Allegheny Technologies Inc. reported Wednesday its fourth-quarter earnings soared as the company sold its tungsten materials business.
The Pittsburgh-based producer and seller of specialty metals worldwide had a fourth-quarter net income of $173.4 million, or $1.62 per diluted share, compared with $10.5 million, or 10 cents a share, in the year-earlier period. This was significantly higher than the analysts’ average estimated loss of 19 cents per share reported by Bloomberg LP.The company’s revenue totaled $915.3 million in the fourth quarter, a 10.4 percent decrease from $1.02 billion the prior year. Revenue shrunk due to lower sales of raw material, according to the company.
Allegheny had an unusual spike in its quarterly earnings in the fourth quarter because of the tungsten sale. The company also recorded $67.5 million in corporate restructuring charges and inventory adjustments. It closed its titanium sponge facility in Albany, Ore., and a stainless finishing facility in New Castle, Ind. Another stainless finishing facility in Wallingford, Conn., is scheduled to shut down mid-2014.Total income from discontinued operations was $257.2 million, a swing from a loss of $5.5 million in the same quarter previous year.Had the company only considered continuing operations, it would have shown a loss of $83.8 million after expenses, or 79 cents per diluted common share.
“We did not expect to see significant signs of improvement in market conditions in the fourth quarter 2013,” said Chairman, CEO and President Richard J. Harshman in a conference call Wednesday. However, “we are continuing to see long-term growth opportunities in many of our global markets,” he said.Allegheny’s capital expenses in 2013 were $613 million, but the company expects to spend $300 million in 2014 due to its strategic investments in Hot-Rolling & Processing Facilities that will bring “lower costs, reduced cycle times and revenue growth beginning in 2015,” according to the earnings report.
Thirty-five percent of total sales were in aerospace and defense markets, a sector Allegheny is emphasizing for projected growth in future years. In a press release Wednesday, Harshman said aerospace build rates and demand for specialty materials are expected to rise in 2014.Analysts seemed to agree with Harshman’s outlook for the company. Wall Street analysts forecast an estimated 69 cents earnings per share in 2014 and expect a 15 percent five-year growth.
“We think bullish investors are looking through near term challenges and valuing shares on what they perceive as normalized earnings ~2016,” said Julie Yates Stewart, research analyst at Credit Suisse Group AG, in a research report. Stewart indicated “neutral” on Jan. 14 for Allegheny.“The investment [Allegheny is] making in 2014 is going to be transformative for them,” said Philip Gibbs, senior equity research analyst at Keybanc Capital Markets Inc. “You should see a corresponding positive impact to restocking once they’re done.”Gibbs indicated “buy” on Jan. 14 for Allegheny, whose shares he believes are a sound investment as the company undergoes restocking changes.In the 2013 fiscal year, Allegheny reported a net income of $154 million with $1.44 earnings per diluted common share, a 2.8 percent decrease from a net income of $158.4 million with $1.43 earnings per share in the 2012 fiscal year. Wall Street estimates for the 2013 fiscal year averaged a loss of 33 cents per share. Sales fell 13.4 percent to $4.04 billion in 2013, from $4.7 billion in 2012.
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