10-QPeriod: Q1 FY2023

ATI INC Quarterly Report for Q1 Ended Mar 31, 2023

Filed May 4, 2023For Securities:ATI

Summary

ATI Inc. reported a significant increase in sales for the first quarter of 2023, reaching $1.04 billion, a 25% rise from the prior year's $834.1 million. This growth was primarily driven by a strong recovery in the commercial aerospace sector, which now accounts for 56% of total sales. While sales increased, gross profit margin slightly decreased to 18.6% from 20.3% year-over-year, impacted by the absence of prior year COVID-19 relief benefits and costs associated with restarting titanium operations. Net income attributable to ATI rose to $70.1 million ($0.48 per diluted share) from $30.9 million ($0.23 per diluted share) in the first quarter of 2022. The company also announced an additional $75 million stock repurchase authorization, signaling confidence in its financial position and future prospects.

Financial Highlights

47 data points
Beta

Revenue

$1.01B

19.1% Gross Margin

Net Income

$193.00M

19.1% Net Margin

EPS (Diluted)

$1.30

Total Assets

$4.29B

Cash & Equivalents

$196.20M

Free Cash Flow

-$285.20M

Financial Statements
Beta
Revenue$1.01B
Cost of Revenue$844.90M
Gross Profit$193.20M
SG&A Expenses$80.60M
Operating Income$108.70M
Net Income$193.00M
EPS (Basic)$1.49
EPS (Diluted)$1.30
Shares Outstanding (Basic)128.50M
Shares Outstanding (Diluted)150.10M

Key Highlights

  • 1First quarter 2023 sales surged 25% year-over-year to $1.04 billion, driven by strong recovery in commercial aerospace demand.
  • 2Net income attributable to ATI increased significantly to $70.1 million from $30.9 million in the prior year period.
  • 3Diluted EPS grew to $0.48 from $0.23 year-over-year, reflecting improved profitability.
  • 4Aerospace & Defense segment sales jumped 57%, with commercial aerospace products (jet engines and airframes) showing particularly strong growth.
  • 5The company ended the quarter with $196.2 million in cash and cash equivalents and has approximately $550 million in available liquidity under its ABL facility.
  • 6ATI announced an additional $75 million stock repurchase authorization, indicating confidence in its financial health.
  • 7Managed Working Capital as a percentage of annualized sales increased to 37.6% from 30.1% at the end of 2022, mainly due to timing of sales and increased operating levels.

Frequently Asked Questions

The primary driver for the 25% year-over-year sales increase to $1.04 billion was the strong recovery in demand from the commercial aerospace market, particularly for jet engines and airframes. This segment now represents 56% of ATI's total sales.

Net income attributable to ATI more than doubled to $70.1 million ($0.48 per diluted share) in Q1 2023, compared to $30.9 million ($0.23 per diluted share) in Q1 2022. While gross profit increased in absolute terms, the gross profit margin slightly decreased year-over-year due to the absence of government relief benefits from the prior year and costs associated with restarting titanium operations.

As of March 31, 2023, ATI had $196.2 million in cash and cash equivalents. Additionally, the company has approximately $550 million in available liquidity under its Asset Based Lending (ABL) credit facility, indicating a solid liquidity position to meet its financial obligations.

The company's Board of Directors authorized an additional $75 million for stock repurchases, following the remaining utilization of a previous $150 million authorization. This signals management's confidence in ATI's financial health and its belief that its stock is undervalued, allowing for a return of capital to shareholders.