ATI (ATI) Q4 2000 earnings summary

Executive summary

• FY2000 sales rose to $2.46B from $2.30B; continuing income before extraordinary gains reached $132.5M, up 19% YoY.

• Fourth-quarter net income was $5.4M, including $20.0M in after-tax charges for titanium sponge idling, workforce reduction and executive management changes.

• High-value materials represented 64% of sales; aerospace, electrical energy and oil and gas markets strengthened, while energy costs and stainless steel conditions pressured Q4 results.

Financial highlights

• Sales were $2,460.4M in 2000 versus $2,296.1M in 1999; income from continuing operations before extraordinary gains was $132.5M versus $111.0M.

• Diluted EPS from continuing operations before extraordinary gains was $1.60 versus $1.16; reported net income was $132.5M versus $300.2M, which included 1999 discontinued operations and extraordinary gains.

• Cash provided by operating activities rose 32% to $135.5M; operating cost savings reached $92M.

• Corporate expenses fell 21% to $30.6M, reflecting cost controls and a 20% reduction in headquarters employees.

Outlook and guidance

• 2001 plan targets cost reductions exceeding $110M, managed working-capital reductions over $70M and capital investment above $100M; debt reduction is also planned.

• Approximately $50M of approved 2001 capital spending is aimed at expanding Allvac, Allvac Ltd and Wah Chang capacity in high-growth, high-value products; projects are expected to finish in H1 2002.

• Annual market growth through 2004 is projected at 5% for stainless steel and up to 8% for higher-value products; long-term revenue and earnings growth ambition is double-digit annually.

• Q1 2001 outlook is tempered by volatile energy costs and stainless steel market conditions; aerospace, power generation and oil and gas strength, surcharges and cost reductions are expected to support the rest of 2001.