ATI reports $1.12B loss in last 3 months of 2020; advances layoff, cost-cutting plans

Allegheny Technologies Inc. took a $1.12 billion hit in the last three months of 2020 and is moving forward with previously announced layoffs and cost-cutting measures by the end of this year, company officials said Thursday.

Despite the steep losses, the global metals company’s fourth-quarter results weren’t as bad as the company or market analysts expected.

Executives attributed the bulk of the year’s total $1.6 billion in losses to a major restructuring and related charges and weak product demand during the pandemic. There was a decline in the number of commercial airplanes being built, less demand in the energy sector, paused defense contracts and a decreased need for medical products while elective procedures were postponed.

CEO Bob Wetherbee expressed optimism that as ATI shifts away from standard steel sheet products — used for the likes of appliances — and snaps up more military, aeronautical and energy specialty contracts, the Pittsburgh-based company is on track to become a “leaner, more competitive aerospace and defense- focused powerhouse.”

“We are optimistic that the worst is behind us and demand will begin to rebound as covid-19 vaccines are increasingly approved and administered around the world,” Wetherbee said in a statement released with the quarterly earnings report.

The company also slashed costs by $170 million and has plans to continue doing so.

Fewer than 200 workers in the Alle-Kiski Valley have been given layoff notices, according to ATI spokeswoman Natalie Gillespie.

ATI’s operation include sites in Latrobe in Westmoreland County, Zelienople in Butler County, Robinson and Oakdale in Allegheny County and Monaca and Rochester in Beaver County.

Compared with 2019, ATI is poised to have shed at least 800 jobs from its specialty and standard rolled products operations, according to Gillespie. Employment in the Pittsburgh area will have decreased from 1,700 at the end of 2019 to 1,500 at the end of 2021.

‘We’re glad 2020 is over’

Wetherbee acknowledged the past year has been rough for ATI’s operations and employees.

In addition to plunging sales and extra workforce needs spurred by the covid-19 pandemic, ATI confronted stalled contracts with unionized workers, sought relief from tariffs imposed under the Trump administration and announced looming layoffs that riled union representatives who accused the company’s leaders of a “knee-jerk reaction” to a short-term crisis.

Total year-end revenue plunged from $4.1 billion in 2019 to $3 billion.

“No surprise: We’re glad 2020 is over. It was a challenging year, amplified by significant uncertainty, and yet we made the best of it,” Wetherbee told industry observers and market analysts on a fourth-quarter earnings call. “Our team persevered and focused on doing the right thing, quickly and decisively, to position ATI to emerge from the crisis stronger, a company focused on aerospace and defense.”

ATI offered early retirement incentives to nonunion employees and worked to reduce its pension and debt obligations.

“By quickly reducing our costs,” Wetherbee said, ATI limited “the steep demand drop’s impact on our bottom line.”

“We did what was necessary to ensure ATI would not only survive the global recession, but emerge stronger in recovery,” Wetherbee said.

The $1.12 billion loss amounted to $8.85 per share, for a loss of 33 cents per share adjusted for one-time gains and costs. Analysts at Zacks Investment Research had expected a loss of 37 cents per share, The Associated Press reports. Others had predicted as much as a 44-cent drop.

Vandergrift still set for upgrades

Though there’s still “a fair amount of uncertainty” ahead, executives expressed optimism in strengthening ATI’s financial position as the company becomes more focused on specialized metals using advanced processes and pumps money into upgrades at its Vandergrift operation.

The Vandergrift investment, expected to total between $65 million and $85 million over the next three years, is part of ATI’s increased focus on specialty rolled products and specialty energy projects.

Standard stainless steel is produced at high volume for products such as appliances and vehicles. Specialty stainless steel and other alloys are made for highly specialized products such as consumer electronics and solar panels, where it needs to be extremely thin and possess specific properties.

“Our customers count on us to deliver the mission-critical materials and components to keep their planes flying, vehicles moving, energy flowing and medical equipment and electronics working flawlessly,” Wetherbee said.

“We expect continued defense growth in 2021, albeit at a slower pace,” Wetherbee said. He cited as examples expectations for less demand for materials used for a type of ground vehicle amid a contract delay and increased demand for components used in jet engines, airframes and work on “future government defense initiatives such as hypersonics.”

RELATED: ATI to invest up to $85M in Vandergrift facility, phase out production of standard stainless steel

Headquartered at PPG Place in Downtown Pittsburgh, ATI employs more than 6,500 people worldwide, with about 25% of employees based in Pennsylvania, according to Gillepsie.