Allegheny Technologies Inc. ATI announced plans to offer $350 million in total principal amount of 5.875% senior notes due 2027. The company also priced the notes offering.
The notes are expected to pay interest on a semi-annual basis in arrears at a rate of 5.875% per year. Its maturity date is expected to be Dec 1, 2027, unless repurchased or redeemed earlier.
The company plans to use the net proceeds from the offering along with cash on hand to fund the redemption of its outstanding 5.950% of senior notes due 2021, of which $500 million total principal amount is outstanding, per the indenture terms governing the 2021 notes.
BofA Securities, Inc and Citigroup Global Markets Inc serve as the book-running managers for the senior notes offering.
Shares of Allegheny Technologies have lost 11.4% in the past year against the industry’s 4.4% growth.
The company recorded net income of $111 million or 78 cents per share in third-quarter 2019, up from $50.5 million or 37 cents per share in the prior-year quarter. Its adjusted earnings per share of 33 cents were in line with the Zacks Consensus Estimate.
The company delivered revenues of $1,018.7 million in the quarter, down 0.2% year over year. However, the top line surpassed the Zacks Consensus Estimate of $993.5 million.
Allegheny Technologies ended the third quarter with cash and cash equivalents of $511.3 million, up more than 233% year over year. Its long-term debt rose to $1,541.7 million from $1,535.3 million in the year-ago quarter.
The company expects backlogs for single-aisle platforms to remain strong in the High Performance Materials & Components (“HPMC”) unit. However, it expects uneven order patterns along with inventory management actions by customers to negatively impact shipments in the fourth quarter of 2019. This is likely to partly offset the benefit from Allegheny Technologies’ larger share of high-value commercial jet engine materials and components.
For the Flat-Rolled Products (“FRP”), the company expects consistent profitability in the fourth quarter of 2019 on sustained strength in high-value products in the United States as well as its STAL joint venture. Also, the favorable impact of higher nickel prices on raw material surcharge values is expected to drive the segment.
Allegheny Technologies Incorporated Price and Consensus
Allegheny Technologies Incorporated price-consensus-chart | Allegheny Technologies Incorporated Quote
Zacks Rank & Stocks to Consider
Allegheny Technologies currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the basic materials space are Impala Platinum Holdings Ltd. IMPUY, Franco-Nevada Corporation FNV and Agnico Eagle Mines Limited AEM, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Impala Platinum has an expected earnings growth rate of 248.3% for the current fiscal year. The company’s shares have surged 243.7% in the past year.
Franco-Nevada has a projected earnings growth rate of 46.2% for 2019. The company’s shares have rallied 44.3% in a year.
Agnico Eagle has an estimated earnings growth rate of 168.6% for the current year. Its shares have moved up 67.8% in the past year.
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