Allegheny's (ATI) Earnings & Revenues Top Estimates in Q1

Allegheny Technologies Inc. ATI reported net earnings of $58 million or 42 cents per share for first-quarter 2018, compared with $17.5 million or 16 cents recorded a year-ago.

 

Barring one-time items, adjusted earnings came in at 32 cents per share for the quarter, which surpassed the Zacks Consensus Estimate of 24 cents.

 

Revenues for the quarter rose 13% year over year to $979 million, beating the Zacks Consensus Estimate of $950 million.

 

 

Allegheny Technologies Incorporated Price, Consensus and EPS Surprise

 

Allegheny Technologies Incorporated Price, Consensus and EPS Surprise | Allegheny Technologies Incorporated Quote

 

Segment Highlights

 

Revenues from the High Performance Materials & Components (“HPMC”) segment improved 10% year over year to $560.7 million in the first quarter driven by increased sales of forged and cast components.

 

Operating profit increased to $85.5 million from $50.9 million in the prior-year quarter. The increase is due to higher productivity from increasing aerospace and defense sales, and better product mix of next-generation nickel alloys and forgings for the aero engine market.

 

The Flat-Rolled Products (“FRP”) segment’s sales rose 17.7% year over year to $418.3 million on the back of higher shipment volume for high-value products, mainly nickel-based and specialty alloys for oil & gas projects.

 

The segment’s operating profit came in at $10.9 million, down from the year-ago figure of $19 million. The decline is due to roughly $8 million of unfavorable impact from required accounting changes on retirement benefit cost capitalization in inventory, as well as reduced benefits of foreign currency hedges.

 

Financial Position

 

Allegheny’s cash in hand as of Mar 31, 2018 was $110 million, down 31.2% year over year. Long-term debt fell 13.4% to $1,535.3 million.

 

The company generated operating cash flows of $47.1 million in the quarter.  

 

Outlook

 

Allegheny expects continued operating margin improvement and revenue growth in its HPMC unit in 2018 from improved asset utilization and aerospace market demand growth. Allegheny also expects FRP unit to capitalize on the operational improvements and A&T Stainless joint venture and growth in differentiated products.

 

Additionally, the company anticipates to generate at least $150 million of free cash flow in 2018, excluding contributions to the ATI Pension Plan.

 

Price Performance

 

Shares of Allegheny have moved up 30.2% over a year, outperforming the industry’s gain of 24.6%.

 

 

 

 

Zacks Rank & Other Stocks to Consider

 

Allegheny currently sports a Zacks Rank #1 (Strong Buy).

 

Some other top-ranked stocks in the basic materials space are Kronos Worldwide Inc. KRO, Celanese Corporation CE and Methanex Corporation MEOH.

 

Kronos has an expected long-term earnings growth rate of 5% and flaunts a Zacks Rank #1. The company’s shares have moved up 45.2% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

 

Celanese has an expected long-term earnings growth rate of 8.9% and flaunts a Zacks Rank #1. Its shares have gained 25% over a year.

 

Methanex has an expected long-term earnings growth rate of 15% and carries a Zacks Rank #2 (Buy). Its shares have gained 44.7% over a year.

 

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