Allegheny Technologies Announces Third Quarter 2012 Results

Allegheny Technologies Incorporated (NYSE: ATI) reported net income for the third quarter 2012 of $35.3 million, or $0.32 per share, on sales of $1.22 billion. In the third quarter 2011, ATI reported net income of $62.3 million, or $0.56 per share, on sales of $1.35 billion.

For the nine months ended September 30, 2012, net income was $147.9 million, or $1.32 per share, on sales of $3.93 billion. For the nine months ended September 30, 2011, net income was $182.6 million, or $1.68 per share, on sales of $3.93 billion.

“Continuing uncertainty regarding global economic conditions impacted our third quarter 2012 results,” said Rich Harshman, Chairman, President and Chief Executive Officer. “We are seeing conservative inventory management throughout the supply chains of most of our major end markets. These actions appear to be driven by concerns about the U.S. election and resolution of the U.S. ‘fiscal cliff’, and uncertain economic trends in China, Europe, and Japan.

“We believe that as these uncertainties begin to be resolved, demand will improve for our GDP-sensitive products and strong secular growth trends will resume in our key global markets. We are not waiting for resolution of these macroeconomic issues. We continue to improve our cost structure and execute our strategies to enhance our competitive position by completing our strategic capital investments, introducing and qualifying innovative new products, improving our position with existing customers, and growing our participation at new customers.”

• 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 the first nine months of 2012:
  • Sales to the aerospace and defense market were $1.25 billion and represented 32% of ATI sales.
  • Sales to the oil and gas/chemical process industry were $769 million and represented 20% of ATI sales.
  • Sales to the electrical energy market were $464 million and represented 12% of ATI sales.
  • Sales to the medical market were $166 million and represented 4% of ATI sales.
• Direct international sales were $1.4 billion for the first nine months of 2012 and represented nearly 36% of ATI sales.

“The current economic conditions have resulted in softening of demand from the jet engine aftermarket and a cautious approach to managing inventory in the supply chains of both airframe and jet engine OEMs,” said Mr. Harshman. “In spite of these short-term headwinds, we see strong growth in demand for our products from the commercial aerospace market over the next 3 to 5 years. OEM backlogs remain at record levels and announced production rate ramps remain on schedule. The new airframe designs and the new jet engines that meet the need for improved energy and environmental efficiency are demand drivers for ATI’s differentiated products.

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