01—Abstract
Summary
Summary of the 10-Q filed August 6, 2019. Cited figures are marked; the original filing is the authoritative source.
ATI Inc. reported second quarter 2019 results with sales of $1.08 billiona, a slight increase from the prior year's $1.01 billion.
Net income attributable to ATI was $75.1 millionb, 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 billionc, 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.
02—Key points
Key Highlights
- Total sales for Q2 2019 increased by 7.0% to $1,080.4 million compared to $1,009.5 million in Q2 2018.
- Net income attributable to ATI for Q2 2019 was $75.1 million, an increase from $72.8 million in Q2 2018.
- Diluted EPS for Q2 2019 was $0.54, up from $0.52 in Q2 2018.
- The High Performance Materials & Components (HPMC) segment reported a 9% increase in sales year-over-year, driven by strong performance in the aerospace & defense market.
- The 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.
- As 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.
- The backlog of confirmed orders stood at $2.38 billion at June 30, 2019, with approximately 80% expected to be satisfied within 12 months.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2019, ATI Inc kept $0.07.
- Revenue$1.08B100.0%
- Cost of revenue−$902.7M83.6%
- Gross profit$177.7M16.4%
- Operating costs−$67.7M6.3%
- Operating income$110.0M10.2%
- Interest, other & tax−$34.9M3.2%
- Net income$75.1M7.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2019filed August 6, 2019Financial Statements
Q2 FY2019 against Q2 FY2018
| Line item | Q2 FY2019Q2 FY2018 | Change |
|---|---|---|
| Revenue | $1.08B$1.01B | +7.0% |
| Cost of Revenue | $902.70M$835.80M | +8.0% |
| Gross Profit | $177.70M$173.70M | +2.3% |
| SG&A Expenses | $67.70M$62.70M | +8.0% |
| Operating Income | $110.00M$111.00M | −0.9% |
| Net Income | $75.10M$72.80M | +3.2% |
| EPS (Basic) | $0.60$0.58 | +3.4% |
| EPS (Diluted) | $0.54$0.52 | +3.8% |
| Shares Outstanding (Basic) | 126.10M125.70M | +0.3% |
| Shares Outstanding (Diluted) | 146.40M145.80M | +0.4% |
05—Questions
Frequently Asked Questions
What was ATI's revenue performance in the second quarter of 2019?
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.
How did ATI's profitability change in the second quarter of 2019?
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.
What is the company's outlook regarding non-core asset sales and their financial impact?
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.
What is the company's current liquidity position?
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.
06—Continue