10-KPeriod: FY2022

ATI INC Annual Report, Year Ended Dec 31, 2022

Filed February 24, 2023For Securities:ATI

Summary

ATI Inc. reported a significant turnaround in 2022, returning to profitability with a net income of $130.9 million, a substantial improvement from a net loss of $38.2 million in 2021. This rebound was driven by a 37% increase in sales to $3.8 billion, fueled by a strong recovery in the aerospace and defense markets, which now represent 49% of total sales. The company's High Performance Materials & Components (HPMC) segment saw a 42% sales increase, largely due to a 58% jump in aerospace and defense sales, with commercial jet engine products leading the growth. The Advanced Alloys & Solutions (AA&S) segment also performed well, with a 33% sales increase, benefiting from the ongoing transformation and a strategic focus on higher-margin products. ATI's financial health improved with positive operating cash flow of $225 million and a strong liquidity position with over $1 billion in total liquidity, including an undrawn credit facility. The company also made progress in reducing its net pension liability. Management is focused on continued profitable growth, leveraging long-term agreements (LTAs) in the aerospace sector and the ongoing recovery in commercial aerospace demand. The company anticipates strong year-over-year revenue and segment EBITDA growth in 2023, driven by these favorable market trends.

Financial Highlights

51 data points
Beta

Revenue

$2.80B

11.9% Gross Margin

Net Income

$184.60M

6.6% Net Margin

EPS (Diluted)

$1.32

Total Assets

$4.29B

Cash & Equivalents

$687.70M

Free Cash Flow

$16.10M

Financial Statements
Beta
Revenue$2.80B
Cost of Revenue$2.47B
Gross Profit$333.20M
R&D Expenses$16.50M
SG&A Expenses$226.90M
Operating Income$117.60M
Interest Expense$97.60M
Net Income$184.60M
EPS (Basic)$1.45
EPS (Diluted)$1.32
Shares Outstanding (Basic)127.10M
Shares Outstanding (Diluted)152.70M

Key Highlights

  • 1ATI Inc. returned to profitability in 2022, reporting a net income of $130.9 million, a significant improvement from a net loss in 2021.
  • 2Total sales increased by 37% to $3.8 billion in 2022, driven by strong demand in key end markets, particularly aerospace and defense.
  • 3The High Performance Materials & Components (HPMC) segment experienced a 42% sales increase, primarily due to a 58% rise in aerospace and defense sales, with commercial jet engines being a major driver.
  • 4The Advanced Alloys & Solutions (AA&S) segment saw a 33% sales increase, reflecting its strategic repositioning and strong performance in aerospace and defense markets.
  • 5The company generated positive cash flow from operations of $225 million and maintained strong liquidity with over $1 billion in total liquidity at year-end 2022.
  • 6ATI continued to reduce its net pension liability, improving its funded position significantly.
  • 7The company's backlog of confirmed orders stood at $2.9 billion at the end of 2022, providing visibility into future revenue.

Frequently Asked Questions

ATI's primary end markets are aerospace & defense (nearly 50% of total sales) and energy (nearly 70% of revenue in aggregate, including oil & gas and downstream processing). In 2022, aerospace & defense sales grew significantly, driven by the recovery in commercial jet engine demand. Energy markets also showed growth.

ATI operates in two segments: High Performance Materials & Components (HPMC) and Advanced Alloys & Solutions (AA&S). HPMC sales increased by 42% in 2022, largely due to strong demand from the aerospace & defense sector. AA&S sales grew by 33%, benefiting from a strategic transformation and increased sales in aerospace & defense and energy markets.

ATI demonstrated improved financial health in 2022, with net income of $130.9 million and positive operating cash flow of $225 million. The company ended the year with $584 million in cash and over $1 billion in total liquidity, including its undrawn credit facility. This strong liquidity position and improved profitability provide a solid foundation for future operations and growth.

ATI's main risks include the cyclical nature of its key end markets, particularly commercial aerospace and oil & gas, which can lead to volatile demand. Other risks include dependence on critical raw material availability and price fluctuations, intense competition, potential disruptions to manufacturing processes, and cybersecurity threats. The company also manages risks related to its workforce, including labor relations and talent retention.