UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): |
April 24, 2013 |
Allegheny Technologies Incorporated |
(Exact name of registrant as specified in its charter) |
Delaware |
1-12001 |
25-1792394 |
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
1000 Six PPG Place, Pittsburgh, Pennsylvania |
15222-5479 |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code |
(412) 394-2800 |
N/A |
(Former name or former address, if changed since last report). |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On April 24, 2013, Allegheny Technologies Incorporated issued a press release with respect to its first quarter 2013 financial results. A copy of the press release is attached as Exhibit 99.1 and is being furnished, not filed, under Item 2.02 of this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit 99.1 Press release dated April 24, 2013.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ALLEGHENY TECHNOLOGIES INCORPORATED |
|||
|
|||
|
|
By: |
/s/ Elliot S. Davis |
Elliot S. Davis |
|||
Senior Vice President, General Counsel, |
|||
Chief Compliance Officer and Corporate Secretary |
|||
Dated: |
April 24, 2013 |
Exhibit 99.1
Allegheny Technologies Announces First Quarter 2013 Results
First Quarter 2013 Results
PITTSBURGH--(BUSINESS WIRE)--April 24, 2013--Allegheny Technologies Incorporated (NYSE: ATI) reported net income for the first quarter 2013 of $10.0 million, or $0.09 per share, on sales of $1.18 billion. For the first quarter 2012, ATI reported net income of $56.2 million, or $0.50 per share, on sales of $1.35 billion.
“We saw continued sluggish demand from many of our major end markets during the first quarter,” said Rich Harshman, Chairman, President and Chief Executive Officer. “While demand from aerospace OEMs in support of new builds improved, compared to the fourth quarter 2012, demand from the jet engine aftermarket remained low. The markets for flat-rolled stainless sheet and plate and grain-oriented electrical steel remained challenging due to lackluster demand, low base-selling prices, and high levels of imports. Demand for forgings from the construction and mining equipment markets was depressed as OEMs adjusted production and reduced inventories to match current global demand.”
High-value products sales were nearly 78% of ATI first quarter 2013 sales and increased about 5% compared to the fourth quarter 2012. Sales of nickel-based alloys and specialty alloys increased 12% compared to the fourth quarter 2012 and represented 24% of first quarter 2013 ATI sales. Sales of our titanium products, including Uniti joint venture conversion, increased nearly 22% compared to the fourth quarter 2012 and represented 16% of first quarter 2013 ATI sales. Titanium shipments improved to 10.3 million pounds, an increase of over 15% compared to the fourth quarter 2012. Sales of precision forgings and castings represented over 12% of first quarter 2013 sales and were at the same level as the fourth quarter 2012. Sales of Precision Rolled Strip® products and engineered strip products increased by more than 7% compared to the fourth quarter 2012 and represented over 11% of first quarter 2013 ATI sales, benefitting from solid demand from the automotive market. Demand was weak for zirconium and related alloys and grain-oriented electrical steel from the nuclear energy and chemical process industry, and electrical power generation markets, respectively. As a result, first quarter 2013 sales of these products declined by 23% compared to the fourth quarter 2012.
“Segment operating profit was approximately $78 million, or 6.6% of sales,” Harshman continued. “Higher inventory costs resulting from higher unit conversion costs due to lower operating rates in the fourth quarter 2012, combined with the impact of higher raw material costs for products with longer manufacturing cycle times not aligned with falling raw material indices/surcharges, reduced operating profit, especially in the High Performance Metals segment. Operating profit in the High Performance Metals segment was 14.5% of sales and, in addition to the issues noted above, was impacted by low demand from the jet engine aftermarket, weak demand for zirconium alloys, reduced demand for forgings from the construction and mining equipment market, and pricing pressures on transaction, or spot, business. Flat-Rolled Products segment operating profit was $2.4 million, or 0.4% of sales, reflecting a weaker high-value product mix as well as record-low base-selling prices for standard stainless sheet. Operating profit in our Engineered Products segment was essentially break-even, as lower operating rates affected profit margins.
“Cost reduction remains a strategic focus and we have targeted a minimum of $100 million in new gross cost reductions for 2013. Our operations achieved almost $40 million in gross cost reductions during the first quarter 2013. These cost reductions will benefit ATI operations over the rest of 2013. In addition, managed working capital was reduced to 37.8% of annualized sales at the end of March 2013 from 41.1% at year-end 2012.
“Construction at our Flat-Rolled Products segment Hot-Rolling and Processing Facility (HRPF) is progressing on schedule and on budget. As previously stated, the HRPF is expected to be production-ready by the end of 2013, with commissioning occurring through the first half 2014. We believe this approximately $1.2 billion strategic investment transforms our flat-rolled products business. It is designed to significantly expand our product offering capabilities, shorten manufacturing cycle times, reduce inventory requirements, and improve the cost structure of our flat-rolled products business. Including investments associated with this project, we currently expect 2013 capital expenditures to be approximately $550 million.”
“Our balance sheet remains solid with cash on hand of $138 million and net debt to total capitalization of 35% at the end of the first quarter 2013. There were no borrowings outstanding under ATI’s $400 million unsecured domestic borrowing facility.”
Strategy and Outlook
“As we stated in January, we expected the first quarter and possibly the first half of 2013 to be challenging due to slow and inconsistent economic growth as a result of ongoing global macroeconomic and fiscal policy issues,” Harshman continued. “We certainly saw this in the first quarter. While we see some signs of improvement as we enter the second quarter and it appears the fourth quarter 2012 may have been the trough in demand, we expect challenging conditions to continue to impact many of our end markets throughout the second quarter. We believe our customers will continue to remain cautious as near-term global economic uncertainties remain, lead times remain short, and raw materials prices, especially for nickel and titanium scrap, remain under pressure. We remain cautiously optimistic that business conditions will gradually improve as we move through 2013. We expect some improvement in demand from our key global markets and moderate recovery in domestic economic growth from the expected improvement in the housing construction market.
“While the short-term is challenging, we continue to focus on taking actions to improve ATI’s financial performance while we continue to strengthen our position for long-term profitable growth. We are accelerating cost reduction actions, aggressively identifying and acting on market opportunities that provide important short-term business volume opportunities, and implementing actions to reduce managed working capital.
“Looking beyond the short-term challenges, we believe ATI remains well-positioned for profitable growth over the long-term as a result of our unmatched diversification in specialty metals products, technology leadership, and unsurpassed manufacturing capabilities. We continue to believe that market conditions remain favorable for long-term secular growth from our key markets of aerospace, oil & gas/chemical process industry, electrical energy, and medical.”
Three Months Ended | ||||||||
March 31 | ||||||||
2013 | 2012 | |||||||
In Millions | ||||||||
Sales | $ | 1,179.4 | $ | 1,352.5 | ||||
Net income attributable to ATI | $ | 10.0 | $ | 56.2 | ||||
Per Diluted Share | ||||||||
Net income attributable to ATI | $ | 0.09 | $ | 0.50 | ||||
First Quarter 2013 Financial Results
High Performance Metals Segment
Market Conditions
First quarter 2013 compared to first quarter 2012
Flat-Rolled Products Segment
Market Conditions
First quarter 2013 compared to first quarter 2012
Engineered Products Segment
Market Conditions
First quarter 2013 compared to first quarter 2012
Other Expenses
Retirement Benefit Expense
Income Taxes
Cash Flow, Working Capital and Debt
Allegheny Technologies will conduct a conference call with investors and analysts on April 24, 2013, at 8:30 a.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 materially differ 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, oil and gas/chemical process industry, electrical energy, 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, 2012, 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 $4.9 billion for the last twelve months. ATI has approximately 11,100 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 | |||||||||
(Unaudited, dollars in millions, except per share amounts) | |||||||||
Three Months Ended | |||||||||
March 31 | |||||||||
2013 | 2012 | ||||||||
Sales | $ | 1,179.4 | $ | 1,352.5 | |||||
Costs and expenses: | |||||||||
Cost of sales | 1,065.1 | 1,145.5 | |||||||
Selling and administrative expenses | 85.7 | 103.4 | |||||||
Income before interest, other income and income taxes |
28.6 | 103.6 | |||||||
Interest expense, net | (14.4 | ) | (19.9 | ) | |||||
Other income, net | 1.1 | 0.4 | |||||||
Income before income tax provision | 15.3 | 84.1 | |||||||
Income tax provision | 3.7 | 25.8 | |||||||
Net income | 11.6 | 58.3 | |||||||
|
|
||||||||
Less: |
Net income attributable to noncontrolling interests |
1.6 | 2.1 | ||||||
Net income attributable to ATI | $ | 10.0 | $ | 56.2 | |||||
Basic net income attributable to ATI per common share |
$ | 0.09 | $ | 0.53 | |||||
Diluted net income attributable to ATI per common share |
$ | 0.09 | $ | 0.50 | |||||
Weighted average common shares outstanding -- basic (millions) |
106.6 | 105.9 | |||||||
Weighted average common shares outstanding -- diluted (millions) |
107.1 | 116.4 | |||||||
Actual common shares outstanding -- end of period (millions) |
108.0 | 107.1 | |||||||
Allegheny Technologies Incorporated and Subsidiaries | ||||||||
Sales and Operating Profit by Business Segment | ||||||||
(Unaudited - Dollars in millions) | ||||||||
Three Months Ended | ||||||||
March 31 | ||||||||
2013 | 2012 | |||||||
Sales: | ||||||||
High Performance Metals | $ | 518.4 | $ | 581.3 | ||||
Flat-Rolled Products | 558.1 | 636.0 | ||||||
Engineered Products | 102.9 | 135.2 | ||||||
Total External Sales | $ | 1,179.4 | $ | 1,352.5 | ||||
Operating Profit: | ||||||||
High Performance Metals | $ | 75.3 | $ | 104.1 | ||||
% of Sales | 14.5 | % | 17.9 | % | ||||
Flat-Rolled Products | 2.4 | 46.8 | ||||||
% of Sales | 0.4 | % | 7.4 | % | ||||
Engineered Products | 0.6 | 12.3 | ||||||
% of Sales | 0.6 | % | 9.1 | % | ||||
Operating Profit | 78.3 | 163.2 | ||||||
% of Sales | 6.6 | % | 12.1 | % | ||||
Corporate expenses | (12.4 | ) | (21.7 | ) | ||||
Interest expense, net | (14.4 | ) | (19.9 | ) | ||||
|
||||||||
Closed company and other expenses |
(3.7 | ) | (6.9 | ) | ||||
Retirement benefit expense | (32.5 | ) | (30.6 | ) | ||||
Income before income taxes |
$ | 15.3 | $ | 84.1 | ||||
Allegheny Technologies Incorporated and Subsidiaries |
||||||
Consolidated Balance Sheets | ||||||
(Current period unaudited--Dollars in millions) | ||||||
March 31, | December 31, | |||||
2013 | 2012 | |||||
ASSETS | ||||||
Current Assets: | ||||||
Cash and cash equivalents | $ | 138.0 | $ | 304.6 | ||
Accounts receivable, net of allowances for doubtful accounts of $5.3 and $5.5 at March 31, 2013 and December 31, 2012, respectively |
681.5 | 613.3 | ||||
Inventories, net | 1,537.5 | 1,536.6 | ||||
Prepaid expenses and other current assets |
89.4 | 56.1 | ||||
Total Current Assets | 2,446.4 | 2,510.6 | ||||
Property, plant and equipment, net | 2,597.2 | 2,559.9 | ||||
Cost in excess of net assets acquired | 736.3 | 740.1 | ||||
Deferred income taxes | 31.3 | 71.5 | ||||
Other assets | 363.1 | 365.7 | ||||
Total Assets | $ | 6,174.3 | $ | 6,247.8 | ||
LIABILITIES AND EQUITY | ||||||
Current Liabilities: | ||||||
Accounts payable | $ | 479.4 | $ | 499.9 | ||
Accrued liabilities | 280.0 | 330.5 | ||||
Deferred income taxes | 36.6 | 24.0 | ||||
Short term debt and current portion of long-term debt |
17.1 | 17.1 | ||||
Total Current Liabilities | 813.1 | 871.5 | ||||
Long-term debt | 1,462.0 | 1,463.0 | ||||
Accrued postretirement benefits | 487.8 | 495.2 | ||||
Pension liabilities | 713.7 | 721.1 | ||||
Other long-term liabilities | 101.0 | 109.9 | ||||
Total Liabilities | 3,577.6 | 3,660.7 | ||||
Total ATI stockholders' equity | 2,487.1 | 2,479.6 | ||||
Noncontrolling interests | 109.6 | 107.5 | ||||
Total Equity | 2,596.7 | 2,587.1 | ||||
Total Liabilities and Equity | $ | 6,174.3 | $ | 6,247.8 | ||
Allegheny Technologies Incorporated and Subsidiaries | ||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||
(Unaudited - Dollars in millions) | ||||||||||
Three Months Ended | ||||||||||
March 31 | ||||||||||
2013 | 2012 | |||||||||
Operating Activities: | ||||||||||
Net income | $ | 11.6 | $ | 58.3 | ||||||
Depreciation and amortization | 48.5 | 48.0 | ||||||||
Change in managed working capital | (84.4 | ) | (155.0 | ) | ||||||
Change in retirement benefits | 16.6 | 11.5 | ||||||||
Accrued liabilities and other | (49.7 | ) | 19.0 | |||||||
Cash used in operating activities | (57.4 | ) | (18.2 | ) | ||||||
Investing Activities: | ||||||||||
Purchases of property, plant and equipment | (86.9 | ) | (69.9 | ) | ||||||
Asset disposals and other | 0.7 | 0.9 | ||||||||
Cash used in investing activities | (86.2 | ) | (69.0 | ) | ||||||
Financing Activities: | ||||||||||
Payments on long-term debt and capital leases | (0.1 | ) | - | |||||||
Net repayments under credit facilities | - | (1.4 | ) | |||||||
Dividends paid | (19.2 | ) | (19.1 | ) | ||||||
Taxes on share-based compensation | (4.1 | ) | (22.8 | ) | ||||||
Exercises of stock options and other | 0.4 | 0.2 | ||||||||
Cash used in financing activities | (23.0 | ) | (43.1 | ) | ||||||
Decrease in cash and cash equivalents | (166.6 | ) | (130.3 | ) | ||||||
Cash and cash equivalents at beginning of period | 304.6 | 380.6 | ||||||||
Cash and cash equivalents at end of period | $ | 138.0 | $ | 250.3 | ||||||
Allegheny Technologies Incorporated and Subsidiaries | |||||||
Computation of Basic and Diluted Earnings Per Share | |||||||
(Unaudited, dollars in millions, except per share amounts) | |||||||
Three Months Ended | |||||||
March 31 | |||||||
2013 | 2012 | ||||||
Numerator for Basic net income per common share - | |||||||
Net income attributable to ATI | $ | 10.0 | $ | 56.2 | |||
Effect of dilutive securities: | |||||||
4.25% Convertible Notes due 2014 | - | 2.3 | |||||
Numerator for Dilutive net income per common share - | |||||||
Net income attributable to ATI after assumed conversions |
$ | 10.0 | $ | 58.5 | |||
Denominator for Basic net income per common share - | |||||||
Weighted average shares outstanding | 106.6 | 105.9 | |||||
Effect of dilutive securities: | |||||||
Share-based compensation | 0.5 | 0.9 | |||||
4.25% Convertible Notes due 2014 | - | 9.6 | |||||
Denominator for Diluted net income per common share - | |||||||
Adjusted weighted average assuming conversions | 107.1 | 116.4 | |||||
Basic net income attributable to ATI per common share | $ | 0.09 | $ | 0.53 | |||
Diluted net income attributable to ATI per common share | $ | 0.09 | $ | 0.50 | |||
Allegheny Technologies Incorporated and Subsidiaries | |||||||
Other Financial Information | |||||||
Managed Working Capital | |||||||
(Unaudited - Dollars in millions) | |||||||
March 31, | December 31, | ||||||
2013 | 2012 | ||||||
Accounts receivable | $ | 681.5 | $ | 613.3 | |||
Inventory | 1,537.5 | 1,536.6 | |||||
Accounts payable | (479.4 | ) | (499.9 | ) | |||
Subtotal | 1,739.6 | 1,650.0 | |||||
Allowance for doubtful accounts | 5.3 | 5.5 | |||||
LIFO reserve | 76.4 | 76.9 | |||||
Corporate and other | 63.9 | 68.4 | |||||
Managed working capital | $ | 1,885.2 | $ | 1,800.8 | |||
Annualized prior 2 months sales |
$ | 4,988.3 | $ | 4,380.0 | |||
Managed working capital as a % of annualized sales |
37.8 | % | 41.1 | % | |||
March 31, 2013 change in managed working capital |
$ | 84.4 | |||||
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 | ||||||||
(Unaudited - Dollars in millions) | ||||||||
March 31, | December 31, | |||||||
2013 | 2012 | |||||||
Total debt | $ | 1,479.1 | $ | 1,480.1 | ||||
Less: Cash | (138.0 | ) | (304.6 | ) | ||||
Net debt | $ | 1,341.1 | $ | 1,175.5 | ||||
Net debt | $ | 1,341.1 | $ | 1,175.5 | ||||
Total ATI stockholders' equity | 2,487.1 | 2,479.6 | ||||||
Net ATI capital | $ | 3,828.2 | $ | 3,655.1 | ||||
Net debt to ATI capital | 35.0 | % | 32.2 | % | ||||
Total debt | $ | 1,479.1 | $ | 1,480.1 | ||||
Total ATI stockholders' equity | 2,487.1 | 2,479.6 | ||||||
Total ATI capital | $ | 3,966.2 | $ | 3,959.7 | ||||
Total debt to total ATI capital | 37.3 | % | 37.4 | % |
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. |
CONTACT:
Allegheny Technologies Incorporated
Dan L. Greenfield,
412-394-3004