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Allegheny (ATI) Q2 Earnings and Revenues Surpass Estimates

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·3 min read
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Allegheny Technologies Incorporated ATI recorded net loss of $49.2 million or 39 cents per share in second-quarter 2021 compared with a loss of $422.6 million or $3.34 per share in the prior-year quarter.

Barring one-time items, adjusted loss was 12 cents per share, narrower than the Zacks Consensus Estimate of a loss of 20 cents.

The company delivered revenues of $616.2 million in the quarter, down 20% year over year. Nevertheless, the figure surpassed the Zacks Consensus Estimate of $582 million.

Allegheny Technologies Incorporated Price, Consensus and EPS Surprise

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

Allegheny Technologies Incorporated price-consensus-eps-surprise-chart | Allegheny Technologies Incorporated Quote

Segment Highlights

In the second quarter, revenues in the High-Performance Materials & Components (“HPMC”) segment totaled $300.6 million, flat year over year. The company stated that sales figure reflected lower commercial aerospace sales driven by pandemic, offset by higher government defense and energy markets sales. EBITDA in the unit was $37.2 million compared with $28.7 million in the prior-year quarter. Higher production volumes and cost-cutting actions aided operating margins.

The Advanced Alloys & Solutions (“AA&S”) segment’s sales fell 33.3% year over year to $315.6 million, owing to impacts from the strike as well as the exit from the standard stainless sheet market. EBITDA in the division totalled $36 million compared with $33.4 million in the prior-year quarter. Richer product mix, including a smaller proportion of standard stainless products, benefit from raw material price changes and gains from 2020 cost reductions have improved operating margin.

Financial Position

Allegheny ended the quarter with cash and cash equivalents of $472.5 million, down 12.4% year over year. Long-term debt increased 5.6% year over year at $1,602.2 million.

Cash used in operating activities for the first half of 2021 was $102.6 million.

Outlook

Allegheny expects continued recovery in its jet engine market in the third quarter. The recovery is expected to be driven by increasing narrow body aircraft production rates as well as ongoing strength in its energy and electronics end markets.

It anticipates lingering effects on its SRP business, with production levels returning to pre-strike levels across the balance of the third quarter. However, despite this challenge in the near term, ongoing global economic recovery is gradually expanding and providing optimism for its most impactful end markets, Allegheny noted.

Price Performance

Shares of Allegheny have surged 117.6% in the past year compared with 83.8% rise of the industry.

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Zacks Investment Research


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Zacks Rank & Key Picks

Allegheny currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space are Nucor Corporation NUE, Dow Inc. DOW and Cabot Corporation CBT.

Nucor has a projected earnings growth rate of around 444.9% for the current year. The company’s shares have surged 145.3% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Dow has an expected earnings growth rate of around 403.01% for the current year. The company’s shares have gained 48.2% in the past year. It currently carries a Zacks Rank #2.

Cabot has an expected earnings growth rate of around 137.5% for the current fiscal. The company’s shares have surged 43.4% in the past year. It currently holds a Zacks Rank #2.


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