Stockholders' Equity

12 Months Ended

Dec. 29, 2024

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Preferred Stock

Authorized preferred stock may be issued in one or more series, with designations, powers and preferences as shall be designated by the Board of Directors. At December 29, 2024, there were no shares of preferred stock issued.

Dividends

Under the ABL credit facility, there is no limit on dividend declarations or payments provided that the undrawn availability, after giving effect to a particular dividend payment, is at least the greater of $120 million and 20% of the total facility size, after giving effect to any repayment of term loans, and no event of default under the ABL credit facility has occurred and is continuing or would result from paying the dividend.  In addition, there is no limit on dividend declarations or payments if the undrawn availability is less than the greater of $120 million and 20% of the total facility size, after giving effect to any repayment of term loans, but more than the greater of $75 million and 12.5% of the total facility size, after giving effect to any repayment of term loans, if (i) no event of default has occurred and is continuing or would result from paying the dividend, (ii) the Company demonstrates to the administrative agent that, prior to and after giving effect to the payment of the dividend (A) the undrawn availability, as measured both at the time of the dividend payment and as an average for the 60 consecutive day period immediately preceding the dividend payment, is at least the greater of $75 million and 12.5% of the total facility size, after giving effect to any repayment of term loans, and (B) the Company maintains a fixed charge coverage ratio of at least 1.00:1.00, as calculated in accordance with the terms of the ABL credit facility.

Share-based Compensation

In May 2022, the Company’s stockholders approved the ATI Inc. 2022 Incentive Plan (the “2022 Incentive Plan”). Following adoption, all new share-based compensation awards are being made under the 2022 Incentive Plan. Shares previously remaining available for grant under prior incentive plans, or which become available for award due to the forfeiture or cancellation of prior awards under those prior plans, are available for award under the 2022 Incentive Plan. Outstanding grants previously made under prior incentive plans remain in effect in accordance with relevant terms.

Awards earned under the Company’s share-based incentive compensation programs are paid with shares held in treasury or newly issued shares depending on the level of treasury shares held. At December 29, 2024, 5.6 million shares of common stock were available for future awards under the 2022 Incentive Plan. The general terms of each arrangement granted under the 2022 Incentive Plan, and predecessor plans, the method of estimating fair value for each arrangement, and award activity is reported below.

The Company’s share-based incentive compensation program consists of both service-based and performance/market-based awards. These awards convey participants the right to receive shares of ATI common stock if the service conditions, and performance or market requirements, of the awards are attained.

Service-based awards:

Restricted share units (RSUs) are rights to receive shares of Company stock when the award vests. The RSUs generally vest over three years based on employment service, with one-third of the award vesting on each of the first, second and third anniversaries of the grant date. RSU awards to non-employee directors vest in one year. No dividends are accumulated or paid on the RSUs. The fair value of the RSU award is measured based on the stock price at the grant date.

Compensation expense related to RSU awards was $16.3 million in fiscal year 2024, $14.5 million in fiscal year 2023, and $13.4 million in fiscal year 2022. Approximately $10.8 million of unrecognized fair value compensation expense relating to restricted stock units is expected to be recognized through fiscal year 2027, with $7.5 million expected to be recognized in fiscal year 2025, including estimates of service period forfeitures. Activity under the Company’s RSU awards for the fiscal years ended December 29, 2024, December 31, 2023, and January 1, 2023 was as follows:

	Fiscal Year
(Shares in thousands, $ in millions)	2024			2023			2022
	Number of shares/units	Weighted Average Grant Date Fair Value		Number of shares/units	Weighted Average Grant Date Fair Value		Number of shares	Weighted Average Grant Date Fair Value
Nonvested, beginning of fiscal year	1,220	$	28.0	1,479	$	26.0	1,409	$	25.6
Granted	465	21.8		512	16.0		831	14.8
Vested	(717)	(15.3)		(729)	(13.1)		(634)	(12.3)
Forfeited	(107)	(3.5)		(42)	(0.9)		(127)	(2.1)
Nonvested, end of fiscal year	861	$	31.0	1,220	$	28.0	1,479	$	26.0

Performance condition awards:

The Company awarded performance share units (PSUs) with performance requirements through fiscal year 2020. These PSU award opportunities, the last of which vested at the conclusion of its applicable three-year performance period on January 1, 2023, were determined at a target number of units, and the number of shares awarded was based on attainment of two ATI financial performance metrics. PSU awards through fiscal year 2020 are accounted for as performance condition plans with service vesting requirements, with compensation expense during the performance period recognized based on estimates of attaining the performance criteria, including estimated forfeitures. The metrics for PSU awards granted in fiscal year 2020 measured (1) net income attributable to ATI and (2) return on capital employed, over a three-year performance period with a threshold attainment of 25% and a maximum attainment of 200% of the target financial performance metrics and target share units, measured over the applicable three-year performance period. For certain senior executives, the number of PSUs to be awarded based on the performance criteria was modified up or down by up to 20% based on the Company’s relative total shareholder return (TSR) over the performance measurement period (“TSR Modifier”), but not above the maximum number of PSUs to be vested. The TSR Modifier measured the return of the Company’s stock price (including assumed dividend reinvestment, if any) at the end of the performance period as compared to the stock prices (including assumed dividend reinvestment, if any) of a group of industry peers. The fair value of the PSU award was measured based on the stock price at the grant date, including the effect of the TSR Modifier. The fair value of the TSR Modifier was determined by using Monte Carlo simulations of stock price correlation, projected dividend yields and other variables over a three-year time horizon matching the TSR performance measurement period. Expense recognition varied with the level of performance achieved.

Market condition awards:

The Company awarded PSUs with market requirements in fiscal years 2021, 2022, 2023 and 2024. These PSU award opportunities are determined at a target number of share units, and the number of shares awarded is based on TSR, representing the measured return of the Company’s stock price (including assumed dividend reinvestment, if any) at the end of the three year period as compared to the stock prices (including assumed dividend reinvestment, if any) of a group of industry peers. The fiscal year 2021, 2022, 2023 and 2024 PSU awards are accounted for as a market condition plan with service vesting requirements, with expense recognized over the service period without regard to the level of TSR attainment or shares awarded. The actual number of shares awarded at the end of the measurement period may range from a minimum of zero to a maximum of two times target. For the fiscal year 2021 and 2022 awards, TSR is determined over eight distinct quarterly periods as measured from January 1 of the grant year of the award through the end of each quarterly period starting with the first quarter ending in the second year following the grant of the award. For the 2023 and 2024 awards, TSR is determined over four distinct six-month periods as measured from January 1 of the grant year of the award through the end of each six-month period starting with the second quarter ending in the second year following the grant of the award; earned payouts from each TSR measurement period are averaged to determine the final payout at the conclusion of the three-year period. The fair value for this award was determined by using Monte Carlo simulations of stock price correlation, projected dividend yields and other variables over the three-year time horizon matching the TSR measurement period.

In fiscal year 2022, the Company awarded a new one-time grant of PSUs with market requirements, called the Breakout Performance Award (BPA). In fiscal year 2024, 6,530 shares were issued due to retirement vesting. In fiscal year 2023, 46,046 additional share units under the fiscal year 2022 BPA were awarded to new members of senior management and 4,807 shares

were issued due to retirement vesting. The BPA has a target number of share units, and the number of shares awarded is based on the absolute return on the Company’s stock during a four-year measurement period. The service vesting requirements of the BPA award are four years for one half of the award and five years for the remaining half. The BPA award is accounted for as a market condition plan with service vesting requirements, with expense recognized over the service periods without regard to the level of absolute return attainment or shares awarded. The actual number of BPA shares awarded at the end of the measurement period may range from a minimum of zero to a maximum of three times target. The fair value for this award was determined by using Monte Carlo simulations of stock price correlation, projected dividend yields and other variables over the four-year time horizon matching the BPA measurement period.

At December 29, 2024, a maximum of 3.9 million shares have been reserved for issuance for all PSU awards. The Company recognized $17.8 million, $14.6 million and $12.6 million of compensation expense in fiscal years 2024, 2023 and 2022, respectively, for all PSU awards. Forfeited share units in fiscal years 2024, 2023 and 2022 were 183,418, 19,863, and 159,298, respectively, with a weighted average grant date fair value of $5.1 million, $0.5 million, and $3.4 million, respectively.

The fair value of each PSU award, the target share units awarded and projected future compensation expense to be recognized for these awards, including actual and estimated forfeitures at December 29, 2024 was as follows:

(Shares in thousands, $ in millions)
PSU Award Performance Period	Award Fair Value		December 29, 2024 Unrecognized Compensation Expense		Compensation Expense Expected to be Recognized in the next 12 months		Target Share Units
Fiscal Year 2022-2024	$	11.0	—		—		494
Fiscal Year 2023-2025	$	12.6	3.9		3.9		330
Fiscal Year 2024-2026	$	13.6	5.3		2.5		262
Fiscal Year 2022-2025 BPA	$	20.3	5.2		3.6		857
Total			$	14.4	$	10.0

In fiscal year 2024, the fiscal year 2022 PSU awards vested with TSR attainment of 200.0%, resulting in the issuance of 849,422 shares in the first quarter of fiscal year 2025. In fiscal year 2023, the fiscal year 2021 PSU awards vested with TSR attainment of 198.5%, resulting in the issuance of 848,194 shares in the first quarter of fiscal year 2024. In fiscal year 2022, the fiscal year 2020 PSU awards vested with financial performance attainment between threshold and target and at 0% for the TSR Modifier, resulting in the issuance of 182,628 shares in the first quarter of fiscal year 2023.