10-QPeriod: Q2 FY2019

ATI INC Quarterly Report for Q2 Ended Jun 30, 2019

Filed August 6, 2019For Securities:ATI

Summary

ATI Inc. reported second quarter 2019 results with sales of $1.08 billion, a slight increase from the prior year's $1.01 billion. Net income attributable to ATI was $75.1 million, or $0.54 per diluted share, up from $72.8 million, or $0.52 per diluted share, in the same period last year. The High Performance Materials & Components (HPMC) segment showed strong growth, particularly in aerospace and defense, driven by next-generation jet engine products and commercial airframe demand. The Flat Rolled Products (FRP) segment saw a modest sales increase, supported by project-based demand in oil & gas and energy markets, though it was impacted by lower demand for standard stainless products. For the first six months of 2019, sales reached $2.09 billion, up from $1.99 billion in the prior year. However, net income attributable to ATI decreased to $90.1 million ($0.66 per diluted share) from $130.8 million ($0.94 per diluted share) in the first half of 2018. This decrease was influenced by higher retirement benefit expenses and the absence of a significant gain recognized in the prior year from the deconsolidation of the A&T Stainless joint venture. The company continues its strategic focus on divesting non-core assets, having completed the sale of two forging facilities and a portion of its oil and gas rights during the quarter, with further divestitures planned for the third quarter.

Financial Highlights

46 data points
Beta

Revenue

$1.08B

16.4% Gross Margin

Net Income

$75.10M

7.0% Net Margin

EPS (Diluted)

$0.54

Total Assets

$5.55B

Cash & Equivalents

$281.20M

Free Cash Flow

$25.60M

Financial Statements
Beta
Revenue$1.08B
Cost of Revenue$902.70M
Gross Profit$177.70M
SG&A Expenses$67.70M
Operating Income$110.00M
Net Income$75.10M
EPS (Basic)$0.60
EPS (Diluted)$0.54
Shares Outstanding (Basic)126.10M
Shares Outstanding (Diluted)146.40M

Key Highlights

  • 1Total sales for Q2 2019 increased by 7.0% to $1,080.4 million compared to $1,009.5 million in Q2 2018.
  • 2Net income attributable to ATI for Q2 2019 was $75.1 million, an increase from $72.8 million in Q2 2018.
  • 3Diluted EPS for Q2 2019 was $0.54, up from $0.52 in Q2 2018.
  • 4The High Performance Materials & Components (HPMC) segment reported a 9% increase in sales year-over-year, driven by strong performance in the aerospace & defense market.
  • 5The company completed the sale of two non-core forging facilities and a portion of its oil and gas rights during the quarter, generating $63 million in cash.
  • 6As of June 30, 2019, the company had $281.2 million in cash and cash equivalents, with approximately $360 million in available liquidity under its ABL facility.
  • 7The backlog of confirmed orders stood at $2.38 billion at June 30, 2019, with approximately 80% expected to be satisfied within 12 months.

Frequently Asked Questions

ATI's total sales for the second quarter of 2019 were $1,080.4 million, an increase of 7.0% compared to $1,009.5 million in the second quarter of 2018. The High Performance Materials & Components (HPMC) segment saw a 9% sales increase, primarily driven by the aerospace & defense market, while the Flat Rolled Products (FRP) segment experienced a 5% sales increase.

Net income attributable to ATI increased to $75.1 million in the second quarter of 2019, up from $72.8 million in the same period of 2018. Diluted earnings per share also saw a slight improvement, rising to $0.54 from $0.52. The company's gross profit margin was 16.4% in Q2 2019.

ATI continues to divest non-core assets. During the second quarter of 2019, the company completed the sale of two forging facilities and a portion of its oil and gas rights, generating $63 million in cash. The company expects to recognize pre-tax gains on these transactions and anticipates further cash proceeds from upcoming divestitures, which are intended to be used for strategic priorities such as pension obligations and debt reduction.

As of June 30, 2019, ATI reported $281.2 million in cash and cash equivalents. Additionally, the company had approximately $360 million in available liquidity under its Asset Based Lending (ABL) Credit Facility. This financial position is expected to be sufficient to meet liquidity needs, including pension contributions.