ATI Comments on Third Quarter 2015
October 06 2015 - 4:15PM
Business Wire
Allegheny Technologies Incorporated (NYSE: ATI) today commented
that business and operating conditions in its flat rolled products
business remain challenging and demand from the oil & gas
market further weakened. Due primarily to the effects of rapid
declines in current and projected raw material values, particularly
for nickel that is near decade-low exchange-determined prices, ATI
also expects to report the following items in its third quarter
results:
- A LIFO inventory valuation benefit of
approximately $76 million, pretax;
- An offsetting $76 million pretax
non-cash charge for Net Realizable Value (NRV) inventory reserves,
which are required to offset ATI’s aggregate net debit LIFO
inventory balance that exceeds current inventory replacement
cost;
- A non-cash charge for income tax
valuation allowances of approximately $65 million, net of tax, as a
result of a three year cumulative loss from U.S. operations.
For the third quarter, ATI expects to report a net loss
attributable to ATI of $142 to $148 million, or $(1.32) to $(1.38)
per share. Excluding the non-cash NRV inventory reserve and income
tax valuation charges, ATI’s third quarter net loss attributable to
ATI is expected to be $29 to $34 million, or $(0.27) to $(0.32) per
share.
ATI’s third quarter performance continued to be pressured by the
ATI Flat Rolled Products segment. Business conditions in this
segment remained challenging. Stainless steel demand was soft
mainly due to unusually high domestic inventory levels that
resulted from the first-half 2015 surge of low-priced imports,
primarily from China, and generally weak demand which is affected
by falling raw material surcharges. Demand from the oil & gas
market continued to deteriorate during the quarter. In addition,
ATI Flat Rolled Products issued a lockout notice, effective August
15, 2015, to more than 2,000 employees at various locations, due to
lack of progress in ongoing contract negotiations with the United
Steelworkers (USW). The facilities are being operated by salaried
and temporary workers. After an initial drop in asset utilization
due to the work stoppage, production rates continue to improve.
These facilities are meeting and in many cases exceeding output,
quality, and safety expectations.
In the High Performance Materials and Components segment,
weakened demand from the oil & gas market continued to
negatively impact results. Third quarter sales to the aerospace
market were lower than the previous quarter due to seasonal demand,
primarily in Europe, as well as the rapid decline in the value of
raw materials, particularly for nickel.
“We remain confident that our High Performance Materials and
Components segment operating performance will significantly improve
in 2016. Our production schedules from our aerospace customers show
demand improvement for our next-generation nickel-based alloys and
titanium-based alloys and our precision forgings, castings, and
components,” said Rich Harshman, Chairman, President and CEO.
“In our Flat Rolled Products segment, as reported last week,
repair of the Hot-Rolling and Processing Facility’s Rotary Crop
Shear was successfully completed on schedule. Our flat rolled
products facilities are operating, mostly at pre-work stoppage
levels, and asset utilization continues to improve. We are
committed to reaching a fair and more competitive labor agreement
with the USW. Our goal is to have the cost structure and enhanced
product mix that enables ATI Flat Rolled Products to be a
competitive business now and in the future.
ATI will provide live Internet listening access to its
conference call with investors and analysts scheduled for Tuesday,
October 20, 2015 at 8:30 a.m. ET. The conference call will be
conducted after the Company’s planned release of third quarter 2015
results. The conference call will be broadcast, and accompanying
presentation slides will be available, at www.ATImetals.com. To
access the broadcast, go to the home page and select “Conference
Call”. Replay of the conference call will be available on the ATI
website.
This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on management’s current
expectations and include known and unknown risks, uncertainties and
other factors, many of which we are unable to predict or control,
that may cause our actual results, performance or achievements to
materially differ from those expressed or implied in the
forward-looking statements. Additional information concerning
factors that could cause actual results to differ materially from
those projected in the forward-looking statements is contained in
our filings with the Securities and Exchange Commission. We assume
no duty to update our forward-looking statements.
Creating Value Thru Relentless Innovation®
Allegheny Technologies Incorporated is one of the largest and
most diversified specialty materials and components producers in
the world with revenues of approximately $4.3 billion for the
twelve months ended June 30, 2015. ATI has approximately 9,600
full-time employees world-wide who use innovative technologies to
offer global markets a wide range of specialty materials solutions.
Our major markets are aerospace and defense, oil and gas/chemical
process industry, electrical energy, medical, automotive, food
equipment and appliance, and construction and mining. The ATI
website is www.ATImetals.com.
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version on businesswire.com: http://www.businesswire.com/news/home/20151006006867/en/
Allegheny Technologies IncorporatedDan L. Greenfield,
412-394-3004
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