Ampco-Pittsburgh's second quarter is the first one in which the company looks like the business it says it wants to be. Forged and Cast Engineered Products - the segment that took a $41.4 million deconsolidation charge when the U.K. cast roll subsidiary entered administration on October 14, 2025 - grew operating income 15% on a U.S.-dollar-adjusted basis in Q2 even as reported sales fell 13.6% on the absence of the U.K. plant. Air and Liquid Processing, the smaller segment that management has been quietly turning into a power-generation and U.S. Navy pump story, lifted operating income 34% on a 1.2% sales gain. Adjusted EBITDA, the company's stated operating-performance metric, rose 22% to $9.8 million at a 9.5% margin, up 240 basis points year over year, with the GAAP-loss comparison flattered only by the absence of last year's $5.9 million U.K. severance charge. Backlog grew 11.6% sequentially to $385.4 million - the highest level in the file, with $144 million of new orders in the quarter, up 50% year over year. The headline bottom line is small, but positive: $1.5 million of net income attributable to Ampco ($0.07 per share) versus a $7.3 million loss a year ago, on revenue of $102.9 million versus $113.1 million. The market priced the operating story: the stock is up roughly 5.3x from its 52-week low of $1.75 set intraday on November 10, 2025 - the day after the U.K. administration was filed - and traded as high as $12.81 on June 15, 2026, before settling at $9.21 on August 12.
The bear case is the balance sheet. Total debt of $137.6 million against $7.0 million of cash gives net debt of $130.5 million; the asbestos liability on the balance sheet totals $184.976 million gross (current $28.0 million + long-term $157.0 million) against $117.0 million of insurance receivable ($19.0 million current + $98.0 million long-term). The company is in a different sort of turnaround than the steel cycle it depends on: the U.K. exit cleaned up a chronic loss-maker, the Sweden facility is now ramping to take its place, and the Air and Liquid Processing segment is on a structural power-generation and defense tailwind. But adjusted EBITDA for the LTM through June 30, 2026 was approximately $30.1 million, against a $7.0 million cash balance and a $29.0 million total liquidity pool. The current debt of $17.3 million includes Industrial Revenue Bonds that can be put back to the company on short notice. The Asbestos Liability has been re-evaluated every year for decades and is matched by long-dated insurance, but it is the single largest liability on the balance sheet by a factor of more than three.
The next three quarters are the test of whether the operating recovery is enough to push through that balance sheet. The narrative question is whether FY2026 adjusted EBITDA can continue to expand toward the segment-level profitability the Sweden ramp and the ALP capacity build make plausible - and whether a single quarter of recovery from the U.K. exit can be sustained while the steel market is still working through 2025's slowdown.