Market Overview

ATI Announces First Quarter 2018 Results

Share:

First Quarter 2018 Results

  • Sales were $979 million, 8% higher than Q4 2017; increased 13%
    versus Q1 2017
    • High Performance Materials & Components sales of $561 million,
      increased 8% versus Q4 2017; up 10% year-over-year
    • Flat Rolled Products sales of $418 million, 7% higher
      sequentially; up 18% versus Q1 2017
  • Business segment operating profit was $96.4 million, or 9.8% of
    sales
    • HPMC segment operating profit was $85.5 million, or 15.2% of
      sales
      • Strong Q1 aero-engine market sales
    • FRP segment operating profit was $10.9 million, or 2.6% of sales
      • FRP results include $8 million of negative Q1 items
  • Net income attributable to ATI was $58.0 million, or $0.42 per share
    • Results include a $15.9 million pre-tax gain, or $0.10 per
      share, related to the A&T Stainless joint venture formation
    • Adjusted net income attributable to ATI of $43.3 million, or
      $0.32 per share, excluding the joint venture gain

Allegheny Technologies Incorporated (NYSE:ATI) reported first quarter
2018 results, with sales of $979 million and net income attributable to
ATI of $58.0 million, or $0.42 per share. Adjusted first quarter 2018
net income attributable to ATI was $43.3 million, or $0.32 per share,
excluding a $15.9 million pre-tax, or $0.10 per share, gain on the sale
of a 50% interest and subsequent deconsolidation of the A&T Stainless
joint venture in March 2018, which was excluded from business segment
results. ATI sales were 8% higher and adjusted net income was 25% higher
compared to the fourth quarter 2017 adjusted results. Compared to the
prior year quarter, ATI sales were 13% higher and adjusted earnings per
share of $0.32 doubled the Q1 2017 results of $0.16 per share.

"Results in our High Performance Materials and Components (HPMC) segment
were better than expected, particularly sales to aero-engine customers,
with revenue from the commercial jet engine market growing 23% versus
the prior year," said Rich Harshman, Chairman, President and Chief
Executive Officer. "Continued strong sales of next-generation jet engine
products, which were up 65% year-over-year, drove HPMC segment operating
profit margin to 15.2% of sales, marking its best quarterly performance
in over 5 years. These results demonstrate the power of next-generation
product mix, with these materials, parts, and components representing
48% of total first quarter HPMC jet engine product sales.

"Our Flat Rolled Products (FRP) business continued to make good progress
in the first quarter towards our goal of sustainable profitability,
generating approximately $11 million of segment operating profit, or
2.6% of sales. First quarter sales increased 18% versus the prior year,
including an 80% increase in sales to the oil & gas market, which was
primarily due to large international pipeline projects. Consistent with
our prior guidance, first quarter 2018 FRP results were negatively
impacted by $8 million, mostly due to required accounting changes on
retirement benefit cost capitalization in inventory. FRP was also
negatively impacted by lower foreign currency hedge gains compared to
fourth quarter 2017. Expected negative impacts from lower ferrochrome
surcharges were mostly offset by higher nickel surcharges experienced
late in the quarter."

  • ATI's sales to key global markets represented 81% of total ATI sales
    for 2018:
    • Sales to the aerospace and defense markets were $462 million and
      represented 47% of ATI sales: 28% commercial jet engine, 12%
      commercial airframe, 7% government aero/defense.
    • Sales to the oil & gas market were $153 million and represented
      16% of ATI sales.
    • Sales to the automotive market were $79 million and represented 8%
      of ATI sales.
    • Sales to the electrical energy market were $52 million and
      represented 5% of ATI sales.
    • Sales to the medical market were $45 million and represented 5% of
      ATI sales.
  • International sales represented 43% of ATI's 2018 sales.

"On March 1, 2018, we announced the formation of the A&T Stainless joint
venture (JV) to produce 60-inch wide stainless sheet products for sale
in North America. ATI's share of the A&T Stainless JV results is
included in FRP segment operating profit. ATI's contribution to the JV
included our previously-idled direct roll anneal and pickle (DRAP)
facility in Midland, PA. Our JV partner purchased its 50% JV interest
for $17.5 million, which will be paid in installments during 2018. As a
result, ATI recognized a $15.9 million pre-tax gain, which was excluded
from FRP segment results. On March 26, 2018, we filed for an exclusion
from the recently enacted Section 232 tariffs on behalf of the A&T
Stainless JV, which imports semi-finished stainless slab products from
Indonesia. In the absence of an exclusion, these slabs will be subject
to the 25% tariff recently levied on all stainless steel products
imported into the United States," Harshman said.

As of March 31, 2018, cash on hand was $110 million and available
additional liquidity under the asset-based lending (ABL) credit facility
was approximately $305 million, with $50 million borrowed under the
revolving credit portion of the ABL. As expected, growth in managed
working capital to support higher business volumes and funding during
the production ramp-up of the A&T Stainless JV combined to require
short-term ABL borrowings. However, managed working capital as a
percentage of sales declined sequentially to 37% as revenue growth
continued. Capital expenditures for the first quarter 2018 were $42
million, including the initial down payments for the recently announced
iso-thermal press and heat treating expansions as well as significant
expenditures on the STAL expansion in China, which is scheduled to be
completed in the second quarter.

Strategy and Outlook

"We expect continued year-over-year revenue growth and operating margin
improvement in our HPMC segment in 2018 resulting from ongoing aerospace
market demand growth and improved asset utilization. We continue to
expect HPMC segment margins to expand by approximately 200 basis points
versus the full year 2017. The rate of improvement will likely vary by
quarter due to the next-generation product sales cadence and other
factors," Harshman said. "We remain confident in our customers'
continued elevated order patterns due to increasing jet engine build
rates over the next several years. Our focus continues to be on strong
operational execution, continuous improvement initiatives, and on
meeting the aerospace production ramp requirements.

"In the FRP segment, we see continued strong end-market demand and the
benefits from ongoing operational improvements, growth in our
differentiated products, and benefits from the A&T Stainless joint
venture.

"Cash generation from operations remains a key focus, and we intend to
carefully balance our working capital and other cash needs with the pace
of our capital expenditure requirements and financing obligations. As a
result of our ongoing operational improvements, anticipated financial
performance, and disciplined spending, we expect to generate at least
$150 million of free cash flow in 2018, excluding contributions to the
ATI Pension Plan. We plan to end 2018 with no borrowings under our ABL
facility. Finally, we do not expect to pay any significant U.S. federal
or state income taxes in 2018 due to net operating loss carryforwards,"
Harshman concluded.

First Quarter 2018 Financial Results

  • Sales for the first quarter 2018 were $979.0 million, an 8%
    increase compared to the fourth quarter 2017 and a 13% increase
    compared to the prior year's first quarter. HPMC sales in 2018 reflect
    stronger demand for nickel-based and specialty alloy products and
    components. FRP sales in 2018 include a stronger mix of high-value
    products, particularly nickel-based alloys.
  • Gross profit in the first quarter 2018 was $148.6 million, or
    15.2% of sales, compared to $142.6 million, or 15.7% of sales, in the
    fourth quarter of 2017 and $124.8 million, or 14.4% of sales in the
    prior year's first quarter. Gross profit and operating profit now
    reflect required accounting changes to classify the non-service cost
    components of retirement benefit expense as nonoperating expenses.
    Prior period results were restated for this required reporting change,
    which did not affect pre-tax or net-of-tax results, or how ATI
    calculates business segment operating profit.
  • Non-operating income in the first quarter 2018 includes a $15.9
    million gain on the deconsolidation and derecognition of the A&T
    Stainless entity following the sale of a 50% interest to our JV
    partner. The gain, including ATI's retained 50% share, was based on
    the fair value of the joint venture.
  • Net income attributable to ATI for the first quarter 2018 was
    $58.0 million, or $0.42 per share, and adjusted net income was $43.3
    million, or $0.32 per share, excluding the A&T Stainless gain. This
    compares to net income attributable to ATI of $1.7 million, or $0.01
    per share for the fourth quarter 2017, and adjusted net income of
    $34.6 million, or $0.27 per share, excluding the debt extinguishment
    charge and tax legislation benefits. For the first quarter 2017, net
    income attributable to ATI was $17.5 million, or $0.16 per share.
    Results in all periods include impacts from income taxes which differ
    from applicable standard tax rates, primarily related to impacts of
    income tax valuation allowances.
  • Cash on hand at March 31, 2018 was $109.9 million. In the first
    quarter 2018, cash used in operating activities was $47.1 million,
    including $63.1 million invested in managed working capital. Capital
    expenditures in the first quarter 2018 were $41.6 million. Cash
    provided by financing activities was $56.9 million, primarily related
    to $50.0 million of revolving credit borrowings under the ABL.

High Performance Materials & Components Segment

Market Conditions

  • Aerospace and defense sales in the first quarter 2018 were $426.7
    million, 7% higher than the fourth quarter 2017, and represented 76%
    of total segment sales. Compared to the fourth quarter 2017,
    commercial jet engine sales were 17% higher, commercial airframe sales
    were flat and government aero/defense sales were 16% lower. Total HPMC
    first quarter 2018 sales increased 8% over the fourth quarter 2017,
    with sales to the construction & mining markets up 30%. Sales of
    forged and cast components were more than 25% above fourth quarter
    2017 levels. Direct international sales represented 48% of total
    segment sales for the first quarter 2018.

First quarter 2018 compared to first quarter 2017

  • Sales were $560.7 million, a $50.3 million, or 10%, increase compared
    to the first quarter 2017, primarily due to higher sales of forged and
    cast components, which were up by one-third over the prior year. Sales
    to the commercial aerospace market, which represented 65% of first
    quarter 2018 sales, were 13% higher than the prior year, including a
    23% increase in sales to the commercial jet engine market.
    Construction and mining market sales were 52% higher, while sales to
    the medical market were 13% lower primarily due to increased
    competition in MRI end uses.
  • Segment operating profit improved to $85.5 million, or 15.2% of sales,
    compared to $50.9 million, or 10.0% of sales for the first quarter
    2017. This operating profit improvement reflects higher productivity
    from increasing aerospace and defense sales, and an improved product
    mix of next-generation nickel alloys and forgings for the aero engine
    market.

Flat Rolled Products Segment

Market Conditions

  • In the first quarter 2018, market conditions continued to improve in
    the oil & gas market, with sales of $137.5 million, a 20% increase
    compared to the fourth quarter 2017, primarily due to demand for
    nickel sheet for large oil & gas and pipeline projects. Additional
    project-based demand is expected later in 2018. Sales remained strong
    in the automotive market, increasing 18% sequentially. Sales increased
    4% for high-value products and 11% for standard products, compared to
    the fourth quarter 2017. Direct international sales were 37% of first
    quarter 2018 segment sales.

First quarter 2018 compared to first quarter 2017

  • Sales were $418.3 million, a $62.8 million, or 18%, increase compared
    to the prior year period, due to higher shipment volume for high-value
    products, primarily nickel-based and specialty alloys for oil & gas
    projects. Sales of standard products were 5% lower, compared to the
    first quarter 2017.
  • Segment operating profit was $10.9 million, or 2.6% of sales, compared
    to $19.0 million, or 5.3% of sales for the first quarter 2017. Results
    in 2018 included approximately $8 million of negative impacts from
    required accounting changes on retirement benefit cost capitalization
    in inventory, as well as reduced benefits of foreign currency hedges.
    Prior year results also reflect $6 million of higher raw material
    surcharge benefits related primarily to a change in the ferrochrome
    surcharge calculation.

Closed Operations and Other Expenses

  • Closed operations and other expenses in the first quarter 2018 were
    $8.1 million, which was $2.5 million higher than the fourth quarter
    2017. The prior year period included a $3.7 million benefit for
    reductions in liabilities for legacy employee benefit programs. For
    the remaining quarters of 2018, we expect closed operations and other
    expenses to be comparable to the first quarter 2018.

Income Taxes

  • ATI continues to maintain income tax valuation allowances on its U.S.
    federal and state deferred tax assets, and we do not expect to pay any
    significant U.S. federal or state income taxes for the next few years
    due to net operating loss carryforwards. The first quarter 2018 7.6%
    tax rate primarily relates to income taxes on non-U.S. operations.

Allegheny Technologies will conduct a conference call with investors and
analysts on Tuesday, April 24, 2018, at 8:30 a.m. ET to discuss the
financial results. The conference call will be broadcast, and
accompanying presentation slides will be available, at ATImetals.com.
To access the broadcast, click on "Conference Call". Replay of the
conference call will be available on the Allegheny Technologies website.

This news release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Certain
statements in this news release relate to future events and expectations
and, as such, constitute forward-looking statements. Forward-looking
statements, which may contain such words as "anticipates," "believes,"
"estimates," "expects," "would," "should," "will," "will likely result,"
"forecast," "outlook," "projects," and similar expressions, are based on
management's current expectations and include known and unknown risks,
uncertainties and other factors, many of which we are unable to predict
or control. Our performance or achievements may differ materially from
those expressed or implied in any forward-looking statements due to the
following factors, among others: (a) material adverse changes in
economic or industry conditions generally, including global supply and
demand conditions and prices for our specialty metals; (b) material
adverse changes in the markets we serve; (c) our inability to achieve
the level of cost savings, productivity improvements, synergies, growth
or other benefits anticipated by management from strategic investments
and the integration of acquired businesses; (d) volatility in the price
and availability of the raw materials that are critical to the
manufacture of our products; (e) declines in the value of our defined
benefit pension plan assets or unfavorable changes in laws or
regulations that govern pension plan funding; (f) labor disputes or work
stoppages; (g) equipment outages and (h) other risk factors summarized
in our Annual Report on Form 10-K for the year ended December 31, 2017,
and in other reports filed with the Securities and Exchange Commission.
We assume no duty to update our forward-looking statements.

Creating Value Thru Relentless Innovation™

ATI is a global manufacturer of technically advanced specialty materials
and complex components. With revenue of $3.6 billion for the twelve
month period ended March 31, 2018, our largest market is aerospace &
defense, particularly jet engines. We also have a strong presence in the
oil & gas, electrical energy, medical, automotive, and other industrial
markets. ATI is a market leader in manufacturing differentiated
specialty alloys and forgings that require our unique manufacturing and
precision machining capabilities and our innovative new product
development competence. We are a leader in producing powders for use in
next-generation jet engine forgings and 3D-printed aerospace products.
ATIMetals.com

     
Allegheny Technologies Incorporated and Subsidiaries
Consolidated Statements of Income
(Unaudited, dollars in millions, except per share amounts)
 
 
Three Months Ended
March 31 December 31 March 31
2018 2017 2017
 
Sales $ 979.0 $ 909.9 $ 865.9
 
Cost of sales   830.4     767.3     741.1  
Gross profit 148.6 142.6 124.8
 
Selling and administrative expenses   67.1     60.5     57.9  
Operating income 81.5 82.1 66.9
Nonoperating retirement benefit expense (8.3 ) (13.4 ) (13.6 )
Interest expense, net (25.5 ) (31.6 ) (33.5 )
Debt extinguishment charge - (37.0 ) -
Other income, net   17.8     0.3     3.3  
Income before income taxes 65.5 0.4 23.1
Income tax provision (benefit)   5.0     (4.8 )   2.0  
Net income $ 60.5 $ 5.2 $ 21.1
Less: Net income attributable to noncontrolling interests   2.5     3.5     3.6  
Net income attributable to ATI $ 58.0   $ 1.7   $ 17.5  
 
Basic net income attributable to ATI per common share $ 0.46   $ 0.01   $ 0.16  
 
Diluted net income attributable to ATI per common share $ 0.42   $ 0.01   $ 0.16  
 

 

Weighted average common shares outstanding -- basic (millions)

125.0 117.5 107.5

 

Weighted average common shares outstanding -- diluted (millions)

145.5 118.6 128.2

 

Actual common shares outstanding -- end of period (millions)

125.6 125.9 108.8
 

   
Allegheny Technologies Incorporated and Subsidiaries
Sales and Operating Profit by Business Segment
(Unaudited, dollars in millions)
 
Three Months Ended
March 31 December 31 March 31
2018 2017 2017
Sales:
High Performance Materials & Components $ 560.7 $ 517.7 $ 510.4
Flat Rolled Products   418.3     392.2     355.5  
 
Total external sales $ 979.0   $ 909.9   $ 865.9  
 
Operating profit:
 
High Performance Materials & Components $ 85.5 $ 65.8 $ 50.9
% of Sales 15.2 % 12.7 % 10.0 %
 
Flat Rolled Products 10.9 22.4 19.0
% of Sales   2.6 %   5.7 %   5.3 %
 
Total operating profit 96.4 88.2 69.9
% of Sales 9.8 % 9.7 % 8.1 %
 
 
LIFO and net realizable value reserves - - -
 
Corporate expenses (13.2 ) (13.6 ) (10.3 )
 
Closed operations and other expense (8.1 ) (5.6 ) (3.0 )
 
Gain on joint venture deconsolidation 15.9 - -
 
Debt extinguishment charge - (37.0 ) -
 
Interest expense, net   (25.5 )   (31.6 )   (33.5 )
 
 
Income before income taxes $ 65.5   $ 0.4   $ 23.1  
 

   
Allegheny Technologies Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets

(Current period unaudited, dollars in millions)

 
March 31, December 31,
2018 2017
ASSETS
 
Current Assets:
Cash and cash equivalents $ 109.9 $ 141.6

Accounts receivable, net of allowances for doubtful accounts

606.4 545.3
Short-term contract assets 38.6 -
Inventories, net 1,210.8 1,176.1
Prepaid expenses and other current assets   86.1   52.7
Total Current Assets 2,051.8 1,915.7
 
Property, plant and equipment, net 2,490.7 2,495.7
Goodwill 534.2 531.4
Long-term contract assets 16.1 -
Other assets   257.2   242.6
 
Total Assets $ 5,350.0 $ 5,185.4
 
LIABILITIES AND EQUITY
 
Current Liabilities:
Accounts payable $ 424.7 $ 420.1
Accrued liabilities 205.3 282.4
Short-term contract liabilities 66.2 -

Short-term debt and current portion of long-term debt

  63.7   10.1
Total Current Liabilities 759.9 712.6
 
Long-term debt 1,535.3 1,530.6
Accrued postretirement benefits 311.4 317.8
Pension liabilities 687.2 697.0
Deferred income taxes 10.7 9.7
Long-term contract liabilities 19.7 -
Other long-term liabilities   62.5   73.2
Total Liabilities   3,386.7   3,340.9
 
Total ATI stockholders' equity 1,846.1 1,739.4
Noncontrolling interests   117.2   105.1
Total Equity   1,963.3   1,844.5
 
Total Liabilities and Equity $ 5,350.0 $ 5,185.4
 

   
Allegheny Technologies Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited, dollars in millions)
Three Months Ended
March 31
2018 2017
 
Operating Activities:
 
Net income $ 60.5 $ 21.1
 
Depreciation and amortization 39.8 40.3
Deferred taxes (0.2 ) 1.2
Change in managed working capital (63.1 ) (11.2 )
Change in retirement benefits (a) 0.5 (128.1 )
Accrued liabilities and other   (84.6 )   (33.5 )
Cash used in operating activities   (47.1 )   (110.2 )
Investing Activities:
Purchases of property, plant and equipment (41.6 ) (24.8 )
Asset disposals and other   0.1     2.6  
Cash used in investing activities   (41.5 )   (22.2 )
Financing Activities:
Borrowings on long-term debt 6.4 -
Payments on long-term debt and capital leases (1.3 ) (0.3 )
Net borrowings under credit facilities 50.9 67.7
Sale to noncontrolling interests 7.4 -
Taxes on share-based compensation and other   (6.5 )   (4.8 )
Cash provided by financing activities   56.9     62.6  
Decrease in cash and cash equivalents (31.7 ) (69.8 )
Cash and cash equivalents at beginning of period   141.6     229.6  
Cash and cash equivalents at end of period $ 109.9   $ 159.8  

(a)

 

Includes $(135) million contribution to the U.S. defined benefit
pension plan in 2017.

 

   
Allegheny Technologies Incorporated and Subsidiaries
Selected Financial Data
(Unaudited)
 
Three Months Ended
March 31 December 31 March 31
2018 2017 2017
Percentage of Total ATI Sales
High-Value Products
Nickel-based alloys and specialty alloys 29 % 31 % 26 %
Precision forgings, castings and components 21 % 18 % 18 %
Titanium and titanium-based alloys 16 % 16 % 18 %
Precision and engineered strip 13 % 14 % 14 %
Zirconium and related alloys   5 %   5 %   6 %
Total High-Value Products 84 % 84 % 82 %
Standard Products
Stainless steel sheet 9 % 8 % 10 %
Specialty stainless sheet 4 % 4 % 5 %
Stainless steel plate and other   3 %   4 %   3 %
Total Standard Products   16 %   16 %   18 %
Grand Total   100 %   100 %   100 %
 
 
Three Months Ended
March 31 December 31 March 31
Shipment Volume: 2018 2017 2017
 
Flat Rolled Products (000's lbs.)
High value 84,042 90,332 75,333
Standard   109,249     100,973     114,985  
Flat Rolled Products total 193,291 191,305 190,318
 
 
Average Selling Prices:
 
Flat Rolled Products (per lb.)
High value $ 3.30 $ 2.94 $ 2.77
Standard $ 1.26 $ 1.23 $ 1.26
Flat Rolled Products combined average $ 2.15 $ 2.04 $ 1.86
 

 
Allegheny Technologies Incorporated and Subsidiaries
Computation of Basic and Diluted Earnings Per Share Attributable
to ATI
(Unaudited, in millions, except per share amounts)
       
Three Months Ended
March 31 December 31 March 31
2018 2017 2017
 
Numerator for Basic net income per common share -
Net income attributable to ATI $ 58.0 $ 1.7 $ 17.5
Effect of dilutive securities:
4.75% Convertible Senior Notes due 2022   3.2   -   3.0
Numerator for Diluted net income per common share -
Net income attributable to ATI after assumed conversions $ 61.2 $ 1.7 $ 20.5
 
Denominator for Basic net income per common share -
Weighted average shares outstanding 125.0 117.5 107.5
Effect of dilutive securities:
Share-based compensation 0.6 1.1 0.8
4.75% Convertible Senior Notes due 2022   19.9   -   19.9
Denominator for Diluted net income per common share -
Adjusted weighted average shares assuming conversions   145.5   118.6   128.2
 
Basic net income attributable to ATI per common share $ 0.46 $ 0.01 $ 0.16
 
Diluted net income attributable to ATI per common share $ 0.42 $ 0.01 $ 0.16
 

   
Allegheny Technologies Incorporated and Subsidiaries
Other Financial Information
Managed Working Capital
(Unaudited, dollars in millions)
 
March 31 December 31
2018 2017
 
Accounts receivable $ 606.4 $ 545.3
Short-term contract assets 38.6 -
Inventory 1,210.8 1,176.1
Accounts payable (424.7 ) (420.1 )
Short-term contract liabilities   (66.2 )   -  
Subtotal 1,364.9 1,301.3
 
Allowance for doubtful accounts 5.9 5.9
LIFO reserve (23.1 ) (43.1 )
Inventory reserves   101.0     121.5  
Managed working capital $ 1,448.7   $ 1,385.6  
 

Annualized prior 3 months sales

$ 3,916.1   $ 3,639.5  
 

Managed working capital as a % of annualized sales

37.0 % 38.1 %
 

March 31, 2018 change in managed working capital

$ 63.1
As part of managing the liquidity in our business, we focus on
controlling managed working capital, which is defined as gross
accounts receivable and gross inventories, less accounts payable. In
measuring performance in controlling this managed working capital,
we exclude the effects of LIFO and other inventory valuation
reserves and reserves for uncollectible accounts receivable which,
due to their nature, are managed separately. With the adoption of
the new revenue recognition accounting guidance in 2018, we now
include short-term contract assets and liabilities in the
calculation of managed working capital. In 2017 and prior periods,
portions of contract assets and liabilities were included in managed
working capital. Prior managed working capital calculations were not
revised for this accounting change.
 

 
Allegheny Technologies Incorporated and Subsidiaries
Other Financial Information
Debt to Capital
(Unaudited, dollars in millions)
 
March 31 December 31
2018 2017
 
Total debt (a) $ 1,611.5 $ 1,553.8
Less: Cash   (109.9 )   (141.6 )
Net debt $ 1,501.6 $ 1,412.2
 
Net debt $ 1,501.6 $ 1,412.2
Total ATI stockholders' equity   1,846.1     1,739.4  
Net ATI capital $ 3,347.7 $ 3,151.6
 
Net debt to ATI capital   44.9 %   44.8 %
 
Total debt (a) $ 1,611.5 $ 1,553.8
Total ATI stockholders' equity   1,846.1     1,739.4  
Total ATI capital $ 3,457.6 $ 3,293.2
 
Total debt to total ATI capital   46.6 %   47.2 %

(a)

 

Excludes debt issuance costs.

 

In managing the overall capital structure of the Company, some of
the measures that we focus on are net debt to net capitalization,
which is the percentage of debt, net of cash that may be available
to reduce borrowings, to the total invested and borrowed capital
of ATI (excluding noncontrolling interest), and total debt to
total ATI capitalization, which excludes cash balances.

 

Allegheny Technologies Incorporated and Subsidiaries
Non-GAAP Financial Measures
(Unaudited, dollars in millions, except per share amounts)
 

The Company reports its financial results in accordance with
accounting principles generally accepted in the United States of
America ("GAAP"). However, management believes that certain
non-GAAP financial measures, used in managing the business, may
provide users of this financial information with additional
meaningful comparisons between current results and results in
prior periods. Non-GAAP financial measures should be viewed in
addition to, and not as an alternative for, the Company's reported
results prepared in accordance with GAAP. The following table
provides the calculation of the non-GAAP financial measures
discussed in the Company's press release dated April 24, 2018:

  Three Months Ended
March 31   December 31
2018 2017
 
Net income attributable to ATI $ 58.0 $ 1.7
Adjust for special items:
Gain on joint venture deconsolidation, net of tax (a) (14.7 ) -
Debt extinguishment charge, net of tax (b) - 37.0
Income tax items including valuation allowances (c)   -     (4.1 )
Net income attributable to ATI excluding special items $ 43.3   $ 34.6  
 
Per Diluted Share *
Net income attributable to ATI $ 0.42 $ 0.01
Adjust for special items:
Gain on joint venture deconsolidation, net of tax (a) (0.10 ) -
Debt extinguishment charge, net of tax (b) - 0.29
Income tax items including valuation allowances (c)   -     (0.03 )
Net income attributable to ATI excluding special items $ 0.32   $ 0.27  
* Presentation of adjusted results per diluted share includes the
effects of convertible debt, if dilutive.
 

(a) First quarter 2018 results include a gain on deconsolidation
of A&T Stainless following the sale of a 50% noncontrolling
interest and subsequent derecognition. The $15.9 pretax gain,
including ATI's retained 50% share, was recorded at fair value.

 
(b) Fourth quarter 2017 results include a debt extinguishment charge
of $37.0 after-tax, or $(0.29) per share, for the full redemption of
the $350, 9.375% Senior Notes due 2019.
 
(c) Fourth quarter 2017 results include $4.1 of tax benefits, or
$0.03 per share, from the 2017 Tax Cuts and Jobs Act legislation.
 

Free cash flow as defined by ATI includes the total of cash
provided by (used in) operating activities and investing
activities as presented on the consolidated statements of cash
flows, adjusted to exclude cash contributions to the ATI Pension
Plan, the Company's U.S. qualified defined benefit pension plan.

View Comments and Join the Discussion!