ATI Completes Sale of Sheffield, UK Operation

Rhea-AI Summary

Allegheny Technologies Incorporated (NYSE: ATI) has successfully divested its Sheffield, UK operation to Mutares SE & Co. KGaA, completing the agreement initially announced in March 2022. The Sheffield operation, which generated $36 million in sales in 2021, primarily served the oil and gas markets, conflicting with ATI's strategy to focus on aerospace and defense. The divestiture comes with a non-cash charge of approximately $110 million, attributed to a UK pension plan transfer and currency translation losses. This strategic move aims to optimize ATI's cost structure and enhance operational focus.

Positive

• Divestiture aligns ATI's operations with its strategic focus on aerospace and defense.
• Opportunity for Sheffield operation to enhance its reputation and product offerings under new ownership.

Negative

• Incurred a non-cash charge of approximately $110 million related to the divestiture.

Divestiture sharpens focus on aerospace and defense markets

PITTSBURGH, May 12, 2022 /PRNewswire/ -- Allegheny Technologies Incorporated (NYSE: ATI) has completed the sale of its Sheffield, UK operation to Mutares SE & Co. KGaA (ISIN: DE000A2NB650). Agreement was announced in early March and regulatory approvals and closing conditions are now complete.

"As ATI accelerates its strategy to become an aerospace and defense leader, we continually review our operations for opportunities to maximize value and optimize cost structure," said Kimberly Fields, Executive Vice President and Chief Operating Officer. "With this transaction, the Sheffield operation has the opportunity to build on its excellent reputation for quality and service, delivering high integrity products in low alloy steels, stainless steels and nickel-based super alloys."

This operation has been part of the Specialty Materials business unit in ATI's High Performance Materials & Components (HPMC) segment. With more than 80% of the operation's $36 million 2021 sales focused on the oil and gas markets, it was not well-aligned with ATI's strategic focus. In 2021, it delivered a negative EBITDA of $6 million.

In the first quarter of 2022, ATI recognized a partial non-cash charge of about $25 million related to the pending sale. It expects to record an additional non-cash charge of approximately $110 million for the completed sale, primarily relating to a UK defined benefit pension plan that transfers with the Sheffield operation and cumulative foreign currency translation losses, in the second quarter of 2022.

ATI: Proven to Perform.

ATI (NYSE: ATI) is a $3 billion global producer of high performance materials and solutions for the global aerospace and defense markets, and critical applications in electronics, medical and specialty energy. We're solving the world's most difficult challenges through materials science. 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. 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. Learn more at ATIMetals.com.

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SOURCE Allegheny Technologies

FAQ

What did ATI announce on May 12, 2022?

ATI announced the completion of the sale of its Sheffield, UK operation to Mutares SE & Co. KGaA.

How much did ATI generate in sales from the Sheffield operation in 2021?

The Sheffield operation generated $36 million in sales in 2021.

What was the EBITDA of the Sheffield operation before the sale?

The Sheffield operation reported a negative EBITDA of $6 million.

What non-cash charges is ATI expecting from the Sheffield sale?

ATI expects a total non-cash charge of approximately $110 million related to the sale.

Why did ATI sell its Sheffield operation?

The sale was part of ATI's strategy to focus on aerospace and defense markets, as the Sheffield operation was primarily aligned with oil and gas.