01—Abstract
Summary
Summary of the 10-K filed February 25, 2022. Cited figures are marked; the original filing is the authoritative source.
Allegheny Technologies Incorporated (ATI) reported revenues of $2.8 billiona for the fiscal year ended December 31, 2021, a 6% decrease from 2020, primarily due to ongoing market recoveries post-COVID-19 and strategic exits from lower-margin businesses.
The company shifted its focus to higher-margin products, with 93% of its Advanced Alloys & Solutions (AA&S) segment sales now considered high-value. The High Performance Materials & Components (HPMC) segment, heavily reliant on aerospace and defense, saw stable revenues year-over-year, with a notable increase in energy and medical markets offsetting a decline in aerospace & defense. ATI returned to profitability with an operating income of $118 millionb in 2021, a significant improvement from a substantial operating loss in 2020, which was impacted by large restructuring, impairment, and strike-related charges.
Financially, ATI strengthened its liquidity position, ending 2021 with over $1 billionc in liquidity, including $688 million in cash. The company also took steps to optimize its debt structure, issuing new senior notes and retiring older, higher-cost debt.
While the company generated positive cash from operations, it experienced an increase in working capital. Looking ahead, ATI anticipates continued revenue and earnings growth in 2022, driven by the ongoing recovery in the commercial aerospace sector and favorable demand in specialty energy and other key markets.
02—Key points
Key Highlights
- ATI reported 2021 revenues of $2.8 billion, a slight decrease from 2020, but achieved a significant turnaround to an operating income of $118 million, compared to a large operating loss in the prior year.
- The company is strategically repositioning its Advanced Alloys & Solutions (AA&S) segment, exiting lower-margin standard stainless sheet products, with 93% of AA&S sales now classified as high-value, up from 86% in 2020.
- The High Performance Materials & Components (HPMC) segment's revenues remained stable year-over-year at $1.16 billion, with strong growth in energy and medical markets offsetting a decline in aerospace & defense demand.
- ATI ended 2021 with robust liquidity, including $688 million in cash and over $1 billion in total liquidity, supporting its operations and strategic initiatives.
- The company successfully managed its debt by issuing new senior notes totaling $675 million and retiring $500 million of higher-cost debt, extending its debt maturity profile.
- A significant labor strike in the AA&S segment occurred in 2021, resulting in $63.2 million in strike-related costs and impacting production, but a new four-year labor agreement was ratified in July 2021.
- Capital expenditures in 2021 totaled $152.6 million, primarily focused on HPMC growth initiatives, including investments in a new iso-thermal press and heat-treating capacity.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2021, ATI Inc lost $0.01.
- Revenue$2.80B100.0%
- Cost of revenue−$2.47B88.1%
- Gross profit$333.2M11.9%
- Operating costs−$215.6M7.7%
- Operating income$117.6M4.2%
- Interest, other & tax−$155.8M5.6%
- Net income−$38.2M1.4%
Where FY2021 revenue went
$2.80B- Cost of revenue: $2.47B, 88% of revenue
- Operating income: $117.6M, 4.2% of revenue
- R&D: $16.5M, 0.6% of revenue
- SG&A: $226.9M, 8.1% of revenue
Kept 4.2% as operating incomeOperating income $117.6M · 4.2%R&D $16.5M · 0.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 25, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $2.80B$2.98B | −6.1% |
| Cost of Revenue | $2.47B$2.69B | −8.3% |
| Gross Profit | $333.20M$292.80M | +13.8% |
| R&D Expenses | $16.50M$14.10M | +17.0% |
| SG&A Expenses | $226.90M$201.00M | +12.9% |
| Operating Income | $117.60M-$1.30B | +109.0% |
| Interest Expense | $97.60M$96.10M | +1.6% |
| Net Income | -$38.20M-$1.57B | +97.6% |
| EPS (Basic) | $-0.30$-12.43 | +97.6% |
| EPS (Diluted) | $-0.30$-12.43 | +97.6% |
| Shares Outstanding (Basic) | 127.10M126.50M | +0.5% |
| Shares Outstanding (Diluted) | 127.10M126.50M | +0.5% |
05—Questions
Frequently Asked Questions
What was ATI's financial performance in 2021 compared to 2020?
In 2021, ATI reported revenues of $2.8 billion, a 6% decrease from $2.98 billion in 2020. However, the company achieved a significant financial turnaround, reporting an operating income of $118 million compared to an operating loss of $1.3 billion in 2020. Adjusted EBITDA improved to $290.9 million (10.4% of sales) from $196.3 million (6.6% of sales) in 2020. This improvement was driven by market recoveries, cost-saving actions, and a strategic focus on higher-margin products.
How is ATI strategically repositioning its business segments?
ATI is strategically repositioning its Advanced Alloys & Solutions (AA&S) segment to focus on higher-margin, high-value products, including exiting the production and sale of lower-margin standard stainless sheet products. This initiative is on track for completion in the first half of 2022. As a result, 93% of AA&S sales were high-value products in 2021, up from 86% in 2020. The High Performance Materials & Components (HPMC) segment continues to focus on growth in aerospace & defense, medical, and energy markets.
What was the impact of the labor strike in 2021?
In 2021, ATI experienced a labor strike by the USW that lasted for approximately 3.5 months, primarily impacting the AA&S segment. This strike resulted in $63.2 million in strike-related costs, which included below-normal operating rates, higher conversion costs, and signing bonuses. The strike also led to lower revenues during the period. A new four-year labor agreement with the USW was ratified in July 2021, ending the strike.
How has ATI managed its debt and liquidity?
ATI ended 2021 with strong liquidity, holding $688 million in cash and over $1 billion in total liquidity. The company also took proactive steps to strengthen its balance sheet by issuing $675 million in new senior notes in September 2021 and using the proceeds to retire $500 million of higher-cost debt. This transaction extended the company's debt maturity profile and reduced annual interest expenses. The company also made significant voluntary contributions to its pension plans.
06—Continue