CRS Carpenter Technology Corp

Allegheny Technologies Incorporated (ATI) announced that the United Steelworkers’ (USW) members have ratified its four-year contract with Allegheny Ludlum by a wide margin. The agreement will expire on June 30, 2015. The existing contracts have been extended and are effective through August 8, 2011.

Allegheny is one of the largest and most diversified specialty metals producers in the world. It has approximately 11,300 full-time employees world wide, who utilizes innovative technologies to offer global markets a wide range of specialty metals solutions.

The USW represents 850,000 workers in North America in a wide variety of industries including the public and private sectors.

On July 27, 2011, Allegheny reported its second-quarter 2011 results. Net income was $76.7 million or 70 cents per share (excluding acquisition related expenses of $12.7 million, net of tax) versus $36.4 million or 36 cents per share in the same quarter of 2010. However, the profit was lower than the Zacks Consensus Estimate of 73 cents per share.

Sales in the quarter increased 28.5% to $1.35 billion, driven by higher shipments for most high-value products, higher raw material surcharges and increases in average base selling prices for many products. It was higher than the Zacks Consensus Estimate of $1.30 billion.

Segment operating profit increased to $173.4 million, or 12.8% of sales, from $117.3 million, or 11.2% of sales, in the second quarter of 2010.

Allegheny expects revenues of $5.4 to $5.5 billion for full-year 2011 compared with its previous guidance range of $4.6 to $4.8 billion, and segment operating profit of 13% to 14% of revenues, excluding the impact of purchase inventory accounting charges.

The guidance is based on the strength in the company’s key global markets, improving shipments and higher base prices for many of its high-value products, the expectation of improved demand in the fourth quarter for its standard stainless products, and the view that certain raw material costs will moderate slightly or at least remain at current levels.

The company also anticipates capital expenditures to be approximately $275 to $300 million during the year, of which $98 million has been spent till date. It expects cash on-hand to increase in the third quarter as investment in managed working capital declines.

Over the next 3 to 5 years, Allegheny expects to continue to benefit from its new alloys and products, diversified global growth markets and differentiated product mix. Demand is expected to be strong for its mill products along with highly engineered forged and cast components from the aerospace market. Strong growth is also expected from the oil and gas/chemical process industry for its titanium-based alloys, nickel-based alloys and specialty alloys, and tungsten products.

Based in Pittsburgh, Pennsylvania, Allegheny Technologies produces and sells specialty metals worldwide. Its primary competitor includes Carpenter Technology Corp. (CRS). The company currently retains a Zacks #4 Rank, which translates to a short-term “Sell” rating.

 
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