organic growth provides for double digit revenue growth, a focus on R&D and new products, sales and marketing improvement programs, and continuing cost reduction especially in the area of manufacturing. We have a scheduled a meeting at the New York Stock Exchange next week on November 10, during which time my senior team and I will present a summary of this plan. The Company continue to execute its previously identified cost reduction programs during the third quarter. For example, personnel at corporate head quarters were all relocated to our Carnegie, Pennsylvania office building from Downtown Pittsburg 600 Grant Street. Our lease for the Old Grant street occupancy will end in February 2016, and thus reduce cost at that time. On an annualized basis, savings derived from this one change will be approximately $700,000. We continue negotiations with our Carnegie plant united steelworkers union during the quarter. I believe both parties are worked hard in the past three months and negotiated in good phase. Attentive settlement has been reached and I hope that the contract will be ratified this week so we can move forward together. I believe that the Carnegie plant can play a vital role in our Company's future growth. We begin the integration of our July 29 acquisition, Alloys Unlimited & Processing Incorporated. Alloys Unlimited is a machining and distribution center for Forged products located in Ohio. The operation was relocated in early August and I believe we have achieved normal operation in a relatively quick period of time. The employees have transitioned smoothly and quickly, no customer orders were missed. Now it's time to begin to grow this distribution center. We continue to work on the new bank credit facility. It will be an asset based loan that will establish a level of credits with very few financial covenants. When combined with our cash reserves currently on our balance sheet, the credit facility will provide strategic flexibility allowing Ampco to take advantage of opportunities to improve its future performance through acquisition and other investments. We expect completion of the deal during the fourth quarter. Currently there are several opportunities to acquire companies in our strategic space. The conditions in our markets have been depressed for so long then I believed many quality companies are now in a weakened state or in search of a strategy to create a better future. Ampco has identified attractive targets for merger and acquisition, and has pursued these targets during Q3. It is premature to discuss any details about these opportunities and I won't entertain any questions about them today. However I will say, that I believe there is a number of ways that our Company can become stronger, more flexible, more diverse and a greater marketing force. Work is continued on the project to improve the financial performance of our Chinese joint venture. Currently, we’re working on structural changes that should improve our market approach in our cost space. I hope the action plans can be completed in Q4, however certain government approvals are needed in China and these may delay the end dates into Q1 of 2016. Looking ahead at Q4, at this time we expect revenue for Q4 to improve over Q3 and Q2 provided that our customers don't push orders that are currently scheduled for delivery in Q4 end of Q1 of 2016 that does happen sometimes. From an activity perspective, we expect Q4 to be extremely busy as we continue very important work, and hopefully bring some of this work to a close such as in the credit facility. There will be more expenses for consultant work for M&A activity and the bank deal. Additionally, we will continue to execute our new action plans contained in our strategic plan. We will now take any questions.

Well hopefully, next call will have more reason to talk. I expect our Air and Liquid Processing segment to continue to perform well. With respect to UES or our Forged and Cast Engineered Product segment, it's going to be a difficult time extending into 2016. But we expect to stabilize the performance of this segment. We will make many changes and many improvements. However, since we do not project any substantial market improvements in our two key market steel and fracking for many months, I believe our major performance turnaround for the Corporation may not be immediate but it will occur at least as soon as our markets do and hopefully sooner. All of the ingredients are in place or they will be within weeks. Much has been done in the last 10 months and I continue to be truly excited about our Corporation's future. Thank you.

This concludes today's conference call. You may now disconnect.