Advanced Technology Materials Co. Posts 21.5% Increase in Q3 Revenue as Aerospace Market Rebounds

Source: Streetwise Reports   10/28/2021

Shares of Allegheny Technologies Inc. traded 13% higher after the company reported it has returned to profitability fueled by recovery in the aerospace market and implementation of its own business transformation initiatives.

Advanced specialty materials and complex components manufacturer Allegheny Technologies Inc. (ATI:NYSE), today announced financial results for the third quarter of 2021 ended September 30, 2021.

The company reported that for Q3/21 it had net sales of $726.7 million, compared to $598.0 million in Q3/20. The firm mentioned that sales in Q3/21 were also up 18% sequentially over the $616.2 million in sales it posted during Q2/21.

Allegheny Technologies advised that in Q3/21 it earned net income attributable to ATI of $48.7 million, or $0.35 per share and adjusted net income attributable to ATI of $6.2 million, or $0.05 per share. The company added that adjusted EBITDA in Q3/21 was $79.9 million, compared to $53.7 million in Q2/21 and $16.6 million in Q3/20.

Allegheny Technologies’ Board Chair, President and CEO Robert S. Wetherbee commented, “We delivered profitable third quarter results that exceeded our expectations. We are laser-focused, locking in our cost structure improvements as our end markets begin to show signs of sustained recovery…Our Specialty Rolled Products business accelerated its production rates to pre-strike levels to take advantage of strong demand and favorable pricing in most end-markets, especially energy and industrial applications.”

“Showing ongoing signs of recovery, commercial aerospace continues to expand unevenly across our product portfolio. Jet engine forgings demand remained strong, bolstered by our 2021 share gains. Demand for our jet engine specialty materials was mixed, varying by customer and product largely due to uneven supply chain inventory levels and customer order patterns…We continue to strengthen and de-risk our balance sheet,” Wetherbee added.

The firm stated its Q3/21 financial results were negatively impacted somewhat due to a strike by employees which concluded on July 13, 2021. The company noted that the impact primarily effected its Specialty Rolled Products (SRP) business.

The company stated that HPMC sales in Q3/21 were in-line with those recorded in Q2/21 as demand for materials and specialty products for the energy markets increased by 19%. The firm said the gains were offset by sales to defense industry clients. Allegheny said that commercial aerospace sales in Q3/21 improved 36% year-over-year versus Q3/20 from higher commercial jet engine and energy markets sales.

The company indicated that in Q3/21, sales in its AA&S segment were 35% than Q2/21 and 13% higher than Q3/20. The firm advised that a sizable portion of the gains in Q3/21 over Q2/21 was due to lower comparable results in the second quarter due to strike-related impacts which has since been resolved.

Allegheny Technologies reported that it completed the sale of its Flowform Products business for $55.0 million in August 2021 and stated that it recognized a $13.7 million gain from the sale during Q3/21.

The company did not provide any specific forward guidance. CEO Wetherbee stated that the company expects to achieve higher sequential revenue and earnings growth in Q4/21 in its HPMC segment from the ongoing recovery in commercial aerospace.

The firm expects that reductions in working capital requirements and improvements in inventory management and manufacturing operations will aid in boosting operating cash flow in Q4/21. The company noted that it is actively revamping and upgrading its manufacturing operations in the AA&S segment which is expected to have a short-term unfavorable effect on costs in the fourth quarter.

Allegheny Tech. is a manufacturer of advanced specialty materials and components headquartered in Pittsburgh, Pa. The firm operates through two primary business segments: High Performance Materials & Components (HPMC); and Advanced Alloys & Solutions (AA&S). The company’s HPMC business includes high performance specialty materials, forged and finished products, and powders for forging and additive products. The AA&S segment produces high value products including nickel-based, specialty, titanium and zirconium alloys and stainless-steel products for the aerospace, defense and energy markets.

Allegheny Technologies began the day with a market cap of around $1.9 billion with approximately 127.2 million shares outstanding and a short interest of about 10.9%. ATI shares opened 5% higher today at $15.71 (+$0.77, +5.15%) over yesterday’s $14.94 closing price. The stock has traded today between $15.69 and $17.24 per share and is currently trading at $17.00 (+$2.06, +13.79%).

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