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Allegheny Technologies Reports 4th Quarter, Full Year 2011 Results

01/27/2012 - Allegheny Technologies Inc. reported net income for the fourth quarter 2011 of $31.7 million, or $0.29 per share, on sales of $1.25 billion. For the full year 2011, net income was $214.3 million, or $1.97 per share, on sales of $5.18 billion.

Allegheny Technologies Inc. reported net income for the fourth quarter 2011 of $31.7 million, or $0.29 per share, on sales of $1.25 billion. The company noted that fourth quarter 2011 results were impacted by restructuring and Ladish acquisition expenses, which reduced earnings by $2.8 million, or $0.02 per share.
 
In the fourth quarter 2010, ATI reported net income of $15.1 million, or $0.15 per share, on sales of $1.04 billion.
 
For the full year 2011, net income was $214.3 million, or $1.97 per share, on sales of $5.18 billion. Results for 2011 included $29.6 million of charges, net of tax, for Ladish acquisition expenses, accelerated recognition of equity compensation due to executive retirements, and restructuring and start-up expenses, which reduced earnings by $0.26 per share.
 
For the full year 2010, net income was $70.7 million, or $0.72 per share, on sales of $4.05 billion. Results for 2010 included non-recurring tax charges of $9.2 million, or $0.10 per share, primarily due to the effects of the Patient Protection and Affordable Care Act and the Small Business Jobs and Credit Act.
 
“Our 2011 results continued to demonstrate the benefits of ATI’s recent strategic investments and our focus on key global markets and high-value differentiated products,” said Rich Harshman, Chairman, President and Chief Executive Officer. “Sales for 2011 were 28% higher than in 2010. Segment operating profit, excluding inventory fair value adjustments associated with the Ladish acquisition, was 12.3% of ATI sales, or $639.3 million. This performance represents a 79% increase over 2010 segment operating profit. Earnings per share before special charges was $2.23, 210% higher than 2010.”
 
ATI’s sales to the key global markets of aerospace and defense, oil and gas/chemical process industry, electrical energy, and medical grew 33% compared to 2010 and represented 70% of ATI sales:
 
  • Sales to the aerospace and defense market grew 44% and represented 29% of ATI sales as the acquisition of Ladish augmented organic growth.
  • Sales to the oil and gas/chemical process industry grew 41%, representing 21% of ATI sales.
  • Sales to the electrical energy market grew 16% and represented 15% of ATI sales.
  • Sales to the medical market grew 8%, representing 5% of ATI sales.
  • Direct international sales increased $530.3 million, or 41%, compared to 2010 and represented 35% of ATI 2011 sales.
 
“Our fourth quarter 2011 results were impacted by significantly lower demand and historically low base prices for our standard stainless products,” said Harshman. “In addition, demand for some of our high-value products in both the High Performance Metals and Flat-Rolled Products segments was impacted by short-term actions to keep inventories lean, which was partially driven by the expectation of lower raw material surcharges in the first quarter 2012.
 
“Construction at our Flat-Rolled Products segment Hot-Rolling and Processing Facility is progressing on schedule and on budget. As previously stated, project construction is expected to be completed by the end of 2013 with commissioning occurring during the first half of 2014. Including investments associated with this project, we currently expect 2012 capital expenditures to be approximately $485 million, all of which we expect to fund from operating cash flow and available cash on hand. Depreciation expense in 2012 is expected to be $194 million.”
 
Outlook – “Our focus is to continue to deliver value for our customers and profitable growth for our stockholders,” Harshman said. “Over the next three to five years, we believe the demand drivers will remain positive in our key global markets of aerospace, oil and gas/chemical process industry, electrical energy, and medical.”
 
“We expect revenue growth of at least 10% in 2012, compared to 2011, and expect segment operating profit in the range of 13% to 14% of sales,” he added.
 
Allegheny Technologies Inc. is one of the largest and most diversified specialty metals producers in the world with revenues of $5.2 billion during 2011. 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, forgings, castings, and fabrication and machining capabilities.