Allegheny Technologies Announces Fourth Quarter and Full Year 2012 Results

Wed Jan 23, 2013 7:30am EST

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Fourth Quarter 2012 Results

* Sales were $1.10 billion
* Segment operating profit of $95.3 million, or 8.7% of sales
* Net income attributable to ATI before a special charge was $19.3 million, or
$0.18 per share
* Net income attributable to ATI was $10.5 million, or $0.10 per share,
including the special charge of $8.8 million, or $0.08 per share
* Gross cost reductions were $26.8 million
* Cash on hand increased $23.6 million during the quarter to $304.6 million

Full Year 2012 Results

* Sales were $5.03 billion
* Segment operating profit of $537.9 million, or 10.7% of sales
* Net income attributable to ATI before a special charge was $167.2 million, or
$1.51 per share
* Net income attributable to ATI including the special charge was $158.4
million, or $1.43 per share
* Gross cost reductions were $113.8 million
* Net debt to total capitalization was 32.2%
* Total debt to total capitalization decreased to 37.4%

PITTSBURGH--(Business Wire)--
Allegheny Technologies Incorporated (NYSE: ATI) reported fourth quarter 2012
sales of $1.10 billion and net income of $10.5 million, or $0.10 per share,
which includes a special charge of $8.8 million, or $0.08 per share. Fourth
quarter 2012 net income excluding the special charge was $19.3 million, or $0.18
per share. The fourth quarter 2012 special charge reflects asset write-downs in
the Engineered Products segment associated with consolidating casting
facilities. 

In the fourth quarter 2011, ATI reported net income of $31.7 million, or $0.29
per share, on sales of $1.25 billion. Fourth quarter 2011 results were impacted
by restructuring and Ladish acquisition expenses, which reduced earnings by $2.8
million, or $0.02 per share. 

For the full year 2012, net income was $158.4 million, or $1.43 per share, on
sales of $5.03 billion. Net income for the full year 2012 excluding the fourth
quarter special charge was $167.2 million, or $1.51 per share. 

For the full year 2011, net income was $214.3 million, or $1.97 per share, on
sales of $5.18 billion. Results for 2011 included $29.6 million of charges, net
of tax, for Ladish acquisition expenses, accelerated recognition of equity
compensation due to executive retirements, and restructuring and start-up
expenses, which reduced earnings by $0.26 per share. 

"The fourth quarter 2012 was negatively impacted by headwinds resulting from
uncertain global economic conditions," said Rich Harshman, Chairman, President
and Chief Executive Officer. "We saw continued conservative inventory management
throughout the supply chains of most of our major end markets. These actions
appear to have been driven by near-term concerns about the U.S. economy related
to resolution of U.S. fiscal policy issues and challenging economic conditions
in Europe, Japan, and to a lesser extent China. While these headwinds are
creating challenging short-term conditions, we remain optimistic about the
long-term growth opportunities in many of our global markets."

* ATI`s sales to the key global markets of aerospace and defense, oil and
gas/chemical process industry, electrical energy, and medical represented 67% of
ATI sales for 2012:

* Sales to the aerospace and defense markets were $1.62 billion and represented
32% of ATI sales. 
* Sales to the oil and gas/chemical process industry were $956 million and
represented 19% of ATI sales. 
* Sales to the electrical energy market were $600 million and represented 12% of
ATI sales. 
* Sales to the medical market were $224 million and represented 4% of ATI
sales.

* Direct international sales were $1.8 billion and represented 36% of ATI 2012
sales.

"Our fourth quarter 2012 results were impacted by continued low demand and
historically low base prices for our standard stainless products," said Mr.
Harshman. "In addition, demand for some of our high-value products in both the
High Performance Metals and Flat-Rolled Products segments was impacted by
short-term actions by our customers to keep inventories lean and by delays in
projects. 

"While 2012 presented challenging business conditions, we continued to enhance
our competitive position by improving our cost structure, enhancing our
manufacturing capabilities, and growing relationships with our customers. These
actions are aimed at improving our future performance and positioning ATI to
benefit from longer-term growth opportunities. Some examples of our strategic
actions include:

* Our continuing focus on reducing costs, which resulted in gross cost
reductions before the effects of inflation of nearly $114 million in 2012. 
* In the first full year as part of ATI, the ATI Ladish high performance
forgings and castings business recorded its best revenue year ever. Synergy
opportunities continue to expand and are gaining momentum. We are internally
sourcing more titanium alloy and nickel-based superalloy mill products and are
achieving other cost reductions and technology improvements. It is clear that
ATI`s vertically integrated capabilities in nickel, titanium, and specialty
alloys provide opportunities for value creation for our customers and
shareholders. 
* We further improved our position with both existing and new customers in the
key end markets of aerospace, oil and gas/chemical process industry, electrical
energy, and medical through strategic and long-term agreements for new alloys
and new products. 
* Our Rowley titanium sponge facility completed the standard-grade qualification
(SQ) process during the first half of 2012. We continue to improve the
facility`s cost structure through process and productivity improvements and
technology initiatives, and we expect to begin the premium-grade qualification
(PQ) process in 2013. 
* We continued to enhance our capabilities as the world`s leader in titanium
plasma arc melting (PAM) with the qualification during 2012 of our newest PAM
furnace. This is our fourth PAM furnace and ATI remains the world`s leading PAM
melter for the most critical and demanding jet engine applications. 
* Our Flat-Rolled Products segment Hot-Rolling and Processing Facility (HRPF)
project is on schedule and on budget. Construction is expected to be completed
by the end of 2013. While the HRPF is expected to be ready for service by the
end of this year, commissioning is scheduled to occur during the first half of
2014. This game-changing investment is designed to significantly enhance ATI`s
flat-rolled products capabilities, reduce manufacturing cycle times, and lower
costs. 
* We took steps to size our primary zirconium operations to improve its cost
structure in the post-Fukushima Daiichi nuclear electrical energy market. 
* To further improve our operating efficiency, we consolidated operations in our
Engineered Products segment resulting in the closure of our iron casting
facility in Alpena, MI, which resulted in a $8.8 million, after-tax, non-cash
special charge in the fourth quarter 2012. In our Flat-Rolled Products segment,
we are consolidating service center operations, which is on schedule to be
completed by the end of the 2013 first quarter. 
* Our financial position remains solid with cash on hand of $305 million at the
end of 2012. Cash provided by operations was $182 million in the fourth quarter
and $428 million for the full year 2012."

Strategy and Outlook

"Although near-term global economic and U.S. fiscal policy uncertainties remain,
we are cautiously optimistic that business conditions will gradually improve as
we move through 2013," Mr. Harshman continued. "We believe conditions in the
first quarter, and perhaps the first half, of 2013 are likely to remain
challenging. 

"Looking beyond these near-term headwinds, we believe market conditions remain
favorable for strong secular growth over the next 3 to 5 years in many of our
key global markets. Aerospace build rates are expected to continue to increase
and OEM backlogs remain at record levels. Demand for ATI`s new products is
expected to grow substantially as new technology airframe and jet engine
deliveries increase. In addition, demand for jet engine spare parts is projected
to begin to modestly improve, compared to the second half of 2012, as we move
through 2013. 

"Global oil and gas exploration and production forecasts project spending to set
a new record and upstream capital spending, especially in the U.S., is expected
to grow. 

"We also expect continuing solid growth in demand for our high performance
specialty metals from the medical market. 

"In the short-term, demand from the electrical energy market is expected to
remain flat for both power generation and power distribution because of tepid
GDP growth in advanced economies and improving, but still weak, new housing
construction in the U.S. 

"In our High Performance Metals segment, we expect to benefit from growing
demand from most of our key global markets, increasing demand for our new
products, especially from the aerospace market, and lower costs at our titanium
sponge facility. These benefits are expected to more than offset continued
weakness in demand from the nuclear energy market, softer demand in the first
half of 2013 from industrial markets for forged parts, and reduced demand from
defense markets primarily due to reduced defense spending in the U.S. and
Europe. 

"In our Flat-Rolled Products segment, we see improved demand in 2013, compared
to 2012, for our high-value products, particularly titanium, nickel-based alloys
and specialty alloys, and our Precision Rolled Strip products. Our backlog of
project orders from the oil and gas/chemical process industry market, including
seawater desalination, is beginning to rebuild. We are seeing modest signs of
improvement in the first quarter for our standard stainless products. However,
we remain cautious in the near-term about domestic GDP-sensitive markets as
consumer and business confidence are both extraordinarily low and the political
tone in the U.S. has created headwinds that are slowing sustainable domestic
economic recovery. 

"In our Engineered Products segment, we see continued solid demand for our
tungsten-based products. After very strong demand for our industrial forgings in
the first half of 2012, demand decreased in the second half due to slowing
global growth, which impacted the heavy equipment market. We expect these
conditions to continue in the first half of 2013, with improving demand in the
second half. 

"We expect 2013 pre-tax retirement benefit expense to be about $130 million, or
approximately $8 million higher than 2012. Essentially all of the 2013 pension
expense is expected to be non-cash. 

"We currently expect 2013 capital expenditures to be approximately $550 million,
which includes approximately $450 million relating to the HRPF project. We
expect 2013 to be our peak year for capital expenditures. Depreciation expense
in 2013 is forecasted to be approximately $195 million. 

"In summary, we are very well-positioned to benefit from improving market
conditions throughout 2013 and beyond. We believe demand from the aerospace, oil
and gas, and medical global markets, and certain chemical processing industry
markets, will improve for our products as we move through 2013. We expect most
short-cycle GDP-sensitive markets will continue to be challenged in the first
quarter of 2013 and perhaps the first half of 2013. Overall, these economic
conditions should provide relatively stable raw material costs in 2013, compared
to current levels. We continue to focus on improving our cost structure and
financial performance and we have targeted a minimum of $100 million in new
gross cost reductions for 2013. Based on these views, we expect moderate growth
in revenue and improvement in segment operating profit in 2013, compared to
2012, with the first half of 2013 providing greater uncertainties."

                                                                Three Months Ended                                 Year Ended                            
                                                                December 31                                        December 31                           
                                                                In Millions                                                                              
                                                                2012                    2011                       2012                 2011             
 Sales                                                          $    1,101.1            $    1,251.4               $   5,031.5          $   5,183.0      
                                                                                                                                                         
 Net income attributable to ATI before special charges          $    19.3               $    34.5                  $   167.2            $   243.9        
                                                                                                                                                         
 Special charges*                                               $    (8.8     )         $    (2.8     )            $   (8.8     )       $   (29.6    )   
                                                                                                                                                         
 Net income attributable to ATI                                 $    10.5               $    31.7                  $   158.4            $   214.3        
                                                                                                                                                         
                                                                Per Diluted Share                                                                        
 Net income attributable to ATI before special charges          $    0.18               $    0.31                  $   1.51             $   2.23         
                                                                                                                                                         
 Special charges*                                               $    (0.08    )         $    (0.02    )            $   (0.08    )       $   (0.26    )   
                                                                                                                                                         
 Net income attributable to ATI                                 $    0.10               $    0.29                  $   1.43             $   1.97         
                                                                                                                                                         


* For 2012 special charges are comprised of $8.8 million for asset write-downs
associated with a casting facility closure. For 2011, special charges include
non-recurring Ladish acquisition expenses, accelerated recognition of
equity-based compensation expense due to executive retirements, restructuring
costs, and a discrete tax charge. 

Fourth Quarter and Full Year 2012 Financial Results

* Sales for the fourth quarter 2012 were $1.10 billion, compared to $1.25
billion in the fourth quarter 2011. Compared to the fourth quarter 2011, sales
decreased 4% in the High Performance Metals segment resulting from lower
shipments of specialty steel alloys and lower raw material surcharges due to
declines in nickel raw material and titanium scrap costs. In the Flat-Rolled
Products segment, sales declined 17% primarily due to lower raw material
surcharges, lower base prices for standard stainless products, and reduced
shipments of titanium products to the industrial markets due to project delays.
Sales decreased 21% in the Engineered Products segment due to reduced demand for
tungsten-based products and from the electrical energy market. 
* Sales for the full year 2012 were $5.03 billion compared to $5.18 billion for
2011. Direct international sales were $1.80 billion and represented 36% of total
sales, compared to 35% for 2011. Compared to the full year 2011, sales increased
12% in the High Performance Metals segment, but decreased 14% in the Flat-Rolled
Products segment and 2% in the Engineered Products segment. 
* Fourth quarter 2012 segment operating profit was $95.3 million, or 8.7% of
sales, compared to $114.4 million, or 9.1% of sales, for the comparable 2011
period. Results include a LIFO inventory valuation reserve benefit of $47.6
million and $5.9 million for the fourth quarter of 2012 and 2011, respectively. 
* Full year 2012 segment operating profit was $537.9 million, or 10.7% of sales,
compared to $612.0 million, or 11.8% of sales, for 2011. Results included a LIFO
inventory valuation reserve benefit of $76.8 million for 2012 and $9.3 million
for the 2011 period. 
* Net income attributable to ATI for the fourth quarter 2012 was $10.5 million,
or $0.10 per diluted share, compared to $31.7 million, or $0.29 per diluted
share, in the fourth quarter 2011. Fourth quarter 2012 net income was impacted
by a special charge for asset write-downs associated with consolidating
operations in the Engineered Products segment, which reduced earnings by $8.8
million, or $0.08 per share. Net income for the fourth quarter 2011 was
negatively affected by restructuring and Ladish acquisition expenses, which
reduced earnings by $2.8 million, or $0.02 per share. 
* Full year 2012 net income attributable to ATI was $158.4 million, or $1.43 per
diluted share, compared to $214.3 million, or $1.97 per diluted share, for 2011.
Full year 2012 results included the $8.8 million, or $0.08 per share, special
charge. Full year 2011 net income included $29.6 million, or $0.26 per share, of
Ladish acquisition expenses and other charges, including Ladish
acquisition-related expenses, accelerated recognition of equity-based
compensation expense due to executive retirements, and restructuring charges for
facility closure costs. 
* Cash flowprovided by operations for 2012 was $427.5 million, including $181.7
million in the fourth quarter 2012. 
* Cash on hand at the end of 2012 was $304.6 million, an increase of $23.6
million from September 30, 2012 but a decrease of $76.0 million from year-end
2011. 
* Gross cost reductions, before the effects of inflation, totaled $26.8 million
company-wide in the fourth quarter 2012. Gross cost reductions for the full year
2012 totaled $113.8 million.

High Performance Metals Segment
Market Conditions

* Mill product shipments of our nickel-based and specialty alloys declined 23%
and shipments of our titanium and titanium alloys declined 13%, both compared to
the third quarter 2012. Zirconium and related alloys shipments increased 35%
compared to the third quarter 2012 primarily due to improved demand for our
niobium-titanium alloy products from the medical market. Compared to the third
quarter 2012, average selling prices were flat for nickel-based alloys and
superalloys, and increased 14% for specialty alloys as a better shipment mix
offset lower raw material surcharges. Average selling prices for titanium alloys
increased 3% primarily due to product mix. Average selling prices for zirconium
and related alloys decreased 12% due to product mix. 
* Sales of high performance forgings and castings were flat with the third
quarter 2012 as improved demand from jet engine and airframe customers offset
lower demand for construction and mining components.

Fourth quarter 2012 compared to fourth quarter 2011

* Sales decreased by 4% to $503.8 million. 
* Mill product shipments of nickel-based alloys and specialty alloys decreased
6% primarily due to demand from the electrical energy market. Shipments of
titanium and titanium alloy mill products were 1% higher primarily due to
increased shipments to airframe customers which offset reduced demand from the
jet engine aftermarket. Zirconium and related alloys shipments increased 9%
primarily due to improved demand for our niobium-titanium alloy products from
the medical equipment market. Average selling prices increased 1% for
nickel-based and specialty alloys primarily due to a higher value-add product
mix, partially offset by lower raw material surcharges. Average selling prices
decreased 5% for titanium and titanium alloys due to raw material surcharges.
Average selling prices decreased 1% for zirconium and related alloys primarily
due to product mix. 
* Sales for high performance forgings and castings increased 3% due to better
demand for airframe components, which was offset by lower demand from the jet
engine aftermarket and for construction and mining equipment, and by lower
material surcharges. 
* Segment operating profit decreased to $80.8 million, or 16.0% of total sales
compared to $90.3 million, or 17.2% of total sales, for the fourth quarter 2011
primarily as a result of lower shipments. Fourth quarter 2012 segment operating
profit included a LIFO inventory valuation reserve benefit of $27.5 million
which was partially offset by higher costs for raw materials, primarily nickel,
resulting from the misalignment of the raw material surcharge with raw material
costs due to the long manufacturing cycle of certain products. The fourth
quarter 2011 segment operating profit included a LIFO inventory valuation
reserve benefit of $6.0 million. 
* Results benefited from $15.3 million of gross cost reductions in the fourth
quarter 2012, bringing the full year 2012 gross cost reductions in this segment
to $62.4 million.

Flat-Rolled Products Segment
Market Conditions

* Demand was soft from nearly all markets and base selling prices for most
standard stainless products were at historically low levels. Compared to the
third quarter 2012, shipments decreased 10% for high-value products, which
includes titanium, nickel-based alloys, Precision Rolled Strip products, and
grain-oriented electrical steel. Shipments for standard stainless products
(sheet and plate) decreased 3%. Direct international sales for the fourth
quarter 2012 represented 30% of total segment sales. Fourth quarter 2012
Flat-Rolled Products segment titanium shipments, including Uniti joint venture
conversion, were 3.2 million pounds, a 22% increase compared to the third
quarter 2012 as shipments for previously-delayed projects began. Compared to the
third quarter 2012, average selling prices for standard stainless products
decreased 3%, and decreased 6% for high-value products, both primarily due to
lower raw material surcharges and lower base prices.

Fourth quarter 2012 compared to fourth quarter 2011

* Sales were $495.6 million, 17.2% lower than the prior year period, primarily
due to lower raw material surcharges and reduced base prices for most products.
Shipments of high-value products declined 12% compared to the fourth quarter
2011 as higher shipments of our Precision Rolled Strip products were offset by
reduced shipments of our other high-value products. Shipments of standard
stainless products increased 28%. Average selling prices for standard stainless
products declined 14% due to lower base prices and lower raw material
surcharges. Average selling prices for high-value products decreased 20%
primarily due to product mix and lower raw material surcharges. 
* Segment operating profit declined to $9.4 million, or 1.9% of total sales,
including surcharges, compared to $17.5 million, or 2.9% of total sales, in the
fourth quarter 2011 primarily due to lower base prices for standard stainless
and grain-oriented electrical steel products and reduced shipments of certain
high-value products due to delays of major project business. The fourth quarter
2012 included a LIFO inventory valuation reserve benefit of $20.0 million which
was partially offset by higher costs for raw material, primarily nickel, which
did not align with raw material surcharges. In the fourth quarter 2011, a LIFO
inventory valuation reserve benefit of $5.0 million was recognized. 
* Results benefited from $9.1 million in gross cost reductions in the fourth
quarter 2012, bringing the full year 2012 gross cost reductions in this segment
to $42.9 million.

Engineered Products Segment
Market Conditions

* Demand was lower from the construction and mining, transportation, and oil and
gas markets.

Fourth quarter 2012 compared to fourth quarter 2011

* Sales were $101.7 million, a decrease of 20.7%, primarily as a result of
weaker demand for tungsten-based products and industrial forgings. 
* Segment operating profit declined to $5.1 million from $6.6 million in the
fourth quarter 2011 due to weaker demand. Results for the fourth quarter 2012
included a LIFO inventory valuation reserve benefit of $0.1 million compared to
a $5.1 million LIFO inventory valuation reserve charge for the comparable 2011
period. 
* Results benefited from $2.4 million in gross cost reductions in the fourth
quarter 2012, bringing the full year 2012 gross cost reductions in this segment
to $8.5 million.

Other Expenses

* Corporate expenses for the fourth quarter 2012 were $16.0 million, compared to
$20.0 million in the year-ago period. The decrease in corporate expenses was
primarily related to lower incentive compensation expenses associated with
long-term performance plans. 
* Interest expense, net of interest income, for the fourth quarter 2012 was
$15.9 million, compared to $22.2 million in the fourth quarter 2011. The
decrease in interest expense was primarily due to lower debt levels and
increased capitalized interest on major strategic capital projects. 
* Capitalized interest on major strategic capital projects reduced interest
expense by $7.8 million and $3.7 million for the 2012 and 2011 fourth quarters,
respectively. Full year 2012 and 2011 capitalized interest was $24.5 million and
$12.1 million, respectively. 
* Other expenses for the fourth quarter 2012 totaled $16.7 million, which
include a pre-tax non-cash special charge of $13.0 million related to asset
valuation charges associated with consolidating operations in our Engineered
Products segment and $3.7 million related to closed operations, compared to $2.3
million in the year-ago period for closed operations.

Retirement Benefit Expense

* Retirement benefit expense, which includes pension expense and other
postretirement expense, increased to $30.6 million in the fourth quarter 2012,
compared to $20.0 million in the fourth quarter 2011. This increase was
primarily due to utilization of a lower discount rate to value retirement
benefit obligations and lower than expected returns on plan assets. 
* For the fourth quarter 2012, retirement benefit expense of $22.6 million was
included in cost of sales and $8.0 million was included in selling and
administrative expenses. For the fourth quarter 2011, retirement benefit expense
of $14.3 million was included in cost of sales and $5.7 million was included in
selling and administrative expenses. 
* For the full year 2012, retirement benefit expense of $89.3 million was
included in cost of sales, and $33.1 million was included in selling and
administrative expenses, compared to full year 2011 retirement benefit expense
of $55.1 million in cost of sales and $22.8 million in selling and
administrative expenses. 
* We currently expect pre-tax retirement benefit expense to be approximately $8
million higher in 2013 than in 2012 due to the negative effects of having to
utilize a lower discount rate to value retirement benefit obligations and lower
expected returns on plan assets. Pension expense is expected to be approximately
$106 million in 2013 compared to pension expense of $97.6 million in 2012. As a
result, we expect 2013 pre-tax retirement benefit expense, which includes
pension expense and other postretirement benefits expense, of approximately $130
million compared to $122.4 million in 2012. We expect nearly all of the 2013
pension expense to be non-cash. At December 31, 2012, our U.S. qualified defined
benefit plan was approximately 77% funded, as measured for financial reporting
purposes. We are not required to make any contribution to this plan for 2013.

Income Taxes

* The fourth quarter 2012 provision for income taxes was $2.6 million, or 16.1%
of income before tax, which included adjustments associated with prior years`
and foreign taxes, compared to the fourth quarter 2011 provision for income
taxes of $15.7 million, or 31.5% of income before tax.

Cash Flow, Working Capital and Debt

* Cash on hand was $304.6 million at year-end 2012, an increase of $23.6 million
from September 30, 2012 but a decrease of $76.0 million from year-end 2011. 
* Cash flow provided by operations in the fourth quarter 2012 was $181.7
million. Cash flow provided by operations for 2012 was $427.5 million and
included a reduction of $22.4 million in managed working capital. The $22.4
million reduction in managed working capital during 2012 resulted from a $97.3
million decrease in accounts receivable and a $7.7 million increase in accounts
payable, partially offset by an $82.6 million increase in inventory as we staged
inventory to meet 2013 demand. At December 31, 2012, managed working capital was
41.1% of annualized sales, compared to 37.8% of annualized fourth quarter sales
at year-end 2011. We define managed working capital as accounts receivable plus
gross inventories less accounts payable. 
* Cash used in investing activities was $378.7 million in 2012, including $382.0
million of capital expenditures, the majority of which was related to the
construction of the new Flat-Rolled Products segment Hot-Rolling and Processing
Facility (HRPF). 
* Cash used in financing activities was $124.8 million in 2012 and included
dividend payments of $76.5 million, $27.1 million of net debt retirements, and
$21.2 million of tax payments on share-based compensation associated with
performance-based plans. 
* Total debt to total capital decreased to 37.4% at December 31, 2012, compared
to 37.9% at the end of 2011. Net debt as a percentage of total capitalization
was 32.2% at the end of 2012, compared to 31.3% at the end of 2011. 
* There were no borrowings outstanding under ATI`s $400 million unsecured
domestic borrowing facility, although a portion of the letters of credit
capacity was utilized.

Allegheny Technologies will conduct a conference call with investors and
analysts on Wednesday, January 23, 2013, at 1:00 p.m. ET to discuss the
financial results. The conference call will be broadcast live on
www.ATImetals.com. To access the broadcast, click on "Conference Call". Replay
of the conference call will be available on the Allegheny Technologies website. 

This news release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Certain statements in this
news release relate to future events and expectations and, as such, constitute
forward-looking statements. Forward-looking statements include those containing
such words as "anticipates," "believes," "estimates," "expects," "would,"
"should," "will," "will likely result," "forecast," "outlook," "projects," and
similar expressions. Forward-looking statements are based on management`s
current expectations and include known and unknown risks, uncertainties and
other factors, many of which we are unable to predict or control, that may cause
our actual results, performance or achievements to differ materially from those
expressed or implied in the forward-looking statements. Important factors that
could cause actual results to differ materially from those in the
forward-looking statements include: (a) material adverse changes in economic or
industry conditions generally, including global supply and demand conditions and
prices for our specialty metals; (b) material adverse changes in the markets we
serve, including the aerospace and defense, electrical energy, oil and
gas/chemical process industry, medical, automotive, construction and mining, and
other markets; (c) our inability to achieve the level of cost savings,
productivity improvements, synergies, growth or other benefits anticipated by
management from strategic investments and the integration of acquired
businesses, whether due to significant increases in energy, raw materials or
employee benefits costs, project cost overruns or unanticipated costs and
expenses, or other factors; (d) volatility of prices and availability of supply
of the raw materials that are critical to the manufacture of our products; (e)
declines in the value of our defined benefit pension plan assets or unfavorable
changes in laws or regulations that govern pension plan funding; (f) significant
legal proceedings or investigations adverse to us; and (g) other risk factors
summarized in our Annual Report on Form 10-K for the year ended December 31,
2011, and in other reports filed with the Securities and Exchange Commission. We
assume no duty to update our forward-looking statements. 

Building the World`s Best Specialty Metals Company
Allegheny Technologies Incorporated is one of the largest and most diversified
specialty metals producers in the world with revenues of approximately $5.0
billion in 2012. ATI has approximately 11,200 full-time employees world-wide who
use innovative technologies to offer global markets a wide range of specialty
metals solutions. Our major markets are aerospace and defense, oil and
gas/chemical process industry, electrical energy, medical, automotive, food
equipment and appliance, machine and cutting tools, and construction and mining.
Our products include titanium and titanium alloys, nickel-based alloys and
superalloys, grain-oriented electrical steel, stainless and specialty steels,
zirconium, hafnium, and niobium, tungsten materials, forgings, castings and
fabrication and machining capabilities. The ATI website is www.ATImetals.com.

                                                                                                                                                                      
                                                                                                                                                                      
 Allegheny Technologies Incorporated and Subsidiaries                                                                                                                 
 Consolidated Statements of Income                                                                                                                                    
 (Dollars in millions, except per share amounts)                                                                                                                      
                                                                                                                                                                      
                                                                            Three Months Ended                             Twelve Months Ended                        
                                                                            December 31                                    December 31                                
                                                                            2012                    2011                   2012                    2011               
                                                                                                                                                                      
 Sales                                                                      $    1,101.1            $    1,251.4           $    5,031.5            $    5,183.0       
 Costs and expenses:                                                                                                                                                  
                               Cost of sales                                     976.6                   1,082.4                4,338.3                 4,369.8       
                               Selling and administrative expenses               92.0                    97.4                   377.8                   382.1         
 Income before interest, other income                                                                                                                                 
                               and income taxes                                  32.5                    71.6                   315.4                   431.1         
 Interest expense, net                                                           (15.9    )              (22.2    )             (71.6    )              (92.3    )    
 Other income (expense), net                                                     (0.5     )              0.5                    0.2                     0.6           
 Income before income tax provision                                              16.1                    49.9                   244.0                   339.4         
 Income tax provision                                                            2.6                     15.7                   76.2                    116.3         
                                                                                                                                                                      
 Net income                                                                      13.5                    34.2                   167.8                   223.1         
                                                                                                                                                                      
 Less: Net income attributable to                                                                                                                                     
                               noncontrolling interests                          3.0                     2.5                    9.4                     8.8           
                                                                                                                                                                      
 Net income attributable to ATI                                             $    10.5               $    31.7              $    158.4              $    214.3         
                                                                                                                                                                      
 Basic net income attributable to                                                                                                                                     
 ATI per common share                                                       $    0.10               $    0.30              $    1.49               $    2.09          
                                                                                                                                                                      
 Diluted net income attributable to                                                                                                                                   
 ATI per common share                                                       $    0.10               $    0.29              $    1.43               $    1.97          
                                                                                                                                                                      
 Weighted average common shares                                                                                                                                       
                               outstanding -- basic (millions)                   106.3                   105.1                  106.1                   102.5         
                                                                                                                                                                      
 Weighted average common shares                                                                                                                                       
                               outstanding -- diluted (millions)                 107.2                   116.6                  116.6                   113.9         
                                                                                                                                                                      
 Actual common shares outstanding--                                                                                                                                   
                               end of period (millions)                          107.4                   106.4                  107.4                   106.4         
                                                                                                                                                                      


                                                                                                                                   
                                                                                                                                   
 Allegheny Technologies Incorporated and Subsidiaries                                                                              
 Sales and Operating Profit by Business Segment                                                                                    
 (Dollars in millions)                                                                                                             
                                                                                                                                   
                                         Three Months Ended                             Twelve Months Ended                        
                                         December 31                                    December 31                                
                                         2012                    2011                   2012                    2011               
 Sales:                                                                                                                            
 High Performance Metals                 $    503.8              $    524.6             $    2,190.6            $    1,955.9       
 Flat-Rolled Products                         495.6                   598.5                  2,349.2                 2,726.0       
 Engineered Products                          101.7                   128.3                  491.7                   501.1         
                                                                                                                                   
 Total External Sales                    $    1,101.1            $    1,251.4           $    5,031.5            $    5,183.0       
                                                                                                                                   
 Operating Profit:                                                                                                                 
                                                                                                                                   
 High Performance Metals                 $    80.8               $    90.3              $    371.6              $    364.5         
 % of Sales                                   16.0     %              17.2     %             17.0     %              18.6     %    
                                                                                                                                   
 Flat-Rolled Products                         9.4                     17.5                   126.9                   213.4         
 % of Sales                                   1.9      %              2.9      %             5.4      %              7.8      %    
                                                                                                                                   
 Engineered Products                          5.1                     6.6                    39.4                    34.1          
 % of Sales                                   5.0      %              5.1      %             8.0      %              6.8      %    
                                                                                                                                   
 Operating Profit                             95.3                    114.4                  537.9                   612.0         
 % of Sales                                   8.7      %              9.1      %             10.7     %              11.8     %    
                                                                                                                                   
 Corporate expenses                           (16.0    )              (20.0    )             (68.4    )              (92.5    )    
                                                                                                                                   
 Interest expense, net                        (15.9    )              (22.2    )             (71.6    )              (92.3    )    
                                                                                                                                   
 Closed company and                                                                                                                
 other expenses                               (16.7    )              (2.3     )             (31.5    )              (9.9     )    
                                                                                                                                   
 Retirement benefit expense                   (30.6    )              (20.0    )             (122.4   )              (77.9    )    
                                                                                                                                   
 Income before                                                                                                                     
 income taxes                            $    16.1               $    49.9              $    244.0              $    339.4         
                                                                                                                                   


                                                                                             
                                                                                             
 Allegheny Technologies Incorporated and Subsidiaries                                        
 Consolidated Balance Sheets                                                                 
 (Dollars in millions)                                                                       
                                                                                             
                                                     December 31,          December 31,      
                                                     2012                  2011              
 ASSETS                                                                                      
                                                                                             
 Current Assets:                                                                             
 Cash and cash equivalents                           $        304.6        $        380.6    
 Accounts receivable, net of allowances for                                                  
 doubtful accounts of $5.5 and $5.9 at                                                       
 December 31, 2012 and 2011, respectively                     613.3                 709.1    
 Inventories, net                                             1,536.6               1,384.3  
 Prepaid expenses and                                                                        
 other current assets                                         56.1                  95.5     
 Total Current Assets                                         2,510.6               2,569.5  
                                                                                             
 Property, plant and equipment, net                           2,559.9               2,368.8  
 Cost in excess of net assets acquired                        740.1                 737.7    
 Deferred income taxes                                        71.5                  -        
 Other assets                                                 365.7                 370.9    
                                                                                             
 Total Assets                                        $        6,247.8      $        6,046.9  
                                                                                             
 LIABILITIES AND EQUITY                                                                      
                                                                                             
 Current Liabilities:                                                                        
 Accounts payable                                    $        499.9        $        490.7    
 Accrued liabilities                                          330.5                 320.3    
 Deferred income taxes                                        24.0                  23.5     
 Short term debt and current                                                                 
 portion of long-term debt                                    17.1                  27.3     
 Total Current Liabilities                                    871.5                 861.8    
                                                                                             
 Long-term debt                                               1,463.0               1,482.0  
 Accrued postretirement benefits                              495.2                 488.1    
 Pension liabilities                                          721.1                 508.9    
 Deferred income taxes                                        -                     9.8      
 Other long-term liabilities                                  109.9                 124.7    
 Total Liabilities                                            3,660.7               3,475.3  
                                                                                             
 Total ATI stockholders' equity                               2,479.6               2,475.3  
 Noncontrolling interests                                     107.5                 96.3     
 Total Equity                                                 2,587.1               2,571.6  
                                                                                             
 Total Liabilities and Equity                        $        6,247.8      $        6,046.9  
                                                                                             


                                                                                                                                            
                                                                                                                                            
 Allegheny Technologies Incorporated and Subsidiaries                                                                                       
 Condensed Consolidated Statements of Cash Flows                                                                                            
 (Dollars in millions)                                                                                                                      
                                                                                                                                            
                                                                                              Twelve Months Ended                           
                                                                                              December 31                                   
                                                                                              2012                        2011              
                                                                                                                                            
 Operating Activities:                                                                                                                      
                                                                                                                                            
                                       Net income                                             $    167.8                  $    223.1        
                                                                                                                                            
                                       Depreciation and amortization                               194.0                       174.4        
                                       Deferred taxes                                              (19.4   )                   52.7         
                                       Change in managed working capital                           22.4                        (273.3  )    
                                       Change in retirement benefits                               58.9                        19.6         
                                       Accrued liabilities and other                               3.8                         100.3        
 Cash provided by operating activities                                                             427.5                       296.8        
 Investing Activities:                                                                                                                      
                                       Purchases of property, plant and equipment                  (382.0  )                   (278.2  )    
                                       Acquisition of business                                     -                           (349.2  )    
                                       Asset disposals and other                                   3.3                         2.7          
 Cash used in investing activities                                                                 (378.7  )                   (624.7  )    
 Financing Activities:                                                                                                                      
                                       Borrowings on long-term debt                                -                           500.0        
                                       Payments on long-term debt and capital leases               (16.7   )                   (143.8  )    
                                       Net repayments under credit facilities                      (10.4   )                   (3.1    )    
                                       Debt issuance costs                                         -                           (5.0    )    
                                       Dividends paid to shareholders                              (76.5   )                   (74.7   )    
                                       Dividends paid to noncontrolling interests                  -                           (7.2    )    
                                       Exercises of stock options                                  2.2                         1.6          
                                       Taxes on share-based compensation and other                 (23.4   )                   8.4          
 Cash provided by (used in) financing activities                                                   (124.8  )                   276.2        
 Decrease in cash and cash equivalents                                                             (76.0   )                   (51.7   )    
 Cash and cash equivalents at beginning of period                                                  380.6                       432.3        
 Cash and cash equivalents at end of period                                                   $    304.6                  $    380.6        
                                                                                                                                            


                                                                                                                                
                                                                                                                                
 Allegheny Technologies Incorporated and Subsidiaries                                                                           
 Selected Financial Data - Mill Products                                                                                        
 (Unaudited)                                                                                                                    
                                                                                                                                
                                                Three Months Ended                      Twelve Months Ended                     
                                                December 31                             December 31                             
 Mill Products Volume:                          2012                 2011               2012                   2011             
 High Performance Metals (000's lbs.)                                                                                           
 Titanium mill products                               5,748                5,688              25,943                 26,518     
 Nickel-based and specialty alloys                    11,118               11,852             54,329                 47,913     
 Zirconium and related alloys                         1,142                1,048              3,901                  4,094      
                                                                                                                                
 Flat-Rolled Products (000's lbs.)                                                                                              
 High value                                           107,604              122,763            475,808                497,079    
 Standard                                             155,600              121,693            656,285                587,648    
 Flat-Rolled Products total                           263,204              244,456            1,132,093              1,084,727  
                                                                                                                                
                                                                                                                                
 Mill Products Average Prices:                                                                                                  
 High Performance Metals (per lb.)                                                                                              
 Titanium mill products                         $     22.65          $     23.90        $     22.56            $     22.01      
 Nickel-based and specialty alloys              $     15.59          $     15.41        $     15.13            $     15.58      
 Zirconium and related alloys                   $     66.68          $     67.05        $     70.54            $     66.31      
                                                                                                                                
 Flat-Rolled Products (per lb.)                                                                                                 
 High value                                     $     2.61           $     3.27         $     2.89             $     3.32       
 Standard                                       $     1.35           $     1.57         $     1.46             $     1.80       
 Flat-Rolled Products combined average          $     1.87           $     2.42         $     2.06             $     2.49       
                                                                                                                                


Mill Products volume and average price information includes shipments to ATI
Ladish for all periods presented. High Performance Metals mill product forms
include ingot, billet, bar, shapes and rectangles, rod, wire, and seamless
tubes.

                                                                                                                                                                                 
                                                                                                                                                                                 
 Allegheny Technologies Incorporated and Subsidiaries                                                                                                                            
 Computation of Basic and Diluted Earnings Per Share                                                                                                                             
 (Unaudited, in millions, except per share amounts)                                                                                                                              
                                                                                                                                                                                 
                                                                                                             Three Months Ended                  Twelve Months Ended             
                                                                                                             December 31                         December 31                     
                                                                                                             2012               2011             2012               2011         
 Numerator for Basic net income per common share -                                                                                                                               
                                           Net income attributable to ATI                                    $     10.5         $     31.7       $     158.4        $     214.3  
 Effect of dilutive securities:                                                                                                                                                  
                                           4.25% Convertible Notes due 2014                                        -                  2.4              8.5                9.9    
 Numerator for Dilutive net income per common share -                                                                                                                            
                                           Net income attributable to ATI after assumed conversions          $     10.5         $     34.1       $     166.9        $     224.2  
                                                                                                                                                                                 
 Denominator for Basic net income per common share -                                                                                                                             
                                           Weighted average shares outstanding                                     106.3              105.1            106.1              102.5  
 Effect of dilutive securities:                                                                                                                                                  
                                           Share-based compensation                                                0.9                1.9              0.9                1.8    
                                           4.25% Convertible Notes due 2014                                        -                  9.6              9.6                9.6    
 Denominator for Diluted net income per common share -                                                                                                                           
                                           Adjusted weighted average assuming conversions                          107.2              116.6            116.6              113.9  
                                                                                                                                                                                 
 Basic net income attributable to ATI per common share                                                       $     0.10         $     0.30       $     1.49         $     2.09   
                                                                                                                                                                                 
 Diluted net income attributable to ATI per common share                                                     $     0.10         $     0.29       $     1.43         $     1.97   
                                                                                                                                                                                 


                                                                                                    
                                                                                                    
 Allegheny Technologies Incorporated and Subsidiaries                                               
 Other Financial Information                                                                        
 Managed Working Capital                                                                            
 (Dollars in millions)                                                                              
                                                                                                    
                                                  December 31,               December 31,           
                                                  2012                       2011                   
                                                                                                    
 Accounts receivable                              $      613.3               $      709.1           
 Inventory                                               1,536.6                    1,384.3         
 Accounts payable                                        (499.9   )                 (490.7   )      
 Subtotal                                                1,650.0                    1,602.7         
                                                                                                    
 Allowance for doubtful accounts                         5.5                        5.9             
 LIFO reserve                                            76.9                       153.7           
 Corporate and other                                     68.4                       60.9            
 Managed working capital                          $      1,800.8             $      1,823.2         
                                                                                                    
 Annualized prior 2 months                                                                          
 sales                                            $      4,379.6             $      4,820.6         
                                                                                                    
 Managed working capital as a                                                                       
 % of annualized sales                                   41.1     %                 37.8     %      
                                                                                                    
 December 31, 2012 change in managed                                                                
 working capital                                  $      (22.4    )                                 
                                                                                                    


As part of managing the liquidity in our business, we focus on controlling
managed working capital, which is defined as gross accounts receivable and gross
inventories, less accounts payable. In measuring performance in controlling this
managed working capital, we exclude the effects of LIFO inventory valuation
reserves, excess and obsolete inventory reserves, and reserves for uncollectible
accounts receivable which, due to their nature, are managed separately.

                                                                                                
                                                                                                
 Allegheny Technologies Incorporated and Subsidiaries                                           
 Other Financial Information                                                                    
 Debt to Capital                                                                                
 (Dollars in millions)                                                                          
                                                                                                
                                              December 31,               December 31,           
                                              2012                       2011                   
                                                                                                
 Total debt                                   $      1,480.1             $      1,509.3         
 Less: Cash                                          (304.6   )                 (380.6   )      
 Net debt                                     $      1,175.5             $      1,128.7         
                                                                                                
 Net debt                                     $      1,175.5             $      1,128.7         
 Total ATI stockholders' equity                      2,479.6                    2,475.3         
 Net ATI capital                              $      3,655.1             $      3,604.0         
                                                                                                
 Net debt to ATI capital                             32.2     %                 31.3     %      
                                                                                                
 Total debt                                   $      1,480.1             $      1,509.3         
 Total ATI stockholders' equity                      2,479.6                    2,475.3         
 Total ATI capital                            $      3,959.7             $      3,984.6         
                                                                                                
 Total debt to total ATI capital                     37.4     %                 37.9     %      
                                                                                                


In managing the overall capital structure of the Company, some of the measures
that we focus on are net debt to net capitalization, which is the percentage of
debt, net of cash that may be available to reduce borrowings, to the total
invested and borrowed capital of ATI (excluding noncontrolling interest), and
total debt to total ATI capitalization, which excludes cash balances.

Allegheny Technologies Incorporated
Dan L. Greenfield, 412-394-3004 

Copyright Business Wire 2013

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