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Allegheny (ATI) Posts Narrower-than-Expected Q3 Loss

Allegheny Technologies Inc.ATI is a diversified specialty materials producer operating through two segments, High Performance Materials and Components, and Flat-Rolled Products.

Allegheny is in the process of finishing several self-funded capital projects, some of which have already been completed, to help augment organic growth and its cost structure. The company's $1.2 billion Hot-Rolling and Processing Facility (HRPF) is now fully integrated into daily operations and is producing high-value and standard flat rolled products in wider, longer and thinner coils. The HRPF facility is expected to significantly boost capabilities of the Flat-Rolled Products division. The company has also started production ramp at its Rowley titanium sponge facility.

Allegheny is exposed to certain challenges (including pricing pressure) in its Flat Rolled Products segment. Selling prices and demand for the company's standard stainless products also remain under pressure.

Let's have a quick look at this Pennsylvania-based company's third-quarter release.

Estimate Trend & Surprise History

Investors should note that the earnings estimate for Allegheny for the third quarter has declined by 22 cents to a loss of 30 cents over the past month. The company has beaten the Zacks Consensus Estimate in 2 of the trailing 4 quarters with an average beat of around 32.08%.

Earnings

Allegheny delivered adjusted loss from continuing operations of 29 cents per share, narrower than the Zacks Consensus Estimate of a loss of 30 cents.

Revenues

Allegheny reported revenues of $832.7 million. That missed the consensus estimate of $964 million.

Key Stats/Developments to Note

Allegheny's performance in the third quarter was affected by continued pressure in its Flat Rolled Products segment, further weakening in demand from the oil and gas markets, and weak demand for forged products from the construction and mining market.

In the Flat Rolled Products unit, difficult market conditions for commodity stainless products and temporary operational disruptions from the shutdown and restart of operations resulting from the lockout of United Steelworkers -represented (USW) employees in Aug 2015 led to a 25% fall in shipment volume in the third quarter on a sequential comparison basis.

Allegheny remains focused on cost-reduction and has set a target of at least $100 million in new gross cost reductions for 2015.

The company remains optimistic that operating performance in its High Performance Materials and Components division will materially improve in 2016.

Zacks Rank

Currently, Allegheny has a Zacks Rank #5 (Strong Sell), but that could change following its earnings report which was just released.

Market Reaction

Allegheny's shares were inactive following the release. It would be interesting to see how the market reacts to the results during the trading session today.

Check back later for our full write up on Allegheny's earnings report!

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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