ATI will sell castings operation to Cleveland-based company

Allegheny Technologies Inc. announced on Tuesday it will sell a business segment that produces castings for aircraft and spacecraft to a Cleveland company, one day after the Pittsburgh specialty metals producer said it would sell two forging plants to a private equity firm.

The company did not release the purchase price for the transaction, which is expected to close in the third quarter of 2019.

The Cast Products business segment produces titanium parts that are primarily used by aerospace and defense manufacturers in the production of commercial jet airframes and engines.

The business will go to Consolidated Precision Products Corp., a Cleveland-based manufacturer of products for the aerospace and defense industries. The company, owned by New York City-based private equity firm Warburg Pincus, operates 16 plants around the world.

The deal comes as ATI sells two forging plants to Wynnchurch Capital, LLC, a private equity firm. The forging plants,

in Portland, Ind., and Lebanon, Ky., use traditional methods to produce carbon steel products for use in the oil and gas, transportation and construction and mining industries, the company said Monday in a news release.

That sale to the Chicagobased firm is expected to close “almost immediately,” an ATI spokeswoman said.

Put together, the deals indicate the company is willing to offload underperforming assets to refocus the company under new CEO Robert Wetherbee, who took over on Jan. 1.

“They have a new set of eyes looking at the business,” Phil Gibbs, a Cleveland-based equity research analyst with KeyBanc Capital Markets Inc. “I think they’re going to be taking a harder look at the assets they have and their portfolio.”

Mr. Gibbs said both deals involve operations that brought in a large amount of revenue but low profit margins. He estimated that, combined, the businesses had sales of $150 million to $200 million annually.

“They are businesses that probably took a disproportionate amount of management’s time, despite the fact they weren’t generating much return,” Mr. Gibbs said. “The company has lots of [other] positive stuff on their plate.”

ATI did not respond to a request for an interview.

Both deals involve selling operations under ATI’s high-performance materials and components business segment.

John Sims, executive vice president of that segment, said in a statement on Tuesday that the goal is to “couple our materials science expertise and extensive forging experience to produce critical jet engine components in our world-class production facilities.”

As with the announcement on Monday, the company said it would use proceeds from the sale to pay down debt and fund pension obligations.