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© 2018 ATI. All rights reserved.
Cowen Aerospace & Defense Conference
Pat DeCourcy, SVP Finance & CFO
February 8, 2018
© 2018 ATI. All rights reserved.
Forward-Looking Statements
This presentation contains forward-looking statements. Actual results may differ
materially from results anticipated in the forward-looking statements due to various
known and unknown risks, many of which we are unable to predict or control. These
and additional risk factors are described from time to time in the Company’s filings
with the Securities and Exchange Commission, including its Annual Report on Form
10-K for the year ended December 31, 2016.
© 2018 ATI. All rights reserved.
3
Extensive portfolio of highly differentiated products serving diverse end-markets
Jet Engine
Airframe
Defense
Aerospace & Defense Key Customers
/
Overview of ATI
Produce differentiated products with significant barriers to
entry for a wide variety of end-markets
Unmatched materials technology and manufacturing
capabilities within our industry
Operates in two business segments:
• High Performance Materials & Components (HPMC)
• Flat Rolled Products (FRP)
FY 2017 Revenue by Market
FY 2017 Revenue by Segment
HPMC
59%
FRP
41%
Aerospace
& Defense
49%
Oil
& Gas
12%
Other
11%
Construction
& Mining
6%
Medical
5%
Electronics
4%
Electrical Energy
5%
Automotive
8%
© 2018 ATI. All rights reserved.
2017 Revenue
Aerospace & Defense Market % of Revenue
Commercial Aero 63%
Jet Engine 44%
Airframe 19%
Government & Defense 13%
Total Aerospace & Defense 76%
Well-positioned to meet end-market demand growth and improve profitability
4
HPMC revenue: ~$2.1B Significant increases in revenue & operating margin driven
by aerospace growth
Capitalize on growth opportunities beyond core aerospace
markets utilizing technical and manufacturing capabilities
Leverage investments in powder alloy development and
production, including additive manufacturing
Expand economic moat through technology an capability
2018 execution:
• Focused on meeting aerospace customer next-generation
production ramps; improving HPMC product mix
• Significant profit improvement in castings business
• Aerospace qualification expected to significantly reduce
powder facility operational start-up costs
Strategy & Outlook
High Performance Materials & Components Technology-Driven, Critical Supplier to Key Aerospace & Defense Customers
Aerospace & Defense 76%
Medical 8%
Electrical Energy 6%
Oil & Gas
3%
Construction & Mining
2% Other
5%
© 2018 ATI. All rights reserved.
Next
Generation
2013 2014 2015 2016 2017F 2018F 2019F 2020F
Next
Generation
Legacy
Source: ATI Market Outlook, Airline Monitor, Forecast International
Nu
mber
of E
ngin
es
2017
~39% of ATI’s Jet Engine market sales
were next-generation products
+ nickel-based super-alloys
+ isothermal and hot-die forgings
+ titanium castings
+ powder metal alloys
+ advanced components
+ additive manufacturing
RR Trent XWB
CFM LEAP
Pure Power® Geared Turbofan™
©2017 United Technologies Corporation,
Reproduced with Permission – All Rights Reserved
5
Next-generation engines use more ATI Products; enabling a richer product mix
High Performance Materials & Components Well Positioned to Benefit from On-Going Trends in Aerospace Industry
© 2018 ATI. All rights reserved.
0
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2020
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2200
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2240
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2310
Maturity R&D/Introduction Growth Decline
ATI 718TM
ATI’s differentiation in jet engines
drives next-generation growth
3D printing
Nickel-based and
specialty alloy powder
Titanium-alloy powder
Meltless titanium alloy
powder development
ATI 718Plus
ATI 720
Rene 65
Ni Powder Billet
Economic moat grows wider and deeper
High Performance Materials & Components Driven by Technology; Enabled by Manufacturing
6
• Highly differentiated products
• Next-generation applications
• Long product life spans
• More commoditized products
• Current generation applications
• Mid-to-late product life cycle
© 2018 ATI. All rights reserved.
7
High Performance Materials & Components Focused on Growing Market Share via Transformative Technologies
Expanding capabilities and capacity to serve growing industry needs
Existing
Existing Enhanced
Expanded
Capability
Capacity
Robinson Mfg. (PA)
Oakdale (PA)
Bakers Powder Existing
(NC)
New Powder Expansion
(NC)
GE / ATI R&D JV
Richburg (SC)
Titanium Alloys
Nickel, Copper & Other Alloys
Commercial qualification process
ongoing
Recently approved expansion to produce
primarily standard titanium alloy powders
Produce meltless titanium alloy
powders initially for use in additive
manufacturing. Capacity and capability
increases as process matures.
Smaller batch sizes; primarily serves
current ATI additive mfg. demand
Larger batch sizes; primarily serves
current ATI forging demand
Robinson R&D (PA)
New alloy development, initial
production scale-up
New ATI investments
Ongoing Leadership in Aerospace Powder Alloys
© 2018 ATI. All rights reserved.
Oil & Gas
24%
Food Equip.
& Appliance
15%
Automotive
18%
Electrical Energy
6%
Aerospace
& Defense
10%
Construction
& Mining
10%
FRP revenue: ~$1.5B
Sustainable profitability and cash flow generation regardless of raw
materials or trade policy
• FY 2017 profitability; first since 2012
Profitable growth through product mix enhancements
• Increased shipments of nickel-based alloy and titanium products
• Continued penetration of oil & gas markets and aerospace markets
Focus on continuous improvement in cost structure and operations
Negotiate long-term agreements to increase key asset utilization
• JV and HRPF conversion agreement announced with Tsingshan
• Strong pipeline of 3rd party opportunities to drive HRPF utilization
Flat Rolled Products Operating Profit Improvement Driven by Product Mix and Cost Focus
Oil & Gas
Auto
Other
Revenue by Market Strategy & Outlook
8
Increasing asset utilization; Relentless focus on cost and mix optimization
Oil & Gas25%
Automotive15%
Food Equipment & Appliances
9%Aerospace & Defense
7%
Construction/Mining
11%
Electronics/Computers/Communication
7%
Electrical Energy
17%
Other9%
2012
2017
Improving Product Mix Oil & Gas: Strong rebound in 2017 after several years of low industry activity
Aerospace & Defense: Increasing share of FRP revenue; targeted to be
FRP’s second-largest market
Electronics / Computers / Communication: Higher revenue share driven by
increased market penetration through STAL JV (China)
Electrical Energy: Lower revenue contribution following exit from grain
oriented electrical steel (“GOES”) market
Other
7%
Electronics/Computers/
Communication
10%
© 2018 ATI. All rights reserved.
50-50 Joint Venture, which will manufacture and sell 60 in.
wide stainless sheet in North America
• Tsingshan is the world’s largest stainless steel producer
and has developed innovative manufacturing technologies
• ATI is a global manufacturer of technically advanced
specialty materials, parts, and complex components
Conversion volume expected to significantly increase HRPF
utilization; utilize previously idled DRAP finishing facility
First customer shipments expected in first half 2018
Another step to position ATI FRP for sustainable profitability
9
Tsingshan’s Morowali Industrial Park
ATI’s HRPF
1. JV buys slabs from Tsingshan
• Sourced from new and unparalleled refining/casting
facility in Indonesia
2. Slabs are rolled under HRPF conversion agreement between
ATI and JV
3. Coils are finished on JV’s DRAP continuous automated facility
• Completes finishing process in minutes - conventional
process takes weeks
4. Highly efficient global supply chain to produce high quality
products and reduce raw material volatility.
Joint Venture Overview
Two Global Innovators – Unsurpassed Manufacturing
Flat Rolled Products ATI and Tsingshan to Form Innovative Joint Venture
© 2018 ATI. All rights reserved.
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2012 2013 2014 2015 2016 2017
Actives-Open Actives-Frozen Deferred Retiree
Proactively reducing pension plan population
• >20% of participants removed since 2012
through liability management actions
Nearly all operations frozen/closed to new entrants
Plan funded status improved
• Increased 6 percentage points 2017 YOY
Evaluating additional options to further reduce
pension liabilities
Strengthening Balance Sheet Positioning for long-term profitable growth
0
350
0
500 500
0
150
288
100
2018 2019 2020 2021 2022 2023 2024 2025
Notes Convertible Senior Notes Term LoanIn $ millions
Debt Maturity Profile ATI Pension Plan Participation
# participants
Eliminated in Q4’17
using follow on
common equity
proceeds
Redeemed $350 million debt @ 9.375% interest
rate due 2019
• Lower interest expense; ~$32M annual savings
• Used majority of proceeds from follow-on
equity offering (~$400 million)
No significant debt maturities until 2021
-1,700 Deferred
through lump
sum cash out
-3,700 Retirees
through annuity
buyout
2,600 actives
hard frozen YE
2014
-1,350 Deferred
through lump
sum cash out
Reduce Balance Sheet Leverage; Improve Cash Flow
10
© 2018 ATI. All rights reserved.
$142 million cash on hand
$305 million available on ABL
• No outstanding borrowings on ABL/revolver
• Q3 ‘17 balance of $25 million
$76 million cash flow from operations in Q4 2017
Financial Update (as of 12/31/2017)
11
Cash and Liquidity
$123 million FY 2017
• Annual depreciation & amortization ~$160 million for FY ‘17
2018 capex expected to be $100 million - $125 million
• Incl. 100% of $25 million investment in Next Gen Alloys JV; GE to fund ~50%
• Incl. 100% of ongoing STAL JV expansion (China); fully funded via JV cash
Capital Expenditures
© 2018 ATI. All rights reserved.
High Performance Materials & Components Segment Q1 2018 financial results expected to continue strong YOY growth trend
FY 2018 revenues expected to increase a high-single digit percentage YOY
• Commercial jet engine revenue growth > 10%
FY 2018 operating margins expected to increase by ~200 basis points YOY
• Ongoing next-generation aerospace growth and improving product mix
Flat Rolled Products Segment Q1 2018 customer demand patterns consistent with Q4 2017
Q1 2018 negatively impacted by ~$10 million due to:
• Lower raw material surcharges tied to ferrochrome decline
• Required retirement cost capitalization accounting change impact
• Low single-digit operating margins expected in Q1 2018
FY 2018 revenues expected to increase a high-single digit percentage YOY
• Continued recovery in key end markets
FY 2018 operating margins expected to improve 100 – 300 basis points YOY
• Increased JV contributions; new conversion agreements (both in H2’18)
• Continued operational improvements; product mix benefits
Strategy & Outlook (as of 1/23/2018)
12
© 2018 ATI. All rights reserved.
Thank you for your interest in ATI.
Investor Contact:
Scott Minder (412) 395-2720
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