Allegheny Technologies (NYSE: ATI) reported Q1 EPS of $0.32, $0.08 better than the analyst estimate of $0.24. Revenue for the quarter came in at $979 million versus the consensus estimate of $932.88 million.

Strategy and Outlook

“We expect continued year-over-year revenue growth and operating margin improvement in our HPMC segment in 2018 resulting from ongoing aerospace market demand growth and improved asset utilization. We continue to expect HPMC segment margins to expand by approximately 200 basis points versus the full year 2017. The rate of improvement will likely vary by quarter due to the next-generation product sales cadence and other factors,” Harshman said. “We remain confident in our customers’ continued elevated order patterns due to increasing jet engine build rates over the next several years. Our focus continues to be on strong operational execution, continuous improvement initiatives, and on meeting the aerospace production ramp requirements.

“In the FRP segment, we see continued strong end-market demand and the benefits from ongoing operational improvements, growth in our differentiated products, and benefits from the A&T Stainless joint venture.

“Cash generation from operations remains a key focus, and we intend to carefully balance our working capital and other cash needs with the pace of our capital expenditure requirements and financing obligations. As a result of our ongoing operational improvements, anticipated financial performance, and disciplined spending, we expect to generate at least $150 million of free cash flow in 2018, excluding contributions to the ATI Pension Plan. We plan to end 2018 with no borrowings under our ABL facility. Finally, we do not expect to pay any significant U.S. federal or state income taxes in 2018 due to net operating loss carryforwards,” Harshman concluded.

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