ATI announces $7.9M 1st quarter loss as USW strike continues
Apr. 29—Allegheny Technologies Inc. reported a $7.9 million loss in the first quarter of 2021, but the company said it anticipates that demand for its jet engine products will increase as air travel recovers from the covid pandemic.
"Our first-quarter financial results exceeded expectations, benefiting from the ongoing modest recovery in jet engine production, our aggressive 2020 cost-cutting actions and a strong tailwind from nickel and other raw material prices," President and CEO Robert S. Wetherbee said in ATI's results statement released Thursday.
"Despite our expected seasonal cash burn, our strong balance sheet and cash position ensure our ability to meet customer obligations and succeed in a challenging environment," he said.
The United Steelworkers union went on strike at ATI's Specialty Rolled Products locations on March 30, a day before the end of the quarter. The strike is continuing after the union rejected a four-year contract offer that expired Monday.
In a federal filing, ATI said the strike did not have a significant impact on its first-quarter results.
Wetherbee said ATI "remain(s) committed to our business continuity plan to safely operate in a way that allows us to deliver to our customers on our quantity and quality commitments during this strike. Our operating teams are committed to minimizing the operational interruption and financial impact from the strike as we seek to reach a fair and equitable settlement with our striking workers."
The USW did not immediately have a response or comment on ATI's first-quarter report.
For the first quarter of 2021, ATI reported sales of $693 million and a net loss of $7.9 million, or 6 cents per share. Sales were up 5.3% from $658 million in the fourth quarter of 2020, when ATI reported a $1.1 billion loss, or $8.85 per share.
The company said results improved because of higher operating levels and benefits from rising raw material prices.
For the first quarter, ATI reported $240.9 million in sales in its High Performance Materials & Components (HPMC) segment, and $451.6 million in sales in Advanced Alloys & Solutions (AA&S).
In the HPMC segment, ATI reported an increase in sales over the fourth quarter of 2020 on increased demand from the commercial aerospace market. Sales of next-generation jet engine products increased, driven by recovering jet engine demand.
However, ATI said total sales in the segment were down by nearly half year-over-year due to challenging market conditions in commercial aerospace largely brought on by the pandemic.
In its AA&S segment, ATI said sales improved slightly over the fourth quarter of 2020, but were lower year-over-year. It said sales in the aerospace and defense markets were down because of customer order patterns for defense applications and lower airframe demand, while sales to automotive and oil and gas markets were up from the fourth quarter of 2020.
Compared to the first quarter of 2020, aerospace and defense market sales were down, attributed to lower demand because of the pandemic, while sales of products for electronic applications were higher driven by demand in China. Sales of specialty energy and automotive market products also increased.
Wetherbee said ATI remains on-track within its Advanced Alloys & Solutions segment to exit production of low-margin standard stainless sheet products in 2021, while growing profitable specialty products.
"It's imperative that each of ATI's business units stands on its own and has a cost structure that enables it to sustainably generate returns in excess of our cost of capital," he said.
ATI reported it had $541.7 million in cash on hand as of March 31.
ooking toward the second quarter, Wetherbee said ATI expects a modest increase in demand for its jet engine products supported by increasing air travel rates.
Brian C. Rittmeyer is a Tribune-Review staff writer. You can contact Brian at 724-226-4701, brittmeyer@triblive.com or via Twitter .
