Global Fastener News

FIN STOCK REPORT
Stock Report: ALCOA

2014

Alcoa reported its Engineered Products and Solutions segment, including results from Alcoa Fastening Systems, achieved its 19th consecutive quarter of year-over-year after-tax operating income growth.

Engineered Products and Solutions segment ATOI in the fourth quarter was $165 million, down $3 million, or 2%, year-over-year, including a Firth Rixson integration impact of $12 million. Excluding the impact, ATOI was a fourth quarter record and the 19th consecutive quarter of year-over-year ATOI growth; continued productivity gains and higher volumes drove the improvement, mostly offset by cost increases and unfavorable mix. This segment reported a fourth quarter adjusted EBITDA margin of 18.9% compared to 20.3% for the same quarter last year; excluding Firth Rixson, adjusted EBITDA margin performance of 20.6 percent was a fourth quarter record.

Segment third-party aluminum shipments rose 10.7% to 62 kmt in Q4, while sales grew 11.4% to $1.57 billion.

Full-year Engineered Products segment third-party aluminum shipments increase 7.4% to 246 kmt, with sales up 4.8% to $6 billion.

During Q4, AFS announced a partnership with the Netherlands-based ThermoPlastic Composites Research Center (TPRC) to develop thermoplastic composite technologies.

“The growing role of composite structures in modern aircraft requires adapted fasteners and in certain cases fasteners that have different functions,” said Massimo Cella, Director Development Programs at AFS. “AFS believes in R&D to evolve products in harmony with new requirements. In this perspective AFS has joined TPRC and is looking forward to projects and activities to support concepts and design of future solutions.”

TPRC is a not-for-profit organization that performs research to increase the market for thermoplastic composites. Since the opening of its laboratory in 2012, TPRC has steadily grown its activities in aerospace and more recently in automotive as well. Web: tprc.nl/

During 2014 Alcoa stock increase 48.5% in value, according to the FIN Fastener Stock Index, with consolidated sales gaining 4% to $23.9 billion and net income of $268 million, or $0.21 per share.

Alcoa projects another strong year for global aerospace sales. The company expects 2015 global aerospace sales to increase 9 – 10% over 2014 on continued robust demand for large commercial aircraft, regional jets and jet engines.

For automotive, the Alcoa projects steady growth to continue in 2015. The company forecasts global automotive production of 2 – 4% driven by replacement demand and low lending rates in North America and both the growth of the middle class and clean air regulations in China.

2013

In early 2014 CEO Klaus Kleinfeld called his company “very optimistic” about its fastener business. And it’s easy to see why.

Alcoa Fastening Systems sales grew 6.4% to a record $1.5 billion in 2013. 

“Today, every Western commercial aircraft uses Alcoa fasteners and every Western commercial and military aircraft engine is built with Alcoa nickel super-alloy investment castings,” the company said in its annual report. 

AFS is part of Alcoa’s Engineered Products segment, whose sales rose 3.8% to $5.73 billion in 2013, with ATOI climbing 18.6% to $726 million.

In 2013, AFS agreed to provide Commercial Aircraft of China, Ltd. with technical assistance in fastener and assembly tooling selection, joint design consideration and quality management.

“This agreement establishes Alcoa Fastening Systems as a key partner with COMAC in the development and production of its commercial C919 aircraft,” said AFS president Vitaliy Rusakov. 

Alcoa reported sales at its Engineered Products segment, including AFS, grew 4.2% to $1.4 billion in the fourth quarter of 2013. Third-party shipments rose 7.7% to 56 kmt. Segment ATOI was a Q4 record of $168 million, down $24 million sequentially and up $28 million, or 20%, year-over-year.

“Sequentially, seasonal cost increases and unfavorable volume and price/mix were somewhat offset by continued productivity improvements,” Alcoa stated.

For 2013 Engineered Products sales rose 3.8% to $5.73 billion, while third party shipments gained 2.7% to 229 kmt. Full-year segment ATOI climbed 18.6% to $726 million.

Alcoa reported revenue at its Engineered Products and Solutions segment, including Alcoa Fastening Systems, rose 5.1% to $1.4 billion in the third quarter of 2013, after-tax operating income up 22% year-over-year to $192 million and quarterly adjusted EBITDA margin achieved a record. Q3 third party aluminum shipments increase 13.2% to 60 kmt.

“Sequentially, continued productivity improvements across all market segments were offset by volume declines and cost increases,” the company stated. “Innovation continues to drive share gains across all markets.”

Nine-month Engineered Products sales increase 3.6% to $4.3 billion, while third party aluminum shipments rose 1.8% to 173 kmt and operating income climbed 18.2% to $558 million.

In the first three quarters of 2013, Alcoa’s value-add businesses, comprising Engineered Products and Solutions and Global Rolled Products, accounted for 57% of total revenues and 79% of segment after-tax operating income (ATOI). Over the last 10 years, Alcoa has grown its value-add businesses to be more meaningful contributors to the Company’s overall profitability. ATOI for the value-add businesses has nearly tripled since 2003.

Consolidated Q3 revenue declined 1.2% to 5.8 billion, with profit growing to $44 million as compared to a $175 loss in the third quarter of 2012.

Nine-month revenue shrank 2% to $17.4 billion.

2012

Alcoa reported sales at its Engineered Products and Solutions segment, including Alcoa Fastening Systems, grew 2.4% to $1.42 billion in the opening quarter of 2013.

Segment after-tax operating income (ATOI) gained 10.2% to $173 million, boosted by favorable productivity and higher volumes in the aerospace businesses.

During 2012 Engineered Product sales gained 3.4% to $5.5 billion, with third-party shipments up slightly to 222 kmt. ATOI grew 13.5% to $612 million. Engineered Products ended the year with a record annual adjusted EBITDA margin of 19.2% — more than double where it was 10 years ago.

In 2013 AFS agreed to provide Commercial Aircraft of China, Ltd. with technical assistance in fastener and assembly tooling selection, joint design consideration and quality management. “This agreement establishes Alcoa Fastening Systems as a key partner with COMAC in the development and production of its commercial C919 aircraft,” said AFS president Vitaliy Rusakov.

2011

Alcoa reported sales at its Engineered Products and Solutions segment, including Alcoa Fastening Systems, rose 12% to $1.4 billion in the opening quarter of 2012. Segment ATOI grew 8% to $122 million from fourth quarter 2010 and down 12% from third quarter 2011. 

During 2011 Engineering segment sales increased 16.6% to $5.34 billion, with segment ATOI climbing 30% to $539 million.

Full-year ATOI increased 31% to $415 million, boosting by a doubling of its operating income during the fourth quarter. 

CEO Klaus Kleinfeld trumpeted those results. “We are #1 in fasteners,” Kleinfeld stated. “90% of the fasteners are specialty fastener, 55% are patented.”

In March 2011 Alcoa completed its $240 million acquisition of TransDigm Group’s aerospace fastener business, which included Valley-Todeco and Linread. TransDigm operates three locations (one in California and two in the UK) that employ a combined 400 people.

Richard Hagan of New York-based Pinnacle Capital told GlobalFastenerNews.com that the Valley-Todeco Inc. and Linread Limited divisions of McKechnie “significantly strengthen the AFS product offering with respect to aerospace bolts and nuts for both airframe and engine applications.”

In addition to hot-forged and cold-headed fasteners, Valley-Todeco also manufactures spherical, slotted-entry bearings used in a range of airframe applications, Hagan noted.

“The bearing division of Valley-Todeco is a highly-attractive niche business which expands the AFS product range into new territory,” Hagan pointed out.

2010

Alcoa reported sales at its Engineered Products and Solutions segment, including Alcoa Fastening Systems, increased 16% to $1.07 billion in the first quarter of 2011. 

First quarter segment ATOI soared 60% to $130 million.

Automotive end markets for the U.S. and China are seeing the highest growth rates, with the U.S. pegged at 9% to 13% growth and China forecasted at 9% to 14% growth.

During 2010 Engineering segment sales declined 2.2% to $4.58 billion despite an 11% sales increase to $1.21 billion during the final quarter.

Full-year ATOI increased 31% to $415 million, boosting by a doubling of its operating income during the fourth quarter. 

In March 2011 Alcoa completed its $240 million acquisition of TransDigm Group’s aerospace fastener business, which included Valley-Todeco and Linread.
 

2009
After reporting disappointing sales for 2009, Alcoa re-aligned its Engineered Products and Solutions (EPS) business, including Alcoa Fastening Systems, to serve the aerospace, automotive, commercial transportation, building and construction, and oil and gas markets.

During 2009 Alcoa reported sales at its Engineered Products segment, including fasteners, declined 24% to $4.7 billion, while segment operating profit dipped 40% to $315 million.

The realignment included the promotion of AFS president Olivier Jarrault to the newly created position of COO of Engineered Products and Building Systems, which includes AFS in its business group. Jarrault had been AFS president since 2002, following Alcoa’s acquisition of Fairchild Fasteners.

Replacing Jarrault is Vitaliy Rusakov, former general manager of AFS North America Aerospace. He also joined Alcoa from Fairchild Fasteners in 2002.

Strong productivity gains and modest end-market improvement helped Alcoa’s Engineered Products segment achieve a 42% sequential ATOI increase to $81 million despite a 15% drop in sales during the opening quarter of 2010.

2008
Alcoa’s Engineered Solutions segment, including Alcoa Fastening Systems, reported revenue rose 7% to $5.6 billion during 2008, while ATOI climbed 23% to $503 million.

Engineered Products sales dropped 4% to $1.26 billion during the final quarter of 2008, while income was $65 million.

During the first quarter of 2008 AFS boosted its aerospace capacity by paying a combined $276 million to acquire Republic Fastener Manufacturing Corp. and Van Petty Manufacturing, both of Newbury Park, CA. The companies have a total of 240 employees and combined 2007 revenue of $51 million.

AFS president Olivier Jarrault said the acquisitions added “much-needed aerospace fastener capacity.” In January 2009 AFS’ Industrial Distribution Group (IDG) established new headquarters in Tracy, CA.

“Providing high-level logistics and packaging services, this 25,000 sq ft facility represents a key element in the ongoing development of the company’s distribution infrastructure,” announced IDG director Rod Alavi.

IDG supplies fastening products to both the auto aftermarket and industrial markets. Product brands include Marson, Recoil, Keysert, and Huck brand fastening products.

History
Alcoa entered the fastener industry with the 2000 acquisition of Cordant Technologies Inc., which included Huck. Huck had acquired fastener manufacturer Jacobson Mfg. Co. in 1998 and Chicago-based Continental/Midland Group in 1999.

Alcoa acquired Fairchild Fasteners in 2002 for $655 million, combining the company with Huck International to form AFS.

AFS operates 22 manufacturing and distribution facilities in the U.S., Mexico, Europe, Asia and Australia. AFS employs 6,800 people in two divisions: aerospace and industrial.  The company is headquartered at 3016 W. Lomita Blvd., Torrance, CA 90505. Tel: 805 527-3600 Web: alcoafasteners.com

Corporate Office: 201 Isabella St., Pittsburgh, PA 15212-5858. Tel: 412 553-4545 Fax 412 553-4498
Web: alcoa.com
CEO: Klaus Kleinfeld
Fastener executives: Olivier Jarrault, President of Engineered Products and Solutions; Vitaliy Rusakov, president, AFS
Employees: 59,000, including 26,000 in the U.S.
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