Allegheny Technologies Announces Q2 2010 Results
07/29/2010 - Allegheny Technologies Inc. reported net income for the second quarter 2010 of $36.4 million, or $0.36 per share, on sales of $1.05 billion. This compares favorably to last year’s Q2 net loss, including special charges, of $13.4 million, or $0.14 per share, on sales of $710.0 million.
Allegheny Technologies Inc. reported net income for the second quarter 2010 of $36.4 million, or $0.36 per share, on sales of $1.05 billion. This compares favorably to last year’s Q2 net loss, including special charges, of $13.4 million, or $0.14 per share, on sales of $710.0 million. (Excluding special charges, net income was $3.6 million, or $0.03 per share, in Q2 2009.)
For the six months ended June 30, 2010, net income, including special charges, was $54.6 million, or $0.54 per share. Results included a non-recurring tax charge of $5.3 million related to the Patient Protection and Affordable Care Act. Excluding this non-recurring tax charge, net income was $59.9 million, or $0.60 per share, on sales of $1.95 billion.
For the same six-month period last year, ATI reported a net loss, including special charges, of $7.5 million, or $0.08 per share, on sales of $1.54 billion. Excluding special charges, six-month results were net income of $9.5 million, or $0.09 per share.
Executive remarks—“Our markets continued to improve in the second quarter, and we still see 2010 as a transition year to the resumption of strong secular growth in our key global markets.” said L. Patrick Hassey, Chairman, President, and Chief Executive Officer.
“Second-quarter shipments of most of our products reached the highest levels in the last six quarters. Sales improved 48% compared to the second quarter 2009 and 17% compared to the first quarter 2010. Operating profit improved 118% compared to the second quarter 2009 and 33% from the first quarter 2010.
“In our Flat-Rolled Products segment, shipments of high-value products increased 2% and shipments of standard products increased 13%, compared to the first quarter 2010. The segment’s improved performance is primarily due to continued growth in the oil and gas, electrical energy, and aerospace markets, and recovery in the global automotive market,” Hassey said.
“We continued to invest in unsurpassed manufacturing capabilities. The meltshop consolidation at our Brackenridge, Pa., facility is nearly complete. We continue to expect considerable cost savings from this project beginning in late 2010,” Hassey continued. “In June, Siemens VAI was selected to design, engineer, and supply the hot-rolling mill for our new hot-rolling and processing facility (HRPF). The HRPF is designed to further transform our Flat-Rolled Products segment. We now expect approximately $325 million in capital expenditures in 2010.
“Looking ahead to the second half of 2010, our key markets are performing well. The aerospace market continues to improve, and we are seeing improved demand from oil and gas and chemical processing projects in Asia and the Middle East. Caution best describes our standard stainless steel business, which reflects falling raw materials costs and uncertain economic conditions.
“In our Flat-Rolled Products segment, we expect performance to be significantly negatively impacted by out-of-phase surcharges due to the rapid decline in nickel prices from the highs reached in April and May and lower volumes of our standard stainless products,” Hassey said. “Customers are taking a wait-and-see attitude as raw materials prices moderate and concerns exist in the economy. We expect a fourth quarter rebound in demand for our standard stainless products because of restocking in the supply chain and because end-use demand does not appear to be deteriorating.”
Flat-Rolled Products segment—Compared to the first quarter 2010, demand increased 13% for standard stainless products and 2% for high-value products, which includes titanium, nickel-based alloys, Precision Rolled Strip® products and grain-oriented electrical steel. Direct international sales represented 39% of total segment sales for the 2010 second quarter.
Second-quarter Flat-Rolled Products segment titanium shipments, including Uniti joint venture conversion products, were approximately 2.6 million pounds. Average selling prices for all products, which include surcharges, increased 10% compared to the first quarter 2010.
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Sales increased to $615.3 million, 84% higher than the second quarter 2009, primarily due to increased shipments, higher raw material surcharges, and improved base-selling prices for stainless products. Shipments of standard stainless products (sheet and plate) increased 50% and high-value products shipments increased 34%.
Average transaction prices for all products, which include surcharges, were 32% higher due to increased raw material surcharges and improved base prices for stainless products.
Segment operating profit improved to $42.1 million, or 6.8% of sales, compared to $22.3 million, or 6.7% of sales, for the second quarter 2009 due primarily to increased shipments and higher base prices for stainless products. A LIFO inventory valuation reserve charge of $1.6 million was recognized in the second quarter 2010. The 2009 second quarter included a LIFO inventory valuation benefit of $26.1 million.
Results benefited from $12.5 million of gross cost reductions, bringing first-half 2010 gross cost reductions in this segment to $26.6 million.
Allegheny Technologies Inc. is one of the largest and most diversified specialty metals producers in the world with revenues of $3.1 billion during 2009. ATI has approximately 8900 full-time employees worldwide. Its products include titanium and titanium alloys, nickel-based alloys and superalloys, grain-oriented electrical steel, stainless and specialty steels, zirconium, hafnium, and niobium, tungsten materials, and forgings and castings.
