Slide 1: Fourth Quarter and Full Year 2019 Earnings Presentation
Fourth Quarter and Full Year 2019 Earnings Presentation Feb. 4, 2020 © 2019 ATI. All rights reserved.
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements. Actual results may differ materially from results anticipated in the forward-looking statements due to various known and unknown risks, many of which we are unable to predict or control. These and additional risk facto
Slide 3: Five Strategic Imperatives Drive Our Focus
Five Strategic Imperatives Drive Our Focus • Execute aerospace production ramp • Sustainable profitability in Flat Rolled Products • Continue to improve the balance sheet • Create the foundation for future competitiveness and growth • Expand our competitive moat © 2019 ATI. All rights reserved. 3
Slide 4: 2019 Highlights
2019 Highlights $M (excl. EPS) Q4 2018 Q4 2019 % Chg. FY 2018 FY 2019 % Chg. Revenue $1,037.9 $1,018.6 (2%) $4,046.6 $4,122.5 +2% Revenue (ex. divestitures) $989.9 $1,018.6 +3% $3,863.8 $4,027.2 +4% Segment Operating Profit $87.3 $105.3 +21% $413.2 $380.7 (8%) Net Income* $41.1 $56.5 +37% $222.4 $25
Slide 5: High Performance Materials & Components
High Performance Materials & Components Segment ($M) Q4 ‘18 Q4 ‘19 ‘19 O/(U) ‘18 FY ‘18 FY ‘19 ‘19 O/(U) ‘18 Revenue $596.1 $602.8 +1% $2,334.2 $2,398.1 +3% Revenue (ex. divestitures) $548.1 $602.8 +10% $2,151.4 $2,302.8 +7% Segment Operating Profit $76.0 $92.8 +22% $335.4 $343.1 +2% % of Revenue 12
Slide 6: High Performance Materials & Components: Revenue by Market
High Performance Materials & Components Revenue by Market (excluding divestitures) 2019 Full Year Revenue Aerospace & Defense Medical Gov’t & Defense 7% Energy 14% 7% Airframe Other 7% 20% Jet Engine 45% Jet Engine YOY 2019 YOY Revenue Change by Market ▪ Next generation: 51% of 2019 jet engine produ
Slide 7: Flat Rolled Products
Flat Rolled Products Segment ($M) Q4 ‘18 Q4 ‘19 ‘19 O/(U) ‘18 FY ‘18 FY ‘19 ‘19 O/(U) ‘18 Revenue $441.8 $415.8 (6%) $1,712.4 $1,724.4 +1% Segment Operating Profit $11.3 $12.5 +11% $77.8 $37.6 (52%) % of Revenue 2.6% 3.0% +40 b.p. 4.5% 2.2% (230 b.p.) Fourth Quarter vs. Prior Year ▪ Revenue declined
Slide 8: Flat Rolled Products: Revenue by Market & Product
Flat Rolled Products Revenue by Market & Product 2019 Full Year Revenue by Market 2019 Full Year Revenue by Product Construction & Mining Energy Food Equip/ Appliance 9% 8% 12% Electronics 9% Standard Value Precision & Eng. Stainless Strip 4% Other 30% 32% Aero & Def 15% Oil & Gas Nickel & Automotiv
Slide 9: Financial Update
Financial Update Free Cash Flow Balance Sheet and Cash Flow $ millions ▪ Q4 and FY 2019 results 2015 2016 2017 2018 2019 ▪ Strong liquidity with $491 million cash on hand and ~$450 million of 457 undrawn revolver capacity at year end +59% ▪ Cash from operations of $240 million in Q4 2019 ▪ Managed w
Slide 10: 2020 Outlook
2020 Outlook Full Year 2020 Key Outlook Assumptions ▪ 737 MAX production restart in Q2 EPS1 FCF2 ▪ Nickel prices in expected range ($6.00/lb. - $6.50/lb.) $0.75 - $0.90 $135M - $165M ▪ Minimal global impact from the Coronavirus epidemic ▪ Effective tax rate 23% - 25% in 2020 Q1 2020 Key Drivers ▪ Ae
Slide 11: 2020 Financial Assumptions
2020 Financial Assumptions Category 2020 Expected Impact 2019 Actual U.S. Pension trust contribution ~$130 $145 Retirement benefit expense ~$60 $88 Capital expenditures $200 - $210 $168 Managed working capital ~30.0% sales 30.0% sales Interest expense $86 - $90 $99 Effective book tax rate 23% - 25%
Slide 12: Q&A
Fourth Quarter and Full Year 2019 Earnings Presentation Q&A © 2019 ATI. All rights reserved. 12
Slide 13: Additional Materials Appendix
Additional Materials Appendix
Slide 14: Non-GAAP Financial Measures
Non-GAAP Financial Measures Allegheny Technologies Incorporated and Subsidiaries Non-GAAP Financial Measures (Unaudited, dollars in millions, except per share amounts) The Company reports its financial results in accordance with accounting principles generally accepted in the United States of Americ
Slide 15: Non-GAAP Financial Measures
Non-GAAP Financial Measures * Presentation of adjusted results per diluted share includes the effects of convertible debt, if dilutive. (a) Full year 2019 results include a $91.7 million pre-taxgain on the sale of oil & gas rights in New Mexico. (b) Full year 2019 results include an $8.1 million pre
Slide 16: Non-GAAP Financial Measures
Non-GAAP Financial Measures Fiscal Year Ended First Quarter 2019 December 31, 2019 Per Diluted Share Per Diluted Share Net income attributable to ATI $ 0.12 $ 1.85 Tax rate impact (i) (0.03) (0.62) Adjusted net income attributable to ATI $ 0.09 1.23 Special items (j) (0.27) Adjusted net income attri
Slide 17: Non-GAAP Financial Measures
Non-GAAP Financial Measures Free Cash Flow For the Years Ended December 31, ($ in millions) 2015 2016 2017 2018 2019 Cash provided by (used in) operating activities $ 131.4 $ (43.7) $ 22.4 $ 392.8 $ 230.1 Cash (used in) provided by investing activities (145.1) (200.0) (119.6) (145.1) 81.7 Add back:
Slide 18: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted Sales Information Industrial Forgings ($ in millions) and Cast Products Reported Businesses Adjusted HPMC All Other Sales (ex Aero & Defense)- Full Year 2019 $ 519.0 $ (27.3) $ 491.7 HPMC All Other Sales (ex Aero & Defense)- Full Year 2018 562.9 (74.7) 488.2 Perc