ATI Announces Multi-Year $700 Million Share Repurchase Program, Upcoming Convertible Notes Redemption

Rhea-AI Summary

ATI Inc. (NYSE: ATI) has announced a $700 million share repurchase program authorized by its Board of Directors. The multi-year program allows for open market or private transactions, with timing and amount dependent on market conditions. Simultaneously, ATI is redeeming the remaining $291 million of its 3.5% Senior Convertible Notes due 2025 on September 10, 2024. Noteholders can convert their holdings to ATI common stock at a rate of 64.7178 shares per $1,000 principal until September 9, 2024. CEO Kim Fields stated these actions demonstrate ATI's confidence in long-term financial performance, robust cash position, and commitment to a balanced capital allocation strategy emphasizing de-leveraging and shareholder returns while funding growth.

Positive

• Authorization of a substantial $700 million share repurchase program
• Redemption of $291 million in convertible notes, potentially reducing debt
• Strong cash and liquidity position reported by the company
• Balanced capital allocation strategy focusing on de-leveraging and shareholder returns

Negative

• Potential dilution if convertible noteholders choose to convert to common stock

Insights

Financial Analyst

ATI's announcement of a $700 million share repurchase program signals strong confidence in their financial outlook and cash position. This move is likely to be viewed positively by investors, potentially boosting stock value. The multi-year nature of the program provides flexibility and demonstrates a long-term commitment to shareholder returns.

The redemption of $291 million in convertible notes further strengthens ATI's balance sheet by reducing debt. If note holders choose to convert to common stock, it could dilute existing shareholders but avoid cash outlay. This balanced approach to capital allocation, focusing on de-leveraging and shareholder returns while funding growth, indicates prudent financial management.

Investors should monitor the pace of share repurchases and any impact on ATI's liquidity and growth investments. Overall, these actions suggest a positive outlook for ATI's financial health and shareholder value.

Market Research Analyst

ATI's strategic moves reflect broader trends in the materials and manufacturing sectors. The $700 million share repurchase program suggests management's belief that the stock is undervalued, potentially indicating strong future performance expectations in their key markets.

The company's mention of being "well-positioned in growing markets" aligns with increasing demand for high-performance materials in aerospace, defense and energy sectors. This positioning could provide a competitive edge and drive long-term growth.

Investors should consider ATI's market position relative to competitors and assess how these financial maneuvers might impact its ability to capitalize on market opportunities. The balance between returning capital to shareholders and investing in growth will be important for maintaining market leadership in high-performance materials.

PITTSBURGH, Sept. 3, 2024 /PRNewswire/ -- ATI Inc. (NYSE: ATI) announced that its Board of Directors has authorized the repurchase of up to $700 million of its outstanding common stock, which the Company currently expects will support a multi-year share repurchase program. Repurchases under the program may be made in the open market or in privately negotiated transactions, with the amount and timing of repurchases depending on market conditions and corporate needs. Open market repurchases will be structured to occur within the pricing and volume requirements of SEC Rule 10b-18. The stock repurchase program does not obligate the Company to repurchase any specific number of shares, and it may be modified, suspended, or terminated at any time by the Board of Directors without prior notice.

"This latest renewal of our stock repurchase program reflects our continuing confidence in ATI's long-term financial performance and our robust cash and liquidity position," said President and CEO Kim Fields. "We are well-positioned in growing markets, delivering the high-performance materials and solutions our customers need."

Additionally, the Company has notified the holders of the remaining $291 million principal amount outstanding of its 3.5% Senior Convertible Notes due 2025 (the "Notes") that the Notes will be redeemed on September 10, 2024.  At any time prior to the close of business on September 9, 2024, holders of any outstanding Notes have the right to convert the principal amount of such Notes into shares of ATI's common stock, par value $0.10 per share (the "Common Stock") at a conversion rate of 64.7178 shares of Common Stock per $1,000 principal amount of the Notes.  Notes not tendered for conversion prior to the close of business on September 9, 2024 will be redeemed on September 10, 2024 in cash, at a redemption price equal to the principal amount of such Notes, plus accrued and unpaid interest on such Notes.  

"Together, these actions reflect our strong commitment to a balanced capital allocation strategy. We're emphasizing balance sheet de-leveraging and shareholder return while funding profitable growth," said Fields.

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 materials; (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; (h) business and economic disruptions associated with extraordinary events beyond our control, such as war, terrorism, international conflicts, public health issues, such as epidemics or pandemics, natural disasters and climate-related events 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, 2023, and in other reports filed with the Securities and Exchange Commission. We assume no duty to update our forward-looking statements.

ATI: Proven to Perform. 
ATI (NYSE: ATI) is a global producer of high performance materials and solutions for the global aerospace & defense markets, and critical applications in electronics, medical and specialty energy. We're solving the world's most difficult challenges through materials science. We partner with our customers to deliver extraordinary materials that enable their greatest achievements: their products fly higher and faster, burn hotter, dive deeper, stand stronger and last longer. Our proprietary process technologies, unique customer partnerships and commitment to innovation deliver materials and solutions for today and the evermore challenging environments of tomorrow. We are proven to perform anywhere. Learn more at ATImaterials.com.

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SOURCE ATI

FAQ

What is the size of ATI's newly announced share repurchase program?

ATI has announced a $700 million share repurchase program, which is expected to support a multi-year buyback initiative.

When will ATI redeem its 3.5% Senior Convertible Notes due 2025?

ATI will redeem the remaining $291 million principal amount of its 3.5% Senior Convertible Notes due 2025 on September 10, 2024.

What is the conversion rate for ATI's 3.5% Senior Convertible Notes?

The conversion rate is 64.7178 shares of ATI common stock per $1,000 principal amount of the Notes.

How does ATI describe its capital allocation strategy?

ATI describes its capital allocation strategy as balanced, emphasizing balance sheet de-leveraging and shareholder return while funding profitable growth.