Pittsburgh-based Allegheny Technologies Inc. (ATI) said it will exit stainless sheet products by mid-year 2021, instead streamlining its production footprint to focus on more high-return opportunities.
ATI will specifically invest in enhanced capabilities to accelerate the execution of its high-value strategy, primarily in aerospace and defense.
“We are taking decisive action to become a more profitable company by further sharpening our focus on the highest-value opportunities for our business,” ATI President and CEO Robert S. Wetherbee said Wednesday. “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, ATI’s stainless sheet product line represented $445 million of revenue with margins of less than 1 percent. As a result of the company’s exit, ATI expects to achieve EBITDA margins of 15 percent or more within the Advanced Alloys and Solutions (AA&S) segment with recovery of the commercial aerospace end market.
In addition, ATI will consolidate its finishing operations by investing in its location in Vandergrift, Pa., creating a more competitive flow path focused on increasing production of high value, differentiated materials. The $65 million to $85 million incremental investment over a three-year period is expected to be largely self-funded by working capital releases. These changes are expected to enable the AA&S business to significantly improve its margin profile by reducing costs and pursuing an improved revenue mix, as the aerospace market recovers.