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Q3 Sales Up 17% at ATI

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Strong end markets drove a profitable third quarter at Allegheny Technologies Inc., reported the Pittsburgh-based specialty steelmaker.

ATI recorded net income of $50.5 million in the third quarter, compared with a net loss of $121.2 million in the year-ago period. Year-to-date net income was $181.3 million at quarter’s end, compared with a $93.6 million net loss through the same period in 2017.

Third-quarter net sales totaled $1 billion, up from $869.1 million in the prior-year quarter. Through nine months, net sales increased 15 percent to $3 billion.

“ATI’s third quarter 2018 operating performance was solid and in line with our expectations, with business segment operating profit nearly doubling compared to the prior year period,” said Rich Harshman, chairman, president and CEO at ATI. “These results built on strong first-half 2018 financial results.”

Sales in the company’s high performance materials and components segment increased 14 percent to $585.5 million in the third quarter, while flat-rolled products sales jumped 22 percent to $434.7 million.

“The aerospace and defense markets continue to drive results in our high performance materials and components, or HPMC, segment,” said Bob Wetherbee, president, CEO designate and current executive vice president of ATI’s flat-rolled products group. “Our flat-rolled products, or FRP, segment had another solid quarter, generating $30 million in segment operating profit, representing a margin of nearly 7 percent of sales. These results benefited from continued strong market demand, ongoing improvements in asset utilization, and a better matching of raw material costs and surcharges compared to the third-quarter 2017.”

Looking ahead, the company said ongoing aerospace market demand growth and improved asset utilization should drive continued revenue and operating profit growth in the HPMC segment. However, significant price declines in several key raw materials are expected to contribute to weaker fourth-quarter results in the FRP segment, due to the short-term mismatch between input costs and the surcharge index pricing mechanism.

“We anticipate our U.S. Operations to remain profitable in the fourth quarter despite these higher input costs,” Wetherbee added. “Even with these short-term headwinds, we continue to expect a 2018 year-over-year operating margin improvement of 150 to 300 basis points driven by continued strong end-market demand, ongoing growth of our differentiated product sales, and the benefits from improved HRPF utilization.”