Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are forward-looking statements. Actual results or performance could differ materially from those encompassed within such forward-looking statements as a result of various factors, including those described below. Net income and net income per share amounts referenced below are attributable to ATI Inc. and Subsidiaries. The following discussion on the Company’s results of operations, financial condition and liquidity for the year ended December 29, 2024 (fiscal year 2024) as compared to the year ended December 31, 2023 (fiscal year 2023) is presented. Information on the Company’s results of operations, financial condition and liquidity for fiscal year 2023 as compared to the year ended January 1, 2023 (fiscal year 2022) is included in our Annual Report on Form 10-K in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” filed on February 23, 2024 and is incorporated herein by reference.

ATI Overview

ATI is a global manufacturer of technically advanced specialty materials and complex components. Our largest markets are aerospace & defense, representing approximately 62% of total sales, led by products for jet engines and airframes. Additionally, we have a strong presence in our other core markets consisting of the specialty energy, medical and electronics markets. In aggregate, these core end markets represent almost 80% of our revenue. ATI is a market leader in manufacturing differentiated products that require our materials science capabilities and unique process technologies, including our new product development competence.

We operate in two business segments: HPMC and AA&S. The HPMC segment’s primary focus is on maximizing jet engine materials and components growth, with approximately 86% of its revenue derived from the aerospace & defense markets including nearly 60% of its revenue from products for commercial jet engines. Commercial aerospace products have been the main source of sales and EBITDA growth for HPMC over the last several years and are expected to continue to drive HPMC and overall ATI results in the future. HPMC has also experienced growth in defense products, which comprise almost 10% of

total sales. Other core markets include medical and specialty energy. HPMC produces a wide range of high performance materials, components, and advanced metallic powder alloys. These products are made from nickel-based alloys and superalloys, titanium and titanium-based alloys, and a variety of other specialty materials. HPMC’s capabilities range from cast/wrought and powder alloy development to final production of highly engineered finished components, and 3D-printed aerospace products.

The AA&S segment is focused on delivering high-value flat products, with a focus on aerospace & defense and other core markets, which comprise approximately 60% of its revenue. Industrial markets comprise the remaining 40% of AA&S sales, which includes the conventional energy and automotive end-markets. AA&S produces nickel-based alloys, titanium and titanium-based alloys, and specialty alloys in a variety of forms including plate, sheet, and strip products.

Overview of Fiscal Year 2024 Financial Performance

Sales in fiscal year 2024 increased 5%, to $4.4 billion, and gross profit increased 12%, to $898 million, compared to fiscal year 2023, reflecting increased demand for products within our aerospace & defense and other core markets of medical, electronics, and specialty energy, which was partially offset by softness in industrial end markets. International sales, including both U.S. exports and foreign sales from our foreign manufacturing operations, were $1.8 billion in fiscal year 2024 and represented 42% of total sales, compared to $1.9 billion or 46% of total sales in fiscal year 2023.

Results for fiscal year 2024 included $17 million of net pre-tax gains and fiscal year 2023 included $104 million of net pre-tax charges as further described in the Results of Operations section below. The Company’s net income for fiscal year 2024 was $367.8 million, or $2.55 per share. ATI Adjusted EBITDA for fiscal year 2024 was $729.1 million, or 16.7% of sales, compared to $634.6 million, or 15.2% of sales, for fiscal year 2023. See further explanation below for non-GAAP definitions and calculations.

A summary of our results is as follows:

Fiscal Year

(Dollars in millions, except per share amounts) 2024 2023

Gross profit % of sales 20.6 % 19.2 %

Income before income taxes $ 486.1 $ 295.2

Net income attributable to ATI $ 367.8 $ 410.8

Diluted net income attributable to ATI per common share $ 2.55 $ 2.81

Our major accomplishments during fiscal year 2024 include the following:

•Year-over-year sales growth of approximately 5%, with ATI’s 2024 sales representing our highest total since 2012. Fiscal year 2024 sales to the aerospace & defense markets increased 10% and represent 62% of our total sales, compared to 59% of total sales in fiscal year 2023. We achieved 15% year-over-year sales growth in our other core markets, including increases of 27% and 22% in the medical and electronics markets, respectively. Sales to our aerospace & defense and other core markets increased 11% compared to fiscal year 2023.

•Growth in the aerospace & defense and other core markets drove higher adjusted EBITDA, which improved by 15%, and to 16.7% as a percentage of sales, a 150 basis point improvement compared to 2023, reflecting robust demand that we expect will continue in 2025.

•We generated cash flow of $407.2 million from operating activities in fiscal year 2024 as we continued efforts to focus on operational improvements to positively impact the inventory intensity of our business and alleviate the required investment of managed working capital in our growing business. Managed working capital as a percent of sales was 30.9% as of December 29, 2024, compared to 31.0% as of December 31, 2023, despite an increase in 2024 sales of 5%. We ended the year with $721 million of cash on hand and $1.3 billion of total liquidity including the undrawn capacity under our ABL credit facility.

•We completed the sale of non-core assets, including our precision rolled strip operations in New Bedford, MA and Remscheid, Germany, generating approximately $65 million in proceeds that will be redeployed to support our strategy to improve operational efficiency.

•In 2024, we continued to return cash to our shareholders through the repurchase of our stock. We repurchased 5.3 million shares of ATI stock for $260 million, using all the remaining $150 million under the plan approved by our Board of Directors in November 2023 and $110 million under the $700 million plan approved in 2024.

•We made progress in deleveraging our balance sheet. During the third quarter of 2024, we redeemed the $291.4 million outstanding principal amount of ATI’s 3.5% Convertible Senior Notes due 2025 (2025 Convertible Notes) by issuing 18.8 million shares of ATI stock. In addition, we received cash proceeds of $76 million to settle the capped call associated with these notes.

Results of Operations

Fiscal Year 2024 Compared to Fiscal Year 2023

Fiscal year 2024 sales increased $188.4 million to $4.4 billion compared to fiscal year 2023, primarily due to increased demand for next generation commercial engine products and for defense applications and commercial airframes. This increase in sales to the aerospace & defense markets was complemented by an increase in sales across our other core markets, primarily for the medical and electronics end markets. These increases were partially offset by softness in certain industrial markets, particularly the conventional energy market.

Our gross profit was $898.2 million, or 20.6% of sales, a $96 million increase compared to fiscal year 2023. Gross profit in fiscal year 2024 included a benefit of $16.7 million related to the recognition of previously deferred employee retention tax credits, of which $9.0 million of the benefit was recognized in the HPMC segment and $7.7 million in the AA&S segment. Gross profit in fiscal years 2024 and 2023 was also favorably impacted by tax credits of $22.7 million and $10.1 million, respectively. These tax credits were recognized as a reduction in cost of sales by our AA&S segment and are the result of the Advanced Manufacturing Production Credit (AMPC) that was part of the Inflationary Reduction Act of 2022. Operating income was $608.9 million for fiscal year 2024, compared to $466.4 million for fiscal year 2023.

Results for fiscal year 2024 included $16.7 million of net pre-tax benefits, which consisted of the following:

•$52.9 million gain on the sale during the fourth quarter of 2024 of our precision rolled strip operations in New Bedford, MA, which was part of the Specialty-Rolled Products business in the AA&S segment, and Remscheid, Germany, which was part of our European business in the HPMC segment. In fiscal year 2023, these operations had external sales of approximately $100 million and income before tax of approximately $6 million.

•$22.1 million of restructuring and other charges, consisting of $11.3 million of start-up costs, $4.6 million of charges for the restructuring of our European operations, $4.1 million for severance-related restructuring charges primarily for cost reduction actions in our domestic operations and $2.1 million of transaction costs.

•$14.1 million of pension remeasurement losses for the immediate recognition of actuarial losses from the remeasurement of the projected benefit obligation and plan assets for defined benefit pension plans in the fourth quarter of fiscal year 2024.

Results for fiscal year 2023 included $104.3 million of net pre-tax charges, which consisted of the following:

•$0.6 million loss on the sale of our Northbrook, IL operations.

•$35.2 million of restructuring and other charges, consisting of $11.5 million of start-up costs, $14.1 million primarily for asset write-offs associated with the restructuring of our European operations and the closure of our Robinson, PA operations, $1.9 million of costs associated with an unplanned outage at our Lockport, NY melt facility, and $7.7 million of severance-related charges primarily for the restructuring of our European operations and involuntary reductions across ATI’s domestic operations.

•$41.7 million pension settlement loss associated with actions taken as part of our pension derisking strategy. On October 17, 2023, we completed a voluntary cash out for term vested employees and annuity buyouts covering 8,200 U.S. qualified defined benefit pension plan participants.

•$26.8 million of pension remeasurement losses for the immediate recognition of actuarial losses from the remeasurement of the projected benefit obligation and plan assets for defined benefit pension plans in the fourth quarter of fiscal year 2023.

The items discussed above are included in operating income on the consolidated statements of operations, with the exception of the pension related gains and losses in fiscal years 2024 and 2023. Further, the items discussed above are excluded from segment EBITDA.

Fiscal year 2024 results also include charges of $11.8 million, primarily reported in selling & administrative expenses and related to a commercial negotiation with a customer. HPMC segment results reflect $6.3 million of this charge, while the remaining $5.5 million is reflected in the AA&S segment results.

Nonoperating retirement benefit expense was $29.0 million, inclusive of a $14.1 million pension remeasurement loss, in fiscal year 2024, compared to $79.7 million in the prior year, inclusive of a $26.8 million pension remeasurement loss. Fiscal year

2023 also includes a $41.7 million pension settlement loss, as discussed above. Interest expense increased to $108.2 million in fiscal year 2024 compared to $92.8 million in fiscal year 2023 largely due to the issuance in August 2023 of the $425 million aggregate principal amount of 7.25% Senior Notes due 2030 (2030 Notes), partially offset by the redemption of the 2025 Convertible Notes during the third quarter of 2024. Other nonoperating income for fiscal year 2024 includes a $11.6 million gain on the sale of certain oil and gas rights.

Our effective tax rate was 21.3%, resulting in an income tax provision of $103.4 million for the fiscal year 2024. The effective tax rate for fiscal year 2024 includes discrete tax benefits of $6.2 million inclusive of $3.3 million for share-based compensation. Results in fiscal year 2023 include an income tax benefit of $128.2 million, which included a $140.3 million benefit for the reversal of valuation allowances. Net income attributable to ATI was $367.8 million, or $2.55 per share, in fiscal year 2024, compared to $410.8 million, or $2.81 per share, for fiscal year 2023.

Adjusted EBITDA was $729.1 million, or 16.7% of sales, for fiscal year 2024, and $634.6 million, or 15.2% of sales, for fiscal year 2023. EBITDA and Adjusted EBITDA are measures utilized by ATI that we believe are useful to investors because these measures are commonly used to analyze companies on the basis of operating performance, leverage and liquidity. Furthermore, analogous measures are used by industry analysts to evaluate operating performance. EBITDA and Adjusted EBITDA are non-GAAP measures and are not intended to represent, and should not be considered more meaningful than, or as alternatives to, a measure of operating performance as determined in accordance with U.S. generally accepted accounting principles (U.S. GAAP). We define EBITDA as income from continuing operations before interest and income taxes, plus depreciation and amortization, goodwill impairment charges and debt extinguishment charges. We define Adjusted EBITDA as EBITDA excluding significant non-recurring charges or credits, restructuring and other charges/credits, gains or losses from the sale of accounts receivables, strike related costs, long-lived asset impairments, pension remeasurement gains and losses, other postretirement/pension curtailment and settlement gains and losses, and gains or losses on sales of businesses. EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow for management’s discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments and capital expenditures. See the Financial Condition and Liquidity section of Management’s Discussion and Analysis for a reconciliation of amounts reported under U.S. GAAP to these non-GAAP measures.

Results by Business Segment

As discussed above, we operate in two business segments: HPMC and AA&S. HPMC sales increased 8% in fiscal year 2024 compared to fiscal year 2023, primarily due to higher aerospace & defense market sales. Increased demand for next generation commercial jet engines, defense applications, and commercial airframe products resulted in a 10% increase in sales to the aerospace & defense markets. Full fiscal year 2024 AA&S sales increased 2% due to an 11% increase in aerospace & defense sales, a 47% increase in medical market sales and a 22% increase in electronics market sales partially offset by continued softness in certain general industrial end markets, particularly conventional energy.

Total segment EBITDA was $782.3 million, or 17.9% of sales, in fiscal year 2024, compared to total segment EBITDA of $710.2 million, or 17.0% of sales, in fiscal year 2023. Our measure of segment EBITDA, which we use to analyze the performance and results of our business segments, excludes net interest expense, income taxes, depreciation and amortization, goodwill impairment charges, debt extinguishment charges, corporate expenses, closed operations and other income (expense), restructuring and other credits/charges, gains or losses from the sale of accounts receivables, strike related costs, long-lived asset impairments, pension remeasurement gains and losses, other postretirement/pension curtailment and settlement gains and losses, and gains or losses on sales of businesses. Results on our management basis of reporting were as follows:

(In millions) Fiscal Year Ended

December 29, December 31, January 1,

Sales:

EBITDA:

High Performance Materials & Components $ 461.4 $ 433.6 $ 303.4

Closed operations and other income (expenses) 10.8 (13.3) (5.6)

Restructuring and other charges (22.1) (31.4) (23.7)

Retirement benefit settlement loss — (41.7) —

Pension remeasurement gain (loss) (14.1) (26.8) 100.3

Joint venture restructuring credit — — 0.9

Gains (losses) on sale of businesses, net 52.9 (0.6) (105.4)

As part of managing the performance of our business, we focus on controlling Managed Working Capital, which we define as gross accounts receivable, short-term contract assets and gross inventories, less accounts payable and short-term contract liabilities. We exclude the effects of inventory valuation reserves and reserves for uncollectible accounts receivable when computing this non-GAAP performance measure, which is not intended to replace Working Capital or to be used as a measure of liquidity. We employ several strategies to actively manage our Managed Working Capital, seeking to effectively balance the need to maintain appropriate levels of Managed Working Capital to support our growth and operations, while deploying our cash efficiently. Our strategies to actively manage our Managed Working Capital include, but are not limited to, taking advantage of favorable customer and supplier payment terms, participating in supplier financing programs, accounts receivable factoring arrangements and other customer financing programs, managing the timing of purchases of raw materials, and leveling manufacturing process throughput and shipping to limit periodic increases in Managed Working Capital. We assess

Managed Working Capital performance as a percentage of the prior three months’ annualized sales to evaluate the asset intensity of our business.

At December 29, 2024, Managed Working Capital was 30.9% of annualized total ATI sales compared to 31.1% of annualized sales at December 31, 2023. Although overall Managed Working Capital increased year over year primarily due to increases in inventory and accounts receivable, such increases were largely in line and due to our increased sales given our fairly consistent Managed Working Capital as a percentage of annualized sales year over year. The $129.4 million increase in overall Managed Working Capital in fiscal year 2024 is detailed in the table below. Days sales outstanding, which measures actual collection timing for accounts receivable, worsened slightly by 2% as of December 29, 2024 compared to fiscal year 2023. Gross inventory turns, which measures how many times we turn over our inventory relative to cost of sales in a year, was consistent in fiscal year 2024 compared to fiscal year 2023. We continue efforts to focus on operational improvements to positively impact the inventory intensity of our business and alleviate the required investment of Managed Working Capital in our growing business.

The computations of Managed Working Capital at December 29, 2024 and December 31, 2023 reconciled to the financial statement line items as computed under U.S. GAAP, were as follows.

Short-term contract assets 75.6 59.1

Short-term contract liabilities (169.4) (163.6)

Allowance for doubtful accounts 15.0 3.2

Net managed working capital held for sale 8.5 —

Managed working capital as a % of annualized sales 30.9 % 31.1 %

December 29, 2024 change in managed working capital $ 129.4

Comparative information for our overall revenues by end market, and their respective percentages of total revenues, is as follows:

(In millions) Fiscal Year

Aerospace & Defense:

Comparative information for our major products, based on their percentages of revenues, is as follows. Hot-Rolling and Processing Facility (HRPF) conversion service sales in the AA&S segment are excluded from this presentation.

Fiscal Year

Nickel-based alloys and specialty alloys 45 % 49 %

Precision forgings, castings and components 19 % 17 %

Titanium and titanium-based alloys 18 % 17 %

PRS products 9 % 10 %

Zirconium and related alloys 9 % 7 %

Sales by geographic area and as a percentage of total sales, were as follows:

(In millions) Fiscal Year

Information with respect to our business segments follows.

High Performance Materials & Components

Fiscal Year Fiscal Year

Segment EBITDA as a percentage of sales 20.3 % 20.5 %

International sales as a percentage of sales 50.2 % 56.8 %

Our HPMC segment produces a wide range of high performance materials, including titanium and titanium-based alloys, nickel- and cobalt-based alloys and superalloys, advanced powder alloys and other specialty materials, in long product forms such as ingot, billet, bar, rod, wire, shapes and rectangles, and seamless tubes, plus precision forgings, components, and machined parts.

Fiscal Year 2024 Compared to Fiscal Year 2023

Sales of $2.3 billion for the HPMC segment in fiscal year 2024 increased 8% compared to fiscal year 2023, primarily due to strong demand in aerospace & defense markets as well as increased medical market sales, which were up 13% compared to fiscal year 2023. Sales to the commercial aerospace market increased 8%, as airframe sales increased 5% and commercial jet engine sales increased 9%, and sales to the defense market increased 24%. Industrial markets sales declined by 23%.

Comparative information for our HPMC segment revenues by market, the respective percentages of overall segment revenues for the fiscal years 2024 and 2023, and the percentage change in revenues by market for fiscal year 2024 is as follows:

(In millions) Fiscal Year

Aerospace & Defense:

Electronics 3.0 — % 3.1 — % (0.1) (3) %

We utilize LTAs for our specialty materials, including powders, parts and components, with certain of our customers, including several aerospace market OEMs, to reduce their supply uncertainty. These LTAs cover sales of ATI’s specialty materials, parts and components used in both next-generation and legacy aircraft platforms, including jet engines. Our LTAs include a titanium products supply agreement for aircraft airframes and structural components with Boeing. This LTA covers value-added titanium products and provides opportunity for greater use of ATI’s next generation and advanced titanium alloys in both long product and flat-rolled product forms. The agreement includes both long-product forms that are manufactured within the HPMC segment, and a significant amount of plate products that are manufactured utilizing assets of both the HPMC and AA&S segments. Revenues and profits associated with these titanium products covered by the Boeing LTA are included primarily in the results for the HPMC segment. The HPMC segment also includes revenues and profits under our LTA with Airbus for titanium airframe products.

We have LTAs with GE Aviation and Safran to supply premium titanium alloys, nickel-based alloys, and vacuum-melted specialty alloys products for commercial and military jet engine applications. In addition, we have LTAs with Rolls-Royce plc for the supply of disc-quality mill products and precision forgings for commercial jet engine applications and with Pratt & Whitney to provide isothermal and conventional forgings for use in jet engines. We also supply products to other important parts of the aircraft market such as helicopters and rotary engine fixed wing aircraft.

New airframe designs contain a larger percentage of titanium alloys, and the jet engines that power them use newer nickel and titanium-based alloys for improved performance and more economical operating costs. Boeing and Airbus continue to have multi-year backlogs of orders for both legacy models and next-generation aircraft, and there are approximately 30,000 jet engines with firm orders (Aero Engine News, January 2025). Due to manufacturing cycle times, demand for our specialty materials leads the deliveries of new aircrafts by approximately 6 to 12 months.

Use of these newer materials, particularly for jet engine applications, is expected to continue to increase for several years, with strong growth expected in powder metal alloys, including increased usage of iso-thermal forging and additive manufacturing production processes.

In addition, as our specialty materials are used in rotating components of jet engines, demand for our products for spare parts is impacted by aircraft flight activity and engine refurbishment requirements of U.S. and foreign aviation regulatory authorities.

As the number of aircraft in service increases, the need for our materials associated with engine refurbishment is expected to increase.

Comparative information for HPMC’s major product categories based on their percentages of the segment’s overall revenue is as follows:

Fiscal Year

Nickel-based alloys and specialty alloys 41 % 44 %

Precision forgings, castings and components 36 % 33 %

Titanium and titanium-based alloys 23 % 22 %

PRS products — % 1 %

HPMC segment EBITDA for fiscal year 2024 increased 6% to $461.4 million, or 20.3% of sales, compared to $433.6 million, or 20.5% of sales, in fiscal year 2023. Strength in the HPMC segment continues to be driven by increased volumes on higher margin next-generation commercial aerospace platforms. Results in fiscal year 2024 included $9.0 million of benefits related to the recognition of previously deferred employee retention tax credits, which were partially offset by a charge of approximately $6.3 million due to a commercial negotiation with a customer and higher incentive compensation, maintenance and outsourcing costs. Fiscal year 2023 included a $10.5 million benefit associated with an insurance claim due to an outage at one of our facilities.

Advanced Alloys & Solutions

Fiscal Year Fiscal Year

Segment EBITDA as a percentage of sales 15.4 % 13.5 %

International sales as a percentage of sales 33.2 % 35.0 %

Fiscal Year 2024 Compared to Fiscal Year 2023

Sales of $2.1 billion for the AA&S segment in fiscal year 2024 increased 2% compared to fiscal year 2023, as an 11% increase in aerospace & defense sales, a 47% increase in medical market sales and a 22% increase in electronics market sales were partially offset by continued industrial markets softness, particularly conventional energy.

Comparative information for our AA&S segment revenues by market, the respective percentages of overall segment revenues, for the fiscal years 2024 and 2023, and the percentage change in revenues by market for fiscal year 2024 is as follows:

(In millions) Fiscal Year

Aerospace & Defense:

Our AA&S segment produces zirconium and related alloys including hafnium and niobium, nickel-based alloys, titanium and titanium-based alloys, and specialty alloys in a variety of forms including plate, sheet, and PRS products. AA&S also provides hot-rolling conversion services at its HRPF, including carbon steel products under several LTAs.

Comparative information for the AA&S segment’s major product categories, based on their percentages of revenue are presented in the following table. HRPF conversion service sales are excluded from this presentation.

Fiscal Year

Nickel-based alloys and specialty alloys 49 % 54 %

PRS products 19 % 19 %

Zirconium and related alloys 19 % 15 %

Titanium and titanium-based alloys 13 % 12 %

Segment EBITDA was $320.9 million, or 15.4% of sales, a 16% increase from segment EBITDA of $276.6 million, or 13.5% of sales, in fiscal year 2023. The margin increase compared to the prior year was primarily due to a favorable sales mix, as growth in titanium mill products and exotic alloys offset weaker demand for nickel-based alloys. AA&S segment EBITDA in fiscal year 2024 and 2023 included benefits from credits of $22.7 million and $10.1 million, respectively, for the AMPC. Fiscal year 2024 also included $7.7 million of benefits related to the recognition of previously deferred employee retention tax credits, which were partially offset by a charge of approximately $5.5 million due to a commercial negotiation with a customer and higher incentive compensation and maintenance costs.

Corporate Expenses

Corporate expenses, which are primarily included in selling and administrative expenses in the statement of operations, were $64.0 million in fiscal year 2024 compared to $62.3 million in fiscal year 2023. Increased expenses in fiscal years 2024 compared to fiscal year 2023 were primarily due to higher incentive compensation costs.

Closed Operations and Other Income/Expenses

Closed operations and other income/expenses are presented primarily in selling and administrative expenses in the consolidated statements of operations and include legal, environmental, retirement benefits and insurance obligations associated with closed operations as well as gains from the sale of non-core assets. Closed operations and other expenses provided income of $10.8 million in fiscal year 2024, compared to expense of $13.3 million in fiscal year 2023. Fiscal year 2024 includes an $11.6 million gain on the sale of certain oil and gas rights, included within other income, net, on the consolidated statement of operations, and favorable foreign currency transaction impacts as compared to the prior year period. Fiscal year 2024 also includes a $2.3 million gain on the sale of assets for our idled Houston, PA facility included within gain on asset sales and sales of businesses, net, on the consolidated statement of operations. We received $3.5 million of proceeds from this sale, which was reported as an investing activity on the consolidated statement of cash flows. Fiscal year 2023 reflects higher insurance costs associated with an outstanding insurance claim involving our captive insurance company.

Depreciation and Amortization

The following table shows depreciation & amortization for the relevant periods by each business segment. Depreciation expense in fiscal year 2023 includes $3.8 million of accelerated depreciation of fixed assets related to the restructuring of our European operations and the closure of our Robinson, PA operations.

Fiscal Year

Depreciation and amortization:

High Performance Materials & Components $ 71.6 $ 71.1

Advanced Alloys & Solutions 73.2 67.9

Interest Expense, Net

Interest expense, net of interest income and interest capitalization, was $108.2 million in fiscal year 2024, compared to $92.8 million in fiscal year 2023. The increase in fiscal year 2024 compared to fiscal year 2023 is largely a result of the issuance in August 2023 of the 2030 Notes, partially offset by a decline from the redemption of the 2025 Convertible Notes during the third quarter of 2024. Further, interest expense is presented net of interest income of $16.0 million in fiscal year 2024 and $13.0 million in fiscal year 2023. Interest expense in fiscal years 2024 and 2023 was reduced by $11.8 million and $13.5 million, respectively, related to interest capitalization on large, strategic capital projects.

Restructuring and Other Charges/Credits

For the fiscal year ended December 29, 2024, restructuring and other charges were $22.1 million and include $11.3 million of start-up costs, $4.6 million of charges associated with our European restructuring, $4.1 million of severance-related restructuring charges primarily related to cost reduction actions in our domestic operation, and $2.1 million of transaction related costs. These costs were recorded in the consolidated statement of operations based on the nature of the charge, with $15.3 million recorded as cost of sales, $2.7 million recorded as selling and administrative expenses and $4.1 million as restructuring charges on the consolidated statements of operations. These restructuring and other charges are excluded from segment and adjusted EBITDA.

For the fiscal year ended December 31, 2023, restructuring and other charges were $31.4 million, which are excluded from segment results. These charges include $7.7 million of severance-related restructuring charges and $23.7 million of charges included within cost of sales on the consolidated statements of operations. The $7.7 million of severance-related restructuring charges represent severance for our European restructuring and headcount reductions in ATI domestic operations. The $23.7 million of charges within cost of sales include $11.5 million of start-up costs, $1.9 million of costs associated with an unplanned outage at our Lockport, NY facility, and $10.3 million primarily for asset write-offs for the restructuring of our

European operations and the closure of our Robinson, PA operations. These restructuring and other charges are excluded from segment and adjusted EBITDA.

Pension Remeasurement Gains and Losses

The Company recognizes gains and losses from the remeasurement of the projected benefit obligation and plan assets for defined benefit pension plans immediately in earnings through net periodic pension benefit cost. The Company completes the remeasurements of these plans in the fourth quarter of each fiscal year and, as a result, we recognized pension remeasurement losses of $14.1 million and $26.8 million in fiscal years 2024 and 2023, respectively. These losses are excluded from segment and adjusted EBITDA and recorded in nonoperating retirement benefit income/expense on the consolidated statements of operations.

Retirement Benefit Settlement Gains and Losses

On October 17, 2023, we completed a voluntary cash out for term vested employees and a large annuity buyout related to approximately 8,200 U.S. qualified defined benefit pension plan participants. As a result of the annuity buyout, ATI recognized a $41.7 million pretax settlement loss, which is excluded from segment and adjusted EBITDA and recorded in nonoperating retirement benefit income/expense on the consolidated statement of operations.

Gains/Loss on Sale of Businesses, Net

Gain on sales of businesses for fiscal year 2024 is related to a $52.9 million gain on the sale of our precision rolled strip operations in New Bedford, MA operations and Remscheid, Germany, for which $48.0 million of proceeds, net of transaction costs, were received and reported as an investing activity on the consolidated statement of cash flows.

Loss on sales of businesses for fiscal year 2023 is related to a $0.6 million loss on the sale of our Northbrook, IL operations. These gains and losses on sale of businesses are excluded from segment and adjusted EBITDA.

Income Taxes

For fiscal year 2024, our effective tax rate was 21.3% resulting in an income tax provision of $103.4 million. The effective tax rate for fiscal year 2024 includes discrete tax benefits of $6.2 million inclusive of $3.3 million for share-based compensation. Results in fiscal year 2023 include an income tax benefit of $128.2 million, which included a $140.3 million benefit for the reversal of valuation allowances.

Financial Condition and Liquidity

We have an ABL credit facility, which is collateralized by the accounts receivable and inventory of our operations. The ABL credit facility also provides us with the option of including certain machinery and equipment as additional collateral for purposes of determining availability under the facility. The ABL credit facility, which matures in September 2027, includes a $600 million revolving credit facility, a letter of credit sub-facility of up to $200 million, a $200 million term loan (ABL Term Loan), and a swing loan facility of up to $60 million. The ABL Term Loan can be prepaid in increments of $25 million if certain minimum liquidity conditions are satisfied. In addition, we have the right to request an increase of up to $300 million under the revolving credit facility for the duration of the ABL.

As of December 29, 2024, there were no outstanding borrowings under the revolving credit portion of the ABL, and $30.5 million was utilized to support the issuance of letters of credit. There were no revolving credit borrowings under the ABL during fiscal year 2024. There were average revolving credit borrowings of $13 million bearing an average annual interest rate of 6.5% under the ABL during fiscal year 2023.

The ABL Term Loan has an interest rate of 2.0% above adjusted Secured Overnight Financing Rate (SOFR). The applicable interest rate for revolving credit borrowings under the ABL credit facility includes interest rate spreads based on available borrowing capacity that range between 1.25% and 1.75% for SOFR-based borrowings and between 0.25% and 0.75% for base rate borrowings.

The ABL credit facility contains a financial covenant whereby we must maintain a fixed charge coverage ratio of not less than 1.00:1.00 after an event of default has occurred and is continuing or if the undrawn availability under the ABL revolving credit portion of the facility is less than the greater of (i) 10% of the then applicable maximum loan amount under the revolving credit portion of the ABL and the outstanding ABL Term Loan balance, or (ii) $60.0 million. We were in compliance with the fixed charge coverage ratio as of December 29, 2024.

During the fourth quarter of 2024, we received $48.0 million in cash, net of transaction costs, for the sale of our precision rolled strip operations in New Bedford, MA and Remscheid, Germany. We also received $11.6 million in cash for the sale of certain oil and gas rights. Overall, we received cash for non-core assets sales of over $65 million, which are recorded in investing activities on the consolidated statement of cash flows.

During the third quarter of 2024, we notified holders of the $291.4 million outstanding principal amount of our 2025 Convertible Notes that they would be redeemed prior to their maturity date. The holders of any outstanding 2025 Convertible Notes had the right to convert the principal amount of such notes into shares of ATI’s common stock prior to the maturity date. Any 2025 Convertible Notes not tendered for conversion prior to the maturity date were redeemed in cash at a redemption price equal to the principal amount, plus accrued and unpaid interest. As a result, $291.0 million principal amount of the outstanding notes was converted to 18.8 million shares of ATI common stock, with the remaining $0.4 million of outstanding principal balance that was not tendered for conversion paid in cash. We also settled the capped call transactions initiated as part of the issuance of the 2025 Convertible Notes for $76.1 million in cash, which is recorded as additional paid-in capital on the consolidated balance sheet and as a financing activity on the consolidated statement of cash flows.

At December 29, 2024, we had $721 million of cash and cash equivalents, and available additional liquidity from the undrawn capacity under the ABL credit facility of approximately $525 million, for total liquidity of approximately $1.3 billion. Our next meaningful debt maturity is $150 million of debentures in the fourth quarter of fiscal year 2025, which we expect to repay with cash on hand at that time.

In October 2023, we purchased group annuity contracts from an insurer covering approximately 85% of our U.S. qualified defined benefit pension plan obligations. Under these contracts, we transferred the pension obligations and associated assets for approximately 8,200 plan participants to the selected insurance company. After these actions, our U.S. qualified defined benefit plan includes approximately 2,000 participants. Based on current actuarial assumptions, we are not required to make any contributions to our pension plan during fiscal year 2025. Using our long-term weighted average expected rate of return on pension plan assets and other actuarial assumptions, we do not expect to have any significant minimum cash funding requirements to the defined benefit pension plan for at least ten years. However, these funding estimates are subject to significant uncertainty including the actual pension trust assets’ fair value, and the discount rates used to measure pension liabilities.

Periodically, our Board of Directors authorizes the repurchase of ATI Common stock (the “Share Repurchase Program”), the most recent of which was $700 million that was announced in September 2024. In fiscal year 2024, ATI used $260 million to repurchase 5.3 million shares of its common stock under the Share Repurchase Program. As of December 29, 2024, there is $590 million of authorization remaining under the Share Repurchase Program. Repurchases under these programs can 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 are structured to occur within the pricing and volume requirements of SEC Rule 10b-18. The current Share Repurchase Program has no time limit, does not obligate the Company to repurchase any specific number of shares, and may be modified, suspended, or terminated at any time by the Board of Directors without prior notice.

In managing our overall capital structure, we focus on the ratio of net debt to Adjusted EBITDA, which we use as a measure of our ability to repay our incurred debt. We define net debt as the total principal balance of our outstanding indebtedness excluding deferred financing costs, net of cash, at the balance sheet date. See the explanations above for our definitions of Adjusted EBITDA and EBITDA, which are non-GAAP measures and are not intended to represent, and should not be considered more meaningful than, or as alternatives to, a measure of operating performance as determined in accordance with U.S. GAAP. Our ratio of net debt to Adjusted EBITDA (Adjusted EBITDA Leverage Ratio) measures net debt at the balance sheet date to Adjusted EBITDA as calculated on the trailing twelve-month period from this balance sheet date.

Our Debt to Adjusted EBITDA Leverage Ratio and Net Debt to Adjusted EBITDA Leverage ratio improved in fiscal year 2024 compared to fiscal year 2023, resulting from higher earnings and lower debt as a result of the redemption of the 2025 Convertible Notes. The reconciliations of our Adjusted EBITDA Leverage Ratios to the balance sheet and income statement amounts as reported under U.S. GAAP are as follows:

Net income attributable to ATI $ 367.8 $ 410.8

Net income attributable to noncontrolling interests 14.9 12.6

Depreciation and amortization 151.5 146.1

Income tax provision (benefit) 103.4 (128.2)

Pension remeasurement loss 14.1 26.8

Retirement benefit settlement loss — 41.7

Restructuring and other charges 22.1 31.4

Loss (gain) on asset sales and sale of business (52.9) 0.6

Add: Debt issuance costs 14.2 19.6

Debt to Adjusted EBITDA 2.62 3.47

Net Debt to Adjusted EBITDA 1.63 2.29

We believe that internally generated funds, current cash on hand and available borrowings under the ABL credit facility will be adequate to meet our liquidity needs, including the scheduled debt maturity in the fourth quarter of fiscal year 2025. We regularly review our capital structure, various financing alternatives and conditions in the debt and equity markets in order to opportunistically enhance our capital structure and reduce financing costs. As a result, we may seek to refinance or retire existing indebtedness, incur new or additional indebtedness or issue equity or equity-linked securities, in each case, depending on market and other conditions. Further, in the event we seek additional or new financing, the cost, terms and conditions of such borrowings would be impacted by our credit rating. As of December 29, 2024, we have no off-balance sheet arrangements as defined in Item 303(a)(4) of SEC Regulation S-K.

Cash Flow

Cash provided by operations was $407.2 million for fiscal year 2024 and $85.9 million fiscal year 2023, which included $272 million in contributions to the U.S. defined benefit pension plans. Both periods reflect higher accounts receivable and higher inventory balances due to increased operating levels, but these conditions impacted 2024 to a much lesser extent than 2023. Working capital balances, and consequently cash from operations, can fluctuate throughout any operating period based upon the timing of receipts from customers and payments to vendors. However, we actively manage our working capital to allow for the required flexibility to meet our strategic objectives. Other significant fiscal year 2024 operating cash flow items included payment of 2023 annual incentive compensation. Other significant fiscal year 2023 operating cash flow items included payment of 2022 annual incentive compensation.

Cash used in investing activities was $159.6 million in fiscal year 2024, reflecting $239.1 million in capital expenditures to grow our capacity and capabilities with a focus on core markets, including aerospace & defense. These investing activity outflows were partially offset by $48.0 million of proceeds from the sale of our New Bedford, MA operations and Remscheid, Germany operations and $27.6 million of proceeds from property, plant and equipment sales, which included $11.6 million of proceeds on the sale of certain oil and gas rights and $3.5 million of proceeds received for the sale of assets for our idled Houston, PA facility. We expect to fund our capital expenditures with cash on hand, cash flow generated from our operations and, if needed, by using a portion of the ABL credit facility. Cash used in investing activities was $193.2 million in fiscal year 2023, reflecting $200.7 million in capital expenditures primarily related to AA&S transformation projects and various HPMC growth projects.

Cash used by financing activities in fiscal year 2024 was $260.4 million, which included $260.0 million to repurchase 5.3 million shares of ATI stock under our Share Repurchase Program and $16.0 million in dividend payments to the 40% noncontrolling interest in our PRS joint venture in China, partially offset by $76.1 million in cash received from the settlement of the capped call as a result of the redemption of the 2025 Convertible Notes. Cash provided by financing activities in fiscal year 2023 was $267.2 million, and included $418.8 million of net proceeds from the issuance of the 2030 Notes during the third quarter of fiscal year 2023, partially offset by $85.2 million toward the repurchase of 2.0 million shares of ATI stock under our repurchase programs authorized by our Board of Directors and $16.0 million in dividend payments to the 40% noncontrolling interest in our PRS joint venture in China.

At December 29, 2024, cash and cash equivalents on hand totaled $721.2 million, a $22.7 million increase from fiscal year-end 2023. Cash and cash equivalents held by our foreign subsidiaries was $210.8 million at December 29, 2024, of which $100.9 million was held by our PRS joint venture in China.

Contractual Obligations

A summary of required payments under financial instruments (excluding accrued interest) and other commitments are presented below.

(In millions) Total Less than 1year 1-3years 4-5years After 5years

Contractual Cash Obligations

Unconditional Purchase Obligations

Capital expenditures 32.0 32.0 — — —

Other Financial Commitments

Guarantees $ 16.8

(A)Amounts exclude $95 million for certain finance lease contracts the Company has agreed to enter into. See Note 11, Leases for further information.

(B)Amounts include contractual interest payments using the interest rates in effect as of December 29, 2024 applicable to the Company’s ABL Term Loan due 2027, the Allegheny Ludlum 6.95% Debentures due 2025, the 2027 Notes, the 2029 Notes, the 2030 Notes and the 2031 Notes.

(C)Amounts include operating lease obligations at their undiscounted value. These obligations are presented in other current liabilities and other long-term liabilities on the consolidated balance sheets at their discounted value, using applicable interest rates. See Note 11, Leases for further information.

(D)Based on current actuarial studies, amounts include payments for the next 10 years, which are not significant, to defined benefit pension plans, assuming the expected long-term returns on pension assets are achieved. Projections of minimum required payments to the U.S. qualified defined benefit pension plan are subject to significant uncertainty based on a number of factors including actual pension plan asset returns, changes in estimates of participant longevity, and changes in interest rates. Amounts also include actuarial projections of payments under other post-employment benefit plans for the next 10 years. In most retiree healthcare plans, our contributions are capped based on the cost as of a certain date. See Note 14, Retirement Benefits for further information.

(E)We have contracted for physical delivery for certain of our raw materials to meet a portion of our needs. These contracts are based upon fixed or variable price provisions. We used current market prices as of December 29, 2024, for raw material obligations with variable pricing.

(F)We have various contractual obligations that extend through fiscal year 2030 for services involving production facilities, information technology services and administrative operations. Our purchase obligation as disclosed represents the estimated termination fees payable if we were to exit these contracts.

(G)At December 29, 2024, drawn amounts on the U.S. facility were $30.5 million utilized for standby letters of credit under the $600 million ABL credit facility, which renew annually. These standby letters of credit are used to support: $20.8 million in workers’ compensation and general insurance arrangements, $5.4 million related to environmental matters and $4.3 million for performance assurances.

Commitments and Contingencies

At December 29, 2024, our reserves for environmental remediation obligations totaled approximately $15 million, of which $6 million was included in other current liabilities. These reserves included estimated probable future costs of: $3 million for federal Superfund and comparable state-managed sites; $6 million for formerly owned or operated sites for remediation or indemnification obligations; $5 million for owned or controlled sites at which our operations have been or plan to be discontinued; and $1 million for sites utilized by the Company in its ongoing operations. We continue to evaluate whether we may be able to recover a portion of future costs for environmental liabilities from third parties and to pursue such recoveries where appropriate. The timing of expenditures depends on a number of factors that vary by site. ATI expects that it will expend present accruals over many years and that remediation of all sites with which it has been identified will be completed within thirty years.

Asset retirement obligations (AROs) recording by the Company were $8 million at December 29, 2024. These AROs related to landfill closures, decommissioning costs, facility leases and conditional AROs associated with manufacturing activities using what may be characterized as potentially hazardous materials. During fiscal year 2024, we de-recognized $10 million of AROs in connection with the sale of our precision rolled strip operations.

Based on currently available information, it is reasonably possible that the costs for active matters may exceed our recorded reserves by as much as $16 million. However, future investigation or remediation activities may result in the discovery of additional hazardous materials, potentially higher levels of contamination than discovered during prior investigation, and may impact costs of the success or lack thereof in remedial solutions. Therefore, future developments, administrative actions or liabilities relating to environmental matters could have a material adverse effect on the ATI’s consolidated financial condition or results of operations.

Retirement Benefits

All of ATI’s defined benefit pension plans are closed to new entrants, and at most ATI operations with pension participants, the plans are frozen for all future benefit accruals, with less than 800 participants still accruing benefit service. Additionally, all of the remaining collectively-bargained defined benefit retiree health care plans at ATI’s operations are now closed to new entrants, with cost caps in place for these obligations. As a result of these actions, ATI’s retirement savings and other postretirement benefit programs have largely transitioned to a defined contribution structure. From fiscal years 2013 to 2022, five annuity buyouts of retired participants and two voluntary cash out programs of deferred participants during this period helped to reduce the total participants in ATI’s U.S. qualified defined benefit pension plans by more than 60%. During the fourth quarter of fiscal year 2023, we purchased group annuity contracts from an insurer covering approximately 85% of our U.S. qualified defined benefit pension plan obligations. Under these contracts, we transferred the pension obligations and associated assets for approximately 8,200 plan participants to the selected insurance company. To facilitate this pension derisking strategy, we completed a voluntary cash out for term vested employees and contributed $222 million to our pension plan in the third quarter of fiscal year 2023, to fully fund remaining pension liabilities ahead of this annuity transaction. After these actions, our U.S. qualified defined benefit pension plan includes approximately 2,000 participants.

At December 29, 2024, our defined benefit pension plans were approximately 92% funded in accordance with generally accepted accounting principles, and were remeasured at that date using a 5.85% discount rate to measure the projected benefit obligation. For ERISA funding purposes, discount rates used to measure pension liabilities for U.S. qualified defined benefit plans are calculated on a different basis using an IRS-determined segmented yield curve. Funding requirements are also affected by IRS-determined mortality assumptions, which may differ from those used under accounting standards. Based on current actuarial assumptions, we are not required to make any contributions to our pension plan during fiscal year 2025, and will not be required to make significant contributions for at least ten years. However, these estimates are subject to significant uncertainty, including the performance of our pension trust assets and the discount rates used to measure pension liabilities. Pension trust asset performance for both our accounting and ERISA funding calculations is determined using the market value of plan assets at the end of each year.

Critical Accounting Policies

The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles. When more than one accounting principle, or the method of its application, is generally accepted, management selects the principle or method that is most appropriate in our specific circumstances. Application of these accounting principles requires our management to make estimates about the future resolution of existing uncertainties; as a result, actual

results could differ from these estimates. In preparing these consolidated financial statements, management has made its best estimates and judgments of the amounts and disclosures included in the financial statements giving due regard to materiality.

Asset Impairment

We monitor the recoverability of the carrying value of our long-lived assets. An impairment charge is recognized when the expected net undiscounted future cash flows from an asset’s use (including any proceeds from disposition) are less than the asset’s carrying value, and the asset’s carrying value exceeds its fair value. Changes in the expected use of a long-lived asset group, and the financial performance of the long-lived asset group and its operating segment, are evaluated as indicators of possible impairment. Future cash flow value may include appraisals for property, plant and equipment, land and improvements, future cash flow estimates from operating the long-lived assets, and other operating considerations.

As of April 3, 2022, our Sheffield, U.K. operations were classified as held for sale, and the terms of sale resulted in indicators of impairment in the long-lived assets of this disposal group. A $22.3 million long-lived asset impairment charge was recorded in the first quarter of fiscal year 2022, reported as part of the $112.2 million loss on sale of this business for the fiscal year ended January 1, 2023. This long-lived asset impairment charge was determined using the held for sale framework and represents Level 1 information in the fair value hierarchy.

Goodwill is reviewed annually in the fourth quarter of each fiscal year for impairment or more frequently if impairment indicators arise. Other events and changes in circumstances may also require goodwill to be tested for impairment between annual measurement dates. At December 29, 2024, the Company had $227.2 million of goodwill on its consolidated balance sheet, all of which relates to the HPMC segment.

For our annual goodwill impairment evaluation performed in the fourth quarter of fiscal year 2024, quantitative goodwill assessments were performed for the two HPMC reporting units with goodwill. Fair values were determined by using a quantitative assessment that includes discounted cash flow and multiples of cash earnings valuation techniques, plus valuation comparisons to recent public sale transactions of similar businesses, if any, which represents Level 3 unobservable information in the fair value hierarchy. These impairment assessments and valuation methods require us to make estimates and assumptions regarding revenue growth, changes in working capital and capital expenditures, selling prices and profitability that drive cash flows, and the WACC. Many of these assumptions are determined by reference to market participants we have identified. For example, our WACC used in our discounted cash flow assessments was 11.0% and long-term growth rates ranged from 3% to 3.5%. The estimated effect of a 0.50% change in the WACC would result in a 7% change in the fair value of the Forged Products reporting unit. Although we believe that the estimates and assumptions used were reasonable, actual results could differ from those estimates and assumptions.

The $227.2 million of goodwill remaining as of December 29, 2024 on our consolidated balance sheet is comprised of $161.2 million at the Forged Products reporting unit and $66.0 million at the Specialty Materials reporting unit. For our annual goodwill impairment evaluation performed in the fourth quarter of fiscal year 2024, the Specialty Materials reporting unit had a fair value that was significantly in excess of carrying value. The Forged Products reporting unit had a fair value that exceeded carrying value by approximately 95% for the fiscal year 2024 annual assessment, which increased compared to the annual evaluation for fiscal year 2023. As a result, no impairments were determined to exist from the annual goodwill impairment evaluation for the fiscal years ended December 29, 2024, December 31, 2023 or January 1, 2023. In order to validate the reasonableness of the estimated fair values of the reporting units as of the valuation date, a reconciliation of the aggregate fair values of all reporting units to market capitalization was performed using a reasonable control premium. In addition, no indicators of impairment were observed in fiscal years 2024 or 2023 associated with any of our long-lived assets.

Income Taxes

The provision for income taxes includes deferred taxes resulting from temporary differences in income for financial and tax purposes using the liability method. Such temporary differences result primarily from differences in the carrying value of assets and liabilities. Future realization of deferred income tax assets requires sufficient taxable income within the carryback and/or carryforward period available under tax law. On a quarterly basis, we evaluate the realizability of our deferred tax assets.

The evaluation includes the consideration of 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. In situations where a three-year cumulative loss condition exists, accounting standards limit the ability to consider projections of future results as positive evidence to assess the realizability of deferred tax assets. Valuation allowances are established when it is estimated that it is more likely than not that the tax benefit of the deferred tax asset will not be realized.

At the end of fiscal year 2023, ATI’s U.S. operations exited a three-year cumulative loss position, which previously limited the ability to utilize future projections as verifiable sources of income when analyzing the need for a valuation allowance. As part of the exit, we concluded it was appropriate to consider future projections as a source of income when analyzing the need for a valuation allowance. With the utilization of projections, we determined that valuation allowances on net deferred tax asset balances for federal and certain state jurisdictions are no longer required. Certain individual tax attributes still require a valuation allowance based on expected utilization. We updated our projections at the end of fiscal year 2024 and determined a deferred tax asset valuation allowance of $57.7 million was still needed. In addition, we have $23.3 million of valuation allowances on amounts recorded in other comprehensive loss on the consolidated balance sheet as of December 29, 2024. Results for fiscal years 2023 and 2022 include impacts from income taxes that differ from applicable standard tax rates, primarily related to income tax valuation allowances on the current year income along with the release of the valuation allowance in fiscal year 2023.

Retirement Benefits

We have defined contribution retirement plans or benefit pension plans covering substantially all of our employees. We also sponsor several postretirement plans covering certain hourly and salaried employees and retirees. These plans provide health care and life insurance benefits for eligible employees. Company contributions to defined contribution retirement plans are generally based on a percentage of eligible pay or based on hours worked, and are funded with cash. All of ATI’s defined benefit pension plans are closed to new entrants, and at most ATI operations with pension participants the plans are frozen for all future benefit accruals, with less than 800 participants still accruing benefit service. Additionally, all of the remaining, collectively bargained defined benefit retiree health care plans at ATI’s operations are closed to new entrants, with cost caps in place for these obligations. As a result of these actions, ATI’s retirement savings and other postretirement benefit programs have largely transitioned to a defined contribution structure.

Under U.S. generally accepted accounting principles, amounts recognized in financial statements for defined benefit pension plans are determined on an actuarial basis, rather than as contributions are made to the plan. A significant element in determining our pension income or expense in accordance with the accounting standards is the expected investment return on plan assets. In establishing the expected return on plan investments, which is reviewed annually in the fourth quarter, we take into consideration input from our third-party pension plan asset managers and actuaries regarding the types of securities the plan assets are invested in, how those investments have performed historically, and expectations for how those investments will perform in the future. Our weighted average expected long-term return on pension plan investments was 5.80% in fiscal year 2024. The expected long-term rate of return on pension plan investments for fiscal year 2025 will be 5.80%. We apply the assumed rate of return to the market value of plan assets at the end of the previous year. This produces the expected return on plan assets that is included in annual pension expense for the current year. The actual returns on pension plan assets for the last five fiscal years have been (2.7)% for 2024, 2.0% for 2023, (14.5)% for 2022, 12.4% for 2021, and 15.2% for 2020. The effect of increasing, or lowering, the expected return on pension plan investments by 0.25% would result in additional pre-tax annual income, or expense, of approximately $1 million. The cumulative difference between the expected return and the actual return on plan assets is immediately recognized in earnings through net periodic pension benefit cost within nonoperating retirement benefit expense on the consolidated statements of operations when pension plans are remeasured annually in the fourth quarter or on an interim basis as triggering events require remeasurement. The amount of expected return on plan assets can vary significantly from year-to-year since the calculation is dependent on the market value of plan assets as of the end of the preceding year. U.S. generally accepted accounting principles allow companies to calculate the expected return on pension assets using either an average of fair market values of pension assets over a period not to exceed five years, which reduces the volatility in reported pension income or expense, or their fair market value at the end of the previous year. However, the U.S. Securities and Exchange Commission currently does not permit companies to change from the fair market value at the end of the previous year methodology, which is the methodology that we use, to an averaging of fair market values of plan assets methodology. As a result, our results of operations and those of other companies, including companies with which we compete, may not be comparable due to these different methodologies in calculating the expected return on pension investments.

In accordance with accounting standards, we determine the discount rate used to value pension plan liabilities as of the last day of our fiscal year. The discount rate reflects the current rate at which the pension liabilities could be effectively settled. In estimating this rate, we receive input from our actuaries regarding the rates of return on high quality, fixed-income investments with maturities matched to the expected future retirement benefit payments. Based on this assessment, we established a discount rate of 5.85% for valuing the pension liabilities as of December 29, 2024, and for determining the pension expense for fiscal year 2025. We had assumed a discount rate of 5.60% at the end of fiscal year 2023, and initially assumed a discount rate of 5.55% at the end of fiscal year 2022, which changed to 6.40% upon the remeasurement as of October 17, 2023, following the large annuity buyout of retirees. The estimated effect of changing the discount rate by 0.50% would decrease pension liabilities in the case of an increase in the discount rate or increase pension liabilities in the case of a decrease in the discount rate, by approximately $20 million. Such a change in the discount rate would have an insignificant impact to pension expense. The effect on pension liabilities for changes to the discount rate, as well as the net effect of other changes in actuarial assumptions

and experience, are immediately recognized in earnings through net periodic pension benefit cost within nonoperating retirement benefit expense on the consolidated statements of operations when pension plans are remeasured annually in the fourth quarter or on an interim basis as triggering events require remeasurement. This immediate recognition is in accordance with the accounting standards and is the Company’s accounting policy as discussed in Note 1 to the Consolidated Financial Statements.

With respect to our postretirement plans, under most of the plans, our contributions towards retiree medical premiums are capped based upon the cost as of certain dates, thereby creating a defined contribution. In accordance with U.S. generally accepted accounting standards, postretirement expenses recognized in financial statements associated with defined benefit plans are determined on an actuarial basis, rather than as benefits are paid. We use actuarial assumptions, including the discount rate and the expected trend in health care costs, to estimate the costs and benefit obligations for these plans. The discount rate, which is determined annually at the end of each fiscal year, is developed based upon rates of return on high quality, fixed-income investments. At the end of fiscal year 2024, we determined the rate to be 5.60%, compared to a 5.40% discount rate in fiscal year 2023, and a 5.45% discount rate in fiscal year 2022. The estimated effect of changing the discount rate by 0.50% would decrease postretirement obligations in the case of an increase in the discount rate or increase postretirement obligations in the case of a decrease in the discount rate, by approximately $6 million. Such a change in the discount rate would have an insignificant impact to postretirement benefit expense. Based upon predictions of continued significant medical cost inflation in future years, the annual assumed rate of increase in the per capita cost of covered benefits of health care plans is 6.6% in 2025 and is assumed to gradually decrease to 4.0% in the year 2048 and remain level thereafter. Assumed health care cost trend rates can have a significant effect on the benefit obligation for health care plans, however, the Company’s contributions for most of its retiree health plans are capped based on a fixed premium amount, which limits the impact of future health care cost increases.

Forward-Looking Statements

From time-to-time, the Company has made and may continue to make “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements in this report relate to future events and expectations and, as such, constitute forward-looking statements. Forward-looking statements include those containing such words as “anticipates,” “believes,” “estimates,” “expects,” “would,” “should,” “will,” “will likely result,” “forecast,” “outlook,” “projects,” and similar expressions. Such forward-looking statements are based on management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which the Company is unable to predict or control, that may cause our actual results or performance to materially differ from any future results or performance expressed or implied by such statements. Various of these factors are described in Item 1A, Risk Factors, of this Annual Report on Form 10-K and will be described from time-to-time in the Company filings with the SEC, including the Company’s Annual Reports on Form 10-K and the Company’s subsequent reports filed with the SEC on Form 10-Q and Form 8-K, which are available on the SEC’s website at www.sec.gov and on the Company’s website at www.atimetals.com. We assume no duty to update our forward-looking statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

As part of our risk management strategy, we utilize derivative financial instruments, from time to time, to hedge our exposure to changes in energy and raw material prices, foreign currencies, and interest rates. We monitor the third-party financial institutions that are our counterparty to these financial instruments on a daily basis and diversify our transactions among counterparties to minimize exposure to any one of these entities. Fair values for derivatives were measured using exchange-traded prices for the hedged items including consideration of counterparty risk and ATI’s credit risk. Our exposure to volatility in interest rates is presently not material, as nearly all of our debt is at fixed interest rates.

Volatility of Interest Rates. We may enter into derivative interest rate contracts to maintain a reasonable balance between fixed- and floating-rate debt. ATI previously maintained a $50 million floating-for-fixed interest rate swap which converted a portion of the ABL Term Loan to a 4.21% fixed rate that matured during the quarter ended June 30, 2024. There are no outstanding derivative interest rate contracts at December 29, 2024.

Volatility of Energy Prices. Energy resources markets are subject to conditions that create uncertainty in the prices and availability of energy resources. The prices for and availability of electricity, natural gas, oil and other energy resources are subject to volatile market conditions. These market conditions often are affected by political and economic factors beyond our control. Increases in energy costs, or changes in costs relative to energy costs paid by competitors, have and may continue to adversely affect our profitability. To the extent that these uncertainties cause suppliers and customers to be more cost sensitive, increased energy prices may have an adverse effect on our results of operations and financial condition. We use approximately 6 to 8 million MMBtu’s of natural gas annually, depending upon business conditions, in the manufacture of our products. These purchases of natural gas expose us to risk of higher gas prices. For example, a hypothetical $1.00 per MMBtu increase in the price of natural gas would result in increased annual energy costs of approximately $6 to $8 million. We use several

approaches to minimize any material adverse effect on our financial condition or results of operations from volatile energy prices. These approaches include incorporating an energy surcharge on many of our products and using financial derivatives or physical hedges to reduce exposure to energy price volatility.

At December 29, 2024, the outstanding financial derivatives used to hedge our exposure to energy cost volatility included natural gas hedges. At December 29, 2024, we hedged approximately 75% of our annual forecasted domestic requirements for natural gas for fiscal year 2025 and approximately 35% for fiscal year 2026. At December 29, 2024, the net mark-to-market valuation of the outstanding natural gas hedges was an unrealized pre-tax loss of $0.1 million, comprised of $0.8 million in prepaid expenses and other current assets, $0.9 million in other long-term assets, $1.7 million in other current liabilities and $0.1 million in other long-term liabilities on the balance sheet. For the year ended December 29, 2024, the effects of natural gas hedging activity increased cost of sales by $8.0 million.

Volatility of Raw Material Prices. We use raw materials surcharge and index mechanisms to offset the impact of increased raw material costs; however, competitive factors in the marketplace can limit our ability to institute such mechanisms, and there can be a delay between the increase in the price of raw materials and the realization of the benefit of such mechanisms. For example, in fiscal year 2024 we used approximately 70 million pounds of nickel; therefore a hypothetical change of $1.00 per pound in nickel prices would result in increased costs of approximately $70 million. While we enter into raw materials futures contracts from time-to-time to hedge exposure to price fluctuations, such as for nickel, we cannot be certain that our hedge position adequately reduces exposure. We believe that we have adequate controls to monitor these contracts, but we may not be able to accurately assess exposure to price volatility in the markets for critical raw materials.

The majority of our products are sold utilizing raw material surcharges and index mechanisms. However, as of December 29, 2024, we had entered into financial hedging arrangements, primarily at the request of our customers, related to firm orders, for an aggregate amount of approximately 4 million pounds of nickel with hedge dates through fiscal year 2027. The aggregate notional amount hedged is approximately 5% of a single year’s estimated nickel raw material purchase requirements. These derivative instruments are used to hedge the variability of a selling price that is based on the London Metals Exchange (LME) index for nickel, as well as to hedge the variability of the purchase cost of nickel based on this LME index. Any gain or loss associated with these hedging arrangements is included in sales or cost of sales, depending on whether the underlying risk being hedged was the variable selling price or the variable raw material cost, respectively. At December 29, 2024, the net mark-to-market valuation of our outstanding raw material hedges was an unrealized pre-tax loss of $4.2 million, comprised of $4.2 million in other current liabilities on the balance sheet.

Foreign Currency Risk. Foreign currency exchange contracts are used, from time-to-time, to limit transactional exposure to changes in currency exchange rates. We sometimes purchase foreign currency forward contracts that permit us to sell specified amounts of foreign currencies expected to be received from our export sales for pre-established U.S. dollar amounts at specified dates. In addition, we may also hedge forecasted capital expenditures and designate cash balances held in foreign currencies as hedges of forecasted foreign currency transactions. At December 29, 2024, we had no significant outstanding foreign currency forward contracts.

We may also use derivative instruments that are not designated as hedges to protect our results from certain fluctuations in foreign exchange rates, as well as to offset a portion of the foreign currency gains and losses generated by the remeasurement of certain assets and liabilities denominated in non-functional currencies. Changes in the fair value of these foreign exchange contract derivatives not designated as hedging instruments are recorded in cost of sales or selling, general and administrative expenses on the consolidated statement of operations, and we recognized $2.2 million of expense, net, for settled foreign currency forward contracts that were not designated as hedges during the fiscal year ended December 29, 2024, which offset foreign currency gains/losses in the relevant currency. We have no significant outstanding hedges that are not designated as of December 29, 2024.

Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of ATI Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of ATI Inc. and subsidiaries (the Company) as of December 29, 2024 and December 31, 2023, the related consolidated statements of operations, comprehensive income, cash flows and statements of changes in consolidated equity for each of the three years in the period ended December 29, 2024, and the related notes (collectively referred to as the “consolidated financial statements”.) In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 29, 2024 and December 31, 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 29, 2024, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 29, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 21, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill impairment assessment - Forged Products reporting unit

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1996.

Pittsburgh, Pennsylvania

February 21, 2025

ATI Inc. and Subsidiaries

Consolidated Statements of Operations

(In millions, except per share amounts)

Fiscal Year Ended

Restructuring charges (credits) 4.1 7.7 (4.8)

Loss (gain) on asset sales and sales of businesses, net (57.1) 0.4 105.4

Nonoperating retirement benefit income (expense) (29.0) (79.7) 138.4

Less: Net income attributable to noncontrolling interests 14.9 12.6 15.6

Basic net income attributable to ATI per common share $ 2.82 $ 3.21 $ 2.54

Diluted net income attributable to ATI per common share $ 2.55 $ 2.81 $ 2.23

The accompanying notes are an integral part of these statements.

ATI Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In millions)

Fiscal Year Ended

Currency translation adjustment

Unrealized net change arising during the period (13.0) 1.3 (43.5)

Reclassification adjustment included in net income — — 20.0

Derivatives

Net derivatives gain (loss) on hedge transactions (5.9) (28.5) 53.8

Reclassification to net income of net realized loss (gain) 11.0 2.5 (42.8)

Income taxes on derivative transactions 2.0 (6.1) —

Postretirement benefit plans

Actuarial gain/loss

Amortization of net actuarial loss 5.2 6.0 13.2

Net gain (loss) arising during the period (2.2) (3.8) 54.7

Prior service cost

Amortization to net income of net prior service credits (0.5) (0.6) (0.5)

Settlement loss included in net income — 1.1 0.7

Income taxes on postretirement benefit plans 0.5 0.3 —

Other comprehensive income (loss), net of tax (7.9) (16.2) 55.6

Comprehensive income attributable to ATI $ 361.5 $ 395.0 $ 397.4

The accompanying notes are an integral part of these statements.

ATI Inc. and Subsidiaries

Consolidated Balance Sheets

Assets

Cash and cash equivalents $ 721.2 $ 743.9

Short-term contract assets 75.6 59.1

Prepaid expenses and other current assets 86.0 62.2

Liabilities and Stockholders’ Equity

Short-term contract liabilities 169.4 163.6

Short-term debt and current portion of long-term debt 180.4 31.9

Accrued postretirement benefits 164.3 175.2

Equity:

ATI Stockholders’ Equity:

Preferred stock, par value $0.10: authorized-50,000,000 shares; issued-none — —

Retained earnings (loss) 64.3 (70.1)

Accumulated other comprehensive loss, net of tax (89.5) (83.2)

Total Liabilities and Stockholders’ Equity $ 5,230.6 $ 4,985.1

The accompanying notes are an integral part of these statements.

ATI Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In millions)

Fiscal Year Ended

Operating Activities:

Gain from disposal of property, plant and equipment, net (15.7) (0.6) (0.9)

Net loss (gain) from sales of businesses (52.9) 0.6 112.2

Non-cash impairment charges — 3.0 —

Change in operating assets and liabilities:

Pension plan contributions — (272.0) (51.3)

Accrued income taxes (0.3) (4.8) 2.5

Accrued liabilities and other (67.1) (26.8) (23.1)

Investing Activities:

Purchases of property, plant and equipment (239.1) (200.7) (130.9)

Proceeds from disposal of property, plant and equipment 27.6 3.8 3.1

Proceeds from sales of businesses, net of transaction costs 48.0 (0.3) 0.3

Financing Activities:

Borrowings on long-term debt — 425.0 —

Payments on long-term debt and finance leases (29.6) (25.2) (23.1)

Net payments under credit facilities (4.9) (14.0) (5.6)

Debt issuance costs — (6.2) —

Receipt of convertible note capped call 76.1 — —

Sale to noncontrolling interests — — 6.4

Dividends paid to noncontrolling interests (16.0) (16.0) (34.0)

Cash provided by (used in) financing activities (260.4) 267.2 (201.9)

Effect of exchange rate changes on cash and cash equivalents (7.6) — —

Less: Cash held for sale (2.3) — —

Increase (decrease) in cash and cash equivalents (22.7) 159.9 (103.7)

Cash and cash equivalents at beginning of year 743.9 584.0 687.7

Cash and cash equivalents at end of year $ 721.2 $ 743.9 $ 584.0

Amounts presented on the Consolidated Statements of Cash Flows may not agree to the corresponding changes in consolidated balance sheet items due to the accounting for purchases and sales of businesses and the effects of foreign currency translation.

The accompanying notes are an integral part of these statements.

ATI Inc. and Subsidiaries

Statements of Changes in Consolidated Equity

ATI Stockholders

Other comprehensive income (loss) — — — — 73.9 (18.3) 55.6

Purchase of treasury stock — — — (139.9) — — (139.9)

Dividends paid to noncontrolling interest — — — — — (34.0) (34.0)

Sales of subsidiary shares to noncontrolling interest — — — — — 0.9 0.9

Other comprehensive loss — — — — (15.8) (0.4) (16.2)

Purchase of treasury stock — — — (85.8) — — (85.8)

Dividends paid to noncontrolling interest — — — — — (16.0) (16.0)

Other comprehensive loss — — — — (6.3) (1.6) (7.9)

Convertible note capped call — 76.1 — — — — 76.1

Purchase of treasury stock — — — (260.0) — — (260.0)

Dividends paid to noncontrolling interest — — — — — (16.0) (16.0)

The accompanying notes are an integral part of these statements.

Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies

Principles of Consolidation and Reporting

The consolidated financial statements include the accounts of ATI Inc. and its subsidiaries. The financial results of majority-owned joint ventures are consolidated into the Company’s operating results and financial position, with the minority ownership interest recognized in the consolidated statement of operations as net income attributable to noncontrolling interests, and as equity attributable to the noncontrolling interests within total stockholders’ equity. The results for the Shanghai STAL Precision Stainless Steel Company Limited (STAL) are reported on a one month lag. Investments in which the Company exercises significant influence, but which it does not control (generally a 20% to 50% ownership interest) are accounted for under the equity method of accounting, whereby ATI’s carrying value of the equity method investment on the consolidated balance sheet is the capital investment and any undistributed profit or loss. The investments are classified in other (noncurrent) assets on the consolidated balance sheet. The profit or loss attributable to ATI from equity method investments is included in the consolidated statements of operations as a component of Other (non-operating) income (expense). See Note 7 for further explanation of the Company’s joint ventures. Intercompany accounts and transactions have been eliminated. Unless the context requires otherwise, “ATI” and the “Company” refer to ATI Inc. and its subsidiaries.

Fiscal Year

The Company follows a 4-4-5 or 5-4-4 fiscal calendar, whereby each fiscal quarter consists of thirteen weeks grouped into two four-week months and one five-week month, and its fiscal year ends on the Sunday closest to December 31. Unless otherwise stated, references to years in this Annual Report on Form 10-K relate to fiscal years, rather than calendar years. Fiscal years 2024, 2023 and 2022 ended on December 29, 2024, December 31, 2023 and January 1, 2023, respectively. All fiscal years presented include 52 weeks of operations.

Risks and Uncertainties and Use of Estimates

The preparation of consolidated financial statements in conformity with United States (U.S.) generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Management believes that the estimates are reasonable.

The Company markets its products to a diverse customer base, principally throughout the U.S. No single customer accounted for more than 10% of sales for any year presented. The core end markets for ATI’s products are customers in the aerospace & defense, specialty energy, electronics, and medical markets.

At December 29, 2024, ATI has approximately 7,700 active employees, of which approximately 15% are located outside the U.S. Approximately 35% of ATI’s workforce is covered by various collective bargaining agreements (CBAs), predominantly with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied & Industrial Service Workers International Union (USW). The Company is currently renegotiating the CBAs, which expire on February 28, 2025, that cover approximately 1,100 USW-represented full-time employees within our Advanced Alloys & Solutions operations. There can be no assurance that the Company will successfully conclude these renegotiations to replace the expiring CBA.

Cash and Cash Equivalents

Cash equivalents are highly liquid investments that are readily convertible to cash with original maturities of three months or less.

Accounts Receivable

Accounts receivable are presented net of a reserve for doubtful accounts of $15.0 million and $3.2 million at December 29, 2024 and December 31, 2023, respectively. Trade credit is extended based upon periodically updated evaluations of each customer’s ability to perform its obligations. The Company determines a reserve for doubtful accounts based on an aging of accounts receivable and reviews of specific accounts identified as collection risks, as well as expected credit losses. Amounts are written-off against the reserve in the period it is determined that the receivable is uncollectible.

Inventories

Inventories are stated at the lower of cost or net realizable value with the cost of inventories determined using either first in, first out (FIFO) or average cost methods. Costs include direct material, direct labor and applicable manufacturing and engineering overhead, and other direct costs. The term net realizable value is defined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.

The Company evaluates product lines on a quarterly basis to identify inventory carrying values that exceed estimated net realizable value. The calculation of a resulting reserve, if any, is recognized as an expense in the period that the need for the reserve is identified. It is the Company’s general policy to write-down to scrap value any inventory that is identified as slow-moving or aged more than twelve months, subject to sales, backlog and anticipated order considerations. In some instances this aging criterion is up to twenty-four months. Inventory valuation reserves also include amounts pertaining to intercompany profit elimination between different subsidiaries.

Long-Lived Assets

Property, plant and equipment are recorded at cost, including capitalized interest, and include long-lived assets acquired under finance leases. Depreciation is primarily recorded using the straight-line method. The Company periodically reviews estimates of useful life and production capacity assigned to new and in-service assets. Significant enhancements, including major maintenance activities that extend the lives of property and equipment, are capitalized. Costs related to repairs and maintenance are charged to expense in the period incurred. The cost and related accumulated depreciation of property and equipment retired or disposed of are removed from the accounts and any related gains or losses are included in income.

The Company monitors the recoverability of the carrying value of its long-lived assets. An impairment charge is recognized when an indicator of impairment occurs and the expected net undiscounted future cash flows from an asset’s use (including any proceeds from disposition) are less than the asset’s carrying value and the asset’s carrying value exceeds its fair value. If an impairment loss is recognized, the adjusted carrying value of the long-lived asset is its new cost basis and this new cost basis is depreciated over the remaining useful life of the asset. Assets to be disposed of by sale are stated at the lower of their fair values or carrying amounts and depreciation is no longer recognized.

Leases

The Company classifies leases as either operating or financing and records a right-of-use (ROU) asset and a lease liability on the consolidated balance sheets as further discussed below. The lease liability is equal to the present value of the minimum lease payments for the term of the lease, including any optional renewal periods determined to be reasonably certain to be exercised, using the discount rate determined at lease commencement. This discount rate is the rate implicit in the lease, if known; otherwise, the incremental borrowing rate (IBR) for the expected lease term is used. The Company’s IBRs approximate the rate the Company would have to pay to borrow on a collateralized basis over a similar term at lease inception. The ROU asset is equal to the initial measurement of the lease liability plus any lease payments made to the lessor at or before the commencement date and any unamortized initial direct costs incurred by the lessee, less any unamortized lease incentives received. The Company has elected to not separate lease components from non-lease components for all asset classes, and has made an accounting policy election to apply the short-term exception, which does not require the capitalization of leases with terms of 12 months or less.

ROU assets for operating leases are classified in other long-term assets, and ROU assets for finance leases are classified in property, plant and equipment on the consolidated balance sheet. For operating leases, short-term lease liabilities are classified in other current liabilities, and long-term lease liabilities are classified in other long-term liabilities on the consolidated balance sheet. For finance leases, short-term lease liabilities are classified in short-term debt, and long-term lease liabilities are classified in long-term debt on the consolidated balance sheet. On the cash flow statement, payments for operating leases are classified as operating activities. Payments for finance leases are classified as a financing activity, except for the interest component of the payment which is classified as an operating activity.

The Company has lease contracts for real property and machinery and equipment. At inception of a contract, the Company determines whether the contract is or contains a lease. If the Company has a right to obtain substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the asset, then the contract contains a lease. Several of the Company’s real property lease contracts include options to extend the lease term, and the Company reassesses the likelihood of renewal on at least an annual basis. In addition, several real property leases include variable lease payments, for items such as common area maintenance and utilities, which are expensed as incurred as variable lease expense.

Goodwill

Goodwill is reviewed annually for impairment, or more frequently if impairment indicators arise. The review for goodwill impairment requires a comparison of the fair value of each reporting unit that has goodwill associated with its operations with its carrying amount, including goodwill. If this comparison reflects impairment, then the loss would be measured as the excess of the carrying value over the calculated fair value.

Generally accepted accounting principles provide the option to qualitatively assess goodwill for impairment before completing a quantitative assessment. Under the qualitative approach, if, after assessing the totality of events or circumstances, including both macroeconomic, industry and market factors, and entity-specific factors, the Company determines it is likely (more likely than not) that the fair value of a reporting unit is greater than its carrying amount, then the quantitative impairment analysis is not required. The quantitative assessment may be performed each year for a reporting unit at the Company’s option without first performing a qualitative assessment. The Company’s quantitative assessment of goodwill for possible impairment includes estimating the fair value of a reporting unit which has goodwill associated with its operations using discounted cash flow and multiples of cash earnings valuation techniques, plus valuation comparisons to recent public sale transactions of similar businesses, if any. These impairment assessments and valuation methods require the Company to make estimates and assumptions regarding revenue growth, changes in working capital and capital expenditures, selling prices and profitability that drive cash flows, and the weighted average cost of capital. Many of these assumptions are determined by reference to market participants identified by the Company. Although management believes that the estimates and assumptions used were reasonable, actual results could differ from those estimates and assumptions.

Other events and changes in circumstances may also require goodwill to be tested for impairment between annual measurement dates. While a decline in stock price and market capitalization is not specifically cited as a goodwill impairment indicator, a company’s stock price and market capitalization should be considered in determining whether it is more likely than not that the fair value of a reporting unit is less that its carrying value. Additionally, a significant decline in a company’s stock price may suggest that an adverse change in the business climate may have caused the fair value of one or more reporting units to fall below carrying value. A sustained decline in market capitalization below book value may be determined to require an interim goodwill impairment review.

Environmental

Costs that mitigate or prevent future environmental contamination or extend the life, increase the capacity or improve the safety or efficiency of property utilized in current operations are capitalized. Other costs that relate to current operations or an existing condition caused by past operations are expensed. Environmental liabilities are recorded when the Company’s liability is probable and the costs are reasonably estimable, but generally not later than the completion of the feasibility study or the Company’s recommendation of a remedy or commitment to an appropriate plan of action. The accruals are reviewed periodically and, as investigations and remediations proceed, adjustments of the accruals are made to reflect new information as appropriate. Accruals for losses from environmental remediation obligations are not discounted to their present value. The accruals are not reduced by possible recoveries from insurance carriers or other third parties, but do reflect allocations among potentially responsible parties (PRPs) at Federal Superfund sites or similar state-managed sites after an assessment is made of the likelihood that such parties will fulfill their obligations at such sites and after appropriate cost-sharing or other agreements are entered. The measurement of environmental liabilities by the Company is based on currently available facts, present laws and regulations, and current technology. Such estimates take into consideration the Company’s prior experience in site investigation and remediation, the data concerning cleanup costs available from other companies and regulatory authorities, and the professional judgment of the Company’s environmental experts in consultation with outside environmental specialists, when necessary.

Foreign Currencies

Assets and liabilities of international operations are translated into U.S. dollars using fiscal year-end exchange rates, while revenues and expenses are translated at average exchange rates during the period. The resulting net translation adjustments are recorded as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Gains and losses for transactions denominated in foreign currencies are reported in costs of sales or general and administrative expenses in the consolidated statement of operations based on the underlying nature of the transaction.

Sales Recognition

The Company’s contracts with customers are comprised of purchase orders, and for larger customers long-term agreements (LTAs). LTAs typically extend multiple years and are utilized by the Company and certain of its customers for its specialty materials, in the form of mill products, powders, parts and components, to reduce supply uncertainty. While LTAs generally define commercial terms including pricing, termination clauses and other contractual requirements, the Company has determined that the contract with a customer is established when the customer purchase order is accepted or acknowledged.

Contracts (purchase orders) with customers typically relate to the manufacturing of products, which are defined on a line by line basis, and each distinct good represents a single performance obligation that is satisfied at a point in time when control of the product passes to the customer. For most transactions, control passes at the time of shipment in accordance with agreed upon delivery terms. On occasion, shipping and handling charges occur after the customer obtains control of the good. When this occurs, the shipping and handling services are considered activities to fulfill the promise to transfer the good. Sales for conversion services that transform customer-owned inventory to a different dimension, product form, and/or changed mechanical properties are recognized when the service is completed.

Pricing for the Company’s products is also defined in the customer purchase order or LTA on a line item basis and, in some cases, includes variable consideration. Variable consideration is when the selling price of the good is not known or is subject to adjustment under certain conditions. Types of variable consideration may include volume discounts, customer rebates and surcharges. ATI also provides assurances that goods or services will meet the product specifications contained within the acknowledged customer contract. As such, returns and refunds reserves are estimated based upon past product line history or, at certain locations, on a claim by claim basis.

Certain customer agreements involving production of parts and components require revenue to be recognized over time due to there being no alternative use for the product without significant economic loss and an enforceable right to payment including a normal profit margin from the customer in the event of contract termination. The Company uses an input method for determining the amount of revenue, and associated standard cost, to recognize over-time revenue, cost and gross margin for these customer agreements. The input methods used for these agreements include costs incurred and labor hours expended, both of which give an accurate representation of the progress made toward complete satisfaction of that particular performance obligation.

Contract assets are recognized when ATI’s conditional right to consideration for goods or services have transferred to the customer. A conditional right indicates that additional performance obligations associated with the contract are yet to be satisfied. Contract assets are assessed separately for impairment purposes. When ATI’s right to consideration from the customer is unconditional, this asset is accounted for as a receivable and presented separately from contract assets. A right is unconditional if nothing other than the passage of time is required before payment of that consideration is due. Performance obligations that are recognized as revenue at a point-in-time and are billed to the customer are recognized as accounts receivable. Payment terms vary from customer to customer depending upon credit worthiness, prior payment history and other credit considerations.

Contract costs are the incremental costs of obtaining and fulfilling a contract (i.e., costs that would not have been incurred if the contract had not been obtained) to provide goods and services to customers. Contract costs for ATI largely consist of design and development costs for molds, dies and other tools that ATI will own and that will be used in producing the products under the supply arrangement. Contract costs are classified as non-current assets and amortized to expense on a systematic and rational basis over a period consistent with the transfer to the customer of the goods or services to which the asset relates.

Contract liabilities are recognized when ATI has received consideration from a customer to transfer goods or services at a future point in time when the Company performs under the contract. Elements of variable consideration discussed above may be recorded as contract liabilities. In addition, progress billings and advance payments from customers for costs incurred to date are also reported as contract liabilities.

Research and Development

Research, development and technical service activities are closely interrelated and directed toward development of new products, improvement of existing products, quality assurance, development of new manufacturing methods, improvement of existing manufacturing methods, and reducing the Company’s manufacturing costs. Research and development costs are expensed as incurred. Company funded research and development costs were $19.6 million in fiscal year 2024, $20.7 million in fiscal year 2023, and $16.3 million in fiscal year 2022. Customer funded research and development costs were $2.5 million in fiscal year 2024, $1.4 million in fiscal year 2023, and $1.4 million in fiscal year 2022.

Government Assistance

The Company enters into agreements with U.S. federal agencies, U.S. state and local governments, and foreign governments that provide financial assistance and incentives supporting both new capital projects to expand and enhance manufacturing capabilities and also to sustain and maintain existing operations. Depending on the nature of the government program, the financial impacts may be recorded as a reduction to cost of sales through direct offset of labor and overhead costs or lower depreciation expense, or as a reduction of selling, general and administrative expenses for property tax abatement or other similar categories. Benefits from government assistance are recognized as the activities are incurred, subject to ongoing assessments of meeting other relevant terms such as employment or expenditure levels.

In November 2021, ATI entered into an agreement with the U.S. Department of Transportation under the Aviation Manufacturing Jobs Protection (AMJP) program for a grant of up to $22.2 million. The receipt of the award was primarily conditioned upon the Company committing to not furlough or lay off a defined group of employees in the High Performance Materials & Components (HPMC) segment operations during the six-month period of performance between November 2021 and May 2022. The AMJP grant benefit was recognized over the six-month performance period as a reduction to cost of sales in proportion to the compensation expense that the award was intended to defray, with $16.6 million recognized in fiscal year 2022 operating results. Cash receipts from the AMJP program were $11.0 million in fiscal year 2022, and this program is now completed.

ATI is a party to various U.S. states’ economic development incentive programs that provide economic benefits in the forms of property tax relief or cash payments to offset capital expenditures. These programs generally include requirements for levels of capital spending and/or employment to qualify for the government assistance. For the fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023, these state-level programs reduced selling, general and administrative expenses by $1.7 million, $1.4 million, $1.6 million, respectively, and cash receipts were $2.5 million, $3.4 million and $2.8 million, respectively. Receivables for ongoing programs are $1.2 million as of both December 29, 2024 and December 31, 2023.

Defined Benefit Pension and Postretirement Plans

The remeasurement of projected benefit obligation and plan assets for defined benefit pension plans are immediately recognized in earnings through net periodic pension benefit cost within nonoperating retirement benefit expense on the consolidated statements of operations, with pension plans to be remeasured annually in the fourth quarter or on an interim basis as triggering events require remeasurement. For the remeasurement of projected benefit obligation and plan assets for defined benefit postretirement plans, the Company defers the recognition of these gains and losses in accumulated other comprehensive loss on the consolidated balance sheet, and the accumulated actuarial gains/losses are then amortized into net periodic benefit costs within nonoperating retirement benefit expense on the consolidated statements of operations over the average expected remaining life of plan participants.

Stock-based Compensation

The Company accounts for stock-based compensation transactions, such as nonvested restricted stock or stock units and performance equity awards, using fair value. Compensation expense for an award is estimated at the date of grant and is recognized over the requisite service period. Compensation expense is adjusted for equity awards that do not vest because service or performance conditions are not satisfied. However, compensation expense already recognized on awards which vest based solely on the attainment of market conditions, such as total shareholder return measures, is not adjusted based on the award attainment status at the end of the measurement period. Compensation expense is adjusted for estimated forfeitures over the award measurement period.

Income Taxes

The provision for, or benefit from, income taxes includes deferred taxes resulting from temporary differences in income for financial and tax purposes using the liability method. Such temporary differences result primarily from differences in the carrying value of assets and liabilities. Future realization of deferred income tax assets requires sufficient taxable income within the carryback and/or carryforward period available under tax law.

The Company evaluates on a quarterly basis whether, based on all available evidence, it is probable that the deferred income tax assets are realizable. Valuation allowances are established when it is estimated that it is more likely than not that the tax benefit of the deferred tax asset will not be realized. The evaluation includes the consideration of 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. The verifiable evidence such as future reversals of existing temporary differences and the

ability to carryback are considered before the subjective sources such as estimated future taxable income exclusive of temporary differences and tax planning strategies.

It is the Company’s policy to classify interest and penalties recognized on underpayment of income taxes as income tax expense. It is also the Company’s policy to recognize deferred tax amounts stranded in accumulated other comprehensive income (AOCI), which result from tax rate differences on changes in AOCI balances, as an element of income tax expense in the period that the related balance sheet item associated with the AOCI balance ceases to exist. In the case of derivative financial instruments accounted for as hedges, or marketable securities, ATI uses the portfolio method where the stranded deferred tax amount is recognized when all items of a particular category, such as cash flow hedges of a particular risk such as a foreign currency hedge, are settled. In the case of defined benefit pension and other postretirement benefit plans, the stranded deferred tax balance is recognized as an element of income tax expense in the period the benefit plan is extinguished or divested.

Net Income Per Common Share

Basic and diluted net income per share are calculated by dividing the net income available to common stockholders by the weighted average number of common shares outstanding during the fiscal year. Diluted amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding. The calculations of all diluted income/loss per share figures for a period exclude the potentially dilutive effect of dilutive share equivalents if there is a net loss since the inclusion in the calculation of additional shares in the net loss per share would result in a lower per share loss and therefore be anti-dilutive.

New Accounting Pronouncements Adopted

In September 2022, the Financial Accounting Standards Board (FASB) issued new accounting guidance related to disclosures about supplier finance programs. Supplier finance programs allow a buyer to offer its suppliers the option for access to payment in advance of an invoice due date, which is paid by a third-party finance provider or intermediary on the basis of invoices that the buyer has confirmed as valid. This new guidance requires a buyer in a supplier finance program to disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude, using both qualitative and quantitative information about its supplier finance programs. This new guidance, with the exception of annual disclosures on rollforward information, was effective for the Company in fiscal year 2023, and the Company adopted this new accounting guidance effective January 2, 2023. The annual rollforward information disclosures were effective for the Company in fiscal year 2024, and the Company adopted this new accounting guidance effective January 1, 2024. The adoption of these changes did not have an impact on the Company’s consolidated financial statements other than disclosure requirements which are included in Note 9.

In November 2023, the FASB issued new accounting guidance related to segment reporting disclosures. This guidance requires additional disclosures on an annual and interim basis of segment information, including significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and the presentation and composition of other segment items, which is the difference between segment revenue less segment expenses and the measure of segment profit or loss. The guidance also requires that all current segment disclosures required on an annual basis be provided on an interim basis and requires disclosure of the title and position of the CODM and how the CODM uses the reported measure of segment profit or loss in assessing performance and allocating resources. This guidance does not change how an entity identifies its reportable segments. The Company adopted this new guidance for annual disclosures for fiscal year 2024 and will adopt it for interim disclosures in fiscal year 2025. The adoption of these changes did not have an impact on the Company’s consolidated financial statements other than disclosure requirements which are included in Note 18.

Pending Accounting Pronouncements

In December 2023, the FASB issued new accounting guidance related to income tax disclosures. This guidance requires entities to disclose specific categories in its annual rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. This guidance also requires additional annual disclosures for income taxes paid and requires disaggregation of income before tax, between domestic and foreign, and income tax expense, between federal, state and foreign. This guidance also eliminates several current disclosure requirements related to the nature and estimate of the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months and making a statement that an estimate of the range cannot be made and disclosing the cumulative amount of each type of temporary difference when a deferred tax liability is not recognized because of the exceptions to comprehensive recognition of deferred taxes related to subsidiaries and corporate joint ventures. This new guidance will be effective for the Company for fiscal year 2025 and must be applied on a prospective basis with retrospective application permitted. Early adoption of this guidance is also permitted. The Company does not expect to early adopt this guidance and does not expect these changes to have an impact on the Company’s consolidated financial statements other than disclosure requirements.

In November 2024, the FASB issued new accounting guidance related to expense disaggregation disclosures. This guidance requires entities to disclose specified information about certain costs and expenses including (1) the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization, (2) include certain amounts that are already required to be disclosed under current generally accepted accounting principles in the same disclosure as the other disaggregation requirements, (3) a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and (4) the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. This new guidance for annual disclosures will be effective for the Company for fiscal year 2027 and for interim disclosures will be effective for the Company for fiscal year 2028. The guidance can be applied prospectively or retrospectively and early adoption is permitted. The Company does not expect to early adopt this guidance and does not expect these changes to have an impact on the Company’s consolidated financial statements other than disclosure requirements.

Note 2. Revenue from Contracts with Customers

Disaggregation of Revenue

The Company operates in two business segments: High Performance Materials & Components (HPMC) and Advanced Alloys & Solutions (AA&S). Revenue is disaggregated within these two business segments by diversified global markets, primary geographical markets, and diversified products. Comparative information of the Company’s overall revenues (in millions) by global and geographical markets for the fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023 is as follows:

Fiscal Year

HPMC AA&S Total HPMC AA&S Total HPMC AA&S Total

Diversified Global Markets:

Aerospace & Defense:

Fiscal Year

HPMC AA&S Total HPMC AA&S Total HPMC AA&S Total

Primary Geographical Market:

Comparative information of the Company’s major products based on their percentages of sales is included in the following table. HRPF conversion service sales in the AA&S segment are excluded from this presentation.

Fiscal Year

HPMC AA&S Total HPMC AA&S Total HPMC AA&S Total

Diversified Products:

Zirconium and related alloys — % 19 % 9 % — % 15 % 7 % — % 14 % 8 %

Precision rolled strip — % 19 % 8 % 1 % 19 % 10 % — % 25 % 14 %

The Company maintains a backlog of confirmed orders totaling $3.9 billion, $3.8 billion and $2.9 billion at December 29, 2024, December 31, 2023 and January 1, 2023, respectively. Due to the structure of the Company’s LTAs, 70% of this backlog at December 29, 2024 represented booked orders with performance obligations that will be satisfied within the next twelve months. The backlog does not reflect any elements of variable consideration.

Accounts Receivable

As of December 29, 2024 and December 31, 2023, accounts receivable with customers were $724.2 million and $628.2 million, respectively. The following represents the rollforward of accounts receivable - reserve for doubtful accounts for the fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023:

(in millions)

Accounts Receivable - Reserve for Doubtful Accounts

Expense to increase the reserve 4.6

Write-off of uncollectible accounts (0.7)

Expense to increase the reserve 0.1

Write-off of uncollectible accounts (4.6)

Expense to increase the reserve 12.3

Write-off of uncollectible accounts (0.5)

Contract balances

The following represents the rollforward of contract assets and liabilities for the fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023:

(in millions)

Contract Assets

Fiscal Year

Balance as of beginning of fiscal year $ 59.1 $ 64.1 $ 53.9

Reclassified to accounts receivable (72.4) (89.5) (88.0)

Reclassification to/from contract liability — 0.4 (6.8)

(in millions)

Contract Liabilities

Fiscal Year

Balance as of beginning of fiscal year $ 163.6 $ 149.1 $ 116.2

Amounts in beginning balance reclassified to revenue (88.2) (107.9) (99.8)

Current year amounts reclassified to revenue (56.3) (40.9) (72.3)

Reclassification to/from long-term and contract asset 16.7 30.6 21.2

Fiscal Year

Balance as of beginning of fiscal year $ 39.4 $ 66.8 $ 84.4

Reclassification to/from short-term (16.7) (30.2) (28.0)

(a) Long-term contract liabilities are included in Other long-term liabilities on the consolidated balance sheets.

Contract costs for obtaining and fulfilling a contract were $12.0 million and $8.1 million as of December 29, 2024 and December 31, 2023, respectively, which are reported in other long-term assets on the consolidated balance sheets. Amortization expense for the fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023 of these contract costs was $1.1 million, $1.2 million, and $1.0 million, respectively.

Note 3. Inventories

Inventories at December 29, 2024 and December 31, 2023 were as follows (in millions):

Fiscal Year

Raw materials and supplies $ 206.4 $ 234.9

Inventory valuation reserves (68.5) (75.5)

Note 4. Property, Plant and Equipment

Property, plant and equipment at December 29, 2024 and December 31, 2023 was as follows:

Fiscal Year

Equipment and leasehold improvements 3,145.3 3,024.3

Accumulated depreciation and amortization (2,134.4) (2,083.4)

Total property, plant and equipment, net $ 1,776.9 $ 1,665.9

Construction in progress at December 29, 2024 and December 31, 2023 was $262.5 million and $305.9 million, respectively. Capital expenditures on the consolidated statements of cash flows for the fiscal years ended December 29, 2024, December 31, 2023, and January 1, 2023 exclude $36.2 million, $41.9 million, and $38.3 million, respectively, of incurred but unpaid capital expenditures that were included in property, plant and equipment and accrued at December 29, 2024, December 31, 2023, and January 1, 2023, respectively. Depreciation and amortization for the fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023 was as follows:

Fiscal Year

Depreciation of property, plant and equipment $ 118.8 $ 117.4 $ 115.4

Software and other amortization 32.7 28.7 27.5

Note 5. Goodwill and Other Intangible Assets

At December 29, 2024 and December 31, 2023, the Company had $227.2 million of goodwill on its consolidated balance sheet, all of which relates to the HPMC segment.

The Company performs its annual goodwill impairment evaluations in the fourth quarter of each fiscal year. The $227.2 million of goodwill as of December 29, 2024 on the Company’s consolidated balance sheet is comprised of $161.2 million at the Forged Products reporting unit and $66.0 million at the Specialty Materials reporting unit. For the Company’s annual goodwill impairment evaluation in fiscal year 2024, quantitative goodwill assessments were performed for these two HPMC reporting units with goodwill. This quantitative fair value assessment includes discounted cash flow and multiples of cash earnings valuation techniques, plus valuation comparisons to recent public sale transactions of similar businesses, if any, which represents Level 3 unobservable information in the fair value hierarchy. These impairment assessments and valuation methods require the Company to make estimates and assumptions regarding revenue growth, changes in working capital and capital expenditures, selling prices and profitability that drive cash flows, and the weighted average cost of capital. Many of these assumptions are determined by reference to market participants the Company has identified. For example, the weighted average cost of capital used in the discounted cash flow assessment was 11.0% and the long-term growth rates ranged from 3% to 3.5%. In order to validate the reasonableness of the estimated fair values of the reporting units as of the valuation date, a reconciliation of the aggregate fair values of all reporting units to market capitalization was performed using a reasonable control premium. Although the Company believes that the estimates and assumptions used were reasonable, actual results could differ from those estimates and assumptions. The Specialty Materials reporting unit had a fair value that was significantly in excess of carrying value. The Forged Products reporting unit had a fair value that exceeded carrying value by approximately 95% for the fiscal year 2024 annual assessment, which increased compared to the annual evaluation for fiscal year 2023. No impairments were determined to exist from the annual goodwill impairment evaluation for the fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023.

No indicators of impairment were observed in fiscal years 2024, 2023 and 2022 associated with any of the Company’s long-lived assets. Accumulated goodwill impairment losses as of December 29, 2024, December 31, 2023 and January 1, 2023 were $528.0 million.

Other intangible assets, which are included in Other assets on the accompanying consolidated balance sheets as of December 29, 2024 and December 31, 2023 were as follows:

Amortization expense related to intangible assets was approximately $7 million for each of the fiscal years ended December 29, 2024 and December 31, 2023 and $8 million for the fiscal year ended January 1, 2023. Annual amortization expense is expected to be approximately $7 million for each of the fiscal years 2025 through 2028 and $4 million in fiscal year 2029.

Note 6. Divestitures

During the fourth quarter of 2024, the Company completed the sale of its precision rolled strip operations in New Bedford, MA, which was part of the Specialty-Rolled Products business in the AA&S segment, and Remscheid, Germany, which was part of our European business in the HPMC segment. A $52.9 million gain on sale of these operations is reported in gain on asset sales and sales of businesses, net, on the consolidated statement of operations for fiscal year 2024, and is excluded from segment results. The Company received proceeds, net of transaction costs, of $48.0 million in fiscal year 2024, which is reported as an investing activity on the consolidated statement of cash flows. In fiscal year 2023, these operations had external sales of approximately $100 million and income before tax of approximately $6 million.

Also during 2024, the Company approved plans to divest of other certain immaterial, non-core operations from the HPMC segment. These non-core operations, which are classified as held for sale as of December 29, 2024, do not meet the criteria to be classified as discontinued operations in the consolidated financial statements. The following are the assets and liabilities classified as held for sale that are reported as prepaid expenses and other current assets, other long-term assets, other current liabilities, and other long-term liabilities on the consolidated balance sheet as of December 29, 2024.

Assets

Accounts receivable, net 1.2

Inventories, net 3.6

Prepaid expenses and other current assets 0.7

Total current assets 7.8

Property, plant and equipment, net 0.2

Other assets 0.4

Total long-term assets 0.6

Total Assets 8.4

Liabilities

Other current liabilities 1.2

Total current liabilities 1.2

Other long-term liabilities 0.4

Total Liabilities 1.6

Net assets held for sale $ 6.8

On May 12, 2022, the Company completed the sale of its Sheffield, United Kingdom (U.K.) operations, which included facilities for melting and re-melting, machining and bar mill operations, and was part of the Specialty Materials business in the HPMC segment. A $112.2 million loss on sale of the Sheffield operations is reported in loss on asset sales and sales of businesses, net, on the consolidated statement of operations for fiscal year 2022, and is excluded from HPMC segment results. The loss includes $26.8 million related to the U.K. defined benefit pension plan, of which $26.1 million was reported as a net pension asset but which was in a deficit funding position for U.K. statutory reporting purposes, and $0.7 million in accumulated other comprehensive loss on the consolidated ATI balance sheet. The loss also includes $20.0 million of cumulative translation adjustment foreign exchange losses since ATI’s acquisition of these operations in 1998. The Company received proceeds, net of transaction costs, of $0.3 million in fiscal year 2022, which is reported as an investing activity on the consolidated statement of cash flows.

The Company completed the sale of the Pico Rivera, CA operations, as part of the strategy to exit standard stainless products, on January 31, 2022. The Company received cash proceeds of $6.2 million on the sale of these assets in fiscal year 2022. The Company recognized a $6.8 million pretax gain on sale, including de-recognizing certain lease liabilities, which is reported in loss on asset sales and sales of businesses, net, on the consolidated statement of operations in fiscal year 2022 and is excluded from AA&S segment results.

Note 7. Joint Ventures

The financial results of majority-owned joint ventures are consolidated into the Company’s operating results and financial position, with the minority ownership interest recognized in the consolidated statement of operations as net income attributable to noncontrolling interests, and as equity attributable to the noncontrolling interests within total stockholders’ equity. Investments in which the Company exercises significant influence, but which it does not control (generally a 20% to 50% ownership interest) are accounted for under the equity method of accounting.

Majority-Owned Joint Ventures

STAL:

The Company has a 60% interest in the Chinese joint venture known as STAL. The remaining 40% interest in STAL is owned by China Baowu Steel Group Corporation Limited, a state authorized investment company whose equity securities are publicly traded in the People’s Republic of China. STAL is part of ATI’s AA&S segment, and manufactures Precision Rolled Strip® (PRS) stainless products mainly for the electronics and automotive markets located in Asia. Cash and cash equivalents held by STAL as of December 29, 2024 were $100.9 million.

Next Gen Alloys LLC:

The Company has a 51% interest in Next Gen Alloys LLC, a joint venture with GE Aviation for the development of a new meltless titanium alloy powder manufacturing technology; however, there is no active development at this time. Next Gen Alloys LLC funds its development activities through the sale of shares to the two joint venture partners, and in the first quarter of fiscal year 2022 the Company received $0.9 million from sales of noncontrolling interests to its joint venture partner, which is reported as a financing activity on the consolidated statements of cash flows. Cash and cash equivalents held by this joint venture as of December 29, 2024 were $1.0 million.

Equity Method Joint Ventures

A&T Stainless:

The Company has a 50% interest in A&T Stainless, a joint venture with an affiliate company of Tsingshan Group (Tsingshan) to produce 60-inch wide stainless sheet products for sale in North America. Tsingshan purchased its 50% joint venture interest in A&T Stainless in fiscal year 2018 for $17.5 million, of which $12.0 million had been received by ATI through January 2, 2022. ATI received the remaining $5.5 million from Tsingshan in the fourth quarter of fiscal year 2022, which is reported as a financing activity on the consolidated statement of cash flows. The A&T Stainless operations included the Company’s previously-idled direct roll and pickle (DRAP) facility in Midland, PA. ATI provided hot-rolling conversion services to A&T Stainless using the AA&S segment’s Hot-Rolling and Processing Facility. ATI accounts for the A&T Stainless joint venture under the equity method of accounting.

In late March 2018, ATI filed for an exclusion from the Section 232 tariffs on behalf of A&T Stainless, which imported semi- finished stainless slab products from Indonesia. In April 2019, the Company learned that this exclusion request was denied by the U.S. Department of Commerce. ATI filed new requests on behalf of A&T Stainless for exclusion from the Section 232 tariffs in October 2019. These requests were denied by the U.S. Department of Commerce in the second quarter of fiscal year

2020, and the 25% tariff remained in place. Due to repeated tariff exclusion denials, the DRAP facility was idled in an orderly shut down process that was completed in fiscal year 2020. ATI’s share of the A&T Stainless results were losses of $1.0 million and $1.8 million for the fiscal years ended December 29, 2024 and December 31, 2023, respectively, and were income of $9.1 million for the fiscal year ended January 1, 2023, which are included within other income/expense, net, on the consolidated statements of operations. In April 2022, ATI and A&T Stainless entered into a settlement agreement with the U.S. pursuant to which the U.S., without admitting liability, agreed to refund a substantial portion of the Section 232 tariffs previously paid by A&T Stainless. As a result of the settlement agreement, A&T Stainless recorded tariff refunds and accrued interest of approximately $19.7 million, which was recognized as income by the joint venture in fiscal year 2022. ATI’s share of the A&T Stainless results for the fiscal year ended January 1, 2023 included ATI’s $9.9 million share of this tariff refund and accrued interest. AA&S segment results in fiscal years 2024 and 2023 include equity method recognition of A&T Stainless operating losses of $1.0 million and $1.8 million, respectively, and in fiscal year 2022 include equity method recognition of A&T Stainless operating income of $8.2 million. In fiscal year 2022, A&T Stainless reversed $1.8 million of previously-recognized charges for contractual termination benefits as a result of revised estimates and ATI’s share of this credit for termination benefits in fiscal year 2022 was excluded from AA&S segment results.

As of December 29, 2024 and December 31, 2023, ATI had net receivables from A&T Stainless for working capital advances and administrative services of $0.6 million and $1.5 million, respectively.

Uniti:

ATI had a 50% interest in the industrial titanium joint venture known as Uniti LLC (Uniti), with the remaining 50% interest held by VSMPO, a Russian producer of titanium, aluminum, and specialty steel products. On March 9, 2022, the Company announced the termination of Uniti. No impairments were recorded as a result of the decision to terminate the Uniti joint venture. The Company received its final distribution in the first quarter of 2024 as a result of the termination, and formal dissolution occurred in the fourth quarter of 2024. Uniti was accounted for under the equity method of accounting. ATI’s share of Uniti’s income was $0.2 million in fiscal year 2023 and $4.4 million in fiscal year 2022, which were included in AA&S segment’s operating results, and within other income/expense, net, on the consolidated statements of operations. Sales to Uniti, which are included in ATI’s consolidated statements of operations, were $4.9 million in fiscal year 2023 and $45.0 million in fiscal year 2022.

Note 8. Asset Retirement Obligations

The Company maintains reserves where a legal obligation exists to perform an asset retirement activity and the fair value of the liability can be reasonably estimated. These asset retirement obligations (AROs) include liabilities where the timing and (or) method of settlement may be conditional on a future event, that may or may not be within the control of the entity. At December 29, 2024, the Company had recognized AROs of $7.9 million related to landfill closures, decommissioning costs, facility leases and conditional AROs associated with manufacturing activities using what may be characterized as potentially hazardous materials.

Estimates of AROs are evaluated annually in the fourth quarter, or more frequently if material new information becomes known. Accounting for asset retirement obligations requires significant estimation and in certain cases, the Company has determined that an ARO exists, but the amount of the obligation is not reasonably estimable. The Company may determine that additional AROs are required to be recognized as new information becomes available.

Changes in asset retirement obligations for the years ended December 29, 2024 and December 31, 2023 were as follows:

Fiscal Year

Balance at beginning of fiscal year $ 18.3 $ 17.8

Accretion expense 0.5 0.7

Revision of estimates (0.7) —

Divestitures (10.0) —

Balance at end of fiscal year $ 7.9 $ 18.3

During fiscal year 2024, the Company de-recognized $10.0 million of AROs in connection with the sale of its precision rolled strip operations (see Note 6 for further explanation).

Note 9. Supplemental Financial Statement Information

Cash and cash equivalents at December 29, 2024 and December 31, 2023 were as follows:

Fiscal Year

Total cash and cash equivalents $ 721.2 $ 743.9

Other current liabilities included salaries, wages and other employee-related liabilities of $113.6 million and $102.3 million at December 29, 2024 and December 31, 2023, respectively, and accrued interest of $23.9 million and $23.7 million at December 29, 2024 and December 31, 2023, respectively.

Other income (expense) for the fiscal years ended December 29, 2024, December 31, 2023, and January 1, 2023 was as follows:

Fiscal Year

Rent, royalty income and other income $ 3.8 $ 2.6 $ 2.3

Gains from disposal of property, plant and equipment, net 11.6 0.3 0.2

Net equity income (loss) on joint ventures (See Note 7) (1.0) (1.6) 12.6

Joint venture restructuring credit (See Note 7) — — 0.9

Litigation settlement (See Note 21) — — (28.5)

Total other income (expense), net $ 14.4 $ 1.3 $ (12.5)

Gains from disposal of property, plant and equipment, net for the fiscal year ended December 29, 2024 include an $11.6 million gain on the sale of certain oil and gas rights. These cash gains are reported as an investing activity on the consolidated statement of cash flow for the fiscal year ended December 29, 2024.

Supplier Financing

The Company participates in supplier financing programs with two financial institutions to offer its suppliers the option for access to payment in advance of an invoice due date. Under such programs, these financial institutions provide early payment to suppliers at their request for invoices that ATI has confirmed as valid at a pre-determined discount rate commensurate with the creditworthiness of ATI. As of December 29, 2024 and December 31, 2023, the Company had $34.8 million and $15.6 million, respectively, reported in accounts payable on the consolidated balance sheets under such programs. The following represents the rollforward of the Company’s obligations under such programs for the fiscal year ended December 29, 2024:

(in millions) Fiscal Year

Balance as of beginning of fiscal year $ 15.6

New obligations confirmed 282.8

Obligations paid (263.6)

Balance as of period end $ 34.8

Sale of Receivables Program

During the fourth quarter of 2024, the Company entered into an accounts receivables purchase agreement (Receivables Purchase Agreement) with a third-party financial institution to periodically sell certain accounts receivables at a discount. These accounts receivable sales are accounted for as a sale of assets under ASC 860, Transfers and Servicing, as the Company’s continuing involvement is limited to servicing the accounts receivable, collecting the payments for the underlying accounts receivables and remitting such collections to the financial institution. The financial institution is responsible for any credit risk associated with the sold accounts receivables. The Company receives the purchase price, equal to the accounts receivable less the discount, at the time of the sale.

The Company sold $13.5 million of its receivables under this program during the fiscal year ended December 29, 2024, resulting in de-recognition of the receivables from the Company’s consolidated balance sheet. The Company had no amounts collected on behalf of the financial institution under the Receivables Purchase Agreement at December 29, 2024 and the loss on the sales of accounts receivables were not material to the Company. The cash received on these sales of accounts receivable during the fiscal year ended December 29, 2024 is presented in changes in receivables within operating activities in the consolidated statement of cash flows.

Other Customer Receivable Sales

In the fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023, the Company sold $300 million, $308 million and $133 million, respectively, of certain customers’ accounts receivables through programs established by those customers with third-party financial institutions. These customers have extended payment terms and provide the programs to enable suppliers to receive more timely payments. The Company has no continuing involvement with the receivables sold under these programs, including no servicing requirement. The proceeds from these transactions are presented in changes in receivables within operating activities in the consolidated statement of cash flows. The costs associated with these transactions of $6.0 million, $6.3 million and $1.5 million are reflected in the Company’s consolidated statement of operations for the fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023, respectively.

Note 10. Debt

Debt at December 29, 2024 and December 31, 2023 was as follows:

Fiscal Year

ATI Inc. 3.5% Convertible Senior Notes due 2025 — 291.4

U.S. revolving credit facility — —

Foreign credit agreements — 5.0

Debt issuance costs (14.2) (19.6)

Total short-term and long-term debt 1,895.3 2,179.6

Short-term debt and current portion of long-term debt 180.4 31.9

(a)The payment obligations of these debentures issued by Allegheny Ludlum, LLC are fully and unconditionally guaranteed by ATI.

Interest expense was $124.2 million in fiscal year 2024, $105.8 million in fiscal year 2023, and $92.1 million in fiscal year 2022. Interest expense was reduced by $11.8 million, $13.5 million, and $5.1 million, in fiscal years 2024, 2023, and 2022, respectively, from interest capitalization on capital projects. Interest and commitment fees paid were $131.4 million in fiscal year 2024, $114.7 million in fiscal year 2023, and $92.8 million in fiscal year 2022. Net interest expense includes interest income of $16.0 million in fiscal year 2024, $13.0 million in fiscal year 2023, and $4.7 million in fiscal year 2022.

Scheduled principal payments during the next five fiscal years are $180.5 million in 2025, $25.0 million in 2026, $572.2 million in 2027, $16.7 million in 2028, and $335.8 million in 2029. See Note 11, Leases, for the portion of these scheduled principal payments that are related to finance leases.

2030 Notes

In August 2023, ATI issued $425 million aggregate principal amount of 7.25% Senior Notes due 2030 (2030 Notes). Interest on the 2030 Notes is payable semi-annually in arrears at a rate of 7.25% per year. The 2030 Notes will mature on August 15, 2030. Net proceeds were $418.8 million from this issuance, of which $222 million was used to fund ATI’s U.S. qualified defined benefit pension plan in order to facilitate a pension derisking strategy (see Note 14), and the remaining proceeds were

ATI US Equity

ATI · 10-K · period ended 2024-12-29

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

ATI US Equity☆

ATI · 10-K · period ended 2024-12-29

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

ATI US Equity