01—Abstract
Summary
Summary of the 10-Q filed August 4, 2014. Cited figures are marked; the original filing is the authoritative source.
Allegheny Technologies Incorporated (ATI) reported a net loss attributable to ATI of $4.0 milliona, or $(0.03) per share, for the second quarter of 2014, a decline from a net income of $4.4 million, or $0.04 per share, in the same period of the prior year.
This shift is primarily due to higher costs associated with strategic growth projects, particularly the Hot-Rolling and Processing Facility (HRPF) and the Rowley titanium sponge facility's Premium Quality (PQ) qualification process. Sales increased slightly year-over-year to $1.119 billionb, driven by growth in the Flat Rolled Products segment, though this was partially offset by lower selling prices and raw material surcharges.
The company continues to invest in its strategic vision of becoming an integrated specialty materials and components provider, evidenced by recent acquisitions in the High Performance Materials & Components segment. Despite the near-term net loss, management anticipates continued improvement in business conditions and operating results in the latter half of 2014, excluding ongoing start-up and qualification costs.
02—Key points
Key Highlights
- Net loss attributable to ATI of $4.0 million for Q2 2014, compared to net income of $4.4 million in Q2 2013.
- Sales increased 2% year-over-year to $1.119 billion in Q2 2014.
- High Performance Materials & Components segment sales increased 2%, while Flat Rolled Products segment sales rose 9% in Q2 2014.
- The company incurred significant costs related to the HRPF and Rowley titanium sponge facility PQ qualification process.
- Cash and cash equivalents decreased significantly to $355.1 million from $1,026.8 million at year-end 2013, partly due to debt repayments and acquisitions.
- Total outstanding debt decreased to $1.538 billion from $1.947 billion.
- ATI acquired two businesses in Q1 and Q2 2014: Dynamic Flowform Corp. and Hanard Machine, Inc., to expand its specialty materials and components capabilities.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q2 FY2014, ATI Inc lost $0.00.
- Revenue$1.12B100.0%
- Cost of revenue−$1.03B92.0%
- Gross profit$89.5M8.0%
- Operating costs−$65.7M5.9%
- Operating income$23.8M2.1%
- Interest, other & tax−$27.8M2.5%
- Net income−$4.0M0.4%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2014filed August 4, 2014Financial Statements
Q2 FY2014 against Q2 FY2013
| Line item | Q2 FY2014Q2 FY2013 | Change |
|---|---|---|
| Revenue | $1.12B$1.06B | +5.9% |
| Cost of Revenue | $1.03B$969.10M | +6.2% |
| Gross Profit | $89.50M$87.70M | +2.1% |
| SG&A Expenses | $65.70M$67.10M | −2.1% |
| Operating Income | $23.80M$20.60M | +15.5% |
| Net Income | -$4.00M$4.40M | −190.9% |
| EPS (Basic) | $-0.03$0.04 | −175.0% |
| EPS (Diluted) | $-0.03$0.04 | −175.0% |
| Shares Outstanding (Basic) | 108.63M107.98M | +0.6% |
| Shares Outstanding (Diluted) | 107.10M107.20M | −0.1% |
05—Questions
Frequently Asked Questions
What is the primary reason for the company's net loss in the second quarter of 2014?
The primary reason for the net loss in the second quarter of 2014 was the significant costs incurred related to strategic growth projects, including start-up costs for the Hot-Rolling and Processing Facility (HRPF) and qualification costs for the Rowley titanium sponge facility's Premium Quality (PQ) process. These costs, along with lower selling prices and raw material surcharges, offset the modest increase in sales.
How has the company's debt situation changed?
Total outstanding debt decreased to $1.538 billion as of June 30, 2014, down from $1.947 billion at December 31, 2013. This reduction was primarily driven by the repayment of the remaining $397.5 million of the 4.25% Convertible Senior Notes.
What is the company's outlook for the remainder of 2014?
ATI anticipates continued improvement in business conditions and operating results in the third and fourth quarters of 2014. However, the company expects that ongoing start-up and qualification costs for its strategic growth projects will continue to negatively impact results during this period. Management expects third quarter HRPF start-up costs to increase significantly.
What impact have the recent acquisitions had?
ATI acquired Dynamic Flowform Corp. and Hanard Machine, Inc. in the first and second quarters of 2014, respectively. These acquisitions are part of the company's strategy to expand its capabilities in producing specialty materials parts and components, particularly for the aerospace and defense, and oil & gas/chemical process industry markets.
06—Continue