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Allegheny (ATI) Declares Offering of 17M Common Shares

Allegheny Technologies Incorporated ATI announced to offer 17 million shares of common stock, subject to market and other conditions, in an underwritten registered public offering. Allegheny has also priced the common stock offering at a public offering price of $24 per share. The offering will result in gross proceeds of around $408 million.
Allegheny has granted the underwriter a 30-day option to purchase up to 2,550,000 additional shares of common stock. The company plans to use the net proceeds from the offering to fund redemption of all of its outstanding 9.375% Senior Notes due 2019 of which $350 million aggregate principal amount is outstanding. The remaining will be used for general corporate purposes.
Allegheny has outperformed the industry it belongs to over a year. The company’s shares have moved up around 40.6% during this period compared with roughly 29% gain recorded by the industry.
Allegheny reported a net loss of $121.2 million or $1.12 per share for third-quarter 2017 as compared with the prior-year loss of $530.8 million or $4.95. Excluding an earlier-announced goodwill impairment charge, adjusted loss was 7 cents per share for third-quarter 2017, in line with the Zacks Consensus Estimate.
Revenues for the quarter rose 12.8% year over year to $869.1 million, beating the Zacks Consensus Estimate of $865.1 million.
Moving ahead, Allegheny expects its High Performance Metals and Components (HPMC) unit to maintain robust performance especially in the commercial aerospace. Further, the company expects the unit to deliver improved results in the fourth quarter compared with the third.
The Flat-Rolled Products (FRP) unit is expected to benefit from increasing raw material prices in the fourth quarter. The company expects operational improvements and product mix benefits to be carried over in 2018.
Allegheny anticipates significant profit improvement opportunities in 2018, aided by the completion of the start-up and qualification of its new nickel alloys powder facility. Capital expenditures are expected to be around $100 million annually for the next several years.

Allegheny Technologies Incorporated Price and Consensus

Zacks Rank & Key Picks

Allegheny currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies in the basic materials space are BHP Billiton Limited BHP, Air Products and Chemicals, Inc. APD and Koppers Holdings Inc. KOP. All three stocks sport a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BHP Billiton has expected long-term earnings growth of 5.3%.
Air Products has expected long-term earnings growth of 12.1%.
Koppers Holdings has expected long-term earnings growth of 18%.
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