Allegheny Technologies to Exit Stainless Products to Focus on AAS
Allegheny Technologies Incorporated announced that it is exiting standard stainless sheet products by mid-year 2021, streamlining its production footprint and investing in enhanced capabilities to accelerate the execution of its high value strategy, primarily in aerospace and defense. As it accelerates its transformation, ATI expects to cease production activities at five locations by year end 2021. ATI President and Chief Executive Officer Mr Robert S Wetherbee said “We are taking decisive action to become a more profitable company by further sharpening our focus on the highest-value opportunities for our business. By shedding a low margin product line and optimizing our footprint, we are redeploying resources to an aerospace and defense-centered portfolio, expanding margins and driving returns to generate significant value for our shareholders.”
In 2019, stainless sheet products represented USD 445 million of revenue with margins of less than one percent. As a result of these actions, ATI expects to achieve EBITDA margins of 15% or more within the Advanced Alloys and Solutions segment with recovery of the commercial aerospace end market. One-time charges related to the implementation of these actions are expected to be in the range of USD 25-30 million and will be expensed in the fourth quarter of 2020.
The Company has continued transforming the footprint of its Advanced Alloys and Solutions business from one designed to support a high volume strategy to one that emphasizes its advanced capabilities and specialty products to better support its high value strategy.
In addition, the Company will consolidate its finishing operations by investing in its Vandergrift Pennsylvania location, creating a more competitive flow path focused on increasing production of high value, differentiated materials. The USD 65-85 million incremental investments over a three-year period is expected to be largely self-funded by working capital releases. These changes are expected to enable the Advanced Alloys and Solutions business to significantly improve its margin profile by reducing costs and pursuing an improved revenue mix, as the aerospace market recovers.