Third Quarter 2013 Conference Call
October 23, 2013
© 2013 ATI. All Rights Reserved.
Forward-Looking Statements
This presentation contains forward-looking statements. Actual results may differ
materially fro...
Q3 2013 Results – Continuing Operations
Sales

$972 million

Segment Operating Profit

$27.6 million

As % of Sales

2.8%
...
Overview

• Q3 Results Pressured By:
– Falling raw materials prices, economic uncertainty
– Continued destocking at jet en...
Falling Raw Materials Prices
LME Nickel Cash Monthly Average

$/pound

14
13
12
11
10
9
8
7
6
5
4
3

Grade 304 Stainless
$...
Falling Raw Materials Prices
$/pound

9
8
7
6
5
4
3
2
1
0

ATI Allvac RMI – 6-4 titanium bar
6-4 titanium bar
$7.62

Month...
Accelerating Cost Reductions and Lean Manufacturing

• Nine months 2013 gross cost reductions of over $123 million
– 2013 ...
Improved Liquidity and Financial Flexibility

•
•
•
•

Cash on hand at end of third quarter: over $535 million
Modified co...
Segment Overview – High Performance Metals
Transportation 3% Conversion & Other 5%
Construction/Mining 2%
Aerospace &
Defe...
Rowley Titanium Sponge Production
Pounds
Produced
Used in
Industrial
Applications

Standard
Qualification
Achieved

Cash C...
Segment Overview – Flat-Rolled Products
Conversion & Other %
Electronics/Computers/
Communication 6%

Aerospace &
Defense ...
Market Highlights – Aerospace

• Extended and expanded Boeing LTA
– Extended into next decade: unprecedented development a...
INTEGRATED AEROSPACE SUPPLY CHAIN
Value-Added Products

13

© ATI 2013. All Rights Reserved.
October 2013
Market Highlights – Oil & Gas/CPI

• Global Projects

•
•

– Offshore projects are moving forward
– No nickel-based alloy ...
Uncertain Short Term/Confidence in Long Term

• Challenging conditions to continue in short term
• Taking steps to keep AT...
Third Quarter 2013 Conference Call
October 23, 2013
© 2013 ATI. All Rights Reserved.
Third Quarter 2013 Conference Call
October 23, 2013
© 2013 ATI. All Rights Reserved.
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ATI Q3 2013 Conference Call

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ATI Q3 2013 Conference Call

  1. 1. Third Quarter 2013 Conference Call October 23, 2013 © 2013 ATI. All Rights Reserved.
  2. 2. Forward-Looking Statements This presentation contains forward-looking statements. Actual results may differ materially from results anticipated in the forward-looking statements. These and additional risk factors are described from time to time in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2012. 2 © ATI 2013. All Rights Reserved. October 2013
  3. 3. Q3 2013 Results – Continuing Operations Sales $972 million Segment Operating Profit $27.6 million As % of Sales 2.8% Earnings Per Share Attributable to ATI $(0.27) Includes Tax Rate Impact of $(0.04) 3 © 2013 ATI. All Rights Reserved. October 2013
  4. 4. Overview • Q3 Results Pressured By: – Falling raw materials prices, economic uncertainty – Continued destocking at jet engine OEMs – Lack of large nickel-based alloy and titanium FRP projects • Accelerating Cost Reductions and Lean Manufacturing • • – Restructured Engineered Products segment Actions to Improve Liquidity and Financial Flexibility – Pending sale of tungsten materials business More Confidence in the Long Term – Extended and expanded LTA with Boeing – Rowley PQ qualification has begun Bridging the Gap Between Current and Future 4 © 2013 ATI. All Rights Reserved. October 2013
  5. 5. Falling Raw Materials Prices LME Nickel Cash Monthly Average $/pound 14 13 12 11 10 9 8 7 6 5 4 3 Grade 304 Stainless $12.82 Month Surcharge April May September $0.652 $0.639 October July Arpil January October July April January October July April January October July April January $0.636 October 2013 $0.664 August 2012 $0.685 July 2011 $0.740 June $6.30 $0.769 Nickel Prices Seem to Have Stabilized 5 © 2013 ATI. All Rights Reserved. October 2013
  6. 6. Falling Raw Materials Prices $/pound 9 8 7 6 5 4 3 2 1 0 ATI Allvac RMI – 6-4 titanium bar 6-4 titanium bar $7.62 Month RMI Q3 2012 Q4 2012 Q2 2013 $5.04 $4.86 Q4 2013 2012 $5.64 Q3 2013 2011 $6.67 Q1 2013 $4.36 $6.85 $4.36 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Titanium Raw Material Index Continued to Fall 6 © 2013 ATI. All Rights Reserved. October 2013
  7. 7. Accelerating Cost Reductions and Lean Manufacturing • Nine months 2013 gross cost reductions of over $123 million – 2013 target of $100 million – Accelerated cost reduction effort due to challenging market conditions – Almost 50% of total cost reductions are from operating performance improvement • Cost-out actions continue across all operations • Lean Manufacturing – Reduced managed working capital (MWC) by $122 million in Q3 2013 7 © 2013 ATI. All Rights Reserved. October 2013
  8. 8. Improved Liquidity and Financial Flexibility • • • • Cash on hand at end of third quarter: over $535 million Modified covenants of $400 million unsecured credit facility Pending sale of tungsten materials business for $605 million 2013 remaining capex of approximately $200 million Expect approximately $1.4 billion of cash and available liquidity at end of 2013 Future Present 8 © 2013 ATI. All Rights Reserved. October 2013
  9. 9. Segment Overview – High Performance Metals Transportation 3% Conversion & Other 5% Construction/Mining 2% Aerospace & Defense 65% Medical 9% Electrical Energy 7% Highlights Q3 2013 ($ millions) Sales $463.9 Segment Operating Profit As % of Sales 90% Key Growth Markets $48.0 10.3% Titanium shipments* Oil & Gas/Chemical Process Industry 9% Nickel-based shipments* Flat Down 9% Precision forgings and castings sales* Zirconium shipments* Nine Months 2013 Percentage of Segment Sales Includes specialty steel forgings business formerly in Engineered Products segment Down 16% Down 16% *Compared to the second quarter 2013 9 © ATI 2013. All Rights Reserved. October 2013
  10. 10. Rowley Titanium Sponge Production Pounds Produced Used in Industrial Applications Standard Qualification Achieved Cash Cost ($/Pound) Formal Premium Quality (PQ) qualification began in October 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2011 2012 2013 Stable Process, PQ Chemistry, Reducing Costs 10 © 2013 ATI. All Rights Reserved. October 2013
  11. 11. Segment Overview – Flat-Rolled Products Conversion & Other % Electronics/Computers/ Communication 6% Aerospace & Defense 7% Highlights Q3 2013 ($ millions) Sales Food Equipment & Appliances 12% Oil & Gas/Chemical Process Industry 27% 50% Key Growth Markets Transportation 5% Construction/Mining 10% $508.5 Segment Operating Profit (Loss) $(20.4) As % of Sales High-value shipments* Down 2% Titanium Electrical Energy 15% -4.0% Standard shipments* 3.4 m. #s Down 7% Automotive 16% Medical 1% Nine Months 2013 Percentage of Segment Sales *Compared to the second quarter 2013 11 © ATI 2013. All Rights Reserved. October 2013
  12. 12. Market Highlights – Aerospace • Extended and expanded Boeing LTA – Extended into next decade: unprecedented development and build rates • 787-8,-9, -10, 737 MAX , 777X – Includes ATI’s value-added long products and flat-rolled products – • Improves buy-to-fly ratio Includes next-generation and advanced titanium alloys ATI is Developing the Enabling Technologies 12 © 2013 ATI. All Rights Reserved. October 2013
  13. 13. INTEGRATED AEROSPACE SUPPLY CHAIN Value-Added Products 13 © ATI 2013. All Rights Reserved. October 2013
  14. 14. Market Highlights – Oil & Gas/CPI • Global Projects • • – Offshore projects are moving forward – No nickel-based alloy or titanium “mega projects” on our books at this time – U.S. refining and petrochemical builds are on the rebound High Performance Metals Segment – Oil service inventory correction seems to be stabilizing Flat-Rolled Products Segment – Demand for umbilicals and flowline remains strong – U.S. natural gas driving investment in CPI infrastructure 14 © 2013 ATI. All Rights Reserved. October 2013
  15. 15. Uncertain Short Term/Confidence in Long Term • Challenging conditions to continue in short term • Taking steps to keep ATI strongly positioned • • – Negotiating new and extending existing LTAs – PQ qualification at Rowley, UT sponge facility has begun – Completing construction of HRPF with commissioning planned for 2014 Accelerated Cost Reductions ATI is Well Positioned for Long-Term Profitable Growth – Secular growth markets remain intact • Our innovative products and unique processes continue to gain traction at customers • Have Necessary Liquidity and Financial Flexibility Bridging the Gap Between Current and Future 15 © 2013 ATI. All Rights Reserved. October 2013
  16. 16. Third Quarter 2013 Conference Call October 23, 2013 © 2013 ATI. All Rights Reserved.
  17. 17. Third Quarter 2013 Conference Call October 23, 2013 © 2013 ATI. All Rights Reserved.

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