Income Taxes

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for income taxes for the quarter and nine months ended September 30, 2021 was $22.0 million and $31.5 million, respectively. The current year tax expense is mainly attributable to the $15.5 million in discrete tax effects related to the postretirement medical benefits gain discussed in Note 12, in accordance with ATI’s accounting policy for recognizing deferred tax amounts stranded in accumulated other comprehensive income. The tax provision for the three and nine months ended September 30, 2020 was $0.8 million, or (1.7)%, and $104.2 million, or (30.7)%, respectively, of loss before taxes, based on the actual year to date effective rate for this period.

In the second quarter 2020, the Company entered into a three-year cumulative loss within the United States, limiting the Company’s ability to utilize future projections when analyzing the need for a valuation allowance, therefore limiting sources of income as part of the analysis. As a result, ATI recorded a $99.0 million deferred tax asset valuation allowance on its U.S. federal and state tax attributes in the second quarter of 2020. ATI continues to maintain valuation allowances on its U.S. federal and state deferred tax assets, as well as for certain foreign jurisdictions. Throughout 2020, the Company calculated the provision for income taxes based upon actual year to date results due to the uncertainty of future projections as a result of the global pandemic. For 2021, the Company continues to be unable to make a reliable estimate of the annual effective tax rate, as significant changes in projected results for the Company’s U.S. operations could produce a significant variation in its annual effective tax rate. As a result, the Company recorded income tax for the nine months ended September 30, 2021 based upon an annual effective tax rate for its foreign, non-valuation allowance operations, combined with actual year-to-date tax expense related to its U.S. jurisdictions.