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"Our fourth quarter results demonstrated the strong fundamentals of our business as we delivered on increasing customer demand," said Kimberly A. Fields, President and CEO. "We achieved double-digit sales and adjusted EBITDA growth compared to the prior year fourth quarter. Fourth quarter sales to the aerospace & defense markets exceeded 65% of ATI's total sales, bringing the full year aerospace & defense mix to over 62%.

"Full year sales of $4.4 billion are the highest we have achieved since 2012, increasing 5% over 2023. Free cash flow* of $248 million for the full year 2024 reflected an increase of 50% compared to the prior year. Adjusted EBITDA for the full year was $729 million, up 15% from 2023, reflecting robust demand which we expect will continue in 2025," said Fields.

"We remain committed to efficiently deploying capital to capture growth opportunities and return capital to our shareholders," said Fields. In 2024, ATI invested $239 million in capital expenditures to grow our capacity and capabilities. The company generated over $65 million in cash proceeds from the sale of non-core assets, capital that will be redeployed as part of its reliability and debottlenecking strategy. In addition to those outcomes, ATI also repurchased $260 million shares of its stock, ending the year with $721 million in cash.  "We believe ATI is very well positioned for continued strong performance that will drive growth and value in 2025 and beyond," said Fields.

Operating Results by Segment

 

• HPMC's fourth quarter 2024 sales increased $81.8 million, or 15%, compared to the third quarter 2024, primarily due to higher aerospace & defense sales of next generation commercial jet engine and airframe products. These increases were partially offset by lower sales to the medical market. Overall aerospace & defense sales represented 89% of total HPMC sales in the fourth quarter 2024, an increase from 86% in the third quarter of 2024.  Fourth quarter 2024 sales improved 9% compared to fourth quarter 2023, with total aerospace & defense related sales increasing 13% compared to the prior year period, primarily due to next generation commercial jet engine demand, which was partially offset by a slight decline in sales of commercial airframe products as well as lower sales to the medical market.

• HPMC fourth quarter 2024 segment EBITDA was $126.8 million, or 20.0% of sales.  The sequential decline in margins was primarily due to unfavorable sales mix and higher costs, including incentive compensation costs and carry over of costs due to third quarter 2024 outages, which offset the impact of higher volumes. The fourth quarter 2024 margin was also negatively impacted by a charge of approximately $6.3 million due to a commercial negotiation with a customer.

• Fourth quarter 2024 and third quarter 2024 results included benefits of $2.6 million and $2.9 million, respectively, from the recognition of previously deferred employee retention credits.

 

• AA&S fourth quarter 2024 sales increased $39.7 million, or 8%, compared to the third quarter 2024, primarily due to higher sales of defense applications and next generation commercial jet engine products, partially offset by lower sales of commercial airframe products. Sales also increased to the specialty energy and medical markets. Overall aerospace & defense sales were 38% of total AA&S sales in the fourth quarter 2024.  Fourth quarter 2024 sales increased 12% compared to the fourth quarter 2023. Higher year-over-year sales across core markets, including aerospace & defense, medical, specialty energy and electronics, were partially offset by lower sales to the conventional energy market.

• AA&S fourth quarter 2024 segment EBITDA was $88.0 million, or 16.3% of sales. The sequential increase in margins was due in part to an increase in deliveries of titanium and exotic alloys, partially offset by higher costs, including incentive compensation costs and unfavorable manufacturing variances. The fourth quarter 2024 margin also benefited from a $10.4 million credit related to the Advanced Manufacturing Production Credit, which was partially offset by charges of approximately $5.5 million, primarily resulting from a commercial negotiation with a customer. The credit associated with the Advanced Manufacturing Production Credit was the result of final regulations issued by the U.S. Department of the Treasury during the quarter that clarified the inclusion of certain direct and indirect materials in the determination of the credit.

• Fourth quarter 2024 and third quarter 2024 results included benefits of $0.7 million and $1.9 million, respectively, from the recognition of previously deferred employee retention credits.

Corporate Items and Cash

• Restructuring and other charges:

  • Fourth quarter 2024:  $9.3 million includes pre-tax charges consisting of $5.3 million of severance-related restructuring costs, primarily related to cost reduction actions in our domestic operations, and $4.0 million of other charges, primarily for start-up and transaction related costs.

  • Third quarter 2024: $4.3 million includes pre-tax charges consisting primarily of $2.5 million of start-up costs and $1.7 million of transaction related costs.

  • Fourth quarter 2023: $16.8 million includes pre-tax charges of $13.8 million of costs primarily associated with the transformation of our European organization and $3.0 million for startup costs.

• Fourth quarter 2024 includes a $52.9 million gain on the sale of our precision rolled strip operations in New Bedford, MA and Remscheid, Germany.

• The remeasurement of pension plan assets and obligations resulted in actuarial losses of $14.1 million in the fourth quarter 2024 and $26.8 million in the fourth quarter 2023. The Company's pension accounting policy is to record actuarial gains and losses in current period earnings.

• Corporate expenses in the fourth quarter 2024 were $14.1 million, compared to $13.4 million in the third quarter 2024, and $15.2 million in the prior year quarter. The increase in corporate expenses in fourth quarter 2024 compared to third quarter 2024 was primarily due to higher incentive compensation costs.

• Closed operations and other income/expense was income of $9.1 million in the fourth quarter 2024, compared to income of $2.3 million in the third quarter 2024, and expense of $6.5 million in the prior year quarter. The fourth and third quarters of 2024 included gains of $7.9 million and $3.7 million, respectively, from the sale of oil & gas rights.

• Fourth quarter 2024 results include a $32.9 million income tax provision, or an effective tax rate of 18.8%.  Third quarter 2024 results include a $28.3 million income tax provision, or an effective tax rate of 24.6%.   The effective tax rate for the fourth quarter 2024 decreased compared to the third quarter 2024 primarily due to the higher-than-expected utilization of permanent tax benefits.  Fourth quarter 2023 included a $137.4 million discrete tax benefit, primarily related to the reversal of the Company's valuation allowance.

• Cash provided by operating activities was $381 million and $407 million for the fourth quarter and fiscal year 2024, respectively. While managed working capital increased on an annual basis, the Company's focus on operational improvements resulted in a decrease in managed working capital in the fourth quarter 2024. Fourth quarter 2024 managed working capital as a percent of sales was 30.9%, which decreased from 40.0% in the third quarter 2024. Capital expenditures were $47 million and $239 million for the fourth quarter and fiscal year 2024, respectively.

• Cash on hand at December 29, 2024 was $721 million, and available additional liquidity under the asset-based lending (ABL) credit facility was approximately $525 million.  As of December 29, 2024, we had no outstanding borrowings on the ABL credit facility.  Our next meaningful debt maturity is $150 million of debentures in the fourth quarter of 2025.

• In the fourth quarter 2024, the company repurchased $70 million of common stock at an average price of $55.59, retiring approximately 1.3 million shares.  As of December 29, 2024, total share repurchase authorization remaining under the $700 million authorized share repurchase program was $590 million.

• As of December 29, 2024, our U.S. qualified defined benefit pension plan is 106% funded on a U.S. GAAP basis. Our consolidated net pension liability, inclusive of obligations related to our qualified and nonqualified defined benefit plans was $26 million, or 92% funded on a U.S. GAAP basis.

Fiscal Year 2024 Results

 

Full year net income and earnings per share declined in 2024 as compared to 2023, primarily due to the 2023 reversal of the Company's valuation allowance of $137.4 million.  Full year 2024 and 2023 included benefits from credits of $22.7 million and $10.1 million, respectively, for the Advanced Manufacturing Production Credit. The 2024 Advanced Manufacturing Production Credit included a benefit of $10.4 million in the fourth quarter of 2024 due to the issuance of final regulations by the U.S. Department of the Treasury, which applied to periods prior to the quarter.

Adjusted earnings per share declined in 2024 as compared to 2023, primarily due to higher income tax expense, which excludes the impact of the 2023 reversal of the Company's valuation allowance. Adjusted EBITDA increased by 15% compared to 2023. Adjusted results for 2024 exclude pre-tax special items that were a benefit of $16.7 million, or a benefit of $12.8 million after-tax, primarily consisting of gains on the sale of businesses, partially offset by pension related remeasurement losses and restructuring and other charges. Adjusted results for 2023 exclude pre-tax special charges totaling $104.3 million. However, the after-tax impact of the special items, including the reversal of the Company's valuation allowance, was a benefit of $37.4 million. Pre-tax special charges primarily consist of pension related settlement and remeasurement losses and restructuring and other charges. The reconciliations within the non-GAAP tables provides additional details on special items.

Outlook

"Following our strong finish to 2024, we're focused on staying agile, prepared as the aerospace and defense supply chain normalizes and geopolitical uncertainties evolve, including changes in global trade policies. With very strong demand in our end markets, we believe we are positioned to deliver growth and margin expansion in 2025 and beyond," said Fields.

The Company is providing its first quarter and full year 2025 guidance in the table below:

 

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ATI will conduct a conference call with investors and analysts on Tuesday, February 4, 2025, 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 ATImaterials.com. To access the broadcast, click on "Conference Call." Replay of the conference call will be available on the ATI 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 materials; (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; (h) business and economic disruptions associated with extraordinary events beyond our control, such as war, terrorism, international conflicts, public health issues, such as epidemics or pandemics, natural disasters and climate-related events that may arise in the future and (i) other risk factors summarized in our Annual Report on Form 10-K for the year ended December 31, 2023, and in other reports filed with the Securities and Exchange Commission. We assume no duty to update our forward-looking statements.

ATI: Proven to Perform.
ATI (NYSE: ATI) is a global producer of high performance materials and solutions for the global aerospace & defense markets, and critical applications in electronics, medical and specialty energy. We're solving the world's most difficult challenges through materials science. We partner with our customers to deliver extraordinary materials that enable their greatest achievements: their products fly higher and faster, burn hotter, dive deeper, stand stronger and last longer. Our proprietary process technologies, unique customer partnerships and commitment to innovation deliver materials and solutions for today and the evermore challenging environments of tomorrow.  We are proven to perform anywhere.  Learn more at ATImaterials.com.

 

 

 

 

 

 

 

 

ATI Inc.
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.  For example, EBITDA and Adjusted EBITDA are measures utilized by management to analyze the performance and result of our business.  Further, we believe these measures are useful to investors and industry analysts because these measures are commonly used to analyze companies on the basis of operating performance, leverage and liquidity.  EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow for management's discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments and capital expenditures.  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 this press release:

 

 

 

 

Free Cash Flow

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 plan.

 

Managed Working Capital

As part of managing the performance of our business, we focus on Managed Working Capital, which we define as gross accounts receivable, short-term contract assets and gross inventories, less accounts payable and short-term contract liabilities.  We exclude the effects of inventory valuation reserves and reserves for uncollectible accounts receivable when computing this non-GAAP performance measure, which is not intended to replace Working Capital or to be used as a measure of liquidity.  We assess Managed Working Capital performance as a percentage of the prior three months annualized sales to evaluate the asset intensity of our business.  The December 29, 2024 and September 29, 2024 amounts include management working capital balances that are classified as held for sale.

 

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