ATI (ATI) Q4 2022 earnings summary

Executive summary

• FY2022 sales rose 37% to $3.84B as aerospace and defense demand recovered; gross profit more than doubled and results returned to profitability.

• Net income attributable to ATI was $130.9M; Q4 sales exceeded $1B and net income was $77M.

• The Specialty Rolled Products transformation and footprint consolidation were nearly complete, sharpening the portfolio toward higher-value aerospace and defense markets.

Financial highlights

• Sales were $3,836.0M vs. $2,799.8M in 2021; gross profit was $714.2M vs. $333.2M, with gross margin of 18.6% vs. 11.9%.

• Operating income was $287.3M vs. $117.6M; income before tax was $162.0M vs. $10.6M.

• Net income attributable to ATI was $130.9M, or diluted EPS of $0.96, vs. a $38.2M net loss and diluted loss per share of $0.30 in 2021.

• Adjusted EBITDA was $549.3M, or 14.3% of sales, vs. $290.9M, or 10.4%; adjusted net income was $288M and adjusted diluted EPS was $1.99.

• 2022 results included $34M of COVID-relief benefits and $157M of net pretax charges, primarily the Sheffield sale loss and restructuring-related costs.

Outlook and guidance

• HPMC expected strong YoY revenue and segment EBITDA growth in 2023, primarily driven by continued commercial aerospace recovery.

• Backlog was $2.9B at year-end 2022; ~80% was expected to be filled in 2023. HPMC backlog was $2.3B, with ~75% expected to ship in 2023.

• AA&S backlog was $0.6B, with nearly 100% expected to be filled in 2023; longer-term commercial airframe flat-product sales were projected to increase.

• Aerospace demand catalysts included accelerating narrowbody and widebody production and increased use of next-generation alloys, powder metals and isothermal forging.