Co. Enjoys Strong Growth on Aerospace Recovery

Source: Streetwise Reports   02/02/2022

Allegheny Technologies Inc. shares traded 17% higher after the company reported Q4/21 financial results that included a 16% YoY increase in sales to $765.4 million.

Complex components manufacturer and advanced specialty materials company Allegheny Technologies Inc. (ATI:NYSE), today announced financial results for the fourth quarter of 2021 ended Dec. 31, 2021.

Allegheny Technologies advised that it saw strong growth and profit margin expansion in Q4/21 with the acceleration in the recovery of the aerospace industry.

The company reported that for Q4/21, sales increased by 16% to $765.4 million, compared to $658.3 million in Q4/20.

The firm stated that in Q4/21 it posted a net loss of $29.8 million, or a net loss of $0.23 per share and adjusted earnings net income of $33.6 million, or a net gain of $0.25 per share, which it said, “excluded $66 million debt extinguishment charge and restructuring adjustments.”

The company noted that in Q4/21 in achieved adjusted EBITDA of $94.7 million and generated operating cash flow in the amount of $261 million.

Allegheny Technologies’ Board Chair, President, and Chief Executive Officer Robert S. Wetherbee stated, “Our fourth quarter results reflect growing momentum in our business. The aerospace market continues to recover, and we are seeing tangible results from our transformation in the AA&S segment. … We eclipsed 2019’s full year adjusted EBITDA margins for the second straight quarter despite lower revenues. This demonstrates that we’re maintaining our lean cost structures and improving our product mix and pricing.”

The company explained that during Q4/21, sales in its High Performance Materials & Components (HPMC) segment increased 5% sequentially. The firm noted that its commercial aerospace sales increased 16% which it said was attributable to higher demand for aero engine products.

Allegheny added that sales in its Advanced Alloys & Solutions (AA&S) segment were up 6% from Q3/21 driven by a 12% gain in aerospace and defense business and a 7% increase in its sales to the energy market.

“Our fourth quarter results reflect growing momentum in our business. The aerospace market continues to recover, and we are seeing tangible results from our transformation in the AA&S segment. … We eclipsed 2019’s full year adjusted EBITDA margins for the second straight quarter despite lower revenues. This demonstrates that we’re maintaining our lean cost structures and improving our product mix and pricing.”

—Allegheny Technologies’ Board Chair, President, and Chief Executive Officer Robert S. Wetherbee

For FY/21, the company posted aggregate sales of $2.80 billion, compared to $2.98 billion in FY/20.

The company made significant improvements to the bottom line and reported that for FY/21, it posted a net loss attributable to ATI of $38.2 million, or a loss of $0.30 per share, versus a net loss attributable to ATI of $1,572.6 million, or a loss of $12.43 per share in FY/20.

The company offered only some very general forward guidance and stated that it expects to enjoy strong year-over-year revenue and earnings growth in Q1/22. The firm stated that it anticipates that it will benefit from both its long-term business transformation efforts and the ongoing recovery in the commercial aerospace market. CEO Wetherbee noted that the company plans to offer more details at its virtual Investor Day scheduled for Thursday, Feb. 17, 2022.

In a separate news release Wednesday, the company announced that “its Board of Directors has authorized the repurchase of up to $150 million of its outstanding common stock.” According to the report, the firm may at its discretion elect to purchase shares either in the open market or through privately negotiated transactions.

Allegheny Technologies’ Executive Vice President and Chief Financial Officer Don P. Newman remarked, “This stock repurchase program demonstrates our confidence in ATI’s future financial performance and our strong cash and liquidity position. … We strongly believe in a balanced capital allocation strategy that funds profitable growth, furthers our balance sheet de-leveraging efforts and provides for shareholder return.”

Allegheny Technologies is a global manufacturer of advanced specialty materials and components based in Pittsburgh. The company’s operations are grouped into two primary business segments: High Performance Materials & Components (HPMC); and Advanced Alloys & Solutions (AA&S). The HPMC business is focused on the creation and production of high-performance specialty materials, forged and finished products, and powders for forging and additive products. The AA&S segment produces high value products such as titanium and zirconium alloys and stainless-steel products for the aerospace, defense, and energy markets.

Allegheny Technologies started the day with a market cap of around $2.4 billion with approximately 127.2 million shares outstanding and a short interest of about 11.8%. ATI shares opened close to 13% higher at $21.22 (+$2.41, +12.81%) over Tuesday’s $18.81 closing price. The stock has traded today between $20.66 and $22.68 per share and closed for trading at $22.02 (+$3.21, +17.07%).

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