Increased sales offset by unexpected
operational headwinds; on track to deliver improved results for
remainder of 2019
First Quarter 2019 Highlights
- Sales were $1.0 billion, 3% higher
than Q1 2018
- High Performance Materials &
Components (HPMC) sales of $601 million, increased 7% versus Q1
2018
- Flat Rolled Products (FRP) sales of
$404 million, down 4% versus Q1 2018
- Business segment operating profit
was $61.7 million, or 6.1% of sales
- HPMC segment operating profit was
$72.6 million, or 12.1% of sales
- FRP segment operating loss was $10.9
million, or (2.7)% of sales
- Both segments impacted by unexpected
short-term operational headwinds
- Net income attributable to ATI was
$15.0 million, or $0.12 per share
Allegheny Technologies Incorporated (NYSE: ATI) reported first
quarter 2019 results, with sales of $1.0 billion and net income
attributable to ATI of $15.0 million, or $0.12 per share. This
compares to ATI’s first quarter 2018 sales of $979 million and net
income attributable to ATI of $58.0 million, or $0.42 per share,
and first quarter 2018 adjusted results of $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 (JV).
“While our first quarter sales increased to $1 billion, our
financial results were below our expectations as we faced
unexpected operational headwinds in both of our business segments,”
said Robert S. Wetherbee, ATI President and Chief Executive
Officer. “We are working proactively to address challenges we faced
in the form of short-term powder billet shortages and higher
operating costs by ramping up our own production to offset future
uncertainty. The company holds strong positions in high-value,
growing markets, and the overall fundamentals of our businesses are
solid. We are on track to deliver improved results in the second
quarter and throughout the balance of 2019, and progress toward our
longer-term objectives remains on pace.”
HPMC sales increased 7.2% in the first quarter 2019 compared to
prior year primarily due to higher aerospace & defense market
sales, led by growth in airframes and government and defense.
Next-generation jet engine products sales increased by 8.9% and
represented 52% of total first quarter 2019 HPMC jet engine product
sales. Despite the increase in these sales, HPMC operating profit
declined versus prior year to $72.6 million, or 12.1% of sales, due
to the greater than anticipated operational and cost headwinds.
“HPMC segment results were negatively impacted by the ongoing
disruption in third party nickel powder billet supply, as well as
the related operating costs to qualify materials and quickly ramp
nickel powder production to help alleviate the shortage of incoming
third-party powder billet. Segment results were also adversely
impacted by the temporary margin compression caused by a recent
steep and rapid drop in cobalt prices,” said Mr. Wetherbee.
FRP sales were down 4% in the first quarter 2019 compared to
prior year, largely due to weaker demand for commodity stainless
products, resulting in an operating loss of $10.9 million for the
first quarter of 2019. “Our STAL JV extended its production
downtime for the Lunar New Year holiday period as a result of lower
domestic demand in China, which is in part related to the current
trade tensions between the U.S. and China. This lower demand,
coupled with increased operating costs for the newly expanded STAL
JV production facilities, resulted in lower than expected first
quarter profitability,” said Mr. Wetherbee. Additionally, due to
customer inventory destocking actions, the U.S. Flat Rolled
business faced weaker than expected demand for commodity stainless
products which resulted in operational inefficiencies in downstream
finishing operations. FRP segment results in the first quarter 2019
also include a $3 million loss for ATI’s share of the A&T
Stainless JV as a direct result of the ongoing Section 232 import
tariffs. The Company continues to work toward securing an exclusion
on behalf of the JV.
As of March 31, 2019, cash on hand was $217 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. Cash used in
operations for the first quarter of 2019 was $130.0 million,
largely due to higher managed working capital from increased
business activity, a $25 million contribution to the U.S. defined
benefit pension plan and payment of 2018 annual incentive
compensation. Capital expenditures for the first quarter 2019 were
$24 million.
Strategy and Outlook
“We continue to work proactively with our customers to jointly
address current supply constraints related to the ongoing aerospace
production ramp, and as previously announced, we expect to maintain
our current production and delivery schedules related to the 737
MAX aircraft,” said Mr. Wetherbee. “We have full confidence in
Boeing’s ability to address current narrow-body model issues.”
In the HPMC segment, the Company is aligned and focused on
overcoming first quarter headwinds and anticipates sequential
improvement in segment financial results. However, operating
margins will likely be below initial expectations for the second
quarter while the Company works aggressively to offset operational
challenges and prepare the Bakers Powder facility for additional
profitable growth. Segment operating margins in the second half of
2019 are expected to be much improved over the first half of the
year. The Company believes that the supply chain issues are
temporary and the benefits from increased share of high value
commercial jet engine materials and components will provide a
financial tailwind. “We are dedicated to strong operational
execution and to meeting our aerospace production ramp
requirements,” said Mr. Wetherbee.
In the FRP segment, the Company expects higher sequential
revenue and a solid return to profitability in the second quarter
of 2019 due to improved customer demand for high-value products,
both in the U.S. and for the STAL JV, and favorable raw material
surcharge values. Continued improvements in the second half of 2019
are expected due to further increases in high-value nickel and
titanium product sales. “Our focus for the FRP segment remains on
improving product mix and increasing volumes related to our HRPF
conversion agreements while ensuring a strong cost discipline as
the business changes over time.
“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. We expect to generate significant positive
free cash flow over the balance of 2019, excluding pension plan
contributions,” Wetherbee concluded.
First Quarter 2019 Financial Results
- Sales for the first quarter 2019
were $1.0 billion, a 3% increase compared to the first quarter
2018. HPMC sales reflect stronger demand for titanium products and
nickel-based and specialty alloy products, partially offset by
declines in forged components. FRP sales declined 4% principally in
oil and gas and commodity stainless sheet products. Aerospace &
defense market sales in the FRP segment were up 70% year-over-year.
This was supported by significantly higher production of titanium
armor plate for the Abrams tank in the U.S. and Stryker vehicle in
the U.K.; additional titanium volumes for jet airframes; and
increased nickel and cobalt bearing alloy sheet products for jet
engines.
- Gross profit in the first
quarter 2019 was $131.1 million, or 13.0% of sales, compared to
$148.6 million, or 15.2% of sales, in the first quarter of
2018.
- Net income attributable to ATI
for the first quarter 2019 was $15.0 million, or $0.12 per share,
compared to net income attributable to ATI of $58.0 million, or
$0.42 per share for the first quarter 2018, and adjusted net income
for the first quarter 2018 of $43.3 million, or $0.32 per share,
excluding the A&T Stainless gain. First quarter 2019 results
reflect a $9 million increase in retirement benefit expense.
Results in all periods include impacts from income taxes, which
differ from applicable standard tax rates, primarily related to the
impact of income tax valuation allowances.
- Cash on hand at March 31, 2019
was $217.0 million. In the first quarter 2019, cash used in
operating activities was $130.0 million, including $121.0 million
invested in managed working capital for increased business activity
and a $25.1 million contribution to the U.S. defined benefit
pension plan. Capital expenditures in the first quarter 2019 were
$23.5 million, in line with expectations. Cash used in financing
activities was $11.4 million, primarily related to income tax
withholding on share-based compensation.
High Performance Materials & Components Segment
Market Conditions
- Aerospace and defense sales in the
first quarter 2019 were $465.1 million, 1% higher than the fourth
quarter 2018, and represented 77% of total segment sales. Compared
to the fourth quarter 2018, commercial airframe sales were up 16%
and government aero/defense sales were 21% higher, while commercial
jet engine sales were 9% lower. Total HPMC first quarter 2019 sales
increased 1% over the fourth quarter 2018, with sales to the
medical market up 16%, offset by a 30% decline in the oil & gas
market. Direct international sales represented 44% of total segment
sales for the first quarter 2019.
- The Company extended its Long-Term
Purchase Agreement (LTPA) with Rolls-Royce to supply rotating disc
quality specialty materials for the Trent engine family; the LTPA
reliably secures Rolls-Royce’s supply of critical materials for
their innovative engine portfolio through 2029.
First quarter 2019 compared to first quarter 2018
- Sales were $601.2 million, a $40.5
million, or 7%, increase compared to the first quarter 2018,
primarily due to higher sales of titanium products and nickel-based
and specialty alloy products, both up over 15%. Sales to the
aerospace and defense markets were 9% higher than the prior year,
including a 25% increase in airframe sales and a 30% increase in
aero/engine defense sales. Commercial jet engine sales declined 2%
compared to prior year, despite a 9% increase in next-generation
jet engine products.
- Segment operating profit declined to
$72.6 million, or 12.1% of sales, compared to $85.5 million, or
15.2% of sales for the first quarter 2018. This decline reflects
various operational headwinds, including third party nickel-powder
billet supply constraints, higher operating costs in preparation
for increased nickel-powder production and negative impacts from
the recent rapid drop in raw material prices, largely driven by
cobalt. These headwinds more than offset any operating profit
improvement from higher productivity related to increasing
aerospace and defense sales, and an improved product mix of
next-generation jet engine products.
Flat Rolled Products Segment
Market Conditions
- In the first quarter 2019, sales to the
oil & gas market declined 12% compared to the fourth quarter
2018. Recovery is anticipated in this market for the remainder of
the year; as previously announced, ATI has been selected to supply
the nickel-based flat rolled products for a large oil pipeline
project in South America. Expected revenue value is $45 million in
2019, with shipments beginning in the second quarter.
- In addition, sales to the electronics
market declined 25% sequentially along with a 16% sequential
decline in food equipment & appliances. Sales decreased 5% for
high-value products and 2% for standard products, compared to the
fourth quarter 2018. Direct international sales were 29% of first
quarter 2019 segment sales.
First quarter 2019 compared to first quarter 2018
- Sales were $403.6 million, a $14.7
million, or 4%, decrease compared to the prior year period, due to
8% lower sales of standard products, primarily commodity stainless
steel sheet. Shipment volume for high-value products was 2% lower,
compared to the first quarter 2018.
- Segment operating loss was $10.9
million, or (2.7%) of sales, compared to profit of $10.9 million,
or 2.6% of sales for the first quarter 2018. Results in 2019
reflect negative impacts from our STAL JV, due to demand softness
and higher operating costs related to the recent production
expansion, and commodity stainless products in the U.S. business,
resulting from cost inefficiencies in our finishing operations as a
result of customer inventory destocking actions. In addition, FRP
segment results for the first quarter 2019 reflect higher
retirement benefit expense and a $3 million loss for ATI’s share of
the A&T Stainless JV, primarily due to Section 232
tariffs.
Corporate Expenses/Closed Operations and Other
Expenses
- Corporate expenses in the first quarter
2019 were $16.6 million, which was $3.4 million higher than the
first quarter 2018, which includes higher expense for company-owned
life insurance policies and higher incentive compensation
costs.
- Closed operations and other expenses in
the first quarter 2019 were $3.1 million, which was $5.0 million
lower than the first quarter 2018 primarily from lower carry costs
and environmental costs for closed facilities in 2019, along with
foreign currency remeasurement gains in 2019 compared to losses in
2018.
Income Taxes
- ATI continues to maintain income tax
valuation allowances on its U.S. federal and state deferred tax
assets, and the Company does 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 2019 4.7% tax rate
primarily relates to the combination of the low tax rate caused by
the valuation allowances mentioned above and the inclusion of
income taxes on non-U.S. operations, resulting in a rate
substantially lower than the U.S. statutory rate of 21%.
Allegheny Technologies will conduct a conference call with
investors and analysts on Tuesday, April 23, 2019, 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, 2018, 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 $4.1 billion for
the twelve month period ended March 31, 2019. 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 Income
(Unaudited, dollars in millions, except
per share amounts)
Three Months Ended March 31
December 31 March 31 2019 2018
2018 Sales $ 1,004.8 $
1,037.9 $ 979.0 Cost of sales
873.7 890.3 830.4 Gross profit
131.1 147.6 148.6 Selling and administrative expenses
68.0 72.9 67.1 Operating income
63.1 74.7 81.5 Nonoperating retirement benefit expense (18.3 ) (8.4
) (8.3 ) Interest expense, net (24.8 ) (25.2 ) (25.5 ) Other
(expense) income, net (2.9 ) (1.9 ) 17.8
Income before income taxes 17.1 39.2 65.5 Income tax
provision (benefit) 0.8 (5.8 ) 5.0
Net income $ 16.3 $ 45.0
$ 60.5 Less: Net income attributable to
noncontrolling interests 1.3 3.9
2.5
Net income attributable to ATI $
15.0 $ 41.1 $ 58.0
Basic net income attributable to ATI
per common share
$ 0.12 $ 0.33 $
0.46 Diluted net income attributable to ATI
per common share $ 0.12 $
0.30 $ 0.42
Allegheny Technologies Incorporated and Subsidiaries
Sales and Operating Profit (Loss) by Business Segment
(Unaudited, dollars in millions)
Three Months
Ended March 31 December 31 March
31 2019 2018 2018 Sales: High Performance
Materials & Components $ 601.2 $ 596.1 $ 560.7 Flat Rolled
Products 403.6 441.8 418.3
Total external sales $ 1,004.8
$ 1,037.9 $ 979.0
Operating profit (loss): High Performance Materials
& Components $ 72.6 $ 76.0 $ 85.5 % of Sales 12.1 % 12.7 % 15.2
% Flat Rolled Products (10.9 ) 11.3 10.9 % of Sales
-2.7 % 2.6 % 2.6 %
Total operating
profit 61.7 87.3 96.4 % of Sales 6.1 % 8.4
% 9.8 % LIFO and net realizable value reserves (0.1 )
(0.7 ) - Corporate expenses (16.6 ) (17.2 ) (13.2 )
Closed operations and other expense (3.1 ) (5.0 ) (8.1 )
Gain on joint venture deconsolidation - - 15.9 Interest
expense, net (24.8 ) (25.2 ) (25.5 )
Income before income taxes $ 17.1
$ 39.2 $ 65.5
Allegheny Technologies Incorporated and
Subsidiaries Condensed Consolidated Balance Sheets
(Current period unaudited, dollars in millions)
March 31, December 31, 2019 2018
ASSETS Current Assets: Cash and cash
equivalents $ 217.0 $ 382.0
Accounts receivable, net of allowances for
doubtful accounts
565.1 527.8 Short-term contract assets 48.7 51.2 Inventories, net
1,254.4 1,211.1 Prepaid expenses and other current assets
92.7 74.6
Total Current Assets 2,177.9
2,246.7 Property, plant and equipment, net 2,470.7
2,475.0 Goodwill 536.8 534.7 Other assets 305.6 245.4
Total Assets $ 5,491.0 $
5,501.8 LIABILITIES AND EQUITY
Current Liabilities: Accounts payable $ 455.3 $ 498.8
Accrued liabilities 220.4 260.1 Short-term contract liabilities
77.9 71.4
Short-term debt and current portion of
long-term debt
6.4 6.6
Total Current Liabilities 760.0
836.9 Long-term debt 1,536.2 1,535.5 Accrued
postretirement benefits 309.5 318.4 Pension liabilities 701.1 730.0
Deferred income taxes 14.5 12.9 Other long-term liabilities
123.1 76.5
Total Liabilities 3,444.4
3,510.2 Total ATI stockholders' equity 1,934.2
1,885.7 Noncontrolling interests 112.4 105.9
Total
Equity 2,046.6 1,991.6
Total Liabilities and Equity $ 5,491.0
$ 5,501.8 Allegheny Technologies
Incorporated and Subsidiaries Condensed Consolidated
Statements of Cash Flows (Unaudited, dollars in millions)
Three Months Ended March 31 2019
2018 Operating Activities: Net
income $ 16.3 $ 60.5 Depreciation and amortization 38.7 39.8
Deferred taxes 1.6 (0.2 ) Change in managed working capital (121.0
) (63.1 ) Change in retirement benefits (18.4 ) 0.5 Accrued
liabilities and other (47.2 ) (84.6 )
Cash used in
operating activities (130.0 )
(47.1 ) Investing Activities: Purchases of property,
plant and equipment (23.5 ) (41.6 ) Asset disposals and other
(0.1 ) 0.1
Cash used in investing
activities (23.6 ) (41.5
) Financing Activities: Borrowings on long-term debt - 6.4
Payments on long-term debt and finance leases (1.5 ) (1.3 ) Net
(payments) borrowings under credit facilities - 50.9 Sale to
noncontrolling interests - 7.4 Taxes on share-based compensation
and other (9.9 ) (6.5 )
Cash (used in) provided by
financing activities (11.4 )
56.9 Decrease in cash and cash equivalents
(165.0 ) (31.7 ) Cash and cash
equivalents at beginning of period 382.0 141.6
Cash and cash equivalents at end of period $
217.0 $ 109.9
Allegheny Technologies Incorporated and
Subsidiaries
Revenue by Market (Unaudited, dollars in millions)
Three Months Ended March 31
March 31 2019 2018 Market Aerospace &
Defense: Jet Engines $ 280.0 28 % $ 276.7 28 % Airframes 152.3 15 %
120.3 12 % Government Aerospace & Defense 93.3 9 %
65.4 7 % Total Aerospace & Defense $ 525.6 52 % $ 462.4
47 % Oil & Gas 112.8 11 % 152.7 16 % Automotive 76.9 8 % 79.1 8
% Construction/Mining 57.9 6 % 55.6 6 % Electrical Energy 55.7 6 %
52.2 5 % Food Equipment & Appliances 53.2 5 % 58.9 6 % Medical
46.1 5 % 44.9 5 % Electronics/Computers/Communications 34.1 3 %
32.9 3 % Other 42.5 4 % 40.3 4 % Total $ 1,004.8 100
% $ 979.0 100 %
Allegheny Technologies
Incorporated and Subsidiaries Selected Financial Data
(Unaudited)
Three Months Ended March 31
December 31 March 31 2019 2018
2018 Percentage of Total ATI Sales High-Value
Products Nickel-based alloys and specialty alloys 30 % 30 % 30
% Precision forgings, castings and components 19 % 19 % 21 %
Titanium and titanium-based alloys 19 % 19 % 16 % Precision and
engineered strip 13 % 14 % 14 % Zirconium and related alloys
6 % 5 % 5 % Total High-Value Products 87 % 87 % 86 %
Standard Products Stainless steel sheet 7 % 8 % 8 %
Specialty stainless sheet 4 % 4 % 4 % Stainless steel plate and
other 2 % 1 % 2 % Total Standard Products
13 % 13 % 14 %
Grand Total 100 %
100 % 100 %
Three Months Ended
March 31 December 31 March 31 Shipment
Volume: 2019 2018 2018 Flat Rolled
Products (000's lbs.) High value 82,178 89,963 84,042 Standard
92,638 90,529 109,249
Flat Rolled Products total 174,816 180,492 193,291
Average Selling Prices: Flat Rolled Products (per
lb.) High value $ 3.27 $ 3.14 $ 3.30 Standard $ 1.37 $ 1.43 $ 1.26
Flat Rolled Products combined average $ 2.26 $ 2.28 $ 2.15
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 2019
2018 2018 Numerator for Basic net income per
common share - Net income attributable to ATI $ 15.0 $ 41.1 $ 58.0
Effect of dilutive securities: 4.75% Convertible Senior Notes due
2022 - 3.3 3.2 Numerator for Diluted net
income per common share -
Net income attributable to ATI after
assumed conversions
$ 15.0 $ 44.4 $ 61.2 Denominator for Basic net income per
common share - Weighted average shares outstanding 125.4 125.2
125.0 Effect of dilutive securities: Share-based compensation 0.7
1.4 0.6 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
126.1 146.5 145.5 Basic net income
attributable to ATI per common share
$ 0.12 $
0.33 $ 0.46 Diluted net income
attributable to ATI per common share
$ 0.12 $
0.30 $ 0.42 Allegheny
Technologies Incorporated and Subsidiaries Other Financial
Information Managed Working Capital (Unaudited, dollars
in millions)
March 31 December 31 2019
2018 Accounts receivable $ 565.1 $ 527.8 Short-term
contract assets 48.7 51.2 Inventory 1,254.4 1,211.1 Accounts
payable (455.3 ) (498.8 ) Short-term contract liabilities
(77.9 ) (71.4 ) Subtotal 1,335.0 1,219.9 Allowance
for doubtful accounts 5.7 6.0 LIFO reserve (4.7 ) (2.9 ) Inventory
reserves 96.5 88.5 Managed working
capital $ 1,432.5 $ 1,311.5
Annualized prior 3 months sales
$ 4,019.0 $ 4,151.3
Managed working capital as a % of
annualized sales
35.6 % 31.6 %
March 31, 2019 change in managed working
capital
$ 121.0 As part of managing the liquidity in our business, we focus
on controlling managed working capital, which is defined as gross
accounts receivable, short-term contract assets and gross
inventories, less accounts payable and short-term contract
liabilities. 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.
Allegheny Technologies Incorporated and
Subsidiaries Other Financial Information Debt to
Capital (Unaudited, dollars in millions)
March
31 December 31 2019 2018 Total debt
(a) $ 1,552.3 $ 1,552.5 Less: Cash (217.0 ) (382.0 )
Net debt $ 1,335.3 $ 1,170.5 Net debt $ 1,335.3 $ 1,170.5
Total ATI stockholders' equity 1,934.2 1,885.7
Net ATI capital $ 3,269.5 $ 3,056.2
Net debt to
ATI capital 40.8 % 38.3
% Total debt (a) $ 1,552.3 $ 1,552.5 Total ATI
stockholders' equity 1,934.2 1,885.7
Total ATI capital $ 3,486.5 $ 3,438.2
Total debt to total
ATI capital 44.5 % 45.2
%
(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 April 23, 2019:
Three Months Ended March 31 2018
Net income attributable to ATI $ 58.0 Adjust for special items:
Gain on joint venture deconsolidation, net of tax (a) (14.7
) Net income attributable to ATI excluding special items $ 43.3
Per Diluted Share * Net income attributable to
ATI $ 0.42 Adjust for special items: Gain on joint venture
deconsolidation, net of tax (a) (0.10 ) Net income
attributable to ATI excluding special items $ 0.32 *
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 Allegheny &
Tsingshan 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.
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 Company's U.S. qualified
defined benefit pension plans.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190423005505/en/
Investor Contact:Scott A.
Minder412-395-2720scott.minder@atimetals.com
Media Contact:Natalie
Gillespie412-394-2850natalie.gillespie@atimetals.comwww.ATImetals.com
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