XML 30 R20.htm IDEA: XBRL DOCUMENT v3.20.2
Business Segments
 9 Months Ended
Sep. 30, 2020
Segment Reporting [Abstract]  
Business Segments Business SegmentsEffective January 1, 2020, the Company began operating under two revised business segments: High Performance Materials & Components (HPMC) and Advanced Alloys & Solutions (AA&S). HPMC is now comprised of the Specialty Materials and Forged Products businesses, as well as our ATI Europe distribution operations. The updated HPMC segment intensifies its primary focus on maximizing aero-engine materials and components growth, with approximately 80% of its revenue derived from the aerospace and defense markets. The new AA&S segment combines our Specialty Alloys & Components (SAC) business, including the primary titanium operations in Richland, WA and Albany, OR, with ATI’s former Flat Rolled Products (FRP) business segment, which included the FRP business, the 60%-owned STAL joint venture, and the Uniti and A&T Stainless 50%-owned joint ventures that are reported in AA&S segment results under the equity method of accounting. AA&S is focused on delivering high-value flat products primarily to the energy, aerospace, and defense end-markets, which comprise approximately 50% of its revenue. AA&S was created to align melting technologies with hot-rolling capabilities to produce products with faster flow times and lower costs. Financial results of our aerospace-grade titanium plate products also transferred from HPMC to AA&S effective January 1, 2020. All segment reporting information for 2020 and prior periods below reflect these two revised business segments.
The measure of segment operating profit, which is used to analyze the performance and results of the business segments, excludes all effects of LIFO inventory accounting and any related changes in net realizable value inventory reserves which offset the Company’s aggregate net debit LIFO valuation balance, income taxes, corporate expenses, net interest expense, closed operations and other expenses, charges for goodwill impairment (see Note 5), restructuring and other charges (see Note 14), debt extinguishment charges and non-operating gains and losses. Management believes segment operating profit, 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):
Three months ended September 30,Nine months ended September 30,
 2020201920202019
Total sales:
High Performance Materials & Components$230.1 $471.6 $995.3 $1,540.7 
Advanced Alloys & Solutions393.3 626.2 1,487.1 1,811.2 
623.4 1,097.8 2,482.4 3,351.9 
Intersegment sales:
High Performance Materials & Components8.8 19.8 53.0 59.2 
Advanced Alloys & Solutions16.6 59.3 105.6 188.8 
25.4 79.1 158.6 248.0 
Sales to external customers:
High Performance Materials & Components221.3 451.8 942.3 1,481.5 
Advanced Alloys & Solutions376.7 566.9 1,381.5 1,622.4 
$598.0 $1,018.7 $2,323.8 $3,103.9 
Three months ended September 30,Nine months ended September 30,
 2020201920202019
Segment operating profit (loss):
High Performance Materials & Components$(2.7)$68.4 $63.6 $198.5 
Advanced Alloys & Solutions(4.1)30.8 38.1 76.9 
Total segment operating profit (loss)(6.8)99.2 101.7 275.4 
LIFO and net realizable value reserves— — — (0.1)
Corporate expenses(10.9)(16.0)(31.4)(50.6)
Closed operations and other expense(1.1)(8.2)(5.3)(19.2)
Restructuring and other charges (See Note 14)(2.3)— (27.0)— 
Impairment of goodwill (See Note 5)— — (287.0)— 
Joint venture restructuring charges (See Note 6)— — (2.4)— 
Gain on asset sales, net— 68.2 2.5 89.8 
Debt extinguishment charge (See Note 8)— — (21.5)— 
Interest expense, net(25.1)(24.2)(68.7)(74.9)
Income (loss) before income taxes$(46.2)$119.0 $(339.1)$220.4 

Corporate expenses were lower for the third quarter and first nine months of 2020 compared to 2019 primarily due to lower incentive compensation expense based on expected performance versus targeted metrics, and lower expenses resulting from cost reduction actions. Closed operations and other expenses were lower in the third quarter and first nine months of 2020 compared to 2019, reflecting lower legal and retirement benefit expense of closed operations. Closed operations and other expenses for the first nine months of 2020 also benefited by $4.3 million from settlements of contract indemnity obligations, along with lower environmental expense of closed operations compared to the prior year period.

The $2.5 million gain on asset sales, net for the nine months ended September 30, 2020 consists of a gain on the sale of certain oil and gas rights (see Note 7). The $68.2 million net gain on asset sales for the third quarter ended September 30, 2019 consists of a $62.4 million gain on the sale of certain oil and gas rights and a $6.2 million gain on the sale of the Company’s Cast Products business, partially offset by a $0.4 million loss on the sale of two non-core forging facilities, located in Portland, IN and Lebanon, KY. The $89.8 million net gain on asset sales for the nine months ended September 30, 2019 consists of a
$91.7 million gain on the sale of oil and gas rights and a $6.2 million gain on the sale of the Company’s Cast Products business, partially offset by an $8.1 million loss on the sale of two non-core forging facilities, located in Portland, IN and Lebanon, KY.