Allegheny Technologies Incorporated (ATI): Comprehensive Overview

Company Profile

History and Background:

- Founded: 1939 as Allegheny Ludlum Steel Corporation, through the merger of Allegheny Steel Company and Ludlum Steel Company. - Headquarters: Pittsburgh, Pennsylvania, USA. - Business: Leading producer of specialty materials and components including stainless steel, titanium, nickel & cobalt based alloys for aerospace, defense, energy, automotive, chemical and electronics industries.

Core Business Areas:

- High Performance Materials & Components Division: Offers high-temperature stainless steel, nickel, cobalt & titanium-based alloys to aerospace, defense, energy & industrial markets globally. - Engineered Products Segment & Flat-Rolled Products Div.: Offers stainless, carbon, electrical steel sheets and strip, bars in North America & automotive steel stampings in Mexico. - Finishing Solutions Segment - ATI Forged Products Div.: Offers forged products including bars, rings, shapes, forgings from its North Amerca locations.

Executive Leadership/Structure:

- Current CEO - Robert S Wetherbee Jr.: Joined AT 9-Jan-12, with prior 31 years' experience in the Steel, Metals & Minerals Ind - Chairman, Board Member - Ronald D. Ritchie. - Senior Vice President & Treasurer (12-Oct-22), Michael L. Kinstl, 26 years with ATI. Others, not full board- 6 EVPs, plus General Counsel/VP - Law.

Top Products and Market Share

**Key Products - **Specialty Metals; Nickel Alloys - INCONEL,**MONEL® alloys (High performance for aerospace; medical etc).

Market- ** Global Nickel alloy: ATI 17%, Carpenter Tech-8%, Aubert& Duvall~7% Global stainless steel flat prod (cold-finished); AT 9%

Performance vs competition- In aerospace/specialty, strong. Cold-finished stainless - mixed, trailing cold roll/plate players.**

Total Addressable Market
86-84.7B $ 2027 Nickel-Based; Specialty alloys are smaller segment within, yet ATI leader 186.13B- 261.79B stainless (hot & cold rolled 22/F.Y.), incl ATs flat-products market. (Source of these 3: Statista).

**Financial **

2ndQ FY28/F (vs 88 days earlier);

- revenue-1.874B (-771M). Net income-532M(728M), due partly to 476M inventory step-up due to acquisition; EPS-.63(-62); Op inc 9M(173M).
Y-over-Y- sales down, yet net, eps & operating up is +; Qtr alone may not annualize as is cyclic ind.
Cash and short-ter 1754B, long-term debt 946B; total- 1261M(debt to equity 73%).
# **Dividend

-Dividend declared Q2 FY8 (record date,8-Sep; pay day 22; annual .06, .58 for Q2- Q1 was also.3).     

Payout ratio thus 91-82%; NOT sustainable; high due special 8-Jul div to avoid dividend tax increase under CARES.*

& *Shareholde

     Annual total return -87.96, 73.97%, 56.57% since last 03 3yrs,5,10yr;    52wk -77%.     

Highs, due strong 74 in Jan., AT tied to industry cyclicality- steel

** Growth* **
8900 Empl. HQ' 4 facilities/8 in total. *

**Last three-year growth:** (F.21-26 Y-over year sales; Net)      2900 to 6293 to 3568M(mil, not bil;); EPS (neg to pos-68,-9,-58,.09), to .87; *
     - Net has highest variance as above: it & EPS tied not only to sales, BUT: *      - Inventory gains/loses as in QTR 2. *       - Debt. Q2'27 673 M to 946 (mil to mil) as per F, means more int. expense (lowering net as above).      

•  - Provisos: -    
  
            ## 5th Largest producer - Specialty Materials 4.96 Billion Revenue (US$ ) in 6/ 26 (Source 451Research- this year, in F27/FY28 Q, was sales were 1.8 Billion US$.
  

  • Steel cyclic: Growth depends more on Econ & less, Company per se* *Industry Trends, Adaptabil

    • ATI in Specialty, thus better than commodity metal peers ## Industry *

•  - Growth projected as strong (Statista -11.91% compounded 86-7B; 97-6B 91-3B. AT' *     
  

•    #
  

**Competiti *

• • 1. United S (X): 6th-largest specialty metals (2777B Rev), not just in stainless 
    

    2 .Allegh-Lud (ATI 4781). - (ATI was div off).

3.CarpenterT(CRS: * 4972). (ATI similar size; CRS more cold-roll etc, AT- aero).

# 4.RyersonH(RYI,5655), metal/tub/processer/dist; less head-on comp

    ##      5.Nucor (NUE 31.9B- BUT mostly carbon/construction steel -not ATI*     - *

AT has niche - Aerospace (24%) >Nuc/Ry. # *

## * #

• • -
    

**

 ###
        -   - Competition *     

• *ATI- niche but: large players can impact overall ## *

• *Challenges - 3 ##

1). China (40% global; AT was there -17%, BUT X 5x the scale even then).

• 2):

   ## *     
  
  
  
  - Auto - weak now,  was 9% of AT.      
  

  3). ##

### - Demand: steel tied GDP; Fed raising rates impacts growth (thus steel).

• *Opportunities ### - 1). ## * ##

• Aero/medical etc - growing; AT well-situated (if econ doesn't turn).* ## *2)- AT: more niche; less CAPEX/competition #

3,4)- (to address challenges):* - (3: auto = strategic all. (4. China - tough, they overbuilt*

Recent Acq. *

• ATI does a LOT (19, since '11); last 3 yrs have: # *

  21 Mar: Fine Tubes (U.k. tube man.) +94M Eur (why: in oil/gas/ aero -AT* *
  10-Mar.22 : AAT/ 682.5M$ (why - they made AT the largest melt producer* 3181B$ *

##

*AI Evaluation - - * # ## *

**1 to *

**10 scale (Justification, * ###

• Good: ##

  • Niche leader in growing industry (aero). - (Rel: low debt to peers). # * - Good leadership - deep AT exp. #

*Bad

•   - Cyclial and thus -88% stock past, year - market risk
     ##      - Not high dividend - pay't unsustainable long-t
  
   ## 
  

  **Sources & Disclaimer - Please, be a responsible investor; do further due. The following * were used - (in text as well- if unsure, I used it.)

* 10K/ 455Research/ Statista- these were NOT, for inv. advice *