Corporate Items and Cash

• Corporate expenses in the first quarter 2020 were $12.8 million, or $3.8 million lower than the prior year period, primarily due to lower incentive compensation expense based on expected performance versus targeted metrics.
• An $8.0 million restructuring charge for a voluntary early retirement program to eligible salaried employees was recorded in the first quarter 2020. Costs for this program are expected to be paid through mid-2021 based on the timing of the benefits provided.
• Closed operations and other expenses in the first quarter 2020 were $6.6 million, or $3.5 million higher year-over-year, mainly due to legal-related costs.
• ATI had a 31% year-to-date effective tax rate for the first quarter 2020, higher than initially expected due primarily to higher overall state taxes based on income apportionment. Due to ongoing global economic uncertainty, the Company was unable to project a full-year effective tax rate for Q1 2020. No significant income tax benefit is expected to be realized from the recently enacted CARES Act. ATI does not expect to pay any significant U.S federal or state income taxes for the next few years due to net operating loss carryforwards.
• Cash on hand at March 31, 2020 was $639.0 million, which included $300 million of borrowings under the revolving credit portion of the Company's asset-based lending (ABL) credit facility. Those first quarter ABL borrowings were repaid in April 2020. At March 31, 2020 available additional liquidity under the ABL was approximately $260 million.
• For the three months ended March 31, 2020, in line with prior years' seasonal patterns and our expectations, cash used in operating activities was $115.4 million, including $134.7 million for managed working capital. ATI contributed $27.9 million to the U.S. defined benefit pension trust during the quarter. Cash used in investing activities was $25.2 million, primarily related to capital expenditures of $29.1 million.

Outlook

“Looking ahead, we anticipate challenging and uncertain economic conditions to continue due to the ongoing COVID-19 pandemic and its impact on the global aerospace industry. We are taking significant steps to help mitigate the negative impacts on our financial results while ensuring the safety of our employees. We are confident that more normalized business conditions will return over time and we stand ready to support our customers' recovery efforts," said Wetherbee. In light of current market uncertainty, the Company is withdrawing its full year 2020 guidance, but will provide additional information regarding its 2020 outlook on the first quarter earnings call.

Allegheny Technologies will conduct a conference call with investors and analysts on Tuesday, May 5, 2020, at 8:30 a.m. ET to discuss the financial results. The conference call will be broadcast, and accompanying presentation slides will be available, at ATImetals.com. To access the broadcast, click on “Conference Call”. Replay of the conference call will be available on the Allegheny Technologies website.

This news release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements in this news release relate to future events and expectations and, as such, constitute forward-looking statements. Forward-looking statements, which may contain such words as “anticipates,” “believes,” “estimates,” “expects,” “would,” “should,” “will,” “will likely result,” “forecast,” “outlook,” “projects,” and similar expressions, are based on management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which we are unable to predict or control. Our performance or achievements may differ materially from those expressed or implied in any forward-looking statements due to the following factors, among others: (a) material adverse changes in economic or industry conditions generally, including global supply and demand conditions and prices for our specialty metals; (b) material adverse changes in the markets we serve; (c) our inability to achieve the level of cost savings, productivity improvements, synergies, growth or other benefits anticipated by management from strategic investments and the integration of acquired businesses; (d) volatility in the price and availability of the raw materials that are critical to the manufacture of our products; (e) declines in the value of our defined benefit pension plan assets or unfavorable changes in laws or regulations that govern pension plan funding; (f) labor disputes or work stoppages; (g) equipment outages and (h) business and economic disruptions associated with the currently ongoing COVID-19 pandemic or other similar widespread public health crises that may arise in the future and (i) other risk factors summarized in our Annual Report on Form 10-K for the year ended December 31, 2019, and in other reports filed with the Securities and Exchange Commission. We assume no duty to update our forward‑-looking statements.

Solving the World’s Challenges through Materials Science

ATI (NYSE: ATI) is a $4 billion global manufacturer solving the world’s most difficult challenges through materials science; advanced, integrated process technologies; and relentlessly innovative people. We serve customers whose demanding applications need to fly higher, dig deeper, stand stronger, and last longer— anywhere on, above, or below the earth. We partner to create new specialty materials in forms that deliver ultimate performance and long-term value in applications like jet engine forgings and 3D-printed aerospace components. We produce powders for forging and additive manufacturing; rolled materials, and finished components. Our specialty materials withstand extremes of temperature, stress and corrosion to improve and protect human lives every day. Learn more at ATIMetals.com.

Allegheny Technologies Incorporated and Subsidiaries Consolidated Statements of Income (Unaudited, dollars in millions, except per share amounts)
		Three Months Ended
		March 31				December 31				March 31
		2020				2019				2019
Sales		$	955.5			$	1,018.6			$	1,004.8
Cost of sales		820.7				849.3				873.7
Gross profit		134.8				169.3				131.1
Selling and administrative expenses		58.4				66.3				68.0
Restructuring charges		8.0				4.5				—
Operating income		68.4				98.5				63.1
Nonoperating retirement benefit expense		(11.2		)		(18.4		)		(18.3		)
Interest expense, net		(21.9		)		(24.1		)		(24.8		)
Debt extinguishment charge		—				(21.6		)		—
Other expense, net		(0.9		)		(13.2		)		(2.9		)
Income before income taxes		34.4				21.2				17.1
Income tax provision (benefit)		10.8				(38.8		)		0.8
Net income		$	23.6			$	60.0			$	16.3
Less: Net income attributable to noncontrolling interests		2.5				3.5				1.3
Net income attributable to ATI		$	21.1			$	56.5			$	15.0
Basic net income attributable to ATI per common share		$	0.17			$	0.45			$	0.12
Diluted net income attributable to ATI per common share		$	0.16			$	0.41			$	0.12

Allegheny Technologies Incorporated and Subsidiaries Sales and Operating Profit by Business Segment (Unaudited, dollars in millions)
		Three Months Ended
		March 31				December 31				March 31
		2020				2019				2019
Sales:
High Performance Materials & Components		$	420.3			$	497.0			$	496.6
Advanced Alloys & Solutions		535.2				521.6				508.2
Total external sales		$	955.5			$	1,018.6			$	1,004.8
Segment operating profit:
High Performance Materials & Components		$	57.1			$	73.1			$	51.7
% of Sales		13.6		%		14.7		%		10.4		%
Advanced Alloys & Solutions		24.1				32.2				10.0
% of Sales		4.5		%		6.2		%		2.0		%
Total segment operating profit		81.2				105.3				61.7
% of Sales		8.5		%		10.3		%		6.1		%
LIFO and net realizable value reserves		—				—				(0.1		)
Corporate expenses		(12.8		)		(16.2		)		(16.6		)
Closed operations and other expense		(6.6		)		(6.3		)		(3.1		)
Restructuring and other charges		(8.0		)		(4.5		)		—
Joint venture impairment charge		—				(11.4		)		—
Gain on asset sales		2.5				—				—
Debt extinguishment charge		—				(21.6		)		—
Interest expense, net		(21.9		)		(24.1		)		(24.8		)
Income before income taxes		$	34.4			$	21.2			$	17.1

Allegheny Technologies Incorporated and Subsidiaries Condensed Consolidated Balance Sheets (Current period unaudited, dollars in millions)
		March 31				December 31
		2020				2019
ASSETS
Current Assets:
Cash and cash equivalents		$	639.0			$	490.8
Accounts receivable, net of allowances for doubtful accounts		593.4				554.1
Short-term contract assets		43.5				38.5
Inventories, net		1,181.1				1,155.3
Prepaid expenses and other current assets		51.0				64.3
Total Current Assets		2,508.0				2,303.0
Property, plant and equipment, net		2,445.5				2,450.1
Goodwill		520.8				525.8
Other assets		332.8				355.7
Total Assets		$	5,807.1			$	5,634.6
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable		$	424.6			$	521.2
Short-term contract liabilities		114.3				78.7
Short-term debt and current portion of long-term debt		310.7				11.5
Other current liabilities		209.6				237.8
Total Current Liabilities		1,059.2				849.2
Long-term debt		1,390.0				1,387.4
Accrued postretirement benefits		307.5				312.5
Pension liabilities		694.3				731.5
Other long-term liabilities		163.5				160.8
Total Liabilities		3,614.5				3,441.4
Total ATI stockholders' equity		2,087.8				2,090.1
Noncontrolling interests		104.8				103.1
Total Equity		2,192.6				2,193.2
Total Liabilities and Equity		$	5,807.1			$	5,634.6

Allegheny Technologies Incorporated and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited, dollars in millions)
		Three Months Ended
		March 31				March 31
		2020				2019
Operating Activities:
Net income		$	23.6			$	16.3
Depreciation and amortization		37.3				38.7
Deferred taxes		8.3				1.6
Net (gain) loss from disposal of property, plant and equipment		(2.5		)		0.8
Change in managed working capital		(134.7		)		(121.0		)
Change in retirement benefits		(23.0		)		(18.4		)
Accrued liabilities and other		(24.4		)		(48.0		)
Cash used in operating activities		(115.4		)		(130.0		)
Investing Activities:
Purchases of property, plant and equipment		(29.1		)		(23.5		)
Proceeds from disposal of property, plant and equipment		2.9				—
Other		1.0				(0.1		)
Cash used in investing activities		(25.2		)		(23.6		)
Financing Activities:
Payments on long-term debt and finance leases		(2.0		)		(1.5		)
Net borrowings (repayments) under credit facilities		298.6				—
Taxes on share-based compensation and other		(7.8		)		(9.9		)
Cash provided by (used in) financing activities		288.8				(11.4		)
Increase (decrease) in cash and cash equivalents		148.2				(165.0		)
Cash and cash equivalents at beginning of period		490.8				382.0
Cash and cash equivalents at end of period		$	639.0			$	217.0

Allegheny Technologies Incorporated and Subsidiaries Revenue by Market (Unaudited, dollars in millions)
		Three Months Ended
		March 31						March 31
		2020						2019
Market
Aerospace & Defense:
Jet Engines		$	272.2		29	%		$	292.4		29	%
Airframes		134.9			14	%		157.8			16	%
Government Aerospace & Defense		85.4			9	%		75.4			7	%
Total Aerospace & Defense		$	492.5		52	%		$	525.6		52	%
Energy*		170.6			18	%		168.5			17	%
Automotive		76.5			8	%		76.9			8	%
Food Equipment & Appliances		50.4			5	%		53.2			5	%
Construction/Mining		43.6			5	%		57.9			6	%
Medical		38.6			4	%		46.1			5	%
Electronics/Computers/Communications		33.2			3	%		34.1			3	%
Other		50.1			5	%		42.5			4	%
Total		$	955.5		100	%		$	1,004.8		100	%

*Includes the oil & gas, hydrocarbon and chemical processing, and electrical energy markets.

Allegheny Technologies Incorporated and Subsidiaries Selected Financial Data (Unaudited)
		Three Months Ended
		March 31			December 31			March 31
		2020			2019			2019
Percentage of Total ATI Sales
High-Value Products
Nickel-based alloys and specialty alloys		32	%		32	%		30	%
Titanium and titanium-based alloys		17	%		19	%		19	%
Precision forgings, castings and components		16	%		17	%		19	%
Precision rolled strip products		12	%		12	%		11	%
Zirconium and related alloys		7	%		6	%		6	%
Total High-Value Products		84	%		86	%		85	%
Standard Products
Standard stainless products		16	%		14	%		15	%
Grand Total		100	%		100	%		100	%

Note: Hot-Rolling and Processing Facility conversion service sales in the AAS segment are excluded from this presentation.

Allegheny Technologies Incorporated and Subsidiaries Computation of Basic and Diluted Earnings Per Share Attributable to ATI (Unaudited, dollars in millions, except per share amounts)
			Three Months Ended
			March 31				December 31				March 31
			2020				2019				2019
Numerator for Basic net income per common share -
	Net income attributable to ATI		$	21.1			$	56.5			$	15.0
Effect of dilutive securities:
	4.75% Convertible Senior Notes due 2022		2.3				3.1				—
Numerator for Diluted net income per common share -
	Net income attributable to ATI after assumed conversions		$	23.4			$	59.6			$	15.0
Denominator for Basic net income per common share -
	Weighted average shares outstanding		126.1				125.9				125.4
Effect of dilutive securities:
	Share-based compensation		0.4				1.3				0.7
	4.75% Convertible Senior Notes due 2022		19.9				19.9				—
Denominator for Diluted net income per common share -
	Adjusted weighted average shares assuming conversions		146.4				147.1				126.1
Basic net income attributable to ATI per common share			$	0.17			$	0.45			$	0.12
Diluted net income attributable to ATI per common share			$	0.16			$	0.41			$	0.12

Allegheny Technologies Incorporated and Subsidiaries Other Financial Information Managed Working Capital (Unaudited, dollars in millions)
		March 31				December 31
		2020				2019
Accounts receivable		$	593.4			$	554.1
Short-term contract assets		43.5				38.5
Inventory		1,181.1				1,155.3
Accounts payable		(424.6		)		(521.2		)
Short-term contract liabilities		(114.3		)		(78.7		)
Subtotal		1,279.1				1,148.0
Allowance for doubtful accounts		4.4				4.6
LIFO reserve		(45.6		)		(33.6		)
Inventory reserves		119.9				104.1
Managed working capital		$	1,357.8			$	1,223.1
Annualized prior 3 months sales		$	3,821.9			$	4,074.4
Managed working capital as a
% of annualized sales		35.5		%		30.0		%
March 31, 2020 change in managed
working capital		$	134.7

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