Steel Mills
ATI Back in the Black, Fueled by Post-Strike Aerospace Recovery
Written by David Schollaert
October 28, 2021
Allegheny Technologies Inc. (ATI) reported profitability for the first time since Q1 2020, three months ahead of schedule, company executives said on Thursday’s earnings call. The third-quarter net income of $48.7 million – up 35% against second-quarter results – was fueled by an improving aerospace market and a post-strike accelerated recovery.
ATI said that production at its hot rolling and processing facility (HRPF) in Brackenridge, Pa., surpassed forecasts as strike recovery efforts sped up in September.
“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,” said Robert Wetherbee, ATI’s chairman, president and CEO.
The lengthy strike by the United Steelworkers (USW) union that concluded in July cost the company $40.3 million in the second quarter. But thanks to an aggressive ramp up in production and a long-term slab toll rolling agreement with JSW Steel USA, ATI’s results topped forecasts.
“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,” added Wetherbee. “Our end-market diversity fuels our ability to maximize gains in this unbalanced economic recovery.”
The recovery of commercial aerospace continues from the nosedive that followed the outbreak of the COVID-19 pandemic last year, as revenue was up 9% from the second quarter, and up 19% versus the same year-ago period, company executives said.
“Showing ongoing signs of recovery, commercial aerospace continues to expand unevenly across our product portfolio,” Wetherbee said on the call. “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.”
The company anticipates revenue and earnings growth for the fourth quarter, driven primarily by the continued recovery in commercial aerospace, and improved performance from its long-term slab toll rolling agreement with JSW. Working capital reductions and strategically curtailed manufacturing to better align inventory levels with market demand “will fuel fourth-quarter cash generation,” concluded Wetherbee.
By David Schollaert, David@SteelMarketUpdate.com
David Schollaert
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