01—Abstract
Summary
Summary of the 10-K filed February 24, 2023. Cited figures are marked; the original filing is the authoritative source.
ATI Inc. reported a significant turnaround in 2022, returning to profitability with a net income of $130.9 milliona, 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 billionb, 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 millionc 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.
02—Key points
Key Highlights
- ATI Inc. returned to profitability in 2022, reporting a net income of $130.9 million, a significant improvement from a net loss in 2021.
- Total sales increased by 37% to $3.8 billion in 2022, driven by strong demand in key end markets, particularly aerospace and defense.
- The 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.
- The Advanced Alloys & Solutions (AA&S) segment saw a 33% sales increase, reflecting its strategic repositioning and strong performance in aerospace and defense markets.
- The 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.
- ATI continued to reduce its net pension liability, improving its funded position significantly.
- The company's backlog of confirmed orders stood at $2.9 billion at the end of 2022, providing visibility into future revenue.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, ATI Inc kept $0.07.
- 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$67.0M2.4%
- Net income$184.6M6.6%
Where FY2022 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-KFY2022filed February 24, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $2.80B$2.80B | 0.0% |
| Cost of Revenue | $2.47B$2.47B | 0.0% |
| Gross Profit | $333.20M$333.20M | 0.0% |
| R&D Expenses | $16.50M$16.50M | 0.0% |
| SG&A Expenses | $226.90M$226.90M | 0.0% |
| Operating Income | $117.60M$117.60M | 0.0% |
| Interest Expense | $97.60M$97.60M | 0.0% |
| Net Income | $184.60M-$38.20M | +583.2% |
| EPS (Basic) | $1.45$-0.30 | +583.3% |
| EPS (Diluted) | $1.32$-0.30 | +540.0% |
| Shares Outstanding (Basic) | 127.10M127.10M | 0.0% |
| Shares Outstanding (Diluted) | 152.70M127.10M | +20.1% |
05—Questions
Frequently Asked Questions
What are ATI's primary end markets and how did they perform in 2022?
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.
How did ATI's two business segments perform in 2022?
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.
What is ATI's financial position and liquidity outlook?
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.
What are the key risks facing ATI?
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.
06—Continue