ATI INC. Overview
ATI is a global manufacturer of technically advanced specialty materials and complex components. Our largest markets are aerospace & defense, representing over 45% of sales for the nine months endedSeptember 30, 2022 , led by products for jet engines. Additionally, we have a strong presence in the energy markets, including oil & gas, downstream processing, and specialty energy, as well as the medical and electronics markets. In aggregate, these markets represent more than 75% of our 2022 revenue. ATI is a market leader in manufacturing differentiated products that require our materials science capabilities and unique process technologies, including our new product development competence. Our capabilities range from cast/wrought and powder alloy development to final production of highly engineered finished components, including those used in next-generation jet engines and 3D-printed aerospace products. Third quarter 2022 sales increased 42% to$1.03 billion , compared to sales of$725.7 million for the third quarter of 2021, primarily due to a significant recovery in demand for commercial aerospace products, which is our largest end market. Our gross profit for the third quarter of 2022 was$183.8 million , or 17.8% of sales, compared to$82.5 million , or 11.4% of sales, for the third quarter 2021, a$101.3 million , or 640 basis point, increase reflecting benefits of our ongoing transformation with a focus on the key growth markets of aerospace and defense, and our streamlined value-add production capabilities. Third quarter 2021 results included negative impacts from a labor strike of$22.9 million , which are excluded from our segment results and included costs for below-normal operating rates as production returned to normal levels following the end of the strike inmid-July 2021 . Third quarter 2022 and 2021 results include$2.6 million and$2.3 million , respectively, of net credits for previously-recognized restructuring charges, primarily related to lowered severance-related reserves based on changes in planned operating rates and revised workforce reduction estimates. Third quarter 2021 results include a$64.9 million retirement benefit settlement gain related to a plan termination that eliminated certain postretirement medical benefit liabilities, which is recorded in nonoperating retirement benefit income/expense on the consolidated statement of operations. Other nonoperating income (expense) for the third quarter of 2022 includes a$19.9 million charge for the settlement of litigation withU.S. Magnesium, LLC related to the closed Rowley, UT titanium sponge production facility. Other nonoperating income (expense) for the third quarter of 2021 includes a$13.7 million gain on the sale of our Flowform Products business. All of these items are excluded from segment EBITDA. Our pretax income was$67.4 million in the third quarter of 2022, compared to$77.2 million in the prior year period. Income tax expense for the third quarter of 2022 was$3.0 million primarily related to our Asian precision rolled strip business, and income tax expense for the third quarter of 2021 was$22.0 million , including$15.5 million of discrete tax expense related to the retirement benefit settlement gain. ATI continues to maintain a valuation allowance on itsU.S. deferred tax assets. Net income attributable to ATI was$61.1 million , or$0.42 per share, in the third quarter of 2022, compared to$48.7 million , or$0.35 per share, for the third quarter of 2021. Adjusted EBITDA was$141.1 million , or 13.7% of sales, for the third quarter 2022, and$79.9 million , or 11.0% of sales, for the prior year third quarter. EBITDA and Adjusted EBITDA are measures utilized by ATI that we believe are useful to investors because these measures are commonly used to analyze companies on the basis of operating performance, leverage and liquidity. Furthermore, analogous measures are used by industry analysts to evaluate operating performance. EBITDA and Adjusted EBITDA are non-GAAP measures and are not intended to represent, and should not be considered more meaningful than, or as alternatives to, a measure of operating performance as determined in accordance withU.S. generally accepted accounting principles (U.S. GAAP). We categorically define EBITDA as income from continuing operations before interest and income taxes, plus depreciation and amortization, goodwill impairment charges and debt extinguishment charges. We categorically define Adjusted EBITDA as EBITDA excluding significant non-recurring charges or credits, restructuring charges/credits, strike related costs, long-lived asset impairments and other postretirement/pension curtailment and settlement gains and losses. EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow for management's discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments and capital expenditures. See the Liquidity and Financial Condition section of Management's Discussion and Analysis for a reconciliation of amounts reported underU.S. GAAP to these non-GAAP measures. Compared to the third quarter 2021, sales increased 53% in the HPMC business segment and 35% in the AA&S business segment. In aggregate, ATI's aerospace & defense markets sales increased 87% to$530 million in the third quarter 2022, compared to$283 million the third quarter 2021, reflecting increasing demand for commercial aerospace jet engine and 27 --------------------------------------------------------------------------------
airframe products. In the HPMC segment, third quarter 2022 sales of commercial jet engine products increased 137% compared to the prior year period.
Results for the first nine months of 2022 were sales of$2.83 billion and income before tax of$76.6 million , compared to sales of$2.03 billion and income before tax of$39.9 million for the first nine months of 2021. Our results for the first nine months of 2022 reflect benefits of our ongoing transformation with a focus on the key growth markets of aerospace and defense, most notably jet engine materials and components, and our streamlined value-add production capabilities. Our gross profit was$529 million , or 18.7% of sales, compared to gross profit of$211.0 million , or 10.4% of sales, for the first nine months of 2021, a$318 million , or 830 basis point, increase. Results in the first nine months of 2022 include$34.3 million of benefits from management actions to access available grants and other forms of COVID-19 relief available from previously-enactedU.S. legislation. These benefits included$16.8 million of a$22.4 million grant under the Aviation Manufacturing Jobs Protection (AMJP) program for our operations in the HPMC segment, which helped fund ongoing wage and benefit costs for a six-month period throughMay 2022 , and$17.5 million in employee retention credits applicable across all of ATI's domestic operations, largely for preserving jobs throughout the global pandemic-related economic downturn. Additionally, our strategic transformation efforts within the AA&S segment to eliminate production of lower-margin standard stainless sheet products in the SRP business is now complete. The 2021 results include the$63.2 million of strike related costs which are excluded from segment results. The nine month 2022 results include a$141.0 million loss on theMay 12, 2022 sale of theSheffield, UK operations, which is reported in loss on asset sales and sales of businesses, net. TheSheffield operations were part of the HPMC segment, and were not well-aligned with ATI's strategic focus. In 2021, theSheffield operations had external sales of$36 million , with over 80% of its sales to energy markets, primarily oil & gas, and had a net loss before tax of$9 million . Loss on asset sales and sales of businesses, net, for the first nine months of 2022 also included a$6.8 million gain from the sale of assets from ourPico Rivera, CA operations as part of the strategy to exit standard stainless products. Nine month 2022 and 2021 results also include$5.0 million and$8.5 million , respectively, of net credits for adjustments to previously-recognized restructuring charges. The gains/losses on sale and restructuring credits are excluded from segment results. Results for the first nine months of 2021 include a$64.9 million retirement benefit settlement gain related to a plan termination that eliminated certain postretirement medical benefit liabilities, which is recorded in nonoperating retirement benefit income/expense on the consolidated statement of operations. Other nonoperating income (expense) for the first nine months of 2022 includes a$28.5 million charge for the settlement of litigation withU.S. Magnesium, LLC related to the closed Rowley, UT titanium sponge production facility, partially offset by a$9.9 million benefit from the A&T Stainless joint venture's settlement of Section 232 claims, which is included in AA&S segment results. Other nonoperating income (expense) for the first nine months of 2021 includes a$13.7 million gain on the sale of our Flowform Products business. Our pretax income was$76.6 million in the first nine months of 2022, compared to income of$39.9 million in the prior year period. Income tax expense for the first nine months of 2022 was$11.3 million primarily related to our Asian precision rolled strip business, and income tax expense for the first nine months of 2021 was$31.5 million , including$15.5 million of discrete tax expense related to the retirement benefit settlement gain. Net income attributable to ATI was$54.0 million , or$0.42 per share, in the first nine months of 2022, compared to a net loss attributable to ATI of$8.4 million , or ($0.07 ) per share, for the first nine months of 2021. Compared to the first nine months of 2021, sales increased 42% in the HPMC business segment and 37% in the AA&S business segment. Sales to the aerospace & defense markets in the HPMC segment were 56% higher than the first nine months of 2021, due to improvements in the commercial aerospace market. AA&S sales reflect higher sales across most major markets, particularly an 82% increase in the aerospace & defense markets and a 46% increase in the energy market. Prior year results included impacts from the USW labor strike, which predominantly affected the AA&S segment. 28
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Comparative information for our overall revenues (in millions) by end market and
their respective percentages of total revenues for the three and nine month
periods ended
Three months ended Three months ended
Markets September 30, 2022 September 30, 2021
Aerospace & Defense:
Jet Engines- Commercial $ 312.6 30 % $ 128.8 18 %
Airframes- Commercial 131.4 13 % 71.3 10 %
Defense 86.1 8 % 82.8 11 %
Total Aerospace & Defense $ 530.1 51 % $ 282.9 39 %
Energy:
Oil & Gas 127.1 12 % 92.4 13 %
Specialty Energy 65.6 7 % 73.8 10 %
Total Energy 192.7 19 % 166.2 23 %
Automotive 69.6 7 % 78.3 11 %
Electronics 48.5 5 % 56.5 8 %
Construction/Mining 47.8 5 % 25.3 3 %
Medical 47.4 4 % 34.3 5 %
Food Equipment & Appliances 45.2 4 % 43.4 6 %
Other 50.7 5 % 38.8 5 %
Total $ 1,032.0 100 % $ 725.7 100 %
Nine months ended Nine months ended
Markets September 30, 2022 September 30, 2021
Aerospace & Defense:
Jet Engines- Commercial $ 757.9 27 % $ 364.5 18 %
Airframes- Commercial 331.2 12 % 183.9 9 %
Defense 244.2 9 % 269.9 13 %
Total Aerospace & Defense $ 1,333.3 48 % $ 818.3 40 %
Energy:
Oil & Gas 355.4 13 % 231.0 11 %
Specialty Energy 197.3 7 % 202.6 10 %
Total Energy 552.7 20 % 433.6 21 %
Automotive 236.1 8 % 237.8 12 %
Electronics 149.5 5 % 155.4 8 %
Food Equipment & Appliances 141.9 5 % 99.5 5 %
Construction/Mining 139.7 5 % 89.7 4 %
Medical 123.1 4 % 95.3 5 %
Other 149.3 5 % 104.8 5 %
Total $ 2,825.6 100 % $ 2,034.4 100 %
For the third quarter 2022, international sales of $421 million , or 41% of total
sales, increased from $328 million in the third quarter 2021. ATI's
international sales are mostly to the aerospace, energy, electronics, automotive
and medical markets.
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Comparative information for our major products based on their percentages of
revenues are shown below. We no longer report standard stainless product sales
as a separate product category. Prior period information includes these sales
within the nickel-based alloys and specialty alloys category. HRPF conversion
service sales in the AA&S segment are excluded from this presentation.
Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021
Nickel-based alloys and specialty alloys 54 % 45 % 52 % 43 %
Precision forgings, castings and components 15 % 15 % 15 % 16 %
Precision rolled strip products 12 % 19 % 14 % 19 %
Titanium and titanium-based alloys 11 % 12 % 11 % 12 %
Zirconium and related alloys 8 % 9 % 8 % 10 %
Total 100 % 100 % 100 % 100 %
Segment EBITDA for the third quarter 2022 was $161.6 million , or 15.7% of sales,
compared to segment EBITDA of $94.2 million , or 13.0% of sales, for the third
quarter of 2021. Segment EBITDA for the first nine months of 2022 was $469.9
million , or 16.6% of sales, compared to segment EBITDA of $241.7 million , or
11.9% of sales, for the first nine months of 2021. Our measure of segment
EBITDA, which we use to analyze the performance and results of our business
segments, categorically excludes income taxes, depreciation and amortization,
corporate expenses, net interest expense, closed operations and other income
(expense), charges for goodwill and asset impairments, restructuring and other
credits/charges, strike related costs, debt extinguishment charges and gains or
losses on asset sales and sales of businesses. Results on our management basis
of reporting were as follows (in millions):
Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021
Sales:
High Performance Materials & Components $ 457.6 $ 300.0 $ 1,195.3 $ 841.5
Advanced Alloys & Solutions 574.4 425.7 1,630.3 1,192.9
Total external sales $ 1,032.0 $ 725.7 $ 2,825.6 $ 2,034.4
EBITDA:
High Performance Materials & Components $ 85.8 $ 37.4 $ 214.2 $ 99.2
% of Sales 18.8 % 12.5 % 17.9 % 11.8 %
Advanced Alloys & Solutions 75.8 56.8 255.7 142.5
% of Sales 13.2 % 13.3 % 15.7 % 11.9 %
Total segment EBITDA $ 161.6 $ 94.2 $ 469.9 $ 241.7
% of Sales 15.7 % 13.0 % 16.6 % 11.9 %
Corporate expenses (14.2) (12.9) (47.9) (41.0)
Closed operations and other expense (6.3) (1.4) (12.8) (4.5)
ATI Adjusted EBITDA 141.1 79.9 409.2 196.2
Depreciation & amortization (35.6) (35.6) (107.1) (108.0)
Interest expense, net (20.8) (25.1) (67.8) (72.2)
Restructuring and other credits (charges) (17.3) 2.3 (23.5) 8.5
Strike related costs - (22.9) - (63.2)
Retirement benefit settlement gain - 64.9 - 64.9
Gain (loss) on asset sales and sales of
businesses, net - 13.7 (134.2) 13.7
Income before income taxes 67.4 77.2 76.6 39.9
Income tax provision 3.0 22.0 11.3 31.5
Net income 64.4 55.2 65.3 8.4
Less: Net income attributable to noncontrolling
interests 3.3 6.5 11.3 16.8
Net income (loss) attributable to ATI $ 61.1 $ 48.7 $ 54.0 $ (8.4)
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As part of managing the performance of our business, we focus on controlling
Managed Working Capital , which we define as gross accounts receivable,
short-term contract assets and gross inventories, less accounts payable and
short-term contract liabilities. We exclude the effects of inventory valuation
reserves and reserves for uncollectible accounts receivable when computing this
non-GAAP performance measure, which is not intended to replace Working Capital
or to be used as a measure of liquidity. We assess Managed Working Capital
performance as a percentage of the prior three months annualized sales to
evaluate the asset intensity of our business. At September 30, 2022 , Managed
Working Capital decreased as a percentage of annualized total ATI sales to 36.5%
compared to 37.5% at December 31, 2021 , as the operating efficiency of the
business improved. Days sales outstanding, which measures actual collection
timing for accounts receivable, worsened by 8% as of September 30, 2022 compared
to year end 2021, primarily due to increased foreign sales that generally have a
longer collection cycle. Gross inventory turns improved 13% as of September 30,
2022 compared to year end 2021, as an improvement in the pace of inventory flow
across our operations was partially offset by higher overall inventory levels
due to both rising raw material values and management actions to secure adequate
supplies of key raw materials in response to supply chain uncertainties.
The computations of
September 30, December 31,
(In millions) 2022 2021
Accounts receivable $ 678.1 $ 470.0
Short-term contract assets 70.2 53.9
Inventory 1,216.9 1,046.3
Accounts payable (410.2) (375.5)
Short-term contract liabilities (120.7) (116.2)
Subtotal 1,434.3
1,078.5
Allowance for doubtful accounts 3.9 3.8 Inventory valuation reserves 69.4 65.4 Managed working capital$ 1,507.6 $ 1,147.7 Annualized prior 3 months sales$ 4,128.0 $ 3,061.5 Managed working capital as a % of annualized sales 36.5 % 37.5 % Business Segment Results
High Performance Materials & Components Segment
Third quarter 2022 sales were$457.6 million , increasing 53% compared to the third quarter 2021, reflecting increasing commercial aerospace demand. Sales to the commercial aerospace market increased 116%, reflecting a 137% increase in commercial jet engines, while defense sales declined 27% based on the timing of orders for the next phase of several defense programs. Overall aerospace and defense market sales were 82% of total HPMC sales in the third quarter of 2022. Sales to the energy markets decreased 43%, mainly due to lower specialty energy sales to Asian markets. 31
-------------------------------------------------------------------------------- Comparative information for our HPMC segment revenues (in millions) by market and their respective percentages of the segment's overall revenues for the three month periods endedSeptember 30, 2022 and 2021 is as follows: Three months ended Three months ended Markets September 30, 2022 September 30, 2021 Aerospace & Defense: Jet Engines- Commercial $ 285.7 63 % $ 120.4 40 % Airframes- Commercial 49.8 11 % 35.0 12 % Defense 38.5 8 % 52.1 17 % Total Aerospace & Defense 374.0 82 % 207.5 69 % Energy: Oil & Gas 6.9 1 % 10.4 3 % Specialty Energy 26.4 6 % 47.1 16 % Total Energy 33.3 7 % 57.5 19 % Medical 22.3 5 % 16.8 6 % Construction/Mining 9.5 2 % 5.6 2 % Other 18.5 4 % 12.6 4 % Total $ 457.6 100 % $ 300.0 100 % International sales represented 53% of total segment sales for the third quarter 2022, which was consistent with the prior year period. Comparative information for the HPMC segment's major product categories, based on their percentages of revenue for the three months endedSeptember 30, 2022 and 2021, is as follows: Three months ended September 30, 2022 2021 Nickel-based alloys and specialty alloys 52 % 46 % Precision forgings, castings and components 32 % 35 % Titanium and titanium-based alloys 16 % 19 % Total 100 % 100 % Segment EBITDA in the third quarter 2022 increased to$85.8 million , or 18.8% of total sales, compared to$37.4 million , or 12.5% of total sales, for the third quarter 2021, a 630 basis point improvement in operating margins reflecting higher sales of next-generation jet engine products and higher facility utilization levels. Sales for the first nine months of 2022 were$1.20 billion , increasing 42% compared to the first nine months of 2021, reflecting higher sales across most end markets, led by commercial jet engines. Consistent with the trends in quarterly results, sales to the commercial aerospace market increased 91%, reflecting a 106% increase in commercial jet engines, while defense sales declined 30% based on the timing of orders for the next phase of several defense programs. Sales to the energy markets decreased 12% with higher sales for oil & gas applications more than offset by declines in demand for specialty energy applications. 32
-------------------------------------------------------------------------------- Comparative information for our HPMC segment revenues (in millions) by market and their respective percentages of the segment's overall revenues for the nine month periods endedSeptember 30, 2022 and 2021 is as follows: Nine months ended Nine months ended Markets September 30, 2022 September 30, 2021 Aerospace & Defense: Jet Engines- Commercial $ 696.1 58 % $ 338.3 40 % Airframes- Commercial 130.9 11 % 95.6 11 % Defense 120.6 10 % 172.0 21 % Total Aerospace & Defense 947.6 79 % 605.9 72 % Energy: Oil & Gas 32.1 3 % 29.0 3 % Specialty Energy 88.0 7 % 107.6 13 % Total Energy 120.1 10 % 136.6 16 % Medical 52.3 5 % 42.6 5 % Construction/Mining 25.8 2 % 16.8 2 % Other 49.5 4 % 39.6 5 % Total $ 1,195.3 100 % $ 841.5 100 % International sales represented 54% of total segment sales for the first nine months of 2022. Comparative information for the HPMC segment's major product categories, based on their percentages of revenue for the nine months endedSeptember 30, 2022 and 2021, is as follows: Nine months ended
2022 2021
Nickel-based alloys and specialty alloys
50 % 43 %
Precision forgings, castings and components
34 % 37 %
Titanium and titanium-based alloys 16 % 20 % Total 100 % 100 % Segment EBITDA in the first nine months of 2022 increased to$214.2 million , or 17.9% of total sales, compared to$99.2 million , or 11.8% of total sales, for the first nine months of 2021, a 610 basis point improvement in operating margins reflecting higher sales of next-generation jet engine products and higher facility utilization levels. Results in the first nine months of 2022 include$27.5 million of benefits from the AMJP program and employee retention credits, partially offset by labor and other costs related to ramp readiness. HPMC first nine months of 2022 results reflect an ongoing recovery with improvements in many of our key end markets, most notably jet engine materials and components, as well as the continued benefits from our aggressive 2020 cost cutting actions and recent share gains. Looking ahead to the fourth quarter of 2022, we anticipate continued strong demand for commercial aerospace products. Demand for our commercial airframe long-form products in the HPMC segment is projected to increase over the longer-term due in part to the reordering of the commercial aerospace supply chain in response to theRussia /Ukraine conflict. While availability of raw material inputs for our melting processes remains adequate during the ongoingRussia /Ukraine conflict, changes in raw material prices may cause variability in profit margins based on the timing of index pricing mechanisms.
Advanced Alloys & Solutions Segment
Third quarter 2022 sales were$574.4 million , increasing 35% compared to the third quarter of 2021. The prior year period included impacts from a labor strike that ended inmid-July 2021 , which reduced sales in that period. Sales to the aerospace & defense markets increased 107%, due in part to a significant increase in commercial airframe demand for various flat-rolled product forms. Sales to the energy markets were 47% higher than the prior year quarter, led by chemical and hydrocarbon industry applications increasing 160%. Sales at our STAL Precision Rolled Strip facility inChina continue to be negatively impacted by Covid-related market interruptions. 33 -------------------------------------------------------------------------------- Comparative information for our AA&S segment revenues (in millions) by market and their respective percentages of the segment's overall revenues for the three month periods endedSeptember 30, 2022 and 2021 is shown below. Three months ended Three months ended Markets September 30, 2022 September 30, 2021 Energy: Oil & Gas $ 120.2 21 % $ 82.0 19 % Specialty Energy 39.2 7 % 26.7 6 % Total Energy 159.4 28 % 108.7 25 % Aerospace & Defense: Jet Engines- Commercial 26.9 5 % 8.4 2 % Airframes- Commercial 81.6 14 % 36.3 9 % Defense 47.6 8 % 30.7 7 % Total Aerospace & Defense 156.1 27 % 75.4 18 % Automotive 66.1 11 % 76.2 18 % Electronics 47.8 8 % 56.1 13 % Food Equipment & Appliances 45.0 8 % 43.4 10 % Construction/Mining 38.3 7 % 19.7 5 % Other 61.7 11 % 46.2 11 % Total $ 574.4 100 % $ 425.7 100 % International sales represented 31% of total segment sales for the third quarter 2022, compared to 40% in the prior year's third quarter. Comparative information for the AA&S segment's major product categories, based on their percentages of revenue for the three months endedSeptember 30, 2022 and 2021, are presented in the following table. We no longer report standard stainless product sales as a separate product category. Prior period information includes these sales within the nickel-based alloys and specialty alloys category. HRPF conversion service sales are excluded from this presentation. Three months ended
2022 2021
Nickel-based alloys and specialty alloys 57 % 45 % Precision rolled strip products 22 % 33 % Zirconium and related alloys 14 % 15 % Titanium and titanium-based alloys 7 % 7 % Total 100 % 100 % Segment EBITDA was$75.8 million , or 13.2% of sales, for the third quarter 2022, compared to segment EBITDA of$56.8 million , or 13.3% of sales, for the third quarter 2021. Although results reflect a stronger product mix of nickel-alloy mill products as our exit of standard stainless products was completed, declining raw material surcharges and negative impacts on our STAL Precision Rolled Strip facility inChina from Covid-related market interruptions resulted in margins remaining flat to prior year. Strike related costs of$21.5 million for the third quarter of 2021, primarily related to lower productivity and utilization levels, were excluded from AA&S segment results. Sales for the first nine months of 2022 were$1.63 billion , increasing 37% compared to the first nine months of 2021, which included impacts from a multi-month labor strike which reduced sales in the prior year period. Sales to the aerospace & defense markets increased 82%, due in part to a significant increase in commercial airframe demand for various flat-rolled product forms. Sales to the energy markets were 46% higher led by chemical and hydrocarbon industry applications increasing 104%. Increased sales prices, resulting from higher base prices and elevated raw material pass-through mechanisms, also drove revenue increases compared to the prior year-to-date period and helped offset inflationary impacts. Sales at our STAL Precision Rolled Strip facility inChina continue to be negatively impacted by Covid-related market interruptions. 34 -------------------------------------------------------------------------------- Comparative information for our AA&S segment revenues (in millions) by market and their respective percentages of the segment's overall revenues for the nine month periods endedSeptember 30, 2022 and 2021 is shown below. Nine months ended Nine months ended Markets September 30, 2022 September 30, 2021 Energy: Oil & Gas 323.3 20 % 202.0 17 % Specialty Energy 109.3 6 % 95.0 8 % Total Energy 432.6 26 % 297.0 25 % Aerospace & Defense: Jet Engines- Commercial 61.8 4 % 26.2 2 % Airframes- Commercial 200.3 12 % 88.3 8 % Defense 123.6 8 % 97.9 8 % Total Aerospace & Defense 385.7 24 % 212.4 18 % Automotive 227.4 14 % 232.3 20 % Electronics 147.6 9 % 154.5 13 % Food Equipment & Appliances 141.7 9 % 99.4 8 % Construction/Mining 113.9 7 % 72.9 6 % Other 181.4 11 % 124.4 10 % Total $ 1,630.3 100 % $ 1,192.9 100 % International sales represented 32% of total segment sales for the first nine months of 2022. Comparative information for the AA&S segment's major product categories, based on their percentages of revenue for the nine months endedSeptember 30, 2022 and 2021, are presented in the following table. We no longer report standard stainless product sales as a separate product category. Prior period information includes these sales within the nickel-based alloys and specialty alloys category. HRPF conversion service sales are excluded from this presentation. Nine months ended September 30, 2022 2021 Nickel-based alloys and specialty alloys 55 % 42 % Precision rolled strip products 25 % 34 % Zirconium and related alloys 14 % 17 % Titanium and titanium-based alloys 6 % 7 % Total 100 % 100 % Segment EBITDA was$255.7 million , or 15.7% of sales, for the first nine months of 2022, compared to segment EBITDA of$142.5 million , or 11.9% of sales, for the first nine months of 2021. Compared to the prior year period, results reflect a stronger product mix of nickel-alloy mill products as we completed our exit of standard stainless products. Sales of exotic materials from our Specialty Alloys & Components business and improved operating performance also drove AA&S segment margin growth. The 2022 segment EBITDA includes a$9.9 million benefit from the A&T Stainless joint venture's settlement of Section 232 tariff claims and$6.8 million of employee retention credits, partially offset by labor and other costs related to ramp readiness. Strike related costs, primarily related to lower productivity and utilization levels, were excluded from AA&S segment results. We expect AA&S sales to be sequentially lower in the fourth quarter of 2022 based on falling raw material surcharges and planned operating rates to further reduce managed working capital. Sales of commercial airframe flat-form products in the AA&S segment are projected to increase over the longer-term due in part to the repositioning of the commercial aerospace supply chain in response to theRussia /Ukraine conflict. While availability of raw materials for our melting processes remains adequate during the ongoingRussia /Ukraine conflict, changes in raw material prices may cause variability in profit margins based on the timing of index pricing mechanisms. 35 --------------------------------------------------------------------------------
Corporate Items
Corporate expenses for the third quarter of 2022 were$14.2 million , compared to$12.9 million for the third quarter 2021. For the nine months endedSeptember 30, 2022 , corporate expenses were$47.9 million , compared to$41.0 million for the nine months endedSeptember 30, 2021 . The current year increases reflect business transformation initiatives and higher incentive compensation costs compared to the prior year periods. Closed operations and other expense for the third quarter 2022 was$6.3 million , compared to$1.4 million for the third quarter 2021. For the nine months endedSeptember 30, 2022 , closed operations and other expenses were$12.8 million , compared to$4.5 million for the nine months endedSeptember 30, 2021 . Increases in closed operations and other expense in 2022 are largely due to changes in foreign currency remeasurement impacts primarily related to ATI's EuropeanTreasury operation and higher legal costs for closed facilities.
The following is depreciation & amortization by each business segment:
Three months ended September
30, Nine months ended September 30,
2022 2021 2022 2021
High Performance Materials & Components
$ 51.5 $ 57.0 Advanced Alloys & Solutions 17.1 16.3 50.0 47.9 Other 1.8 1.1 5.6 3.1$ 35.6 $ 35.6 $ 107.1 $ 108.0 Interest expense, net of interest income, in the third quarter 2022 was$20.8 million , compared to$25.1 million for the third quarter 2021. On a year-to-date basis, net interest expense was$67.8 million for the first nine months of 2022 compared to$72.2 million for the first nine months of 2021. The declines reflect lower debt balances in 2022. Capitalized interest reduced interest expense by$2.0 million in the third quarter 2022 and$1.3 million in the third quarter 2021. For the nine months endedSeptember 30, 2022 and 2021, capitalized interest was$2.6 million and$3.8 million , respectively. Restructuring and other charges/credits were charges of$17.3 million and$23.5 million for the third quarter and nine months endedSeptember 30, 2022 , respectively, reflecting a$19.9 million and$28.5 million charge, respectively, for the settlement of litigation withU.S. Magnesium, LLC related to the closed Rowley, UT titanium sponge production facility, partially offset by credits of$2.6 million and$5.0 million , respectively, for a reduction in severance-related reserves related to approximately 60 and 110 employees, respectively, based on changes in planned operating rates and revised workforce reduction estimates. Restructuring charges for the third quarter endedSeptember 30, 2021 were a net credit of$2.3 million for a reduction in severance-related reserves related to approximately 50 employees based on changes in planned operating rate and revised workforce reduction estimates. Restructuring charges for the nine months endedSeptember 30, 2021 were a net credit of$8.5 million , reflecting a$9.2 million reduction in severance-related reserves related to approximately 250 employees based on changes in planned operating rates and revised workforce reduction estimates, partially offset by$0.7 million of other costs related to facility idlings. These items were excluded from segment EBITDA. Cash payments associated with prior restructuring programs were$2.8 million in the first nine months of 2022. Of the$9.9 million of remaining reserves associated with these restructuring actions as ofSeptember 30, 2022 ,$2.8 million are expected to be paid within the next year. Strike related costs were$22.9 million and$63.2 million in the third quarter and first nine months of 2021, respectively. For the third quarter of 2021,$21.5 million were excluded from AA&S segment EBITDA and$1.4 million were excluded from HPMC segment EBITDA. For the first nine months of 2021,$59.7 million were excluded from AA&S segment EBITDA and$3.5 million were excluded from HPMC segment EBITDA. These items primarily consisted of overhead costs recognized in the period due to below-normal operating rates, higher costs for outside conversion activities, and ongoing benefit costs for striking employees. Third quarter 2021 results include a$64.9 million retirement benefit settlement gain related to a plan termination that eliminated certain postretirement medical benefit liabilities. This was effective upon theJuly 2021 ratification of the new USW collective bargaining agreement. This gain, which is recorded in nonoperating retirement benefit income/expense on the consolidated statement of operations and is excluded from segment EBITDA, was comprised of$43.0 million of long-term postretirement benefit liabilities as ofJuly 2021 and$21.9 million of amounts recorded in accumulated other comprehensive income at that date. 36 -------------------------------------------------------------------------------- Gain/loss on asset sales and sales of businesses, net, for the first nine months of 2022 was a loss of$134.2 million , including a$141.0 million loss on the sale of the Company'sSheffield, UK operations, partially offset by a$6.8 million gain from the sale of assets from ourPico Rivera, CA operations. Gain/loss on asset sales and sales of businesses, net, for the third quarter and first nine months of 2021 was a$13.7 million gain on the sale of our Flowform Products business within the HPMC segment, which is recorded in nonoperating income/expense on the consolidated statement of operations. These items are excluded from segment EBITDA.
Income Taxes
The provision for income taxes for the third quarter and nine months endedSeptember 30, 2022 was$3.0 million and$11.3 million , respectively. Tax expense in 2022 is mainly attributable to our foreign operations. The tax expense for the third quarter and nine months endedSeptember 30, 2022 was based on an estimated annual effective tax rate calculation which included foreign, non-valuation allowance, operations combined with theU.S. jurisdiction. The provision for income taxes for the third quarter and nine months endedSeptember 30, 2021 was$22.0 million and$31.5 million , respectively. The 2021 tax expense includes$15.5 million of discrete tax expense related to the postretirement medical benefits gain discussed above, in accordance with ATI's accounting policy for recognizing deferred tax amounts stranded in accumulated other comprehensive income. The third quarter and nine months endedSeptember 30, 2021 utilized an annual effective tax rate calculation for its foreign, non-valuation allowance operations, combined with actual year-to-date tax expense related to itsU.S. jurisdiction. In the second quarter 2020, the Company entered into a three-year cumulative loss withinthe United States , limiting the Company's ability to utilize future projections when analyzing the need for a deferred tax asset valuation allowance, therefore limiting sources of income as part of the analysis. ATI continues to maintain valuation allowances on itsU.S. federal and state deferred tax assets, as well as for certain foreign jurisdictions.
Liquidity and Financial Condition
OnSeptember 9, 2022 , we amended and restated our Asset Based Lending (ABL) Credit Facility, which is collateralized by the accounts receivable and inventory of our operations. As amended, the ABL facility also provides us with the option of including certain machinery and equipment as additional collateral for purposes of determining availability under the facility. This amendment and restatement extended the ABL facility throughSeptember 2027 and includes an increase of$100 million in the revolving credit facility, to$600 million . The ABL continues to include a letter of credit sub-facility of up to$200 million and a$200 million term loan (Term Loan), and with the amendment now includes a swing loan facility of up to$60 million . In addition, as amended, we have 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 ABL, as amended, has interest rates that are consistent with the previous facility, replacing LIBOR with Secured Overnight Financing Rate (SOFR) plus an applicable SOFR adjustment. The Term Loan, as amended, has an interest rate of 2.0% above adjusted SOFR. As amended, 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. The ABL facility contains a financial covenant whereby we must maintain a fixed charge coverage ratio of not less than 1.00:1.00 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 . We were in compliance with the fixed charge coverage ratio as ofSeptember 30, 2022 . Additionally, we 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 our wholly owned subsidiary,Allegheny Ludlum LLC . Costs associated with entering into the ABL amendment were$2.4 million , and are being amortized to interest expense over the extended term of the facility endingSeptember 2027 , along with$1.7 million of unamortized deferred costs previously recorded for the ABL. The ABL, as amended, 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 our fixed charge coverage ratio is less than 1.00:1.00 and our 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. 37 -------------------------------------------------------------------------------- As ofSeptember 30, 2022 , there were no outstanding borrowings under the revolving portion of the ABL facility, and$40.8 million was utilized to support the issuance of letters of credit. AtSeptember 30, 2022 , we had$329 million of cash and cash equivalents, and available additional liquidity under the ABL facility of approximately$550 million . During the second quarter of 2022,$82.5 million of the 2022 Convertible Senior Notes were converted into 5.7 million shares of ATI common stock, with the remaining$1.7 million of outstanding principal balance paid in cash for notes that were not converted. The conversion rate for the 2022 Convertible Notes was 69.2042 shares of ATI common stock per$1,000 principal amount of the 2022 Convertible Notes, equivalent to a conversion price of$14.45 per share. During the third quarter of 2021, we issued$325 million aggregate principal amount of 4.875% Senior Notes due 2029 and$350 million aggregate principal amount of 5.125% Senior Notes due 2031. Total combined net proceeds of$665.7 million from both of these issuances were primarily used to fund the redemption of all of the$500 million aggregate principal amount outstanding of the 5.875% Senior Notes due 2023 onOctober 14, 2021 . OnFebruary 2, 2022 , we announced that our Board of Directors authorized the repurchase of up to$150 million of ATI stock. Repurchases under the program may be 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 will be structured to occur within the pricing and volume requirements of SEC Rule 10b-18. The stock repurchase program does not obligate the Company to repurchase any specific number of shares and it may be modified, suspended, or terminated at any time by the Board of Directors without prior notice. In the three and nine months endedSeptember 30, 2022 , we used$15.0 million and$104.9 million , respectively, to repurchase 0.5 million and 4.0 million shares, respectively, of our common stock under this program. We believe that internally generated funds, current cash on hand and available borrowings under the ABL facility will be adequate to meet our liquidity needs, including currently projected required contributions to our pension plans. We do not expect to pay any significantU.S. federal or state income taxes in the next several years due to net operating loss carryforwards. If we needed to obtain additional financing using the credit markets, the cost and the terms and conditions of such borrowings may be influenced by our credit rating. In addition, we regularly review our capital structure, various financing alternatives and conditions in the debt and equity markets in order to opportunistically enhance our capital structure. In connection therewith, we may seek to refinance or retire existing indebtedness, incur new or additional indebtedness or issue equity or equity-linked securities, in each case, depending on market and other conditions. We have no off-balance sheet arrangements as defined in Item 303(a)(4) of SEC Regulation S-K. In managing our overall capital structure, we focus on the ratio of net debt to Adjusted EBITDA, which we use as a measure of our ability to repay our incurred debt. We define net debt as the total principal balance of our outstanding indebtedness excluding deferred financing costs, net of cash, at the balance sheet date. See the explanations above for our definitions of Adjusted EBITDA and EBITDA, which are non-GAAP measures and are not intended to represent, and should not be considered more meaningful than, or as alternatives to, a measure of operating performance as determined in accordance withU.S. GAAP. Our ratio of net debt to Adjusted EBITDA (Adjusted EBITDA Leverage Ratio) measures net debt at the balance sheet date to Adjusted EBITDA as calculated on the trailing twelve-month period from this balance sheet date. 38 -------------------------------------------------------------------------------- Our Debt to Adjusted EBITDA Leverage Ratio improved in the third quarter of 2022 compared to year-end 2021, primarily as a result of higher earnings. Our Net Debt to Adjusted EBITDA Leverage ratio also improved in the third quarter of 2022 compared to year-end 2021, despite a decreased cash balance, primarily due to higher earnings. The reconciliations of our Adjusted EBITDA Leverage Ratios to the balance sheet and income statement amounts as reported underU.S. GAAP are as follows: Latest 12 months Fiscal year Three months ended ended ended September 30, December 31, September 30, 2022 September 30, 2021 2022 2021 Net income (loss) attributable to ATI $ 61.1 $ 48.7$ 24.2 $ (38.2) Net income attributable to noncontrolling interests 3.3 6.5 16.5 22.0 Net income (loss) 64.4 55.2 40.7 (16.2) Interest expense 20.8 25.1 92.5 96.9 Depreciation and amortization 35.6 35.6 143.0 143.9 Income tax provision 3.0 22.0 6.6 26.8 Restructuring and other charges (credits) 17.3 (2.3) 21.5 (10.5) Strike related costs - 22.9 - 63.2 Retirement benefit settlement gain - (64.9) - (64.9) Debt extinguishment charge - - 65.5 65.5 Loss (gain) on asset sales and sale of businesses, net - (13.7) 134.1 (13.8) Adjusted EBITDA$ 141.1 $ 79.9$ 503.9 $ 290.9 Debt$ 1,729.3 $ 1,842.9 Add: Debt issuance costs 18.0 20.8 Total debt 1,747.3 1,863.7 Less: Cash (329.1) (687.7) Net debt$ 1,418.2 $ 1,176.0
Total Debt to Adjusted EBITDA 3.47 6.41 Net Debt to Adjusted EBITDA 2.81 4.04 Cash Flow For the nine months endedSeptember 30, 2022 , cash used in operations was$99.4 million , primarily related to higher accounts receivable and inventory balances. Increased operating levels, higher sales including longer collection cycles, increased raw material values and strategic inventory purchase actions to ensure adequate raw material availability all contributed to these operating cash flow uses. Other significant 2022 operating cash flow items included the payment of 2021 annual incentive compensation and receipt of$8.5 million for repayment of working capital advances from A&T Stainless. For the nine months endedSeptember 30, 2021 , cash used in operations was$244.8 million , primarily due to higher accounts receivable and inventory balances related to increased business activity, rising raw material costs and the lingering strike impacts. Other significant 2021 operating cash flow items included$67.5 million in contributions to aU.S. defined benefit pension plan and payment of 2020 annual incentive compensation, partially offset by receipt of advance payments as part of long-term supply agreements in 2021. Cash used in investing activities was$101.0 million in the first nine months of 2022, reflecting$100.5 million in capital expenditures primarily related to AA&S transformation projects and various HPMC growth projects. We expect to fund our capital expenditures with cash on hand and cash flow generated from our operations and, if needed, by using a portion of the ABL facility. Cash used in financing activities was$158.2 million in the first nine months of 2022 and consisted primarily of$104.9 million for the repurchase of 4.0 million shares of ATI stock under the$150 million repurchase program authorized by our Board of Directors onFebruary 2, 2022 , and a$16.0 million dividend payment to the 40% noncontrolling interest in our PRS joint venture inChina . AtSeptember 30, 2022 , cash and cash equivalents on hand totaled$329.1 million , a decrease of$358.6 million from year end 2021. Cash and cash equivalents held by our foreign subsidiaries was$106.6 million atSeptember 30, 2022 , of which$65.3 million was held by the STAL joint venture. 39 --------------------------------------------------------------------------------
Critical Accounting Policies
Asset Impairment
We monitor the recoverability of the carrying value of our long-lived assets. An impairment charge is recognized when the expected net undiscounted future cash flows from an asset's use (including any proceeds from disposition) are less than the asset's carrying value, and the asset's carrying value exceeds its fair value. Changes in the expected use of a long-lived asset group, and the financial performance of the long-lived asset group and its operating segment, are evaluated as indicators of possible impairment. Future cash flow value may include appraisals for property, plant and equipment, land and improvements, future cash flow estimates from operating the long-lived assets, and other operating considerations. In the fourth quarter of each year in conjunction with the annual business planning cycle, or more frequently if new material information is available, we evaluate the recoverability of idled facilities. As ofMarch 31, 2022 , ourSheffield, UK operations were classified as held for sale, and the terms of sale resulted in indicators of impairment in the long-lived assets of this disposal group. A$22.3 million long-lived asset impairment charge was recorded in the first quarter 2022, reported as part of the$141.0 million loss on sale of this business for the nine months endedSeptember 30, 2022 . This long-lived asset impairment charge was determined using the held for sale framework and represents Level 1 information in the fair value hierarchy.Goodwill is reviewed annually in the fourth quarter of each year for impairment or more frequently if impairment indicators arise. Other events and changes in circumstances may also require goodwill to be tested for impairment between annual measurement dates. AtSeptember 30, 2022 , we had$227.2 million of goodwill on our consolidated balance sheet. All goodwill relates to reporting units in the HPMC segment. Management concluded that, other than theSheffield, UK business, none of ATI's reporting units or long-lived assets experienced any triggering event that would have required an interim impairment analysis atSeptember 30, 2022 .
Income Taxes
The provision for income taxes includes deferred taxes resulting from temporary differences in income for financial and tax purposes using the liability method. Such temporary differences result primarily from differences in the carrying value of assets and liabilities. Future realization of deferred income tax assets requires sufficient taxable income within the carryback and/or carryforward period available under tax law. On a quarterly basis, we evaluate the realizability of our deferred tax assets. The evaluation includes the consideration of all available evidence, both positive and negative, regarding historical operating results including recent years with reported losses, the estimated timing of future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards, and potential tax planning strategies which may be employed to prevent an operating loss or tax credit carryforward from expiring unused. In situations where a three-year cumulative loss condition exists, accounting standards limit the ability to consider projections of future results as positive evidence to assess the realizability of deferred tax assets. Valuation allowances are established when it is estimated that it is more likely than not that the tax benefit of the deferred tax asset will not be realized. Since the second quarter of 2020, our results reflected a three year cumulative loss fromU.S. operations. As a result, we established deferred tax asset valuation allowances in the second quarter of 2020 on ourU.S. Federal and state deferred tax assets. In 2021 and 2022, ATI continues to maintain income tax valuation allowances on itsU.S. Federal and state deferred tax assets. In addition, we have$27.1 million of valuation allowances on amounts recorded in other comprehensive loss as ofSeptember 30, 2022 . While we remain in a cumulative loss condition, our ability to evaluate the realizability of deferred tax assets is generally limited to the ability to offset timing differences on taxable income associated with deferred tax liabilities. Therefore, a change in estimate of deferred tax asset valuation allowances for federal, state, or foreign jurisdictions during this cumulative loss condition period will primarily be affected by changes in estimates of the time periods that deferred tax assets and liabilities will be realized, or on a limited basis to tax planning strategies that may result in a change in the amount of taxable income realized. 40 --------------------------------------------------------------------------------
Retirement Benefits
In accordance with accounting standards, we determine the discount rate used to value pension plan liabilities as of the last day of each year. The discount rate reflects the current rate at which the pension liabilities could be effectively settled. In estimating this rate, we receive input from our actuaries regarding the rate of return on high quality, fixed income investments with maturities matched to the expected future retirement benefit payments. Based on current market conditions, discount rates are above the rates in effect at the year-end 2021 remeasurement date, when a 2.95% discount rate was used for valuing pension liabilities. The estimated effect at the year-end 2021 valuation date of an increase in the discount rate by 0.50% would decrease pension liabilities by approximately$145 million . The effect on pension liabilities for changes to the discount rate, the difference between expected and actual plan asset returns, and the net effect of other changes in actuarial assumptions and experience are deferred and amortized over future periods in accordance with accounting standards. For ERISA (Employee Retirement Income Security Act of 1974, as amended) funding purposes, discount rates used to measure pension liabilities forU.S. qualified defined benefit plans are calculated on a different basis using anIRS -determined segmented yield curve, which currently results in a higher discount rate than the discount rate methodology required by accounting standards. Funding requirements are also affected byIRS -determined mortality assumptions, which may differ from those used under accounting standards. We have certain collective bargaining agreements that include participation in a multiemployer pension plan. Under current law, an employer that withdraws or partially withdraws from a multiemployer pension plan may incur a withdrawal liability to the plan, which represents the portion of the plan's underfunding that is allocable to the withdrawing employer under very complex actuarial and allocation rules. A subsidiary of the Company participates in the Steelworkers Western Independent Shops Pension Plan (WISPP) for union-represented employees of our primary titanium operations inAlbany, OR , which is funded on an hours-worked basis. As ofDecember 31, 2020 , manufacturing operations at this facility were indefinitely idled, and a limited number of employees that participate in the WISPP remain active in maintenance and other functions. It is reasonably possible that a significant reduction or the elimination of hours-worked contributions due to changes in operating rates at this facility could result in a withdrawal liability assessment in a future period. A complete withdrawal liability is estimated to be approximately$27 million on an undiscounted basis. If this complete withdrawal liability was incurred, ATI estimates that payments of the obligation would be required on a straight-line basis over a 14-year period.
Other Critical Accounting Policies
A summary of other significant accounting policies is discussed in Management's Discussion and Analysis of Financial Condition and Results of Operations and in Note 1 to the consolidated financial statements contained in our Annual Report on Form 10-K for the year endedDecember 31, 2021 . The preparation of the financial statements in accordance withU.S. generally accepted accounting principles requires us to make judgments, estimates and assumptions regarding uncertainties that affect the reported amounts of assets and liabilities. Significant areas of uncertainty that require judgments, estimates and assumptions include the accounting for derivatives, retirement plans, income taxes, environmental and other contingencies, as well as asset impairment, inventory valuation and collectability of accounts receivable. We use historical and other information that we consider to be relevant to make these judgments and estimates. However, actual results may differ from those estimates and assumptions that are used to prepare our financial statements.
Pending Accounting Pronouncements
See Note 1 of the Notes to Consolidated Financial Statements for information on new and pending accounting pronouncements.
Forward-Looking and Other Statements
From time to time, we have made and may continue to make "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Certain statements in this report relate to future events and
expectations and, as such, constitute forward-looking statements.
Forward-looking statements include those containing such words as "anticipates,"
"believes," "estimates," "expects," "would," "should," "will," "will likely
result," "forecast," "outlook," "projects," and similar expressions.
Forward-looking statements are based on management's current expectations and
include known and unknown risks, uncertainties and other factors, many of which
we are unable to predict or control, that may cause our actual results,
performance or achievements to differ materially from those expressed or implied
in the forward-looking statements. Important factors that could cause actual
results to differ materially from those in the forward-looking statements
include: (a) material
41--------------------------------------------------------------------------------
adverse changes in economic or industry conditions generally, including global supply and demand conditions and prices for our specialty metals and changes in international trade duties and other aspects of international trade policy; (b) material adverse changes in the markets we serve; (c) our inability to achieve the level of cost savings, productivity improvements, synergies, growth or other benefits anticipated by management, from strategic investments and the integration of acquired businesses; (d) volatility in the price and availability of the raw materials that are critical to the manufacture of our products; (e) declines in the value of our defined benefit pension plan assets or unfavorable changes in laws or regulations that govern pension plan funding; (f) labor disputes or work stoppages; (g) equipment outages; (h) the risks of business and economic disruption related to the currently ongoing COVID-19 pandemic and other health epidemics or outbreaks that may arise; and (i) other risk factors summarized in our Annual Report on Form 10-K for the year endedDecember 31, 2021 , and in other reports filed with theSecurities and Exchange Commission . We assume no duty to update our forward-looking statements.
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