GR Goodrich Corp. (The)

Allegheny Technologies Incorporated (ATI) inked a long-term sourcing agreement with the Goodrich Corporation (GR) for the supply of aerospace forgings used for landing gear components. This agreement boosts Allegheny’s position in the aerospace supply chain.

The terms of the agreement, which begins in 2012 and lasts through 2015, were not disclosed.

As per the agreement, ATI will supply components for aerospace landing gear to Goodrich’s Landing Gear facilities in the U.S., Canada and Poland. The aerospace parts will be coming from the company’s Poland-based ATI ZKM Forging. The Polish facility is part of ATI Ladish, which became an operating unit last year when ATI purchased Ladish Co.

ATI ZKM Forgings is in Stalowa Wola, Poland, and makes engineered parts for aerospace and industrial uses. This agreement displays Allegheny’s plans to broaden its aerospace component business and further its global reach.

In October, Allegheny reported an increase in profit to $70.6 million or 63 cents per share (excluding acquisition related expenses of $8.3 million, net of tax) in the third quarter of 2011 from $1.0 million or 1 cent per share in the same quarter of 2010.

Results exceeded the Zacks Consensus Estimate of 61 cents per share.

Sales in the quarter increased 28% 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. However, sales were lower than the Zacks Consensus Estimate of $1.39 billion.

Segment operating profit surged 157% to $161.8 million, or 12.0% of sales from $63.0 million, or 6.0% of sales, in the third quarter of 2010.

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 and highly engineered forged and cast components generated 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.

Allegheny Technologies, based in Pittsburgh, Pennsylvania, produces and sells specialty metals worldwide. Its primary competitor includes Carpenter Technology Corp. (CRS). The company currently retains a Zacks #3 Rank, which translates into a short-term rating of Hold.

 
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