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.
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version on businesswire.com: https://www.businesswire.com/news/home/20180424005789/en/
Allegheny Technologies IncorporatedScott Minder,
412-395-2720
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