Sunday, August 5, 2012

ATI reports 2Q2012 Earnings.

ATI reported Q2 earnings of $0.50 per share, this missed consensus estimates of $0.54 per share. Revenue was reported as $1.34 billion driven by a weaker environment in manufacturing segments. Aerospace had a weaker quarter, which appeared to rebound toward late June and early into July. ATI’s diverse global strategy helped keep robust earnings during a tougher quarter for demand in certain segments.

Aerospace and defense made up 31% of ATI’s sales during the quarter of $851 million. Sustained jet engine demand helped the segment during the quarter.

High performance metals, which make up 18.1% of sales, increased 10% year over year and became a more focused part of ATI’s business model. This can be contrasted with Flat-Rolled Metals, which make up 6.8% of sales, decreased by 40% year over year. Engineered products contributed to ATI’s shift in business focus over the past year, makes up 9.9% of sales, increased by 94% year over year.

Our current outlook, after earnings, for ATI is positive. ATI has held up through a tough environment by adapting their business model to changing customer demands. While ATI remains under pressure from macro economic troubles, the stock price appears to be towards its relative bottom point. Most analysts on the street are wildly bullish on ATI, which reassures us of our Buy rating as well. As a recovery takes place, ATI is well positioned to capture renewed manufacturing demand. A true example of this was ATI’s 5.16% rise in market cap Friday, August 3rd 2012. This was sparked by widespread upward market gains following a better than expected July non farm payroll report.  This is an optimistic sign for the manufacturing industry, ATI’s customers, and therefore ATI’s bottom line going forward. 

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