Allegheny Tech Closes Fabricated Components Unit; To Divest Iron Casting Unit

(RTTNews) - Allegheny Technologies Inc. (ATI) said that it closed the fabricated components business and plans to divest its iron casting business, as a result of completion of a strategic review. As a result of these strategic actions, it will record a non-recurring pre-tax charge of about $9 million in the third quarter 2013, primarily related to asset impairment.

The iron castings business and fabricated components business were two small operations, which were part of ATI's Engineered Products segment.

The company noted that it has restructured its Engineered Products segment as a result of the previously announced pending sale of its tungsten materials business, and the integration of the previously standalone specialty steel forgings business into ATI Ladish's forgings operations.

In addition, to improve operating efficiencies and reduce costs ATI said it has integrated its precision titanium and specialty alloy flat-rolled finishing business into ATI Allegheny Ludlum's specialty plate business. As a result, effective with the reporting of the third quarter 2013 results, ATI will report the results of its tungsten materials business as discontinued operations; the specialty steel forgings business will be included in ATI's High Performance Metals segment and the precision titanium and specialty alloy flat-rolled finishing business will be included in ATI's Flat-Rolled Products segment.

"These strategic actions are designed to position ATI for improved financial performance in 2014 and beyond, simplify capital allocation decisions, and enhance our focus on ATI's strategic businesses," said Rich Harshman, ATI's Chairman, President and Chief Executive Officer.

Excluding discontinued operations, the company expects third quarter 2013 sales of approximately $970 million and total segment operating profit in the range of $25 million to $30 million.

The company expects that third quarter results continued to be negatively impacted by lower shipments associated with many high-value and standard products, lower base-selling prices for many products, and the impact of higher raw material input costs for products with longer manufacturing cycle times not aligned with falling raw material sales indices and surcharges, which continue to negatively impact raw materials cost recovery.

The firm expects third quarter 2013 loss from continuing operations to be approximately $0.27 to $0.30 per share, which includes an additional $(0.04) per share resulting from a lower than normal tax benefit due to the impacts of income taxes reported in domestic and foreign jurisdictions.

Analysts polled by Thomson Reuters expected the company to report breakeven per share and revenues of $1.15 billion for the third-quarter. Analysts' estimates typically exclude special items.

In addition, ATI third quarter 2013 results for discontinued operations are expected to include the previously discussed non-recurring special charge of approximately $(0.08) per share.

While business conditions to remain challenging through the end of 2013, the company said it continues to focus on taking actions to keep it strongly positioned to deliver on the strong profitable growth opportunities for the company over the next 3 to 5 years.

The company stated that the actions include: negotiating new and extending existing long-term agreements with strategic customers; positioning our titanium sponge facility in Rowley, Utah to begin the premium grade qualification program; and completing construction of our game changing Flat-Rolled Products segment Hot-Rolling and Processing Facility or HRPF to initiate and complete the cold- and hot-commissioning process in 2014.

The firm stated that it continue to accelerate its cost reduction and lean manufacturing efforts throughout the Company.

The company also expects to significantly improve its liquidity and financial flexibility with the previously announced sale of its tungsten materials business for $605 million. The transaction is expected to be completed during the fourth quarter 2013. As a result, it expects to record a significant gain in the fourth quarter 2013 from this transaction.