Income Taxes

12 Months Ended

Dec. 28, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income (loss) before income taxes for the Company’s U.S. and non-U.S. operations was as follows:

	Fiscal Year
(In millions)	2025		2024		2023
U.S.	$	470.6	$	421.1	$	258.2
Non-U.S.	51.7		65.0		37.0
Income before income taxes	$	522.3	$	486.1	$	295.2

The income tax provision (benefit) was as follows:

	Fiscal Year
(In millions)	2025		2024		2023
Current:
Federal	$	28.8	$	(0.3)	$	3.0
State	8.5		6.9		0.5
Foreign	6.6		7.0		7.8
Total	43.9		13.6		11.3
Deferred:
Federal	56.3		84.5		(96.1)
State	2.7		4.3		(42.5)
Foreign	0.8		1.0		(0.9)
Total	59.8		89.8		(139.5)
Income tax provision (benefit)	$	103.7	$	103.4	$	(128.2)

The following is a reconciliation of income taxes computed at the statutory U.S. Federal income tax rate to the actual effective income tax provision (benefit):

	Fiscal Year
(In millions)	2025				2024				2023
Income before income taxes	$	522.3			$	486.1			$	295.2
Taxes computed at the federal rate	109.7		21.0	%	102.0		21.0	%	62.0		21.0	%
State and local income taxes, net of federal tax benefit(1)	9.3		1.8	%	9.3		1.9	%	(32.4)		(11.0)	%
Foreign tax effects
China
Preferential tax rate	(4.1)		(0.8)	%	(4.1)		(0.8)	%	(3.6)		(1.2)	%
Other	3.0		0.6	%	1.7		0.3	%	1.7		0.6	%
Other foreign jurisdictions	(1.6)		(0.3)	%	(1.0)		(0.2)	%	5.2		1.8	%
Effect of changes in tax laws enacted in the period	—		—	%	—		—	%	—		—	%
Effect of cross-border tax laws
Global Intangible Low-Taxed Income (GILTI)	1.0		0.2	%	3.3		0.7	%	5.0		1.7	%
Foreign-Derived Intangible Income (FDII)	(6.8)		(1.3)	%	(0.9)		(0.2)	%	—		—	%
Tax credits	(6.1)		(1.2)	%	(7.1)		(1.5)	%	(4.8)		(1.6)	%
Change in valuation allowance	(2.9)		(0.6)	%	—		—	%	(162.0)		(54.9)	%
Nontaxable or nondeductible items	2.2		0.4	%	(1.5)		(0.3)	%	0.8		0.3	%
Changes in unrecognized tax benefits	(2.9)		(0.6)	%	(1.0)		(0.2)	%	0.3		0.1	%
Other adjustments	2.9		0.6	%	2.7		0.6	%	(0.4)		(0.1)	%
Income tax provision (benefit)	$	103.7	19.9	%	$	103.4	21.3	%	$	(128.2)	(43.4)	%

(1) State taxes in California, Connecticut, Illinois, Massachusetts, New Jersey, Pennsylvania and Wisconsin made up the majority (greater than 50%) of the tax effect in this category.

The Company has elected to recognize GILTI liabilities as an element of income tax expense in the period incurred.

Total credits in the current year are primarily related to research and development benefits and the disallowance of the above the line income related to the Advanced Manufacturing Production Credit (AMPC) as discussed in Note 18. While the AMPC is an above the line credit and refundable, if tax is due, the credit is first applied against the current tax liability. As a result, it has been considered associated with income taxes paid in the table below.

In fiscal year 2025, the income tax provision of $103.7 million includes discrete tax benefits of $6.0 million, which primarily related to share-based compensation, release of uncertain tax positions, and the release of valuation allowances. These were offset by unfavorable return to provision adjustments from the 2024 federal and state tax returns.

In fiscal year 2024, the income tax provision of $103.4 million includes discrete tax benefits of $6.2 million which includes $3.3 million for share-based compensation and $0.8 million related to the recognition of a stranded deferred tax valuation allowance in accumulated other comprehensive loss that was associated with the Company’s interest rate swap due to its maturity (see Note 15).

In the fourth quarter of fiscal year 2024, the Company was granted a preferential tax rate related to the PRS joint venture operations in China for tax years 2024 through 2026. The preferential tax rate is 15%, compared to the statutory rate of 25%. The Company must re-apply for the High and New-Technology Enterprise (HNTE) status every three years to be eligible for the preferential rate. This same preferential rate was in effect for tax years 2021-2023.

In fiscal year 2023, ATI recorded a tax benefit associated with the release of the valuation allowance due to the current year income for the U.S. operations and a $140.3 million additional benefit was recorded related to the valuation allowance release associated with ATI’s ability to utilize projections for future income.

The Company recognizes deferred tax assets to the extent it believes these deferred tax assets are more likely than not to be realized. Valuation allowances are established when it is estimated that it is more likely than not the tax benefit of the deferred tax asset will not be realized. In making such determination, the Company considers all available evidence, both positive and negative, regarding the estimated future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards, historical taxable income in prior carryback periods if carryback is permitted, and potential tax planning strategies which may be employed to prevent an operating loss or tax credit carryforward from expiring unused. If the Company determines that it would not be able to realize its deferred tax assets in the future in excess of their recorded net amount, an adjustment to the deferred tax asset valuation allowance would result.

The Company also maintained valuation allowances on deferred tax amounts recorded in AOCI in fiscal years 2025, 2024 and 2023 of $23.3 million, $23.3 million, and $24.1 million, respectively (see Note 15).

Deferred income taxes result from temporary differences in the recognition of income and expense for financial and income tax reporting purposes, and differences between the fair value of assets acquired in business combinations accounted for as purchases for financial reporting purposes and their corresponding tax bases. Deferred income taxes represent future tax benefits or costs to be recognized when those temporary differences reverse. The categories of assets and liabilities that have resulted in differences in the timing of the recognition of income and expense at December 28, 2025 and December 29, 2024 were as follows:

	Fiscal Year
(In millions)	2025		2024
Deferred income tax assets
Net operating loss carryovers	52.9		73.4
Post retirement benefits other than pension	44.5		45.2
Employee compensation and benefits	35.8		29.0
Inventory valuation	26.5		24.3
Federal and state tax credits	21.5		44.0
Operating lease liability	19.9		14.8
Deferred revenue	18.6		20.5
Research and development	12.5		25.7
Other items - assets	26.6		44.5
Gross deferred income tax assets	258.8		321.4
Valuation allowance for deferred tax assets	(49.8)		(57.7)
Total deferred income tax assets	209.0		263.7
Deferred income tax liabilities
Basis of property, plant and equipment	187.8		180.5
Operating lease right of use assets	18.7		13.8
Amortization of intangibles	11.8		13.4
Other items - liabilities	12.3		14.2
Total deferred tax liabilities	230.6		221.9
Net deferred tax (liability) asset	$	(21.6)	$	41.8

The Company’s valuation allowance for deferred taxes was $49.8 million at December 28, 2025, $57.7 million at December 29, 2024. The reduction in the valuation allowance in fiscal year 2025 was primarily due to a state valuation allowance release and and foreign tax restructuring activities. The reduction in the valuation allowance in fiscal year 2024 was primarily due to a state valuation allowance release, which was mostly offset by the expiration of state tax attributes for income tax purposes.

The Company has recorded $6.7 million of foreign withholding taxes on earnings expected to be repatriated to the U.S. The Company does not intend to distribute previously taxed earnings resulting from the one-time transition tax under the Tax Act, and has not recorded any deferred taxes related to such amounts. The remaining excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries is indefinitely reinvested, and the determination of any deferred tax liability on this amount is not practicable.

The following summarizes the carryforward periods for the tax attributes related to NOLs and credits by jurisdiction.

($ in millions, U.S. and U.K. NOL amounts are pre-tax, all other items are after-tax, and state is before federal benefit)
Jurisdiction	Attribute	Amount	Expiration Period	Amount expiring within 5 years	Amount expiring in 5-20 years
U.S.	Foreign Tax Credit	$13	10 years	$13	$—
State	NOL	$64	Various	$9	$55
State	NOL	$1	Indefinite
State	Credits	$8	Various	$3	$5
U.K.	NOL	$8	Indefinite
Poland	Economic Zone Credit	$2	7 years	$2

Income taxes paid and amounts received as refunds were as follows:

	Fiscal Year
(In millions)	2025		2024		2023
Federal	$	52.3	$	1.5	$	1.1
State	8.9		6.4		3.8
Foreign	15.5		7.1		10.9
Income taxes paid, net	$	76.7	$	15.0	$	15.8

Income taxes paid (net of refunds) exceeded 5 percent of total income taxes paid (net of refunds) in the following jurisdictions:

	Fiscal Year
(In millions)	2025		2024		2023
State
California	*		$	2.5	*
Illinois	*		$	1.0	$	1.2
Massachusetts	*		$	1.3	*
Pennsylvania	*		*		$	0.9
Foreign
China	$	7.7	$	4.3	$	7.6
Germany	*		$	1.4	*
Japan	*		*		$	2.2

* Jurisdiction was below the reporting threshold for the period presented.

Uncertain tax positions are recorded using a two-step process based on (1) determining whether it is more-likely-than-not the tax positions will be sustained on the basis of the technical merits of the position and (2) for those positions that meet the more-likely-than-not recognition threshold, the Company records the largest amount of the tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The changes in the liability for unrecognized income tax benefits for the fiscal years ended December 28, 2025, December 29, 2024 and December 31, 2023 were as follows:

	Fiscal Year
(In millions)	2025		2024		2023
Balance at beginning of fiscal year	$	7.8	$	8.9	$	9.1
Increases in prior period tax positions	0.4		—		1.2
Decreases in prior period tax positions	(2.8)		(0.9)		—
Settlements	—		(0.2)		—
Expiration of the statute of limitations	(0.7)		—		(1.4)
Balance at end of fiscal year	$	4.7	$	7.8	$	8.9

For fiscal years ended December 28, 2025, December 29, 2024 and December 31, 2023, the liability includes $4.1 million, $6.9 million and $7.2 million, respectively, of unrecognized tax benefits that are classified within deferred income taxes as a reduction of NOL carryforwards and other tax attributes. The total estimated unrecognized tax benefit that, if recognized, would affect ATI’s effective tax rate is approximately $0.6 million.

The Company recognizes accrued interest and penalties related to uncertain tax positions as income tax expense. The amounts accrued for interest and penalty charges for the fiscal years 2025, 2024 and 2023 were not significant. At December 28, 2025 and December 29, 2024, the accrued liabilities for interest and penalties related to unrecognized tax benefits were $0.4 million and $0.8 million, respectively.

The Company, and/or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. A summary of tax years that remain subject to examination, by major tax jurisdiction, is as follows:

Jurisdiction	Earliest Year Open to Examination
U.S. Federal	2025
States:
California	2021
Connecticut	2022
Illinois	2022
Massachusetts	2022
New Jersey	2021
Pennsylvania	2021
Wisconsin	2021
Foreign:
China	2022
Poland	2019