ATI(US:ATI)2024-04-30 17:52Financial Performance - First quarter 2024 sales were $1.04 billion, flat compared to $1.04 billion in the first quarter of 2023, with aerospace & defense sales increasing to 59% of total sales from 56%[109] - Gross profit for the first quarter of 2024 was $197.4 million, or 18.9% of sales, up from $193.2 million, or 18.6% of sales in the first quarter of 2023[109] - Adjusted EBITDA for the first quarter 2024 was $151.0 million, or 14.5% of sales, compared to $147.1 million, or 14.2% of sales in the prior year[112] - Segment EBITDA for the first quarter 2024 was $169.4 million, or 16.2% of sales, compared to $165.3 million, or 15.9% of sales for the first quarter of 2023[118] - Net income attributable to ATI was $66.1 million, or $0.46 per share, down from $84.5 million, or $0.58 per share in the first quarter of 2023[111] - The company reported a net income of $68.4 million for the quarter ended March 31, 2024, compared to $86.6 million for the same period in 2023[144] Sales and Market Performance - International sales increased to $471 million, or 45% of total sales, from $450 million, or 43% of total sales in the first quarter of 2023[114] - Sales in the aerospace & defense markets increased 7% to $616 million in the first quarter 2024, compared to $576 million in the first quarter 2023[113] - The medical market sales more than doubled compared to the prior year period, contributing to overall growth in the HPMC segment[113] - First quarter 2024 sales for the High Performance Materials & Components Segment were $529.9 million, a 13% increase compared to the first quarter 2023, driven by strong demand in aerospace & defense markets[124] - Advanced Alloys & Solutions Segment sales decreased to $513.0 million, a 10% decline compared to the first quarter of 2023, primarily due to prolonged recovery in general industrial end markets[128] Expenses and Costs - Interest expense increased to $26.6 million in the first quarter of 2024 from $19.9 million in the first quarter of 2023 due to the issuance of $425 million Senior Notes[110] - Corporate expenses for the first quarter of 2024 were $17.1 million, slightly up from $16.9 million in the first quarter 2023[132] - Cash used in operations was $98.8 million in Q1 2024, a significant decrease from $285.2 million in Q1 2023, reflecting improved management of working capital[145] - Cash used in investing activities was $63.8 million in Q1 2024, primarily for capital expenditures related to AA&S transformation projects[146] - Interest expense increased to $26.6 million in Q1 2024 from $19.9 million in Q1 2023, indicating higher borrowing costs[144] Working Capital and Liquidity - Managed Working Capital increased to 35.9% of annualized sales as of March 31, 2024, compared to 31.1% at December 31, 2023[121] - Managed working capital increased to $1,498.7 million as of March 31, 2024, compared to $1,321.9 million as of December 31, 2023, representing 35.9% of annualized sales[123] - The company expects to meet its liquidity needs through internally generated funds and available borrowings under the ABL facility, with no significant contributions required to the pension plan in 2024[140] - As of March 31, 2024, the company had $394 million in cash and cash equivalents, with additional liquidity of approximately $557 million under the ABL facility[138] Debt and Financial Ratios - The total debt to Adjusted EBITDA ratio was 3.43 as of March 31, 2024, slightly improved from 3.47 at year-end 2023[144] - The net debt to Adjusted EBITDA ratio increased to 2.82 in Q1 2024 from 2.29 at year-end 2023, primarily due to a decreased cash balance[144] Investments and Future Outlook - The company continues to invest in hiring new employees and expanding titanium melt capacity to meet increased demand in the aerospace & defense markets[127] - The company expects margin expansion within the Advanced Alloys & Solutions Segment through 2024 due to improved sales mix and operating performance[131] - The company utilized $150 million to repurchase 3.4 million shares of its common stock in the quarter ended March 31, 2024, fully utilizing the authorized amount under the Share Repurchase Program[139] Hedging and Commodity Costs - The company uses approximately 6 to 8 million MMBtu's of natural gas annually, with a hypothetical $1.00 per MMBtu increase resulting in increased annual energy costs of approximately $6 to $8 million[162] - As of March 31, 2024, the net mark-to-market valuation of outstanding natural gas hedges was an unrealized pre-tax loss of $6.2 million[163] - The company used approximately 70 million pounds of nickel in 2023, with a hypothetical $1.00 per pound change resulting in increased costs of approximately $70 million[164] - As of March 31, 2024, the net mark-to-market valuation of outstanding raw material hedges was an unrealized pre-tax loss of $4.5 million[165] - Approximately 70% of the company's forecasted domestic requirements for natural gas for the remainder of 2024 are hedged[163] - The company has entered into financial hedging arrangements for an aggregate notional amount of approximately 2 million pounds of nickel, which is less than 5% of a single year's estimated nickel raw material purchase requirements[165] - The company monitors third-party financial institutions daily to minimize exposure to any one entity in its derivative financial instruments[158] - The company has no material outstanding foreign currency forward contracts as of March 31, 2024[166] - The company anticipates that increases in energy costs may adversely affect profitability due to heightened cost sensitivity among suppliers and customers[162]