Arconic shares tumbled 10 percent Monday after the company reported a third-quarter earnings miss, raised its full-year sales estimate and named a veteran General Electric executive CEO.
The aluminum and titanium parts maker said third-quarter profit fell 28 percent to $119 million, or 22 cents per share, vs. earnings of $166 million, or 33 cents per share, in the year ago quarter. Sales totaled $3.24 billion, up 3 percent from year-ago levels.
Excluding one-time items, adjusted earnings were 25 cents per share.
Wall Street analysts had forecast Arconic would report adjusted earnings of 27 cents per share on sales of $3.09 billion.
Arconic said Charles “Chip” Blankenship, 51, will take over as CEO, effective Jan. 15. Mr. Blankenship formerly led GE’s commercial engine operations and was the president and CEO of its appliance business before the unit was sold to Haier Co. last year. He will also become a member of Arconic’s board.
Interim CEO David Hess, who took over in April during a proxy fight with Elliott Management, will remain on the board.
Elliott had promoted its own CEO candidate, former Spirit AeroSystems CEO Larry Lawson. The activist hedge fund and Arconic negotiated an end to the bitter proxy fight in May, agreeing to vote on a unified slate of directors that included three candidates nominated by Elliott.
On Monday, Elliott endorsed Mr. Blankenship, calling the former GE executive “a talented and hands-on operator.”
The hedge fund also agreed with Arconic’s decision to name John Plant, a director since 2016, as chairman of the board, effective immediately. Mr. Plant, 64, succeeds Patricia Russo, who took over on an interim basis in April and will remain on the board.
Arconic said it now expects to report sales of $12.6 billion to $12.8 billion for the year, up from its previous forecast of $12.3 billion to $12.7 billion. The company affirmed its full-year guidance that adjusted earnings will be $1.15 to $1.20 per share.
Shareholders will vote next month on a proposal to reincorporate the company in Delaware. It is currently incorporated in Pennsylvania. The company’s new certificate of incorporation and bylaws will require its entire board to be elected each year.
Arconic was formed in November when Alcoa broke into two companies. The mining, refining and smelting businesses maintained the Alcoa name while the businesses that make aluminum and titanium parts for the aerospace, automotive and other industries became Arconic.
Arconic shares closed Monday at $24.35, down $2.82. They are up 31 percent this year.
Len Boselovic: lboselovic@post-gazette.com or 412-263-1941.
First Published: October 23, 2017, 3:51 p.m.
