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美國
證券交易委員會
華盛頓特區20549
 表格 10-Q
☒根據1934年證券交易法第13或15(d)節的季度報告
截至季度末2024年9月29日
或者
☐根據1934年證券交易法第13或15(d)節的轉型報告書
過渡期從                     至                    
委員會文件號 1-12001
 ati inc
(根據其章程規定的註冊人準確名稱)
特拉華州25-1792394
（國家或其他管轄區的（IRS僱主
公司成立或組織）唯一識別號碼）
2021 McKinney Avenue
大都市得克薩斯州75201
(主要領導機構的地址)(郵政編碼)
(800) 289-7454
(註冊人電話號碼，包括區號)

在法案第12(b)條的規定下注冊的證券：
每一類的名稱交易代碼在其上註冊的交易所的名稱
普通股，面值0.10美元ATI請使用moomoo賬號登錄查看New York Stock Exchange
請勾選表示公司註冊申報：（1）在過去的12個月內（或申報者所需申報的更短週期內），申報了證券交易所法第13或15（d）條所要求的全部報告；（2）過去90天一直受此申報要求的約束。是  ☒    否  ☐
請勾選以表示該公司是否已在過去的12個月內（或申報者所需提交的更短週期內）遞交了根據S-t法規405條（本章232.405條）所要求提交的每個交互數據文件。是  ☒    否  ☐
請勾選表示此申報者是大型加速申報者、加速申報者、非加速申報者還是較小的報告公司。請參見證券交易所法規則12億.2中「大型加速申報者」、「加速申報者」、「較小的報告公司」和「新興成長公司」的定義。
大型加速報告人☒加速文件申報人☐
非加速文件提交人☐更小的報告公司☐
新興成長公司☐
如果公司無法符合證券交易法第13(a)條規定，使用延長過渡期來遵守任何新的或修訂的財務會計準則，請在複選框中指示。 ☐
請勾選以表示該公司是否爲空殼公司（依據證券交易所法規則12億.2的定義）。是☐    否  ☒
2024年10月11日，註冊人仍有未決 142,642,589 股普通股。


ati inc
SEC表格10-Q
2024年9月29日季度結束
指數
 頁號
第一部分。-財務信息
第 1 項。財務報表
合併資產負債表
合併運營報表
綜合收益（虧損）合併報表
合併現金流量表
合併權益變動表
合併財務報表附註
第 2 項。管理層對財務狀況和經營業績的討論和分析
第 3 項。關於市場風險的定量和定性披露
第 4 項。控制和程序
第二部分。-其他信息
第 1 項。法律訴訟
第 1A 項。風險因素
第 2 項。未註冊的股權證券銷售和所得款項的使用
第 5 項。其他信息
第 6 項。展品
簽名


第一部分 財務信息
項目1：基本報表
ATI公司和其子公司
合併資產負債表
（以百萬爲單位，除每股股份和每股股份之外）
（本期未經審計）
2023年9月29日
2024		12月31日
2023
資產
流動資產：
現金及現金等價物$406.6 $743.9 
應收賬款淨額730.2 625.0 
短期合同資產90.5 59.1 
淨存貨1,414.5 1,247.5 
預付費用和其他流動資產136.6 62.2 
流動資產合計2,778.4 2,737.7 
物業、廠房和設備，淨值1,746.5 1,665.9 
商譽227.2 227.2 
其他313.7 354.3 
總資產$5,065.8 $4,985.1 
負債和股東權益
流動負債:
應付賬款$528.5 $524.8 
開空合約負債146.5 163.6 
短期借款和長期債務的流動部分27.9 31.9 
其他流動負債242.4 256.8 
總流動負債945.3 977.1 
長期債務1,855.5 2,147.7 
應計退休福利負債163.8 175.2 
養老金責任37.1 39.7 
其他長期負債152.1 164.9 
總負債3,153.8 3,504.6 
股東權益：
ATI股東權益：
優先股，面值$0.10：授權-50,000,000 股份；發行-無
— — 
普通股，每股面值 $，授權股數：百萬股；發行股數：分別爲2024年6月30日和2023年12月31日：百萬股；流通股數：分別爲2024年6月30日和2023年12月31日：百萬股0.10：授權-500,000,000 股份；發行-142,871,688 2024年9月29日股份和 132,300,971 124,463,814股142,631,508 2024年9月29日股份和 126,879,099 截至2023年12月31日的股份
14.3 13.2 
額外實收資本1,937.8 1,697.1 
保留虧損(72.8)(70.1)
庫存股： 240,180 在2024年9月29日收購股份 5,421,872 截至2023年12月31日的股份
(13.3)(184.0)
歸屬於母公司股東權益的累積其他綜合收益（扣除所得稅後）(74.6)(83.2)
ATI公司股東權益總額1,791.4 1,373.0 
非控制權益120.6 107.5 
總股本1,912.0 1,480.5 
總負債和股權$5,065.8 $4,985.1 

附註是這些報表的組成部分。
1

ATI公司和其子公司
截至2020年6月30日和2019年6月30日三個月和六個月的營業額
(以百萬爲單位，除每股金額外)
(未經審計)
 
季度已結束年初至今已結束
2024年9月29日2023年10月1日2024年9月29日2023年10月1日
銷售$1,051.2 $1,025.6 $3,189.4 $3,109.7 
銷售成本826.4 831.0 2,539.8 2,512.8 
毛利 224.8 194.6 649.6 596.9 
銷售和管理費用82.4 69.8 253.3 235.8 
重組費用（積分）0.5 (0.5)(1.2)2.2 
資產出售和企業銷售的虧損（收益），淨額(0.3)0.1 (2.5)0.8 
營業收入 142.2 125.2 400.0 358.1 
非營業退休金支出(3.7)(2.4)(11.1)(7.3)
利息支出，淨額(28.0)(23.8)(83.0)(65.0)
其他收入，淨額4.4 — 5.2 1.3 
所得稅前收入114.9 99.0 311.1 287.1 
所得稅準備金 28.3 4.9 70.5 12.9 
淨收入 86.6 94.1 240.6 274.2 
減去：歸屬於非控股權益的淨收益3.9 3.9 9.9 9.1 
歸因於 ATI 的淨收入$82.7 $90.2 $230.7 $265.1 
每股普通股歸屬於ATI的基本淨收益$0.64 $0.70 $1.82 $2.06 
攤薄後每股普通股歸屬於ATI的淨收益$0.57 $0.62 $1.61 $1.82 
附註是這些報表的組成部分。

2

ATI公司和其子公司
綜合收益（損失）合併報表
（以百萬計）
(未經審計)
 
季度結束截至本年度之日期
 2024年9月29日2023年10月1日2024年9月29日2023年10月1日
淨利潤$86.6 $94.1 $240.6 $274.2 
貨幣翻譯調整
未實現淨變動（期間發生）17.4 (9.2)7.1 (14.0)
衍生品
對沖交易的淨衍生品損失(1.9)(3.2)(4.3)(20.6)
將淨實現損失重新分類爲淨利潤3.7 1.8 8.0 0.1 
衍生品交易所得稅0.5 — 1.7 — 
總費用1.3 (1.4)2.0 (20.5)
退休後福利計劃
精算虧損
淨會計損失的攤銷1.3 1.5 3.9 4.5 
往前役期費用
攤銷到淨收益的淨往期服務信貸(0.1)(0.1)(0.4)(0.4)
養老福利計劃所得稅0.3 — 0.8 — 
總費用0.9 1.4 2.7 4.1 
其他綜合收益（虧損），淨額19.6 (9.2)11.8 (30.4)
綜合收益106.2 84.9 252.4 243.8 
扣除歸屬於非控股權益的綜合收益7.9 1.8 13.1 5.7 
歸屬於ATI的綜合收益$98.3 $83.1 $239.3 $238.1 
附註是這些報表的組成部分。

3

ATI公司和其子公司
合併現金流量表
（以百萬計）
(未經審計)
 
截至本年度之日期
 2024年9月29日2023年10月1日
經營活動：
淨利潤$240.6 $274.2 
調整淨利潤以便於(使用於)經營活動的現金流量:
折舊和攤銷112.4 106.6 
股權酬金26.6 21.5 
遞延所得稅56.5 2.2 
處置固定資產和設備的淨收益(6.0)(0.1)
出售業務的損益— 0.6 
經營性資產和負債變動:
存貨(198.4)(158.2)
應收賬款(111.3)(104.0)
應付賬款20.2 (108.2)
養老金計劃的捐款— (272.0)
養老福利(7.9)(12.3)
應計負債及其他(106.4)(81.6)
經營活動產生的現金流量淨額26.3 (331.3)
投資活動：
購買固定資產(191.8)(147.3)
處置固定資產收益10.6 3.3 
出售業務的交易成本淨額— (0.3)
其他3.0 1.1 
投資活動使用的現金(178.2)(143.2)
籌資活動：
長期債務負債— 425.0 
長期債務和融資租賃的償付款(21.9)(22.0)
信貸設施下的淨付款(5.1)(7.3)
可轉換票據封頂看漲收入76.1 — 
債務發行費用— (6.1)
購買庫存股(190.0)(55.1)
爲支付股權激勵和其他稅收而回購的股票(25.3)(11.1)
融資活動產生的現金流量淨額(166.2)323.4 
持有待售現金(19.2)— 
現金及現金等價物減少(337.3)(151.1)
期初現金及現金等價物餘額743.9 584.0 
期末現金及現金等價物$406.6 $432.9 
附註是這些報表的組成部分。

4

ATI公司和其子公司
合併股本變動表
（以百萬計）
(未經審計)
ATI股東
普通股
股票		額外的
實繳
資本		留存收益
收益		國庫
股票		累積的
其他
綜合
收益（損失）		非公司治理股份
控制權
利益		總費用
股權
截至2023年7月2日餘額$13.2 $1,682.0 $(306.0)$(107.9)$(87.3)$115.2 $1,309.2 
淨利潤— — 90.2 — — 3.9 94.1 
其他綜合損失— — — — (7.1)(2.1)(9.2)
購買庫存股— — — (45.4)— — (45.4)
員工股票計劃— 7.5 — (0.3)— — 7.2 
2023年10月1日的餘額$13.2 $1,689.5 $(215.8)$(153.6)$(94.4)$117.0 $1,355.9 
2024年6月30日結餘$13.4 $1,712.9 $78.4 $(359.3)$(90.2)$112.7 $1,467.9 
淨利潤— — 82.7 — — 3.9 86.6 
其他綜合收益— — — — 15.6 4.0 19.6 
可轉換票據的轉換0.9 140.1 (233.9)384.6 — — 291.7 
可轉換票據有上限看漲— 76.1 — — — — 76.1 
購買庫存股— — — (38.8)— — (38.8)
員工股票計劃— 8.7 — 0.2 — — 8.9 
2024年9月29日餘額$14.3 $1,937.8 $(72.8)$(13.3)$(74.6)$120.6 $1,912.0 

ATI股東
普通股
股票		額外的
實繳
資本		留存收益
收益		國庫
股票		累積的
其他
綜合
收益（損失）		非公司治理股份
控制權
利益		總費用
股權
2023年1月1日的餘額$13.1 $1,668.1 $(480.9)$(87.0)$(67.4)$111.3 $1,157.2 
淨利潤— — 265.1 — — 9.1 274.2 
其他綜合損失— — — — (27.0)(3.4)(30.4)
購買庫存股— — — (55.5)— — (55.5)
員工股票計劃0.1 21.4 — (11.1)— — 10.4 
2023年10月1日的餘額$13.2 $1,689.5 $(215.8)$(153.6)$(94.4)$117.0 $1,355.9 
2023年12月31日的餘額$13.2 $1,697.1 $(70.1)$(184.0)$(83.2)$107.5 $1,480.5 
淨利潤— — 230.7 — — 9.9 240.6 
其他綜合收益— — — — 8.6 3.2 11.8 
可轉換票據的轉換0.9 140.1 (233.9)384.6 — — 291.7 
可轉換票據有上限看漲期權— 76.1 — — — — 76.1 
購買庫存股— — — (190.0)— — (190.0)
員工股票計劃0.2 24.5 0.5 (23.9)— — 1.3 
2024年9月29日餘額$14.3 $1,937.8 $(72.8)$(13.3)$(74.6)$120.6 $1,912.0 
附註是這些報表的組成部分。
5

基本報表附註
未經審計
注1會計政策
本中期合併財務報表包括ATI Inc.及其子公司的賬目。除非上下文另有說明，「ATI」和「公司」均指ATI Inc.及其子公司。
公司採用4-4-5或5-4-4財政日曆，即每個財政季度由13周組成，分爲兩個四周月份和一個五週月份，其財政年度以12月31日最近的星期日結束。除非另有說明，否則本季度報告中對年份和季度的引用是指財政年度和季度，而不是日曆年度和季度。
這些未經審計的合併財務報表已按照美國通用會計準則和《10-Q表格》和《S-X條例》的規定編制，因此，它們並未包括美國通用會計準則所需的所有信息和附註披露，僅包括認爲必要的一切調整（僅包括正常循環調整）以進行公正的展示。出於與2024年報表的一致性，某些往年的金額已被重新分類。這些未經審計的合併財務報表應與公司2023年年度報告中的合併財務報表和附註一同閱讀。這些中期期間的經營結果未必反映任何未來期間的經營結果。2023年12月31日的財務信息來源於公司審計過的合併財務報表。
新的會計準則
2022年9月，財務會計準則委員會（FASB）發佈了有關供應商融資計劃披露的新會計準則。供應商融資計劃允許買方向其供應商提供預先支付發票到期日期的選擇，由第三方融資提供者或中介支付，根據買方確認爲有效的發票計算。這種新指導要求供應商融資項目的買方披露足夠的信息，以使財務報表的用戶了解該項目的性質、期間活動、期間變化和潛在規模，並使用其供應商融資項目的定性和定量信息。這個新的指導，除了滾動信息的年度披露外，已於2023財年對公司生效，公司於2023年1月2日採納了這個新的會計準則。滾動信息的年度披露將於2024財年對公司生效，可提前採納。公司沒有提前採用該指導。這些變化的採納對公司的合併財務報表沒有任何影響，除了必須包含在第7條的披露要求中。
待定的會計準則
2023年11月，FASB發佈了有關分段報告披露的新會計準則。這項指南要求年度和中期基礎上進一步披露分段信息，包括經常提供給首席運營決策者（CODM）的重要分段費用以及其他分段項目的展示和構成，這是分段收入減分段費用和分段利潤或虧損的差異。該指南還要求提供所有目前在年度基礎上要求的分段披露。中期分段披露的抬頭和職位以及CODm如何在評估績效和分配資源時使用報告的分段利潤或虧損。這個指導並不會改變實體如何確定其可披露的分段。這個新指導包括年度披露要求，將於2024財年對公司生效，以及每季度的披露要求，將於2025財年生效。指南必須進行追溯應用，可以提前採取。公司不打算提前採用這項指導，也不希望這些變化對公司的合併財務報表產生影響，除了必須遵守的披露要求。
2023年12月，FASB發佈了與所得稅披露相關的新會計準則指引。該指引要求實體在其年度稅率調整中披露特定類別，並提供用於調節達到定量閾值的項目的額外信息。該指引還要求就所支付的所得稅額額外披露，並要求對稅前利潤進行分解，區分國內和國外，以及對所得稅費用進行分解，區分聯邦、州和國外。該指引還取消了幾項與當前披露要求相關的內容，其中包括：(1)未來12個月內未識別的稅務利益餘額合理可能發生變化範圍的性質和估計，(2)聲明無法確定估計範圍，以及(3)在因子公司和企業合資企業的綜合確認異常未確認遞延稅款出現時，披露每種暫時差異的累積額。這項新指引將於2025年度財政年度對公司生效，必須
6

這一準則允許透視應用，並允許前瞻性的申請。公司不打算早期採納該準則，也不認爲這些變化會影響公司的合併財務報表，除了披露要求。
註釋2。與客戶簽訂合同的營業收入
訂閱和支持收入包括以下內容（以百萬美元爲單位）：
本公司運營於兩個 業務分爲：高性能材料和元件(HPMC)以及先進合金與解決方案(AA&S)。收入在這些業務部門內按照多元化全球市場、主要地理市場和多元化產品進行細分。以下表格包括截至2024年6月30日和2023年7月2日的季度和截至當年同期的全球和地理市場公司整體收入的對比信息。 兩個 收入在這些業務部門內按照多元化全球市場、主要地理市場和多元化產品進行細分。 包括截至2024年9月29日和2023年10月1日止的季度和截至目前年度的全球和地理市場公司整體營業收入的比較信息，詳見下表。
（單位：百萬）季度已結束
2024年9月29日2023年10月1日
HPMCAA&S總計HPMCAA&S總計
多元化的全球市場：
航空航天與國防：
噴氣發動機-商用$341.9 $24.0 $365.9 $312.5 $16.9 $329.4 
機身-商用84.1 96.7 180.8 104.0 99.6 203.6 
防禦48.9 58.2 107.1 39.7 53.1 92.8 
Total 航空航天與國防474.9 178.9 653.8 456.2 169.6 625.8 
能量：
傳統能源2.4 70.2 72.6 2.5 84.5 87.0 
特種能源26.3 43.6 69.9 20.2 41.7 61.9 
總能量28.7 113.8 142.5 22.7 126.2 148.9 
汽車4.6 59.2 63.8 7.2 40.9 48.1 
醫療28.6 24.5 53.1 28.9 18.6 47.5 
電子產品— 49.1 49.1 0.6 44.2 44.8 
建築/採礦4.9 36.9 41.8 7.7 32.3 40.0 
食品設備和電器— 12.9 12.9 — 16.2 16.2 
其他10.7 23.5 34.2 16.2 38.1 54.3 
總計$552.4 $498.8 $1,051.2 $539.5 $486.1 $1,025.6 
（單位：百萬）年初至今已結束
2024年9月29日2023年10月1日
HPMCAA&S總計HPMCAA&S總計
多元化的全球市場：
航空航天與國防：
噴氣發動機-商用$970.6 $59.3 $1,029.9 $914.2 $67.0 $981.2 
機身-商用263.5 318.2 581.7 242.0 295.7 537.7 
防禦160.9 180.9 341.8 131.6 157.8 289.4 
Total 航空航天與國防1,395.0 558.4 1,953.4 1,287.8 520.5 1,808.3 
能量：
傳統能源8.3 232.9 241.2 8.6 317.2 325.8 
特種能源67.0 135.6 202.6 75.0 137.8 212.8 
總能量75.3 368.5 443.8 83.6 455.0 538.6 
汽車13.4 177.2 190.6 19.5 140.8 160.3 
醫療97.5 76.4 173.9 70.7 53.7 124.4 
電子產品3.0 139.8 142.8 1.8 113.4 115.2 
建築/採礦19.9 93.3 113.2 26.9 101.9 128.8 
食品設備和電器— 41.0 41.0 — 58.6 58.6 
其他40.2 90.5 130.7 47.4 128.1 175.5 
總計$1,644.3 $1,545.1 $3,189.4 $1,537.7 $1,572.0 $3,109.7 
7

（單位：百萬）季度已結束
2024年9月29日2023年10月1日
HPMCAA&S總計HPMCAA&S總計
主要地域市場：
美國$285.8 $339.8 $625.6 $242.6 $314.2 $556.8 
歐洲201.4 41.6 243.0 217.7 49.7 267.4 
亞洲30.3 93.0 123.3 37.8 103.4 141.2 
加拿大16.4 15.0 31.4 13.1 10.4 23.5 
南美洲、中東等18.5 9.4 27.9 28.3 8.4 36.7 
總計$552.4 $498.8 $1,051.2 $539.5 $486.1 $1,025.6 
（單位：百萬）年初至今已結束
2024年9月29日2023年10月1日
HPMCAA&S總計HPMCAA&S總計
主要地域市場：
美國$797.9 $1,037.8 $1,835.7 $661.1 $1,052.3 $1,713.4 
歐洲636.9 146.5 783.4 619.7 137.7 757.4 
亞洲106.5 258.5 365.0 132.8 316.4 449.2 
加拿大45.4 39.5 84.9 41.7 34.9 76.6 
南美洲、中東等57.6 62.8 120.4 82.4 30.7 113.1 
總計$1,644.3 $1,545.1 $3,189.4 $1,537.7 $1,572.0 $3,109.7 
Comparative information regarding the Company’s major products based on their percentages of sales is included in the following table. Hot-Rolling and Processing Facility (HRPF) conversion service sales in the AA&S segment are excluded from this presentation.
Quarter ended
September 29, 2024October 1, 2023
HPMCAA&STotalHPMCAA&STotal
Diversified Products and Services:
     Nickel-based alloys and specialty alloys43 %50 %46 %42 %52 %47 %
     Precision forgings, castings and components36 %— %20 %33 %— %18 %
     Titanium and titanium-based alloys21 %12 %17 %24 %13 %19 %
     Precision rolled strip products— %21 %9 %1 %19 %9 %
     Zirconium and related alloys— %17 %8 %— %16 %7 %
Total100 %100 %100 %100 %100 %100 %
Year-to-date period ended
September 29, 2024October 1, 2023
HPMCAA&STotalHPMCAA&STotal
Diversified Products and Services:
     Nickel-based alloys and specialty alloys41 %50 %45 %45 %56 %50 %
     Precision forgings, castings and components36 %— %19 %33 %— %17 %
     Titanium and titanium-based alloys23 %13 %18 %21 %11 %16 %
     Zirconium and related alloys— %18 %9 %— %15 %8 %
     Precision rolled strip products— %19 %9 %1 %18 %9 %
Total100 %100 %100 %100 %100 %100 %
The Company maintained a backlog of confirmed orders totaling $3.9 billion and $3.6 billion at September 29, 2024 and October 1, 2023, respectively. Due to the structure of the Company’s long-term agreements, approximately 65% of this backlog at September 29, 2024 represented booked orders with performance obligations that will be satisfied within the next 12 months. The backlog does not reflect any elements of variable consideration.


8

Contract balances
As of September 29, 2024 and December 31, 2023, accounts receivable from customers were $732.8 million and $628.2 million, respectively. The following represents the rollforward of accounts receivable - reserve for doubtful accounts and contract assets and liabilities for the year-to-date periods ended September 29, 2024 and October 1, 2023:
(in millions)
Accounts Receivable - Reserve for Doubtful AccountsSeptember 29,
2024		October 1,
2023
Balance as of beginning of year$3.2 $7.7 
Expense to increase the reserve— 0.2 
Write-off of uncollectible accounts(0.6)(4.2)
Balance as of period end$2.6 $3.7 
(in millions)
Contract Assets
Short-termSeptember 29,
2024		October 1,
2023
Balance as of beginning of year$59.1 $64.1 
Recognized in current year68.9 66.6 
Reclassified to accounts receivable(37.5)(74.1)
Balance as of period end$90.5 $56.6 
(in millions)
Contract Liabilities
Short-termSeptember 29,
2024		October 1,
2023
Balance as of beginning of year$163.6 $149.1 
Recognized in current year75.1 61.4 
Amounts in beginning balance reclassified to revenue(67.7)(86.7)
Current year amounts reclassified to revenue(36.9)(40.9)
Other— (0.1)
Reclassification to/from long-term12.4 27.4 
Balance as of period end$146.5 $110.2 
Long-term (a)September 29,
2024		October 1,
2023
Balance as of beginning of year$39.4 $66.8 
Recognized in current year10.8 1.0 
Reclassification to/from short-term(12.4)(27.4)
Balance as of period end$37.8 $40.4 
(a) Long-term contract liabilities are included in other long-term liabilities on the consolidated balance sheets.

Contract costs for obtaining and fulfilling a contract were $9.8 million and $8.1 million as of September 29, 2024 and December 31, 2023, respectively, and are reported in other long-term assets on the consolidated balance sheet. Contract cost amortization expense for the quarter and year-to-date period ended September 29, 2024 was $0.2 million and $0.8 million, respectively. Contract cost amortization expense for the quarter and year-to-date period ended October 1, 2023 was $0.2 million and $0.9 million, respectively.

9

Note 3. Inventories
Inventories at September 29, 2024 and December 31, 2023 were as follows (in millions):
September 29,
2024		December 31,
2023
Raw materials and supplies$217.0 $234.9 
Work-in-process1,188.2 973.6 
Finished goods81.0 114.5 
1,486.2 1,323.0 
Inventory valuation reserves(71.7)(75.5)
Total inventories, net$1,414.5 $1,247.5 
Inventories are stated at the lower of cost (first-in, first-out (FIFO) and average cost methods) or net realizable value.
Note 4. Property, Plant and Equipment
Property, plant and equipment at September 29, 2024 and December 31, 2023 was as follows (in millions):
September 29,
2024		December 31,
2023
Land$30.9 $32.3 
Buildings and leasehold improvements711.2 692.7 
Equipment3,099.2 3,024.3 
3,841.3 3,749.3 
Accumulated depreciation and amortization(2,094.8)(2,083.4)
Total property, plant and equipment, net$1,746.5 $1,665.9 
The construction in progress portion of property, plant and equipment at September 29, 2024 was $259.8 million. Capital expenditures on the consolidated statement of cash flows for the year-to-date periods ended September 29, 2024 and October 1, 2023 exclude $28.3 million and $28.9 million, respectively, of accrued capital expenditures that were included in property, plant and equipment at September 29, 2024 and October 1, 2023, respectively.

10

Note 5. Divestitures
During 2024, the Company approved plans to divest of certain immaterial, non-core operations from both the HPMC and AA&S segments. These non-core operations, which are classified as held for sale as of September 29, 2024, do not meet the criteria to be classified as discontinued operations in the consolidated financial statements. The following are the assets and liabilities classified as held for sale that are reported as prepaid expenses and other current assets, other long-term assets, other current liabilities, and other long-term liabilities on the consolidated balance sheet as of September 29, 2024.
(in millions)September 29,
2024
Assets
Cash$19.2 
Accounts receivable, net6.1
Inventories, net31.4
Prepaid expenses and other current assets0.3
   Total current assets57.0 
Property, plant and equipment, net5.4
Other assets6.5
   Total long-term assets11.9
      Total Assets68.9
Liabilities
Accounts payable2.4
Other current liabilities2.8 
   Total current liabilities5.2
Other long-term liabilities3.9
      Total Liabilities9.1
Net assets held for sale$59.8 
Note 6. Joint Ventures
The financial results of majority-owned joint ventures are consolidated into the Company’s operating results and financial position, with the minority ownership interest recognized in the consolidated statements of operations as net income attributable to noncontrolling interests, and as equity attributable to the noncontrolling interests within total stockholders’ equity. Investments in which the Company exercises significant influence, but which it does not control (generally a 20% to 50% ownership interest), are accounted for under the equity method of accounting.

Majority-Owned Joint Ventures

STAL:
The Company has a 60% interest in the Chinese joint venture known as STAL. The remaining 40% interest in STAL is owned by China Baowu Steel Group Corporation Limited, a state authorized investment company whose equity securities are publicly traded in the People’s Republic of China. STAL is part of ATI’s AA&S segment and manufactures Precision Rolled Strip (PRS) stainless products mainly for the electronics and automotive markets located in Asia. Cash and cash equivalents held by STAL as of September 29, 2024 were $102.3 million.

Next Gen Alloys LLC:
The Company has a 51% interest in Next Gen Alloys LLC, a joint venture with GE Aviation for the development of a new meltless titanium alloy powder manufacturing technology; however, there is no active development at this time. Next Gen Alloys LLC funds its development activities through the sale of shares to the two joint venture partners. Cash and cash equivalents held by this joint venture as of September 29, 2024 were $1.0 million.

11

Equity Method Joint Ventures

A&T Stainless:
The Company has a 50% interest in A&T Stainless, a joint venture with an affiliate company of Tsingshan Group (Tsingshan) to produce 60-inch wide stainless sheet products for sale in North America. Tsingshan purchased its 50% joint venture interest in A&T Stainless in 2018 for $17.5 million. The A&T Stainless operations included the Company’s previously-idled direct roll and pickle (DRAP) facility in Midland, PA. ATI provided hot-rolling conversion services to A&T Stainless using the AA&S segment’s HRPF. The DRAP facility has been idled since the third quarter of 2020. ATI accounts for the A&T Stainless joint venture under the equity method of accounting.

ATI’s share of A&T Stainless results were losses of $0.2 million and $1.0 million for the quarter and year-to-date period ended September 29, 2024, respectively, and $0.5 million and $1.3 million for the quarter and year-to-date period ended October 1, 2023, respectively, which are included within other income/expense, net, on the consolidated statements of operations and in the AA&S segment’s operating results. As of September 29, 2024 and December 31, 2023, ATI had net receivables for working capital advances and administrative services from A&T Stainless of $0.2 million and $1.5 million, respectively.

Uniti:
ATI had a 50% interest in the industrial titanium joint venture known as Uniti, with the remaining 50% interest held by VSMPO, a Russian producer of titanium, aluminum, and specialty steel products. On March 9, 2022, the Company announced the termination of Uniti, LLC. No impairments were recorded as a result of the decision to terminate the Uniti joint venture. Uniti was accounted for under the equity method of accounting. ATI’s share of Uniti’s results were losses of $0.2 million for quarter ended October 1, 2023 and income of $0.3 million for the year-to-date period ended October 1, 2023, which were included in the AA&S segment’s operating results, and within other income/expense, net on the consolidated statements of operations. The Company received its final distribution in the first quarter of 2024 as a result of the termination, and formal dissolution occurred in the fourth quarter of 2024.
Note 7. Supplemental Financial Statement Information
Other income (expense), net for the quarters and year-to-date periods ended September 29, 2024 and October 1, 2023 was as follows:
(in millions)Quarter endedYear-to-date period ended
September 29, 2024October 1, 2023September 29, 2024October 1, 2023
Rent and royalty income$0.7 $0.7 $2.3 $2.0 
Gains from disposal of property, plant and equipment, net3.7 — 3.7 0.3 
Net equity loss on joint ventures (See Note 6)(0.2)(0.7)(1.0)(1.0)
Other$0.2 $— $0.2 $— 
Total other income, net$4.4 $— $5.2 $1.3 
Gains from disposal of property, plant and equipment, net for the quarter and year-to-date period ended September 29, 2024 include a $3.7 million gain on the sale of certain oil and gas rights. These cash gains are reported as an investing activity on the consolidated statement of cash flow for the year-to-date period ended September 29, 2024.

Restructuring
Restructuring charges were $0.5 million for the quarter ended September 29, 2024 and represent severance for the involuntary reduction of several domestic employees. Restructuring charges were a credit of $1.2 million for the year-to-date period ended September 29, 2024, primarily for a reduction in severance-related reserves for approximately 80 employees based on revised workforce reduction estimates, which includes the ongoing restructuring of the Company’s European operations. Restructuring charges for the third quarter ended October 1, 2023 were a credit of $0.5 million for a reduction in severance-related reserves related to approximately 10 employees based on revised workforce reduction estimates. Restructuring charges for the year-to-date period ended October 1, 2023 were a charge of $2.2 million and represent severance for the involuntary reduction of approximately 40 employees across the Company’s domestic operations, partially offset by the credit in the third quarter 2023 discussed above. These amounts are presented as restructuring charges (credits) in the consolidated statements of operations and are excluded from segment EBITDA.
12

Restructuring reserves for severance cost activity is as follows:
Severance and Employee
Benefit Costs
Balance at December 31, 2023$15.2 
Adjustments(1.2)
Payments(5.2)
Balance at September 29, 2024$8.8 
The $8.8 million restructuring reserve balance at September 29, 2024 is recorded in other current liabilities on the consolidated balance sheet.
Supplier Financing
The Company participates in supplier financing programs with two financial institutions to offer its suppliers the option for access to payment in advance of an invoice due date. Under such programs, these financial institutions provide early payment to suppliers at their request for invoices that ATI has confirmed as valid at a pre-determined discount rate commensurate with the creditworthiness of ATI. As of September 29, 2024 and December 31, 2023, the Company had $58.4 million and $15.6 million, respectively, reported in accounts payable on the consolidated balance sheets under such programs.
Note 8. Debt
Debt at September 29, 2024 and December 31, 2023 was as follows (in millions): 
September 29,
2024		December 31,
2023
ATI Inc. 7.25% Notes due 2030
$425.0 $425.0 
ATI Inc. 5.875% Notes due 2027
350.0 350.0 
ATI Inc. 5.125% Notes due 2031
350.0 350.0 
ATI Inc. 4.875% Notes due 2029
325.0 325.0 
ATI Inc. 3.5% Convertible Senior Notes due 2025
— 291.4 
Allegheny Ludlum 6.95% Debentures due 2025 (a)
150.0 150.0 
ABL Term Loan200.0 200.0 
U.S. revolving credit facility— — 
Foreign credit facilities— 5.0 
Finance leases and other98.2 102.8 
Debt issuance costs(14.8)(19.6)
Debt1,883.4 2,179.6 
Short-term debt and current portion of long-term debt27.9 31.9 
Long-term debt$1,855.5 $2,147.7 
 
(a) The payment obligations of these debentures issued by Allegheny Ludlum, LLC are fully and unconditionally guaranteed by ATI.
Revolving Credit Facility

The Company has an Asset Based Lending (ABL) Credit Facility, which is collateralized by the accounts receivable and inventory of the Company’s operations. The ABL facility also provides the Company with the option of including certain machinery and equipment as additional collateral for purposes of determining availability under the facility. 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 (Term Loan), and a swing loan facility of up to $60 million. The Term Loan has an interest rate of 2.0% above the adjusted Secured Overnight Financing Rate (SOFR) and can be prepaid in increments of $25 million if certain minimum liquidity conditions are satisfied. In addition, the Company has the right to request an increase of up to $300 million in the maximum amount available under the revolving credit facility for the duration of the ABL. The Company previously maintained a $50 million floating-for-fixed interest rate swap which converted a portion of the Term Loan to a 4.21% fixed interest rate that matured in June 2024.

13

The applicable interest rate for revolving credit borrowings under the ABL facility includes interest rate spreads based on available borrowing capacity that range between 1.25% and 1.75% for SOFR-based borrowings and between 0.25% and 0.75% for base rate borrowings. The ABL facility contains a financial covenant whereby the Company must maintain a fixed charge coverage ratio of not less than 1.00:1.00 after an event of default has occurred and is continuing or if the undrawn availability under the ABL revolving credit portion of the facility is less than the greater of (i) 10% of the then applicable maximum loan amount under the revolving credit portion of the ABL and the outstanding Term Loan balance, or (ii) $60.0 million. The Company was in compliance with the fixed charge coverage ratio as of September 29, 2024. Additionally, the Company must demonstrate minimum liquidity specified by the facility during the 90-day period immediately preceding the stated maturity date of its 6.95% Debentures due 2025 issued by the Company’s wholly owned subsidiary, Allegheny Ludlum LLC. The ABL also contains customary affirmative and negative covenants for credit facilities of this type, including limitations on the Company’s ability to incur additional indebtedness or liens or to enter into investments, mergers and acquisitions, dispositions of assets and transactions with affiliates, some of which are more restrictive, at any time during the term of the ABL when the Company’s fixed charge coverage ratio is less than 1.00:1.00 and its undrawn availability under the revolving portion of the ABL is less than the greater of (a) $120 million or (b) 20% of the sum of the maximum loan amount under the revolving credit portion of the ABL and the outstanding Term Loan balance.

As of September 29, 2024, there were no outstanding borrowings under the revolving portion of the ABL facility, and $31.7 million was utilized to support the issuance of letters of credit. There were no revolving credit borrowings under the ABL facility during the year-to-date period ended September 29, 2024. There were average revolving credit borrowings of $17 million bearing an average annual interest rate of 6.5% under the ABL facility for the year-to-date period ended October 1, 2023. The Company also has foreign credit facilities, primarily in China, that total $59 million based on September 29, 2024 foreign exchange rates, none of which was drawn as of September 29, 2024 and $5.0 million of which was drawn as of December 31, 2023.
2025 Convertible Notes

During the third quarter of 2024, the Company notified holders of the $291.4 million outstanding principal amount of its 3.5% Convertible Notes due 2025 (2025 Convertible Notes) that they would be redeemed prior to their maturity date. The holders of any outstanding 2025 Convertible Notes had the right to convert the principal amount of such notes into shares of ATI’s common stock prior to the redemption date. Any 2025 Convertible Notes not tendered for conversion prior to the redemption date were redeemed in cash at a redemption price equal to the principal amount, plus accrued and unpaid interest.

As a result, $291.0 million principal amount of the outstanding notes was converted at a rate of 64.7178 shares of ATI common stock per $1,000 principal amount, equivalent to a conversion price of $15.45 per share or 18.8 million shares of ATI common stock. Due to the early redemption of the 2025 Convertible Notes, the conversion rate was a premium to the conversion rate of 64.5745 shares of ATI common stock per $1,000 principal amount, or approximately $15.49 per share, that would have been due at maturity. The remaining $0.4 million of outstanding principal balance were not tendered for conversion and, as a result, the Company redeemed those for cash.

For those holders who exercised the conversion rights, the terms of the 2025 Convertible Notes provided that any accrued but unpaid interest at the date of conversion was forfeited. As a result, accrued interest from the last interest payment date of June 15, 2024 through the date of conversion, totaling $2.3 million, was credited to additional paid-in capital. In addition, the remaining unamortized deferred issuance costs of $1.6 million at the date of conversion were charged to additional paid-in capital.

Coincident with its redemption of the 2025 Convertible Notes, the Company also settled the capped call transactions initiated as part of the issuance of the 2025 Convertible Notes. The capped call transactions included a cap price of $19.76 per share and were settled for $76.1 million in cash, which is recorded as additional paid-in capital on the consolidated balance sheet and as a financing activity on the consolidated statement of cash flows.


14

As of December 31, 2023, the fair value of the 2025 Convertible Notes was $864 million based on the quoted market price, which is classified in Level 1 of the fair value hierarchy. The 2025 Convertible Notes had a 3.5% cash coupon rate that was payable semi-annually in arrears on each June 15 and December 15. Including amortization of deferred issuance costs, the effective interest rate was 4.2% for the quarters and year-to-date periods ended September 29, 2024 and October 1, 2023. Remaining deferred issuance costs were $2.9 million at December 31, 2023. Interest expense on the 2025 Convertible Notes was as follows:

Quarter endedYear-to-date period ended
(in millions)September 29, 2024October 1, 2023September 29, 2024October 1, 2023
Contractual coupon rate$2.1 $2.5 $7.2 $7.6 
Amortization of debt issuance costs0.3 0.5 1.3 1.4 
   Total interest expense$2.4 $3.0 $8.5 $9.0 

Note 9. Derivative Financial Instruments and Hedging
As part of its risk management strategy, the Company, from time-to-time, utilizes derivative financial instruments to manage its exposure to changes in raw material prices, energy costs, foreign currencies, and interest rates. In accordance with applicable accounting standards, the Company accounts for most of these contracts as hedges.
The Company sometimes uses futures and swap contracts to manage exposure to changes in prices for forecasted purchases of raw materials, such as nickel, and natural gas. Under these contracts, which are generally accounted for as cash flow hedges, the price of the item being hedged is fixed at the time that the contract is entered into, and the Company is obligated to make or receive a payment equal to the net change between this fixed price and the market price at the date the contract matures.
The majority of ATI’s products are sold under contractual arrangements that include raw material surcharges and index mechanisms. However, as of September 29, 2024, the Company had entered into financial hedging arrangements, primarily at the request of its customers related to firm orders, for an aggregate notional amount of approximately 4 million pounds of nickel with hedge dates through 2025. The aggregate notional amount hedged is approximately 6% of a single year’s estimated nickel raw material purchase requirements. These derivative instruments are used to hedge the variability of a selling price that is based on the London Metal Exchange (LME) index for nickel, as well as to hedge the variability of the purchase cost of nickel based on this LME index. Any gain or loss associated with these hedging arrangements is included in sales or cost of sales, depending on whether the underlying risk being hedged was the variable selling price or the variable raw material cost, respectively.
At September 29, 2024, the outstanding financial derivatives used to hedge the Company’s exposure to energy cost volatility consisted of natural gas cost hedges. At September 29, 2024, the Company hedged approximately 85% of its forecasted domestic requirements for natural gas for the remainder of 2024, approximately 55% for 2025 and approximately 10% for 2026.
While the majority of the Company’s direct export sales are transacted in U.S. dollars, it uses foreign currency exchange contracts, from time-to-time, to limit transactional exposure to changes in currency exchange rates for those transactions denominated in a non-U.S. currency. The Company sometimes purchases foreign currency forward contracts that permit it to sell specified amounts of foreign currencies it expects to receive from its export sales for pre-established U.S. dollar amounts at specified dates. In addition, the Company may also hedge forecasted capital expenditures and designate cash balances held in foreign currencies as hedges of forecasted foreign currency transactions. At September 29, 2024, the Company had no material outstanding foreign currency forward contracts.
The Company may enter into derivative interest rate contracts to maintain a reasonable balance between fixed- and floating-rate debt. The Company previously maintained a $50 million floating-for-fixed interest rate swap which converted a portion of the ABL Term Loan to a 4.21% fixed rate that matured during the quarter ended June 30, 2024. There are no outstanding derivative interest rate contracts at September 29, 2024.
There are no credit risk-related contingent features in the Company’s derivative contracts, and the contracts contain no provisions under which the Company has posted, or would be required to post, collateral. The counterparties to the Company’s derivative contracts are substantial and creditworthy commercial banks that are recognized market makers. The Company controls its credit exposure by diversifying across multiple counterparties and by monitoring credit ratings and credit default swap spreads of its counterparties. The Company also enters into master netting agreements with counterparties when possible.
15

The fair values of the Company’s derivative financial instruments are presented below, representing the gross amounts recognized which are not offset by counterparty or by type of item hedged. All fair values for these derivatives were measured using Level 2 information as defined by the accounting standard hierarchy, which includes quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs derived principally from or corroborated by observable market data.
(In millions)
Asset derivatives
Balance sheet locationSeptember 29,
2024		December 31,
2023
Derivatives designated as hedging instruments:
Interest rate swapPrepaid expenses and other current assets$— $0.7 
Foreign exchange contractsPrepaid expenses and other current assets— 0.1 
Nickel and other raw material contractsPrepaid expenses and other current assets0.6 — 
Natural gas contractsPrepaid expenses and other current assets0.1 — 
Nickel and other raw material contractsOther assets0.2 — 
Natural gas contractsOther assets0.1 0.1 
Total derivatives designated as hedging instruments$1.0 $0.9 
Liability derivativesBalance sheet location  
Derivatives designated as hedging instruments:
Foreign exchange contractsOther current liabilities0.1 — 
Natural gas contractsOther current liabilities2.7 5.6 
Nickel and other raw material contractsOther current liabilities3.0 7.5 
Natural gas contractsOther long-term liabilities0.3 1.1 
Foreign exchange contractsOther long-term liabilities0.3 — 
Total derivatives designated as hedging instruments$6.4 $14.2 
For derivative financial instruments that are designated as cash flow hedges, the gain or loss on the derivative is reported as a component of other comprehensive income (OCI) and reclassified into earnings in the same period or periods during which the hedged item affects earnings. For derivative financial instruments that are designated as fair value hedges, changes in the fair value of these derivatives are recognized in current period results. There were no outstanding fair value hedges as of September 29, 2024. The cash flow impact for all derivative financial instruments is reported in cash flows provided by operating activities on the consolidated statement of cash flows. The Company did not use net investment hedges for the periods presented. The effects of derivative instruments in the tables below are presented net of related income taxes, excluding any impacts of changes to income tax valuation allowances affecting results of operations or other comprehensive income, when applicable (see Note 15 for further explanation).
Assuming market prices remain constant with those at September 29, 2024, a pre-tax loss of $5.1 million is expected to be recognized over the next 12 months.
Activity with regard to derivatives designated as cash flow hedges for the quarters and year-to-date periods ended September 29, 2024 and October 1, 2023 was as follows (in millions): 
Amount of Gain (Loss)
Recognized in OCI on
Derivatives		Amount of Gain (Loss)
Reclassified from
Accumulated OCI
into Income (a)
Quarter endedQuarter ended
Derivatives in Cash Flow Hedging RelationshipsSeptember 29, 2024October 1, 2023September 29, 2024October 1, 2023
Nickel and other raw material contracts$(0.2)$(1.6)$(1.4)$(0.4)
Natural gas contracts(1.1)(1.0)(1.4)(1.4)
Foreign exchange contracts(0.2)0.1 — 0.1 
Interest rate swap— 0.1 — 0.3 
Total$(1.5)$(2.4)$(2.8)$(1.4)
16

Amount of Gain (Loss)
Recognized in OCI on
Derivatives		Amount of Gain (Loss)
Reclassified from
Accumulated OCI
into Income (a)
Year-to-date period endedYear-to-date period ended
Derivatives in Cash Flow Hedging RelationshipsSeptember 29, 2024October 1, 2023September 29, 2024October 1, 2023
Nickel and other raw material contracts$(1.3)$(8.5)$(2.5)$3.5 
Natural gas contracts(2.1)(7.8)(5.0)(4.6)
Foreign exchange contracts0.1 0.3 0.2 0.2 
Interest rate swap— 0.3 1.2 0.8 
Total$(3.3)$(15.7)$(6.1)$(0.1)
(a)The gains (losses) reclassified from accumulated OCI into income related to the derivatives, with the exception of the interest rate swap, are presented in sales and cost of sales in the same period or periods in which the hedged item affects earnings. The gains (losses) reclassified from accumulated OCI into income on the interest rate swap are presented in interest expense in the same period as the interest expense on the Term Loan is recognized in earnings.
The disclosures of gains or losses presented above for nickel and other raw material contracts and foreign currency contracts do not take into account the anticipated underlying transactions. Since these derivative contracts represent hedges, the net effect of any gain or loss on results of operations may be fully or partially offset.
The Company may also use derivative instruments that are not designated as hedges to protect the Company’s results from certain fluctuations in foreign exchange rates, as well as to offset a portion of the foreign currency gains and losses generated by the remeasurement of certain assets and liabilities denominated in non-functional currencies. Changes in the fair value of these foreign exchange contract derivatives not designated as hedging instruments are recorded in cost of sales or selling, general and administrative expenses on the consolidated statement of operations, and the Company recognized $1.0 million and $0.5 million of income, net, for settled foreign currency forward contracts that were not designated as hedges during the third quarter and year-to-date period ended September 29, 2024, respectively, which offset foreign currency gains/losses in the relevant currency. We have no significant outstanding hedges that are not designated as of September 29, 2024.
Note 10. Fair Value of Financial Instruments
The estimated fair value of financial instruments at September 29, 2024 was as follows: 
  Fair Value Measurements at Reporting Date Using
(In millions)Total
Carrying
Amount		Total
Estimated
Fair Value		Quoted Prices in
Active Markets for
Identical Assets (Level 1)		Significant
Observable
Inputs
(Level 2)
Cash and cash equivalents$406.6 $406.6 $406.6 $— 
Derivative financial instruments:
Assets1.0 1.0 — 1.0 
Liabilities6.4 6.4 — 6.4 
Debt (a)1,898.2 1,911.2 1,613.0 298.2 

The estimated fair value of financial instruments at December 31, 2023 was as follows: 
  Fair Value Measurements at Reporting Date Using
(In millions)Total
Carrying
Amount		Total
Estimated
Fair Value		Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant
Observable
Inputs
(Level 2)
Cash and cash equivalents$743.9 $743.9 $743.9 $— 
Derivative financial instruments:
Assets0.9 0.9 — 0.9 
Liabilities14.2 14.2 — 14.2 
Debt (a)2,199.2 2,746.7 2,438.9 307.8 
(a)The total carrying amount for debt for both periods excludes debt issuance costs related to the recognized debt liability which is presented in the consolidated balance sheet as a direct reduction from the carrying amount of the debt liability.
17

In accordance with accounting standards, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards established three levels of a fair value hierarchy that prioritize the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The availability of observable market data is monitored to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period.

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:
Cash and cash equivalents: Fair value was determined using Level 1 information.
Derivative financial instruments: Fair values for derivatives were measured using exchange-traded prices for the hedged items. The fair value was determined using Level 2 information, including consideration of counterparty risk and the Company’s credit risk.
Short-term and long-term debt: The fair values of the Company’s publicly traded debt were based on Level 1 information. The fair values of the other short-term and long-term debt were determined using Level 2 information.
Note 11. Business Segments
The Company operates under two business segments: High Performance Materials & Components (HPMC) and Advanced Alloys & Solutions (AA&S). The measure of segment EBITDA excludes net interest expense, income taxes, depreciation and amortization, goodwill impairment charges, debt extinguishment charges, corporate expenses, closed operations and other income (expense), restructuring and other credits/charges, strike related costs, long-lived asset impairments, pension remeasurement gains and losses, other postretirement/pension curtailment and settlement gains and losses, and gains or losses on sales of businesses. Management believes segment EBITDA, as defined, provides an appropriate measure of controllable operating results at the business segment level. Following is certain financial information with respect to the Company’s business segments for the periods indicated (in millions):
Quarter endedYear-to-date period ended
 September 29, 2024October 1, 2023September 29, 2024October 1, 2023
Total sales:
High Performance Materials & Components$612.9 $578.1 $1,828.6 $1,670.5 
Advanced Alloys & Solutions588.4 551.8 1,753.7 1,791.0 
1,201.3 1,129.9 3,582.3 3,461.5 
Intersegment sales:
High Performance Materials & Components60.5 38.6 184.3 132.8 
Advanced Alloys & Solutions89.6 65.7 208.6 219.0 
150.1 104.3 392.9 351.8 
Sales to external customers:
High Performance Materials & Components552.4 539.5 1,644.3 1,537.7 
Advanced Alloys & Solutions498.8 486.1 1,545.1 1,572.0 
$1,051.2 $1,025.6 $3,189.4 $3,109.7 
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Quarter endedYear-to-date period ended
 September 29, 2024October 1, 2023September 29, 2024October 1, 2023
EBITDA:
High Performance Materials & Components$123.2 $117.2 $334.6 $308.5 
Advanced Alloys & Solutions73.6 61.5 232.9 219.3 
Total segment EBITDA196.8 178.7 567.5 527.8 
Corporate expenses(13.4)(12.5)(49.9)(47.1)
Closed operations and other income (expense)2.3 (3.6)1.7 (6.8)
Depreciation & amortization (a)(38.5)(35.6)(112.4)(106.6)
Interest expense, net(28.0)(23.8)(83.0)(65.0)
Restructuring and other charges(4.3)(4.2)(12.8)(14.6)
Loss on asset sales and sales of businesses, net— — — (0.6)
Income before income taxes$114.9 $99.0 $311.1 $287.1 
a) The following is depreciation & amortization by each business segment:
Quarter endedYear-to-date period ended
September 29, 2024October 1, 2023September 29, 2024October 1, 2023
High Performance Materials & Components$18.6 $16.5 $52.8 $51.8 
Advanced Alloys & Solutions18.2 17.3 54.5 49.6 
Other1.7 1.8 5.1 5.2 
$38.5 $35.6 $112.4 $106.6 
Beginning in 2020, the U.S. government enacted various relief packages in response to the COVID-19 pandemic, including refundable employee retention tax credits. The Company applied for these employee retention tax credits and deferred recognition of a portion of the tax credits pending the completion of any potential audit or examination, or the expiration of the related statute of limitations. During the quarter and year-to-date periods ended September 29, 2024, the Company recognized a benefit of $4.8 million and $13.4 million, respectively, in cost of sales on the consolidated statement of operations due to the expiration of the statute of limitations for a portion of these credits. For the quarter ended September 29, 2024, the Company recognized $2.9 million of the benefit in the HPMC segment and $1.9 million in the AA&S segment. For the year-to-date periods ended September 29, 2024, the Company recognized $6.4 million of the benefit in the HPMC segment and $7.0 million in the AA&S segment. See Note 16 for further explanation.
Closed operations and other income (expense) for the quarter ended September 29, 2024 includes a $3.7 million gain on the sale of certain oil and gas rights, included within other income, net, on the consolidated statement of operations, and favorable foreign currency transaction impacts as compared to the prior year period. Closed operations and other income (expense) for the year-to-date period ended September 29, 2024 also includes a $2.3 million gain on the sale of assets for the Company’s idled Houston, PA facility, which is included within gain on asset sales and sales of businesses, net, on the consolidated statement of operations. The Company received $3.5 million of proceeds from this sale that are reported as an investing activity on the consolidated statement of cash flows.
Restructuring and other charges of $4.3 million for the quarter ended September 29, 2024 include $2.5 million of start-up costs, partially offset by a $0.4 million credit for adjustments to inventory reserves related to the Company’s ongoing European restructuring, both of which are included within cost of sales on the consolidated statements of operations. These charges also include $1.7 million of transaction costs, which are included within selling and administrative expenses on the consolidated statements of operations, and restructuring charges of $0.5 million (see Note 7). Restructuring and other charges of $12.8 million for the year-to-date period ended September 29, 2024 include $7.2 million of start-up costs and $5.1 million of inventory write-downs related to the Company’s ongoing European restructuring, both of which are included within cost of sales on the consolidated statements of operations. These charges also include $1.7 million of transaction costs, which are included within selling and administrative expenses on the consolidated statements of operations, and restructuring credits of $1.2 million primarily for revised workforce reduction estimates (see Note 7).
Restructuring and other charges of $4.2 million for the quarter ended October 1, 2023 include $2.8 million of start-up costs and $1.9 million of costs associated with an unplanned outage at the Company’s Lockport, NY facility, both of which are included within cost of sales on the consolidated statements of operations. These charges were partially offset by a $0.5 million pre-tax
19

credit for restructuring charges, primarily related to lowered severance-related reserves based on changes in planned operating rates and revised workforce reduction estimates (see Note 7). Restructuring and other charges of $14.6 million for the year-to-date period ended October 1, 2023 include $2.2 million of severance-related restructuring charges (see Note 7) as well as $8.5 million of start-up costs, $1.9 million of costs associated with an unplanned outage at the Company’s Lockport, NY facility, and $2.0 million primarily for asset write-offs for the closure of the Company’s Robinson, PA operations, all of which are included within cost of sales on the consolidated statements of operations.
Note 12. Retirement Benefits
The Company has defined contribution retirement plans or defined benefit pension plans covering substantially all employees. Company contributions to defined contribution retirement plans are generally based on a percentage of eligible pay or based on hours worked. Benefits under the defined benefit pension plans are generally based on years of service and/or final average pay. The Company funds the U.S. pension plans in accordance with the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended. The Company also sponsors several postretirement plans covering certain collectively-bargained salaried and hourly employees. The plans provide health care and life insurance benefits for eligible retirees. In most retiree health care plans, Company contributions towards premiums are capped based on the cost as of a certain date, thereby creating a defined contribution. All defined benefit pension and retiree health care plans are closed to new entrants.
For the quarters ended September 29, 2024 and October 1, 2023, the components of pension and other postretirement benefit expense for the Company’s defined benefit plans included the following (in millions): 
Pension BenefitsOther Postretirement Benefits
Quarter endedQuarter ended
 September 29, 2024October 1, 2023September 29, 2024October 1, 2023
Service cost - benefits earned during the year$1.5 $1.5 $0.2 $0.2 
Interest cost on benefits earned in prior years4.1 24.0 2.5 2.7 
Expected return on plan assets(4.1)(25.7)— — 
Amortization of prior service cost (credit)0.1 0.1 (0.2)(0.2)
Amortization of net actuarial loss— — 1.3 1.5 
Total retirement benefit expense (income)$1.6 $(0.1)$3.8 $4.2 
For the year-to-date periods ended September 29, 2024 and October 1, 2023, the components of pension and other postretirement benefit expense for the Company’s defined benefit plans included the following (in millions): 
Pension BenefitsOther Postretirement Benefits
Year-to-date period endedYear-to-date period ended
 September 29, 2024October 1, 2023September 29, 2024October 1, 2023
Service cost - benefits earned during the year$4.4 $4.7 $0.4 $0.5 
Interest cost on benefits earned in prior years12.3 72.0 7.6 8.2 
Expected return on plan assets(12.3)(77.0)— — 
Amortization of prior service cost (credit)0.2 0.3 (0.6)(0.7)
Amortization of net actuarial loss— — 3.9 4.5 
Total retirement benefit expense $4.6 $— $11.3 $12.5 
Note 13. Income Taxes
For the quarter and year-to-date period ended September 29, 2024, the Company’s effective tax rate was 24.6% and 22.7%, respectively, resulting in an income tax provision of $28.3 million and $70.5 million, respectively. Discrete tax benefits for the year-to-date period ended September 29, 2024 were $4.5 million, which includes $3.3 million for share-based compensation and the recognition of a stranded deferred tax valuation allowance in accumulated other comprehensive loss that was associated with the Company’s interest rate swap due to its maturity (see Note 15). For the quarter and year-to-date period ended October 1, 2023, the Company’s effective tax rate was 4.9% and 4.5%, respectively, resulting in an income tax provision of $4.9 million and $12.9 million, respectively. The Company’s effective tax rates for the quarter and year-to-date period ended October 1, 2023 were impacted by the net valuation allowance position in the U.S. and the Company’s foreign earnings.

20

Note 14. Per Share Information
The following table sets forth the computation of basic and diluted income per common share: 
(In millions, except per share amounts)Quarter endedYear-to-date period ended
September 29, 2024October 1, 2023September 29, 2024October 1, 2023
Numerator:
Numerator for basic income per common share –
Net income attributable to ATI$82.7 $90.2 $230.7 $265.1 
Effect of dilutive securities:
3.5% Convertible Senior Notes due 2025
1.7 2.7 6.0 7.9 
Numerator for diluted net income per common share –
Net income attributable to ATI after assumed conversions$84.4 $92.9 $236.7 $273.0 
Denominator:
Denominator for basic net income per common share – weighted average shares128.7 128.1 126.5 128.4 
Effect of dilutive securities:
Share-based compensation3.7 3.3 3.1 2.9 
3.5% Convertible Senior Notes due 2025
14.4 18.8 17.3 18.8 
Denominator for diluted net income per common share – adjusted weighted average shares and assumed conversions146.8 150.2 146.9 150.1 
Basic net income attributable to ATI per common share$0.64 $0.70 $1.82 $2.06 
Diluted net income attributable to ATI per common share$0.57 $0.62 $1.61 $1.82 
Common stock that would be issuable upon the assumed conversion of the 2025 Convertible Notes, prior to their redemption during the third quarter of 2024, and other option equivalents and contingently issuable shares are excluded from the computation of contingently issuable shares, and therefore, from the denominator for diluted earnings per share, if the effect of inclusion is anti-dilutive. There were no anti-dilutive shares for the quarters and year-to-date periods ended September 29, 2024 and October 1, 2023.
Periodically, the Company’s Board of Directors authorizes the repurchase of ATI common stock (the “Share Repurchase Program”), the most recent of which was $700 million that was announced in September 2024. Repurchases under these programs are made in the open market or in privately negotiated transactions, with the amount and timing of repurchases depending on market conditions and corporate needs. Open market repurchases are structured to occur within the pricing and volume requirements of SEC Rule 10b-18. In the quarter and year-to-date period ended September 29, 2024, ATI used $40.0 million and $190.0 million, respectively, to repurchase 0.7 million and 4.1 million, respectively, of its common stock under the Share Repurchase Program. At September 29, 2024, the Company has utilized $40 million of the $700 million currently authorized under the Share Repurchase Program. In the quarter ended October 1, 2023, ATI used $45.0 million to repurchase 1.0 million shares of its common stock under the Share Repurchase Program, and in the year-to-date period ended October 1, 2023, ATI used $55.1 million to repurchase 1.2 million shares of its common stock under the Share Repurchase Program.
The Company’s share repurchases are subject to a 1% excise tax as a result of the Inflation Reduction Act of 2022. Excise taxes incurred on share repurchases represent direct costs of the repurchase and are recorded as part of the cost basis of the shares within treasury stock. The cost of share repurchases may differ from the repurchases of common stock amounts in the consolidated statements of cash flows due to these excise taxes. However, for 2024, there was no excise tax due to the impact of the conversion of the 2025 Convertible Notes (see Note 8).

21

Note 15. Accumulated Other Comprehensive Income (Loss)
The changes in AOCI by component, net of tax, for the quarter ended September 29, 2024 were as follows (in millions):
Post-
retirement
benefit plans		Currency
translation
adjustment		DerivativesDeferred Tax Asset Valuation AllowanceTotal
Attributable to ATI:
Balance, June 30, 2024$(30.7)$(77.9)$(4.9)$23.3 $(90.2)
OCI before reclassifications — 13.4  (1.5)— 11.9 
Amounts reclassified from AOCI(a)0.9 (b)— (c)2.8 (d)— 3.7 
Net current-period OCI 0.9 13.4  1.3 — 15.6 
Balance, September 29, 2024$(29.8)$(64.5)$(3.6)$23.3 $(74.6)
Attributable to noncontrolling interests:
Balance, June 30, 2024$— $6.5 $— $— $6.5 
OCI before reclassifications — 4.0  — — 4.0 
Amounts reclassified from AOCI — (b)—  — — — 
Net current-period OCI — 4.0  — — 4.0 
Balance, September 29, 2024$— $10.5 $— $— $10.5 
The changes in AOCI by component, net of tax, for the year-to-date period ended September 29, 2024 were as follows (in millions):
Post-
retirement
benefit plans		Currency
translation
adjustment		DerivativesDeferred Tax Asset Valuation AllowanceTotal
Attributable to ATI:
Balance, December 31, 2023$(32.5)$(68.4)$(6.4)$24.1 $(83.2)
OCI before reclassifications — 3.9  (3.3)— 0.6 
Amounts reclassified from AOCI(a)2.7 (b)— (c)6.1 (d)(0.8)8.0 
Net current-period OCI 2.7 3.9  2.8 (0.8)8.6 
Balance, September 29, 2024$(29.8)$(64.5)$(3.6)$23.3 $(74.6)
Attributable to noncontrolling interests:
Balance, December 31, 2023$— $7.3 $— $— $7.3 
OCI before reclassifications — 3.2  — — 3.2 
Amounts reclassified from AOCI — (b)—  — — — 
Net current-period OCI — 3.2  — — 3.2 
Balance, September 29, 2024$— $10.5 $— $— $10.5 
(a)Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans (see Note 12).
(b)No amounts were reclassified to earnings.
(c)Amounts related to derivatives are included in sales, cost of goods sold or interest expense in the period or periods the hedged item affects earnings (see Note 9).
(d)Represents the net change in deferred tax asset valuation allowances on changes in AOCI balances between the balance sheet dates. The income tax provision for the year-to-date period ended September 29, 2024 includes $0.8 million of a tax benefit for the recognition of a stranded deferred tax valuation allowance that was associated with the Company’s interest rate swap due to its maturity (see Notes 9 and 13).
22

The changes in AOCI by component, net of tax, for the quarter ended October 1, 2023 were as follows (in millions):
Post-
retirement
benefit plans		Currency
translation
adjustment		DerivativesDeferred Tax Asset Valuation AllowanceTotal
Attributable to ATI:
Balance, July 2, 2023$(32.6)$(73.6)$(1.1)$20.0 $(87.3)
OCI before reclassifications — (7.1) (2.4)— (9.5)
Amounts reclassified from AOCI(a)1.0 (b)— (c)1.4 (d)— 2.4 
Net current-period OCI 1.0 (7.1) (1.0)— (7.1)
Balance, October 1, 2023$(31.6)$(80.7)$(2.1)$20.0 $(94.4)
Attributable to noncontrolling interests:
Balance, July 2, 2023$— $6.4 $— $— $6.4 
OCI before reclassifications — (2.1) — — (2.1)
Amounts reclassified from AOCI — (b)—  — — — 
Net current-period OCI — (2.1) — — $(2.1)
Balance, October 1, 2023$— $4.3 $— $— $4.3 
The changes in AOCI by component, net of tax, for the year-to-date period ended October 1, 2023 were as follows (in millions):
Post-
retirement
benefit plans		Currency
translation
adjustment		DerivativesDeferred Tax Asset Valuation AllowanceTotal
Attributable to ATI:
Balance, January 1, 2023$(34.7)$(70.1)$13.5 $23.9 $(67.4)
OCI before reclassifications — (10.6) (15.7)— (26.3)
Amounts reclassified from AOCI(a)3.1 (b)— (c)0.1 (d)(3.9)(0.7)
Net current-period OCI 3.1 (10.6) (15.6)(3.9)(27.0)
Balance, October 1, 2023$(31.6)$(80.7)$(2.1)$20.0 $(94.4)
Attributable to noncontrolling interests:
Balance, January 1, 2023$— $7.7 $— $— $7.7 
OCI before reclassifications — (3.4) — — (3.4)
Amounts reclassified from AOCI — (b)—  — — — 
Net current-period OCI — (3.4) — — $(3.4)
Balance, October 1, 2023$— $4.3 $— $— $4.3 
(a)Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans (see Note 12).
(b)No amounts were reclassified to earnings.
(c)Amounts related to derivatives are included in sales, cost of goods sold or interest expense in the period or periods the hedged item affects earnings (see Note 9).
(d)Represents the net change in deferred tax asset valuation allowances on changes in AOCI balances between the balance sheet dates.
Other comprehensive income (loss) amounts (OCI) reported above by category are net of applicable income tax expense (benefit) for each period presented. Income tax expense (benefit) on OCI items is recorded as a change in a deferred tax asset or liability. Amounts recognized in OCI include the impact of any deferred tax asset valuation allowances, when applicable. Foreign currency translation adjustments, including those pertaining to noncontrolling interests, are generally not adjusted for income taxes as they relate to indefinite investments in non-U.S. subsidiaries.

23

Reclassifications out of AOCI for the quarters and year-to-date periods ended September 29, 2024 and October 1, 2023 were as follows: 
 
Details about AOCI Components
(In millions)
Three months ended September 29, 2024Three months ended October 1, 2023Year-to-date
period ended
 September 29, 2024		Year-to-date period ended October 1, 2023Affected line item in the statements
of operations
Postretirement benefit plans
Prior service credit$0.1 0.1 $0.4 $0.4 (a) 
Actuarial losses(1.3)(1.5)(3.9)(4.5)(a) 
(1.2)(1.4)(3.5)(4.1)(c) Total before tax
(0.3)(0.4)(0.8)(1.0)Tax benefit (d)
$(0.9)$(1.0)$(2.7)$(3.1)Net of tax
Derivatives
Nickel and other raw material contracts$(1.9)$(0.5)$(3.3)$4.6 (b)
Natural gas contracts(1.8)(1.8)(6.5)(6.0)(b)
Foreign exchange contracts— 0.2 0.2 0.3 (b)
Interest rate swap— 0.3 1.6 1.0 (b)
(3.7)(1.8)(8.0)(0.1)(c)Total before tax
(0.9)(0.4)(1.9)— Tax expense (benefit) (d)
$(2.8)$(1.4)$(6.1)$(0.1)Net of tax
(a)Amounts are reported in nonoperating retirement benefit expense (see Note 12).
(b)Amounts related to derivatives, with the exception of the interest rate swap, are included in sales or cost of goods sold in the period or periods the hedged item affects earnings. Amounts related to the interest rate swap are included in interest expense in the same period as the interest expense on the Term Loan is recognized in earnings (see Note 9).
(c)For pre-tax items, positive amounts are income and negative amounts are expense in terms of the impact to net income. Tax effects are presented in conformity with ATI’s presentation in the consolidated statements of operations.
(d)These amounts exclude the impact of any deferred tax asset valuation allowances, when applicable.
Note 16. Commitments and Contingencies
The Company is subject to various domestic and international environmental laws and regulations that govern the discharge of pollutants and disposal of wastes, and which may require that it investigate and remediate the effects of the release or disposal of materials at sites associated with past and present operations. The Company could incur substantial cleanup costs, fines, and civil or criminal sanctions, third party property damage or personal injury claims as a result of violations or liabilities under these laws or noncompliance with environmental permits required at its facilities. The Company is currently involved in the investigation and remediation of a number of its current and former sites, as well as third party sites.
Environmental liabilities are recorded when the Company’s liability is probable and the costs are reasonably estimable. In many cases, however, the Company is not able to determine whether it is liable or, if liability is probable, to reasonably estimate the loss or range of loss. Estimates of the Company’s liability remain subject to additional uncertainties, including the nature and extent of site contamination, available remediation alternatives, the extent of corrective actions that may be required, and the number, participation, and financial condition of other potentially responsible parties (PRPs). The Company adjusts its accruals to reflect new information as appropriate. Future adjustments could have a material adverse effect on the Company’s consolidated results of operations in a given period, but the Company cannot reliably predict the amounts of such future adjustments.

24

At September 29, 2024, the Company’s reserves for environmental remediation obligations totaled approximately $12 million, of which $6 million was included in other current liabilities. The reserve includes estimated probable future costs of $3 million for federal Superfund and comparable state-managed sites; $7 million for formerly owned or operated sites for which the Company has remediation or indemnification obligations; and $2 million for owned or controlled sites at which Company operations have been or plan to be discontinued. The timing of expenditures depends on a number of factors that vary by site. The Company 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. The Company continues to evaluate whether it may be able to recover a portion of past and future costs for environmental liabilities from third parties and to pursue such recoveries where appropriate.
Based on currently available information, it is reasonably possible that costs for recorded matters may exceed the Company’s recorded reserves by as much as $16 million. Future investigation or remediation activities may result in the discovery of additional hazardous materials or potentially higher levels of contamination than discovered during prior investigation, and may impact costs associated with the success or lack thereof in remedial solutions. Therefore, future developments, administrative actions or liabilities relating to environmental matters could have a material adverse effect on the Company’s consolidated financial condition or results of operations and cash flows.
A number of other lawsuits, claims and proceedings have been or may be asserted against the Company relating to the conduct of its currently and formerly owned businesses, including those pertaining to product liability, environmental, health and safety matters and occupational disease (including as each relates to alleged asbestos exposure), as well as patent infringement, commercial, government contracting, construction, employment, employee and retiree benefits, taxes, environmental, and stockholder and corporate governance matters. While the outcome of litigation cannot be predicted with certainty, and some of these lawsuits, claims or proceedings may be determined adversely to the Company, management does not believe that the disposition of any such pending matters is likely to have a material adverse effect on the Company’s financial condition or liquidity, although the resolution in any reporting period of one or more of these matters could have a material adverse effect on the Company’s consolidated results of operations for that period.
Beginning in 2020, the U.S. government enacted various relief packages in response to the COVID-19 pandemic, one of which was the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act included, among other items, provisions relating to refundable employee retention payroll tax credits. The Company applied for these employee retention tax credits and recognized a portion of the benefit from these credits as they were received in the statement of operations in the fiscal year ended December 31, 2022. Due to the complex nature of the employee retention credit computations, the Company deferred recognition of a portion of the tax credits pending the completion of any potential audit or examination, or the expiration of the related statute of limitations. During the quarter and year-to-date period ended September 29, 2024, the Company recognized a benefit of $4.8 million and $13.4 million, respectively, in cost of sales on the consolidated statement of operations due to the expiration of the statute of limitations for a portion of these credits. As of September 29, 2024, the Company has approximately $15 million of remaining deferred retention tax credits, of which the statute of limitations expire for $3 million in 2024 with the remaining expirations occurring in 2025 and 2027. There is pending legislation that could extend the statute of limitations, which would impact the timing of the expected recognition of the remaining credits if and when such legislation is passed.
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. Nesbit, Robin L. Rosewicz, George E. Poole and James E. Swartz, Jr., individually and as representatives of a class of participants and beneficiaries of the Allegheny Technologies Incorporated Pension Plan v. 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. (Case No. 2:24-cv-01214), both of which are filed in federal district court for the Western District of Pennsylvania. These lawsuits assert various claims associated with the Company’s October 2023 purchase of group annuity contracts to transfer a portion of its U.S. qualified defined benefit pension plan obligations to Athene Annuity and Life Company and Athene Annuity & Life Assurance of New York. The Company disputes and intends 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.
25


Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
ATI is a global manufacturer of technically advanced specialty materials and complex components. Our largest market is aerospace & defense, representing 61% of sales for the year-to-date period ended September 29, 2024, led by products for jet engines and airframes. Additionally, we have a strong presence in the specialty energy, medical and electronics markets. In aggregate, these markets represented 77% of our sales for the year-to-date period ended September 29, 2024. ATI is a market leader in manufacturing differentiated products that require our materials science capabilities and unique process technologies, including our new product development competence. Our capabilities range from cast/wrought and powder alloy development to final production of highly engineered finished components, including those used in latest generation jet engines and 3D-printed aerospace products.
ATI 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. Unless otherwise stated, references to years and quarters in this Quarterly Report on Form 10-Q relate to fiscal years and quarters, rather than calendar years and quarters.
Third quarter 2024 sales increased 2.5% to $1.05 billion, compared to $1.03 billion of sales for the third quarter 2023, as increases in sales to the aerospace & defense, specialty energy, medical and electronics markets were offset by continued softness in certain industrial markets, particularly conventional energy. The increase in the aerospace & defense market was a result of sales increases in commercial jet engines and defense, partially offset by a decline in airframe sales. Total aerospace & defense sales were $653.8 million, or 62% of total sales for the third quarter 2024, compared to $625.8 million, or 61% of total sales for the third quarter 2023. Gross profit for the third quarter of 2024 was $224.8 million, or 21.4% of sales, compared to $194.6 million, or 19.0% of sales for the third quarter 2023. Third quarter 2024 gross profit includes a benefit of $4.8 million related to the recognition of previously deferred employee retention tax credits. The Company recognized $2.9 million of the benefit in the HPMC segment and $1.9 million in the AA&S segment. Third quarter 2024 gross profit also includes restructuring and other credits/charges consisting of $2.5 million of start-up costs, partially offset by a $0.4 million credit for adjustments to inventory reserves related to the Company’s ongoing European restructuring. Third quarter 2023 includes restructuring and other credits/charges consisting of $2.8 million of start-up costs and $1.9 million of costs associated with an unplanned outage at our Lockport, NY melt facility. These restructuring and other credits/charges were excluded from segment EBITDA.
Selling and administrative expenses for the third quarter 2024 include $1.7 million of transaction costs, which are excluded from adjusted EBITDA. Restructuring charges for the third quarter of 2024 were $0.5 million representing severance for the involuntary reduction of several domestic employees, compared to a credit of $0.5 million for the third quarter of 2023, primarily for revised workforce reduction estimates.
Interest expense increased to $28.0 million in the third quarter of 2024 compared to $23.8 million in the third quarter of 2023 as a result of the issuance in August 2023 of $425 million aggregate principal amount of 7.25% Senior Notes due 2030 (2030 Notes). During the third quarter of 2024, we notified holders of the $291.4 million outstanding principal amount of our 3.5% Convertible Notes due 2025 (2025 Convertible Notes) that the 2025 Convertible Notes would be redeemed prior to their maturity date. The holders of the outstanding 2025 Convertible Notes had the right to convert the principal amount of the notes into shares of ATI’s common stock prior to the redemption date. As a result, $291.0 million principal amount of the outstanding notes was converted to 18.8 million shares of ATI common stock, with the remaining $0.4 million of outstanding principal balance that was not tendered for conversion paid in cash. We also received $76.1 million in cash in settlement of the capped call transactions initiated as part of the issuance of the 2025 Convertible Notes.
Other nonoperating income for the third quarter 2024 includes a $3.7 million gain on the sale of certain oil and gas rights.
Third quarter 2024 pre-tax income was $114.9 million, compared to $99.0 million in the prior year period. Our effective tax rate was 24.6%, resulting in an income tax provision of $28.3 million for the third quarter of 2024. Our effective tax rate was 4.9%, resulting in an income tax provision of $4.9 million for the third quarter of 2023. The effective tax rate for the third quarter of 2023 was impacted by the net valuation allowance position in the U.S. and our foreign earnings. Net income attributable to ATI was $82.7 million, or $0.57 per share, in the third quarter of 2024, compared to $90.2 million, or $0.62 per share, for the third quarter of 2023.
26

Adjusted EBITDA was $185.7 million, or 17.7% of sales, for the third quarter 2024, and $162.6 million, or 15.9% of sales, for the prior year third quarter. EBITDA and Adjusted EBITDA are measures we use to analyze the performance and results of our business. Further, we believe these measures are useful to investors and industry analysts because these measures are commonly used to analyze companies on the basis of operating performance, leverage and liquidity. EBITDA and Adjusted EBITDA are non-GAAP measures and are not intended to represent, and should not be considered more meaningful than, or as alternatives to, a measure of operating performance as determined in accordance with U.S. generally accepted accounting principles (U.S. GAAP). We define EBITDA as income from continuing operations before interest and income taxes, plus depreciation and amortization, goodwill impairment charges and debt extinguishment charges. We define Adjusted EBITDA as EBITDA excluding significant non-recurring charges or credits, restructuring and other charges/credits, 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. EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow for management’s discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments and capital expenditures. See the Liquidity and Financial Condition section of Management’s Discussion and Analysis for a reconciliation of amounts reported under U.S. GAAP to these non-GAAP measures.
Sales to the HPMC and AA&S segments increased 2% and 3%, respectively, in the third quarter of 2024, compared to the third quarter of 2023, primarily due to increased demand in the aerospace & defense market. Sales of aerospace & defense products increased 4% and 5% for the HPMC and AA&S business segments, respectively, in the third quarter 2024 compared to the third quarter 2023. The increase in the aerospace & defense market for both segments was a result of sales increases in commercial jet engines and defense, partially offset by a decline in airframe sales.
Results for the year-to-date period ended September 29, 2024 included sales of $3.19 billion and income before tax of $311.1 million, compared to sales of $3.11 billion and income before tax of $287.1 million for the comparable 2023 period. Our results for the year-to-date 2024 period reflect increased sales to the aerospace & defense, medical and electronics markets, partially offset by softness in certain industrial markets, particularly the conventional energy market. Our gross profit was $649.6 million, or 20.4% of sales, for the year-to-date period ended September 29, 2024, compared to $596.9 million, or 19.2% of sales for the comparable 2023 period. Year-to-date 2024 gross profit includes a benefit of $13.4 million related to the recognition of previously deferred employee retention tax credits. The Company recognized $6.4 million of the benefit in the HPMC segment and $7.0 million in the AA&S segment. Year-to-date 2024 gross profit also includes restructuring and other credits/charges consisting of $7.2 million of start-up costs and $5.1 million of charges for inventory write-downs related to the Company’s ongoing European restructuring. Year-to-date 2023 gross profit includes restructuring and other credits/charges consisting of $8.5 million of start-up costs, $2.0 million of charges primarily for asset write-offs for the closure of our Robinson, PA operations, and $1.9 million of costs associated with an unplanned outage at our Lockport, NY melt facility. These restructuring and other credits/charges were excluded from segment EBITDA.
Selling and administrative expenses for the year-to-date period of 2024 include $1.7 million of transaction costs, which are excluded from adjusted EBITDA. Restructuring charges were a credit of $1.2 million for the year-to-date period ended September 29, 2024 primarily for revised workforce reduction estimates, partially offset by the charge in the third quarter 2024 discussed above for the involuntary reduction of several domestic employees. The year-to-date period ended October 1, 2023 included restructuring charges of $2.2 million primarily for involuntary reductions across ATI’s domestic operations, partially offset by a credit in the third quarter 2023 discussed above for a reduction in severance-related reserves. Year-to-date 2024 results include a $2.3 million gain on the sale of assets for our idled Houston, PA facility, which is reported in gain/loss on asset sales and sales of businesses, net.
Interest expense increased to $83.0 million in the year-to-date period ended September 29, 2024 compared to $65.0 million in the year-to-date period ended October 1, 2023 as a result of the issuance in August 2023 of the 2030 Notes.
Other nonoperating income for the 2024 year-to-date period includes a $3.7 million gain on the sale of certain oil and gas rights.
Our pre-tax income was $311.1 million in the year-to-date period ended September 29, 2024, compared to $287.1 million in the prior year period. Our effective tax rate was 22.7%, resulting in an income tax provision of $70.5 million for the year-to-date period ended September 29, 2024. Our effective tax rate was 4.5%, resulting in an income tax provision of $12.9 million for the year-to-date period ended October 1, 2023. The effective tax rate for the year-to-date period ended September 29, 2024 includes discrete tax benefits of $4.5 million inclusive of $3.3 million for share-based compensation as well as the impact from the recognition of a stranded deferred tax valuation allowance in accumulated other comprehensive loss due to the maturity of our interest rate swap. The effective tax rate for the year-to-date period ended October 1, 2023 was impacted by the net valuation allowance position in the U.S. and our foreign earnings. Net income attributable to ATI was $230.7 million, or $1.61 per share, in the year-to-date period ended September 29, 2024, compared to a net income attributable to ATI of $265.1 million, or $1.82 per share, for the prior year period.
27

Year-to-date 2024 period sales increased 7% in the HPMC business segment and decreased 2% in the AA&S business segment compared to the year-to-date 2023 period. In aggregate, ATI’s aerospace & defense market sales increased 8% in the year-to-date period 2024 compared to the year-to-date 2023 period, reflecting increases in sales of commercial aerospace jet engine and airframe products as well as defense products. Sales to the aerospace & defense market in the HPMC segment were 8% higher than the year-to-date period 2023, reflecting increases in sales of commercial aerospace jet engine and airframe products as well as defense products. The decline in the AA&S segment reflects continued softness in certain general industrial end markets, particularly conventional energy, which were partially offset by a 7% increase in aerospace & defense sales and a 42% increase in medical market sales.
Comparative information regarding our overall revenues (in millions) by end market and their respective percentages of total revenues for the quarters and year-to-date periods ended September 29, 2024 and October 1, 2023 is shown below.

 Quarter endedQuarter ended
MarketsSeptember 29, 2024October 1, 2023
Aerospace & Defense:
     Jet Engines- Commercial$365.9 35 %$329.4 32 %
     Airframes- Commercial180.8 17 %203.6 20 %
     Defense107.1 10 %92.8 9 %
     Total Aerospace & Defense$653.8 62 %$625.8 61 %
Energy:
     Conventional Energy72.6 7 %87.0 8 %
     Specialty Energy69.9 7 %61.9 6 %
     Total Energy142.5 14 %148.9 14 %
Automotive63.8 6 %48.1 5 %
Medical53.1 5 %47.5 5 %
Electronics49.1 5 %44.8 4 %
Construction/Mining41.8 4 %40.0 4 %
Food Equipment & Appliances12.9 1 %16.2 2 %
Other34.2 3 %54.3 5 %
Total$1,051.2 100 %$1,025.6 100 %

 Year-to-date period endedYear-to-date period ended
MarketsSeptember 29, 2024October 1, 2023
Aerospace & Defense:
     Jet Engines- Commercial$1,029.9 32 %$981.2 32 %
     Airframes- Commercial581.7 18 %537.7 17 %
     Defense341.8 11 %289.4 9 %
     Total Aerospace & Defense$1,953.4 61 %$1,808.3 58 %
Energy:
     Conventional Energy241.2 8 %325.8 10 %
     Specialty Energy202.6 6 %212.8 7 %
     Total Energy443.8 14 %538.6 17 %
Automotive190.6 6 %160.3 5 %
Medical173.9 6 %124.4 4 %
Electronics142.8 4 %115.2 4 %
Construction/Mining113.2 4 %128.8 4 %
Food Equipment & Appliances41.0 1 %58.6 2 %
Other130.7 4 %175.5 6 %
Total$3,189.4 100 %$3,109.7 100 %
For the third quarter 2024, international sales decreased to $426 million, or 40% of total sales, from $469 million, or 46% of total sales, in the third quarter 2023. ATI’s international sales are mostly to the aerospace, energy, electronics, automotive and medical markets.
28

Comparative information regarding our major products based on their percentages of revenues are shown below. HRPF conversion service sales in the AA&S segment are excluded from this presentation.
Quarter endedYear-to-date period ended
September 29, 2024October 1, 2023September 29, 2024October 1, 2023
Nickel-based alloys and specialty alloys46 %47 %45 %50 %
Precision forgings, castings and components20 %18 %19 %17 %
Titanium and titanium-based alloys17 %19 %18 %16 %
Precision rolled strip products9 %9 %9 %9 %
Zirconium and related alloys8 %7 %9 %8 %
Total100 %100 %100 %100 %
Segment EBITDA for the third quarter 2024 was $196.8 million, or 18.7% of sales, compared to segment EBITDA of $178.7 million, or 17.4% of sales, for the third quarter of 2023. Segment EBITDA for year-to-date period of 2024 was $567.5 million, or 17.8% of sales, compared to segment EBITDA of $527.8 million, or 17.0% of sales, for the year-to-date period of 2023. 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, 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. Results on our management basis of reporting were as follows (in millions):

Quarter endedYear-to-date period ended
 September 29, 2024October 1, 2023September 29, 2024October 1, 2023
Sales:
High Performance Materials & Components$552.4 $539.5 $1,644.3 $1,537.7 
Advanced Alloys & Solutions498.8 486.1 1,545.1 1,572.0 
Total external sales$1,051.2 $1,025.6 $3,189.4 $3,109.7 
EBITDA:
High Performance Materials & Components$123.2 $117.2 $334.6 $308.5 
% of Sales22.3 %21.7 %20.4 %20.1 %
Advanced Alloys & Solutions73.6 61.5 232.9 219.3 
% of Sales14.8 %12.7 %15.1 %14.0 %
Total segment EBITDA$196.8 $178.7 $567.5 $527.8 
% of Sales18.7 %17.4 %17.8 %17.0 %
Corporate expenses(13.4)(12.5)(49.9)(47.1)
Closed operations and other income (expense)2.3 (3.6)1.7 (6.8)
ATI Adjusted EBITDA185.7 162.6 519.3 473.9 
Depreciation & amortization(38.5)(35.6)(112.4)(106.6)
Interest expense, net(28.0)(23.8)(83.0)(65.0)
Restructuring and other charges(4.3)(4.2)(12.8)(14.6)
Loss on asset sales and sales of businesses, net— — — (0.6)
Income before income taxes114.9 99.0 311.1 287.1 
Income tax provision28.3 4.9 70.5 12.9 
Net income 86.6 94.1 240.6 274.2 
Less: Net income attributable to noncontrolling interests3.9 3.9 9.9 9.1 
Net income attributable to ATI$82.7 $90.2 $230.7 $265.1 
As part of managing the performance of our business, we focus on Managed Working Capital, which we define as gross accounts receivable, short-term contract assets and gross inventories, less accounts payable and short-term contract liabilities. We exclude the effects of inventory valuation reserves and reserves for uncollectible accounts receivable when computing this non-GAAP performance measure, which is not intended to replace Working Capital or to be used as a measure of liquidity.
29

We employ several strategies to actively manage our Managed Working Capital, seeking to effectively balance the need to maintain appropriate levels of Managed Working Capital to support our growth and operations, while deploying our cash efficiently. Our strategies to actively manage our Managed Working Capital include, but are not limited to, taking advantage of favorable customer and supplier payment terms, participating in customer and supplier financing programs, managing the timing of purchases of raw materials, and leveling manufacturing process throughput and shipping to limit periodic increases in Managed Working Capital. We assess Managed Working Capital performance as a percentage of the prior three months annualized sales to evaluate the asset intensity of our business.
At September 29, 2024, Managed Working Capital increased as a percentage of annualized sales to 40.0% compared to 31.1% at December 31, 2023. The increase in Managed Working Capital as a percentage of annualized sales was primarily due to increases in inventory and accounts receivable. Days sales outstanding, which measures actual collection timing for accounts receivable, worsened by 18% as of September 29, 2024 compared to year end 2023. Gross inventory turns, which measures how many times we turn over our inventory relative to cost of sales in a year, worsened by 19% as of September 29, 2024 compared to year end 2023. 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, however, during the third quarter of 2024, short-term uncertainty within our customer base, especially for commercial airframe products, unplanned outages and delayed shipments due to Hurricane Helene resulted in an increase in inventory levels. In addition, these factors resulted in an increase in accounts receivable due to the timing of sales, which were weighted in the latter part of the quarter.
The computations of Managed Working Capital at September 29, 2024 and December 31, 2023, reconciled to the financial statement line items as computed under U.S. GAAP, were as follows. The September 29, 2024 amounts include management working capital balances that are classified as held for sale.
September 29,December 31,
(In millions)20242023
Accounts receivable$730.2 $625.0 
Short-term contract assets90.5 59.1 
Inventory1,414.5 1,247.5 
Accounts payable(528.5)(524.8)
Short-term contract liabilities(146.5)(163.6)
Subtotal1,560.2 1,243.2 
Allowance for doubtful accounts2.6 3.2 
Inventory valuation reserves71.7 75.5 
Net managed working capital held for sale47.3 — 
Managed working capital$1,681.8 $1,321.9 
Annualized prior 3 months sales$4,205.1 $4,255.8 
Managed working capital as a % of annualized sales40.0 %31.1 %
Business Segment Results
High Performance Materials & Components Segment
Third quarter 2024 sales were $552.4 million, an increase of 2% compared to the third quarter 2023, primarily due to a 4% increase in sales to the aerospace & defense market, as well as a 29% increase in sales to the specialty energy market. The increase in aerospace & defense sales was primarily due to increases in commercial jet engine sales of 9% and defense sales of 24%, partially offset by a 19% decline in commercial airframe sales. Overall aerospace & defense market sales were 86% of total HPMC sales in the third quarter of 2024.

30

Comparative information for our HPMC segment revenues (in millions) by market and their respective percentages of the segment’s overall revenues for the quarters ended September 29, 2024 and October 1, 2023 is as follows: 
 Quarter endedQuarter ended
MarketsSeptember 29, 2024October 1, 2023
Aerospace & Defense:
Jet Engines- Commercial$341.9 62 %$312.5 58 %
Airframes- Commercial84.1 15 %104.0 20 %
Defense48.9 9 %39.7 7 %
Total Aerospace & Defense474.9 86 %456.2 85 %
Energy:
       Conventional Energy2.4 — %2.5 — %
       Specialty Energy26.3 5 %20.2 4 %
       Total Energy28.7 5 %22.7 4 %
Medical28.6 5 %28.9 5 %
Construction/Mining4.9 1 %7.7 1 %
Other15.3 3 %24.0 5 %
Total$552.4 100 %$539.5 100 %
International sales represented 48% of total segment sales for the third quarter 2024, compared to 55% in the prior year period. Comparative information for the HPMC segment’s major product categories, based on their percentages of revenue for the quarters ended September 29, 2024 and October 1, 2023, is as follows: 

Quarter ended
 September 29, 2024October 1, 2023
Nickel-based alloys and specialty alloys43 %42 %
Precision forgings, castings and components36 %33 %
Titanium and titanium-based alloys21 %24 %
Precision rolled strip products— %1 %
Total 100 %100 %
Segment EBITDA in the third quarter 2024 was $123.2 million, or 22.3% of total sales, compared to $117.2 million, or 21.7% of total sales, for the third quarter 2023. The increase in segment EBITDA, as a percentage of sales, was primarily due to improved sales mix. The third quarter of 2024 included $2.9 million of benefits related to the recognition of previously deferred employee retention tax credits, which were mostly offset by higher maintenance and outsourcing costs.
Sales for the year-to-date period ended September 29, 2024 were $1.64 billion, an increase of 7% compared to the year-to-date period ended October 1, 2023, primarily due to strong demand in aerospace & defense market as well as increased medical market sales, which were up 38% compared to the 2023 comparable period. Sales to the commercial aerospace market increased 7%, as airframe sales increased 9% and commercial jet engine sales increased 6%, and sales to the defense market increased 22%. Sales to the energy markets decreased 10%, mainly due to lower specialty energy sales.
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Comparative information for our HPMC segment revenues (in millions) by market and their respective percentages of the segment’s overall revenues for the year-to-date periods ended September 29, 2024 and October 1, 2023 is as follows:

 Year-to-date period endedYear-to-date period ended
MarketsSeptember 29, 2024October 1, 2023
Aerospace & Defense:
Jet Engines- Commercial$970.6 59 %$914.2 59 %
Airframes- Commercial263.5 16 %242.0 16 %
Defense160.9 10 %131.6 9 %
Total Aerospace & Defense1,395.0 85 %1,287.8 84 %
Medical97.5 6 %70.7 5 %
Energy:
       Conventional Energy8.3 1 %8.6 — %
       Specialty Energy67.0 4 %75.0 5 %
       Total Energy75.3 5 %83.6 5 %
Construction/Mining19.9 1 %26.9 2 %
Other56.6 3 %68.7 4 %
Total$1,644.3 100 %$1,537.7 100 %
International sales represented 52% of total segment sales for the 2024 year-to-date period. Comparative information for the HPMC segment’s major product categories, based on their percentages of revenue for the year-to-date periods ended September 29, 2024 and October 1, 2023, is as follows:
Year-to-date period ended
 September 29, 2024October 1, 2023
Nickel-based alloys and specialty alloys41 %45 %
Precision forgings, castings and components36 %33 %
Titanium and titanium-based alloys23 %21 %
Precision rolled strip products— %1 %
Total 100 %100 %
Segment EBITDA in the 2024 year-to-date period increased to $334.6 million, or 20.4% of total sales, compared to $308.5 million, or 20.1% of total sales, for the 2023 year-to-date period. Results in the 2024 year-to-date period included $6.4 million of benefits related to the recognition of previously deferred employee retention tax credits, which were partially offset by higher incentive compensation, maintenance and outsourcing costs.
Despite unplanned outages in third quarter 2024, the deferral of certain customer orders, and shipment delays due to Hurricane Helene, HPMC results for the first nine months of 2024 reflected year-over-year improved operating leverage as we continued to experience increasing demand from the aerospace & defense market. We continue to invest to meet expected demand and capitalize on market opportunities, including the continuation of our titanium melt expansion in Richland, Washington. Furthermore, our commitment to continuous improvement is resulting in adjustments to our work-flow processes to de-bottleneck our critical operations. We believe that these investments, strong backlog and our LTAs with aerospace market OEMs for our specialty materials, including powders, parts and components, position the HPMC segment for profitable growth for the next several years. Although the aerospace market OEMs have experienced near-term challenges and delays in their estimated production ramps, we believe the backlog of commercial aircraft, increasing requirements for maintenance, repair, and operations, and the current OEM production forecasts support our long-term growth expectations in this end market.
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Advanced Alloys & Solutions Segment
Third quarter 2024 sales were $498.8 million, an increase of 3% compared to the third quarter 2023, primarily due a 5% increase in aerospace & defense products and 32% increase in medical market sales, partially offset by continued softness in certain general industrial end markets, particularly conventional energy. The increase in aerospace & defense sales was primarily due to higher commercial jet engine sales of 42% and defense sales of 9%, partially offset by a 3% decline in commercial airframe sales.
Comparative information regarding our AA&S segment revenues (in millions) by market and their respective percentages of the segment’s overall revenues for the quarters ended September 29, 2024 and October 1, 2023 is shown below.
 Quarter endedQuarter ended
MarketsSeptember 29, 2024October 1, 2023
Aerospace & Defense:
Jet Engines- Commercial$24.0 5 %$16.9 4 %
Airframes- Commercial96.7 19 %99.6 20 %
Defense58.2 12 %53.1 11 %
Total Aerospace & Defense178.9 36 %169.6 35 %
Energy:
       Conventional Energy70.2 14 %84.5 17 %
       Specialty Energy43.6 9 %41.7 9 %
       Total Energy113.8 23 %126.2 26 %
Automotive59.2 12 %40.9 8 %
Electronics49.1 10 %44.2 9 %
Construction/Mining36.9 7 %32.3 7 %
Medical24.5 5 %18.6 4 %
Food Equipment & Appliances12.9 2 %16.2 3 %
Other23.5 5 %38.1 8 %
Total$498.8 100 %$486.1 100 %
International sales represented 32% of total segment sales for the third quarter of 2024, compared to 35% in the prior year’s third quarter. Comparative information regarding the AA&S segment’s major product categories, based on their percentages of revenue for the quarters ended September 29, 2024 and October 1, 2023, are presented in the following table. HRPF conversion service sales are excluded from this presentation.
Quarter ended
 September 29, 2024October 1, 2023
Nickel-based alloys and specialty alloys50 %52 %
Precision rolled strip products21 %19 %
Zirconium and related alloys17 %16 %
Titanium and titanium-based alloys12 %13 %
Total100 %100 %
Segment EBITDA was $73.6 million, or 14.8% of sales, for the third quarter 2024, compared to segment EBITDA of $61.5 million, or 12.7% of sales, for the third quarter 2023. The margin increase compared to the prior year was primarily due to a favorable sales mix, as growth in exotic alloys offset weaker demand for nickel-based alloys. Results in the third quarter of 2024 included $1.9 million of benefits related to the recognition of previously deferred employee retention tax credits, which were offset by higher maintenance costs.
Sales for the year-to-date period ended September 29, 2024 were $1.55 billion, a decrease of 2% compared to the year-to-date period ended October 1, 2023, as continued softness in certain general industrial end markets, especially conventional energy, was partially offset by a 7% increase in sales of aerospace & defense products, 23% increase in electronics sales, and 42% increase in medical market sales.


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Comparative information regarding our AA&S segment revenues (in millions) by market and their respective percentages of the segment’s overall revenues for the year-to-date periods ended September 29, 2024 and October 1, 2023 is shown below.
 Year-to-date period endedYear-to-date period ended
MarketsSeptember 29, 2024October 1, 2023
Aerospace & Defense:
Jet Engines- Commercial$59.3 4 %$67.0 4 %
Airframes- Commercial318.2 20 %295.7 19 %
Defense180.9 12 %157.8 10 %
Total Aerospace & Defense558.4 36 %520.5 33 %
Energy:
       Conventional Energy232.9 15 %317.2 20 %
       Specialty Energy135.6 9 %137.8 9 %
       Total Energy368.5 24 %455.0 29 %
Automotive177.2 11 %140.8 9 %
Electronics139.8 9 %113.4 7 %
Construction/Mining93.3 6 %101.9 6 %
Medical76.4 5 %53.7 4 %
Food Equipment & Appliances41.0 3 %58.6 4 %
Other90.5 6 %128.1 8 %
Total$1,545.1 100 %$1,572.0 100 %
International sales represented 33% of total segment sales for the year-to-date period ended September 29, 2024. Comparative information regarding the AA&S segment’s major product categories, based on their percentages of revenue for the year-to-date periods ended September 29, 2024 and October 1, 2023, are presented in the following table. HRPF conversion service sales are excluded from this presentation.
Year-to-date period ended
 September 29, 2024October 1, 2023
Nickel-based alloys and specialty alloys50 %56 %
Precision rolled strip products19 %18 %
Zirconium and related alloys18 %15 %
Titanium and titanium-based alloys13 %11 %
Total100 %100 %
Segment EBITDA was $232.9 million, or 15.1% of sales, for the year-to-date period ended September 29, 2024, compared to segment EBITDA of $219.3 million, or 14.0% of sales, for the year-to-date period ended October 1, 2023. The margin increase compared to the prior year was primarily due to a favorable sales mix, as growth in titanium mill products and exotic alloys offset weaker demand for nickel-based alloys. Results for the year-to-date period ended September 29, 2024 included $7.0 million of benefits related to the recognition of previously deferred employee retention tax credits, which were partially offset by higher incentive compensation and maintenance costs.
While unplanned outages and the deferral of certain customer orders impacted third quarter 2024, we continue to expect margin expansion within this segment through 2024 with improved sales mix and improving operating performance. We have increased capacity at our titanium melt shop in Albany, Oregon in the first nine months of fiscal year 2024, and expect to reach full production capacity at that facility in the fourth quarter of fiscal year 2024. While availability of raw materials for our melting processes remains adequate, changes in raw material prices may cause variability in profit margins based on the timing of index pricing mechanisms.
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Corporate Items
Corporate expenses for the third quarter of 2024 were $13.4 million, compared to $12.5 million for the third quarter 2023. For the year-to-date period ended September 29, 2024, corporate expenses were $49.9 million, compared to $47.1 million for the year-to-date period ended October 1, 2023. The current year increases reflect higher incentive compensation costs compared to the prior year periods.
Closed operations and other income/expense for the third quarter 2024 was income of $2.3 million, compared to expense of $3.6 million for the third quarter 2023. For the year-to-date period ended September 29, 2024, closed operations and other income/expense was income of $1.7 million, compared to expense of $6.8 million for the year-to-date period ended October 1, 2023. Closed operations and other income /expense for the quarter ended September 29, 2024 includes a $3.7 million gain on the sale of certain oil and gas rights, included within other income, net, on the consolidated statement of operations, and favorable foreign currency transaction impacts as compared to the prior year period. Closed operations and other income /expense for the year-to-date period ended September 29, 2024 also includes a $2.3 million gain on the sale of assets for our idled Houston, PA facility included within gain on asset sales and sales of businesses, net, on the consolidated statement of operations. The Company received $3.5 million of proceeds from this sale, which was reported as an investing activity on the consolidated statement of cash flows.
The following table shows depreciation & amortization for the relevant periods by each business segment.

Quarter endedYear-to-date period ended
September 29, 2024October 1, 2023September 29, 2024October 1, 2023
High Performance Materials & Components$18.6 $16.5 $52.8 $51.8 
Advanced Alloys & Solutions18.2 17.354.5 49.6 
Other1.7 1.85.1 5.2 
$38.5 $35.6 $112.4 $106.6 
Interest expense, net of interest income, in the third quarter 2024 increased to $28.0 million, compared to $23.8 million for the third quarter 2023. Interest expense, net of interest income, for the year-to-date period ended September 29, 2024 was $83.0 million, compared to $65.0 million for the year-to-date period ended October 1, 2023. These increases reflect the issuance of the 2030 Notes during the third quarter 2023. Capitalized interest reduced interest expense by $2.9 million in the third quarter 2024 and $3.3 million in the third quarter 2023. For the year-to-date periods ended September 29, 2024 and October 1, 2023, capitalized interest was $8.8 million and $10.0 million, respectively.
Restructuring and other charges of $4.3 million for the third quarter of 2024 include $2.5 million of start-up costs, partially offset by a $0.4 million credit for adjustments to inventory reserves related to our ongoing European restructuring, both of which are included within cost of sales on the consolidated statements of operations. These charges also include $1.7 million of transaction costs, which are included within selling and administrative expenses on the consolidated statements of operations, and restructuring charges of $0.5 million. Restructuring and other charges of $12.8 million for the year-to-date period ended September 29, 2024 include $7.2 million of start-up costs and $5.1 million of inventory write-downs related to our ongoing European restructuring, both of which are included within cost of sales on the consolidated statements of operations. These charges also include $1.7 million of transaction costs, which are included within selling and administrative expenses on the consolidated statements of operations, and restructuring credits of $1.2 million primarily for revised workforce reduction estimates.
Restructuring and other charges of $4.2 million for the third quarter of 2023 include $2.8 million of start-up costs and $1.9 million of costs associated with an unplanned outage at our Lockport, NY facility, both of which are included within cost of sales on the consolidated statements of operations. These charges were partially offset by a $0.5 million pre-tax credit for restructuring charges, primarily related to revised workforce reduction estimates. Restructuring and other charges of $14.6 million for the year-to-date period ended October 1, 2023 include $2.2 million of severance-related restructuring charges as well as $8.5 million of start-up costs, $1.9 million of costs associated with an unplanned outage at our Lockport, NY facility, and $2.0 million primarily for asset write-offs for the closure of our Robinson, PA operations, all of which are included within cost of sales on the consolidated statements of operations. These restructuring and other charges were excluded from segment and adjusted EBITDA. Cash payments associated with prior restructuring programs were $5.2 million in the year-to-date
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period ended September 29, 2024. Of the $8.8 million of remaining reserves associated with these restructuring actions as of September 29, 2024, all are expected to be paid within the next year.
Income Taxes
For the quarter and year-to-date period ended September 29, 2024, our effective tax rate was 24.6% and 22.7%, respectively, resulting in an income tax provision of $28.3 million and $70.5 million, respectively. Discrete tax benefits for the year-to-date period ended September 29, 2024 were $4.5 million, which includes $3.3 million for share-based compensation and the recognition of a stranded deferred tax valuation allowance in accumulated other comprehensive loss that was associated with our interest rate swap due to its maturity. The effective tax rates for the quarter and year-to-date period ended October 1, 2023 were impacted by the net valuation allowance position in the U.S. and our foreign earnings.
Liquidity and Financial Condition
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. 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 (Term Loan), and a swing loan facility of up to $60 million. The Term Loan has an interest rate of 2.0% above adjusted Secured Overnight Financing Rate (SOFR) and can be prepaid in increments of $25 million if certain minimum liquidity conditions are satisfied. In addition, we have the right to request an increase of up to $300 million in the maximum amount available under the revolving credit facility for the duration of the ABL.
The applicable interest rate for revolving credit borrowings under the ABL facility includes interest rate spreads based on available borrowing capacity that range between 1.25% and 1.75% for SOFR-based borrowings and between 0.25% and 0.75% for base rate borrowings. The ABL facility contains a financial covenant whereby we must maintain a fixed charge coverage ratio of not less than 1.00:1.00 after an event of default has occurred and is continuing or if the undrawn availability under the ABL revolving credit portion of the facility is less than the greater of (i) 10% of the then applicable maximum loan amount under the revolving credit portion of the ABL and the outstanding Term Loan balance, or (ii) $60.0 million. We were in compliance with the fixed charge coverage ratio as of September 29, 2024. Additionally, we must demonstrate minimum liquidity specified by the facility during the 90-day period immediately preceding the stated maturity date of our 6.95% Debentures due 2025 issued by our wholly owned subsidiary, Allegheny Ludlum LLC. The ABL also contains customary affirmative and negative covenants for credit facilities of this type, including limitations on our ability to incur additional indebtedness or liens or to enter into investments, mergers and acquisitions, dispositions of assets and transactions with affiliates, some of which are more restrictive, at any time during the term of the ABL when our fixed charge coverage ratio is less than 1.00:1.00 and our undrawn availability under the revolving portion of the ABL is less than the greater of (a) $120 million or (b) 20% of the sum of the maximum loan amount under the revolving credit portion of the ABL and the outstanding Term Loan balance.
As of September 29, 2024, there were no outstanding borrowings under the revolving portion of the ABL facility, and $31.7 million was utilized to support the issuance of letters of credit. At September 29, 2024, we had $407 million of cash and cash equivalents, and available additional liquidity under the ABL facility of approximately $551 million. We have no significant debt maturities until the fourth quarter 2025.
During the third quarter of 2024, we notified holders of the $291.4 million outstanding principal amount of our 2025 Convertible Notes that they would be redeemed prior to their maturity date. The holders of any outstanding 2025 Convertible Notes had the right to convert the principal amount of such notes into shares of ATI’s common stock prior to the maturity date. Any 2025 Convertible Notes not tendered for conversion prior to the maturity date were redeemed in cash at a redemption price equal to the principal amount, plus accrued and unpaid interest. As a result, $291.0 million principal amount of the outstanding notes was converted to 18.8 million shares of ATI common stock, with the remaining $0.4 million of outstanding principal balance that was not tendered for conversion paid in cash. We also settled the capped call transactions initiated as part of the issuance of the 2025 Convertible Notes for $76.1 million in cash, which is recorded as additional paid-in capital on the consolidated balance sheet and as a financing activity on the consolidated statement of cash flows.
In August 2023, we issued $425 million aggregate principal amount of 7.25% Senior Notes due 2030. Underwriting fees and other third-party expenses for the issuance of the 2030 Notes were $6.2 million, and are being amortized to interest expense over the 7-year term of the 2030 Notes. Net proceeds were $418.8 million from this issuance, of which $222 million was used to fund ATI’s U.S. qualified defined benefit pension plan in order to facilitate a pension derisking strategy (see below for further explanation), and the remaining proceeds were used for liquidity and general corporate purposes.
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In the first quarter 2023, we made $50 million in voluntary cash contributions to our U.S. qualified defined benefit pension plans to improve the plans’ funded position, and in the third quarter of 2023, we made an additional $222 million in voluntary cash contributions to our U.S. qualified defined benefit pension plans in order to fully fund remaining pension liabilities ahead of an annuity transaction that occurred in the fourth quarter of 2023 whereby we purchased group annuity contracts from an insurer covering approximately 85% of our U.S. qualified defined benefit pension plan obligations and transferred the pension obligations and associated assets for approximately 8,200 plan participants to the selected insurance company.
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. Repurchases under these programs are made in the open market or in privately negotiated transactions, with the amount and timing of repurchases depending on market conditions and corporate needs. Open market repurchases are structured to occur within the pricing and volume requirements of SEC Rule 10b-18. In the quarter and year-to-date period ended September 29, 2024, ATI used $40.0 million and $190.0 million, respectively, to repurchase 0.7 million and 4.1 million, respectively, of its common stock under the Share Repurchase Program. At September 29, 2024, ATI has utilized $40 million of the $700 million currently authorized under the Share Repurchase Program. In the quarter ended October 1, 2023, ATI used $45.0 million to repurchase 1.0 million shares of its common stock under the Share Repurchase Program, and in the year-to-date period ended October 1, 2023, ATI used $55.1 million to repurchase 1.2 million shares of its common stock under the Share Repurchase Program. The current Stock Repurchase Program has no time limit, does not obligate the Company to repurchase any specific number of shares, and may be modified, suspended, or terminated at any time by the Board of Directors without prior notice.
We believe that internally generated funds, current cash on hand and available borrowings under the ABL facility will be adequate to meet our liquidity needs. Based on current actuarial assumptions, we are not required to make any contributions to our pension plan during year 2024. Also, we do not expect to pay any significant U.S. federal or state income taxes in year 2024 due to net operating loss and tax attribute carryovers. If we needed to obtain additional financing using the credit markets, the cost and the terms and conditions of such borrowings may be influenced by our credit rating. In addition, we regularly review our capital structure, various financing alternatives and conditions in the debt and equity markets in order to opportunistically enhance our capital structure. In connection therewith, we may seek to refinance or retire existing indebtedness, incur new or additional indebtedness or issue equity or equity-linked securities, in each case, depending on market and other conditions. We have no off-balance sheet arrangements as defined in Item 303(a)(4) of SEC Regulation S-K.
In managing our overall capital structure, we focus on the ratio of net debt to Adjusted EBITDA, which we use as a measure of our ability to repay our incurred debt. We define net debt as the total principal balance of our outstanding indebtedness excluding deferred financing costs, net of cash, at the balance sheet date. See the explanations above for our definitions of Adjusted EBITDA and EBITDA, which are non-GAAP measures and are not intended to represent, and should not be considered more meaningful than, or as alternatives to, a measure of operating performance as determined in accordance with U.S. GAAP. Our ratio of net debt to Adjusted EBITDA (Adjusted EBITDA Leverage Ratio) measures net debt at the balance sheet date to Adjusted EBITDA as calculated on the trailing twelve-month period from this balance sheet date.

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Our Debt to Adjusted EBITDA Leverage and Net Debt to Adjusted EBITDA Leverage ratios improved in the third quarter of 2024 compared to year end 2023, resulting from higher earnings and lower debt as a result of the redemption of the 2025 Convertible Notes. The reconciliations of our Adjusted EBITDA Leverage Ratios to the balance sheet and income statement amounts as reported under U.S. GAAP are as follows:
Quarter endedTrailing 12-month period endedYear ended
September 29, 2024October 1, 2023September 29, 2024December 31, 2023
Net income attributable to ATI$82.7 $90.2 $376.4 $410.8 
Net income attributable to noncontrolling interests3.9 3.9 13.4 12.6 
Net income 86.6 94.1 389.8 423.4 
Interest expense 28.0 23.8 110.8 92.8 
Depreciation and amortization 38.5 35.6 151.9 146.1 
Income tax provision (benefit)28.3 4.9 (70.6)(128.2)
Pension remeasurement loss— — 26.8 26.8 
Pension settlement loss— — 41.7 41.7 
Restructuring and other charges4.3 4.2 29.6 31.4 
Loss on asset sales and sale of businesses, net— — — 0.6 
Adjusted EBITDA$185.7 $162.6 $680.0 $634.6 
Debt$1,883.4 $2,179.6 
Add: Debt issuance costs14.8 19.6 
Total debt1,898.2 2,199.2 
Less: Cash(406.6)(743.9)
Net debt$1,491.6 $1,455.3 
Total Debt to Adjusted EBITDA2.79 3.47 
Net Debt to Adjusted EBITDA2.19 2.29 
Cash Flow
Cash provided by operations was $26.3 million in the year-to-date period ended September 29, 2024, compared to cash used in operations of $331.3 million in the year-to-date period ended October 1, 2023, which included $272 million in contributions to the U.S. defined benefit pension plans. Both periods reflect higher accounts receivable and higher inventory balances due to increased operating levels, but these conditions impacted 2024 to a much lesser extent than 2023. Working capital balances, and consequently cash from operations, can fluctuate throughout any operating period based upon the timing of receipts from customers and payments to vendors. However, we actively manage our working capital to allow for the required flexibility to meet our strategic objectives. Other significant year-to-date 2024 operating cash flow items included payment of 2023 annual incentive compensation. Other significant year-to-date 2023 operating cash flow items included payment of 2022 annual incentive compensation.
Cash used in investing activities was $178.2 million in the year-to-date period ended September 29, 2024. Capital expenditures of $191.8 million primarily related to various growth projects to support the aerospace & defense and aero-like markets and included customer funded amounts of approximately $11.0 million. Proceeds from disposals of property, plant and equipment in the year-to-date period ended September 29, 2024 of $10.6 million largely relate to $3.7 million of proceeds on the sale of certain oil and gas rights and $3.5 million of proceeds received for the sale of assets for our idled Houston, PA facility. For the year-to-date period ended October 1, 2023, cash used in investing activities was $143.2 million, reflecting $147.3 million in capital expenditures. We expect to fund our capital expenditures with cash on hand and cash flow generated from our operations and, if needed, by using a portion of the ABL facility.
Cash used in financing activities was $166.2 million in the year-to-date period ended September 29, 2024, which included $190.0 million to repurchase 4.1 million shares of ATI stock under our Share Repurchase Program authorized by our Board of Directors offset by $76.1 million in cash received for the settlement of the capped call as a result of the redemption of the 2025 Convertible Notes. For the year-to-date period ended October 1, 2023, cash provided by financing activities was $323.4 million, and included $418.8 million of net proceeds from the issuance of the 2030 Notes during the third quarter of 2023 and $55.1 million of payments for the repurchase of 1.2 million shares of ATI stock under our repurchase programs authorized by our Board of Directors.
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At September 29, 2024, cash and cash equivalents on hand totaled $406.6 million, a decrease of $337.3 million from year end 2023. Cash and cash equivalents held by our foreign subsidiaries, excluding the $19.2 million of cash held for sale, was $178.3 million at September 29, 2024, of which $102.3 million was held by the STAL joint venture.
Critical Accounting Policies
Asset Impairment
We monitor the recoverability of the carrying value of our long-lived assets. An impairment charge is recognized when the expected net undiscounted future cash flows from an asset’s use (including any proceeds from disposition) are less than the asset’s carrying value, and the asset’s carrying value exceeds its fair value. Changes in the expected use of a long-lived asset group, and the financial performance of the long-lived asset group and its operating segment, are evaluated as indicators of possible impairment. Future cash flow value may include appraisals for property, plant and equipment, land and improvements, future cash flow estimates from operating the long-lived assets, and other operating considerations. In the fourth quarter of each year in conjunction with the annual business planning cycle, or more frequently if new material information is available, we evaluate the recoverability of idled facilities.
Goodwill is reviewed annually in the fourth quarter of each year for impairment or more frequently if impairment indicators arise. Other events and changes in circumstances may also require goodwill to be tested for impairment between annual measurement dates. At September 29, 2024, we had $227.2 million of goodwill on our consolidated balance sheet. All goodwill relates to reporting units in the HPMC segment.
Management concluded that none of ATI’s reporting units or long-lived assets experienced any triggering event that would have required an interim impairment analysis at September 29, 2024.
Income Taxes
The provision for income taxes includes deferred taxes resulting from temporary differences in income for financial and tax purposes using the liability method. Such temporary differences result primarily from differences in the carrying value of assets and liabilities. Future realization of deferred income tax assets requires sufficient taxable income within the carryback and/or carryforward period available under tax law. On a quarterly basis, we evaluate the realizability of our deferred tax assets.
The evaluation includes the consideration of all available evidence, both positive and negative, regarding historical operating results including recent years with reported losses, the estimated timing of future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards, and potential tax planning strategies which may be employed to prevent an operating loss or tax credit carryforward from expiring unused. In situations where a three-year cumulative loss condition exists, accounting standards limit the ability to consider projections of future results as positive evidence to assess the realizability of deferred tax assets. Valuation allowances are established when it is estimated that it is more likely than not that the tax benefit of the deferred tax asset will not be realized.
Retirement Benefits
In accordance with accounting standards, we determine the discount rate used to value pension plan liabilities as of the last day of each year. The discount rate reflects the current rate at which the pension liabilities could be effectively settled. In estimating this rate, we receive input from our actuaries regarding the rate of return on high quality, fixed income investments with maturities matched to the expected future retirement benefit payments. The effect on pension liabilities for changes to the discount rate, the difference between expected and actual plan asset returns, and the net effect of other changes in actuarial assumptions and experience are 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. This immediate recognition is in accordance with the accounting standards.
For ERISA (Employee Retirement Income Security Act of 1974, as amended) funding purposes, discount rates used to measure pension liabilities for U.S. qualified defined benefit plans are calculated on a different basis using an IRS-determined segmented yield curve, which currently results in a higher discount rate than the discount rate methodology required by accounting standards. Funding requirements are also affected by IRS-determined mortality assumptions, which may differ from those used under accounting standards.
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Other Critical Accounting Policies
A summary of other significant accounting policies is discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Note 1 to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2023.
The preparation of the financial statements in accordance with U.S. generally accepted accounting principles requires us to make judgments, estimates and assumptions regarding uncertainties that affect the reported amounts of assets and liabilities. Significant areas of uncertainty that require judgments, estimates and assumptions include the accounting for derivatives, retirement plans, income taxes, environmental and other contingencies, as well as asset impairment, inventory valuation and collectability of accounts receivable. We use historical and other information that we consider to be relevant to make these judgments and estimates. However, actual results may differ from those estimates and assumptions that are used to prepare our financial statements.
Pending Accounting Pronouncements
See Note 1 of the Notes to Consolidated Financial Statements for information on new and pending accounting pronouncements.
Forward-Looking and Other Statements
From time to time, we have made and may continue to make “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements in this report relate to future events and expectations and, as such, constitute forward-looking statements. Forward-looking statements include those containing such words as “anticipates,” “believes,” “estimates,” “expects,” “would,” “should,” “will,” “will likely result,” “forecast,” “outlook,” “projects,” and similar expressions. Forward-looking statements are based on management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which we are unable to predict or control, that may cause our actual results, performance or achievements to differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include: (a) material adverse changes in economic or industry conditions generally, including global supply and demand conditions and prices for our specialty materials and changes in international trade duties and other aspects of international trade policy; (b) material adverse changes in the markets we serve; (c) our inability to achieve the level of cost savings, productivity improvements, synergies, growth or other benefits anticipated by management, from strategic investments and the integration of acquired businesses; (d) volatility in the price and availability of the raw materials that are critical to the manufacture of our products; (e) declines in the value of our defined benefit pension plan assets or unfavorable changes in laws or regulations that govern pension plan funding; (f) labor disputes or work stoppages; (g) equipment outages; (h) the risks of business and economic disruption associated with extraordinary events beyond our control, such as war, terrorism, international conflicts, public health issues, such as epidemics or pandemics, natural disasters and climate-related events that may arise in the future; and (i) other risk factors summarized in our Annual Report on Form 10-K for the year ended December 31, 2023, and in other reports filed with the Securities and Exchange Commission. We assume no duty to update our forward-looking statements.
Item 3.Quantitative and Qualitative Disclosures About Market Risk
As part of our risk management strategy, we utilize derivative financial instruments, from time to time, to hedge our exposure to changes in energy and raw material prices, foreign currencies, and interest rates. We monitor the third-party financial institutions which are our counterparties to these financial instruments on a daily basis and diversify our transactions among counterparties to minimize exposure to any one of these entities. Fair values for derivatives were measured using exchange-traded prices for the hedged items including consideration of counterparty risk and the Company’s credit risk. Our exposure to volatility in interest rates is presently not material, as nearly all of our debt is at fixed interest rates.
Volatility of Interest Rates. We may enter into derivative interest rate contracts to maintain a reasonable balance between fixed- and floating-rate debt. The Company previously maintained a $50 million floating-for-fixed interest rate swap which converted a portion of the Term Loan to a 4.21% fixed rate, that matured during the quarter ended June 30, 2024. Any gain or loss associated with this hedging arrangement was included in interest expense. There are no outstanding derivative interest rate contracts at September 29, 2024.
Volatility of Energy Prices. Energy resource 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
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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. 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. 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 the 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. We use several approaches to minimize any material adverse effect on our results of operations or financial condition from volatile energy prices. These approaches include incorporating an energy surcharge on many of our products and using financial derivatives to reduce exposure to energy price volatility.
At September 29, 2024, the outstanding financial derivatives used to hedge our exposure to energy cost volatility consisted of natural gas hedges. Approximately 85% of our forecasted domestic requirements for natural gas for the remainder of 2024, approximately 55% for 2025, and approximately 10% for 2026. At September 29, 2024, the net mark-to-market valuation of these outstanding natural gas hedges was an unrealized pre-tax loss of $2.8 million, comprised of $0.1 million in prepaid expenses and other current assets, $0.1 million in other long-term assets, $2.7 million in other current liabilities and $0.3 million in other long-term liabilities on the balance sheet. For the quarter ended September 29, 2024, natural gas hedging activity increased cost of sales by $1.8 million.
Volatility of Raw Material Prices. We use raw material surcharge and index mechanisms to offset the impact of increased raw material costs; however, competitive factors in the marketplace can limit our ability to institute such mechanisms, and there can be a delay between the increase in the price of raw materials and the realization of the benefit of such mechanisms. For example, in 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. While we enter into raw materials futures contracts from time-to-time to hedge exposure to price fluctuations, such as for nickel, we cannot be certain that our hedge position adequately reduces exposure. 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.
The majority of our products are sold utilizing raw material surcharges and index mechanisms. However, as of September 29, 2024, we had entered into financial hedging arrangements, primarily at the request of our customers related to firm orders, for an aggregate notional amount of approximately 4 million pounds of nickel with hedge dates through 2025. The aggregate notional amount hedged is approximately 6% of a single year’s estimated nickel raw material purchase requirements. These derivative instruments are used to hedge the variability of a selling price that is based on the London Metal Exchange (LME) index for nickel, as well as to hedge the variability of the purchase cost of nickel based on this LME index. Any gain or loss associated with these hedging arrangements is included in sales or cost of sales, depending on whether the underlying risk being hedged was the variable selling price or the variable raw material cost, respectively. At September 29, 2024, the net mark-to-market valuation of our outstanding raw material hedges was an unrealized pre-tax loss of $2.2 million, comprised of $0.6 million in prepaid expenses and other current assets, $0.2 million in other long-term assets, and $3.0 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. We sometimes purchase foreign currency forward contracts that permit us to sell specified amounts of foreign currencies we expect to receive from our export sales for pre-established U.S. dollar amounts at specified dates. In addition, we may also hedge forecasted capital expenditures and designate cash balances held in foreign currencies as hedges of forecasted foreign currency transactions. At September 29, 2024, we had no material outstanding foreign currency forward contracts.
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. 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 $1.0 million and $0.5 million of income, net, for settled foreign currency forward contracts that were not designated as hedges during the third quarter and year-to-date period ended September 29, 2024, respectively, which offset foreign currency gains/losses in the relevant currency. We have no significant outstanding hedges that are not designated as of September 29, 2024.
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Item 4.Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of September 29, 2024, and they concluded that these disclosure controls and procedures are effective.

(b) Changes in Internal Controls
There was no change in our internal controls over financial reporting identified in connection with the evaluation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of September 29, 2024 conducted by our Chief Executive Officer and Chief Financial Officer, that occurred during the quarter ended September 29, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION
Item 1.Legal Proceedings
A number of lawsuits, claims and proceedings have been or may be asserted against the Company relating to the conduct of its currently or formerly owned businesses, including those pertaining to product liability, environmental, health and safety matters and occupational disease (including as each relates to alleged asbestos exposure), as well as patent infringement, commercial, government contracting, construction, employment, employee and retiree benefits, taxes, environmental, and stockholder and corporate governance matters. Certain of such lawsuits, claims and proceedings are described in our Annual Report on Form 10-K for the year ended December 31, 2023, and addressed in Note 16 to the unaudited interim financial statements included herein. While the outcome of litigation cannot be predicted with certainty, and some of these lawsuits, claims or proceedings may be determined adversely to the Company, management does not believe that the disposition of any such pending matters is likely to have a material adverse effect on the Company’s financial condition or liquidity, although the resolution in any reporting period of one or more of these matters could have a material adverse effect on the Company’s 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. Nesbit, Robin L. Rosewicz, George E. Poole and James E. Swartz, Jr., individually and as representatives of a class of participants and beneficiaries of the Allegheny Technologies Incorporated Pension Plan v. 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. (Case No. 2:24-cv-01214), both of which are filed in federal district court for the Western District of Pennsylvania. These lawsuits assert various claims associated with the Company’s October 2023 purchase of group annuity contracts to transfer a portion of its U.S. qualified defined benefit pension plan obligations to Athene Annuity and Life Company and Athene Annuity & Life Assurance of New York. The Company disputes and intends 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.
Item 1A.Risk Factors
The following is an update to, and should be read in conjunction with Item 1A. Risk Factors contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10- K for the year ended December 31, 2023, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Labor Matters. We have approximately 7,800 active employees, of which approximately 10% 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
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notice by the union. After termination, the union may authorize a strike. 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. 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. There can be no assurance that we will succeed in concluding collective bargaining agreements to replace those that expire. Our current CBAs with USW-represented active full-time employees at our Specialty Rolled Products business and certain employees at one facility included in our Specialty Alloys & Components business expire in February 2025.
Risks Associated with Current or Future Litigation and Claims. A number of lawsuits, claims and proceedings have been or may be asserted against us relating to the conduct of our currently and formerly owned businesses, including those pertaining to product liability, patent infringement, commercial disputes, government contracting, employment matters, employee and retiree benefits, taxes, environmental matters, health and safety and occupational disease, and stockholder and corporate governance matters. Due to the uncertainties of litigation, we can give no assurance that we will prevail on all claims made against us in the lawsuits that we currently face or that additional claims will not be made against us in the future. While the outcome of litigation cannot be predicted with certainty, and some of these lawsuits, claims or proceedings may be determined adversely to us, we do not believe that the disposition of any such pending matters is likely to have a material adverse effect on our financial condition or liquidity, although the resolution in any reporting period of one or more of these matters could have a material adverse effect on our results of operations for that period. Also, 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.
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. 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.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Set forth below is information regarding the Company’s stock repurchases during the period covered by this report, comprised of shares repurchased by ATI under the $700 million Share Repurchase Program authorized by the Company’s Board of Directors in September 2024 and shares repurchased by ATI from employees to satisfy employee-owed taxes on share-based compensation. The Company's current Stock Repurchase Program has no time limit, does not obligate the Company to repurchase any specific number of shares, and may be modified, suspended, or terminated at any time by the Board of Directors without prior notice.
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 ProgramsMaximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
July 1, 2024 - August 4, 20242,594 $55.20 — $— 
August 5, 2024 - September 1, 20243,273 $58.99 — $— 
September 2, 2024 - September 29, 2024673,927 $59.37 673,927 $660,000,006 
Total679,794 $59.35 673,927 $660,000,006 
(a) Includes shares repurchased by ATI from employees to satisfy employee-owed taxes on share based compensation.
(b) Share repurchases are inclusive of amounts for any relevant commissions.
(c) Excludes excise taxes incurred on share repurchases

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Item 5.Other Information

Rule 10b5-1 Plan Elections

During the quarter ended September 29, 2024, none of the Company’s directors or officers, as defined in Section 16 of the Securities Exchange Act of 1934, adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K of the Securities Exchange Act of 1934.


Item 6.Exhibits
(a) Exhibits
10.1
31.1
31.2
32.1
101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

*Management contract or compensatory plan or arrangement required to be filed as an Exhibit to this Report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ATI INC.
(Registrant)
 
Date:October 29, 2024By/s/ Donald P. Newman
 Donald P. Newman
 Executive Vice President, Finance and Chief Financial Officer
(Principal Financial Officer)
Date:October 29, 2024By/s/ Michael B. Miller
Michael B. Miller
Vice President, Controller and Chief Accounting Officer
(Principal Accounting Officer)
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