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Allegheny Technologies Updates Earnings Outlook
10/12/2007 - Allegheny Technologies expects to report full-year 2007 earnings per share in the range of $7.00 to $7.25 per diluted share, reflecting lower-than-expected second-half 2007 earnings.
Allegheny Technologies Inc. expects to report full-year 2007 earnings per share in the range of $7.00 to $7.25 per diluted share, a 25% to 29% growth in earnings per share compared to 2006. The outlook reflects lower-than-expected second-half 2007 earnings.
According to ATI, higher inventories at certain mills and depots plus volatile raw material costs are contributing to continued softness in demand for standard stainless sheet. In addition, rapid declines in the cost of nickel, nickel-bearing scrap, and titanium scrap is expected to lead to a significant reduction in raw material surcharges and indexes. The company’s LIFO inventory accounting method mitigates some, but not all, of the impact of rapidly falling raw material costs.
“ATI expects 2007 to be a record year for sales, earnings, and cash flow from operating activities,” said L. Patrick Hassey, Chairman, President and CEO. “Our long-term profitable growth outlook remains intact. We believe ATI remains very well-positioned to achieve strong earnings growth in 2008 and beyond from the global markets that have been driving our profitable growth over the last several years. We see continuing growth in demand for our high-value products from the global aerospace and defense, chemical process industry, oil and gas, and electrical energy markets. Shipments under long-term agreements in these markets should continue to grow over the next several years. We do not anticipate a significant impact from the recently announced delay in the Boeing 787 Dreamliner schedule.
“The softness in demand for standard stainless sheet appears to be bottoming out and inventory levels at distributors are low by historic measures. Demand for these products should begin to improve in early 2008 once the high inventories at stainless mills and depots are reduced.
“Our self-funded strategic growth capital projects remain on track. Cash flow from operations remains strong. Cash on hand at the end of the third quarter 2007 is expected to be over $660 million, an increase of over $130 million compared to the previous quarter. We believe our strong cash position provides additional opportunities to enhance shareholder value.”
ATI expects third-quarter 2007 earnings to be in the range of $1.85 to $1.88 per diluted share. Compared to the third quarter, the company expects the fourth quarter to be further impacted by continuing low operating volumes in its Flat-Rolled Products segment and lower LIFO inventory reserve reversals. This outlook could be changed if the current costs of raw materials change significantly.
ATI is scheduled to release third-quarter 2007 earnings results before the market opens on Wednesday, October 24, 2007.
Allegheny Technologies Inc. is one of the largest and most diversified specialty metals producers in the world with revenues of $5.5 billion during the most recent four quarters ending June 30, 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. The company’s products include titanium and titanium alloys, nickel-based alloys and superalloys, stainless and specialty steels, zirconium, hafnium, and niobium, tungsten materials, grain-oriented silicon electrical steel and tool steels, and forgings and castings.
