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Allegheny Technologies Announces Fourth Quarter And Full Year 2012 Results

Stocks in this article: ATI

Building the World’s Best Specialty Metals Company® Allegheny Technologies Incorporated is one of the largest and most diversified specialty metals producers in the world with revenues of approximately $5.0 billion in 2012. ATI has approximately 11,200 full-time employees world-wide who use innovative technologies to offer global markets a wide range of specialty metals solutions. Our major markets are aerospace and defense, oil and gas/chemical process industry, electrical energy, medical, automotive, food equipment and appliance, machine and cutting tools, and construction and mining. Our products include titanium and titanium alloys, nickel-based alloys and superalloys, grain-oriented electrical steel, stainless and specialty steels, zirconium, hafnium, and niobium, tungsten materials, forgings, castings and fabrication and machining capabilities. The ATI website is www.ATImetals.com.

               
 

Allegheny Technologies Incorporated and Subsidiaries

Consolidated Statements of Income
(Dollars in millions, except per share amounts)
   
Three Months Ended Twelve Months Ended
December 31 December 31
2012 2011 2012 2011
 
Sales $ 1,101.1 $ 1,251.4 $ 5,031.5 $ 5,183.0
Costs and expenses:
Cost of sales 976.6 1,082.4 4,338.3 4,369.8
Selling and administrative expenses   92.0     97.4     377.8     382.1  
Income before interest, other income
and income taxes 32.5 71.6 315.4 431.1
Interest expense, net (15.9 ) (22.2 ) (71.6 ) (92.3 )
Other income (expense), net   (0.5 )   0.5     0.2     0.6  
Income before income tax provision 16.1 49.9 244.0 339.4
Income tax provision   2.6     15.7     76.2     116.3  
 
Net income 13.5 34.2 167.8 223.1
 
Less: Net income attributable to
noncontrolling interests   3.0     2.5     9.4     8.8  
 
Net income attributable to ATI $ 10.5   $ 31.7   $ 158.4   $ 214.3  
 
Basic net income attributable to
ATI per common share $ 0.10   $ 0.30   $ 1.49   $ 2.09  
 
Diluted net income attributable to
ATI per common share $ 0.10   $ 0.29   $ 1.43   $ 1.97  
 
Weighted average common shares
outstanding -- basic (millions) 106.3 105.1 106.1 102.5
 
Weighted average common shares
outstanding -- diluted (millions) 107.2 116.6 116.6 113.9
 
Actual common shares outstanding--
end of period (millions) 107.4 106.4 107.4 106.4
 

       
 
Allegheny Technologies Incorporated and Subsidiaries
Sales and Operating Profit by Business Segment
(Dollars in millions)
       

Three Months Ended

Twelve Months Ended
December 31 December 31
2012 2011 2012 2011
Sales:
High Performance Metals $ 503.8 $ 524.6 $ 2,190.6 $ 1,955.9
Flat-Rolled Products 495.6 598.5 2,349.2 2,726.0
Engineered Products   101.7     128.3     491.7     501.1  
 
Total External Sales $ 1,101.1   $ 1,251.4   $ 5,031.5   $ 5,183.0  
 
Operating Profit:
 
High Performance Metals $ 80.8 $ 90.3 $ 371.6 $ 364.5
% of Sales 16.0 % 17.2 % 17.0 % 18.6 %
 
Flat-Rolled Products 9.4 17.5 126.9 213.4
% of Sales 1.9 % 2.9 % 5.4 % 7.8 %
 
Engineered Products 5.1 6.6 39.4 34.1
% of Sales   5.0 %   5.1 %   8.0 %   6.8 %
 
Operating Profit 95.3 114.4 537.9 612.0
% of Sales 8.7 % 9.1 % 10.7 % 11.8 %
 
Corporate expenses (16.0 ) (20.0 ) (68.4 ) (92.5 )
 
Interest expense, net (15.9 ) (22.2 ) (71.6 ) (92.3 )
 
Closed company and
other expenses (16.7 ) (2.3 ) (31.5 ) (9.9 )
 
Retirement benefit expense   (30.6 )   (20.0 )   (122.4 )   (77.9 )
 
Income before
income taxes $ 16.1   $ 49.9   $ 244.0   $ 339.4  
 

           
 
Allegheny Technologies Incorporated and Subsidiaries
Consolidated Balance Sheets
(Dollars in millions)
 
December 31, December 31,
2012 2011
ASSETS
 
Current Assets:
Cash and cash equivalents $ 304.6 $ 380.6
Accounts receivable, net of allowances for
doubtful accounts of $5.5 and $5.9 at
December 31, 2012 and 2011, respectively 613.3 709.1
Inventories, net 1,536.6 1,384.3

Prepaid expenses and

other current assets   56.1   95.5
Total Current Assets 2,510.6 2,569.5
 
Property, plant and equipment, net 2,559.9 2,368.8
Cost in excess of net assets acquired 740.1 737.7
Deferred income taxes 71.5 -
Other assets   365.7   370.9
 
Total Assets $ 6,247.8 $ 6,046.9
 
LIABILITIES AND EQUITY
 
Current Liabilities:
Accounts payable $ 499.9 $ 490.7
Accrued liabilities 330.5 320.3
Deferred income taxes 24.0 23.5
Short term debt and current
portion of long-term debt   17.1   27.3
Total Current Liabilities 871.5 861.8
 
Long-term debt 1,463.0 1,482.0
Accrued postretirement benefits 495.2 488.1
Pension liabilities 721.1 508.9
Deferred income taxes - 9.8
Other long-term liabilities   109.9   124.7
Total Liabilities   3,660.7   3,475.3
 
Total ATI stockholders' equity 2,479.6 2,475.3
Noncontrolling interests   107.5   96.3
Total Equity   2,587.1   2,571.6
 
Total Liabilities and Equity $ 6,247.8 $ 6,046.9
 

           
 
Allegheny Technologies Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Dollars in millions)
 
    Twelve Months Ended
December 31
2012 2011
 
Operating Activities:
 
Net income $ 167.8 $ 223.1
 
Depreciation and amortization 194.0 174.4
Deferred taxes (19.4 ) 52.7
Change in managed working capital 22.4 (273.3 )
Change in retirement benefits 58.9 19.6
Accrued liabilities and other   3.8     100.3  
Cash provided by operating activities   427.5     296.8  
Investing Activities:
Purchases of property, plant and equipment (382.0 ) (278.2 )
Acquisition of business - (349.2 )
Asset disposals and other   3.3     2.7  
Cash used in investing activities   (378.7 )   (624.7 )
Financing Activities:
Borrowings on long-term debt - 500.0
Payments on long-term debt and capital leases (16.7 ) (143.8 )
Net repayments under credit facilities (10.4 ) (3.1 )
Debt issuance costs - (5.0 )
Dividends paid to shareholders (76.5 ) (74.7 )
Dividends paid to noncontrolling interests - (7.2 )
Exercises of stock options 2.2 1.6
Taxes on share-based compensation and other   (23.4 )   8.4  
Cash provided by (used in) financing activities   (124.8 )   276.2  
Decrease in cash and cash equivalents (76.0 ) (51.7 )
Cash and cash equivalents at beginning of period   380.6     432.3  
Cash and cash equivalents at end of period $ 304.6   $ 380.6  
 

               
 
Allegheny Technologies Incorporated and Subsidiaries
Selected Financial Data - Mill Products
(Unaudited)
 
Three Months Ended Twelve Months Ended
December 31 December 31
Mill Products Volume: 2012 2011 2012 2011
High Performance Metals (000's lbs.)
Titanium mill products 5,748 5,688 25,943 26,518
Nickel-based and specialty alloys 11,118 11,852 54,329 47,913
Zirconium and related alloys 1,142 1,048 3,901 4,094
 
Flat-Rolled Products (000's lbs.)
High value 107,604 122,763 475,808 497,079
Standard   155,600   121,693   656,285   587,648
Flat-Rolled Products total 263,204 244,456 1,132,093 1,084,727
 
 
Mill Products Average Prices:
High Performance Metals (per lb.)
Titanium mill products $ 22.65 $ 23.90 $ 22.56 $ 22.01
Nickel-based and specialty alloys $ 15.59 $ 15.41 $ 15.13 $ 15.58
Zirconium and related alloys $ 66.68 $ 67.05 $ 70.54 $ 66.31
 
Flat-Rolled Products (per lb.)
High value $ 2.61 $ 3.27 $ 2.89 $ 3.32
Standard $ 1.35 $ 1.57 $ 1.46 $ 1.80
Flat-Rolled Products combined average $ 1.87 $ 2.42 $ 2.06 $ 2.49
 

Mill Products volume and average price information includes shipments to ATI Ladish for all periods presented. High Performance Metals mill product forms include ingot, billet, bar, shapes and rectangles, rod, wire, and seamless tubes.

               
 
Allegheny Technologies Incorporated and Subsidiaries
Computation of Basic and Diluted Earnings Per Share
(Unaudited, in millions, except per share amounts)
   
Three Months Ended Twelve Months Ended
December 31 December 31
2012 2011 2012 2011
Numerator for Basic net income per common share -
Net income attributable to ATI $ 10.5 $ 31.7 $ 158.4 $ 214.3
Effect of dilutive securities:
4.25% Convertible Notes due 2014   -   2.4   8.5   9.9
Numerator for Dilutive net income per common share -

Net income attributable to ATI after assumed conversions

$ 10.5 $ 34.1 $ 166.9 $ 224.2
 
Denominator for Basic net income per common share -
Weighted average shares outstanding 106.3 105.1 106.1 102.5
Effect of dilutive securities:
Share-based compensation 0.9 1.9 0.9 1.8
4.25% Convertible Notes due 2014   -   9.6   9.6   9.6
Denominator for Diluted net income per common share -
Adjusted weighted average assuming conversions   107.2   116.6   116.6   113.9
 
Basic net income attributable to ATI per common share $ 0.10 $ 0.30 $ 1.49 $ 2.09
 
Diluted net income attributable to ATI per common share $ 0.10 $ 0.29 $ 1.43 $ 1.97
 

   
 
Allegheny Technologies Incorporated and Subsidiaries
Other Financial Information
Managed Working Capital
(Dollars in millions)
       
December 31, December 31,
2012 2011
 
Accounts receivable $ 613.3 $ 709.1
Inventory 1,536.6 1,384.3
Accounts payable   (499.9 )   (490.7 )
Subtotal 1,650.0 1,602.7
 
Allowance for doubtful accounts 5.5 5.9
LIFO reserve 76.9 153.7
Corporate and other   68.4     60.9  
Managed working capital $ 1,800.8   $ 1,823.2  
 
Annualized prior 2 months
sales $ 4,379.6   $ 4,820.6  
 
Managed working capital as a
% of annualized sales 41.1 % 37.8 %
 
December 31, 2012 change in managed
working capital $ (22.4 )
 

As part of managing the liquidity in our business, we focus on controlling managed working capital, which is defined as gross accounts receivable and gross inventories, less accounts payable. In measuring performance in controlling this managed working capital, we exclude the effects of LIFO inventory valuation reserves, excess and obsolete inventory reserves, and reserves for uncollectible accounts receivable which, due to their nature, are managed separately.

   
 
Allegheny Technologies Incorporated and Subsidiaries
Other Financial Information
Debt to Capital
(Dollars in millions)
       
December 31, December 31,
2012 2011
 
Total debt $ 1,480.1 $ 1,509.3
Less: Cash   (304.6 )   (380.6 )
Net debt $ 1,175.5 $ 1,128.7
 
Net debt $ 1,175.5 $ 1,128.7
Total ATI stockholders' equity   2,479.6     2,475.3  
Net ATI capital $ 3,655.1 $ 3,604.0
 
Net debt to ATI capital   32.2 %   31.3 %
 
Total debt $ 1,480.1 $ 1,509.3
Total ATI stockholders' equity   2,479.6     2,475.3  
Total ATI capital $ 3,959.7 $ 3,984.6
 
Total debt to total ATI capital   37.4 %   37.9 %
 

In managing the overall capital structure of the Company, some of the measures that we focus on are net debt to net capitalization, which is the percentage of debt, net of cash that may be available to reduce borrowings, to the total invested and borrowed capital of ATI (excluding noncontrolling interest), and total debt to total ATI capitalization, which excludes cash balances.

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