Third Quarter 2018 Results
- Sales were $1.02 billion, 17% higher
than Q3 2017 and in line with Q2 2018
- High Performance Materials &
Components sales of $586 million, up 14% versus Q3 2017, down 1%
versus Q2 2018
- Flat Rolled Products sales of $435
million, up 22% versus Q3 2017 and up 4% sequentially
- Business segment operating profit
was $106 million, or 10.3% of sales
- HPMC segment operating profit was
$76 million, or 13.0% of sales
- Aerospace and defense market
strength continues
- FRP segment operating profit was $30
million, or 6.8% of sales
- Net income attributable to ATI was
$50.5 million, or $0.37 per share
Allegheny Technologies Incorporated (NYSE: ATI) reported third
quarter 2018 results, with sales of $1.02 billion and net income
attributable to ATI of $50.5 million, or $0.37 per share. Prior
year results were sales of $869 million and a net loss attributable
to ATI of $121.2 million, or $(1.12) per share, which included a
$113.6 million, or $(1.05) per share, goodwill impairment charge
related to ATI’s titanium investment castings business, which was
excluded from business segment results. Third quarter 2017 results
excluding the goodwill charge were a net loss attributable to ATI
of $7.6 million, or $(0.07) per share.
“ATI’s third quarter 2018 operating performance was solid and in
line with our expectations, with business segment operating profit
nearly doubling compared to the prior year period. These results
built on strong first-half 2018 financial results,” said Rich
Harshman, Chairman, President and Chief Executive Officer. “We
expect ongoing year-over-year operating profit growth as we
continue to focus on producing and delivering highly differentiated
products while accelerating development of advanced production
capabilities, such as additive manufacturing. Our strategy to
generate sustainable profitable growth by leveraging ATI’s
specialty materials capabilities to provide customers with
technically advanced parts and components is on track,” Harshman
concluded.
“The aerospace and defense markets continue to drive results in
our High Performance Materials and Components, or HPMC, segment,”
said Bob Wetherbee, President and CEO Designate, and current EVP,
Flat Rolled Products Group. “Third quarter HPMC segment sales and
operating profit increased significantly versus the prior year but
declined sequentially due to normal business seasonality and a
previously identified nickel powder billet supply issue. Within our
aerospace market results, commercial airframe product sales were
21% higher compared to the prior year period. Sales of
next-generation jet engine products remained strong, increasing by
42% versus the prior year and represented 48% of total third
quarter 2018 HPMC jet engine product sales. Our customers continue
to benefit from our on-time execution and relentless product
innovation.
“Our Flat Rolled Products, or FRP, segment had another solid
quarter, generating $30 million in segment operating profit,
representing a margin of nearly 7% of sales. These results
benefited from continued strong market demand, ongoing improvements
in asset utilization, and a better matching of raw material costs
and surcharges compared to the third quarter 2017. Our business
transformation efforts are clearly visible in the 2018 year-to-date
financial results, with segment operating profit of $67 million
compared to $15 million for the prior year-to-date period.”
- ATI’s sales to key global markets
represented 81% of total ATI sales for the first nine months of
2018:
- Sales to the aerospace and defense
markets were $1.44 billion and represented 48% of ATI sales: 28%
commercial jet engine, 13% commercial airframe, 7% government
aero/defense.
- Sales to the oil & gas market were
$414 million and represented 14% of ATI sales.
- Sales to the automotive market were
$244 million and represented 8% of ATI sales.
- Sales to the electrical energy market
were $180 million and represented 6% of ATI sales.
- Sales to the medical market were $143
million and represented 5% of ATI sales.
- International sales represented 42% of
ATI’s year-to-date 2018 sales.
“We continue to make progress toward our FRP segment goal of
capital efficient asset utilization improvements as evidenced by
our recently announced agreement to provide carbon steel
hot-rolling conversion services for NLMK USA at our world-class Hot
Rolling and Processing Facility, or HRPF. Slab shipments to ATI
will begin in October 2018 and increase to anticipated levels in
the first quarter of 2019. This agreement is a win-win for both
NLMK USA and ATI and we look forward to working with NLMK on
additional growth opportunities,” Wetherbee said. “Lastly, we
continue to work within the U.S. Commerce Department’s Section 232
tariff exclusion request process to secure an exclusion on behalf
of the A&T Stainless JV, which imports semi-finished stainless
slab products from Indonesia. We believe that the facts underlying
this request are compelling and justify an approval.”
As of September 30, 2018, cash on hand was $154 million and
available additional liquidity under the asset-based lending (ABL)
credit facility was approximately $360 million, with no borrowings
under the revolving credit portion of the ABL. During the third
quarter 2018, ATI generated $82 million of cash from operating
activities, including a $28 million decrease in managed working
capital, which improved to 36.4% of sales. Third quarter 2018
capital expenditures were $31 million, totaling $101 million
year-to-date, including the initial down payments for the
previously announced HPMC iso-thermal press and heat-treating
expansions, as well as significant expenditures on the STAL
expansion in China.
Strategy and Outlook
“In the HPMC segment, we expect continued year-over-year revenue
and operating profit growth in the fourth quarter 2018 resulting
from ongoing aerospace market demand growth and improved asset
utilization. We reiterate our guidance for a full year 2018 segment
operating profit margin improvement of approximately 300 basis
points compared to 2017. We remain confident in our customers’
elevated order patterns due to increasing jet engine build rates
over the next several years. Our focus is on strong operational
execution and on meeting our aerospace customer’s production
requirements regardless of aircraft build rate,” Wetherbee
said.
“In the FRP segment, significant price declines in several key
raw materials are expected to result in weaker fourth quarter 2018
results due to the short-term mismatch between input costs and the
surcharge index pricing mechanism. We anticipate our U.S.
Operations to remain profitable in the fourth quarter despite these
higher input costs. Even with these short-term headwinds, we
continue to expect a 2018 year-over-year operating margin
improvement of 150 to 300 basis points driven by continued strong
end-market demand, ongoing growth of our differentiated product
sales, and the benefits from improved HRPF utilization.
“Year-over-year cost inflation in many raw materials used to
manufacture our products is likely to represent a moderate LIFO
expense headwind in the fourth quarter of 2018 which would be
greater than and not fully offset by our remaining NRV inventory
reserves,” Wetherbee continued.
“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 expenditures. We expect strong
fourth quarter 2018 cash generation and reiterate our goal to
generate at least $150 million of free cash flow for the full year
2018, excluding $40 million in contributions to the ATI Pension
Plan. Finally, we expect to end 2018 with zero borrowings under our
ABL revolving credit facility,” Wetherbee concluded.
Third Quarter 2018 Financial Results
- Sales for the third quarter 2018
were $1.02 billion, a 17% increase compared to the third quarter
2017. HPMC sales in 2018 reflect stronger demand for nickel-based
and specialty alloy products, forgings and components. FRP sales in
2018 include a stronger mix of high-value products, particularly
nickel-based alloys.
- Gross profit in the third
quarter 2018 at $160.4 million, or 15.7% of sales, increased more
than 50% compared to gross profit of $105.3 million, or 12.1% of
sales, in the prior year’s third quarter.
- Net income attributable to ATI
for the third quarter 2018 was $50.5 million, or $0.37 per share.
This compares to a third quarter 2017 net loss attributable to ATI
of $121.2 million, or $(1.12) per share, and adjusted Q3 2017 net
loss of $7.6 million, or $(0.07) per share, which excludes a $113.6
million goodwill impairment charge. Results in both 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 September 30,
2018 was $153.5 million. In the third quarter 2018, cash provided
by operating activities was $81.6 million, including a $28.3
million reduction in managed working capital. Cash used in
investing activities in the third quarter 2018 was $39.3 million,
primarily for capital expenditures as well as $10.0 million for the
Addaero acquisition. Cash used in financing activities in Q3 2018
was $11.2 million, primarily for $10.0 million of dividends to
noncontrolling interests from our STAL joint venture.
High Performance Materials & Components
SegmentMarket Conditions
- Aerospace and defense sales in the
third quarter 2018 were $446.5 million, 2% higher than the second
quarter 2018, and represented 76% of total segment sales. Compared
to the second quarter 2018, commercial airframe sales were 13%
higher and government aero/defense sales were 1% higher, while
commercial jet engine sales were 2% lower primarily due to seasonal
factors. Total HPMC third quarter 2018 sales decreased 1% compared
to the second quarter 2018, with sales to the electrical energy
market down 23% across all types of power generation, and sales to
the construction & mining market 3% lower. Direct international
sales represented 46% of total segment sales for the third quarter
2018.
Third quarter 2018 compared to third quarter 2017
- Sales were $585.5 million, a $72.6
million, or 14%, increase compared to the third quarter 2017,
primarily due to higher sales of next-generation jet engine
products. Sales to the commercial aerospace market, which
represented 65% of third quarter 2018 sales, were 18% higher than
the prior year, including a 16% increase in sales to the commercial
jet engine market. Construction and mining market sales were 36%
higher, and medical market sales were 6% higher.
- Segment operating profit improved to
$76.0 million, or 13.0% of sales, compared to $61.7 million, or
12.0% of sales for the third 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 SegmentMarket Conditions
- Sales increased in the third quarter
2018 in most key end markets, including a 21% increase in sales to
aerospace and defense markets, compared to the second quarter 2018.
Sales to the automotive and electrical energy markets increased 7%
and 4%, respectively, while project-based sales to the oil &
gas market declined 4%, all compared to the second quarter 2018.
Sales increased 6% for high-value products, primarily related to
stronger demand for precision and engineered strip products,
compared to the second quarter 2018. Sales declined 1% for standard
products as lower shipment volumes more than offset increased
selling prices which included higher raw material surcharges.
Direct international sales were 33% of third quarter 2018 segment
sales.
Third quarter 2018 compared to third quarter 2017
- Sales were $434.7 million, a $78.5
million, or 22%, increase compared to the prior year period. Sales
of high-value products were 26% higher, primarily for nickel-based
and specialty alloys, and sales of standard products were 13%
higher, compared to the third quarter 2017.
- Segment operating profit was $29.5
million, or 6.8% of sales, compared to a segment operating loss of
$7.3 million for the third quarter 2017. Compared to 2017, results
in 2018 included a better matching of raw material surcharges with
changes in prices for nickel, ferrochrome and other metallics, and
improved cost absorption through higher operating rates.
Closed Operations and Other Expenses
- Closed operations and other expenses in
the third quarter 2018 were $3.4 million, compared to $12.2 million
in the prior year quarter. The third quarter 2018 benefited from
lower carrying costs for closed facilities, mainly related to
property taxes and insurance expenses for the Rowley, UT and
Midland, PA locations, compared to the prior year period.
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 third quarter 2018 11.0% 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, October 23, 2018, at 8:15 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. ATI revenue was $3.9 billion for
the twelve-month period ended September 30, 2018. Our largest
markets are 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. See more at our website ATIMetals.com.
Allegheny Technologies
Incorporated and Subsidiaries Consolidated Statements of
Operations (Unaudited, dollars in millions, except per share
amounts)
Three Months Ended Nine Months
Ended September 30 June 30 September 30
September 30 September 30 2018 2018
2017 2018 2017 Sales $
1,020.2 $ 1,009.5 $ 869.1
$ 3,008.7 $ 2,615.2 Cost of
sales 859.8 835.8 763.8
2,526.0 2,260.8 Gross profit 160.4
173.7 105.3 482.7 354.4 Selling and administrative expenses
65.5 62.7 64.6 195.3 187.5 Impairment of goodwill -
- 114.4 - 114.4
Operating income (loss) 94.9 111.0 (73.7 ) 287.4 52.5
Nonoperating retirement benefit expense (8.4 ) (8.8 ) (13.6 ) (25.5
) (40.9 ) Interest expense, net (24.8 ) (25.5 ) (34.2 ) (75.8 )
(102.2 ) Other income, net 0.8 3.8
0.2 22.4 3.7 Income
(loss) before income taxes 62.5 80.5 (121.3 ) 208.5 (86.9 ) Income
tax provision (benefit) 6.9 4.9
(1.9 ) 16.8 (2.0 )
Net income (loss)
$ 55.6 $ 75.6 $ (119.4
) $ 191.7 $ (84.9 ) Less:
Net income attributable to noncontrolling interests 5.1
2.8 1.8 10.4
8.7
Net income (loss) attributable to ATI
$ 50.5 $ 72.8 $
(121.2 ) $ 181.3 $
(93.6 ) Basic net income (loss)
attributable to ATI per common share $ 0.40
$ 0.58 $ (1.12 )
$ 1.45 $ (0.87 )
Diluted net income (loss) attributable to ATI per common
share $ 0.37 $ 0.52
$ (1.12 ) $ 1.31 $
(0.87 )
Note: Quarterly earnings per share amounts
may not add to year-to-date amounts due to rounding.
Allegheny Technologies
Incorporated and Subsidiaries Sales and Operating Profit by
Business Segment (Unaudited, dollars in millions)
Three Months Ended Nine Months Ended September
30 June 30 September 30 September 30
September 30 2018 2018 2017 2018
2017 Sales: High Performance Materials & Components $
585.5 $ 591.9 $ 512.9 $ 1,738.1 $ 1,549.7 Flat Rolled Products
434.7 417.6 356.2
1,270.6 1,065.5
Total external
sales $ 1,020.2 $ 1,009.5
$ 869.1 $ 3,008.7
$ 2,615.2 Operating profit (loss):
High Performance Materials & Components $ 76.0 $ 97.9 $
61.7 $ 259.4 $ 180.6 % of Sales 13.0 % 16.5 % 12.0 % 14.9 % 11.7 %
Flat Rolled Products 29.5 26.1 (7.3 ) 66.5 14.6 % of Sales
6.8 % 6.3 % -2.0 % 5.2 % 1.4 %
Total operating profit 105.5 124.0
54.4 325.9 195.2 % of Sales 10.3 % 12.3 % 6.3
% 10.8 % 7.5 % LIFO and net realizable value reserves
- - (0.1 ) - (0.2 ) Corporate expenses (14.8 ) (12.9 ) (14.8
) (40.9 ) (36.9 ) Closed operations and other expense (3.4 )
(5.1 ) (12.2 ) (16.6 ) (28.4 ) Impairment of goodwill - -
(114.4 ) - (114.4 ) Gain on joint venture deconsolidation -
- - 15.9 - Interest expense, net (24.8 ) (25.5
) (34.2 ) (75.8 ) (102.2 )
Income
(loss) before income taxes $ 62.5 $
80.5 $ (121.3 ) $
208.5 $ (86.9 )
Allegheny Technologies Incorporated
and Subsidiaries Condensed Consolidated Balance Sheets
(Current period unaudited, dollars in millions)
September
30, December 31, 2018 2017 ASSETS
Current Assets: Cash and cash equivalents $ 153.5 $
141.6 Accounts receivable, net of allowances for doubtful accounts
588.3 545.3 Short-term contract assets 51.6 - Inventories, net
1,239.8 1,176.1 Prepaid expenses and other current assets
89.2 52.7
Total Current Assets 2,122.4
1,915.7 Property, plant and equipment, net 2,472.6
2,495.7 Goodwill 536.4 531.4 Other assets 257.6 242.6
Total Assets $ 5,389.0 $
5,185.4 LIABILITIES AND EQUITY
Current Liabilities: Accounts payable $ 416.1 $ 420.1
Accrued liabilities 228.7 282.4 Short-term contract liabilities
69.2 - Short-term debt and current portion of long-term debt
16.6 10.1
Total Current Liabilities 730.6
712.6 Long-term debt 1,535.3 1,530.6 Accrued
postretirement benefits 301.1 317.8 Pension liabilities 652.7 697.0
Deferred income taxes 12.1 9.7 Long-term contract liabilities 7.3 -
Other long-term liabilities 66.7 73.2
Total
Liabilities 3,305.8 3,340.9
Total ATI stockholders' equity 1,980.2 1,739.4 Noncontrolling
interests 103.0 105.1
Total Equity
2,083.2 1,844.5 Total Liabilities
and Equity $ 5,389.0 $ 5,185.4
Allegheny Technologies
Incorporated and Subsidiaries Condensed Consolidated
Statements of Cash Flows (Unaudited, dollars in millions)
Nine Months Ended September 30
2018 2017 Operating Activities:
Net income (loss) $ 191.7 $ (84.9 ) Depreciation and
amortization 117.1 120.7 Impairment of goodwill - 114.4 Deferred
taxes 2.8 1.7 Change in managed working capital (99.4 ) (81.5 )
Change in retirement benefits (10.1 ) (117.6 ) Accrued liabilities
and other (85.5 ) (6.6 )
Cash provided by (used
in) operating activities 116.6
(53.8 ) Investing Activities: Purchases of property,
plant and equipment (101.3 ) (85.3 ) Purchases of businesses (10.0
) - Asset disposals and other 2.2 3.2
Cash used in investing activities (109.1
) (82.1 ) Financing Activities:
Borrowings on long-term debt 7.1 8.5 Payments on long-term debt and
capital leases (4.6 ) (1.9 ) Net borrowings under credit facilities
4.0 28.0 Debt issuance costs - (0.8 ) Dividends paid to
noncontrolling interests (10.0 ) - Sale to noncontrolling interests
14.4 2.2 Taxes on share-based compensation and other (6.5 )
(4.8 )
Cash provided by financing activities
4.4 31.2 Increase (decrease)
in cash and cash equivalents 11.9 (104.7 )
Cash and cash equivalents at beginning of period 141.6
229.6
Cash and cash equivalents at end of
period $ 153.5 $ 124.9
Allegheny Technologies
Incorporated and Subsidiaries Selected Financial Data
(Unaudited)
Three Months Ended Nine Months
Ended September 30 June 30 September 30
September 30 September 30 2018 2018
2017 2018 2017 Percentage of Total ATI
Sales High-Value Products Nickel-based alloys and
specialty alloys 30% 30% 28% 30% 27% Precision forgings, castings
and components 18% 20% 19% 20% 19% Titanium and titanium-based
alloys 16% 16% 17% 15% 17% Precision and engineered strip 14% 13%
14% 14% 14% Zirconium and related alloys 6% 5%
6% 5% 6% Total High-Value Products 84% 84% 84% 84%
83%
Standard Products Stainless steel sheet 9% 9% 9% 9% 9%
Specialty stainless sheet 4% 4% 4% 4% 4% Stainless steel plate and
other 3% 3% 3% 3% 4% Total
Standard Products 16% 16% 16% 16%
17%
Grand Total 100% 100% 100%
100% 100%
Three Months Ended
Nine Months Ended September 30 June 30
September 30 September 30 September 30
Shipment Volume: 2018 2018 2017
2018 2017 Flat Rolled Products (000's lbs.)
High value 87,994 84,564 83,637 256,601 233,059 Standard
96,211 105,006 115,907 310,466 345,569
Flat Rolled Products total 184,205 189,570 199,544 567,067 578,628
Average Selling Prices: Flat Rolled
Products (per lb.) High value $ 3.22 $ 3.13 $ 2.69 $ 3.22 $ 2.76
Standard $ 1.53 $ 1.42 $ 1.13 $ 1.40 $ 1.20 Flat Rolled Products
combined average $ 2.34 $ 2.19 $ 1.78 $ 2.22 $ 1.83
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 Nine
Months Ended September 30 June 30 September
30 September 30 September 30 2018
2018 2017 2018 2017 Numerator
for Basic net income (loss) per common share - Net income (loss)
attributable to ATI $ 50.5 $ 72.8 $ (121.2 ) $ 181.3 $ (93.6 )
Effect of dilutive securities: 4.75% Convertible Senior Notes due
2022 3.2 3.2 - 9.6 -
Numerator for Diluted net income (loss) per common share -
Net income (loss) attributable to ATI after assumed conversions $
53.7 $ 76.0 $ (121.2 ) $ 190.9 $ (93.6 ) Denominator for
Basic net income (loss) per common share - Weighted average shares
outstanding 125.2 125.2 107.7 125.1 107.7 Effect of dilutive
securities: Share-based compensation 0.9 0.7 - 0.7 - 4.75%
Convertible Senior Notes due 2022 19.9 19.9 -
19.9 - Denominator for Diluted net
income (loss) per common share - Adjusted weighted average shares
assuming conversions 146.0 145.8 107.7
145.7 107.7 Basic net income (loss)
attributable to ATI per common share
$ 0.40 $
0.58 $ (1.12 ) $ 1.45
$ (0.87 ) Diluted net income (loss)
attributable to ATI per common share
$ 0.37 $
0.52 $ (1.12 ) $ 1.31
$ (0.87 )
Note: Quarterly earnings per share amounts
may not add to year-to date amounts due to rounding.
Allegheny Technologies Incorporated
and Subsidiaries Other Financial Information Managed
Working Capital (Unaudited, dollars in millions)
September 30 December 31 2018
2017 Accounts receivable $ 588.3 $ 545.3 Short-term
contract assets 51.6 - Inventory 1,239.8 1,176.1 Accounts payable
(416.1 ) (420.1 ) Short-term contract liabilities (69.2 )
- Subtotal 1,394.4 1,301.3 Allowance for
doubtful accounts 6.2 5.9 LIFO reserve (1.7 ) (43.1 ) Inventory
reserves 86.1 121.5 Managed working
capital $ 1,485.0 $ 1,385.6 Annualized prior 3
months sales $ 4,080.8 $ 3,639.5 Managed
working capital as a % of annualized sales 36.4 % 38.1 %
September 30, 2018 change in managed working capital $ 99.4
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)
September 30 December 31 2018
2017 Total debt (a) $ 1,563.0 $ 1,553.8 Less: Cash
(153.5 ) (141.6 ) Net debt $ 1,409.5 $ 1,412.2
Net debt $ 1,409.5 $ 1,412.2 Total ATI stockholders' equity
1,980.2 1,739.4 Net ATI capital $ 3,389.7 $
3,151.6
Net debt to ATI capital 41.6
% 44.8 % Total debt (a) $
1,563.0 $ 1,553.8 Total ATI stockholders' equity 1,980.2
1,739.4 Total ATI capital $ 3,543.2 $ 3,293.2
Total debt to total ATI capital 44.1
% 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
SubsidiariesNon-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 October 23, 2018:
Three Months Ended September 30,
2017 Net loss attributable to ATI $ (121.2 ) Adjust for
special items: Impairment of goodwill, net of tax (a) 113.6
Net loss attributable to ATI excluding special items $ (7.6
)
Per Diluted Share * Net loss attributable to ATI $
(1.12 ) Adjust for special items: Impairment of goodwill, net of
tax (a) 1.05 Net loss attributable to ATI excluding
special items $ (0.07 )
* Presentation of adjusted results per diluted share includes
the effects of convertible debt, if dilutive.
(a) During the third quarter of 2017, the Company performed an
interim goodwill impairment analysis, as required by accounting
standards, for our Cast Products business and determined that all
goodwill assigned to this business unit was impaired. As a result,
the Company recorded a $114.4 pre-tax non-cash goodwill impairment
charge ($113.6 after-tax), or $(1.05) per share.
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 qualified defined benefit pension plan.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181023005596/en/
Allegheny Technologies IncorporatedInvestor Contact:Scott
A. Minder, 412-395-2720scott.minder@atimetals.comorMedia
Contact:Natalie Gillespie,
412-394-2850natalie.gillespie@atimetals.com
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