What changed in this filing

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Item 1. Financial Statements

2024-10-29 compared with 2024-08-06 · 197 added, 167 removed, 713 unchanged (34% of the section changed)

4 unchanged sentences

(Current period unaudited)

September 29,

2024 December 31,

27 unchanged sentences

authorized- 500,000,000 shares;

issued- 133,796,517 shares at June 30, 2024 and 132,300,971 shares at December 31, 2023;

outstanding- 124,463,814 shares at June 30, 2024 and 126,879,099 shares at December 31, 2023

issued- 142,871,688 shares at September 29, 2024 and 132,300,971 shares at December 31, 2023;

outstanding- 142,631,508 shares at September 29, 2024 and 126,879,099 shares at December 31, 2023

Additional paid-in capital 1,937.8 1,697.1

Retained earnings (loss) 78.4 ( 70.1 )

Retained loss ( 72.8 ) ( 70.1 )

Treasury stock:

9,332,703 shares at June 30, 2024 and 5,421,872 shares at December 31, 2023

240,180 shares at September 29, 2024 and 5,421,872 shares at December 31, 2023

( 13.3 ) ( 184.0 )

9 unchanged sentences

Quarter ended Year-to-date period ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Sales $ 1,051.2 $ 1,025.6 $ 3,189.4 $ 3,109.7

20 unchanged sentences

Quarter ended Year-to-date period ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Net income $ 86.6 $ 94.1 $ 240.6 $ 274.2

2 unchanged sentences

Net derivatives loss on hedge transactions ( 1.9 ) ( 3.2 ) ( 4.3 ) ( 20.6 )

Reclassification to net income of net realized loss (gain) 2.6 3.8 4.3 ( 1.7 )

Reclassification to net income of net realized loss 3.7 1.8 8.0 0.1

Income taxes on derivative transactions 0.5 — 1.7 —

7 unchanged sentences

Total 0.9 1.4 2.7 4.1

Other comprehensive loss, net of tax ( 2.0 ) ( 5.4 ) ( 7.8 ) ( 21.2 )

Other comprehensive income (loss), net of tax 19.6 ( 9.2 ) 11.8 ( 30.4 )

Comprehensive income 106.2 84.9 252.4 243.8

Comprehensive income (loss) attributable to noncontrolling interests 3.1 ( 2.6 ) 5.2 3.9

Comprehensive income attributable to noncontrolling interests 7.9 1.8 13.1 5.7

Comprehensive income attributable to ATI $ 98.3 $ 83.1 $ 239.3 $ 238.1

4 unchanged sentences

Year-to-date period ended

June 30, 2024 July 2, 2023

September 29, 2024 October 1, 2023

Operating Activities:

21 unchanged sentences

Financing Activities:

Borrowings on long-term debt — 425.0

Payments on long-term debt and finance leases ( 21.9 ) ( 22.0 )

Net borrowings (payments) under credit facilities ( 4.9 ) 33.2

Net payments under credit facilities ( 5.1 ) ( 7.3 )

Receipt of convertible note capped call 76.1 —

Debt issuance costs — ( 6.1 )

Purchase of treasury stock ( 190.0 ) ( 55.1 )

17 unchanged sentences

Interests Total

Balance, April 2, 2023 $ 13.2 $ 1,675.1 $ ( 396.4 ) $ ( 107.8 ) $ ( 87.6 ) $ 117.8 $ 1,214.3

Net income — — 90.4 — — 3.1 93.5

Other comprehensive income (loss) — — — — 0.3 ( 5.7 ) ( 5.4 )

Employee stock plans — 6.9 — ( 0.1 ) — — 6.8

Balance, July 2, 2023 $ 13.2 $ 1,682.0 $ ( 306.0 ) $ ( 107.9 ) $ ( 87.3 ) $ 115.2 $ 1,309.2

Balance, March 31, 2024 $ 13.4 $ 1,703.1 $ ( 4.0 ) $ ( 360.1 ) $ ( 88.8 ) $ 109.6 $ 1,373.2

Net income — — 90.2 — — 3.9 94.1

Other comprehensive loss — — — — ( 7.1 ) ( 2.1 ) ( 9.2 )

Purchase of treasury stock — — — ( 45.4 ) — — ( 45.4 )

Employee stock plans — 7.5 — ( 0.3 ) — — 7.2

Balance, October 1, 2023 $ 13.2 $ 1,689.5 $ ( 215.8 ) $ ( 153.6 ) $ ( 94.4 ) $ 117.0 $ 1,355.9

Balance, June 30, 2024 $ 13.4 $ 1,712.9 $ 78.4 $ ( 359.3 ) $ ( 90.2 ) $ 112.7 $ 1,467.9

Net income — — 82.7 — — 3.9 86.6

Other comprehensive income — — — — 15.6 4.0 19.6

Conversion of convertible notes 0.9 140.1 ( 233.9 ) 384.6 — — 291.7

Convertible note capped call — 76.1 — — — — 76.1

Purchase of treasury stock — — — ( 38.8 ) — — ( 38.8 )

Employee stock plans — 8.7 — 0.2 — — 8.9

Balance, September 29, 2024 $ 14.3 $ 1,937.8 $ ( 72.8 ) $ ( 13.3 ) $ ( 74.6 ) $ 120.6 $ 1,912.0

ATI Stockholders

11 unchanged sentences

Employee stock plans 0.1 21.4 — ( 11.1 ) — — 10.4

Balance, July 2, 2023 $ 13.2 $ 1,682.0 $ ( 306.0 ) $ ( 107.9 ) $ ( 87.3 ) $ 115.2 $ 1,309.2

Balance, October 1, 2023 $ 13.2 $ 1,689.5 $ ( 215.8 ) $ ( 153.6 ) $ ( 94.4 ) $ 117.0 $ 1,355.9

Balance, December 31, 2023 $ 13.2 $ 1,697.1 $ ( 70.1 ) $ ( 184.0 ) $ ( 83.2 ) $ 107.5 $ 1,480.5

Net income — — 230.7 — — 9.9 240.6

Other comprehensive loss — — — — ( 7.0 ) ( 0.8 ) ( 7.8 )

Other comprehensive income — — — — 8.6 3.2 11.8

Conversion of convertible notes 0.9 140.1 ( 233.9 ) 384.6 — — 291.7

Convertible note capped call — 76.1 — — — — 76.1

Purchase of treasury stock — — — ( 190.0 ) — — ( 190.0 )

Employee stock plans 0.2 24.5 0.5 ( 23.9 ) — — 1.3

Balance, June 30, 2024 $ 13.4 $ 1,712.9 $ 78.4 $ ( 359.3 ) $ ( 90.2 ) $ 112.7 $ 1,467.9

Balance, September 29, 2024 $ 14.3 $ 1,937.8 $ ( 72.8 ) $ ( 13.3 ) $ ( 74.6 ) $ 120.6 $ 1,912.0

The accompanying notes are an integral part of these statements.

33 unchanged sentences

In December 2023, the FASB issued new accounting guidance related to income tax disclosures.

This guidance requires entities to disclose specific categories in its annual rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

This guidance requires an entity to disclose specific categories in its annual rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

This guidance also requires additional annual disclosures for income taxes paid and requires disaggregation of income before tax, between domestic and foreign, and income tax expense, between federal, state and foreign.

10 unchanged sentences

Revenue is disaggregated within these two business segments by diversified global markets, primary geographical markets and diversified products.

Comparative information regarding the Company’s overall revenues by global and geographical markets for the quarters and year-to-date periods ended June 30, 2024 and July 2, 2023 is included in the following tables.

Comparative information regarding the Company’s overall revenues by global and geographical markets for the quarters and year-to-date periods ended September 29, 2024 and October 1, 2023 is included in the following tables.

(in millions) Quarter ended

June 30, 2024 July 2, 2023

September 29, 2024 October 1, 2023

HPMC AA&S Total HPMC AA&S Total

10 unchanged sentences

Medical 28.6 24.5 53.1 28.9 18.6 47.5

Construction/Mining 8.3 35.9 44.2 11.0 37.4 48.4

Electronics — 49.1 49.1 0.6 44.2 44.8

Construction/Mining 4.9 36.9 41.8 7.7 32.3 40.0

Food Equipment & Appliances — 12.9 12.9 — 16.2 16.2

2 unchanged sentences

(in millions) Year-to-date period ended

June 30, 2024 July 2, 2023

September 29, 2024 October 1, 2023

HPMC AA&S Total HPMC AA&S Total

16 unchanged sentences

(in millions) Quarter ended

June 30, 2024 July 2, 2023

September 29, 2024 October 1, 2023

HPMC AA&S Total HPMC AA&S Total

7 unchanged sentences

(in millions) Year-to-date period ended

June 30, 2024 July 2, 2023

September 29, 2024 October 1, 2023

HPMC AA&S Total HPMC AA&S Total

9 unchanged sentences

Quarter ended

June 30, 2024 July 2, 2023

September 29, 2024 October 1, 2023

HPMC AA&S Total HPMC AA&S Total

1 unchanged sentence

Nickel-based alloys and specialty alloys 43 % 50 % 46 % 42 % 52 % 47 %

Titanium and titanium-based alloys 24 % 15 % 20 % 17 % 11 % 14 %

Precision forgings, castings and components 36 % — % 20 % 33 % — % 18 %

Titanium and titanium-based alloys 21 % 12 % 17 % 24 % 13 % 19 %

Precision rolled strip products — % 21 % 9 % 1 % 19 % 9 %

2 unchanged sentences

Year-to-date period ended

June 30, 2024 July 2, 2023

September 29, 2024 October 1, 2023

HPMC AA&S Total HPMC AA&S Total

6 unchanged sentences

Total 100 % 100 % 100 % 100 % 100 % 100 %

The Company maintained a backlog of confirmed orders totaling $ 4.1 billion and $ 3.5 billion at June 30, 2024 and July 2, 2023, respectively.

Due to the structure of the Company’s long-term agreements, approximately 70 % of this backlog at June 30, 2024 represented booked orders with performance obligations that will be satisfied within the next 12 months.

The Company maintained a backlog of confirmed orders totaling $ 3.9 billion and $ 3.6 billion at September 29, 2024 and October 1, 2023, respectively.

Due to the structure of the Company’s long-term agreements, approximately 65 % of this backlog at September 29, 2024 represented booked orders with performance obligations that will be satisfied within the next 12 months.

The backlog does not reflect any elements of variable consideration.

Contract balances

As of June 30, 2024 and December 31, 2023, accounts receivable from customers were $ 722.5 million and $ 628.2 million, respectively.

The following represents the rollforward of accounts receivable - reserve for doubtful accounts and contract assets and liabilities for the year-to-date periods ended June 30, 2024 and July 2, 2023:

As of September 29, 2024 and December 31, 2023, accounts receivable from customers were $ 732.8 million and $ 628.2 million, respectively.

The following represents the rollforward of accounts receivable - reserve for doubtful accounts and contract assets and liabilities for the year-to-date periods ended September 29, 2024 and October 1, 2023:

(in millions)

Accounts Receivable - Reserve for Doubtful Accounts June 30,

Accounts Receivable - Reserve for Doubtful Accounts September 29,

2024 October 1,

Balance as of beginning of year $ 3.2 $ 7.7

4 unchanged sentences

Contract Assets

Short-term June 30,

Short-term September 29,

2024 October 1,

Balance as of beginning of year $ 59.1 $ 64.1

4 unchanged sentences

Contract Liabilities

Short-term June 30,

Short-term September 29,

2024 October 1,

Balance as of beginning of year $ 163.6 $ 149.1

5 unchanged sentences

Balance as of period end $ 146.5 $ 110.2

Long-term (a) June 30,

Long-term (a) September 29,

2024 October 1,

Balance as of beginning of year $ 39.4 $ 66.8

3 unchanged sentences

(a) Long-term contract liabilities are included in other long-term liabilities on the consolidated balance sheets.

Contract costs for obtaining and fulfilling a contract were $ 9.0 million and $ 8.1 million as of June 30, 2024 and December 31, 2023, respectively, and are reported in other long-term assets on the consolidated balance sheet.

Contract cost amortization expense for the quarter and year-to-date period ended June 30, 2024 was $ 0.3 million and $ 0.6 million, respectively.

Contract cost amortization expense for the quarter and year-to-date period ended July 2, 2023 was $ 0.4 million and $ 0.7 million, respectively.

Inventories at June 30, 2024 and December 31, 2023 were as follows (in millions):

Contract costs for obtaining and fulfilling a contract were $ 9.8 million and $ 8.1 million as of September 29, 2024 and December 31, 2023, respectively, and are reported in other long-term assets on the consolidated balance sheet.

Contract cost amortization expense for the quarter and year-to-date period ended September 29, 2024 was $ 0.2 million and $ 0.8 million, respectively.

Contract cost amortization expense for the quarter and year-to-date period ended October 1, 2023 was $ 0.2 million and $ 0.9 million, respectively.

Inventories at September 29, 2024 and December 31, 2023 were as follows (in millions):

September 29,

2024 December 31,

7 unchanged sentences

Property, Plant and Equipment

Property, plant and equipment at June 30, 2024 and December 31, 2023 was as follows (in millions):

Property, plant and equipment at September 29, 2024 and December 31, 2023 was as follows (in millions):

September 29,

2024 December 31,

5 unchanged sentences

Total property, plant and equipment, net $ 1,746.5 $ 1,665.9

The construction in progress portion of property, plant and equipment at June 30, 2024 was $ 242.5 million.

Capital expenditures on the consolidated statement of cash flows for the year-to-date periods ended June 30, 2024 and July 2, 2023 exclude $ 26.0 million and $ 19.3 million, respectively, of accrued capital expenditures that were included in property, plant and equipment at June 30, 2024 and July 2, 2023, respectively.

During the second quarter of 2024, the Company approved plans to divest of certain immaterial, non-core operations from both the HPMC and AA&S segments.

These non-core operations, which are classified as held for sale as of June 30, 2024, do not meet the criteria to be classified as discontinued operations in the consolidated financial statements.

The following are the assets and liabilities classified as held for sale that are reported as prepaid expenses and other current assets, other long-term assets, other current liabilities, and other long-term liabilities on the consolidated balance sheet as of June 30, 2024.

(in millions) June 30,

The construction in progress portion of property, plant and equipment at September 29, 2024 was $ 259.8 million.

Capital expenditures on the consolidated statement of cash flows for the year-to-date periods ended September 29, 2024 and October 1, 2023 exclude $ 28.3 million and $ 28.9 million, respectively, of accrued capital expenditures that were included in property, plant and equipment at September 29, 2024 and October 1, 2023, respectively.

During 2024, the Company approved plans to divest of certain immaterial, non-core operations from both the HPMC and AA&S segments.

These non-core operations, which are classified as held for sale as of September 29, 2024, do not meet the criteria to be classified as discontinued operations in the consolidated financial statements.

(in millions) September 29,

Accounts receivable, net 6.1

19 unchanged sentences

STAL is part of ATI’s AA&S segment and manufactures Precision Rolled Strip (PRS) stainless products mainly for the electronics and automotive markets located in Asia.

Cash and cash equivalents held by STAL as of June 30, 2024 were $ 93.9 million.

Cash and cash equivalents held by STAL as of September 29, 2024 were $ 102.3 million.

Next Gen Alloys LLC:

2 unchanged sentences

Next Gen Alloys LLC funds its development activities through the sale of shares to the two joint venture partners.

Cash and cash equivalents held by this joint venture as of June 30, 2024 were $ 1.0 million.

Cash and cash equivalents held by this joint venture as of September 29, 2024 were $ 1.0 million.

Equity Method Joint Ventures

6 unchanged sentences

ATI accounts for the A&T Stainless joint venture under the equity method of accounting.

ATI’s share of A&T Stainless results were losses of $ 0.4 million and $ 0.8 million for the quarter and year-to-date period ended June 30, 2024, respectively, and $ 0.3 million and $ 0.8 million for the quarter and year-to-date period ended July 2, 2023, respectively, which are included within other income/expense, net, on the consolidated statements of operations and in the AA&S segment’s operating results.

As of June 30, 2024 and December 31, 2023, ATI had net receivables for working capital advances and administrative services from A&T Stainless of $ 0.5 million and $ 1.5 million, respectively.

ATI’s share of A&T Stainless results were losses of $ 0.2 million and $ 1.0 million for the quarter and year-to-date period ended September 29, 2024, respectively, and $ 0.5 million and $ 1.3 million for the quarter and year-to-date period ended October 1, 2023, respectively, which are included within other income/expense, net, on the consolidated statements of operations and in the AA&S segment’s operating results.

As of September 29, 2024 and December 31, 2023, ATI had net receivables for working capital advances and administrative services from A&T Stainless of $ 0.2 million and $ 1.5 million, respectively.

ATI had a 50 % interest in the industrial titanium joint venture known as Uniti, with the remaining 50 % interest held by VSMPO, a Russian producer of titanium, aluminum, and specialty steel products.

2 unchanged sentences

Uniti was accounted for under the equity method of accounting.

ATI’s share of Uniti’s results was income of $ 0.3 million and $ 0.5 million for the quarter and year-to-date period ended July 2, 2023, respectively, which was included in the AA&S segment’s operating results, and within other income/expense, net on the consolidated statements of operations.

The Company received its final distribution in the first quarter of 2024 as a result of the termination, with formal dissolution expected in the second half of 2024.

ATI’s share of Uniti’s results were losses of $ 0.2 million for quarter ended October 1, 2023 and income of $ 0.3 million for the year-to-date period ended October 1, 2023, which were included in the AA&S segment’s operating results, and within other income/expense, net on the consolidated statements of operations.

The Company received its final distribution in the first quarter of 2024 as a result of the termination, and formal dissolution occurred in the fourth quarter of 2024.

Supplemental Financial Statement Information

Other income (expense), net for the quarters and year-to-date periods ended June 30, 2024 and July 2, 2023 was as follows:

Other income (expense), net for the quarters and year-to-date periods ended September 29, 2024 and October 1, 2023 was as follows:

(in millions) Quarter ended Year-to-date period ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Rent and royalty income $ 0.7 $ 0.7 $ 2.3 $ 2.0

1 unchanged sentence

Net equity loss on joint ventures (See Note 6) ( 0.2 ) ( 0.7 ) ( 1.0 ) ( 1.0 )

Other $ 0.2 $ — $ 0.2 $ —

Total other income, net $ 4.4 $ — $ 5.2 $ 1.3

Gains from disposal of property, plant and equipment, net for the quarter and year-to-date period ended September 29, 2024 include a $ 3.7 million gain on the sale of certain oil and gas rights.

These cash gains are reported as an investing activity on the consolidated statement of cash flow for the year-to-date period ended September 29, 2024.

Restructuring

Restructuring charges were a credit for the quarter and year-to-date period ended June 30, 2024 of $ 1.9 million and $ 1.7 million, respectively, primarily for a reduction in severance-related reserves for approximately 80 employees based on changes in planned operating rates and revised workforce reduction estimates, which includes the ongoing restructuring for the Company’s European operations.

Restructuring charges for both the quarter and year-to-date periods ended July 2, 2023 were $ 2.7 million and represent severance for the involuntary reduction of approximately 40 employees across ATI’s domestic operations.

These amounts were presented as restructuring charges/credits in the consolidated statements of operations and are excluded from segment EBITDA.

Restructuring charges were $ 0.5 million for the quarter ended September 29, 2024 and represent severance for the involuntary reduction of several domestic employees.

Restructuring charges were a credit of $ 1.2 million for the year-to-date period ended September 29, 2024, primarily for a reduction in severance-related reserves for approximately 80 employees based on revised workforce reduction estimates, which includes the ongoing restructuring of the Company’s European operations.

Restructuring charges for the third quarter ended October 1, 2023 were a credit of $ 0.5 million for a reduction in severance-related reserves related to approximately 10 employees based on revised workforce reduction estimates.

Restructuring charges for the year-to-date period ended October 1, 2023 were a charge of $ 2.2 million and represent severance for the involuntary reduction of approximately 40 employees across the Company’s domestic operations, partially offset by the credit in the third quarter 2023 discussed above.

These amounts are presented as restructuring charges (credits) in the consolidated statements of operations and are excluded from segment EBITDA.

Restructuring reserves for severance cost activity is as follows:

4 unchanged sentences

Payments ( 5.2 )

Balance at June 30, 2024 $ 9.4

The $ 9.4 million restructuring reserve balance at June 30, 2024 is recorded in other current liabilities on the consolidated balance sheet.

Balance at September 29, 2024 $ 8.8

The $ 8.8 million restructuring reserve balance at September 29, 2024 is recorded in other current liabilities on the consolidated balance sheet.

Supplier Financing

1 unchanged sentence

Under such programs, these financial institutions provide early payment to suppliers at their request for invoices that ATI has confirmed as valid at a pre-determined discount rate commensurate with the creditworthiness of ATI.

As of June 30, 2024 and December 31, 2023, the Company had $ 33.4 million and $ 15.6 million, respectively, reported in accounts payable on the consolidated balance sheets under such programs.

Debt at June 30, 2024 and December 31, 2023 was as follows (in millions):

As of September 29, 2024 and December 31, 2023, the Company had $ 58.4 million and $ 15.6 million, respectively, reported in accounts payable on the consolidated balance sheets under such programs.

Debt at September 29, 2024 and December 31, 2023 was as follows (in millions):

September 29,

2024 December 31,

21 unchanged sentences

In addition, the Company has the right to request an increase of up to $ 300 million in the maximum amount available under the revolving credit facility for the duration of the ABL.

The Company had a $ 50 million floating-for-fixed interest rate swap which converted a portion of the Term Loan to a 4.21 % fixed interest rate.

The swap matured in June 2024.

The Company previously maintained a $ 50 million floating-for-fixed interest rate swap which converted a portion of the Term Loan to a 4.21 % fixed interest rate that matured in June 2024.

The applicable interest rate for revolving credit borrowings under the ABL facility includes interest rate spreads based on available borrowing capacity that range between 1.25 % and 1.75 % for SOFR-based borrowings and between 0.25 % and 0.75 % for base rate borrowings.

1 unchanged sentence

1.00 after an event of default has occurred and is continuing or if the undrawn availability under the ABL revolving credit portion of the facility is less than the greater of (i) 10 % of the then applicable maximum loan amount under the revolving credit portion of the ABL and the outstanding Term Loan balance, or (ii) $ 60.0 million.

The Company was in compliance with the fixed charge coverage ratio as of June 30, 2024.

Additionally, the Company must demonstrate minimum liquidity specified by the facility during the 90 -day period immediately preceding the stated maturity date of its 3.5 % Convertible Senior Notes due 2025 and the 6.95 % Debentures due 2025 issued by the Company’s wholly owned subsidiary, Allegheny Ludlum LLC.

The ABL also contains customary affirmative and negative covenants for credit facilities of this type, including limitations on the Company’s ability to incur additional indebtedness or liens or to enter into investments, mergers and acquisitions, dispositions of assets and transactions with affiliates, some of which are more restrictive,

at any time during the term of the ABL when the Company’s fixed charge coverage ratio is less than 1.00 :

The Company was in compliance with the fixed charge coverage ratio as of September 29, 2024.

Additionally, the Company must demonstrate minimum liquidity specified by the facility during the 90 -day period immediately preceding the stated maturity date of its 6.95 % Debentures due 2025 issued by the Company’s wholly owned subsidiary, Allegheny Ludlum LLC.

1.00 and its undrawn availability under the revolving portion of the ABL is less than the greater of (a) $ 120 million or (b) 20 % of the sum of the maximum loan amount under the revolving credit portion of the ABL and the outstanding Term Loan balance.

As of June 30, 2024, there were no outstanding borrowings under the revolving portion of the ABL facility, and $ 31.7 million was utilized to support the issuance of letters of credit.

There were no revolving credit borrowings under the ABL facility during the year-to-date period ended June 30, 2024.

There were average revolving credit borrowings of $ 11 million bearing an average annual interest rate of 6.4 % under the ABL facility for the year-to-date period ended July 2, 2023.

The Company also has foreign credit facilities, primarily in China, that total $ 57 million based on June 30, 2024 foreign exchange rates, none of which was drawn as of June 30, 2024 and $ 5.0 million of which was drawn as of December 31, 2023.

As of September 29, 2024, there were no outstanding borrowings under the revolving portion of the ABL facility, and $ 31.7 million was utilized to support the issuance of letters of credit.

There were no revolving credit borrowings under the ABL facility during the year-to-date period ended September 29, 2024.

There were average revolving credit borrowings of $ 17 million bearing an average annual interest rate of 6.5 % under the ABL facility for the year-to-date period ended October 1, 2023.

The Company also has foreign credit facilities, primarily in China, that total $ 59 million based on September 29, 2024 foreign exchange rates, none of which was drawn as of September 29, 2024 and $ 5.0 million of which was drawn as of December 31, 2023.

2025 Convertible Notes

As of June 30, 2024, the Company has $ 291.4 million aggregate principal amount of 3.5 % Convertible Notes due 2025 (2025 Convertible Notes) outstanding, which mature on June 15, 2025 and is included in short-term debt and current portion of long-term debt on the consolidated balance sheet as of June 30, 2024.

As of June 30, 2024 and December 31, 2023, the fair value of the 2025 Convertible Notes was $ 1.04 billion and $ 864 million, respectively, based on the quoted market price, which is classified in Level 1 of the fair value hierarchy.

The 2025 Convertible Notes have a 3.5 % cash coupon rate that is payable semi-annually in arrears on each June 15 and December 15.

Including amortization of deferred issuance costs, the effective interest rate is 4.2 % for the quarters and year-to-date periods ended June 30, 2024 and July 2, 2023.

Remaining deferred issuance costs were $ 2.0 million and $ 2.9 million at June 30, 2024 and December 31, 2023, respectively.

During the third quarter of 2024, the Company notified holders of the $ 291.4 million outstanding principal amount of its 3.5 % Convertible Notes due 2025 (2025 Convertible Notes) that they would be redeemed prior to their maturity date.

The holders of any outstanding 2025 Convertible Notes had the right to convert the principal amount of such notes into shares of ATI’s common stock prior to the redemption date.

Any 2025 Convertible Notes not tendered for conversion prior to the redemption date were redeemed in cash at a redemption price equal to the principal amount, plus accrued and unpaid interest.

As a result, $ 291.0 million principal amount of the outstanding notes was converted at a rate of 64.7178 shares of ATI common stock per $1,000 principal amount, equivalent to a conversion price of $ 15.45 per share or 18.8 million shares of ATI common stock.

Due to the early redemption of the 2025 Convertible Notes, the conversion rate was a premium to the conversion rate of 64.5745 shares of ATI common stock per $1,000 principal amount, or approximately $ 15.49 per share, that would have been due at maturity.

The remaining $ 0.4 million of outstanding principal balance were not tendered for conversion and, as a result, the Company redeemed those for cash.

For those holders who exercised the conversion rights, the terms of the 2025 Convertible Notes provided that any accrued but unpaid interest at the date of conversion was forfeited.

As a result, accrued interest from the last interest payment date of June 15, 2024 through the date of conversion, totaling $ 2.3 million, was credited to additional paid-in capital.

In addition, the remaining unamortized deferred issuance costs of $ 1.6 million at the date of conversion were charged to additional paid-in capital.

Coincident with its redemption of the 2025 Convertible Notes, the Company also settled the capped call transactions initiated as part of the issuance of the 2025 Convertible Notes.

The capped call transactions included a cap price of $ 19.76 per share and were settled for $ 76.1 million in cash, which is recorded as additional paid-in capital on the consolidated balance sheet and as a financing activity on the consolidated statement of cash flows.

As of December 31, 2023, the fair value of the 2025 Convertible Notes was $ 864 million based on the quoted market price, which is classified in Level 1 of the fair value hierarchy.

The 2025 Convertible Notes had a 3.5 % cash coupon rate that was payable semi-annually in arrears on each June 15 and December 15.

Including amortization of deferred issuance costs, the effective interest rate was 4.2 % for the quarters and year-to-date periods ended September 29, 2024 and October 1, 2023.

Remaining deferred issuance costs were $ 2.9 million at December 31, 2023.

Interest expense on the 2025 Convertible Notes was as follows:

Quarter ended Year-to-date period ended

(in millions) June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

(in millions) September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Contractual coupon rate $ 2.1 $ 2.5 $ 7.2 $ 7.6

1 unchanged sentence

Total interest expense $ 2.4 $ 3.0 $ 8.5 $ 9.0

Currently, and prior to the 41st scheduled trading day immediately preceding the maturity date, the Company may redeem all or any portion of the 2025 Convertible Notes, at its option, at a redemption price equal to 100 % of the principal amount thereof, plus any accrued and unpaid interest, if the last reported sale price of ATI’s common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on the trading day immediately preceding the date on which ATI provides written notice of redemption.

The initial conversion rate for the 2025 Convertible Notes is 64.5745 shares of ATI common stock per $1,000 principal amount of the 2025 Convertible Notes, equivalent to an initial conversion price of approximately $ 15.49 per share ( 18.8 million shares).

Prior to the close of business on the business day immediately preceding March 15, 2025, the 2025 Convertible Notes will be convertible at the option of the holders of 2025 Convertible Notes only upon the satisfaction of specified conditions and during certain periods.

Thereafter, until the close of business on the second scheduled trading day immediately preceding the maturity date, the 2025 Convertible Notes will be convertible at the option of holders of 2025 Convertible Notes at any time regardless of these conditions.

Conversions of the 2025 Convertible Notes may be settled in cash, shares of ATI’s common stock or a combination thereof, at ATI’s election.

ATI entered into privately negotiated capped call transactions with certain of the initial purchasers of the 2025 Convertible Notes or their respective affiliates (collectively, the Counterparties).

The capped call transactions are expected generally to reduce potential dilution to ATI’s common stock upon any conversion of the 2025 Convertible Notes and/or offset any cash payments ATI is required to make in excess of the principal amount of converted 2025 Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap based on the cap price.

The capped call transactions initially included a cap price of $ 19.76 per share, and is subject to adjustments under the terms of the capped call transactions.

Derivative Financial Instruments and Hedging

3 unchanged sentences

Under these contracts, which are generally accounted for as cash flow hedges, the price of the item being hedged is fixed at the time that the contract is entered into, and the Company is obligated to make or receive a payment equal to the net change between this fixed price and the market price at the date the contract matures.

The majority of ATI’s products are sold utilizing raw material surcharges and index mechanisms.

However, as of June 30, 2024, the Company had entered into financial hedging arrangements, primarily at the request of its customers related to firm orders, for an aggregate notional amount of approximately 4 million pounds of nickel with hedge dates through 2025.

The majority of ATI’s products are sold under contractual arrangements that include raw material surcharges and index mechanisms.

However, as of September 29, 2024, the Company had entered into financial hedging arrangements, primarily at the request of its customers related to firm orders, for an aggregate notional amount of approximately 4 million pounds of nickel with hedge dates through 2025.

The aggregate notional amount hedged is approximately 6 % of a single year’s estimated nickel raw material purchase requirements.

1 unchanged sentence

Any gain or loss associated with these hedging arrangements is included in sales or cost of sales, depending on whether the underlying risk being hedged was the variable selling price or the variable raw material cost, respectively.

At June 30, 2024, the outstanding financial derivatives used to hedge the Company’s exposure to energy cost volatility included natural gas cost hedges.

At June 30, 2024, the Company hedged approximately 65 % of its forecasted domestic requirements for natural gas for the remainder of 2024 and approximately 35 % for 2025.

At September 29, 2024, the outstanding financial derivatives used to hedge the Company’s exposure to energy cost volatility consisted of natural gas cost hedges.

At September 29, 2024, the Company hedged approximately 85 % of its forecasted domestic requirements for natural gas for the remainder of 2024, approximately 55 % for 2025 and approximately 10 % for 2026.

While the majority of the Company’s direct export sales are transacted in U.S.

dollars, foreign currency exchange contracts are used, from time-to-time, to limit transactional exposure to changes in currency exchange rates for those transactions denominated in a non-U.S.

The Company sometimes purchases foreign currency forward contracts that permit it to sell specified amounts of foreign currencies expected to be received from its export sales for pre-established U.S.

dollars, it uses foreign currency exchange contracts, from time-to-time, to limit transactional exposure to changes in currency exchange rates for those transactions denominated in a non-U.S.

The Company sometimes purchases foreign currency forward contracts that permit it to sell specified amounts of foreign currencies it expects to receive from its export sales for pre-established U.S.

dollar amounts at specified dates.

In addition, the Company may also hedge forecasted capital expenditures and designate cash balances held in foreign currencies as hedges of forecasted foreign currency transactions.

At June 30, 2024, the Company had no material outstanding foreign currency forward contracts.

At September 29, 2024, the Company had no material outstanding foreign currency forward contracts.

The Company may enter into derivative interest rate contracts to maintain a reasonable balance between fixed- and floating-rate debt.

The Company had a $ 50 million floating-for-fixed interest rate swap which converted a portion of the ABL Term Loan to a 4.21 % fixed rate, which matured during the quarter ended June 30, 2024.

The Company designated the interest rate swap as a cash flow hedge of the Company’s exposure to the variability of the payment of interest on a portion of its Term Loan borrowings.

The Company previously maintained a $ 50 million floating-for-fixed interest rate swap which converted a portion of the ABL Term Loan to a 4.21 % fixed rate that matured during the quarter ended June 30, 2024.

There are no outstanding derivative interest rate contracts at September 29, 2024.

There are no credit risk-related contingent features in the Company’s derivative contracts, and the contracts contain no provisions under which the Company has posted, or would be required to post, collateral.

6 unchanged sentences

Asset derivatives

Balance sheet location June 30,

Balance sheet location September 29,

2024 December 31,

2 unchanged sentences

Foreign exchange contracts Prepaid expenses and other current assets — 0.1

Nickel and other raw material contracts Prepaid expenses and other current assets 0.6 —

Natural gas contracts Prepaid expenses and other current assets 0.1 —

Nickel and other raw material contracts Other assets 0.2 —

Natural gas contracts Other assets 0.1 0.1

2 unchanged sentences

Derivatives designated as hedging instruments:

Foreign exchange contracts Other current liabilities 0.1 —

Natural gas contracts Other current liabilities 2.7 5.6

1 unchanged sentence

Natural gas contracts Other long-term liabilities 0.3 1.1

Nickel and other raw material contracts Other long-term liabilities 0.5 —

Foreign exchange contracts Other long-term liabilities 0.3 —

Total derivatives designated as hedging instruments $ 6.4 $ 14.2

1 unchanged sentence

For derivative financial instruments that are designated as fair value hedges, changes in the fair value of these derivatives are recognized in current period results.

There were no outstanding fair value hedges as of June 30, 2024.

There were no outstanding fair value hedges as of September 29, 2024.

The cash flow impact for all derivative financial instruments is reported in cash flows provided by operating activities on the consolidated statement of cash flows.

1 unchanged sentence

The effects of derivative instruments in the tables below are presented net of related income taxes, excluding any impacts of changes to income tax valuation allowances affecting results of operations or other comprehensive income, when applicable (see Note 15 for further explanation).

Assuming market prices remain constant with those at June 30, 2024, a pre-tax loss of $ 6.4 million is expected to be recognized over the next 12 months.

Activity with regard to derivatives designated as cash flow hedges for the quarters and year-to-date periods ended June 30, 2024 and July 2, 2023 was as follows (in millions):

Assuming market prices remain constant with those at September 29, 2024, a pre-tax loss of $ 5.1 million is expected to be recognized over the next 12 months.

Activity with regard to derivatives designated as cash flow hedges for the quarters and year-to-date periods ended September 29, 2024 and October 1, 2023 was as follows (in millions):

Amount of Gain (Loss)

5 unchanged sentences

Quarter ended Quarter ended

Derivatives in Cash Flow Hedging Relationships June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Derivatives in Cash Flow Hedging Relationships September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Nickel and other raw material contracts $ ( 0.2 ) $ ( 1.6 ) $ ( 1.4 ) $ ( 0.4 )

10 unchanged sentences

Year-to-date period ended Year-to-date period ended

Derivatives in Cash Flow Hedging Relationships June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Derivatives in Cash Flow Hedging Relationships September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Nickel and other raw material contracts $ ( 1.3 ) $ ( 8.5 ) $ ( 2.5 ) $ 3.5

8 unchanged sentences

The Company may also use derivative instruments that are not designated as hedges to protect the Company’s results from certain fluctuations in foreign exchange rates, as well as to offset a portion of the foreign currency gains and losses generated by the remeasurement of certain assets and liabilities denominated in non-functional currencies.

Changes in the fair value of these foreign exchange contract derivatives not designated as hedging instruments are recorded in cost of sales or selling, general and administrative expenses on the consolidated statement of operations, and we recognized $ 0.5 million of expense for settled foreign currency forward contracts that were not designated as hedges during the second quarter and year-to-date period ended June 30, 2024, which offset foreign currency gains in the relevant currency.

We have no significant outstanding hedges that are not designated as of June 30, 2024

Changes in the fair value of these foreign exchange contract derivatives not designated as hedging instruments are recorded in cost of sales or selling, general and administrative expenses on the consolidated statement of operations, and the Company recognized $ 1.0 million and $ 0.5 million of income, net, for settled foreign currency forward contracts that were not designated as hedges during the third quarter and year-to-date period ended September 29, 2024, respectively, which offset foreign currency gains/losses in the relevant currency.

We have no significant outstanding hedges that are not designated as of September 29, 2024 .

Fair Value of Financial Instruments

The estimated fair value of financial instruments at June 30, 2024 was as follows:

The estimated fair value of financial instruments at September 29, 2024 was as follows:

Fair Value Measurements at Reporting Date Using

46 unchanged sentences

High Performance Materials & Components (HPMC) and Advanced Alloys & Solutions (AA&S).

The measure of segment EBITDA excludes income taxes, depreciation and amortization, corporate expenses, net interest expense, closed operations and other expenses, charges for goodwill and asset impairments, restructuring and other credits/charges, strike related costs, pension remeasurement gains/losses, debt extinguishment charges and gains or losses on asset sales and sales of businesses.

The measure of segment EBITDA excludes net interest expense, income taxes, depreciation and amortization, goodwill impairment charges, debt extinguishment charges, corporate expenses, closed operations and other income (expense), restructuring and other credits/charges, strike related costs, long-lived asset impairments, pension remeasurement gains and losses, other postretirement/pension curtailment and settlement gains and losses, and gains or losses on sales of businesses.

Management believes segment EBITDA, as defined, provides an appropriate measure of controllable operating results at the business segment level.

1 unchanged sentence

Quarter ended Year-to-date period ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

High Performance Materials & Components $ 612.9 $ 578.1 $ 1,828.6 $ 1,670.5

10 unchanged sentences

Quarter ended Year-to-date period ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

High Performance Materials & Components $ 123.2 $ 117.2 $ 334.6 $ 308.5

10 unchanged sentences

Quarter ended Year-to-date period ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

High Performance Materials & Components $ 18.6 $ 16.5 $ 52.8 $ 51.8

5 unchanged sentences

The Company applied for these employee retention tax credits and deferred recognition of a portion of the tax credits pending the completion of any potential audit or examination, or the expiration of the related statute of limitations.

During the quarter and year-to-date periods ended June 30, 2024, the Company recognized a benefit of $ 8.6 million in cost of sales on the consolidated statement of operations due to the expiration of the statute of limitations for a portion of these credits.

The Company recognized $ 3.5 million of the benefit in the HPMC segment and $ 5.1 million in the AA&S segment.

During the quarter and year-to-date periods ended September 29, 2024, the Company recognized a benefit of $ 4.8 million and $ 13.4 million, respectively, in cost of sales on the consolidated statement of operations due to the expiration of the statute of limitations for a portion of these credits.

For the quarter ended September 29, 2024, the Company recognized $ 2.9 million of the benefit in the HPMC segment and $ 1.9 million in the AA&S segment.

For the year-to-date periods ended September 29, 2024, the Company recognized $ 6.4 million of the benefit in the HPMC segment and $ 7.0 million in the AA&S segment.

See Note 16 for further explanation.

Closed operations and other income (expense) for the quarter and year-to-date period ended June 30, 2024 includes a $ 2.3 million gain on the sale of assets for the Company’s idled Houston, PA facility included within gain on asset sales and sales of businesses, net, on the consolidated statement of operations, for which $ 3.5 million of proceeds were received and reported as an investing activity on the consolidated statement of cash flows.

Restructuring and other charges of $ 5.4 million for the quarter ended June 30, 2024 include $ 5.5 million of inventory write-downs related to the Company’s ongoing European restructuring and $ 1.8 million of start-up costs, both of which are included within cost of sales on the consolidated statements of operations.

These charges were partially offset by credits of $ 1.9 million primarily for lowered severance-related reserves based on changes in planned operating rates and revised workforce reduction estimates (see Note 7).

Restructuring and other charges of $ 8.5 million for the year-to-date period ended June 30, 2024 include $ 5.5 million of inventory write-downs related to the Company’s ongoing European restructuring and $ 4.7 million of start-up costs, both of which are included within cost of sales on the consolidated statements of operations.

These charges were partially offset by credits of $ 1.7 million primarily for lowered severance-related reserves based on changes in planned operating rates and revised workforce reduction estimates (see Note 7).

Restructuring and other charges of $ 9.2 million for the quarter ended July 2, 2023 include $ 2.7 million of severance-related restructuring charges as well as $ 4.5 million of start-up costs and $ 2.0 million primarily for asset write-offs for the closure of the Robinson, PA operations, both of which are included within cost of sales on the consolidated statements of operations.

Restructuring and other charges of $ 10.4 million for the year-to-date period ended July 2, 2023 also include $ 1.2 million of additional start-up costs related to the Company’s titanium operations in Albany, OR, which are included within cost of sales on the consolidated statements of operations.

Depreciation expense in the quarter and year-to-date period ended July 2, 2023 includes $ 0.8 million of accelerated depreciation on fixed assets for the closure of our Robinson, PA operations.

Loss on asset sales and sales of businesses, net, for the quarter and year-to-date period ended July 2, 2023 is related to a $ 0.6 million loss on the sale of the Company’s Northbrook, IL operations.

Closed operations and other income (expense) for the quarter ended September 29, 2024 includes a $ 3.7 million gain on the sale of certain oil and gas rights, included within other income, net, on the consolidated statement of operations, and favorable foreign currency transaction impacts as compared to the prior year period.

Closed operations and other income (expense) for the year-to-date period ended September 29, 2024 also includes a $ 2.3 million gain on the sale of assets for the Company’s idled Houston, PA facility, which is included within gain on asset sales and sales of businesses, net, on the consolidated statement of operations.

The Company received $ 3.5 million of proceeds from this sale that are reported as an investing activity on the consolidated statement of cash flows.

Restructuring and other charges of $ 4.3 million for the quarter ended September 29, 2024 include $ 2.5 million of start-up costs, partially offset by a $ 0.4 million credit for adjustments to inventory reserves related to the Company’s ongoing European restructuring, both of which are included within cost of sales on the consolidated statements of operations.

These charges also include $ 1.7 million of transaction costs, which are included within selling and administrative expenses on the consolidated statements of operations, and restructuring charges of $ 0.5 million (see Note 7).

Restructuring and other charges of $ 12.8 million for the year-to-date period ended September 29, 2024 include $ 7.2 million of start-up costs and $ 5.1 million of inventory write-downs related to the Company’s ongoing European restructuring, both of which are included within cost of sales on the consolidated statements of operations.

Restructuring and other charges of $ 4.2 million for the quarter ended October 1, 2023 include $ 2.8 million of start-up costs and $ 1.9 million of costs associated with an unplanned outage at the Company’s Lockport, NY facility, both of which are included within cost of sales on the consolidated statements of operations.

These charges were partially offset by a $ 0.5 million pre-tax

credit for restructuring charges, primarily related to lowered severance-related reserves based on changes in planned operating rates and revised workforce reduction estimates (see Note 7).

Restructuring and other charges of $ 14.6 million for the year-to-date period ended October 1, 2023 include $ 2.2 million of severance-related restructuring charges (see Note 7) as well as $ 8.5 million of start-up costs, $ 1.9 million of costs associated with an unplanned outage at the Company’s Lockport, NY facility, and $ 2.0 million primarily for asset write-offs for the closure of the Company’s Robinson, PA operations, all of which are included within cost of sales on the consolidated statements of operations.

Retirement Benefits

8 unchanged sentences

All defined benefit pension and retiree health care plans are closed to new entrants.

For the quarters ended June 30, 2024 and July 2, 2023, the components of pension and other postretirement benefit expense for the Company’s defined benefit plans included the following (in millions):

For the quarters ended September 29, 2024 and October 1, 2023, the components of pension and other postretirement benefit expense for the Company’s defined benefit plans included the following (in millions):

Pension Benefits Other Postretirement Benefits

Quarter ended Quarter ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Service cost - benefits earned during the year $ 1.5 $ 1.5 $ 0.2 $ 0.2

3 unchanged sentences

Amortization of net actuarial loss — — 1.3 1.5

Total retirement benefit expense $ 1.4 $ 0.1 $ 3.8 $ 4.1

For the year-to-date periods ended June 30, 2024 and July 2, 2023, the components of pension and other postretirement benefit expense for the Company’s defined benefit plans included the following (in millions):

Total retirement benefit expense (income) $ 1.6 $ ( 0.1 ) $ 3.8 $ 4.2

For the year-to-date periods ended September 29, 2024 and October 1, 2023, the components of pension and other postretirement benefit expense for the Company’s defined benefit plans included the following (in millions):

Pension Benefits Other Postretirement Benefits

Year-to-date period ended Year-to-date period ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Service cost - benefits earned during the year $ 4.4 $ 4.7 $ 0.4 $ 0.5

4 unchanged sentences

Total retirement benefit expense $ 4.6 $ — $ 11.3 $ 12.5

For the quarter and year-to-date period ended June 30, 2024, the Company’s effective tax rate was 22.8 % and 21.5 %, respectively, resulting in an income tax provision of $ 25.3 million and $ 42.2 million, respectively.

For the quarter and year-to-date period ended July 2, 2023, the Company’s effective tax rate was 3.8 % and 4.3 %, respectively, resulting in an income tax provision of $ 3.7 million and $ 8.0 million, respectively.

The effective tax rate for the quarter ended June 30, 2024 includes discrete tax benefits of $ 1.6 million, which includes the recognition of a stranded deferred tax valuation allowance in accumulated other comprehensive loss that was associated with the Company’s interest rate swap due to its maturity (see Note 15).

Discrete tax benefits for the year-to-date period ended June 30, 2024 were $ 4.7 million, which also includes $ 3.2 million for share-based compensation.

The Company’s effective tax rates for the quarter and year-to-date period ended July 2, 2023 were impacted by the net valuation allowance position in the U.S.

For the quarter and year-to-date period ended September 29, 2024, the Company’s effective tax rate was 24.6 % and 22.7 %, respectively, resulting in an income tax provision of $ 28.3 million and $ 70.5 million, respectively.

Discrete tax benefits for the year-to-date period ended September 29, 2024 were $ 4.5 million, which includes $ 3.3 million for share-based compensation and the recognition of a stranded deferred tax valuation allowance in accumulated other comprehensive loss that was associated with the Company’s interest rate swap due to its maturity (see Note 15).

For the quarter and year-to-date period ended October 1, 2023, the Company’s effective tax rate was 4.9 % and 4.5 %, respectively, resulting in an income tax provision of $ 4.9 million and $ 12.9 million, respectively.

The Company’s effective tax rates for the quarter and year-to-date period ended October 1, 2023 were impacted by the net valuation allowance position in the U.S.

and the Company’s foreign earnings.

2 unchanged sentences

(In millions, except per share amounts) Quarter ended Year-to-date period ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Numerator for basic income per common share –

13 unchanged sentences

Diluted net income attributable to ATI per common share $ 0.57 $ 0.62 $ 1.61 $ 1.82

Common stock that would be issuable upon the assumed conversion of the 2025 Convertible Notes and other option equivalents and contingently issuable shares are excluded from the computation of contingently issuable shares, and therefore, from the denominator for diluted earnings per share, if the effect of inclusion is anti-dilutive.

There were no anti-dilutive shares for the quarters and year-to-date periods ended June 30, 2024 and July 2, 2023.

Periodically, the Company’s Board of Directors authorizes the repurchase of ATI common stock (the “Share Repurchase Program”), the most recent of which was $ 150 million in November 2023.

Common stock that would be issuable upon the assumed conversion of the 2025 Convertible Notes, prior to their redemption during the third quarter of 2024, and other option equivalents and contingently issuable shares are excluded from the computation of contingently issuable shares, and therefore, from the denominator for diluted earnings per share, if the effect of inclusion is anti-dilutive.

There were no anti-dilutive shares for the quarters and year-to-date periods ended September 29, 2024 and October 1, 2023.

Periodically, the Company’s Board of Directors authorizes the repurchase of ATI common stock (the “Share Repurchase Program”), the most recent of which was $ 700 million that was announced in September 2024.

Repurchases under these programs are made in the open market or in privately negotiated transactions, with the amount and timing of repurchases depending on market conditions and corporate needs.

Open market repurchases are structured to occur within the pricing and volume requirements of SEC Rule 10b-18.

In the year-to-date period ended June 30, 2024, ATI used $ 150.0 million to repurchase 3.4 million shares of its common stock under the Share Repurchase Program.

At June 30, 2024, the Company has utilized the full amount currently authorized under the Share Repurchase Program.

In the year-to-date period ended July 2, 2023, ATI used $ 10.1 million to repurchase 0.2 million shares of its common stock under the Share Repurchase Program.

In the quarter and year-to-date period ended September 29, 2024, ATI used $ 40.0 million and $ 190.0 million, respectively, to repurchase 0.7 million and 4.1 million, respectively, of its common stock under the Share Repurchase Program.

At September 29, 2024, the Company has utilized $ 40 million of the $ 700 million currently authorized under the Share Repurchase Program.

In the quarter ended October 1, 2023, ATI used $ 45.0 million to repurchase 1.0 million shares of its common stock under the Share Repurchase Program, and in the year-to-date period ended October 1, 2023, ATI used $ 55.1 million to repurchase 1.2 million shares of its common stock under the Share Repurchase Program.

The Company’s share repurchases are subject to a 1% excise tax as a result of the Inflation Reduction Act of 2022.

Excise taxes incurred on share repurchases represent direct costs of the repurchase and are recorded as part of the cost basis of the shares within treasury stock.

The cost of share repurchases for the year-to-date period ended June 30, 2024 of $ 151.2 million differs from the repurchases of common stock amounts in the consolidated statements of cash flows due to these excise taxes.

The cost of share repurchases may differ from the repurchases of common stock amounts in the consolidated statements of cash flows due to these excise taxes.

However, for 2024, there was no excise tax due to the impact of the conversion of the 2025 Convertible Notes (see Note 8).

Accumulated Other Comprehensive Income (Loss)

The changes in AOCI by component, net of tax, for the quarter ended June 30, 2024 were as follows (in millions):

The changes in AOCI by component, net of tax, for the quarter ended September 29, 2024 were as follows (in millions):

benefit plans Currency

1 unchanged sentence

Attributable to ATI:

Balance, March 31, 2024 $ ( 31.6 ) $ ( 74.8 ) $ ( 6.5 ) $ 24.1 $ ( 88.8 )

Balance, June 30, 2024 $ ( 30.7 ) $ ( 77.9 ) $ ( 4.9 ) $ 23.3 $ ( 90.2 )

OCI before reclassifications — 13.4 ( 1.5 ) — 11.9

1 unchanged sentence

Net current-period OCI 0.9 13.4 1.3 — 15.6

Balance, June 30, 2024 $ ( 30.7 ) $ ( 77.9 ) $ ( 4.9 ) $ 23.3 $ ( 90.2 )

Balance, September 29, 2024 $ ( 29.8 ) $ ( 64.5 ) $ ( 3.6 ) $ 23.3 $ ( 74.6 )

Attributable to noncontrolling interests:

Balance, March 31, 2024 $ — $ 7.1 $ — $ — $ 7.1

Balance, June 30, 2024 $ — $ 6.5 $ — $ — $ 6.5

OCI before reclassifications — 4.0 — — 4.0

1 unchanged sentence

Net current-period OCI — 4.0 — — 4.0

Balance, June 30, 2024 $ — $ 6.5 $ — $ — $ 6.5

The changes in AOCI by component, net of tax, for the year-to-date period ended June 30, 2024 were as follows (in millions):

Balance, September 29, 2024 $ — $ 10.5 $ — $ — $ 10.5

The changes in AOCI by component, net of tax, for the year-to-date period ended September 29, 2024 were as follows (in millions):

benefit plans Currency

5 unchanged sentences

Net current-period OCI 2.7 3.9 2.8 ( 0.8 ) 8.6

Balance, June 30, 2024 $ ( 30.7 ) $ ( 77.9 ) $ ( 4.9 ) $ 23.3 $ ( 90.2 )

Balance, September 29, 2024 $ ( 29.8 ) $ ( 64.5 ) $ ( 3.6 ) $ 23.3 $ ( 74.6 )

Attributable to noncontrolling interests:

3 unchanged sentences

Net current-period OCI — 3.2 — — 3.2

Balance, June 30, 2024 $ — $ 6.5 $ — $ — $ 6.5

Balance, September 29, 2024 $ — $ 10.5 $ — $ — $ 10.5

(a) Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans (see Note 12).

2 unchanged sentences

(d) Represents the net change in deferred tax asset valuation allowances on changes in AOCI balances between the balance sheet dates.

The income tax provision for the quarter and year-to-date period ended June 30, 2024 includes $ 0.8 million of a tax benefit for the recognition of a stranded deferred tax valuation allowance that was associated with the Company’s interest rate swap due to its maturity (see Notes 9 and 13).

The changes in AOCI by component, net of tax, for the quarter ended July 2, 2023 were as follows (in millions):

The income tax provision for the year-to-date period ended September 29, 2024 includes $ 0.8 million of a tax benefit for the recognition of a stranded deferred tax valuation allowance that was associated with the Company’s interest rate swap due to its maturity (see Notes 9 and 13).

The changes in AOCI by component, net of tax, for the quarter ended October 1, 2023 were as follows (in millions):

benefit plans Currency

1 unchanged sentence

Attributable to ATI:

Balance, April 2, 2023 $ ( 33.6 ) $ ( 71.2 ) $ ( 2.1 ) $ 19.3 $ ( 87.6 )

Balance, July 2, 2023 $ ( 32.6 ) $ ( 73.6 ) $ ( 1.1 ) $ 20.0 $ ( 87.3 )

OCI before reclassifications — ( 7.1 ) ( 2.4 ) — ( 9.5 )

1 unchanged sentence

Net current-period OCI 1.0 ( 7.1 ) ( 1.0 ) — ( 7.1 )

Balance, July 2, 2023 $ ( 32.6 ) $ ( 73.6 ) $ ( 1.1 ) $ 20.0 $ ( 87.3 )

Balance, October 1, 2023 $ ( 31.6 ) $ ( 80.7 ) $ ( 2.1 ) $ 20.0 $ ( 94.4 )

Attributable to noncontrolling interests:

Balance, April 2, 2023 $ — $ 12.1 $ — $ — $ 12.1

Balance, July 2, 2023 $ — $ 6.4 $ — $ — $ 6.4

OCI before reclassifications — ( 2.1 ) — — ( 2.1 )

1 unchanged sentence

Net current-period OCI — ( 2.1 ) — — $ ( 2.1 )

Balance, July 2, 2023 $ — $ 6.4 $ — $ — $ 6.4

The changes in AOCI by component, net of tax, for the year-to-date period ended July 2, 2023 were as follows (in millions):

Balance, October 1, 2023 $ — $ 4.3 $ — $ — $ 4.3

The changes in AOCI by component, net of tax, for the year-to-date period ended October 1, 2023 were as follows (in millions):

benefit plans Currency

5 unchanged sentences

Net current-period OCI 3.1 ( 10.6 ) ( 15.6 ) ( 3.9 ) ( 27.0 )

Balance, July 2, 2023 $ ( 32.6 ) $ ( 73.6 ) $ ( 1.1 ) $ 20.0 $ ( 87.3 )

Balance, October 1, 2023 $ ( 31.6 ) $ ( 80.7 ) $ ( 2.1 ) $ 20.0 $ ( 94.4 )

Attributable to noncontrolling interests:

3 unchanged sentences

Net current-period OCI — ( 3.4 ) — — $ ( 3.4 )

Balance, July 2, 2023 $ — $ 6.4 $ — $ — $ 6.4

Balance, October 1, 2023 $ — $ 4.3 $ — $ — $ 4.3

(a) Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans (see Note 12).

7 unchanged sentences

subsidiaries.

Reclassifications out of AOCI for the quarters and year-to-date periods ended June 30, 2024 and July 2, 2023 were as follows:

Reclassifications out of AOCI for the quarters and year-to-date periods ended September 29, 2024 and October 1, 2023 were as follows:

Details about AOCI Components

(In millions)

Three months ended June 30, 2024 Three months ended July 2, 2023 Year-to-date period ended June 30, 2024 Year-to-date period ended July 2, 2023 Affected line item in the statements

Three months ended September 29, 2024 Three months ended October 1, 2023 Year-to-date

September 29, 2024 Year-to-date period ended October 1, 2023 Affected line item in the statements

of operations

27 unchanged sentences

Future adjustments could have a material adverse effect on the Company’s consolidated results of operations in a given period, but the Company cannot reliably predict the amounts of such future adjustments.

At June 30, 2024, the Company’s reserves for environmental remediation obligations totaled approximately $ 14 million, of which $ 6 million was included in other current liabilities.

At September 29, 2024, the Company’s reserves for environmental remediation obligations totaled approximately $ 12 million, of which $ 6 million was included in other current liabilities.

The reserve includes estimated probable future costs of $ 3 million for federal Superfund and comparable state-managed sites;

$ 7 million for formerly owned or operated sites for which the Company has remediation or indemnification obligations;

$ 3 million for owned or controlled sites at which Company operations have been or plan to be discontinued;

and $ 1 million for sites utilized by the Company in its ongoing operations.

and $ 2 million for owned or controlled sites at which Company operations have been or plan to be discontinued.

The timing of expenditures depends on a number of factors that vary by site.

11 unchanged sentences

Due to the complex nature of the employee retention credit computations, the Company deferred recognition of a portion of the tax credits pending the completion of any potential audit or examination, or the expiration of the related statute of limitations.

During the quarter ended June 30, 2024, the Company recognized a benefit of $ 8.6 million in cost of sales on the consolidated statement of operations due to the expiration of the statute of limitations for a portion of these credits.

As of June 30, 2024, the Company has approximately $ 20 million of remaining deferred retention tax credits, of which the statue of limitations expire for $ 8 million in 2024 with the remaining expirations occurring in 2025 and 2027.

During the quarter and year-to-date period ended September 29, 2024, the Company recognized a benefit of $ 4.8 million and $ 13.4 million, respectively, in cost of sales on the consolidated statement of operations due to the expiration of the statute of limitations for a portion of these credits.

As of September 29, 2024, the Company has approximately $ 15 million of remaining deferred retention tax credits, of which the statute of limitations expire for $ 3 million in 2024 with the remaining expirations occurring in 2025 and 2027.

There is pending legislation that could extend the statute of limitations, which would impact the timing of the expected recognition of the remaining credits if and when such legislation is passed.

Subsequent Event

On August 2, 2024, the Company received notice that it and certain of its affiliates are parties to a lawsuit captioned William L.

In August 2024, the Company received notice that it and certain of its affiliates are parties to two lawsuits captioned (1) William L.

Schoen, Mary J.

4 unchanged sentences

ATI Inc., The Allegheny Technologies Incorporated Pension Plan Administrative Committee, State Street Global Advisors Trust Co., and John Does 1-5 (Case No.

2:24-cv-01109) and filed in federal district court for the Western District of Pennsylvania.

The lawsuit asserts various claims associated with the Company’s October 2023 purchase of group annuity contracts to transfer a portion of its U.S.

2:24-cv-01109) and (2) J ohn Souza and Karen Souza, individually and as representatives on behalf of a class of similarly situated persons v.

and State Street Global Advisors Trust Co.

2:24-cv-01214) , both of which are filed in federal district court for the Western District of Pennsylvania.

These lawsuits assert various claims associated with the Company’s October 2023 purchase of group annuity contracts to transfer a portion of its U.S.

qualified defined benefit pension plan obligations to Athene Annuity and Life Company and Athene Annuity & Life Assurance of New York.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements