Good morning and welcome to the Ampco-Pittsburgh Corporation First Quarter 2018 Earnings Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Melanie Sprowson, Director of Investor Relations. Please go ahead.

Thank you, Carrie, and good morning to everyone joining us on today's first quarter conference call. I am joined by John Stanik, our Chief Executive Officer; and Mike McAuley, Senior Vice President, Chief Financial Officer and Treasurer. 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. 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. 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, please consult the Investors section of the website at ampcopgh.com. Now let me turn this call over to Mike, who will provide an overview of the company's financial performance for the first quarter.

Thank you, Melanie. Good morning to all our listeners today, and thank you for joining the call. Our earning release for the first quarter of 2018 was issued this morning and I hope most of you had a chance to read it. I will give you a financial review for the quarter by taking you through the consolidated P&L, and then I'll provide more color at the operating segment level and then I’ll review some of the key balance sheet and cash flow activity. Before I begin, let me indicate that effective with the beginning of 2018, the Company had implemented few new accounting pronouncements as will be detailed in our Form 10-Q being filed later today. For Ampco-Pittsburgh Corporation only one of those new accounting standards had a significant effect on our Q1 P&L and that is ASU 2017-07 improving the presentation of net periodic pension cost and net periodic post retirement benefit cost. The amended guidance does not change the amount of net periodic benefit cost to Europe to be recognized only where the components of it are to be recognized in the income statement. Previously, all components of net periodic benefit cost were reported above and hence as part of income from operations. Beginning in 2018, only the service cost component remains recorded against income from operations. But the other components like interest cost, expected return on planned assets and the amortization of actuarial losses and prior service cost reside in other income expense net on our P&L. The new standard was required to be adopted retrospectively meeting prior year amounts had been adjusted as if the new standard were in effect. Accordingly, any comparison I’ll make today to the prior year also consider retrospective application of the new standard. Ampco's net sales for the first quarter…

Thank you, Mike. Good morning. As Mike reported revenue for the quarter in Q1 grew by approximately 11% year-over-year and once again we achieved improvement in reducing year-over-year operating loss. Revenue deviated from our expectations in January and February due to light shipments of product in those two months, much of which was due to customer shipment postponements. Naturally this also had a negative effect on margin and operating income compared to our expectations. I'm pleased to report that as the quarter proceeded from month-to-month, our operating results improved and this was expected. Below the operating income line, there were a few interesting developments. First and foremost, due to an accounting standard change pension income beginning on January 1, 2018 was moved from operating results to below the operating income line. I'll note that if this required change has not occurred, the company would've posted positive operating income for the quarter. I’ll also reiterate that for the prior-year report to maintain an apples-to-apples comparison, the pension income impact was moved accordingly. Currency exchange impact was negative in the first quarter equaling approximately $800,000. This too is in other income/expense line reporting item. And finally there was a sizable contractual settlement with the third-party which provided a nonrecurring benefit of approximately $2.4 million. Due to the terms of the settlement, we're not able to disclose any details about the party involved or what was settled. All of this resulted in a positive net income and also a considerable year-over-year improvement in operating results. During the early part of the first quarter, I instituted a number of organizational focus groups to concentrate on certain areas of the company which I believe are not performing to expectations. These groups which meet weekly have specific targets and expectations. As a matter of fact I…

[Operator Instructions] The first question will come from Justin Bergner of Gabelli & Company. Please go ahead.

First question just relates to the inventory and the delays. Can you just remind me how much the inventory increased quarter-on-quarter and sort of what was the cause of the shipping delays and are they fully behind you?

The answer to your first question is about $10 million of inventory increase. The answer to the second question is no, some of these delays still have not shipped which isn't terribly uncommon unfortunately in our business. We expect all of them actually to ship in the second quarter, but they did not ship in April. So we had a light April just as we had a light beginning to the first quarter.

The shipment transportation constraints or is it a bottleneck on your manufacturing side?

Really the delays we’re talking about have nothing to do with us. One, the largest one had to do with the letter of credit that the customer did not get finalized, it’s for China. And the others are a question of shipment related payments so and credit holds. So those are the two that I'm referring to and I guess the remainder of the light shipments in the beginning part of 2018 the January/February light shipments were probably due to us and not getting our intermediate materials completed on time. Now those issues are behind us as we had a very substantial shipment month in March.

Switching gears to the surcharges, I think you said last quarter that two-thirds of your shipments were on a surcharge mechanism and I'm not sure if I recall this correctly, goal this sort of get to 80% plus has that two-thirds moved up and if not sort of what will be the trigger points or sort of time horizons for that to move up.

No, it hasn’t moved appreciably. The timing of new contracts or updated contracts for each of those customers will proceed over the course of this summer bidding season and that would be the opportunity for us to go back to them and negotiate adding a surcharge included in that number and remember we talked to you in March it’s less than two months ago. We did incorporate a surcharge for very large customer that didn't have one prior to 2018. So we expect to make more progress is the 80% realizable, we really not sure, but we’re going to give it everything we can because it's apparent in these last let say I guess it would be nine months that pricing for certain things whether it's electrodes or refractory or scrap or metal alloys is becoming quite volatile. So it's important that we try and get as many of these in place as possible. And even if we do though I asked shareholders to remember that there is a delay or a lag as I have discussed on several previous calls when those surcharges actually hit the P&L, but that's our strategy.

And then lastly on the tariffs, I just sort want to make sure I understand the basics. I mean in the U.S. to the extent you're producing in the U.S. imported forged and cash rolls will be subject to the tariff. And so you should have increased volume and pricing for such rolls that are made in your U.S. operations?

I am not sure I understand the question Justin.

So imported forged in cash rolls to the U.S. are subject to sort of resolution of the European tariff situation, those could be subject to 25% tariffs or quotas. And so your U.S. operations and other parties U.S. operation should benefit from improved volume and pricing to the extent tariffs or quotas take effect is that I'm just trying to make sure that the usual rules of the game apply to your sort of niche of the steel industry?

No, I don't think that’s a good assumption. First of all I think that Sweden and the U.K. are obviously ally countries and we have the expectation that either exemptions for those countries or quotas will basically have no effect. And for our competitors who reside in Germany or Austria or Italy or those countries we expect that they will also have exemptions and/or quarters. So I think the playing field from Europe will be level. Remember let’s go back and stop and remember that these tariffs we believe strongly do not involve rolls, rolls are not on the list of tariff materials. So the tariffs are for more fundamental steelmaking than for rolls.

That does answer my question. So just by virtue of taking raw steel and putting it into a roll, an international producer in Europe would avoid the tariff regime potentially entirely.

Yes.

Okay thank you that does…

Now let me add something there is and always has been a desire from North American customers to receive rolls from North America. If for no other reason than, just to have that reliability for quick turnaround of product as opposed for having material coming from another continent or across the ocean. So there's a lot of interest right now by our customers to bring back the one plant that is idled it's far too early to talk about whether and when that will happen. But I will mention because it's such a big issue and it has such - that idle plant has such a major effect on our financial performance that this would be a very positive thing for the company if we can work out with the customers commitments for these rolls and these would be additional rolls not the current backlog that we have. And I just want to mention that is something that in consideration but that will take a period of several months if and when that decision is made.

[Operator Instructions] Our next question is a follow-up from Justin Bergner of Gabelli & Company. Please go ahead.

Just to wrap up on the import tariff question or lag thereof. Obviously, you have a lot of operations in Europe including those that send rolls to the U.S. Do you see the sort of tariff situation is more of a sort of driver of uncertainty versus a distinct positive or negative or how do you sort of size up the overall dynamics of the tariffs situation as it relates to you?

Me personally I think this a positive for our customers in North America and I think that even with the dilution that may occur through permanent exemption for those from certain countries I think it will dramatically improve the amounts of steelmaking that has to be made in North America. So for us, for our customers it’s almost assuredly a good thing. If it’s a good thing for them it’s a good thing for us. If it has a global impact on dumping or underpriced product that extends beyond North America and I think it will eventually if not quickly then I think that's a good thing for our company from the standpoint that we’re a global manufacturer. And I think there are things going on in China that have to do with environmental restrictions and other business type decisions that are being made by that government that also should or at least could have an impact on our business in China. So with respect to tariffs I think that there will be a positive long-term impact for our customers which is good for us and I think that there are other positive things going on in the world that could also be a positive for us.

And then just one clarification question. The comment about rolling mill utilization up 12%, was that specific to the U.S. and was that up 12% or 1200 basis points?

U.S. and it was 1200 basis points, excuse me.

I’m seeing no further questions. This concludes our question-and-answer session. I would now like to turn the conference back over to John Stanik for any closing remarks.

Our strategies continue to be executed successfully although our financial performance improvement quarter-to-quarter has been incremental, it has consistently been positive and that should continue. We are working tirelessly to smooth out our rough spots in operations and to diversify our revenue base. We remain very positive about both the short-term and long-term future of this corporation. Thank you for your time and have a great remainder of your day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines. Have a great day.