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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