ATI Provides 2013 Results, Outlook for 2014
01/31/2014 - Allegheny Technologies Inc. announced its earnings results for 2013, commenting on progress made throughout the year, as well as commenting on current market conditions.
Fourth Quarter 2013 Results
For the full year 2013, ATI reported a loss from continuing operations attributable to ATI of US$98.8 million, or US$(0.93) per share including the US$75.1 million, or (US$0.71) per share, fourth quarter restructuring charges and inventory valuation adjustments. Net income attributable to ATI was US$154.0 million, or US$1.44 per share, including the gain on sale of the tungsten materials business, restructuring charges and inventory valuation adjustments in continuing operations, and charges related to discontinued operations. For the full year 2012, income from continuing operations attributable to ATI was US$150.5 million, or US$1.36 per share, and net income attributable to ATI was US$158.4 million, or US$1.43 per share, including impairment charges in discontinued operations.
“Fourth quarter 2013 operating profit results were negatively impacted by low shipments of many high-value and standard products, low base-selling prices for many products, and the impact of higher raw material input costs for products with longer manufacturing cycle times not aligned with falling raw material sales indices and surcharges, which continue to negatively impact raw materials cost recovery,” said Rich Harshman, chairman, president and chief executive officer. “While these headwinds created challenging business conditions in the fourth quarter and throughout 2013, we are continuing to see long-term growth opportunities in many of our global markets.”
Restructuring Actions and Inventory Valuation Adjustments
In the fourth quarter 2013, ATI recorded pre-tax charges of US$133 million as a result of restructuring actions and inventory valuation adjustments, which include non-cash long-lived asset impairment charges. Major restructuring actions and adjustments include:
“While market conditions were difficult in 2013, we continued with our restructuring, cost reduction, and lean manufacturing efforts to better align our cost structure, inventory, and production levels to the demands of our customers and end markets,” Rich Harshman said. “Our recent strategic investments in manufacturing capabilities and process technologies enable the closure of older, higher cost operations, and the streamlining of our manufacturing processes by reducing our manufacturing footprint. For example, continued improvement in operating efficiencies at our Rowley, Utah, titanium sponge facility enables the closure of our standby titanium sponge facility in Albany, Ore. In addition, due to productivity improvements from other new technology investments, our Wallingford, Conn., and New Castle, Ind., flat-rolled stainless finishing facilities are no longer needed.
“Our goal is to streamline and right size our operations while remaining well-positioned to create value for our strategic customers and our stockholders and realize the expected growth in demand over the next 2 to 5 years from many of our key global markets.
“In the fourth quarter 2013, we also recorded a US$35.0 million charge on our inventory valued on the LIFO accounting method in the High Performance Metals segment, which more than offset any fourth quarter 2013 LIFO benefit in this segment. The carrying value of our inventory as valued on the LIFO inventory accounting method exceeded current replacement cost, requiring a pre-tax US$35 million net realizable valuation reserve. In addition, continued sluggish demand for industrial titanium products from global markets has resulted in much lower selling prices for these products. As a result, in the fourth quarter we recorded a US$20.5 million lower of cost or market reserve for industrial titanium products in the Flat-Rolled Products segment.”
2013 Major Accomplishments
“Throughout 2013, we focused on improving our market position and completing our strategic investments to ensure that ATI remains well-positioned as global and economic conditions improve. These actions are aimed at improving our future performance and positioning ATI to benefit from longer-term growth opportunities. Examples of our strategic actions include:
Strategy and Outlook
“As we begin 2014, while challenging conditions remain, global economic conditions appear to be moderately improving, although at lower rates of growth than past recoveries. Again, we begin the year cautiously optimistic that business conditions will gradually improve as we move through 2014,” Mr. Harshman continued.
“We continue to believe market conditions remain favorable for strong secular growth over the next 2 to 5 years in many of our key global markets. Aerospace build rates are expected to continue to increase and OEM backlogs remain at record levels. Demand for ATI’s high performance specialty materials and components is expected to increase in support of the higher build rates. Also, demand for our innovative new products is expected to begin a multi-year period of significant growth as new technology airframe and jet engine deliveries increase. We also expect to see modest growth in demand for jet engine spare parts as we move through 2014.
“Global oil and gas exploration and production forecasts project spending to remain strong, which is expected to result in increased upstream capital spending, especially in the U.S.
“We expect moderate growth in demand for our high performance specialty materials from the medical market.
“In the short-term, demand from the electrical energy market is expected to remain flat for both power generation and power distribution because of modest GDP growth in advanced economies, improved energy efficiencies resulting in lower demand growth, and improving, but still weak, new housing construction in the U.S.
“In our High Performance Metals segment, we expect to benefit from growing demand from most of our key global markets and increasing demand for our new products, especially from the aerospace market. These benefits are expected to more than offset continued weakness in demand from the nuclear energy market and weak demand for forged products from the global mining equipment market.
“In our Flat-Rolled Products segment, we expect to see improved demand in 2014, compared to 2013, for our high-value products, particularly nickel-based alloys and specialty alloys, and Precision Rolled Strip® products. However, we remain cautious in the near-term about domestic GDP-sensitive markets as consumer and business confidence remain low. This, combined with excess global supply of stainless sheet and plate products and grain-oriented electrical steel products, continues to pressure base-selling prices for these products. The new HRPF is expected to result in lower costs, reduced cycle times, and revenue growth beginning in 2015. The commissioning of the HRPF will take most of 2014 and is currently expected to result in start-up costs of approximately US$30 - US$35 million, pre-tax, in 2014.
“We currently expect 2014 pre-tax retirement benefit expense to be about US$99 million, or approximately US$30 million lower than 2013. Most of the 2014 pension expense is expected to be non-cash.
“We expect 2014 pre-tax interest expense to be approximately US$42 million higher in 2014 than the US$65 million recorded in 2013, due to the HRPF’s in-service status, which will reduce capitalized interest on major strategic capital costs.
“We currently expect 2014 capital expenditures to be approximately US$300 million, which is US$313 million lower than in 2013 due to the status of the HRPF. Depreciation and amortization expense in 2014 is forecasted to be approximately US$180 million.
“It has been difficult to forecast demand and pricing trends for most of our products over the last several years primarily due to the fall-out from global economic and fiscal policy uncertainties. As we ended 2013, demand and pricing showed signs of stabilization, and we are seeing early signs of modest growth in demand. However, most customers remain cautious and are showing no significant signs of building inventories in anticipation of a strong recovery. We will remain focused on actions to enhance ATI’s competitive position and improve the cost structure of our businesses. As part of this effort we are targeting US$100 million in new gross cost reductions for the full year 2014. We believe that this focus combined with the capabilities of our strategic investments, including the HRPF, and other strategic actions designed to transform ATI into an aligned and integrated global leader in specialty materials products and components, will keep ATI well-positioned for sustainable profitable growth as market conditions improve in 2014 and beyond.”
Fourth Quarter and Full Year 2013 Financial Results
High Performance Metals Segment
Market Conditions
Fourth quarter 2013 compared to fourth quarter 2012
Flat-Rolled Products Segment
Market Conditions
- Pre-tax gain of US$428 million in discontinued operations from sale of the tungsten materials business
-
Pre-tax charges of US$133 million as a result of restructuring actions and inventory valuation adjustments
- US$123 million in continuing operations
- US$10 million in discontinued operations
- Sales from continuing operations were US$915 million
- Segment operating profit from continuing operations was US$44.6 million, or 4.9% of sales, excluding pre-tax charges; segment results were a loss of US$10.9 million, or (1.2%) of sales, including charges for inventory valuation adjustments
- Loss from continuing operations attributable to ATI before charges was US$8.7 million, or US$(0.08) per share; US$83.8 million, or US$(0.79) per share, including charges
- Net income attributable to ATI was US$173.4 million, or US$1.62 per share, including all charges and the gain on sale of the tungsten materials business
- Cash on hand at year end 2013 was US$1.03 billion
- Sales from continuing operations were US$4.0 billion
- Loss from continuing operations attributable to ATI before charges was US$23.7 million, or US$(0.22) per share; US$98.8 million, or US$(0.93) per share, including charges
- Net income attributable to ATI was US$154.0 million, or US$1.44 per share, including all charges, the gain on sale of the tungsten materials business, and discontinued operations results
- Gross cost reductions were US$141.2 million
For the full year 2013, ATI reported a loss from continuing operations attributable to ATI of US$98.8 million, or US$(0.93) per share including the US$75.1 million, or (US$0.71) per share, fourth quarter restructuring charges and inventory valuation adjustments. Net income attributable to ATI was US$154.0 million, or US$1.44 per share, including the gain on sale of the tungsten materials business, restructuring charges and inventory valuation adjustments in continuing operations, and charges related to discontinued operations. For the full year 2012, income from continuing operations attributable to ATI was US$150.5 million, or US$1.36 per share, and net income attributable to ATI was US$158.4 million, or US$1.43 per share, including impairment charges in discontinued operations.
“Fourth quarter 2013 operating profit results were negatively impacted by low shipments of many high-value and standard products, low base-selling prices for many products, and the impact of higher raw material input costs for products with longer manufacturing cycle times not aligned with falling raw material sales indices and surcharges, which continue to negatively impact raw materials cost recovery,” said Rich Harshman, chairman, president and chief executive officer. “While these headwinds created challenging business conditions in the fourth quarter and throughout 2013, we are continuing to see long-term growth opportunities in many of our global markets.”
-
ATI’s sales to the key global markets of aerospace and defense, oil and gas/chemical process industry, electrical energy, and medical represented 68% of ATI sales for 2013:
- Sales to the aerospace and defense markets were US$1.4 billion and represented 35% of ATI sales.
- Sales to the oil and gas/chemical process industry were US$707 million and represented 17% of ATI sales.
- Sales to the electrical energy market were US$459 million and represented 11% of ATI sales.
- Sales to the medical market were US$208 million and represented 5% of ATI sales.
- Direct international sales were US$1.59 billion and represented 39% of ATI 2013 sales.
Restructuring Actions and Inventory Valuation Adjustments
In the fourth quarter 2013, ATI recorded pre-tax charges of US$133 million as a result of restructuring actions and inventory valuation adjustments, which include non-cash long-lived asset impairment charges. Major restructuring actions and adjustments include:
- Closure of the High Performance Metals segment’s previously idled Albany OR, titanium sponge facility;
- Closure of the Flat-Rolled Products segment’s previously idled New Castle, Ind., stainless finishing facility, and closure of the Wallingford, Conn., stainless finishing facility, which is expected to be completed in mid-2014;
- Inventory charges reflecting LIFO-related net realizable value reserves in the High Performance Metals segment;
- Inventory charges related to the market-based valuation of industrial titanium products in the Flat-Rolled Products segment;
- Write down of fixed assets associated with the ongoing divestitures of the iron castings and fabricated components businesses in connection with the previously announced restructuring of the former Engineered Products segment.
“While market conditions were difficult in 2013, we continued with our restructuring, cost reduction, and lean manufacturing efforts to better align our cost structure, inventory, and production levels to the demands of our customers and end markets,” Rich Harshman said. “Our recent strategic investments in manufacturing capabilities and process technologies enable the closure of older, higher cost operations, and the streamlining of our manufacturing processes by reducing our manufacturing footprint. For example, continued improvement in operating efficiencies at our Rowley, Utah, titanium sponge facility enables the closure of our standby titanium sponge facility in Albany, Ore. In addition, due to productivity improvements from other new technology investments, our Wallingford, Conn., and New Castle, Ind., flat-rolled stainless finishing facilities are no longer needed.
“Our goal is to streamline and right size our operations while remaining well-positioned to create value for our strategic customers and our stockholders and realize the expected growth in demand over the next 2 to 5 years from many of our key global markets.
“In the fourth quarter 2013, we also recorded a US$35.0 million charge on our inventory valued on the LIFO accounting method in the High Performance Metals segment, which more than offset any fourth quarter 2013 LIFO benefit in this segment. The carrying value of our inventory as valued on the LIFO inventory accounting method exceeded current replacement cost, requiring a pre-tax US$35 million net realizable valuation reserve. In addition, continued sluggish demand for industrial titanium products from global markets has resulted in much lower selling prices for these products. As a result, in the fourth quarter we recorded a US$20.5 million lower of cost or market reserve for industrial titanium products in the Flat-Rolled Products segment.”
2013 Major Accomplishments
“Throughout 2013, we focused on improving our market position and completing our strategic investments to ensure that ATI remains well-positioned as global and economic conditions improve. These actions are aimed at improving our future performance and positioning ATI to benefit from longer-term growth opportunities. Examples of our strategic actions include:
- We further improved our position in the key end markets of aerospace, oil and gas/chemical process industry, electrical energy, medical, and automotive through strategic and long-term agreements (LTAs) with both existing and new customers. During 2013, across ATI we completed more than 20 new or revised LTAs representing in excess of US$3 billion of total revenue potential over the terms of the agreements. The largest LTA was the extension of our long-term supply agreement with The Boeing Company, announced in October. This extension agreement covers value-added titanium mill products and provides opportunity for greater use of ATI’s next-generation and advanced titanium alloys.
- Our Flat-Rolled Products segment Hot-Rolling and Processing Facility (HRPF) was placed into service at the end of 2013. Cold-commissioning has begun and is expected to be completed by the end of the first quarter 2014. We will then move to the hot-commissioning phase, which is expected to run through the end of the third quarter 2014. The HRPF is expected to be producing all of ATI’s flat-rolled products by the end of 2014. This game-changing investment is designed to significantly enhance ATI’s flat-rolled products capabilities for all alloys, reduce manufacturing cycle times, and lower production costs.
- In October, we began the premium-quality (PQ) qualification program at our Rowley titanium sponge facility. Although we are operating at a low utilization rate primarily due to reduced demand for industrial titanium products, we continue to achieve improvements in key areas such as cake size and yield.
- In November, we completed the sale of our tungsten materials business for an all cash purchase price of approximately US$605 million. The US$428 million pre-tax gain from the sale is included in the results of discontinued operations for the fourth quarter 2013.
- We are in a solid liquidity position with approximately US$1.4 billion, including cash on hand at the end of the year of approximately US$1.03 billion and no borrowings outstanding under our US$400 million domestic borrowing facility. Capital expenditures in 2013 were approximately US$613 million, the majority of which related to the HRPF.
- We continued to focus on reducing our cost structure, achieving gross cost reductions before the effects of inflation of over US$141 million in 2013.”
Strategy and Outlook
“As we begin 2014, while challenging conditions remain, global economic conditions appear to be moderately improving, although at lower rates of growth than past recoveries. Again, we begin the year cautiously optimistic that business conditions will gradually improve as we move through 2014,” Mr. Harshman continued.
“We continue to believe market conditions remain favorable for strong secular growth over the next 2 to 5 years in many of our key global markets. Aerospace build rates are expected to continue to increase and OEM backlogs remain at record levels. Demand for ATI’s high performance specialty materials and components is expected to increase in support of the higher build rates. Also, demand for our innovative new products is expected to begin a multi-year period of significant growth as new technology airframe and jet engine deliveries increase. We also expect to see modest growth in demand for jet engine spare parts as we move through 2014.
“Global oil and gas exploration and production forecasts project spending to remain strong, which is expected to result in increased upstream capital spending, especially in the U.S.
“We expect moderate growth in demand for our high performance specialty materials from the medical market.
“In the short-term, demand from the electrical energy market is expected to remain flat for both power generation and power distribution because of modest GDP growth in advanced economies, improved energy efficiencies resulting in lower demand growth, and improving, but still weak, new housing construction in the U.S.
“In our High Performance Metals segment, we expect to benefit from growing demand from most of our key global markets and increasing demand for our new products, especially from the aerospace market. These benefits are expected to more than offset continued weakness in demand from the nuclear energy market and weak demand for forged products from the global mining equipment market.
“In our Flat-Rolled Products segment, we expect to see improved demand in 2014, compared to 2013, for our high-value products, particularly nickel-based alloys and specialty alloys, and Precision Rolled Strip® products. However, we remain cautious in the near-term about domestic GDP-sensitive markets as consumer and business confidence remain low. This, combined with excess global supply of stainless sheet and plate products and grain-oriented electrical steel products, continues to pressure base-selling prices for these products. The new HRPF is expected to result in lower costs, reduced cycle times, and revenue growth beginning in 2015. The commissioning of the HRPF will take most of 2014 and is currently expected to result in start-up costs of approximately US$30 - US$35 million, pre-tax, in 2014.
“We currently expect 2014 pre-tax retirement benefit expense to be about US$99 million, or approximately US$30 million lower than 2013. Most of the 2014 pension expense is expected to be non-cash.
“We expect 2014 pre-tax interest expense to be approximately US$42 million higher in 2014 than the US$65 million recorded in 2013, due to the HRPF’s in-service status, which will reduce capitalized interest on major strategic capital costs.
“We currently expect 2014 capital expenditures to be approximately US$300 million, which is US$313 million lower than in 2013 due to the status of the HRPF. Depreciation and amortization expense in 2014 is forecasted to be approximately US$180 million.
“It has been difficult to forecast demand and pricing trends for most of our products over the last several years primarily due to the fall-out from global economic and fiscal policy uncertainties. As we ended 2013, demand and pricing showed signs of stabilization, and we are seeing early signs of modest growth in demand. However, most customers remain cautious and are showing no significant signs of building inventories in anticipation of a strong recovery. We will remain focused on actions to enhance ATI’s competitive position and improve the cost structure of our businesses. As part of this effort we are targeting US$100 million in new gross cost reductions for the full year 2014. We believe that this focus combined with the capabilities of our strategic investments, including the HRPF, and other strategic actions designed to transform ATI into an aligned and integrated global leader in specialty materials products and components, will keep ATI well-positioned for sustainable profitable growth as market conditions improve in 2014 and beyond.”
Fourth Quarter and Full Year 2013 Financial Results
- Sales for the fourth quarter 2013 were US$915 million, compared to US$1.02 billion in the fourth quarter 2012. Compared to the fourth quarter 2012, sales decreased 17% in the High Performance Metals segment resulting from lower shipments and lower raw material surcharges due to declines in nickel raw material and titanium scrap costs. In the Flat-Rolled Products segment, sales declined 4% primarily due to lower raw material surcharges and weak base-selling prices for standard stainless and grain-oriented electrical steel products, which offset higher shipment volumes for both high value and standard products.
- Sales for the full year 2013 were US$4.04 billion compared to US$4.67 billion for 2012. Direct international sales were US$1.59 billion and represented 39% of total sales, compared to 37% for 2012. Compared to the full year 2012, sales decreased 16% in the High Performance Metals segment and 11% in the Flat-Rolled Products segment.
- Fourth quarter 2013 segment operating profit was US$44.6 million, or 4.9% of sales, excluding restructuring and inventory valuation charges. Fourth quarter 2013 restructuring charges related to business segment facility closures were excluded from segment results. Segment operating results as reported, including inventory valuation charges, were a loss of US$10.9 million, or (1.2%) of sales. Segment operating profit for the fourth quarter 2012 was US$91.0 million, or 8.9% of sales.
- Full year 2013 segment operating profit was US$219.9 million, or 5.4% of sales, excluding restructuring and inventory valuation charges. Segment operating profit as reported, including inventory valuation charges, was US$164.4 million, or 4.1% of sales. Segment operating profit for the full year 2012 was US$513.2 million, or 11.0% of sales.
- Income (loss) from continuing operations attributable to ATIfor the fourth quarter 2013 was a loss of US$83.8 million, or US$(0.79) per share, including restructuring and inventory valuation charges of US$75.1 million net of tax, or US$(0.71) per share. For the fourth quarter 2012, income from continuing operations attributable to ATI was US$16.0 million, or US$0.15 per share.
- Net income attributable to ATI for the fourth quarter 2013 was US$173.4 million, or US$1.62 per share, and included the US$75.1 million net of tax charges in continuing operations for restructuring and inventory valuation, and the results of discontinued operations, which include the US$261.4 million net of tax gain on the sale of the tungsten materials business and US$6.1 million net of tax charges relating to ongoing divestitures in the former Engineered Products segment. Net income attributable to ATI for the fourth quarter 2012 was US$10.5 million, or US$0.10 per share.
- Full year 2013 income (loss) from continuing operations attributable to ATI was a loss of US$98.8 million, or US$(0.93) per share, including restructuring and inventory valuation charges of US$75.1 million, or US$(0.71) per share. Income from continuing operations attributable to ATI for the full year 2012 was US$150.5 million, or US$1.36 per share. Net income attributable to ATI was US$154.0 million, or US$1.44 per share, for the full year 2013, compared to US$158.4 million, or US$1.43 per share, for 2012.
- Cash flow provided by operations for 2013 was US$368.4 million, including US$141.0 million in the fourth quarter 2013.
- Cash on hand at the end of 2013 was US$1.03 billion, an increase of US$491.1 million from September 30, 2013 and US$722.2 million from year-end 2012.
- Gross cost reductions, before the effects of inflation, totaled US$17.8 million company-wide in the fourth quarter 2013. Gross cost reductions for the full year 2013 totaled US$141.2 million.
High Performance Metals Segment
Market Conditions
- Demand remained soft in the fourth quarter 2013 for many of our products compared to the third quarter 2013. Mill product shipments of our nickel-based and specialty alloys increased 5%, shipments of our titanium and titanium alloys declined 16%, and shipments of zirconium and related alloys were flat. Sales of precision forgings and castings decreased 8% compared to the third quarter 2013. Sales in the fourth quarter 2013 to the aerospace market, the segment’s largest end market, decreased 8% compared to the third quarter 2013 primarily due to lower raw material surcharges/indices and continued aggressive supply chain inventory management in the jet engine market. Also, shorter lead times and excess capacity has resulted in lower base-selling prices for certain transactional business. Direct international sales represented over 43% of total segment sales for 2013.
Fourth quarter 2013 compared to fourth quarter 2012
- Sales decreased 17% to US$436.7 million compared to the fourth quarter 2012 primarily as a result of lower mill product shipments and a decrease in sales of precision forged and cast components due to lower demand from the jet engine, construction and mining, nuclear energy, and oil and gas markets. In addition, lower raw material indices and lower base-selling prices negatively affected revenues.
- Segment operating profit decreased to US$52.1 million, or 11.9% of total sales, excluding US$35.0 million of LIFO-related net realizable value charges, compared to US$81.6 million, or 15.5% of total sales, for the fourth quarter 2012 primarily as a result of lower shipments. Fourth quarter 2013 segment operating profit as reported, including inventory valuation charges, was US$17.1 million, or 3.9% of sales. Fourth quarter 2013 segment operating profit included a LIFO inventory valuation reserve benefit of US$26.1 million, which was partially offset by higher costs for raw materials, primarily nickel, resulting from the misalignment of the raw material surcharge with raw material costs due to the long manufacturing cycle of certain products. Due to deflationary impacts primarily related to titanium products, the carrying value of our inventory as valued on the LIFO inventory accounting method exceeded replacement cost, requiring a US$35.0 million valuation reserve charge, which offsets the fourth quarter 2013 LIFO benefit. Fourth quarter 2012 segment operating profit included a LIFO inventory valuation reserve benefit of US$27.2 million. Segment results were also impacted by the strategic decision to use ATI-produced titanium sponge rather than lower cost titanium scrap to manufacture certain titanium products.
- Results benefited from US$13.2 million of gross cost reductions in the fourth quarter 2013, bringing the full year 2013 gross cost reductions in this segment to US$90.7 million.
Flat-Rolled Products Segment
Market Conditions
- Demand was lower compared to the third quarter 2013 from the oil and gas/chemical process industry and electrical energy markets. Demand improved modestly in the automotive, food equipment and appliances, and electronics/computers/communications markets. Compared to the third quarter 2013, shipments increased 5% for standard stainless (sheet and plate) products, and shipments of high-value products, which includes titanium, nickel-based alloys, Precision Rolled Strip® products, and grain-oriented electrical steel products were flat. Fourth quarter 2013 Flat-Rolled Products segment titanium shipments, including Uniti joint venture conversion, were 2.8 million pounds, an 18% decrease compared to the third quarter 2013, due to weak demand from global industrial markets. Flat-Rolled Products segment shipment information is presented in the attached Selected Financial Data – Mill Products table.
- Sales were US$478.6 million, 4% lower than the prior year period, primarily due to lower raw material surcharges and reduced base prices for most products. Shipments of high-value products increased 10% compared to the fourth quarter 2012 as shipments of our Precision Rolled Strip® products, nickel-based alloys and titanium increased. Shipments of standard stainless products increased 6%. Average selling prices declined 13% for standard stainless products, primarily due to lower raw material surcharges. Average selling prices declined 8% for high-value products, primarily due to lower selling prices for titanium products and grain-oriented electrical steel products.
- Segment operating results were a loss of US$7.5 million, or (1.6%) of total sales, excluding US$20.5 million of inventory charges related to the market-based valuation of industrial titanium products, compared to a profit of US$9.4 million, or 1.9% of total sales, in the fourth quarter 2012 primarily due to lower base-selling prices for standard stainless and grain-oriented electrical steel products and reduced shipments of certain high-value products due to delays of major project business. Fourth quarter 2013 segment operating results as reported, including inventory valuation charges, were a loss of US$28.0 million, or (5.9%) of sales. The fourth quarter 2013 included a LIFO inventory valuation reserve benefit of US$15.7 million, which was partially offset by higher costs for raw materials, which did not align with raw material surcharges. The fourth quarter 2012 included a LIFO inventory valuation reserve benefit of US$20.0 million.
- Results benefited from US$4.6 million in gross cost reductions in the fourth quarter 2013, bringing the full year 2013 gross cost reductions in this segment to US$50.5 million.
- In the fourth quarter 2013, ATI recorded US$67.5 million in pre-tax restructuring charges in continuing operations, including US$59.3 million of long-lived asset impairment charges and costs associated with facility closures. Impairment charges include the previously idled Albany, Ore., standard titanium sponge production facility in the High Performance Metals segment, and the previously idled New Castle, Ind., finishing facility in the Flat-Rolled Products segment. Additionally, in December 2013, ATI announced the mid-2014 closure of the Wallingford, Conn., finishing facility in the Flat-Rolled Products segment. Restructuring charges also include US$6.1 million in termination benefits for pension and other postretirement benefit plans and US$2.1 million in other severance charges, associated with the Wallingford, Conn., plant closure and other workforce reductions.
