Allegheny Alloy Chosen for Project

Allegheny Technologies Inc. (ATI - Analyst Report) said that its ATI 2003 lean duplex stainless has been selected for topside secondary and outfitting structural components on a major offshore project in the Norwegian North Sea. ATI2003 was selected over 316L stainless and coated carbon steel given its efficiency in dealing with weight concerns and corrosion.

ATI 2003 is a lean duplex stainless steel (LDSS) alloy and provides greater strength and corrosion resistance and is also more economically viable compared to 316L. Though 316L has been in use for several years, recently its usage has shown undesirable chloride pitting and corrosion cracking. Usage of 316L also requires huge maintenance costs. On the other hand, ATI2003 provides more resistance to corrosion and has a 40-year design life in the harsh North Sea environment.

Allegheny Technologies has developed one of the world’s most comprehensive families of duplex alloys. Duplex alloys provide cost savings and can provide enhanced performance compared to conventional stainless steels. ATI 2003 lean duplex stainless steel is used for applications in power generation, oil & gas, chemical processing, desalination, architecture and water treatment and distribution.

Allegheny released its third quarter 2012 results in October 2012. The company reported third-quarter 2012 earnings of 32 cents per share, down from 56 cents (or 63 cents excluding acquisition related charges) recorded a year ago. The results missed the Zacks Consensus Estimate by 7 cents. Profit slid 43% year over year to $35.3 million on lower sales.

Revenues dipped 9.8% year over year to $1,220.5 million, also falling behind the Zacks Consensus Estimate of $1,297 million. Sales fell as lower revenues across Engineered Products and Flat-Rolled Products segments more than offset a modest growth in the High Performance Metals division.

Allegheny, which competes with Carpenter Technology Corp. (CRS - Snapshot Report), currently retains a Zacks Rank #4 (Sell). We have a long-term (more than 6 months) Underpeform recommendation on the stock.