Allegheny (ATI)

Scott Minder Vice President of Investor Relations
Robert Wetherbee President and Chief Executive Officer
Don Newman Chief Financial Officer
Daniel Flick Cowen and Company, LLC
Philip Gibbs KeyBanc Capital Markets
Josh Sullivan The Benchmark Company, LLC
Paretosh Misra Berenberg Bank
Matthew Fields Bank of America Merrill Lynch
Call transcript
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Good morning and welcome to the Allegheny Technologies First Quarter 2020 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Scott Minder. ahead. go Please

Scott Minder

Good first Chad. being welcome the to on Thank XXXX morning conference Technologies ATImetals.com. quarter website is call. Allegheny our you, at and This broadcast call

Wetherbee, in President Don Participating Senior and President Financial Vice today call are Newman, and Executive Officer; the Chief and Officer. Chief Bob

call the you connected see should you’ve If via slides to this Internet, on screen. your

you are available website. slides who on in, dialed of those For our

remarks, we will open for line prepared the questions. our After

questions. session, Q&A During please to X limit the yourself

attempt to Please within that subjects get will earnings the shown this allotted caveats all are release queue We in the the on and slide. to everyone statements noted assumptions call note to in and as time. various forward-looking

Now, I’d to Bob. the like turn call over to

Robert Wetherbee

and discuss conditions, current you today unprecedented These add. XXXX can and there morning us challenging all is we’re and results health. for thank our the has quarter I you all. joining to much market hope I outlook. today more are a not written times of lot finding for Thanks, been Scott. good first in Good After

we’ve So change a short a time. seen period of very dramatic in

economy The the We to and healthy, we us liquidity, ahead be ample our that and As I the – crisis keep the to and and to growth. solid ensure see safe of crisis and and employees markets. enhance global foundation challenge enhance want is results today, are taking strategic necessary the future our actions is yes, clear profitability not the in ATI. to share outlook our inside

They necessary emerge experience actions take of that, our in to stronger from ability from do our the what’s team do to leadership My confident in are and gain relentless crisis. people. innovative all I this because the we we are and to

weeks before. with organization thank heartfelt across tested The of people ATI. today to last to global as want you never the have start XX us, I a our

product safe their the course; missed beat; based flowing, teams, keeping essential impressive. materials a yeah, operational our deemed all supplied, First, stress people have and and operations on to our of commitment absolutely concern, not total

was they team appropriate found global for Asian experience all. And to methods return work. share experience us COVID-XX the challenge, Our benefit the their work their first safely to to teammates with of the the and continue to

Our done. team almost digital employees, XX% quickly highly acted remote for a provide workforce than highly close global in technology our secure, X,XXX Job to well less of week. access to reliable,

And things extraordinary it’s leaders Leadership Our title, across extraordinary and organization challenging creator times, continue our stepped is leaders of doing a are in role. time. in an step a these job the not up. to up

materials. to of operating our essential have right right thank things, you the our proud the and our new themselves customers world adapted new in reality their who a coworkers of our way, doing people, to count right and norms. to time, operators on safe, staff one every as who keep supply change they at So the of frenetic them and I’m the

all ATI team those and you. supporting thank So to them, the

to the related company. of I’m the we’ll of team. emerge in Creating quality effectiveness and our directly stronger shareholder that a leadership near-term the deliver value as our be will and confident

through our elements taken has maintain the the the slide, key ample quickly optimizing of to preserve over customers and our are next evolved, adjusted to reality and last to structure the strong of action change priorities. We’ve liquidity. moving demand weeks, supporting our decisively So cost that X few the continued situation execution. expectations and match as we’ve cash

we’re And of won along support be the the important doing It’s optimize our While comes, all to understand growth our leveraging driving recovery in gains cash for time recently share we’ll and short structure. what the the customers our for we’ll be term, accelerate efficiency recovery. when cost to market the way, and us ready. to

done going Dan his perspectives discuss liquidity turn will the who on position, I’m the our After over that, full-year to it outlook. to I’ve business, and

move done reduce already or to So let’s what have costs. doing to we’re

my XX% leadership May, of vast reduction our staff reduced majority Board, I team well. base least a and The our at next salaries base for of months. taking have are direct As as XX ATI the by salary

be the average sliding a using We’re XX%. scale, near but reduction will

in overhead last Over the needs based on reduce permanently layoff. through through More our indefinite business, adjusting announced furlough, staffing idlings, the or months, we’re through some structure. actions each specific to some of some levels X actively our recently, temporary rolling we’ve operations

on we’re deployed XXX(k) our have to we’ve Our corporate million $XXX focus to adjusting $XXX are between functions. And deferring employees. for incremental March, reductions participating Since and capture identified benefits and truly essential in cost million XXXX. in teams reducing and/or early

ensuring we’re addition, All and quickly reducing actions, maintaining production preserving our cash employees, for preserving on liquidity. capital maintaining these our jobs In are focused significantly balance expenditures we’re thoughtfully and and curtailing capabilities inventories. and our for sheet. strong hands customers, Through deployed, ample

recovery be will arises. the when ready We and opportunity growth

X. Let’s turn to Slide

this as material business to and create science increased As leader enhance segments opportunities to a in the pursuit year, of we shareholder profitable value. further realigned all sustainable in we our earlier growth, accelerate to announced our long-term position

primarily new and pull-through changing segment materials the business Carolinas, components made flow The Irvine, between business, or of forging synchronized brings customer focus material and X Milwaukee, streamlined and is HPMC specialty X of material growth the acceleration structure up advanced response and located business our things: California. The to opportunities; high-performance located increased in largely Wisconsin, signals; materials in units. our demand HPMC on

of covered it program, renewed as talked to life ranging business from we’ve to agreements, under months. segment over executing and largely in recent XXXX margin expanded late with on starting over within expansion, you additional the the segment’s profitably most long-term engine years. gains and have years last calls about XX is which, been share The several and focused of X is successive production next The continuing

our specialty alloys and and with newly and Advanced HPMC aligned the previously into products lines, We’re plate AA&S part & The created titanium components the to with both business combines flat-rolled customers, existing segment of prior closely in new the product based Oregon, Alloys the segment Solutions capabilities. or products segment. leveraging aerospace capacity expand

AA&S for to cost strategic creates and over up produce products materials combines and effectively, opens all additional of to capacity and opportunities advanced products. asset produce markets. alloy better broad as and more ATI’s Materials strip world-class hafnium, titanium, base more ATI’s efficiently The destined largely tantalum, time zirconium, flat ATI’s realignment such all by sheet niobium, high-value and leveraging capabilities.

new standard opportunities are to continue we products more currently, captured. added And deemphasize value value as stainless

combined realignment, XXXX of quarter I in Once the earlier, as synergies. segment the of and primarily mentioned back office new structure announced and combination will making we optimal Together, the one restructuring quarter team of actions, programs X. happen generate on the job profitability, part and designed the $XX January and the it one fully to of implemented, great first deliver capture to did about in of annual As is XXXX, million recently X benefit. the growth fourth a

let’s in core markets. about our So what seeing talk we’re

each each strategic their be leverage has material on COVID-XX, and applications update predicated our due understood macroeconomic think as global our strength going different helpful today’s to I impact universally Although to end on and to that and to markets science those a of be weak in drivers. from respective a demand provide outlook it’s the backdrop quick diversified

While today to there this the are it’s on negatives several easy items to focus in positive environment, note.

aircraft, and ATI’s growing. military land-based Navy, titanium missile fixed-wing both vehicles systems. is We help as manufactured nuclear rotorcraft, for parts power materials for defense strong, the well as for diversified business and that produce materials and armor

We produced saw naval our systems. growth increased quarter and applications materials by for various first and demand missile year-over-year driven for components,

XXXX have defense a strong stability market sales We in backlog ATI. and expect throughout continued our across

strip revenue in late and China, resumed business accomplishment known and as rolled first the precision gone Asia. that an in quite operations growth STAL, given have and the Our quarter, changes year-over-year operating China in produce economic February on in profit

electronics of Asia and second in ramp Looking devices sales. customers begin relatively the televisions quarter in year second as across be demand soft year-end expect consumer advanced holiday the ahead, the producing half that to for up the we

the demand be from stem A inventory actions. significant globally. of expected the In and elective procedures is diagnostic decreases quarter stability management largely due the quarter levels market, surgeries. diminished demand return weak surgeries These more first improve in to elective medical that were market recovery. will first from resurgence system for Medical to to healthcare important OEM with to global

customers will engine chain am going major and I better I say them ever. connected week. repeat their supply aerospace. with reported airframe to Moving partners last what to than and our not we’re

growing to We’re inventory using reduce adjust the and reality demand. of connection potential upstream our to the moving slow for our operations that match to align quickly

end towards first evolving partial large line in half with to generally quarter as second took and in March for XXXX. of first We a from and engine volumes management cash deterioration forging quarter’s the market in the jet actions results benefitted tail began the to OEM see a February. In we increased were advanced expectations weakness, January who the aerospace offset of

getting aerospace to see to with in in to XXXX, XXXX, throughout guidance. XXXX start back expect and consistent continue and other narrow-body Looking ahead, to we shipments XXXX, we expect levels to late our significantly steadily recovery XXXX. early commercial in decline closer XXXX and Stabilizing

OEM and share mill deliveries levels gains with time, January beginning executing XXXX late pricing market major multiyear focused This to are new share ATI’s stretch include a meaningful At in the with aerospace aerospace our business support products accretive contract across portfolio increases on same XXXX. we recent contractual on new and and customer. titanium

high gas, As other quarter and resistant to was for oil pipeline increased for processing, projects, offshore and nickel to electrical submarkets, requiring demand due corrosive sales value highly which market, plate prior materials. chemical first generation the in year. largely Growth increased the destined hydrocarbon and versus energy combines products energy various

lack and ahead exploration predicted are remain activity and low suppressing remain ongoing to production prices overall issues, expected oversupply of due Energy to demand oil consumer due of to is to activities. soft looking

pipeline second XXXX. nickel awarded few majority alloy of high On we the side, projects a value half XXXX the of be the government-backed falling materials to – large with requiring expect a into revenues positive large in

are there for stability control civilian smaller and coal-fired of are refueling our several seeing pollution portions power relative for demand that markets Additionally, nuclear materials plants. gas man-based energy turbines, including

quarter balance results open With call for final line I’ll our insights to over that, thoughts the your and offer outlook our his back the be the questions. to business, first Don year. before of on the for I’ll share our to we turn

Don Newman

Thanks, right. All Bob.

QX dive results, laid I priorities. into out Before our Bob

aligning to and of with despite priority. center terms protecting employees, market headwinds addition in In our position maintaining financial end our a healthy and is customers front

with from even to actions position. Fortunately, taking a are we’re and sheet, and ample starting protect balance strong position that strong liquidity we and a improve

results, quarter first to X, significant disruptions. With Slide despite that see turning ATI solid can that, global you demand generated

First anticipated was the quarter gains AA&S XXXX prior earnings despite reserves segment. XXXX revenues were with driven income This in late in the businesses. a increased share rate, excluding Net tax to significant X% percentages divested than and improvement book up year-over-year, by XXXX, income higher tax per year, by in line release both asset largely XXXX. valuation in of due largely to XX% from in

On metals adjusted specialty our due the declined EPS began primarily the pandemic for as demand a year-over-year revenues XXXX the to segment to production COVID of build. stoppages quarter late XXX basis, and MAX in impact related slowdowns

inventory aggregate by delayed forgings XXXX to partially with forgings, offset units due in and lower caused modestly decreased of large demand volumes conventional management hot-die by recovery isothermal OEM a the action. increased Forgings

despite increased by to powder decline, product a associated increased mix HPMC profits largely pull-through. operating forgings generated and material isothermal revenue favorable due

Additionally, the business quarter. moved of the to half second costs in segment the were lower expenses as reduce

of products, HRPF markets due increased year-over-year rolled across oil the products principally increased value business led U.S. tapered and March Standard product shelter-in-place demand units, but higher to high conversion response revenues half in the gas grew of the orders all and issued to off energy projects. in segment nickel to by AA&S completion quarter, first the sales volumes for stainless around specialty the

were value high increased volumes, substantially year while in period, increased STAL, versus a energy higher conversion growth alloy applications, profits tailwind a primarily standard prior year-over-year COVID-XX in weak impact. negative versus Sales operating despite increased advanced the quarter including and benefits. absorption of provided cost XXXX. prices materials and defense for relatively HRPF Metal AA&S stainless

and of demand March April. and more most a became in pronounced operations weakness ran January in rate While at normalized more in February, accelerated the

have and environment. with to We a to are customers this work collaboratively taken demand our view structure build dynamic cost to current recognizing realistic our forecast, with near-term that align actions significant these change of our in likely

were located facilities facilities and well for into operation. smaller as to as weeks possible consolidated in In In April, HPMC, we each materials we orders several our levels. month plants demand our address Pennsylvania idled specialty powder X in X the in X of the March, our idled in Wisconsin, Carolinas, Bakers to Powder of forging reduced

side, specialty rolled number the Oregon weeklong a better in continue reduce to April businesses, in AA&S serving our and markets. and stainless taken demand, outages be well relatively our the On products In medical times. we’ve match with to and May, costs defense, facilities our utilized particularly energy of plant network levels early inventory to and for across align short lead products standard

idling of the ongoing Pennsylvania Section tariffs. Midland, XXX A&T due facility of this Additionally, JVs summer, impact negative we’ve announced Stainless to the indefinite the

continue We’ve to necessary. the and quickly in adapt demand, pivoted as to rapid we’ll changes

current our we’re view demand. our staying capacity and of with sync production First, managing tightly in

a efficient swift change demand and effort, to required response. demand. disciplined not and reducing Second, is are aligned ensure the but costs structures rapid This a we’re new cost to in

identified cost XXXX longer in term. have $XXX we we than million out to of in We can reductions business amount improve are takeouts believe short-term. the good the executing more And and of keep those the of a profitability

we worked down levels. part capital as our of improving Finally, in levels working managed XXXX, inventory

those and demand. inventory capabilities levels, produce to XXXX of inventory in that don’t liquidity using we additional significantly reduce We’re generate ahead ensure

not liquidity, but demand, tough reduce offset, help completely shareholders. for are completely will value our and preserve necessary maintain the in these loss While costs they not actions offset will

balance the $XXX revolving Bolstered taken to XXXX capital easily debt today with several flows ability years Slide asset capacity the in to under our to to our actions cash balance credit by over access strengthen nearly of sheet, for balance the cash cash We’ve turn as liquidity. million committed our markets. on a Those borrowing of balances, well our the current and evident Let’s we past in our million are our numerous look part due to as sheet. $XXX sales, quarter X at sheet, efforts and access ended facility. our portion the ABL our structure,

$XXX in repaid million full. April, we the In

because for were While shore now We uncertainty market diminished. these March market the the prior U.S. scale and clearly Fed’s markets. to thankful we’re debt capital credit acted funds we actions credit that up business, not disruptions, existed to has saw required potential run large significant to this uncertainty market the

first cash seasonal operations our part of expectations. used line of As quarter, with we in in that’s $XXX normal our million our patterns, cash for the

robust curtail expect we the in cash rate, second contrast, operations the quarter, for by downturn to began associated below Capital of the as $XX to reduced spending in In receivable second the with generate anticipated the non-essential driven well from actions. half first largely and totaled million, the inventories and accounts management run we quarter. activity quarter projects

previously and million million in a and due capturing X% maturities. rates structure, capital from debt ATI no December We interest were in Turning hand near-term to offering proceeds new the use XXXX, that credit debt our upgrade. below rating XXXX, X-year our an $XXX has the and $XXX redeem on notes cash debt unsecured to on early

large ATI and taken our actions maintains ample facility. part options, liquidity due expand extend in ABL in XXXX to to

First, we in a to term option delayed $XXX are have ABL the funds loan drawn, the new the with million these If end late due on of draw concurrently June by XXXX. XXXX. draw

provides facility low we flexible relationship and committed active access supportive of to Group. ABL revolver. with a members cost, minimal capital covenants, with Bank a access have $XXX undrawn the our ABL we and million Additionally, to maintain

longer expected demand by credit We’re in downturn factors. liquidity, with have that and a than cash accelerate, protracted if ensure We’ll prudent linger be the ample world variety to we deterioration impacted or current markets living in market should materialize. a continue of our dynamic

best, prepare the expect for will We the but worst.

a been turn altered. in to We XXXX depth those deterioration and our full few Now with a under let’s the predict and decline, Slide the just and year and to global QX surrounding in cash of XXXX expectations. of end few and earnings In uncertainty recovery confidence assumptions began assumptions. key of months, pace X markets, a free has rapid talk ability economic significantly the about key flows key subsequent of each activity the with

EPS we’re result, our withdrawing year a guidance. As XXXX full

important update and we believe we what that we on know predict. However, accurately it’s today, what feel you to we can

trends In terms shared won’t and the Bob related key of I aerospace repeat our to markets. that overall demand, earlier end

COVID-XX. The initially significant no provided guidance to between assumptions other per from pound, $X.XX COVID-XX $X our key or where and and around XXXX nickel prices impact

XXXX, roughly gap year-to-date, relatively to challenges presented by traded uncertainty headwind the and is level of discussed small COVID-XX. nickel while our to XXXX financial pound, impact between provides have generated well $X.XX the $X prices assumptions, and a compared per this

We’re taking the reduce to incremental This this million savings the actions are major impact quarter The March. in realignment decisive the company we to fourth XXXX economic actions million to expected is save negative roughly restructuring results with $XXX quick during these announced call outlined $XXX changes. in our XXXX. and addition segment an efforts announced and from cost to in

We’ll and continue million budget, our million to another provided capital the to largely our assets. We they $XXX and with ensure maintenance to and a new monitor began XXXX reprioritize driven are $XXX that work adequate of customers with investment our reassess for capital our expectations to allocations. plans demand by opportunity world-class expect. markets growth demand projects The that

in customers our several programs that and Well, for reduce to us XXXX, production to future capital requires expected some with our coupled continue over to the MAX invest gains, years, on business, XXX the growth it’s AXXX and new next levels share return will clear the recent growth.

timing nonessential jeopardizing – spending where be for required scrutinized maintenance CapEx new teams could on have without project that and reduced our possible reliability. and possible significantly projects assets, plans where However, closely eliminated

$XXX spend now free our $XXX spending of projects XX% inventory our prior million and expect versus we many that between levels. million within and control, guidance. flow in to to result, drive a a roughly cash end-market XXXX, the variables equating Despite largely on uncertainty, capital capital are such as reduction As

million flow, be cash net assuming full contributions to of free generating a the free between range and $XXX $XXX Previously, million year pension $XXX which we in capital, estimated between capital million excludes managed favorable cash working for XXXX. lower XXXX. release plan U.S. expenditure anticipate provided, using of $XXX Today, and and flow we income million

around teams challenge, to amount flow the the the and ATI outlook a operating understand of for The a year. attack cash short drivers have a job great in time done maintain positive

move I pension Before on, in pension is expectations. contribution regulations. expected worth line with million. We’ll the revised $XXX it’s part XXXX contributions until U.S. government that prior ATI’s likely defer midyear noting as of That’s yearend to plan be

During the we believe expected customer-provided earnings per orders that visibility give share. have on estimate we based detailed second of sufficient near-term quarter, a our to our more quarterly

first the April, be and will a in of full quarter significant sequential quarter earnings May for And by June, and our revenue impacted and based expect we second The on decline. experience forecast our balance COVID-XX. the

on will actions quarter, the make not be in our will cost-cutting we run While limiting margins our decremental progress at rate. full

decremental our savings We of expect based XXXX, continue timeline to cost around to actions. second implementation our in the reduce half margins upon

between and expect demand the $X.XX an assumptions, and tax per quarters. Given revised similar rate first current quarter, to our we a the using view, second $X.XX loss share in earnings cost of

to over quarter. cash to the Bob to intend some in Importantly, now flow add closing will free the comments. call be turn we I back positive

Robert Wetherbee

focused weeks. you little Thanks, everyone just but call to it’s that team highly a your much just Don. on sure last to have busy, been appreciated. clear, of I’m over And couple it’s bit the the be clear and

an done is environment that our choose we’re understands While team in, needs operating as North be these we We’ll navigate that economic times. speed didn’t we keep leadership have and required. priorities we to leadership challenging Star the these the experienced what as current

and earlier, and with team. success our said the First foremost, as ends begins I ATI

and we tools safely long with team far, health regard done employees they a collectively remain disruptions so keep to alert safe our significant We every as is required. for from work member COVID-XX great on that in need production have ensure during priority job no and to public the infections. have this crisis Our that as

as call operational challenge in supply strive choice Leveraging appreciate market provided a and the shares. trust and when a a technologies be our us role for process will first those has from earn serve our of Each the team, of with when can they agreements that a by ATI. sure customers with their advanced them take awarding we excellence, our multiyear to pride supplier that customer corrosion customers. high-temperature of expect increased We we high degree foundation or

We will when comes. be recovery-ready the time

demand economic described we the The In customers, the for approximately align environment savings support in and incremental addition restructuring to at midpoint built the of totaling reality are cost markets the taking action structure our and $XXX cost-outs to call actions. this acknowledge of our current on range, people million earlier our upon we with serve. our future XXXX of

lean, necessary ATI. to this emerge our efforts That’s for and focused a that These period commitment, are ensure growth. we from prepared stronger

preserving, Finally, about our when do and continue cash remain We’ll improving flows. vigilant this balance to possible, we we’ll will sheet. free generate and

maintain recent stewards and our the built. us in to years strategy assets relentless million will through recover. actions innovative strength have and work $XXX In Over be nearly shareholder our advanced people. our We available we’ve believe remain we creating of closing, prudent process and end-markets that time, of science, cash and value combination priorities clear. technologies, these the with liquidity, and Our right will provide I focused on long-term the are materials of

to back you. Scott,

Scott Minder

Thanks, Bob. the ready question. prepared first That Operator, for our we’re concludes remarks.


Thank you.

Please Cowen. begin come ahead. now question-and-answer Gautam today Khanna session. We first [Operator will And Instructions] will question go from the with the

Daniel Flick

for question. this on for Thanks Yeah, hey, the is Dan Gautam. guys,

were were able XX%, is to say So by curious – in ATI OE how environment? profitable that remain rates like drop we to

Robert Wetherbee

market? morning. Are Are Yeah, talking talking… about the good aerospace specifically you you

Daniel Flick

Yeah, sorry, and yeah, sorry. I’m referring Airbus. Boeing to,

Robert Wetherbee

right. Yeah,

response. team of look our you markets, here if give you in at – it’s a think tag I the So terms we’ll

at of So products. you our perspective, mix think I look have aerospace an to from the yeah,

to yes, have probably So the well don’t on know going if engine engine as airframe little but time, business, military based bit the and jet over the guys. our we’re commercial I long, with good XX%, as see, balance we

On expanded business positions we’re it’s defense, but we’ve the I actually is major of supplying have think business every growing, the and a medical electronics. look our been our airframe and across side, there, stable for mill products breadth relatively guy, relatively so business. our share of almost the stable to aerostructure But stability ATI see you

certainly, we’ve cost going manage And that to to our is go and our rightsized energy up and structure demand. think business down. But I optimizing

our long over Don, to So be expectation want profitable you to any is the term. add to that? color

Don Newman

No, were we’re the in we’re million got to million time, of emphasize, up focus announcing, Those customers, within cost-takeouts with that’s call pretty keep end-markets. And have to them. the of incremental $XXX to I we actions I this profitability. a relationships great of it diversification period that let’s that have about we think $XXX that $XXX XX pretty our maintain with simple, in $XXX are call the would midpoint million, cost We’ve short synched reflective million, do accomplished it days.

a our And demand. cost We structures how understands to so, the we have understand to meet leverage business. that team

the capital see and inventory levels release. same You’ll around commentary working

a think to we’re think I to quickly that it. business, position in move react our good as in I So to changes we of see pockets

Robert Wetherbee

fit aerospace describe be to demand. what phase, particular, XXXX the trough. In – think triage probably during and would of period trough reality time, QX that think, to the piece recovery would starts looks aerospace initial I I Then in want new like in in expect add the that before as the emerge that business, probably QX people cash we we’re That’s such that of and Yeah, to where I’d certainly one Dan, the a reacting the be aerospace into to quickly market. on to we XXXX. profitable in more positive

in but got think Don that time a run I fully QX, year the window and be so as at of by not said, going the here rate be end through, we’ve we we’ll QX QX should in Right, there. of

Don Newman

I’ll Yeah, guess, more thing I one add.

to it I keep think going we’re rolling.

look certain our as has the beneficial our the the in spot, also been end-markets and for position you has we though where customers, that quite team even So certain get drop, business, a we’re around read call. – we’re at businesses seeing end-markets because their in put fortunate us headlines we

quite have what with fortunate customers. is increasing And means that in share that been we

a It you future when doesn’t at decline mean rates, base, for that’s on percent. incremental that share decline. build may dropping have up number share a we’re the experience incremental will certain that or that around we headline part So well in customer a turning be necessarily picked to of same going offset going period because to

putting I – it’s pretty think spot. a is So our diversified in footprint us good

Daniel Flick

XXXX appreciate and the That’s may last? really that long destocking that in guys. I on then, any idea level Thanks, of aero Thanks. follow-up, helpful. really how detail. expected And just a quick do you have

Robert Wetherbee

so people we from foremost, back as Yeah, – forth specific expect do customer adjust. I produce some and perspective, and think ups and to We downs our orders. first

has some should it view of that been inventory be clear So But the communicated think us. pipeline. information I of resolved much we by don’t really And then. see of XXXX. we’ll have in a that I majority think to But what’s pretty in that

Don Newman

might Yeah. And around we customers. are those major inventory though And I open dialogue of customers would say, their with us even most contact send a there’s in really is. their close underlying pipeline demand it. cases multiple they times what their is that some that have week their of in and And don’t that a in real our demand details, impacting what happens, isn’t conversation part

those talking with addressing what the in large but customers relationships do close you’re some especially very have is So helpful we visibility, very, about.

Robert Wetherbee

Yeah, thanks, Dan.

the in announcements were There didn’t and big And fourth schedules around going side March tell take You immediately. adjust inventory late of aerospace immediately. I that particular. to our quarter, started inventories. the we to on some question work out we the schedule our wait melt December almost adjusted melt then, our path in the And down our the changes you conversation until business. or would in

not concert relatively And here something few our to so, airframe rush actually orderly, in been major it’s planned the weeks. customers. and was been in so It’s engine speak last and that both a and land with

think and out. bit to little ahead a of terms we’re is a of little I inventory bit So how going proactivity the in flow

Don Newman

happening that on we at demand the the is, One thing minimums. with Many add a that have look of business, standpoint, on course, those from long-term contracts, and would side what’s have as key of you of customers. HPMC especially contracts I

a demand doesn’t of It blow you And so, to us a cushion declines of don’t safety a a any able of certainly demand. stretch But net it dropping. fully will. we’re terms that. bit if the insulate us floor, imagination or their the gives to We bit mean on from by imply in downside in

Daniel Flick

guys. Thanks,


Thank you.

next will come Markets. from Capital ahead. question with go Gibbs Our KeyBanc Please Phil

Philip Gibbs

Just about not did reductions at million curious QX. outlining, the you’re these hit really that that in $XXX presumably of cost midpoint, much

So the between should it million $XXX X $XXX are view true we year over million made last cost $XXX So, other in the of million? your words, and balance as annualized in the quarters? reductions

Don Newman


good this Don. So, morning. take and Phil, I’ll is it

Philip Gibbs

morning. Good

Don Newman

are ability. million pie way to QX you’re results, $XXX capture Yeah, think good sky is I right. and incremental the in already savings. started in we’re really – million These cost about QX. the The $XXX so the is would not not actually these $X in quote reductions. what that feeling The about I way will say by is, to We’ve

so savings. we savings benefit able We a have to capture on really good those feel second early that throughout And hit about the run-rate see and the expect those QX. quarter. the to – largely ramping so, will QX steady be run in rate should And ability we the again, and QX

Philip Gibbs

carries that, picture back that that revenues in any structural structural these a in call for run just just let’s rate much costs call XXXX, Would XXXX XQ volume simplicity range million of nature? XXXX. levels? a plus over at these those carries it, paint is of how over and that or XQ And of to then between, majority Let’s stay – it, say as come $XXX

Don Newman

That’s question. a great

couple of to – answer you answer So a give here. different an I’ll elements

million is, the a more with are say, disciplined couple One out our It’s orderly. $XXX would on plans. the as happened allow These around of initial the But million, not were do the level costs it. structures of The imagine, is reality work So we’re high cost structural we detailed first, to really points some bullet effort. outcome it that pleased will It’s a forward. things. $XXX quick. keep you identified when takeouts these But when to think going we supporting you of cost whiteboard. we I us that really very can really about need with changes

opportunity real there’s here. I And think

up you placeholder in now think we’d of is cost half of the in for out I $XXX like probably to the the think structures a long-term, keep million of terms right not structural but changes. than as really that, means doing It’s need do might some say we we be to that a more team to that spend so time not able that. that to

at that crossing there’s then move you the XXXX date XXXX you rather, line. over in $XXX look no million, magic as as And to or

of bonuses then elements as to and but potential there’s have get couple a would be you normal XXXX, XXXX, the be a $XXX a go will in paid which Those bonuses there reset, of real bonuses be cost to bonus element levels. that presumably means so reductions like And million. won’t modest targets back the would we

not that hand, we’re that list the On to work. have we continuing the of a $XXX other things are in million

a going I more is It’s great going this great it’s is – so there initial to come. think direction. period, a And an XX-day for effort over outcome and a work about

Robert Wetherbee

Don. right, that’s think I

leaders days point, XX fixed the the table that and into think of between I this say it, us. difference is is variable cost my on for at time. only couple Phil, would A everything

in to days continue by we do facing that first emphasize emphasize And can minimize But are me margins XX that. let or our our the the so and we we’re costs. decremental we is reducing know where that focus we primary to

Philip Gibbs

one one… And last

Robert Wetherbee


Philip Gibbs

one then last one, if And could. I

capital to million, those it goal trying to pension X the what’s something balance up? also year? net correctly then Thanks. contributions, the the move read just Don, things year those million the of making anticipate out? for And of legally – you square million, the side just of and this pension, I the like working working $XXX then despite capital. secondarily, you Is ability On that wanted net just $XXX $XXX to

Don Newman


XX, really federal January just it making So relief can in of X, pension, December make okay. allows of instead on the the you payments terms on you the

– it So mean, because we I intra-year, there’s it’s relief. have not not relief don’t like a huge a a your payments. is to make

versus liabilities So reason XXXX day some the so there we we X, But XXXX, December of reason so liquidity mechanical benefit and that really. we going not a accounting choose because a to is the there is terms XX even forward, is it’s earlier. that’s great. that – of instead in a make a and would that get of reason contributions solution in mechanical short-term contribution long-term it would to January do The and calculation liquidity why the or

tie In our our Phil, mind, you would of like what if I say and it terms capital, working goal. working capital, I’d to liquidity about to don’t

liquidity. $XXX we now, right about quarter So ended million the of with

with That you if expect of million of flow brings add flow if cash kind it be a neutral, cash to contributions, that We flow you ex-pension contributions going $XXX positive. cash you to or are will. means pension

goal if the have and go the do at we liquidity actually in position we of now, of least a look level company. one you in end to the we Our back the points which think, liquidity, we’re year in that is, want high history, at I

inventories, go absolutely in, priority especially but maintaining to the a us. after that, so reductions And for yet continuing

is to add the then drop And of goal markets, and end add going that lot not there’s dynamics let’s below what go even a to so where to though But we’re in liquidity. let’s we our continue we’re first at can. after


go Sullivan next ahead. Please from Company. The The will come question Josh with Benchmark

Josh Sullivan

morning. good Hey,

Robert Wetherbee

Good morning, Josh.

Don Newman

morning. Good

Josh Sullivan

in operations the this think the XXXX, compared quantitatively Yeah, ATI changes if versus done? or how we previous in about the the structural cycle way just XXXX positioned qualitatively cycle? any today to think to and was is about and just either manage to it there downturn that Is you’ve

Robert Wetherbee

business Yeah, clearly fundamentally was HPMC products seen business massive growth standpoint, think just big that when came at the we’re a a related seeing flat-rolled growth even The we acquisition, restructuring time. that’s with Ladish in think, for our structured part. generation XXXX, from morning, certainly that the segment. back And I followed prior XXXX, the powder the in back, next The we look also the a of we’re Josh. structural I stoppage to Thanks Yeah. that. crisis Good been applications. differently whether our forgings in were or those work in of it’s than to by additions We’ve XXXX, XXXX, a of times. finance XXXX significant XXXX, XXXX, XXXX,

So structurally, we’re different.

what In product leads that mix. the to terms of is

to with segment workforce & changes And with Alloys of got we have I XX our that to months value product think, close agreements We’ve the changes respond the we’ve margin we’ve think segment. content of increased as in enhancements with new I well come increased that. the think as over quickly shift long-term Advanced focus had the flexibility that our Solutions our in a on our to steady care made HPMC And I that of volume. over kind to our in business takes made last business. a pension entrants’ a the in mix some cadence significant

back into I going is our position. a line, On resilient the than a different we’re in crisis. company as mentioned, is we were the bottom liquidity more Don peak then, think, And

Josh Sullivan

continued business, complexity? strong be just the supply defense delay a F-XX, seeing Right. chains. business, challenges those you there’ll you there? the pretty any given any for just logistic And that the that. with Or think outlook Do submarine strong is Thanks for then it regard pull-through? Are still to complex are the

Robert Wetherbee

we we’re little issues. pretty usual, don’t early is happy a government, actually, that based And been as And of stable the challenge But set of answer business is testing we see just for in but be with COVID-XX, on any growing us. – we So continue I my hear not the disruptions. see a part team would the much on real a bit seeing behind call us. supply the our backlog ballistics any have. to that’s will and the it with very it’s never real nope, growth that’s because business to chain Candidly, there was

Don Newman

spot. bright A

Josh Sullivan

what just just to operations? are STAL you can on characterize reopening, then the provide ground? the I any is half color, you’re of on expect China the way know any you increase with in there ground how currently year with electronics. STAL’s And consumer an the said the second seeing But you in markets

Robert Wetherbee


what everybody Year, China, happening. So if you knows look at was obviously, Lunar the New

year. markets, was we about as a had consumer we And significant planned. a reported, February, took this I dump so year demand QX. last specific QX in would we electronics talk in over growth X And which saw down decrease in

to look in recovery the second we I V-shaped like half. that space, the expecting electronic think we’re into get when a

of that’s I expect market core flat not other the for for strategic XX% candidly, don’t of government there’s think but in important for we And unless is And to automotive, we which the some that to be kind – market XXXX. about that compared year balance strip. intervention. precision a rolled it’s us, down

And down the is to whether of demand or the broader up. various as growth other price and for the Asia, the ready other thing get China next on in electronics, come our people screens that we’re will XX-inch beyond where seeing it’s those points point the in going generation and businesses STAL the with things, flat

the So Asian holiday of growth get as in ready STAL for we year-end the expect in outside the year second people half season. region the of China for

Josh Sullivan

you. Yeah. Thank


Berenberg. Paretosh The question Misra next come from go ahead. will with Please

Paretosh Misra

morning. my Yeah, question. Thanks. thanks Good for taking

then So sort in you What guidance your second half then ramp-up mentioned. withdrawn expectations? versus for like but more have the your your and previous it should color you of we XXXX? on in contract with titanium major first, how a OEM Can was provide that realize is XXXX? in this guidance, that I And some already expect on that, included you

Robert Wetherbee

come you contract. on Why don’t take guidance back I’ll question, And Don? the the

Don Newman

first. go You

Robert Wetherbee


their in So other see increase than, have not much on it probably aerostructures’ surprising because full it late about we’re not multi-year, XXXX. say, really we titanium should into their more contracts. moment the mill participation at we’re too the adjusting today that And customers go to excited production QX contract, It about I as plates talk we it, going would XXXX our and to have our is is forward. going information too products. But we’ll

Don Newman

would are we terms is I orders. of What Yeah. say guidance in getting

production of of delivery of I it. XXXX benefit you some XXXX, in those, the expect deliveries of that would would see material and would in terms but cost no So absorption you hit to in XXXX. the of because But expect

Paretosh Misra

that shutdown you’ve And in X then asset powder production believe, said you small I your it. about plants Got base, Pennsylvania.

operating? what’s are you right maybe just can total now? plants how the talk many utilization Or about So capacity

Robert Wetherbee

we’ve Let’s a got world, see, across lot. the

say the I just So business. in the that are X only powder down would are

the was to facilities. them demand, related both related to demand, able and actually, other that aerospace aerospace are consolidate to we the were in more of them of One production

for capacity So a that us I X the see what our really would rolling have to those say on mill we might broader doing only week. What take manage temporary or is the plants we call idles, are down. shutdown we’re where a utilization, you

or on doing week kind forgings they We down took were. Don operations our of what business. a Carolina about facilities our for depending we’re up in what talked X

I you our you’ll a say, would our what are probably X if see some is say, so most about running, of shape hey, in of most or month XX% week down are – facilities form, what a So major probably we utilization.

stuff time get to customers, and make to sure it, long-term of making we’re the the for and match can our stage, balance what at is XXXX the doing our make our is at and sure then right in Now, long-term crewing, through inventories we the adjusting reason year. as the line going we to understand demand then, be, the being right defined this

Don Newman

and production help production that our process for range and to But footprint. the plants. Yeah, a of so represent plants perspective percentage capacity, the probably something certainly would not in that XX% for they idling of temporary XX% those some the of huge idled, optimize and does to just it were


of come will ahead. question Matthew from Fields with next Please Our Bank go America.

Matthew Fields

million your total. ask With revolver as Hey, I option you April. understand said in But $XXX including on XX. million was And of that balance a the in the get to as sure I couple March some know of repaid $XXX accordion you on you availability thought $XXX million million questions. $XXX how of Is million the drawn, I revolver? $XXX availability. of that want revolver everyone. I I’m not sheet

Robert Wetherbee

of Yeah, X facility. kind is, there about the are to the way elements so to think it

me let you’d – can if If just describe you. I to those

that have against that��s the your letters we of revolver, credit have outstanding you $XXX So a it. of are headline. million And amount modest

in then term-loan of a is outstanding, the range element Something that’s about that $XXX $XX million, million. got you a

the piece collateral does can base. the final the at is And script that availability, about period in the then, draw move draw end of June. depending upon from talked delayed it period $XXX by that we When my million I you the underlying look to

rates. so, And for it that the in depends not upon accounts period and to whether qualify they or happen receivable draw inventory and

may a and around to revolver, can drawn loans, from the it amount. million term different And so draw a we near – dynamic we’ve full And got much we’ll loan, million But the we’ve first second term pretty availability, is term the change million loan. $XXX term generally, X well where dollar $XXX loan. think $XXX headline way to of about where capacity that’s some the available

Matthew Fields

then… $XXX that’s available million second it’s that $XXX then placed? So you Is loan. term And revolver, if the million the the and way on potential, draw

Robert Wetherbee

got it. And the – that after we had during You million. was drawn that $XXX was

right. You’re

Matthew Fields

right. right, Right,

Robert Wetherbee

math. the got You

math. the got You

Matthew Fields

feature on accordion excludes you your that And the revolver. $XXX million have

Robert Wetherbee

That is absolutely true.

us balances. under good Matt, opportunity have collateral so, imagine, Right one But the as more have revolver. than another now, we look for you and we can is of increase our capacity we point. the to at AR And inventory things potentially liquidity. That’s

it one do makes how to pull so, relative at And the base, potential we facility. yeah, evaluate we that that’s look we a catch. to thing our ABL good is lever element as And But, optimize an collateral if sense.

Matthew Fields

have you $XXX delayed term loan million thanks. ridiculously draw a All low sort right, then, related rate. at that, of And to that

plus I XXX. think it’s LIBOR

Robert Wetherbee


Matthew Fields

buy some that, of of on issue, some some reduce key, $X.XX foremost, discount, and a and back boost Your trading discount revolver bit the preserving issue or the first the debt debt liquidity at why are not understand the overall burden? but little under dollar. capture to sort capture draw I is XX notes and that note delayed

Don Newman

you’re Yeah, right. XXX%

the is time this priority we especially better make for sure during So, first, to we us this get like, the of ample business. of the sight disruption to in liquidity, looks and liquidity line proper sure got make what amount have we down-cycle that of to want that

we our is And on some based to hunting for would had proper if excess an place upon so debts, – to dead start you’re opportunity right. that available, return. interest we probably the arbitrage end up right, there’s max what’s you’re would Then our What capital capital we deploy for outstanding of assessment, us, get you’re doing with right.


would you. turn like Wetherbee any Thank over conference and this the remarks. closing session. gentlemen, I our to for to Ladies Bob back concludes question-and-answer

Robert Wetherbee

All right. for you. us thanks you the Stay joining And call interest your on for Thank in thank And today. continued healthy. ATI.

Scott Minder

Thank us you, XXXX and today. Bob. our all Thank participants you conference to first joining That the quarter call. listeners concludes


today’s Thanks for attending presentation.

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