What happened

Shares of Allegheny Technologies (NYSE:ATI) traded up more than 13% on Tuesday after the aerospace component supplier reported better-than-expected results. The company is feeling the impact of the Boeing 737 MAX grounding but is managing through the challenge better than investors had feared.

So what

Before markets opened Tuesday, Allegheny, a specialty metals producer focused on aerospace and defense applications, reported fourth-quarter adjusted earnings of $0.36 per share on revenue of $1.2 billion, outpacing analyst consensus estimates of $0.32 per share in earnings on sales of $994.42 million.

An airplane landing at night.

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The company generated better-than-expected profitability in both its high-performance materials and components (HPMC) and flat rolled products (FRP) segments. HPMC operating profits were up 22% over the fourth quarter of 2018 and segment margins were up 270 basis points to 15.4%. FRP, meanwhile, saw sales decline 6% year over year but managed to generate a 3% margin, compared to 2.6% last year.

During the year, Allegheny divested its titanium-cast-products business to private equity, helping to boost profitability, and seems to doing a good job managing through Boeing's issues.

"The team executed well in the fourth quarter, delivering solid results in both operating segments, and successfully capping a challenging year buffeted by industry, supply chain and regulatory headwinds," ATI CEO Robert S. Wetherbee said in a statement. "Excluding divested businesses, we expanded our 2019 aerospace and defense sales by a double-digit percentage versus the prior year, demonstrating our focus on strategic end-markets where materials science matters."

Now what

Allegheny isn't free from the turbulence yet. The company said it expects first-quarter 2020 earnings of between $0.12 and $0.16 per share, well short of the $0.29 per share analyst expectations, and full-year 2020 earnings of $0.75 to $0.90 per share compared to the $1.41 per share consensus.

Wetherbee noted the challenges ahead, saying, "we are proactively managing our cost structure and will be opportunistic with our capacity to minimize the negative financial impacts from the 737 MAX production stoppage."

Allegheny shares coming into Tuesday's trading were down nearly 40% over the past year due to worries about how the MAX issues would impact the company's operations. Those concerns have not yet disappeared, but investors are cheering the company's recent ability to manage through the crisis.

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