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Allegheny Technologies Reports 2nd Quarter Results
07/24/2008 - Allegheny Technologies reports net income of $168.9 million on sales of $1.46 billion for the second quarter, and net income of $310.9 million on sales of $2.80 billion for the first six months of 2008.
Allegheny Technologies Inc. reported net income of $168.9 million on sales of $1.46 billion for the second quarter, and net income of $310.9 million on sales of $2.80 billion for the first six months of 2008.
Second Quarter Results—The $168.9 million net income ($1.66 per share) compares to net income of $206.5 million ($2.00 per share) in the second quarter 2007. Sales of $1.46 billion compare to sales of $1.47 billion in the second quarter 2007. Results included a favorable one-time net tax benefit of $11.2 million ($0.11 per share).
“The second quarter demonstrates our ability to deliver good returns during an uncertain time. ATI is benefiting from our ongoing transformation, and our product, market, and geographic diversification,” said L. Patrick Hassey, Chairman, President and CEO. “Return on capital employed of 24%, return on stockholders’ equity of 30%, and overall operating profit of nearly 19% of sales represent outstanding performance for any industrial company.”
Six Month Results—The $310.9 million net income ($3.06 per share) compares to net income was $404.3 million ($3.93 per share) for the six months ended June 30, 2007. Sales of $2.80 billion compare to sales of $2.84 billion for the first six months of 2007.
“In the first six months of 2008, our strong cash flow supported investments of over $500 million in capital expenditures and managed working capital, dividend payments of over $36 million, and share repurchases of over $88 million,” said Hassey. “We ended the quarter with $310 million of cash on hand. Gross cost reductions totaled $69 million for the first half 2008 as we remained focused on reducing costs through improving operating efficiencies.
“Our diversified global markets and products provide balance,” continued Hassey. “Direct international sales were 27% of year-to-date sales. Demand from the aerospace and defense market is good. Demand continues to grow from the global infrastructure markets: chemical process industry, oil and gas, and electrical energy. It is no surprise that demand is weak from the U.S. automotive and housing markets.
“Turning to our products, due to a combination of steady demand from aerospace and growing demand from the global industrial markets, total ATI titanium shipments were nearly 24 million pounds for the first half 2008, a 19% increase compared to the same period last year. Our exotic alloys set a record for total sales. Global demand for our grain-oriented electrical steel remains robust. Shipments of nickel-based and specialty sheet and plate were strong to the chemical process industry, oil and gas, electrical energy, and automotive turbocharger markets. Shipments of our stainless sheet and plate products improved in the second quarter in a flat to declining market due to growing demand for our AL 201HP™ lean-nickel alloy and good demand from the chemical process industry and oil and gas markets.
“Our strategic capital projects are progressing,” continued Hassey. “We commissioned our upgraded specialty and titanium plate facility in June. The premium titanium sponge facility in Utah is expected to begin initial production by the end of the first quarter 2009. The titanium and superalloy forging facility in North Carolina is expected to be operational by the third quarter 2009.
“Aerospace and infrastructure continue to drive our results, and we believe these markets are in a period of long-term growth. Our strategy is to deliver earnings stability and growth as we move through this extended cycle.
“Looking forward,” concluded Hassey, “we expect the normal third-quarter seasonal slowdown. We believe we are well-positioned to continue to achieve good performance in this uncertain U.S. economy due to our product and market diversification and our global reach. At this point, we expect full-year 2008 earnings per share to be in the range of $5.80 to $6.10. This would be the second-best year in ATI’s history."
Allegheny Technologies Inc. is one of the largest and most diversified specialty metals producers in the world with revenues of $5.5 billion during 2007. ATI’s major markets are aerospace and defense, chemical process industry/oil and gas, electrical energy, medical, automotive, food equipment and appliance, machine and cutting tools, and construction and mining. 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.
