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What changed in ATI INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ATI INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+349 added−419 removedSource: 10-K (2025-02-21) vs 10-K (2024-02-23)

Top changes in ATI INC's 2024 10-K

349 paragraphs added · 419 removed · 272 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

62 edited+13 added−11 removed26 unchanged
Biggest changeCertain key supplies used in melting and other processing operations, such as graphite electrodes and industrial gases including helium and argon, are from time-to-time limited in availability and may be subject to significant price inflation. We enter into long-term supply contracts where possible to ensure an adequate supply of these products.
Biggest changeThe following is a summary of the primary source countries of raw materials that play an important role in our products: • Nickel: Canada, Norway, Japan, Finland, and South Africa. • Zirconium: U.S. and China. • Hafnium: U.S. and China. • Cobalt: Norway and Japan. • Chromium: the United Kingdom (U.K.), South Africa, Germany and Turkey. • Niobium: Brazil. • Molybdenum: U.S., Brazil, and China. • Titanium sponge: Japan, Kazakhstan, Saudi Arabia, and China Certain key supplies used in melting and other processing operations, such as graphite electrodes and industrial gases including helium and argon, are from time-to-time limited in availability and may be subject to significant price inflation.
Typical aerospace applications for nickel-based alloys and superalloys and advanced metallic powders include jet engine disks, blades, vanes, rings, casings and shafts. Nickel-based alloys and superalloys remain extremely strong at high temperatures and resist degradation under extreme conditions. The next-generation jet engines use advanced nickel-based superalloys and metallic powder alloys to enable increased fuel efficiency requirements that require hotter-burning engines.
Typical aerospace applications for nickel-based alloys and superalloys and advanced metallic powders include jet engine disks, blades, vanes, rings, casings and shafts. Nickel-based alloys and superalloys remain extremely strong at high temperatures and resist degradation under extreme conditions. Next-generation jet engines use advanced nickel-based superalloys and metallic powder alloys to enable increased fuel efficiency requirements that require hotter-burning engines.
The use of our alloys in these replacement devices offers the potential for longer product lifespans versus previous implant generations. Our biocompatible nickel-titanium (nitinol) shape memory alloy is used for stents to support collapsed or clogged blood vessels. Reduced in diameter for insertion, these stents expand post-implant to the original tube-like shape due to the metal’s superelasticity.
The use of our alloys in these replacement devices offers the potential for longer product lifespans versus previous implant generations. Our biocompatible nickel-titanium (nitinol) shape memory alloy is used for stents to support collapsed or clogged blood vessels. Reduced in diameter for insertion, these stents expand post-implant to their original tube-like shape due to the metal’s superelasticity.
When our Richland, Washington expansion is at full production in late fiscal year 2025, our total titanium melt capacity is expected to be 80% greater than our fiscal year 2022 titanium melt capacity. Our specialty materials and components for defense applications include naval nuclear products, military jet engines, fixed wing and rotorcraft products, and armor applications.
When our Richland, Washington expansion is at full production in late fiscal year 2025, our total titanium melt capacity is expected to be 80% greater than our fiscal year 2022 titanium melt capacity. Our specialty materials and components for defense applications include naval nuclear products, military jet engines, fixed wing and rotorcraft products, armor applications and munitions materials.
Nickel alloys and Precision Rolled Strip ® (PRS) from Specialty Rolled Products (SRP) and our Asian PRS joint venture support computers and smart phones. The magnetic properties of nickel alloys are used in relay cores, magnets and magnetic shielding, while their thermal expansion is useful in glass-to-metal sealing applications such as monitors.
Nickel alloys and Precision Rolled Strip ® (PRS) from Specialty Rolled Products (SRP) and our Asian PRS joint venture are used in computers and smart phones. The magnetic properties of nickel alloys are used in relay cores, magnets and magnetic shielding, while their thermal expansion is useful in glass-to-metal sealing applications such as monitors.
We expect to increase our sales in government defense applications in future years. We continuously seek to develop and manufacture innovative new alloys to better serve the needs of the aerospace & defense markets, and several of the alloys we produce have won significant share in the current and next-generation jet engines.
We expect to continue to increase our sales in government defense applications in future years. We continuously seek to develop and manufacture innovative new alloys to better serve the needs of the aerospace & defense markets, and several of the alloys we produce have won significant share in current and next-generation jet engines.
The principal raw materials we use in the production of our specialty materials are scrap (including iron-, nickel-, chromium-, titanium-, and molybdenum-bearing scrap), nickel, titanium sponge, zirconium sand and sponge, ferrochromium, ferrosilicon, molybdenum and molybdenum alloys, manganese and manganese alloys, cobalt, niobium, vanadium and other alloying materials.
The principal raw materials we use in the production of our specialty materials are scrap (including iron-, nickel-, chromium-, titanium-, and molybdenum-bearing scrap), nickel, titanium sponge, zirconium sand and sponge, ferrochromium, ferrosilicon, molybdenum and molybdenum alloys, manganese and manganese alloys, cobalt, niobium, vanadium, hafnium and other alloying materials.
We believe that we have adequate controls to monitor these contracts, but we may not be able to accurately assess exposure to price volatility in the markets for critical raw materials. Some raw materials, such as nickel, cobalt, and ferrochromium, are available to us and our specialty materials industry competitors primarily from foreign sources.
We believe that we have adequate controls to monitor these contracts, but we may not be able to accurately assess exposure to price volatility in the markets for critical raw materials. Some raw materials, such as nickel, titanium sponge, cobalt, and ferrochromium, are available to us and our specialty materials industry competitors primarily from foreign sources.
Through alloy development, internal growth efforts, and long-term supply agreements on current and next-generation jet engines and airframes, we are well-positioned with a fully qualified asset base to meet the expected multi-year demand growth from the commercial aerospace market.
We believe that through alloy development, internal growth efforts, and long-term supply agreements on current and next-generation jet engines and airframes, we are well-positioned with a fully qualified asset base to meet the expected multi-year demand growth from the commercial aerospace market.
Advanced Alloys & Solutions Segment Our AA&S segment produces nickel-based alloys, titanium and titanium-based alloys, and specialty alloys in a variety of forms including plate, sheet, and PRS products. The major end markets for our flat rolled products are energy, aerospace & defense, automotive, and electronics markets.
Advanced Alloys & Solutions Segment Our AA&S segment produces nickel-based alloys, titanium and titanium-based alloys, and specialty alloys in a variety of forms including plate, sheet, and PRS products. The major end markets for our flat rolled products are specialty and conventional energy, aerospace & defense, automotive, medical and electronics markets.
In fiscal year 2023, approximately 25% of our stainless sheet products by volume were sold to independent service centers, which have slitting, cutting or other processing facilities, with the remainder sold directly to end-use customers. Nickel-based alloy, titanium, and specialty alloy plate products are primarily used in aerospace & defense, and corrosion and industrial markets.
In fiscal year 2024, approximately 30% of our stainless sheet products by volume were sold to independent service centers, which have slitting, cutting or other processing facilities, with the remainder sold directly to end-use customers. Nickel-based alloy, titanium, and specialty alloy plate products are primarily used in aerospace & defense, and corrosion and industrial markets.
Our Internet website and the content contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K. The SEC maintains an Internet website at www.sec.gov, which also contains reports, proxy and information statements and other information that we file electronically with the SEC.
Securities and Exchange Commission (“SEC”). Our Internet website and the content contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K. The SEC maintains an Internet website at www.sec.gov, which also contains reports, proxy and information statements and other information that we file electronically with the SEC.
The Company follows a 4-4-5 or 5-4-4 fiscal calendar, whereby each fiscal quarter consists of thirteen weeks grouped into two four-week months and one five-week month, and its fiscal year ends on the Sunday closest to December 31. Fiscal years 2023, 2022 and 2021 ended on December 31, 2023, January 1, 2023 and January 2, 2022, respectively.
The Company follows a 4-4-5 or 5-4-4 fiscal calendar, whereby each fiscal quarter consists of thirteen weeks grouped into two four-week months and one five-week month, and its fiscal year ends on the Sunday closest to December 31. Fiscal years 2024, 2023 and 2022 ended on December 29, 2024, December 31, 2023, and January 1, 2023, respectively.
The HPMC segment’s primary focus is on maximizing aero-engine materials and components growth, with approximately 85% of its revenue derived from the aerospace & defense markets, including nearly 60% of its revenue from products for commercial jet engines.
The HPMC segment’s primary focus is on maximizing jet engine materials and components growth, with approximately 86% of its revenue derived from the aerospace & defense markets, including nearly 60% of its revenue from products for commercial jet engines.
In fiscal year 2023, approximately 40% of our plate products by volume were sold to independent service centers, with the remainder sold directly to end-use customers. PRS products, which are under 0.015 inches thick, are used by customers to fabricate a variety of products primarily in the automotive and electronics markets.
In fiscal year 2024, approximately 35% of our plate products by volume were sold to independent service centers, with the remainder sold directly to end-use customers. PRS products, which are under 0.015 inches thick, are used by customers to fabricate a variety of products primarily in the automotive and electronics markets.
In addition, our ultra fine diameter (0.002 inch/0.051 mm) titanium wire is used for screens to prevent blood clots from entering critical areas of the body. We have recently announced our strategic partnership with Confluent Medical 4 Technologies (Confluent) whereby Confluent will provide a $50 million investment in our capacity expansion to produce nitinol.
In addition, our ultra fine diameter (0.002 inch/0.051 mm) titanium wire is used for screens to prevent blood 4 clots from entering critical areas of the body. We have a strategic partnership with Confluent Medical Technologies (Confluent) whereby Confluent has begun to provide a $50 million investment in our capacity expansion to produce nitinol.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as proxy and information statements and other information that we file, are available free of charge through our Internet website as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the United States Securities and Exchange Commission (“SEC”).
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as proxy and information statements and other information that we file, are available free of charge through our Internet website as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the U.S.
As such, in fiscal year 2023, we restarted a significant amount of titanium melt capacity in Albany, Oregon with a modest investment and are continuing to invest in additional capacity at this facility, bringing online a fourth furnace in the first half of fiscal year 2024.
As such, in fiscal year 2023, we restarted a significant amount of titanium melt capacity in Albany, Oregon with a modest investment and have continued to invest in additional capacity at this facility, bringing online a fourth furnace in the first half of fiscal year 2024.
Within our AA&S segment, our joint venture in China makes PRS products, which enables us to offer these products more effectively to markets in China and other Asian countries. Backlog, Seasonality and Cyclicality Our backlog of confirmed orders was approximately $3.8 billion at December 31, 2023 and $2.9 billion at January 1, 2023.
Within our AA&S segment, our Asian joint venture makes PRS products, which enables us to offer these products more effectively to markets in China and other Asian countries. Backlog, Seasonality and Cyclicality Our backlog of confirmed orders was approximately $3.9 billion at December 29, 2024 and $3.8 billion at December 31, 2023.
Research and development expenditures for the fiscal years ended December 31, 2023, January 1, 2023, and January 2, 2022 included the following: Fiscal Year Ended (In millions) December 31, 2023 January 1, 2023 January 2, 2022 Company-Funded: High Performance Materials & Components $ 9.6 $ 8.4 $ 9.0 Advanced Alloys & Solutions 10.2 7.3 6.6 Corporate 0.9 0.6 0.9 20.7 16.3 16.5 Customer-Funded: High Performance Materials & Components 1.4 1.4 3.5 Total Research and Development $ 22.1 $ 17.7 $ 20.0 Our research, development and technical service activities are closely interrelated and are directed toward development of new products, improvement of existing products, cost reduction, process improvement and control, quality assurance and control, development of new manufacturing methods, and improvement of existing manufacturing methods.
Research and development expenditures for the fiscal years ended December 29, 2024, December 31, 2023, and January 1, 2023 included the following: Fiscal Year Ended (In millions) December 29, 2024 December 31, 2023 January 1, 2023 Company-Funded: High Performance Materials & Components $ 10.4 $ 9.6 $ 8.4 Advanced Alloys & Solutions 8.4 10.2 7.3 Corporate 0.8 0.9 0.6 19.6 20.7 16.3 Customer-Funded: High Performance Materials & Components 2.5 1.4 1.4 Total Research and Development $ 22.1 $ 22.1 $ 17.7 Our research, development and technical service activities are closely interrelated and directed toward development of new products, improvement of existing products, quality assurance, development of new manufacturing methods, improvement of existing manufacturing methods, and reducing our manufacturing costs.
We expect that approximately 70% of confirmed orders on hand at December 31, 2023 will be filled during fiscal year 2024. Our HPMC segment’s backlog of confirmed orders was approximately $3.0 billion at December 31, 2023 and $2.3 billion at January 1, 2023.
We expect that approximately 70% of confirmed orders on hand at December 29, 2024 will be filled during fiscal year 2025. Our HPMC segment’s backlog of confirmed orders was approximately $3.3 billion at December 29, 2024 and $3.0 billion at December 31, 2023.
We expect that approximately 65% of the confirmed orders on hand at December 31, 2023 for this segment will be filled during fiscal year 2024. Our AA&S segment’s backlog of confirmed orders was approximately $0.8 billion at December 31, 2023 and $0.6 billion at January 1, 2023.
We expect that approximately 70% of the confirmed orders on hand at December 29, 2024 for this segment will be filled during fiscal year 2025. Our AA&S segment’s backlog of confirmed orders was approximately $0.6 billion at December 29, 2024 and $0.8 billion at December 31, 2023.
Fiscal Year Ended December 31, 2023 January 1, 2023 January 2, 2022 High Performance Materials & Components 51 % 43 % 41 % Advanced Alloys & Solutions 49 % 57 % 59 % Information with respect to our business segments is presented below and in Note 18 of the notes to the consolidated financial statements.
Fiscal Year Ended December 29, 2024 December 31, 2023 January 1, 2023 High Performance Materials & Components 52 % 51 % 43 % Advanced Alloys & Solutions 48 % 49 % 57 % Information with respect to our business segments is presented below and in Note 18 of the notes to the consolidated financial statements.
These are made from nickel-based alloys and superalloys, titanium and titanium-based alloys, and a variety of other specialty materials. Capabilities range from cast/wrought and powder alloy development to final production of highly engineered finished components, and 3D-printed aerospace products.
HPMC produces a wide range of high performance materials, components, and advanced metallic powder alloys. These products are made from nickel-based alloys and superalloys, titanium and titanium-based alloys, and a variety of other specialty materials. HPMC’s capabilities range from cast/wrought and powder alloy development to final production of highly engineered finished components, and 3D-printed aerospace products.
High Performance Materials & Components Segment Our HPMC segment produces a wide range of high performance specialty materials, parts and components for several major end markets, including the aerospace & defense, medical, and energy markets, with 85% of fiscal year 2023 revenues derived from the aerospace & defense markets.
High Performance Materials & Components Segment Our HPMC segment produces a wide range of high performance specialty materials, parts and components for several of our core markets, including aerospace & defense, medical, and specialty energy, with approximately 86% of fiscal year 2024 revenues derived from the aerospace & defense markets.
Business Segments Our two business segments accounted for the following percentages of total revenues of $4.17 billion, $3.84 billion, and $2.80 billion for the fiscal years ended December 31, 2023, January 1, 2023, and January 2, 2022, respectively.
Business Segments Our two business segments accounted for the following percentages of total revenues of $4.4 billion, $4.2 billion, and $3.8 billion for the fiscal years ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively.
Strategic end-use markets for our products include: Aerospace & Defense . We are a world leader in the production of specialty materials and components for both commercial and military jet engines and airframes supporting customer needs for initial build requirements and for spare parts.
We are a world leader in the production of specialty materials and components for both commercial and military jet engines and airframes supporting customer needs for initial build requirements and for spare parts.
In fiscal year 2023, ATI announced that we are establishing a dedicated additive manufacturing and post-processing facility outside Fort Lauderdale, Florida which will allow ATI to tap into significant aerospace and defense demand for additively manufactured laser power bed fusion parts, serving both commercial and defense customers. Energy.
In fiscal year 2023, ATI established a dedicated additive manufacturing and post-processing facility near Fort Lauderdale, Florida which achieved its first print in fiscal year 2024. This facility will allow ATI to tap into significant aerospace and defense demand for additively manufactured laser powered bed fusion parts, serving both commercial and defense customers. Energy.
The Compensation and Leadership Development Committee of our Board is responsible for establishing and administering the policies governing annual compensation and long-term compensation to ensure the policies are designed to align compensation with our overall business strategy and performance to link to the interests of our stockholders.
Governanc e : The Compensation and Leadership Development Committee of our Board oversees the Company’s human capital management policies and procedures, including its workforce and professional development and diversity and inclusion initiatives, and is responsible for establishing and administering the policies governing annual compensation and long-term compensation to ensure the policies are designed to align compensation with our overall business strategy and performance to link to the interests of our stockholders.
The increased activity in fiscal year 2023 was largely related to materials and manufacturing methods for products supporting the aerospace & defense markets. We own hundreds of United States patents, many of which are also filed under the patent laws of other nations.
The increase in our research and development expenditures in fiscal years 2024 and 2023 was largely related to efforts to develop and/or refine materials and manufacturing methods for products supporting the aerospace & defense markets. We own hundreds of U.S. patents, many of which are also filed under the patent laws of other nations.
Research, Development and Technical Services We believe that our research and development capabilities give ATI an advantage in developing new products and manufacturing processes that contribute to the long-term profitable growth potential of our businesses.
Research, Development and Technical Services We believe that our research and development capabilities give ATI a competitive advantage in developing new products and manufacturing processes that contribute to the long-term profitable growth potential of our businesses. We conduct research and development at our various operating locations both for ourselves and, on a limited basis, for customers on a contract basis.
We are currently involved in the investigation and remediation of a number of our current and former sites as well as third party sites. We consider environmental compliance to be an integral part of our operations. We have a comprehensive environmental management and reporting program that focuses on compliance with applicable federal, state, regional and local environmental laws and regulations.
We are currently involved in the investigation and remediation of a number of our current and former sites as well as third party sites. We consider environmental compliance to be an integral part of our operations.
Our CRAs are used for pipe, tube, and heat exchanger applications in water systems and in pollution control scrubbers. For nuclear power plants, we are an industry pioneer in producing nuclear reactor fuel cladding and structural components utilizing zirconium and hafnium alloys. We are a technology leader for large diameter components used in natural gas land-based turbines for power generation.
We are an industry pioneer in producing nuclear reactor fuel cladding and structural components utilizing zirconium and hafnium alloys for use in nuclear power generation. We also are a technology leader for large diameter components used in natural gas land-based turbines for power generation, and our alloys are used for alternative energy generation, including solar, fuel cell and geothermal applications.
In aggregate, these markets represent almost 85% of our revenue. We operate in two business segments: High Performance Materials & Components (HPMC) and Advanced Alloys & Solutions (AA&S).
Additionally, we have a strong presence in our other core markets consisting of specialty energy, medical and electronics markets. In aggregate, these core markets represent almost 80% of our revenue. We operate in two business segments: High Performance Materials & Components (HPMC) and Advanced Alloys & Solutions (AA&S).
We also serve energy markets, including specialty energy, oil & gas and downstream processing markets. Our specialty materials are widely used in the global electrical power generation and distribution industries.
We also serve energy markets, with a focus on specialty energy, which includes nuclear power generation and gas turbines. Our specialty materials are widely used in the global electrical power generation and distribution industries.
Further, we partner with top academic institutions and external professional organizations to enhance the diversity of our workforce to attract and retain top talent. We maintain a formal talent review process to work in connection with performance management for systematic career development and succession planning at both the individual employee and organizational levels.
Additionally, we maintain a formal talent review process to work in connection with performance management for systematic career development and succession planning at both the individual employee and organizational levels.
We believe clean energy needs, expanding environmental policies and the electrification of developing countries will continue to drive demand for our specialty materials and products for use in these industries over the long term. For electrical power generation, our specialty materials, including corrosion-resistant alloys (CRAs), are used in nuclear, natural gas and other fuel source applications.
We believe clean energy needs, expanding global environmental policies and the electrification of developing countries will continue to drive demand for our specialty materials and products for use in these industries over the long term.
Further, the Committee oversees the Company’s human capital management policies and procedures, including its workforce and professional development and diversity and inclusion initiatives. 8 Labor Relations and Collective Bargaining : Approximately 35% of our workforce is covered by various collective bargaining agreements (CBAs), predominantly with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied & Industrial Service Workers International Union, AFL-CIO, CLC (USW).
Labor Relations and Collective Bargaining : Approximately 35% of our workforce is covered by various collective bargaining agreements (CBAs), predominantly with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied & Industrial Service Workers International Union (USW).
The operations in this segment include our SRP business, our Specialty Alloys & Components business and the Shanghai STAL Precision Stainless Steel Company Limited (STAL) PRS joint venture in China, in which we hold a 60% interest.
The operations in this segment include our SRP and Specialty Alloys & Components businesses in addition to our Shanghai STAL Precision Stainless Steel Company Limited (STAL) PRS joint venture in China, in which we hold a 60% interest. 5 Nickel-based alloys, titanium, and stainless sheet products are used in a wide variety of industrial and consumer applications.
Raw Materials and Supplies Substantially all raw materials and supplies required in the manufacture of our products are available from more than one supplier, and the sources and availability of raw materials essential to our businesses are currently adequate.
Competitors for nickel-based alloys and superalloys and specialty alloys include Haynes International and VDM Metals GmbH, a subsidiary of Acerinox S.A. Raw Materials and Supplies Substantially all raw materials and supplies required in the manufacture of our products are available from more than one supplier, and the sources and availability of raw materials essential to our businesses are currently adequate.
More than 40% of the members of our Executive Council are women or minorities. Compensation and Benefits : We provide market-based competitive compensation through our salary, annual incentive and long-term incentive programs and robust benefits packages that promote the well-being of our employees across all aspects of their lives.
Compensation and Benefits : We provide market-based competitive compensation through our salary, annual incentive and long-term incentive programs and robust benefits packages that promote the well-being of our employees across all aspects of their lives. Eligible employees are compensated for their contributions to achievement of our goals with both short-term cash incentives and long-term equity-based incentives.
Commercial aerospace products have been the main source of sales and EBITDA growth for HPMC over the last several years, and are expected to continue to drive HPMC and overall ATI results in the future. Other major HPMC end markets include medical and energy. HPMC produces a wide range of high performance materials, components, and advanced metallic powder alloys.
Commercial aerospace products have been the main source of sales and EBITDA growth for HPMC over the last several years and are expected to continue to drive HPMC and overall ATI results in the future. HPMC has also experienced growth in defense products, which comprise almost 10% of total sales. Other core markets include medical and specialty energy.
Our well-being focus addresses physical, mental, financial, and individual needs, providing benefits and resources to help employees and their families be their best, both personally and professionally. We implemented several campaigns to promote well-being and help provide visibility to resources and available benefits.
We believe the structure of our compensation packages provides the appropriate incentives to attract, retain, and motivate our employees. Our well-being focus addresses physical, mental, financial, and individual needs, providing benefits and resources to help employees and their families be their best, both personally and professionally.
Attracting, developing, and retaining purpose and performance-driven leaders building teams with diverse, empowered and fulfilled employees who want to stay and grow with the company is foundational to our vision. As of December 31, 2023, we employed approximately 7,300 active employees, 15% of whom are located outside the United States across 15 countries.
Those leaders build teams with diverse, empowered and fulfilled employees who want to stay and grow with the company. As of December 29, 2024, we employed approximately 7,700 active employees, 15% of whom are located outside the U.S. across 15 countries.
Our HPMC segment has manufacturing capabilities for precision forging and machining in Poland, primarily serving the aerospace, construction & mining and transportation markets. In fiscal year 2022, the Company completed the sale of its Sheffield, UK operations, which included facilities for melting and re-melting, machining and bar mill operations, and was part of the HPMC segment.
In fiscal year 2024, the Company completed the sale of its precision rolled strip operations in Remscheid, Germany, which was part of the HPMC segment. In fiscal year 2022, the Company completed the sale of its Sheffield, U.K. operations, which included facilities for melting and re-melting, machining 6 and bar mill operations, and was part of the HPMC segment.
Each operating company has an environmental management system that includes mechanisms for regularly evaluating environmental compliance and managing changes in business operations while assessing environmental impact. Safety is one of our core values. We strive for a zero injury culture committed to the safety of our people, our products, and the communities in which we operate.
We have a comprehensive environmental management and reporting program that focuses on compliance with applicable federal, state, regional and local environmental 7 laws and regulations. Each operating company has an environmental management system that includes mechanisms for regularly evaluating environmental compliance and managing changes in business operations while assessing environmental impact. Safety is one of our core values.
It outlines our pledge to recognize the dignity of each individual, respect each employee, provide compensation and benefits that are competitive, promote self-development through training, and value diversity of perspectives and ideas. Employees complete Business Conduct and Ethics training and, where permitted by law, must also certify each year that they will comply with the Code.
Our Code of Conduct establishes the baseline requirements of our integrity and compliance program and promotes an environment where everyone is treated ethically and with respect. It outlines our pledge to recognize the dignity of each individual, respect each employee, provide compensation and benefits that are competitive, promote self-development through training, and value diversity of perspectives and ideas.
GE Aerospace (a division of General Electric Company), Rolls-Royce plc, Pratt & Whitney (a division of Raytheon Technologies Corporation), Snecma (SAFRAN Group), and various joint ventures manufacture jet engines. These companies, and their suppliers, form a substantial part of our customer base in this business segment. We have long-term agreements (LTAs) in place with most major aerospace market OEMs.
These companies and their suppliers form a substantial part of our customer base in this business segment. We have long-term agreements (LTAs) in place with most major aerospace market original equipment manufacturers (OEMs).
We expect that approximately 80% the confirmed orders on hand at December 31, 2023 for this segment will be filled during fiscal year 2024. 6 Demand for our products is cyclical over longer periods because specialty materials customers operate in cyclical industries and are subject to changes in general economic conditions and other factors both external and internal to those industries.
Demand for our products is cyclical over longer periods because specialty materials customers generally operate in cyclical industries and are subject to changes in general economic conditions and other factors both external and internal to those industries.
Demand for our products is driven primarily by the commercial aerospace cycle. Large aircraft and jet engines are manufactured by a small number of companies, such as The Boeing Company, Airbus S.A.S. (an Airbus Group company) including the former operations of Bombardier Aerospace, and Embraer (Empresa Brasileira de Aeronáutica S.A.) for airframes.
Most of the products in this segment are sold directly to end-use customers, and a substantial portion of our HPMC segment products are sold under multi-year agreements. Demand for our products is driven primarily by the commercial aerospace cycle. Large aircraft and jet engines are manufactured by a small number of companies, such as The Boeing Company (Boeing), Airbus S.A.S.
However, overall industry shortages may impact our operations and scheduling. Export Sales and Foreign Operations International sales represent approximately 46% of our total annual sales, with direct export sales by our U.S.-based operations to customers in foreign countries accounting for approximately 36% of our total sales.
Export Sales and Foreign Operations International sales represent approximately 42% of our total annual sales, with direct export sales by our U.S.-based operations to customers in foreign countries accounting for approximately 33% of our total sales. Our overseas sales, marketing and distribution efforts are aided by our international marketing team or by independent representatives throughout the world.
The AA&S segment is focused on delivering high-value flat products primarily to the energy, aerospace, and defense end-markets, which comprise over 60% of its revenue. Other important end markets for AA&S include electronics, medical and automotive. AA&S produces nickel-based alloys, titanium and titanium-based alloys, and specialty alloys in a variety of forms including plate, sheet, and strip products.
AA&S produces nickel-based alloys, titanium and titanium-based alloys, and specialty alloys in a variety of forms including plate, sheet, and strip products. Strategic end-use markets for our products include: Aerospace & Defense .
Our alloys are also used for alternative energy generation, in solar, fuel cell and geothermal applications. Both of our business segments produce specialty materials that are critical to the oil & gas industry.
Both of our business segments also produce specialty materials that are critical to the conventional energy market, which includes oil & gas and chemical and hydrocarbon processing industries.
Some of these foreign sources are located in countries that may be subject to unstable political and economic conditions, which could disrupt supplies or affect the price of these materials. We purchase our nickel requirements principally from producers in Australia, Canada, Norway, and the Dominican Republic. We purchase zirconium raw materials primarily domestically and also from producers in China.
Some of these foreign sources are in countries that may be subject to unstable political and economic conditions, which could disrupt supplies or affect the price of these materials. Further changes in global trade policies could materially impact the total cost of imported materials.
We believe our business success is intricately tied to cultivating a culture in which all members of our workforce are included and empowered to do their best work. We recognize the benefits and importance of diversity amongst our board and management. Women comprise 30% of our Board, and 20% of our Directors are racially diverse.
Inclusion and Diversity : Our long tradition of innovation and operational excellence demands the contributions of leaders and team members with a wide array of characteristics, backgrounds, experiences, knowledge, and skills. We believe our business 8 success is intricately tied to cultivating a culture in which all members of our workforce are included and empowered to do their best work.
In addition, we are further investing in additional titanium melt capacity to meet this growing demand with our expansion in Richland, Washington, and we are on track for the first melt in the fourth quarter of fiscal year 2024 at this facility.
In addition, we have further invested in additional titanium melt capacity to meet growing demand at our Richland, Washington facility, which is expected to begin qualifications in the second quarter of 2025.
In fiscal year 2023, approximately 90% of these products by volume were sold directly to end-use customers or through our own distribution network, with the remainder sold to independent service centers. Competitors for nickel-based alloys and superalloys and specialty alloys include Haynes International and VDM Metals GmbH, a subsidiary of Acerinox S.A.
In fiscal year 2024, approximately 90% of these products by volume were sold directly to end-use customers or through our own distribution network, with the remainder sold to independent service centers. With the sale of our New Bedford, MA PRS business in 2024, PRS sales in this segment will be significantly reduced going forward.
Learning and Development : Developing talent and leaders at all levels of the organization is critical to our long-term success. We have early career, technical, leadership and management development programs as well as broad learning opportunities for our employees to support their career growth and advance their skills.
We have leadership and management development programs as well as broad learning opportunities for our employees to support their career growth and advance their skills. By providing a consistent and comprehensive learning experience, we focus on growing top talent across the enterprise and enhancing Front Line Leader development.
Talent Acquisition and Management : Our performance and development process is integrated in the ATI business strategy, and is a key component to recruiting, hiring, and developing top-performing talent. Our hiring practices include a goal that 80% of position candidate slates include a minimum of 30% diverse candidates.
Employees complete Business Conduct and Ethics training and, where permitted by law, are asked to certify each year that they will comply with the Code. Talent Acquisition : Our performance and development process is integrated in the ATI business strategy, and is a key component to recruiting, hiring, and developing top-performing talent.
We are integrated across these alloy systems in melt, forging, finishing, testing and machining processes. Most of the products in this segment are sold directly to end-use customers, and a substantial portion of our HPMC segment products are sold under multi-year agreements.
We are integrated across these alloy systems in melt, forging, finishing, testing and machining processes.
All fiscal years presented include 52 weeks of operations. The dates for prior fiscal years have been revised to more precisely reflect the exact day of the year end periods for these fiscal years given our 4-4-5 or 5-4-4 calendar. Our Business ATI produces specialty materials, highly differentiated by our materials science expertise and advanced process technologies.
All fiscal years presented include 52 weeks of operations. Our Business ATI produces specialty materials, highly differentiated by our materials science expertise and advanced process technologies. Our mission is to solve the world’s challenges through materials science. Our largest markets of aerospace & defense represent approximately 62% of total sales, led by products for jet engines and airframes.
Our fiscal year 2023 OSHA Total Recordable Incident Rate was 1.08 per 200,000 hours and our Lost Time Case Rate was 0.27 per 200,000 hours, which we believe to be competitive with world-class performance for our industry. Nearly all of our domestic employees are reporting to an ATI facility that has achieved its OSHAS 45001 certification.
We strive for a zero injury culture committed to the safety of our people, our products, and the communities in which we operate. Our fiscal year 2024 OSHA Total Recordable Incident Rate was 1.39 per 200,000 hours and our Lost Time Case Rate was 0.26 per 200,000 hours.
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Our mission is to solve the world’s challenges through materials science. Our core markets of aerospace & defense represent nearly 60% of total sales, led by products for jet engines. Additionally, we have a strong presence in the energy markets, including specialty energy, oil & gas and downstream processing, as well as the medical and electronics markets.
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The AA&S segment is focused on delivering high-value flat products, with a focus in aerospace & defense and other core markets, which comprise approximately 60% of its revenue. Industrial markets comprise the remaining 40% of AA&S sales, which includes the conventional energy and automotive end-markets.
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Segment results also include our 50% interest in the Uniti industrial titanium joint venture and our 50% interest in the A&T Stainless joint venture.
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Our specialty materials, including corrosion-resistant alloys (CRAs), are used in nuclear, natural gas and other electrical power generation fuel source applications, including for pipe, tube, and heat exchanger applications in water systems and in pollution control scrubbers.
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On March 9, 2022, we announced the termination of Uniti, and this joint venture is expected to be fully dissolved in the first quarter of fiscal year 2024. 5 Nickel-based alloys, titanium, and stainless sheet products are used in a wide variety of industrial and consumer applications.
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(an Airbus Group company) including the former operations of Bombardier Aerospace, and Empresa Brasileira de Aeronáutica S.A. (Embraer) for airframes. GE Aerospace, Rolls-Royce plc, Pratt & Whitney (a division of Raytheon Technologies Corporation), Safran Aircraft Engines, formerly known as Snecma (a division of Safran Group), and various joint ventures manufacture jet engines.
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Cobalt is purchased primarily from producers in Canada. More than 80% of the world’s reserves of ferrochromium are located in South Africa, Zimbabwe, Albania, and Kazakhstan. Niobium is purchased principally from producers in Brazil, and our titanium sponge comes from sources in Japan and Kazakhstan.
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We source our raw materials through a variety of producers located throughout the world, including the United States (U.S.).
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Our overseas sales, marketing and distribution efforts are aided by our international marketing team or by independent representatives at various locations throughout the world. We believe that at least 50% of ATI’s fiscal year 2023 sales were driven by global markets when we consider exports of our customers.
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We enter into long-term supply contracts where possible to ensure an adequate supply of these products. However, overall industry shortages may impact our operations and scheduling.
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We conduct research and development at our various operating locations both for our own account and, on a limited basis, for customers on a contract basis.
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Changes in global trade policies may negatively impact our international sales if export or import tariffs increase the cost of our products. Our HPMC segment has manufacturing capabilities for precision forging and machining in Poland, primarily serving the aerospace, construction & mining and transportation markets.
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We expect that the balance of our operations will be OSHAS 45001 certified by fiscal year 2025. 7 Human Capital Management We believe that our people and culture are a competitive differentiator.
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We expect that approximately 85% the confirmed orders on hand at December 29, 2024 for this segment will be filled during fiscal year 2025.
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Governanc e : Our Corporate Guidelines for Business Conduct and Ethics establishes the baseline requirements of our integrity and compliance program and promotes an environment where everyone is treated ethically and with respect.
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Nearly all of our domestic employees are working in an ATI facility that has achieved its ISO 45001 certification. Human Capital Management We believe that our people and culture are a competitive differentiator. We attract, develop, and retain purpose and performance-driven leaders.
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We focus on building inclusive teams through training that reinforces our values and ensure our development programs have diverse representation. Inclusion and Diversity : Our long tradition of innovation and operational excellence demands the contributions of leaders and team members with a wide array of characteristics, backgrounds, experiences, knowledge, and skills.
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We believe in providing a welcoming, engaging and inclusive assessment and interviewing process that encourages people from all backgrounds to consider ATI. Our hiring practices include a goal that position candidate slates be composed at least 30% of diverse candidates.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

56 edited+6 added−8 removed76 unchanged
Biggest changeAlso, we can give no assurance that any other claims brought in the future will not have a material effect on our financial condition, liquidity or results of operations. Risks Associated with Insurance Coverage. We have maintained various forms of insurance, including insurance covering claims related to our properties and risks associated with our operations.
Biggest changeAlso, we can give no assurance that any other claims brought in the future will not have a material effect on our financial condition, liquidity or results of operations. 14 In August 2024, the Company received notice that it and certain of its affiliates are parties to two lawsuits, filed in federal district court for the Western District of Pennsylvania, that 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.
Our failure to comply with those covenants could result in an event of default that, if not cured or waived, could result in the acceleration of all of our debt. 15 Risks Associated with Retirement Benefits. On October 17, 2023, we purchased group annuity contacts from an insurer covering approximately 85% of our U.S. qualified defined benefit plan obligations.
Our failure to comply with those covenants could result in an event of default that, if not cured or waived, could result in the acceleration of all of our debt. Risks Associated with Retirement Benefits. On October 17, 2023, we purchased group annuity contacts from an insurer covering approximately 85% of our U.S. qualified defined benefit plan obligations.
Future developments, administrative actions or liabilities relating to environmental matters, however, could have a material adverse effect on our financial condition or results of operations. OTHER OPERATIONAL AND STRATEGIC RISKS Risks Associated with Disruptions to our Manufacturing Processes. The manufacture of many of our products is a highly exacting and complex process.
Future developments, administrative actions or liabilities relating to environmental matters, however, could have a material adverse effect on our financial condition or results of operations. 13 OTHER OPERATIONAL AND STRATEGIC RISKS Risks Associated with Disruptions to our Manufacturing Processes. The manufacture of many of our products is a highly exacting and complex process.
Export Sales and International Trade Matters. We believe that export sales will continue to account for a significant percentage of our future revenues. We also import certain raw materials that are important to our business, including nickel, zirconium, niobium, chromium, cobalt, vanadium and titanium sponge, among others.
Export Sales and International Trade Matters. We believe that export sales will continue to account for a significant percentage of our future revenues. We also import certain raw materials that are important to our business, including nickel, zirconium, niobium, chromium, hafnium, cobalt, vanadium and titanium sponge, among others.
A labor dispute, which could lead to a strike, lockout, or other work stoppage by the employees covered by one or more of the collective bargaining agreements, could have a material adverse effect on production at one or more of our facilities and, depending upon the length of such dispute or work stoppage, on our operating results.
A labor dispute, which could lead to a strike, lockout, or other work stoppage by the employees covered by one or more of the collective bargaining agreements, could have a material adverse effect on production at one or more of our facilities and, depending upon the length of such dispute or work stoppage, on our operating 11 results.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Risks Associated with Our Guidance and Other Targets and Expectations.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 16 Risks Associated with Our Guidance and Other Targets and Expectations.
As a result, our business, financial condition and results of operations could be materially adversely affected. RISKS ASSOCIATED WITH OUR INDEBTEDNESS; OTHER FINANCIAL AND FINANCIAL ACCOUNTING RISKS Risks Associated with Indebtedness. Our substantial indebtedness could adversely affect our business, financial condition or results of operations and prevent us from fulfilling our obligations under our outstanding indebtedness.
As a result, our business, financial condition and results of operations could be materially adversely affected. 15 RISKS ASSOCIATED WITH OUR INDEBTEDNESS; OTHER FINANCIAL AND FINANCIAL ACCOUNTING RISKS Risks Associated with Indebtedness. Our substantial indebtedness could adversely affect our business, financial condition or results of operations and prevent us from fulfilling our obligations under our outstanding indebtedness.
These markets tend to be highly cyclical and subject to volatility as a result of fluctuations in worldwide economic activity and associated demand, changes in applicable regulation, global geopolitical conditions and numerous other factors.
These markets tend to be highly cyclical and subject to volatility as a result of fluctuations in worldwide 9 economic activity and associated demand, changes in applicable regulation, global geopolitical conditions and numerous other factors.
Increased global information technology threats, vulnerabilities, and a rise in sophisticated and targeted international computer crime pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data.
Cybersecurity Threats. Increased global information technology threats, vulnerabilities, and a rise in sophisticated and targeted international computer crime pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data.
Our suppliers may face similar challenges and incur additional compliance costs that are passed on to us. These direct and indirect costs may adversely impact our results. 12 Market and Reputational Risks .
Our suppliers may face similar challenges and incur additional compliance costs that are passed on to us. These direct and indirect costs may adversely impact our results. Market and Reputational Risks .
We intend to continue to strategically position our businesses to improve our ability to compete. Strategies we employ to accomplish this may include seeking new or expanding existing specialty market niches for our products, expanding our global presence, acquiring businesses complementary to existing strengths, and continually evaluating the performance and strategic fit of our existing business units.
We intend to continue to strategically position our businesses to improve our ability to compete. Strategies we employ to accomplish this may include seeking new or expanding existing specialty market niches for our products, expanding our global presence, acquiring businesses complementary to existing strengths, and continually evaluating the performance and strategic fit of our existing business units and their components.
Our businesses operate in highly cyclical industries, such as commercial aerospace and oil & gas, and as such, our estimates of future cash flows, market demand, the cost of capital, and forecasted growth rates and other factors may fluctuate, which may lead to changes in estimated fair value and, therefore, impairment charges in future periods.
Our businesses operate in highly cyclical industries, such as commercial aerospace, and as such, our estimates of future cash flows, market demand, the cost of capital, and forecasted growth rates and other factors may fluctuate, which may lead to changes in estimated fair value and, therefore, impairment charges in future periods.
The cyclical nature of the industries in which our customers operate causes demand for our products to be cyclical, creating potential uncertainty regarding future profitability. Various changes in general economic conditions may affect the industries in which our customers operate. These changes could include decreases in the rate of consumption or use of our customers’ products due to economic downturns.
The cyclical nature of the industries in which our customers operate causes demand for our products to fluctuate, creating potential uncertainty regarding future profitability. Various changes in general economic conditions may affect the industries in which our customers operate. These changes could include decreases in the rate of consumption or use of our customers’ products due to economic downturns.
With respect to proceedings brought under the federal Superfund laws, or similar state statutes, we have been identified as a potentially responsible party (PRP) at 43 of such sites, excluding those at which we believe we have no future liability.
With respect to proceedings brought under the federal Superfund laws, or similar state statutes, we have been identified as a potentially responsible party (PRP) at 41 of such sites, excluding those at which we believe we have no future liability.
Using our long-term weighted average expected rate of return on pension plan assets and other actuarial assumptions, we do not expect to have any significant minimum cash funding requirements to our pension plan for at least the next ten years.
Using our long-term weighted average expected rate of return on pension plan assets and other actuarial assumptions, we do not expect to have any significant minimum cash funding requirements to our pension plan for at least ten years.
For the fiscal year 2023 annual goodwill impairment evaluation, both of our reporting units with goodwill had fair values that were in excess of carrying value.
For the fiscal year 2024 annual goodwill impairment evaluation, both of our reporting units with goodwill had fair values that were in excess of carrying value.
From time-to-time, management holds discussions with management of other companies to explore acquisitions, joint ventures, and other business combination opportunities as well as possible business unit dispositions. As a result, the relative makeup of the businesses comprising our Company is subject to change.
From time-to-time, management holds discussions with management of other companies to explore acquisitions, joint ventures, and other business combination opportunities, as well as possible asset acquisitions or dispositions. As a result, the relative makeup of the businesses comprising our Company is subject to change.
Risks associated with such international 13 trade include, among others: political and economic instability, including weak conditions in the world’s economies; accounts receivable collection; export controls; trade sanctions; changes in legal and regulatory requirements; policy changes affecting the markets for our products; changes in tax laws; and exchange rate fluctuations (which may affect sales to international customers and the value of profits earned on export sales when converted into dollars).
Risks associated with such international trade include, among others: political and economic instability, including weak conditions in the world’s economies; accounts receivable collection; export controls; trade sanctions; changes in legal and regulatory requirements; policy changes affecting the markets for our products; changes in tax laws, including taxes on repatriation of foreign earnings; and exchange rate fluctuations (which may affect sales to international customers and the value of profits earned on export sales when converted into dollars).
We have long-term contracts with certain of our customers, some of which are subject to renewal, renegotiation, or re-pricing at periodic intervals or upon changes in competitive supply conditions.
Risks Associated with Key Customers. We have long-term contracts with certain of our customers, some of which are subject to renewal, renegotiation, or re-pricing at periodic intervals or upon changes in competitive supply conditions.
We intend to adjust our accruals to reflect new information as appropriate. Future adjustments could have a material adverse effect on our results of operations in a given period, but we cannot reliably predict the amounts of such future adjustments. At December 31, 2023, our reserves for environmental matters totaled approximately $13 million.
We intend to adjust our accruals to reflect new information as appropriate. Future adjustments could have a material adverse effect on our results of operations in a given period, but we cannot reliably predict the amounts of such future adjustments. At December 29, 2024, our reserves for environmental matters totaled approximately $15 million.
Our involvement is limited or de minimis at approximately 20 of these sites, the potential loss exposure with respect to 16 individual sites is not considered to be material, and the potential loss exposure on the remaining seven sites could be material. We are a party to various cost-sharing arrangements with other PRPs at many of the sites.
Our involvement is limited or de minimis at approximately 19 of these sites, the potential loss exposure with respect to 14 individual sites is not considered to be material, and the potential loss exposure on the remaining 8 sites could be material. We are a party to various cost-sharing arrangements with other PRPs at many of the sites.
This could lead to disclosure, modification or destruction of proprietary and other key information, production downtimes, operational disruptions, and remediation costs, which in turn could adversely affect our reputation, competitiveness and results of operations. RISK RELATED TO CLIMATE CHANGE AND OTHER ENVIRONMENTAL MATTERS Risks Associated with Climate Change .
A significant security breach could lead to unanticipated disclosure, modification or destruction of proprietary and other key information, production downtimes, operational disruptions, and remediation costs, which in turn could adversely affect our reputation, competitiveness and results of operations. RISK RELATED TO CLIMATE CHANGE AND OTHER ENVIRONMENTAL MATTERS Risks Associated with Climate Change .
Acquisitions, joint ventures, and other business combinations involve various inherent risks, such as: assessing accurately the value, strengths, weaknesses, contingent and other liabilities and potential profitability of acquisition or other transaction candidates; the potential loss of key personnel of an acquired business; our ability to achieve identified financial and operating synergies, growth or other benefits anticipated to result from an acquisition or other transaction; and unanticipated changes in business and economic conditions affecting an acquisition or other transaction.
Acquisitions, joint ventures, and other business combinations involve various inherent risks, such as: the relative accuracy of our assessment of the value, strengths, weaknesses, contingent and other liabilities and potential profitability of acquisition or other transaction candidates; the potential loss of key personnel of an acquired business; unanticipated conditions or events that impact our ability to achieve identified financial and operating synergies, growth or other benefits anticipated to result from an acquisition or other transaction; and unanticipated changes in business and economic conditions.
Labor Matters. We have approximately 7,300 active employees, of which approximately 15% are located outside the United States. Approximately 35% of our workforce is covered by various CBAs, predominantly with the USW. At various times, our CBAs expire and are subject to renegotiation. Generally, collective bargaining agreements that expire may be terminated after notice by the union.
Labor Matters. We have approximately 7,700 active employees, of which approximately 15% are located outside the U.S. Approximately 35% of our workforce is covered by various CBAs, predominantly with the USW. At various times, our CBAs expire and are subject to renegotiation. Generally, CBAs that expire may be terminated after notice by the union.
Government, which requires compliance with laws and regulations relating to the performance of Government contracts. Various claims (whether based on U.S. Government or Company audits and investigations or otherwise) could be asserted against us related to our U.S. Government contract work.
Some of our operating units perform contractual work directly or indirectly for the U.S. Government, which requires compliance with laws and regulations relating to the performance of Government contracts. Various claims (whether based on U.S. Government or Company audits and investigations or otherwise) could be asserted against us related to our U.S. Government contract work.
Demand for our products, particularly within the AA&S segment, is subject to these trends, and in recent years, our business has at times been negatively impacted by depressed demand from general industrial markets.
Demand for our products, particularly within the AA&S segment, is subject to these trends, and in recent years, our business has at times been negatively impacted by depressed demand from general industrial markets. We expect that these end markets will remain highly cyclical.
While we have been able to mitigate some of the adverse impact of volatile raw material costs through various means, including raw material surcharges or indices to customers, rapid changes in raw material costs cause volatility in, and may adversely affect, our results of operations. We change prices on certain of our products from time-to-time.
While we have been able to mitigate some of the adverse impact of volatile raw material costs through various means, including the application of raw material surcharges or pricing indices to customers, rapid changes in raw material costs cause volatility in, and may adversely affect, our results of operations.
Our ability to implement price increases is dependent on market conditions, economic factors, raw material costs and availability, competitive factors, operating costs and other factors, some of which are beyond our control.
We change prices on certain of our products from time-to-time. Our ability to implement price increases is dependent on market conditions, economic factors, raw material costs and availability, competitive factors, operating costs and other factors, some of which are beyond our control.
We expect that these end markets will remain a highly cyclical industry, and future downturns could have an adverse effect on the prices at which we are able to sell our products, and our results of operations, business and financial condition could be materially adversely affected. 9 Product Pricing.
Future downturns in these markets could have an adverse effect on the prices at which we are able to sell our products, and our results of operations, business and financial condition could be materially adversely affected. Product Pricing.
Our existing property and liability insurance coverages contain exclusions and limitations on coverage. From time-to-time, in connection with renewals of insurance, we have experienced additional exclusions and limitations on coverage, larger self-insured retentions and deductibles, and significantly higher premiums.
We have maintained various forms of insurance, including insurance covering claims related to our properties and risks associated with our operations. Our existing property and liability insurance coverages contain exclusions and limitations on coverage. From time-to-time, in connection with renewals of insurance, we have experienced additional exclusions and limitations on coverage, larger self-insured retentions and deductibles, and significantly higher premiums.
From time-to-time, reduced demand, intense competition, and excess manufacturing capacity have resulted in reduced prices, excluding raw material surcharges, for many of our products. These factors have had and may have an adverse impact on our revenues, operating results, and financial condition.
From time-to-time, reduced demand, intense competition, and excess manufacturing capacity have resulted in reduced prices, excluding raw material surcharges, for many of our products. These factors, recent inflationary trends for certain critical raw material costs, and potential international trade actions, as discussed below, have had and may have an adverse impact on our revenues, operating results, and financial condition.
As such, we may be unable to implement price increases to the degree or within the time frame necessary to fully mitigate the impact of inflationary trends or at all, and the benefits of any price increases may be delayed due to long manufacturing lead times and the terms of existing contracts. Risks Associated with Key Customers.
As such, we may be unable to implement price increases to the degree or within the time frame necessary to fully mitigate the impact of inflationary trends, including those resulting from changes in trade policy, or at all, and the benefits of any price increases may be delayed due to long manufacturing lead times and the terms of existing contracts.
The war on terrorism as well as political and social turmoil could put pressure on economic conditions in the United States and worldwide.
The war on terrorism, as well as global political and social turmoil, generally, could put pressure on economic conditions in the U.S. and worldwide.
These sanctions include controls on the export, re-export, and in-country transfer in Russia of certain goods, supplies, and technologies, and the imposition of restrictions on doing business with certain state-owned Russian customers and other investments and business activities in Russia.
Governments in the European Union, the U.S., the U.K. and other countries have enacted sanctions against Russia and Russian interests. These sanctions include controls on the export, re-export, and in-country transfer in Russia of certain goods, supplies, and technologies, and the imposition of restrictions on doing business with certain state-owned Russian customers and other investments and business activities in Russia.
The prices for and availability of electricity, natural gas, oil and other energy resources are subject to volatile market conditions. These market conditions often are affected by political and economic factors beyond our control. Disruptions in the supply of energy resources could temporarily impair our ability to manufacture products for customers.
We rely upon third parties for our supply of energy resources consumed in the manufacture of our products. The prices for and availability of electricity, natural gas, oil and other energy resources are subject to volatile market conditions. These market conditions often are affected by political and economic factors and by supply and demand trends that are beyond our control.
When our liability is probable and we can reasonably estimate our costs, we record environmental liabilities in our financial statements. In many cases, we are not able to determine whether we are liable or if liability is probable or to reasonably estimate the loss or range of loss.
In many cases, we are not able to determine whether we are liable or if liability is probable or to reasonably estimate the loss or range of loss.
At any given time, we may be unable to obtain an adequate supply of these critical supplies on a timely basis, on price and other terms acceptable to us, or at all. If suppliers increase the price of these items, we may not have alternative sources of supply.
Purchase prices and availability of these critical items are subject to volatility. At any given time, we may be unable to obtain 10 an adequate supply of these critical supplies on a timely basis, on price and other terms acceptable to us, or at all.
As we integrate, implement and deploy new information technology processes and information infrastructure across our operations, we could experience disruptions in our business that could have an adverse effect on our business, financial condition, results of operations and cash flow. Cybersecurity Threats.
Any such events could cause us to lose customers or revenue and could require us to incur significant remediation expense. As we integrate, implement and deploy new information technology processes and information infrastructure across our operations, we could experience disruptions in our business that could have an adverse effect on our business, financial condition, results of operations and cash flow.
Recently, due to inflationary trends, certain critical raw material costs, such as nickel, hafnium, titanium sponge, cobalt, chromium, and molybdenum and scrap containing iron, nickel, titanium, chromium, and molybdenum have been volatile.
Recently, due to inflationary trends, certain critical raw material costs, such as nickel, hafnium, titanium sponge, cobalt, chromium, and molybdenum and scrap containing iron, nickel, titanium, chromium, and molybdenum have been volatile and they may continue to be so in the future, including as a result of changes in international trade policy.
Moreover, tariffs, or other changes in U.S. trade policy, have resulted in and may continue to trigger, retaliatory actions by affected countries. Certain foreign governments have instituted or considered imposing trade sanctions on certain U.S. goods, or taking action to deny U.S. companies access to critical raw materials, in response to U.S. trade actions.
At times, certain foreign governments have instituted or considered imposing trade sanctions on certain U.S. goods, or taking action to deny U.S. companies access to critical raw materials, in response to U.S. trade actions, and these or other foreign governments could continue or expand upon these actions in the future.
In addition, the Federal government, through various agencies, is a party to several such arrangements. We believe that we operate our businesses in compliance in all material respects with applicable environmental laws and regulations. However, from time-to-time, we are a party to lawsuits and other proceedings involving alleged violations of, or liabilities arising from, environmental laws.
In addition, the Federal government, through various agencies, is a party to several such arrangements. From time-to-time, we are a party to lawsuits and other proceedings involving alleged violations of, or liabilities arising from, environmental laws. When our liability is probable and we can reasonably estimate our costs, we record environmental liabilities in our financial statements.
In early March 2022, we announced plans to terminate our Uniti, LLC joint venture with Russian-based VSMPO-AVISMA (Verkhnaya Salda Metallurgical Production Association - Berezniki Titanium-Magnesium Works), the purpose of which was to market and sell a range of commercially pure titanium products.
We terminated our Uniti, LLC joint venture with Russian-based VSMPO-AVISMA (Verkhnaya Salda Metallurgical Production Association - Berezniki Titanium-Magnesium Works), the purpose of which was to market and sell a range of commercially pure titanium products. However, conditions in Ukraine and/or existing or future sanctions may disrupt supplies or affect the prices of materials that are necessary to our operations.
Dependence on Critical Supplies Subject to Price and Availability Fluctuations. We rely on third parties for certain supplies, such as graphite electrodes and industrial gases including helium and argon that are critical to the manufacture of our products. Purchase prices and availability of these critical items are subject to volatility.
This could cause us to lose sales, incur additional costs, delay new product introductions, or suffer harm to our reputation. Dependence on Critical Supplies Subject to Price and Availability Fluctuations. We rely on third parties for certain supplies, such as graphite electrodes and industrial gases including helium and argon that are critical to the manufacture of our products.
New or more stringent laws and regulations related to greenhouse gas emissions, water usage and other climate change related concerns may adversely affect us, our suppliers and our customers.
New or more stringent laws and regulations related to greenhouse gas emissions, water usage and other climate change related concerns may adversely affect us, our 12 suppliers and our customers. We have publicly disclosed efforts to reduce certain environmental impacts, including greenhouse gas (GHG) emissions of our operations, and provide for our compliance with applicable environmental regulations.
The manufacture of some of our products is a complex process and requires long lead times. As a result, we may experience delays or shortages of critical supplies. If unable to obtain adequate and timely deliveries of required supplies, we may be unable to timely manufacture sufficient quantities of products.
If suppliers increase the price of these items, we may not have alternative sources of supply. The manufacture of some of our products is a complex process and requires long lead times. As a result, we may experience delays or shortages of critical supplies.
Further, increases in energy costs, or changes in costs relative to energy costs paid by competitors, has and may continue to adversely affect our profitability. To the extent that these uncertainties cause suppliers and customers to be more cost sensitive, increased energy prices may have an adverse effect on our results of operations and financial condition.
To the extent that these uncertainties cause suppliers and customers to be more cost sensitive, increased energy prices may have an adverse effect on our results of operations and financial condition. The ongoing conflict between Russia and Ukraine may adversely affect our business and results of operations. Since February 2022, Russia and Ukraine have been engaged in active armed conflict.
If a problem occurs that impairs this infrastructure, the resulting disruption could impede our ability to record or process orders, manufacture and ship in a timely manner, or otherwise carry on business in the normal course. Any such events could cause us to lose customers or revenue and could require us to incur significant expense to remediate.
Information technology infrastructure is critical to supporting business objectives; failure of our information technology infrastructure to operate effectively could adversely affect our business. If a problem occurs that impairs this infrastructure, the resulting disruption could impede our ability to record or process orders, manufacture and ship in a timely manner, or otherwise carry on business in the normal course.
This could cause us to lose sales, incur additional costs, delay new product introductions, or suffer harm to our reputation. Availability of Energy Resources. We rely upon third parties for our supply of energy resources consumed in the manufacture of our products.
If unable to obtain adequate and timely deliveries of required supplies, we may be unable to timely manufacture sufficient quantities of products. This could cause us to lose sales, incur additional costs, delay new product introductions, or suffer harm to our reputation. Availability of Energy Resources.
Any of these factors could materially adversely affect our results for the period in which they occur. Additionally, changes in international trade duties and other aspects of international trade policy, both in the U.S. and abroad, could materially impact our business.
Any of these factors could materially adversely affect our results for the period in which they occur.
This could cause us to lose sales, incur additional costs, delay new product introductions, or suffer harm to our reputation.
If unable to obtain adequate and timely deliveries of required raw materials, we may be unable to timely manufacture sufficient quantities of products. This could cause us to lose sales, incur additional costs, delay new product introductions, or suffer harm to our reputation.
A failure to sufficiently secure or successfully enforce our intellectual property rights could adversely affect our business and competitive position. Risks Associated with Digital Technology. Information technology infrastructure is critical to supporting business objectives; failure of our information technology infrastructure to operate effectively could adversely affect our business.
Additionally, our competitors may develop technologies of their own that are similar or superior to our proprietary technologies, or design around our patents, to lawfully avoid our intellectual property rights. A failure to sufficiently secure or successfully enforce our intellectual property rights could adversely affect our business and competitive position. Risks Associated with Digital Technology.
As of December 31, 2023, our total consolidated indebtedness was approximately $2.2 billion. Our subsidiaries had the ability to borrow an additional approximately $530 million under our revolving credit facility as of December 31, 2023.
As of December 29, 2024, our total consolidated indebtedness was approximately $1.9 billion. We also had the ability to borrow approximately $525 million under our Asset Based Lending (ABL) credit facility as of December 29, 2024.
International acquisitions and other transactions could be affected by export controls, exchange rate fluctuations, domestic and foreign political conditions, changes in tax laws and a deterioration in domestic and foreign economic conditions. 14 Risks Associated with Government Contracts . Some of our operating units perform contractual work directly or indirectly for the U.S.
The relative success of any business or asset acquisitions and other similar transactions, particularly any cross-border transaction, also could be negatively affected by export controls, exchange rate fluctuations, domestic and foreign trade policy and other geopolitical conditions, changes in tax laws and deterioration in domestic and foreign economic conditions. Risks Associated with Government Contracts .
The possibility exists that there could be ongoing impacts to our operations and financial results as a result of COVID-19 or a similar future pandemic, and the ultimate breadth and duration of these trends and their impact on our business is difficult to predict. Political and Social Turmoil.
Any future similar event could impact our business, results of operations, financial condition and/or cash flows in similar respects, but the ultimate breadth and duration of any such future event and its impacts on our business are difficult to predict. Political and Social Turmoil.
Our intellectual property protects our investments in technological innovation, research and development, and plays an important role in maintaining our competitive position in the markets we serve. Despite efforts to secure our intellectual property, it may be infringed or misappropriated by our employees, our competitors or other third parties.
Despite efforts to secure our intellectual property, it may be infringed or misappropriated by our employees, our competitors or other third parties. The pursuit of remedies for infringement or misappropriation of intellectual property is expensive and uncertain.
There can be no assurance that we will succeed in concluding collective bargaining agreements to replace those that expire. RISKS RELATED TO INTELLECTUAL PROPERTY, INFORMATION TECHNOLOGY AND SECURITY Risks Associated with our Intellectual Property. We own valuable intellectual property, including trade secrets, patents, trademarks and copyrights.
RISKS RELATED TO INTELLECTUAL PROPERTY, INFORMATION TECHNOLOGY AND SECURITY Risks Associated with our Intellectual Property. We own valuable intellectual property, including trade secrets, patents, trademarks and copyrights. Our intellectual property protects our investments in technological innovation, research and development, and plays an important role in maintaining our competitive position in the markets we serve.
Removed
This could cause us to lose sales, incur additional costs, delay new product introductions, or suffer harm to our reputation. The ongoing conflict between Russia and Ukraine may adversely affect our business and results of operations. Since February 2022, Russia and Ukraine have been engaged in active armed conflict.
Added
We source some of these materials from China, which has and may in the future continue to impose export controls that could limit or significantly delay our access to such materials and could compel us to identify alternative sources, which we may not be able to do in a timely fashion or at all.
Removed
Governments in the European Union, the United States, the United Kingdom and other countries have enacted sanctions against Russia and Russian interests.
Added
Disruptions in the supply of energy resources could temporarily impair our ability to manufacture products for customers. Further, increases in energy costs, or changes in costs relative to energy costs paid by competitors, has and may continue to adversely affect our profitability.
Removed
However, conditions in Ukraine and/or existing or future sanctions may disrupt supplies or affect the prices of materials that are necessary to our operations. If unable to obtain adequate and timely deliveries of required raw materials, we 10 may be unable to timely manufacture sufficient quantities of products.
Added
There can be no assurance that we will succeed in obtaining CBAs to replace those that expire. The Company is currently renegotiating CBAs, which expire on February 28, 2025, that cover approximately 1,100 USW-represented full-time employees within our AA&S operations. There can be no assurance that the Company will successfully conclude these renegotiations to replace the expiring CBAs.
Removed
For example, in fiscal year 2021, the USW engaged in a 3 ½ month strike primarily affecting our AA&S segment operations, and we incurred approximately $63 million in strike-related costs and had lower revenues during this period while we continued to operate affected facilities with replacement workers.
Added
We source some materials from China, which has and may in the future continue to impose export controls that could limit or significantly delay our access to such materials and could compel us to identify alternative sources, which we may not be able to do in a timely fashion or at all.
Removed
The pursuit of remedies for infringement or misappropriation of intellectual property is expensive and uncertain. Additionally, our competitors may develop technologies of their own that are similar or superior to our proprietary technologies, or design 11 around our patents, to lawfully avoid our intellectual property rights.
Added
Additionally, global trade policy may, at times, be volatile and unpredictable, and changes in international trade duties and other aspects of international trade policy, both in the U.S. and abroad, could materially impact our business. Tariffs, or other changes in U.S. trade policy, have resulted in and may continue to trigger, retaliatory actions by affected countries.
Removed
We have publicly disclosed efforts to reduce the energy intensity, freshwater intake intensity and greenhouse gas (GHG) emission of our operations, working consistently to enhance the environmental sustainability of our business by reducing our reliance on fossil fuel-based energy sources, promoting water reuse and other responsible water management practices, reducing waste and promoting recycling (including extensive use of recycled feedstock in our manufacturing processes) and ensuring our compliance with applicable environmental regulations.
Added
These two lawsuits were consolidated in late 2024, and in January 2025, we filed a motion to dismiss the consolidated claims. We intend to vigorously defend against these claims, but given the preliminary nature of these matters, cannot predict their outcome or estimate any range of reasonably possible loss at this time. Risks Associated with Insurance Coverage.
Removed
Additionally, in the context of the COVID-19 pandemic or any future similar event, one or more of our suppliers may not have the materials, capacity, or capability to supply products that we require according to our schedule and specifications.
Removed
In that case, we may need to seek alternate suppliers, which may be more expensive, may not be available or may result in delays in shipments to us and subsequently to our customers, each of which would affect our business, results of operations, financial condition and/or cash flows.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThese plans ensure the appropriate escalation, evaluation, management and reporting of cybersecurity incidents in a prompt and appropriately cross-functional manner, facilitating coordination across multiple parts of the Company, and are the subject of regular table- top breach simulations and other exercises and evaluations. • Insurance Coverage .
Biggest changeThese plans ensure the appropriate escalation, evaluation, management and reporting of cybersecurity incidents in a prompt and appropriately cross- 17 functional manner, facilitating coordination across multiple parts of the Company, and are the subject of regular table- top breach simulations and other exercises and evaluations. • Insurance Coverage .
Our Chief Digital and Information Officer (“CDIO”) and our Chief Information Security Officer (“CISO”), each of whom have extensive cybersecurity training and expertise and more than 20 years and 14 years of information technology and cybersecurity 16 experience, respectively, hold primary responsibility within management for assessing, monitoring and managing our cybersecurity risks and program.
Our Chief Digital and Information Officer (“CDIO”) and our Chief Information Security Officer (“CISO”), each of whom have extensive cybersecurity training and expertise and more than 20 years and 14 years of information technology and cybersecurity experience, respectively, hold primary responsibility within management for assessing, monitoring and managing our cybersecurity risks and program.

Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−0 removed4 unchanged
Biggest changeMetal alloy-based additive manufacturing for the aerospace & defense industries takes place in New Britain, CT, and will begin to take place in fiscal year 2024 in our newly leased facility in Fort Lauderdale, Florida. Within the AA&S segment, our production of zirconium, hafnium, niobium and related specialty alloys takes place at facilities located in Millersburg, OR and Huntsville, AL.
Biggest changeMetal alloy-based additive manufacturing for the aerospace & defense industries takes place in our leased facility in Fort Lauderdale, Florida. Within the AA&S segment, our production of zirconium, hafnium, niobium and related specialty alloys takes place at facilities located in Millersburg, OR and Huntsville, AL.
Nickel melting operations are located in Lockport, NY (vacuum induction melting, vacuum arc re-melt, and electro-slag re-melt), and titanium melting operations are located in Albany, OR (vacuum arc 17 re-melt). Our principal AA&S locations for melting flat-rolled specialty materials are located in Brackenridge and Latrobe, PA. Hot-rolling is performed at our domestic facilities in Brackenridge and Washington, PA.
Nickel melting operations are located in Lockport, NY (vacuum induction melting, vacuum arc re-melt, and electro-slag re-melt), and titanium melting operations are located in Albany, OR (vacuum arc re-melt). Our principal AA&S locations for melting flat-rolled specialty materials are located in Brackenridge and Latrobe, PA. Hot-rolling is performed at our domestic facilities in Brackenridge and Washington, PA.
Finishing of our flat-rolled products takes place at our domestic facilities located in Vandergrift, Washington, Rochester, Monaca, and Zelienople, PA, and in New Bedford, MA. Additionally, the AA&S segment will benefit from the expanded capabilities at our new Pageland, SC location. Substantially all of our properties are owned.
Finishing of our flat-rolled products takes place at our domestic facilities located in Vandergrift, Washington, Rochester, Monaca, and Zelienople, PA. Additionally, the AA&S segment will benefit from the expanded capabilities at our new Pageland, SC location. Substantially all of our properties are owned.
We also own or lease facilities in a number of foreign countries, including France, Germany, the United Kingdom, Poland, and the People’s Republic of China. We own highly engineered forging and machining operations in Stalowa Wola, Poland. Through our STAL joint venture, we operate facilities for finishing PRS products in the Xin-Zhuang Industrial Zone, Shanghai, China.
We own or lease facilities, primarily sales and administrative offices, in a number of foreign countries, including France, Germany, the U.K., Poland, and the People’s Republic of China. We also own highly engineered forging and machining operations in Stalowa Wola, Poland. Through our STAL joint venture, we operate facilities for finishing PRS products in the Xin-Zhuang Industrial Zone, Shanghai, China.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+6 added−0 removed2 unchanged
Biggest changeThe resolution in any reporting period of one or more of these matters, including those described above, however, could have a material adverse effect on our results of operations for that period. Information relating to legal proceedings is included in Note 21. Commitments and Contingencies of the Notes to Consolidated Financial Statements and incorporated herein by reference. Item 4.
Biggest changeThe resolution in any reporting period of one or more of these matters, including those described above, however, could have a material adverse effect on our results of operations for that period. 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.
Added
Nesbit, Robin L. Rosewicz, George E. Poole and James E. Swartz, Jr., individually and as 18 representatives of a class of participants and beneficiaries of the Allegheny Technologies Incorporated Pension Plan v.
Added
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 (2) John Souza and Karen Souza, individually and as representatives on behalf of a class of similarly situated persons v. ATI Inc. and State Street Global Advisors Trust Co.
Added
(Case No. 2:24-cv-01214), both of which are filed in federal district court for the Western District of Pennsylvania.
Added
These lawsuits, which were consolidated in late 2024, 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.
Added
We filed a Motion to Dismiss the consolidated claims on January 27, 2025. We dispute and intend to vigorously defend against these claims, but given the preliminary nature of these matters, cannot predict their outcome or estimate any range of reasonably possible loss at this time. Information relating to legal proceedings is included in Note 21.
Added
Commitments and Contingencies of the Notes to Consolidated Financial Statements and incorporated herein by reference. Item 4. Mine Safety Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−2 removed0 unchanged
Biggest changeFiscal Period Total Number of Shares (or Units) Purchased (a) Average Price Paid per Share (or Unit) (b) (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs October 2-29, 2023 531 $ 40.56 — $ 30,000,006 October 30-November 26, 2023 705,070 $ 42.69 702,787 $ — November 27-December 31, 2023 — $ — — $ 150,000,000 Total 705,601 $ 42.69 702,787 $ 150,000,000 (a) Includes shares repurchased by ATI from employees to satisfy employee-owed taxes on share-based compensation.
Biggest changeFiscal Period Total Number of Shares (or Units) Purchased (a) Average Price Paid per Share (or Unit) (b) (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs September 30-November 3, 2024 140,556 $ 54.08 131,494 $ 653,000,054 November 4-December 1, 2024 778,615 $ 55.35 777,064 $ 610,000,045 December 2-29, 2024 351,042 $ 56.99 351,042 $ 590,000,054 Total 1,270,213 $ 55.66 1,259,600 $ 590,000,054 (a) Includes shares repurchased by ATI from employees to satisfy employee-owed taxes on share-based compensation.
The payment of dividends and the amount of such dividends depends upon matters deemed relevant by our Board of Directors, such as our results of operations, financial condition, cash requirements, future prospects, any limitations imposed by law, credit agreements or senior securities, and other factors deemed relevant and appropriate.
The future payment of dividends and the amount of such dividends would depend upon matters deemed relevant by our Board of Directors, such as our results of operations, financial condition, cash requirements, prospects, any limitations imposed by law, credit agreements or senior securities, and other factors deemed appropriate.
“Financial Statements and Supplementary Data.” 18 Sales of Equity Securities Set forth below is information regarding our stock repurchases during the fourth quarter of fiscal year 2023, comprised of shares repurchased by ATI under the $75 million repurchase program authorized by our Board of Directors in April 2023 and shares repurchased by ATI from employees to satisfy employee-owed taxes on share-based compensation.
“Financial Statements and Supplementary Data.” Sales of Equity Securities Set forth below is information regarding our stock repurchases during the fourth quarter of fiscal year 2024, comprised of shares repurchased by ATI under the $700 million repurchase program authorized by our Board of Directors in September 2024 and shares repurchased by ATI from employees to satisfy employee-owed taxes on share-based compensation.
The graph assumes that $100 was invested on December 31, 2018. The stock performance information included in this graph is based on historical results and is not necessarily indicative of future stock price performance.
The graph assumes that $100 was invested on December 29, 2019. The stock performance information included in this graph is based on historical results and is not necessarily indicative of future stock price performance.
Our Asset Based Lending (ABL) Credit Facility restricts our ability to pay dividends in certain circumstances. For more information on the restrictions under our ABL facility, see Note 16 of Item 8.
Further, our ABL credit facility restricts our ability to pay dividends in certain circumstances. For more information on the restrictions under our ABL credit facility, see Note 16 of Item 8.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Prices Our common stock is traded on the New York Stock Exchange (symbol ATI). At February 2, 2024, there were 1,861 record holders of ATI Inc. common stock. We do not currently pay a quarterly dividend.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Prices Our common stock is traded on the New York Stock Exchange (symbol ATI). At January 31, 2025, there were 1,660 record holders of ATI Inc. common stock. Currently, we do not pay a dividend.
Cumulative Total Stockholder Return The graph set forth below shows the cumulative total stockholder return (i.e., price change plus reinvestment of dividends) on our common stock from December 31, 2018 through December 31, 2023, as compared to the S&P 500 Index, the S&P MidCap 400 Industrials Index and the Russell 2000 Index.
(c) Excludes excise taxes incurred on share repurchases. 19 Cumulative Total Stockholder Return The graph set forth below shows the cumulative total stockholder return (i.e., price change plus reinvestment of dividends) on our common stock from December 29, 2019 through December 29, 2024, as compared to the S&P 500 Index, the S&P MidCap 400 Industrials Index and the Russell 2000 Index.
(b) Share repurchases are inclusive of amounts for any relevant commissions. (c) Excludes excise taxes incurred on share repurchases.
(b) Share repurchases are inclusive of amounts for any relevant commissions.
Removed
In November 2023, our Board of Directors authorized the repurchase of an additional $150 million of ATI stock. No shares were repurchased under this new program in the fourth quarter of fiscal year 2023.
Added
Company / Index Dec 2019 Dec 2020 Dec 2021 Dec 2022 Dec 2023 Dec 2024 ATI 100.00 81.17 77.11 144.53 220.09 268.39 S&P 500 Index 100.00 118.40 152.39 124.79 157.59 199.99 S&P MidCap 400 Industrials Index 100.00 116.49 149.62 132.42 174.04 198.82 Russell 2000 Index 100.00 119.96 137.74 109.59 128.14 143.77 Source: Standard & Poor’s Item 6. [Reserved]
Removed
Company / Index Dec 2018 Dec 2019 Dec 2020 Dec 2021 Dec 2022 Dec 2023 ATI 100.00 94.90 77.03 73.17 137.16 208.87 S&P 500 Index 100.00 131.49 155.68 200.37 164.08 207.21 S&P MidCap 400 Industrials Index 100.00 133.55 155.57 199.82 176.84 232.43 Russell 2000 Index 100.00 125.53 150.58 172.90 137.56 160.85 Source: Standard & Poor’s Item 6. [Reserved] 19

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

127 edited+47 added−123 removed50 unchanged
Biggest changeSales to the aerospace & defense markets increased 24%, with a 25% increase in sales of commercial aerospace products, due to a significant increase in commercial airframe demand for various flat-rolled product forms. 30 Comparative information for our AA&S segment revenues (in millions) by market, the respective percentages of overall segment revenues, for the fiscal years 2023 and 2022, and the percentage change in revenues by market for fiscal year 2023 is as follows: Fiscal Year Market 2023 2022 Change Aerospace & Defense: Jet Engines- Commercial 78.2 4 % 87.8 4 % (9.6) (11) % Airframes- Commercial 388.8 19 % 284.8 13 % 104.0 37 % Defense 220.9 11 % 183.0 8 % 37.9 21 % Total Aerospace & Defense 687.9 34 % 555.6 25 % 132.3 24 % Energy: Oil & Gas 404.0 20 % 441.7 20 % (37.7) (9) % Specialty Energy 179.3 8 % 163.0 8 % 16.3 10 % Total Energy 583.3 28 % 604.7 28 % (21.4) (4) % Automotive 186.1 9 % 290.9 13 % (104.8) (36) % Electronics 156.8 8 % 197.6 9 % (40.8) (21) % Construction/Mining 127.9 6 % 142.3 7 % (14.4) (10) % Medical 74.3 4 % 89.9 4 % (15.6) (17) % Food Equipment & Appliances 71.9 3 % 158.3 7 % (86.4) (55) % Other 165.3 8 % 155.5 7 % 9.8 6 % Total $ 2,053.5 100 % $ 2,194.8 100 % $ (141.3) (6) % Our AA&S segment produces zirconium and related alloys including hafnium and niobium, nickel-based alloys, titanium and titanium-based alloys, and specialty alloys in a variety of forms including plate, sheet, and PRS products.
Biggest changeAdvanced Alloys & Solutions Fiscal Year Fiscal Year (In millions) 2024 % Change 2023 Sales to external customers $ 2,083.6 2 % $ 2,053.5 Segment EBITDA $ 320.9 16 % $ 276.6 Segment EBITDA as a percentage of sales 15.4 % 13.5 % International sales as a percentage of sales 33.2 % 35.0 % Fiscal Year 2024 Compared to Fiscal Year 2023 Sales of $2.1 billion for the AA&S segment in fiscal year 2024 increased 2% compared to fiscal year 2023, as an 11% increase in aerospace & defense sales, a 47% increase in medical market sales and a 22% increase in electronics market sales were partially offset by continued industrial markets softness, particularly conventional energy. 28 Comparative information for our AA&S segment revenues by market, the respective percentages of overall segment revenues, for the fiscal years 2024 and 2023, and the percentage change in revenues by market for fiscal year 2024 is as follows: (In millions) Fiscal Year Market 2024 2023 Change Aerospace & Defense: Jet Engines- Commercial 92.4 4 % 78.2 4 % 14.2 18 % Airframes- Commercial 403.2 19 % 388.8 19 % 14.4 4 % Defense 265.4 13 % 220.9 11 % 44.5 20 % Total Aerospace & Defense 761.0 36 % 687.9 34 % 73.1 11 % Electronics 191.3 9 % 156.8 8 % 34.5 22 % Specialty Energy 187.8 9 % 179.3 8 % 8.5 5 % Medical 109.4 6 % 74.3 4 % 35.1 47 % Other Core Markets 488.5 24 % 410.4 20 % 78.1 19 % Core End Markets 1,249.5 60 % 1,098.3 54 % $ 151.2 14 % Conventional Energy 292.2 14 % 404.0 20 % (111.8) (28) % Automotive 244.2 12 % 186.1 9 % 58.1 31 % Construction/Mining 132.2 6 % 127.9 6 % 4.3 3 % Other 165.5 8 % 237.2 11 % (71.7) (30) % Industrial Markets $ 834.1 40 % $ 955.2 46 % $ (121.1) (13) % Total $ 2,083.6 100 % $ 2,053.5 100 % $ 30.1 2 % Our AA&S segment produces zirconium and related alloys including hafnium and niobium, nickel-based alloys, titanium and titanium-based alloys, and specialty alloys in a variety of forms including plate, sheet, and PRS products.
The ABL facility, which matures in September 2027, includes a $600 million revolving credit facility, a letter of credit sub-facility of up to $200 million, a $200 million term loan (ABL Term Loan), and a swing loan facility of up to $60 million.
The ABL credit facility, which matures in September 2027, includes a $600 million revolving credit facility, a letter of credit sub-facility of up to $200 million, a $200 million term loan (ABL Term Loan), and a swing loan facility of up to $60 million.
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 applicable interest rate for revolving credit borrowings under the ABL credit 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 ABL Term Loan balance, or (ii) $60.0 million.
The ABL credit 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 ABL Term Loan balance, or (ii) $60.0 million.
The effect on pension liabilities for changes to the discount rate, as well as the net effect of other changes in actuarial assumptions and experience, are immediately recognized in earnings through net periodic pension benefit cost within nonoperating retirement benefit expense on the consolidated statements of operations when pension plans are remeasured annually in the fourth quarter or on an interim basis as triggering events require remeasurement.
The effect on pension liabilities for changes to the discount rate, as well as the net effect of other changes in actuarial assumptions 37 and experience, are immediately recognized in earnings through net periodic pension benefit cost within nonoperating retirement benefit expense on the consolidated statements of operations when pension plans are remeasured annually in the fourth quarter or on an interim basis as triggering events require remeasurement.
Additionally, all of the remaining collectively-bargained defined benefit retiree health care plans at ATI’s operations are now closed to new 39 entrants, with cost caps in place for these obligations. As a result of these actions, ATI’s retirement savings and other postretirement benefit programs have largely transitioned to a defined contribution structure.
Additionally, all of the remaining collectively-bargained defined benefit retiree health care plans at ATI’s operations are now closed to new entrants, with cost caps in place for these obligations. As a result of these actions, ATI’s retirement savings and other postretirement benefit programs have largely transitioned to a defined contribution structure.
The $23.7 million of charges within cost of sales include $11.5 million of start-up costs, $1.9 million of costs associated with an unplanned outage at our Lockport, NY facility, and $10.3 million primarily for asset write-offs for the restructuring of our European operations and the closure of our Robinson, PA operations.
The $23.7 million of charges within cost of sales include $11.5 million of start-up costs, $1.9 million of costs associated with an unplanned outage at our Lockport, NY facility, and $10.3 million primarily for asset write-offs for the restructuring of our 30 European operations and the closure of our Robinson, PA operations.
Using our long-term weighted average expected rate of return on pension plan assets and other actuarial assumptions, we do not expect to have any significant minimum cash funding requirements to the defined benefit pension plan for at least the next ten years.
Using our long-term weighted average expected rate of return on pension plan assets and other actuarial assumptions, we do not expect to have any significant minimum cash funding requirements to the defined benefit pension plan for at least ten years.
Cash provided by financing activities in fiscal year 2023 was $267.2 million, and included $418.8 million of net proceeds from the issuance of the 2030 Notes during the third quarter of fiscal year 2023, partially offset by $85.2 million of payments for the repurchase of 2.0 million shares of ATI stock under our repurchase programs authorized by our Board of Directors and $16.0 million in dividend payments to the 40% noncontrolling interest in our PRS joint venture in China.
Cash provided by financing activities in fiscal year 2023 was $267.2 million, and included $418.8 million of net proceeds from the issuance of the 2030 Notes during the third quarter of fiscal year 2023, partially offset by $85.2 million toward the repurchase of 2.0 million shares of ATI stock under our repurchase programs authorized by our Board of Directors and $16.0 million in dividend payments to the 40% noncontrolling interest in our PRS joint venture in China.
Forward-looking statements include those containing such words as 42 “anticipates,” “believes,” “estimates,” “expects,” “would,” “should,” “will,” “will likely result,” “forecast,” “outlook,” “projects,” and similar expressions.
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.
In addition, no indicators of impairment were observed in fiscal years 2023 or 2022 associated with any of our long-lived assets. 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.
In addition, no indicators of impairment were observed in fiscal years 2024 or 2023 associated with any of our long-lived assets. 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.
Restructuring and Other Charges/Credits For the year ended December 31, 2023, restructuring and other charges were $31.4 million, which are excluded from segment results. These charges include $7.7 million of severance-related restructuring charges and $23.7 million of charges included within cost of sales on the consolidated statements of operations.
For the fiscal year ended December 31, 2023, restructuring and other charges were $31.4 million, which are excluded from segment results. These charges include $7.7 million of severance-related restructuring charges and $23.7 million of charges included within cost of sales on the consolidated statements of operations.
Results for fiscal year 2023 included $104.3 million of net pre-tax charges, which consisted of the following: • $0.6 million loss on the sale of our Northbrook, IL operations. • $35.2 million of restructuring and other charges, consisting of $11.5 million of start up costs, $14.1 million primarily for asset write-offs associated with the restructuring of our European operations and the closure of our Robinson, PA 21 operations, $1.9 million of costs associated with an unplanned outage at our Lockport, NY melt facility, and $7.7 million of severance-related charges primarily for the restructuring of our European operations and involuntary reductions across ATI’s domestic operations in conjunction with our continued transformation. • $41.7 million pension settlement loss associated with actions taken as part of our pension derisking strategy.
Results for fiscal year 2023 included $104.3 million of net pre-tax charges, which consisted of the following: • $0.6 million loss on the sale of our Northbrook, IL operations. • $35.2 million of restructuring and other charges, consisting of $11.5 million of start-up costs, $14.1 million primarily for asset write-offs associated with the restructuring of our European operations and the closure of our Robinson, PA operations, $1.9 million of costs associated with an unplanned outage at our Lockport, NY melt facility, and $7.7 million of severance-related charges primarily for the restructuring of our European operations and involuntary reductions across ATI’s domestic operations. • $41.7 million pension settlement loss associated with actions taken as part of our pension derisking strategy.
The estimated effect of changing the discount rate by 0.50% would decrease postretirement obligations in the case of an increase in the discount rate or increase postretirement obligations in the case of a decrease in the discount rate, by approximately $7 million. Such a change in the discount rate would have an insignificant impact to postretirement benefit expense.
The estimated effect of changing the discount rate by 0.50% would decrease postretirement obligations in the case of an increase in the discount rate or increase postretirement obligations in the case of a decrease in the discount rate, by approximately $6 million. Such a change in the discount rate would have an insignificant impact to postretirement benefit expense.
For our annual goodwill impairment evaluation performed in the fourth quarter of fiscal year 2023, the Specialty Materials reporting unit had a fair value that was significantly in excess of carrying value.
For our annual goodwill impairment evaluation performed in the fourth quarter of fiscal year 2024, the Specialty Materials reporting unit had a fair value that was significantly in excess of carrying value.
Financial Condition and Liquidity We have an Asset Based Lending (ABL) Credit Facility, which is collateralized by the accounts receivable and inventory of our operations. 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.
Financial Condition and Liquidity We have an ABL credit facility, which is collateralized by the accounts receivable and inventory of our operations. The ABL credit facility also provides us with the option of including certain machinery and equipment as additional collateral for purposes of determining availability under the facility.
Based on currently available information, it is reasonably possible that the costs for active matters may exceed our recorded reserves by as much as $17 million.
Based on currently available information, it is reasonably possible that the costs for active matters may exceed our recorded reserves by as much as $16 million.
To facilitate this pension derisking strategy, we completed a voluntary cash out for term vested employees and contributed $222 million to our pension plan in the third quarter of fiscal year 2023, to fully fund remaining pension liabilities ahead of this annuity transaction. After these actions, our U.S. qualified defined benefit pension plan includes approximately 1,980 participants.
To facilitate this pension derisking strategy, we completed a voluntary cash out for term vested employees and contributed $222 million to our pension plan in the third quarter of fiscal year 2023, to fully fund remaining pension liabilities ahead of this annuity transaction. After these actions, our U.S. qualified defined benefit pension plan includes approximately 2,000 participants.
These reserves included estimated probable future costs of: $3 million for federal Superfund and comparable state-managed sites; $7 million for formerly owned or operated sites for remediation or indemnification obligations; $2 million for owned or controlled sites at which our operations have been or plan to be discontinued; and $1 million for sites utilized by the Company in its ongoing operations.
These reserves included estimated probable future costs of: $3 million for federal Superfund and comparable state-managed sites; $6 million for formerly owned or operated sites for remediation or indemnification obligations; $5 million for owned or controlled sites at which our operations have been or plan to be discontinued; and $1 million for sites utilized by the Company in its ongoing operations.
For our annual goodwill impairment evaluation performed in the fourth quarter of fiscal year 2023, quantitative goodwill assessments were performed for the two HPMC reporting units with goodwill.
For our annual goodwill impairment evaluation performed in the fourth quarter of fiscal year 2024, quantitative goodwill assessments were performed for the two HPMC reporting units with goodwill.
Although we believe that the estimates and assumptions used were reasonable, actual results could differ from those estimates and assumptions. The $227.2 million of goodwill remaining as of December 31, 2023 on our consolidated balance sheet is comprised of $161.2 million at the Forged Products reporting unit and $66.0 million at the Specialty Materials reporting unit.
Although we believe that the estimates and assumptions used were reasonable, actual results could differ from those estimates and assumptions. The $227.2 million of goodwill remaining as of December 29, 2024 on our consolidated balance sheet is comprised of $161.2 million at the Forged Products reporting unit and $66.0 million at the Specialty Materials reporting unit.
Other events and changes in circumstances may also require goodwill to be tested for impairment between annual measurement dates. At December 31, 2023, the Company had $227.2 million of goodwill on its consolidated balance sheet, all of which relates to the HPMC segment.
Other events and changes in circumstances may also require goodwill to be tested for impairment between annual measurement dates. At December 29, 2024, the Company had $227.2 million of goodwill on its consolidated balance sheet, all of which relates to the HPMC segment.
As of April 3, 2022, our Sheffield, 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.
As of April 3, 2022, our Sheffield, U.K. 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.
For example, our WACC used in our discounted cash flow assessments was 12.0% and long-term growth rates ranged from 3% to 3.5%. The estimated effect of a 0.50% change in the WACC would result in a 10% change in the fair value of the Forged 40 Products reporting unit.
For example, our WACC used in our discounted cash flow assessments was 11.0% and long-term growth rates ranged from 3% to 3.5%. The estimated effect of a 0.50% change in the WACC would result in a 7% change in the fair value of the Forged Products reporting unit.
The discount rate, which is determined annually at the end of each fiscal year, is developed based upon rates of return on high quality, fixed-income investments. At the end of fiscal year 2023, we determined the rate to be 5.40%, compared to a 5.45% discount rate in fiscal year 2022, and a 2.80% discount rate in fiscal year 2021.
The discount rate, which is determined annually at the end of each fiscal year, is developed based upon rates of return on high quality, fixed-income investments. At the end of fiscal year 2024, we determined the rate to be 5.60%, compared to a 5.40% discount rate in fiscal year 2023, and a 5.45% discount rate in fiscal year 2022.
Based upon predictions of continued significant medical cost inflation in future years, the annual assumed rate of increase in the per capita cost of covered benefits of health care plans is 7.2% in 2024 and is assumed to gradually decrease to 4.0% in the year 2048 and remain level thereafter.
Based upon predictions of continued significant medical cost inflation in future years, the annual assumed rate of increase in the per capita cost of covered benefits of health care plans is 6.6% in 2025 and is assumed to gradually decrease to 4.0% in the year 2048 and remain level thereafter.
See Note 11, Leases for further information. 38 (B) Amounts include contractual interest payments using the interest rates in effect as of December 31, 2023 applicable to the Company’s ABL Term Loan due 2027, the 2025 Convertible Notes, the Allegheny Ludlum 6.95% Debentures due 2025, the 2027 Notes, the 2029 Notes, the 2030 Notes and the 2031 Notes.
See Note 11, Leases for further information. (B) Amounts include contractual interest payments using the interest rates in effect as of December 29, 2024 applicable to the Company’s ABL Term Loan due 2027, the Allegheny Ludlum 6.95% Debentures due 2025, the 2027 Notes, the 2029 Notes, the 2030 Notes and the 2031 Notes.
Boeing and Airbus continue to have multi-year backlogs of orders for both legacy models and next-generation aircraft, and there are over 28,000 jet engines with firm orders (Aero Engine News, December 2023). Due to manufacturing cycle times, demand for our specialty materials leads the deliveries of new aircrafts by approximately 6 to 12 months.
Boeing and Airbus continue to have multi-year backlogs of orders for both legacy models and next-generation aircraft, and there are approximately 30,000 jet engines with firm orders (Aero Engine News, January 2025). Due to manufacturing cycle times, demand for our specialty materials leads the deliveries of new aircrafts by approximately 6 to 12 months.
The Forged Products reporting unit had a fair value that exceeded carrying value by approximately 60% for the fiscal year 2023 annual assessment, which increased compared to the annual evaluation for fiscal year 2022.
The Forged Products reporting unit had a fair value that exceeded carrying value by approximately 95% for the fiscal year 2024 annual assessment, which increased compared to the annual evaluation for fiscal year 2023.
As a result, no impairments were determined to exist from the annual goodwill impairment evaluation for the fiscal years ended December 31, 2023, January 1, 2023 or January 2, 2022.
As a result, no impairments were determined to exist from the annual goodwill impairment evaluation for the fiscal years ended December 29, 2024, December 31, 2023 or January 1, 2023.
We had previously assumed a discount rate of 5.55% at the end of fiscal year 2022, which changed to 6.40% upon the remeasurement as of October 17, 2023, following the large annuity buyout of retirees, and 2.95% at the end of fiscal year 2021.
We had assumed a discount rate of 5.60% at the end of fiscal year 2023, and initially assumed a discount rate of 5.55% at the end of fiscal year 2022, which changed to 6.40% upon the remeasurement as of October 17, 2023, following the large annuity buyout of retirees.
These are made from nickel-based alloys and superalloys, titanium and titanium-based alloys, and a variety of other specialty materials. Capabilities range from cast/wrought and powder alloy development to final production of highly engineered finished components, and 3D-printed aerospace products.
HPMC produces a wide range of high performance materials, components, and advanced metallic powder alloys. These products are made from nickel-based alloys and superalloys, titanium and titanium-based alloys, and a variety of other specialty materials. HPMC’s capabilities range from cast/wrought and powder alloy development to final production of highly engineered finished components, and 3D-printed aerospace products.
New airframe designs contain a larger percentage of titanium alloys, and the jet engines that power them use newer nickel-based alloys and titanium-based alloys, in both cases for improved performance and more economical operating costs, compared to legacy airframe and engine designs.
New airframe designs contain a larger percentage of titanium alloys, and the jet engines that power them use newer nickel and titanium-based alloys for improved performance and more economical operating costs.
Based on this assessment, we established a discount rate of 5.60% for valuing the pension liabilities as of December 31, 2023, and for determining the pension expense for fiscal year 2024.
Based on this assessment, we established a discount rate of 5.85% for valuing the pension liabilities as of December 29, 2024, and for determining the pension expense for fiscal year 2025.
At December 31, 2023, our defined benefit pension plans were approximately 97% funded in accordance with generally accepted accounting principles, and were remeasured at that date using a 5.60% discount rate to measure the projected benefit obligation.
At December 29, 2024, our defined benefit pension plans were approximately 92% funded in accordance with generally accepted accounting principles, and were remeasured at that date using a 5.85% discount rate to measure the projected benefit obligation.
The increase in fiscal year 2023 reflects higher retirement benefit expense and higher insurance costs associated with an outstanding insurance claim involving our captive insurance company compared to prior year periods. Depreciation and Amortization The following table shows depreciation & amortization for the relevant periods by each business segment.
Fiscal year 2023 reflects higher insurance costs associated with an outstanding insurance claim involving our captive insurance company. Depreciation and Amortization The following table shows depreciation & amortization for the relevant periods by each business segment.
High Performance Materials & Components Fiscal Year Fiscal Year Fiscal Year (In millions) 2023 % Change 2022 % Change 2021 Sales to external customers $ 2,120.2 29 % $ 1,641.2 42 % $ 1,155.1 Segment EBITDA $ 433.6 43 % $ 303.4 78 % $ 170.3 Segment EBITDA as a percentage of sales 20.5 % 18.5 % 14.7 % International sales as a percentage of sales 56.8 % 54.7 % 50.5 % Our HPMC segment produces a wide range of high performance materials, including titanium and titanium-based alloys, nickel- and cobalt-based alloys and superalloys, advanced powder alloys and other specialty materials, in long product forms such as ingot, billet, bar, rod, wire, shapes and rectangles, and seamless tubes, plus precision forgings, components, and machined parts.
High Performance Materials & Components Fiscal Year Fiscal Year (In millions) 2024 % Change 2023 Sales to external customers $ 2,278.5 8 % $ 2,120.2 Segment EBITDA $ 461.4 6 % $ 433.6 Segment EBITDA as a percentage of sales 20.3 % 20.5 % International sales as a percentage of sales 50.2 % 56.8 % Our HPMC segment produces a wide range of high performance materials, including titanium and titanium-based alloys, nickel- and cobalt-based alloys and superalloys, advanced powder alloys and other specialty materials, in long product forms such as ingot, billet, bar, rod, wire, shapes and rectangles, and seamless tubes, plus precision forgings, components, and machined parts.
ATI Adjusted EBITDA for fiscal year 2023 was $634.6 million, or 15.2% of sales, compared to $612.8 million, or 16.0% of sales, for fiscal year 2022. See further explanation below for non-GAAP definitions and calculations.
ATI Adjusted EBITDA for fiscal year 2024 was $729.1 million, or 16.7% of sales, compared to $634.6 million, or 15.2% of sales, for fiscal year 2023. See further explanation below for non-GAAP definitions and calculations.
These standby letters of credit are used to support: $22.0 million in workers’ compensation and general insurance arrangements, $5.4 million related to environmental matters and $4.3 million for performance assurances. Commitments and Contingencies At December 31, 2023, our reserves for environmental remediation obligations totaled approximately $13 million, of which $7 million was included in other current liabilities.
These standby letters of credit are used to support: $20.8 million in workers’ compensation and general insurance arrangements, $5.4 million related to environmental matters and $4.3 million for performance assurances. Commitments and Contingencies At December 29, 2024, our reserves for environmental remediation obligations totaled approximately $15 million, of which $6 million was included in other current liabilities.
On October 17, 2023, we completed a voluntary cash out for term vested employees and annuity buyouts covering 8,200 U.S. qualified defined benefit pension plan participants. • $26.8 million of pension remeasurement losses for the immediate recognition in earnings of the actuarial gains/losses from the remeasurement of the projected benefit obligation and plan assets for defined benefit pension plans in accordance with our newly adopted accounting principle.
On October 17, 2023, we completed a voluntary cash out for term vested employees and annuity buyouts covering 8,200 U.S. qualified defined benefit pension plan participants. • $26.8 million of pension remeasurement losses for the immediate recognition of actuarial losses from the remeasurement of the projected benefit obligation and plan assets for defined benefit pension plans in the fourth quarter of fiscal year 2023.
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.
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.
Our measure of segment EBITDA, which we use to analyze the performance and results of our business segments, categorically excludes all effects of income taxes, depreciation and amortization, corporate expenses, net interest expense, closed operations and other expenses, charges for goodwill and asset impairments, restructuring and other charges, strike-related costs, pension remeasurement gains/losses, debt extinguishment charges and gains or losses on asset sales and sales of businesses.
Our measure of segment EBITDA, which we use to analyze the performance and results of our business segments, 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, gains or losses from the sale of accounts receivables, 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.
In addition, as our specialty materials are used in rotating components of jet engines, demand for our products for spare parts is impacted by aircraft flight activity and engine refurbishment requirements of U.S. and foreign aviation regulatory authorities.
In addition, as our specialty materials are used in rotating components of jet engines, demand for our products for spare parts is impacted by aircraft flight activity and engine refurbishment requirements of U.S. and foreign aviation regulatory authorities. 27 As the number of aircraft in service increases, the need for our materials associated with engine refurbishment is expected to increase.
The HPMC segment’s primary focus is on maximizing aero-engine materials and components growth, with approximately 85% of its revenue derived from the aerospace & defense markets including nearly 60% of its revenue from products for commercial jet engines.
We operate in two business segments: HPMC and AA&S. The HPMC segment’s primary focus is on maximizing jet engine materials and components growth, with approximately 86% of its revenue derived from the aerospace & defense markets including nearly 60% of its revenue from products for commercial jet engines.
At December 31, 2023, we had $744 million of cash and cash equivalents, and available additional liquidity from the undrawn capacity under the ABL facility of approximately $530 million, for total liquidity of approximately $1.3 billion.
At December 29, 2024, we had $721 million of cash and cash equivalents, and available additional liquidity from the undrawn capacity under the ABL credit facility of approximately $525 million, for total liquidity of approximately $1.3 billion.
Results for fiscal years 2023 and 2022 included $104 million and $29 million, respectively, of net pre-tax charges as further described in the Results of Operations section below. The Company’s net income for fiscal year 2023 was $410.8 million, or $2.81 per share.
Results for fiscal year 2024 included $17 million of net pre-tax gains and fiscal year 2023 included $104 million of net pre-tax charges as further described in the Results of Operations section below. The Company’s net income for fiscal year 2024 was $367.8 million, or $2.55 per share.
There were no revolving credit borrowings under the ABL during fiscal year 2022. The ABL Term Loan has an interest rate of 2.0% above adjusted Secured Overnight Financing Rate (SOFR).
There were average revolving credit borrowings of $13 million bearing an average annual interest rate of 6.5% under the ABL during fiscal year 2023. The ABL Term Loan has an interest rate of 2.0% above adjusted Secured Overnight Financing Rate (SOFR).
These plans provide health care and life insurance benefits for eligible employees. Company contributions to defined contribution retirement plans are generally based on a percentage of eligible pay or based on hours worked, and are funded with cash.
Company contributions to defined contribution retirement plans are generally based on a percentage of eligible pay or based on hours worked, and are funded with cash.
This cumulative loss continued until fiscal year 2023 when ATI exited the three-year cumulative loss position and we concluded it was appropriate to consider future projections as a source of income when analyzing the need for a valuation allowance. We determined that valuation allowances on net deferred tax asset balances for federal and certain state jurisdictions are no longer required.
As part of the exit, we concluded it was appropriate to consider future projections as a source of income when analyzing the need for a valuation allowance. With the utilization of projections, we determined that valuation allowances on net deferred tax asset balances for federal and certain state jurisdictions are no longer required.
Net income attributable to ATI was $410.8 million, or $2.81 per share, in fiscal year 2023, compared to $323.5 million, or $2.23 per share, for fiscal year 2022. Adjusted EBITDA was $634.6 million, or 15.2% of sales, for fiscal year 2023, and $612.8 million, or 16.0% of sales, for fiscal year 2022.
Net income attributable to ATI was $367.8 million, or $2.55 per share, in fiscal year 2024, compared to $410.8 million, or $2.81 per share, for fiscal year 2023. Adjusted EBITDA was $729.1 million, or 16.7% of sales, for fiscal year 2024, and $634.6 million, or 15.2% of sales, for fiscal year 2023.
Further, interest expense is presented net of interest income of $13.0 million in fiscal year 2023, $4.7 million in fiscal year 2022 and $0.7 million in fiscal year 2021. Interest expense in fiscal years 2023, 2022 and 2021 was reduced by $13.5 million, $5.1 million and $4.3 million, respectively, related to interest capitalization on major strategic capital projects.
Further, interest expense is presented net of interest income of $16.0 million in fiscal year 2024 and $13.0 million in fiscal year 2023. Interest expense in fiscal years 2024 and 2023 was reduced by $11.8 million and $13.5 million, respectively, related to interest capitalization on large, strategic capital projects.
Therefore, future developments, administrative actions or liabilities relating to environmental matters could have a material adverse effect on the ATI’s consolidated financial condition or results of operations. Labor Matters We have no significant CBAs that expire in fiscal year 2024.
Therefore, future developments, administrative actions or liabilities relating to environmental matters could have a material adverse effect on the ATI’s consolidated financial condition or results of operations.
We assess Managed Working Capital performance as a percentage of the prior three months annualized sales to evaluate the asset intensity of our business. In fiscal year 2023, Managed Working Capital increased to 31.1% of annualized total ATI sales compared to 30.1% of annualized sales at January 1, 2023.
We assess 24 Managed Working Capital performance as a percentage of the prior three months’ annualized sales to evaluate the asset intensity of our business. At December 29, 2024, Managed Working Capital was 30.9% of annualized total ATI sales compared to 31.1% of annualized sales at December 31, 2023.
Fiscal Year (In millions) 2023 2022 2021 Depreciation and amortization: High Performance Materials & Components $ 71.1 $ 68.3 $ 75.0 Advanced Alloys & Solutions 67.9 67.4 64.5 Other 7.1 7.2 4.4 $ 146.1 $ 142.9 143.9 Interest Expense, Net Interest expense, net of interest income and interest capitalization, was $92.8 million in fiscal year 2023, compared to $87.4 million in fiscal year 2022 and $96.9 million in fiscal year 2021.
Fiscal Year (In millions) 2024 2023 Depreciation and amortization: High Performance Materials & Components $ 71.6 $ 71.1 Advanced Alloys & Solutions 73.2 67.9 Other 6.7 7.1 $ 151.5 $ 146.1 Interest Expense, Net Interest expense, net of interest income and interest capitalization, was $108.2 million in fiscal year 2024, compared to $92.8 million in fiscal year 2023.
At December 31, 2023, cash and cash equivalents on hand totaled $743.9 million, a $159.9 million increase from fiscal year-end 2022. Cash and cash equivalents held by our foreign subsidiaries was $141.7 million at December 31, 2023, of which $75.3 million was held by our PRS joint venture in China.
At December 29, 2024, cash and cash equivalents on hand totaled $721.2 million, a $22.7 million increase from fiscal year-end 2023. Cash and cash equivalents held by our foreign subsidiaries was $210.8 million at December 29, 2024, of which $100.9 million was held by our PRS joint venture in China.
Therefore, as a result of the remeasurements of these plans in the fourth quarter of each fiscal year, we recognized a $26.8 million pension remeasurement loss in fiscal year 2023 and $100.3 million and $147.2 million of pension remeasurement gains in fiscal years 2022 and 2021, respectively, which is excluded from segment EBITDA and recorded in nonoperating retirement benefit income/expense on the consolidated statements of operations.
The Company completes the remeasurements of these plans in the fourth quarter of each fiscal year and, as a result, we recognized pension remeasurement losses of $14.1 million and $26.8 million in fiscal years 2024 and 2023, respectively. These losses are excluded from segment and adjusted EBITDA and recorded in nonoperating retirement benefit income/expense on the consolidated statements of operations.
Fiscal Year 2023 2022 Nickel-based alloys and specialty alloys 54 % 54 % PRS products 19 % 25 % Zirconium and related alloys 15 % 14 % Titanium and titanium-based alloys 12 % 7 % Total 100 % 100 % Segment EBITDA was $276.6 million, or 13.5% of sales, a 26% decrease from segment EBITDA of $375.3 million, or 17.1% of sales, in fiscal year 2022.
Fiscal Year 2024 2023 Nickel-based alloys and specialty alloys 49 % 54 % PRS products 19 % 19 % Zirconium and related alloys 19 % 15 % Titanium and titanium-based alloys 13 % 12 % Total 100 % 100 % Segment EBITDA was $320.9 million, or 15.4% of sales, a 16% increase from segment EBITDA of $276.6 million, or 13.5% of sales, in fiscal year 2023.
We have LTAs with GE Aviation and Snecma (Safran) to supply premium titanium alloys, nickel-based alloys, and vacuum-melted specialty alloys products for commercial and military jet engine applications. In addition, we have LTAs with Rolls-Royce plc for the supply of disc-quality mill products and precision forgings for commercial jet engine applications.
We have LTAs with GE Aviation and Safran to supply premium titanium alloys, nickel-based alloys, and vacuum-melted specialty alloys products for commercial and military jet engine applications.
Revenues in our largest end markets, aerospace & defense, increased $601 million, or 32%, compared to fiscal year 2022, and represented 59% of our fiscal year 2023 sales. International sales, including both U.S. exports and foreign sales from our foreign manufacturing operations, were $1.9 billion in fiscal year 2023 and represented 46% of total sales.
International sales, including both U.S. exports and foreign sales from our foreign manufacturing operations, were $1.8 billion in fiscal year 2024 and represented 42% of total sales, compared to $1.9 billion or 46% of total sales in fiscal year 2023.
As the number of aircraft in service increases, the need for our materials associated with engine refurbishment is expected to increase. 28 Comparative information for HPMC’s major product categories based on their percentages of the segment’s overall revenue is as follows: Fiscal Year 2023 2022 High-Value Products Nickel-based alloys and specialty alloys 44 % 49 % Precision forgings, castings and components 33 % 34 % Titanium and titanium-based alloys 22 % 17 % PRS products 1 % — % Total High-Value Products 100 % 100 % HPMC segment EBITDA for fiscal year 2023 increased 43% to $433.6 million, or 20.5% of sales, compared to $303.4 million, or 18.5% of sales, in fiscal year 2022.
Comparative information for HPMC’s major product categories based on their percentages of the segment’s overall revenue is as follows: Fiscal Year 2024 2023 Nickel-based alloys and specialty alloys 41 % 44 % Precision forgings, castings and components 36 % 33 % Titanium and titanium-based alloys 23 % 22 % PRS products — % 1 % Total 100 % 100 % HPMC segment EBITDA for fiscal year 2024 increased 6% to $461.4 million, or 20.3% of sales, compared to $433.6 million, or 20.5% of sales, in fiscal year 2023.
Fiscal Year 2023 2022 2021 Nickel-based alloys and specialty alloys 49 % 52 % 43 % Precision forgings, castings and components 17 % 15 % 16 % Titanium and titanium-based alloys 17 % 11 % 12 % PRS products 10 % 14 % 19 % Zirconium and related alloys 7 % 8 % 10 % Total 100 % 100 % 100 % Sales by geographic area (in millions), including divested businesses prior to sale, and as a percentage of total sales, were as follows: Fiscal Year 2023 2022 2021 United States $ 2,250.8 54 % $ 2,218.6 58 % $ 1,534.9 55 % Europe 1,051.0 25 % 785.2 20 % 475.1 17 % Asia 591.9 14 % 641.6 17 % 593.8 21 % Canada 111.0 3 % 87.4 2 % 75.9 3 % Other 169.0 4 % 103.2 3 % 120.1 4 % Total sales $ 4,173.7 100 % $ 3,836.0 100 % $ 2,799.8 100 % Information with respect to our business segments follows.
Fiscal Year 2024 2023 Nickel-based alloys and specialty alloys 45 % 49 % Precision forgings, castings and components 19 % 17 % Titanium and titanium-based alloys 18 % 17 % PRS products 9 % 10 % Zirconium and related alloys 9 % 7 % Total 100 % 100 % Sales by geographic area and as a percentage of total sales, were as follows: (In millions) Fiscal Year 2024 2023 United States $ 2,525.2 58 % $ 2,250.8 54 % Europe 1,062.4 24 % 1,051.0 25 % Asia 508.6 12 % 591.9 14 % Canada 116.2 3 % 111.0 3 % Other 149.7 3 % 169.0 4 % Total sales $ 4,362.1 100 % $ 4,173.7 100 % Information with respect to our business segments follows.
As of December 31, 2023, there were no outstanding borrowings under the revolving credit portion of the ABL, and $31.7 million was utilized to support the issuance of letters of credit. There were average revolving credit borrowings of $13 million 35 bearing an average annual interest rate of 6.5% under the ABL during fiscal year 2023.
As of December 29, 2024, there were no outstanding borrowings under the revolving credit portion of the ABL, and $30.5 million was utilized to support the issuance of letters of credit. There were no revolving credit borrowings under the ABL during fiscal year 2024.
Gross inventory turns as of December 31, 2023 remained consistent with January 1, 2023 as continued efforts to focus on operational improvements are positively impacting the inventory intensity of our business and alleviating the required investment of managed working capital in our growing business. 25 The computations of Managed Working Capital at December 31, 2023 and January 1, 2023 reconciled to the financial statement line items as computed under U.S.
We continue efforts to focus on operational improvements to positively impact the inventory intensity of our business and alleviate the required investment of Managed Working Capital in our growing business. The computations of Managed Working Capital at December 29, 2024 and December 31, 2023 reconciled to the financial statement line items as computed under U.S. GAAP, were as follows.
Closed operations and other expenses were $13.3 million in fiscal year 2023, compared to $5.6 million of expense in fiscal year 2022 and $3.1 million of income in fiscal year 2021.
Closed operations and other expenses provided income of $10.8 million in fiscal year 2024, compared to expense of $13.3 million in fiscal year 2023.
Results in fiscal years 2021 and 2022 include impacts from income taxes that differ from applicable standard tax rates, primarily related to these income tax valuation allowances.
Results for fiscal years 2023 and 2022 include impacts from income taxes that differ from applicable standard tax rates, primarily related to income tax valuation allowances on the current year income along with the release of the valuation allowance in fiscal year 2023.
ATI expects that it will expend present accruals over many years and that remediation of all sites with which it has been identified will be completed within thirty years.
ATI expects that it will expend present accruals over many years and that remediation of all sites with which it has been identified will be completed within thirty years. Asset retirement obligations (AROs) recording by the Company were $8 million at December 29, 2024.
As a result of the annuity buyout, ATI recognized a $41.7 million pretax settlement loss, which is excluded from segment EBITDA and recorded in nonoperating retirement benefit income/expense on the consolidated statement of operations. ATI’s fiscal year 2021 results include a $64.9 million retirement benefit settlement gain related to a plan termination that eliminated certain postretirement medical benefit liabilities.
As a result of the annuity buyout, ATI recognized a $41.7 million pretax settlement loss, which is excluded from segment and adjusted EBITDA and recorded in nonoperating retirement benefit income/expense on the consolidated statement of operations.
With respect to our postretirement plans, under most of the plans, our contributions towards retiree medical premiums are capped based upon the cost as of certain dates, thereby creating a defined contribution.
This immediate recognition is in accordance with the accounting standards and is the Company’s accounting policy as discussed in Note 1 to the Consolidated Financial Statements. With respect to our postretirement plans, under most of the plans, our contributions towards retiree medical premiums are capped based upon the cost as of certain dates, thereby creating a defined contribution.
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.
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.
Results on our management basis of reporting were as follows (in millions): Fiscal Year Ended December 31, January 1, January 2, 2023 2023* 2022* Sales: High Performance Materials & Components $ 2,120.2 $ 1,641.2 $ 1,155.1 Advanced Alloys & Solutions 2,053.5 2,194.8 1,644.7 Total external sales $ 4,173.7 $ 3,836.0 $ 2,799.8 EBITDA: High Performance Materials & Components $ 433.6 $ 303.4 $ 170.3 % of Sales 20.5 % 18.5 % 14.7 % Advanced Alloys & Solutions 276.6 375.3 246.8 % of Sales 13.5 % 17.1 % 15.0 % Total segment EBITDA 710.2 678.7 417.1 % of Sales 17.0 % 17.7 % 14.9 % Corporate expenses (62.3) (60.3) (53.7) Closed operations and other income (expenses) (13.3) (5.6) 3.1 Total ATI Adjusted EBITDA 634.6 612.8 366.5 Depreciation & amortization (146.1) (142.9) (143.9) Interest expense, net (92.8) (87.4) (96.9) Restructuring and other credits (charges) (31.4) (23.7) 10.5 Strike related costs — — (63.2) Retirement benefit settlement gain (loss) (41.7) — 64.9 Pension remeasurement gain (loss) (26.8) 100.3 147.2 Joint venture restructuring credit — 0.9 — Debt extinguishment charge — — (65.5) Gains (losses) on asset sales and sale of business, net (0.6) (105.4) 13.8 Income before income taxes $ 295.2 $ 354.6 $ 233.4 *Fiscal years ended January 1, 2023 and January 2, 2022 reflect the change in accounting principle as described in Note 1 of the Notes to the Consolidated Financial Statements.
Results on our management basis of reporting were as follows: (In millions) Fiscal Year Ended December 29, December 31, January 1, 2024 2023 2023 Sales: High Performance Materials & Components $ 2,278.5 $ 2,120.2 $ 1,641.2 Advanced Alloys & Solutions 2,083.6 2,053.5 2,194.8 Total external sales $ 4,362.1 $ 4,173.7 $ 3,836.0 EBITDA: High Performance Materials & Components $ 461.4 $ 433.6 $ 303.4 % of Sales 20.3 % 20.5 % 18.5 % Advanced Alloys & Solutions 320.9 276.6 375.3 % of Sales 15.4 % 13.5 % 17.1 % Total segment EBITDA 782.3 710.2 678.7 % of Sales 17.9 % 17.0 % 17.7 % Corporate expenses (64.0) (62.3) (60.3) Closed operations and other income (expenses) 10.8 (13.3) (5.6) Total ATI Adjusted EBITDA 729.1 634.6 612.8 Depreciation & amortization (151.5) (146.1) (142.9) Interest expense, net (108.2) (92.8) (87.4) Restructuring and other charges (22.1) (31.4) (23.7) Retirement benefit settlement loss — (41.7) — Pension remeasurement gain (loss) (14.1) (26.8) 100.3 Joint venture restructuring credit — — 0.9 Gains (losses) on sale of businesses, net 52.9 (0.6) (105.4) Income before income taxes $ 486.1 $ 295.2 $ 354.6 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.
All of these items discussed are excluded from segment EBITDA and are included in operating income on the consolidated statements of operations, with the exception of the pension related gains and losses in fiscal years 2023 and 2022 as well as the litigation charge and the restructuring credit for the A&T Stainless joint venture in fiscal year 2022.
The items discussed above are included in operating income on the consolidated statements of operations, with the exception of the pension related gains and losses in fiscal years 2024 and 2023. Further, the items discussed above are excluded from segment EBITDA.
However, these funding estimates are subject to significant uncertainty including the actual pension trust assets’ fair value, and the discount rates used to measure pension liabilities. In February 2022 and April 2023, our Board of Directors authorized the repurchase of up to $150 million and $75 million, respectively, of ATI stock.
However, these funding estimates are subject to significant uncertainty including the actual pension trust assets’ fair value, and the discount rates used to measure pension liabilities. Periodically, our 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.
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, pension remeasurement gains and losses, and other postretirement/pension curtailment and settlement gains and losses.
We define Adjusted EBITDA as EBITDA excluding significant non-recurring charges or credits, restructuring and other charges/credits, gains or losses from the sale of accounts receivables, 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.
Based on current actuarial assumptions, we are not required to make any contributions to our pension plan during fiscal year 2024, and we are not required to make any significant contributions for at least the next ten years.
Based on current actuarial assumptions, we are not required to make any contributions to our pension plan during fiscal year 2025, and will not be required to make significant contributions for at least ten years. However, these estimates are subject to significant uncertainty, including the performance of our pension trust assets and the discount rates used to measure pension liabilities.
Commercial aerospace products have been the main source of sales and EBITDA growth for HPMC over the last several years and are expected to continue to drive HPMC and overall ATI results in the future. Other major HPMC end markets include medical and energy. HPMC produces a wide range of high performance materials, components, and advanced metallic powder alloys.
Commercial aerospace products have been the main source of sales and EBITDA growth for HPMC over the last several years and are expected to continue to drive HPMC and overall ATI results in the future. HPMC has also experienced growth in defense products, which comprise almost 10% of 20 total sales. Other core markets include medical and specialty energy.
We used current market prices as of December 31, 2023, for raw material obligations with variable pricing. (F) We have various contractual obligations that extend through fiscal year 2028 for services involving production facilities and administrative operations. Our purchase obligation as disclosed represents the estimated termination fees payable if we were to exit these contracts.
We used current market prices as of December 29, 2024, for raw material obligations with variable pricing. (F) We have various contractual obligations that extend through fiscal year 2030 for services involving production facilities, information technology services and administrative operations.
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.
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. 32 Our Debt to Adjusted EBITDA Leverage Ratio and Net Debt to Adjusted EBITDA Leverage ratio improved in fiscal year 2024 compared to fiscal year 2023, resulting from higher earnings and lower debt as a result of the redemption of the 2025 Convertible Notes.
Sales to the energy markets decreased 30%, due to both lower oil and gas and specialty energy sales. 27 Comparative information for our HPMC segment revenues (in millions) by market, the respective percentages of overall segment revenues for the fiscal years 2023 and 2022, and the percentage change in revenues by market for fiscal year 2023 is as follows: Fiscal Year Market 2023 2022 Change Aerospace & Defense: Jet Engines- Commercial $ 1,255.3 59 % $ 975.7 59 % $ 279.6 29 % Airframes- Commercial 350.6 17 % 184.1 11 % 166.5 90 % Defense 181.0 8 % 158.2 10 % 22.8 14 % Total Aerospace & Defense 1,786.9 84 % 1,318.0 80 % 468.9 36 % Energy: Oil & Gas 10.6 1 % 35.0 2 % (24.4) (70) % Specialty Energy 93.9 4 % 113.6 7 % (19.7) (17) % Total Energy 104.5 5 % 148.6 9 % (44.1) (30) % Medical 102.6 5 % 73.2 4 % 29.4 40 % Construction/Mining 35.0 2 % 34.1 2 % 0.9 3 % Other 91.2 4 % 67.3 5 % 23.9 36 % Total $ 2,120.2 100 % $ 1,641.2 100 % $ 479.0 29 % We utilize LTAs for our specialty materials, including powders, parts and components, with certain of our customers, including several aerospace market OEMs, to reduce their supply uncertainty.
Industrial markets sales declined by 23%. 26 Comparative information for our HPMC segment revenues by market, the respective percentages of overall segment revenues for the fiscal years 2024 and 2023, and the percentage change in revenues by market for fiscal year 2024 is as follows: (In millions) Fiscal Year Market 2024 2023 Change Aerospace & Defense: Jet Engines- Commercial $ 1,365.4 60 % $ 1,255.3 59 % $ 110.1 9 % Airframes- Commercial 369.7 16 % 350.6 17 % 19.1 5 % Defense 224.8 10 % 181.0 8 % 43.8 24 % Total Aerospace & Defense 1,959.9 86 % 1,786.9 84 % 173.0 10 % Medical 115.5 5 % 102.6 5 % 12.9 13 % Specialty Energy 96.8 4 % 93.9 4 % 2.9 3 % Electronics 3.0 — % 3.1 — % (0.1) (3) % Other Core Markets 215.3 9 % 199.6 9 % 15.7 8 % Core End Markets 2,175.2 95 % 1,986.5 93 % 188.7 9 % Construction/Mining 26.3 1 % 35.0 2 % (8.7) (25) % Automotive 15.2 1 % 24.6 1 % (9.4) (38) % Conventional Energy 9.8 1 % 10.6 1 % (0.8) (8) % Other 52.0 2 % 63.5 3 % (11.5) (18) % Industrial Markets 103.3 5 % 133.7 7 % (30.4) (23) % Total $ 2,278.5 100 % $ 2,120.2 100 % $ 158.3 8 % We utilize LTAs for our specialty materials, including powders, parts and components, with certain of our customers, including several aerospace market OEMs, to reduce their supply uncertainty.
The actual returns on pension plan assets for the last five fiscal years have been 2.0% for 2023, (14.5)% for 2022, 12.4% for 2021, 15.2% for 2020, and 15.1% for 2019. The effect of increasing, or lowering, the expected return on pension plan investments by 0.25% would result in additional pre-tax annual income, or expense, of approximately $1 million.
The effect of increasing, or lowering, the expected return on pension plan investments by 0.25% would result in additional pre-tax annual income, or expense, of approximately $1 million.
Strength in the HPMC segment continues to be driven by increased volumes on higher margin next-generation commercial aerospace platforms. Results in fiscal year 2022 include $27.5 million of benefits from the AMJP program and employee retention credits.
Strength in the HPMC segment continues to be driven by increased volumes on higher margin next-generation commercial aerospace platforms.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

12 edited+4 added−3 removed9 unchanged
Biggest changeTo the extent that these uncertainties cause suppliers and customers to be more cost sensitive, increased energy prices may have an adverse effect on our results of operations and financial condition. We use approximately 6 to 8 million MMBtu’s of natural gas annually, depending upon business conditions, in the manufacture of our products.
Biggest changeIncreases in energy costs, or changes in costs relative to energy costs paid by competitors, have and may continue to adversely affect our profitability. To the extent that these uncertainties cause suppliers and customers to be more cost sensitive, increased energy prices may have an adverse effect on our results of operations and financial condition.
For example, in fiscal year 2023 we used approximately 70 million pounds of nickel; therefore a hypothetical change of $1.00 per pound in nickel prices would result in increased costs of approximately $70 million.
For example, in fiscal year 2024 we used approximately 70 million pounds of nickel; therefore a hypothetical change of $1.00 per pound in nickel prices would result in increased costs of approximately $70 million.
At December 31, 2023, the net mark-to-market valuation of our outstanding raw material hedges was an unrealized pre-tax loss of $7.5 million, comprised of $7.5 million in other current liabilities on the balance sheet. Foreign Currency Risk. Foreign currency exchange contracts are used, from time-to-time, to limit transactional exposure to changes in currency exchange rates.
At December 29, 2024, the net mark-to-market valuation of our outstanding raw material hedges was an unrealized pre-tax loss of $4.2 million, comprised of $4.2 million in other current liabilities on the balance sheet. Foreign Currency Risk. Foreign currency exchange contracts are used, from time-to-time, to limit transactional exposure to changes in currency exchange rates.
At December 31, 2023, the net mark-to-market valuation of the outstanding natural gas hedges was an unrealized pre-tax loss of $6.6 million, comprised of $0.1 million in other assets, $5.6 million in other current liabilities and $1.1 million in other long-term liabilities on the balance sheet.
At December 29, 2024, the net mark-to-market valuation of the outstanding natural gas hedges was an unrealized pre-tax loss of $0.1 million, comprised of $0.8 million in prepaid expenses and other current assets, $0.9 million in other long-term assets, $1.7 million in other current liabilities and $0.1 million in other long-term liabilities on the balance sheet.
For the year ended December 31, 2023, the effects of natural gas hedging activity increased cost of sales by $7.5 million. Volatility of Raw Material Prices.
For the year ended December 29, 2024, the effects of natural gas hedging activity increased cost of sales by $8.0 million. Volatility of Raw Material Prices.
However, as of December 31, 2023, we had entered into financial hedging arrangements, primarily at the request of our customers, related to firm orders, for an aggregate amount of approximately 4 million pounds of nickel with hedge dates through fiscal year 2024.
However, as of December 29, 2024, we had entered into financial hedging arrangements, primarily at the request of our customers, related to firm orders, for an aggregate amount of approximately 4 million pounds of nickel with hedge dates through fiscal year 2027. The aggregate notional amount hedged is approximately 5% of a single year’s estimated nickel raw material purchase requirements.
At December 31, 2023, we had no significant outstanding foreign currency forward contracts. 44
At December 29, 2024, we had no significant outstanding foreign currency forward contracts.
The prices for and availability of electricity, natural gas, oil and other energy resources are subject to volatile market conditions. These market conditions often are affected by political and economic factors beyond our control. Increases in energy costs, or changes in costs relative to energy costs paid by competitors, have and may continue to adversely affect our profitability.
Energy resources markets are subject to conditions that create uncertainty in the prices and availability of energy resources. The prices for and availability of electricity, natural gas, oil and other energy resources are subject to volatile market conditions. These market conditions often are affected by political and economic factors beyond our control.
At December 31, 2023, the outstanding financial derivatives used to hedge our exposure to energy cost volatility included natural gas hedges. At December 31, 2023, we hedged approximately 75% of our annual forecasted domestic requirements for natural gas for fiscal year 2024 and approximately 35% for fiscal year 2025.
At December 29, 2024, we hedged approximately 75% of our annual forecasted domestic requirements for natural gas for fiscal year 2025 and approximately 35% for fiscal year 2026.
These purchases of natural gas expose us to risk of higher gas prices. For example, a hypothetical $1.00 per MMBtu increase in the price of natural gas would result in increased annual energy costs of approximately $6 to $8 million.
For example, a hypothetical $1.00 per MMBtu increase in the price of natural gas would result in increased annual energy costs of approximately $6 to $8 million. We use several 38 approaches to minimize any material adverse effect on our financial condition or results of operations from volatile energy prices.
We use several approaches to minimize any material adverse effect on our financial condition or results of operations from volatile energy prices. These approaches include incorporating an energy surcharge on many of our products and using financial derivatives or physical hedges to reduce exposure to energy price volatility.
These approaches include incorporating an energy surcharge on many of our products and using financial derivatives or physical hedges to reduce exposure to energy price volatility. At December 29, 2024, the outstanding financial derivatives used to hedge our exposure to energy cost volatility included natural gas hedges.
ATI has a $50 million floating-for-fixed interest rate swap which converts a portion of the ABL Term Loan to a 4.21% fixed rate. The swap matures in June 2024. We designated the interest rate swap as a cash flow hedge of our exposure to the variability of the payment of interest on a portion of its ABL Term Loan borrowings.
ATI 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 December 29, 2024. Volatility of Energy Prices.
Removed
The ineffective portion at hedge inception, determined from the fair value of the swap immediately prior to amendment in July 2019, was amortized to interest expense over the initial ABL Term Loan swap maturity date of January 12, 2021. Any gain or loss associated with this hedging arrangement is included in interest expense.
Added
We use approximately 6 to 8 million MMBtu’s of natural gas annually, depending upon business conditions, in the manufacture of our products. These purchases of natural gas expose us to risk of higher gas prices.
Removed
At December 31, 2023, the net mark-to-market valuation of the outstanding interest rate swap was an unrealized pre-tax gain of $0.7 million, comprised of $0.7 million in prepaid expenses and other current assets on the balance sheet. Volatility of Energy Prices. Energy resources markets are subject to conditions that create uncertainty in the prices and availability of energy resources.
Added
We may also use derivative instruments that are not designated as hedges to protect our 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.
Removed
The aggregate 43 notional amount hedged is approximately 6% of a single year’s estimated nickel raw material purchase requirements.
Added
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 $2.2 million of expense, net, for settled foreign currency forward contracts that were not designated as hedges during the fiscal year ended December 29, 2024, which offset foreign currency gains/losses in the relevant currency.
Added
We have no significant outstanding hedges that are not designated as of December 29, 2024. 39

Other ATI 10-K year-over-year comparisons