ATI Inc.

Good morning and welcome to the Allegheny Technologies Incorporated second quarter 2019 results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Scott Minder, Vice President, Treasurer, and Investor Relations. Please go ahead, sir.

Thank you, Andrew. Good morning, and welcome to the Allegheny Technologies Second Quarter 2019 Conference Call. This call is being broadcast on our website at atimetals.com. Participating in the call today are Bob Weatherby, President and Chief Executive Officer, John Sims, Executive Vice President, High Performance Materials and Components Segment, Kim Fields, Executive Vice President, Flat World Products. Pat DeCourcy, Senior Vice President, Finance and Chief Financial Officer. And Kevin Kramer, Senior Vice President, Chief Commercial and Marketing Officer. If you have connected to this call via the internet, you should see slides on your screen. For those of you who have dialed in, slides are available on our website. After our prepared remarks, we will open the line for questions. During the Q&A session, please limit yourself to two questions to allow time for others. We will try to reach everybody who would like to ask a question. Please note that all forward-looking statements are subject to various assumptions and caveats as noted in the earnings release and shown on this slide. Now I will turn the call over to Bob.

Thanks, Scott. Good morning, everyone, and thanks for joining us. Our second quarter results reflected a significant improvement over our first quarter 2019 results. Year-over-year and sequential revenue growth in both segments demonstrated our ability to deliver increasing quantities of critical, high-quality materials and components on time, enabling our customers to meet their production objectives. Segment operating profit expanded sequentially in both business segments, driven by increased volumes and reduced operating headwinds, those headwinds primarily due to raw materials. On a year-over-year basis, second quarter segment operating profit declined versus a very strong prior year quarter. Turning to slide four, before the team covers our second quarter results and financial outlook in detail, I thought it appropriate to share my perspective on the progress that we've made on several of our strategic initiatives. First, we continue to execute on the aerospace production ramp, and we've grown market share over time principally due to our high-quality manufacturing processes and reliable delivery performance. including our recent gains in the nickel powder billet for a large jet engine OEM. We're completely qualified and on pace to be fully ramped up on these incremental volume requirements by year-end 2019 and expect an additional volume increase in 2020. The aerospace industry continues to be a principal growth engine for ATI, and the recent Paris Airshow strengthened our confidence in the industry's future despite the current challenges related to the Boeing 737 MAX. Briefly on Boeing, to date, we haven't experienced any significant change to our order book or backlog related to the 737 MAX situation. We continue to produce jet engine and airframe materials in higher quantities to satisfy the industry's increasing demands for both single and double aisle aircraft production. Based on recent discussions with Boeing and GE Safran, we don't expect any meaningful negative financial impacts from reduced 737 MAX or LEAP 1B production rates in the third or fourth quarters. We continue to monitor the situation to ensure that we have the latest information and we'll update our manufacturing schedules in concert with our customers' directions if and when instructed. The 737 MAX is clearly an important program for ATI. But it's also important to remember that it's one of many airframe and engine programs we supply in a very healthy global market. Second item for this morning, we continue to make progress with our flat-roll product segment towards sustainable profitability despite the ongoing raw material volatility and uncertain global trade policies. Our product mix improved in the second quarter as we began to ship the initial quantities of a nickel alloy product for a large oil and gas pipeline project in Latin America. Third item for this morning, as we work to improve our balance sheet, our strategic review process identified several non-core assets as divestiture opportunities. In the second quarter, we completed the sale of our industrial forging operations located in Portland, Indiana and Lebanon, Kentucky, raising $37 million in cash. And we announced yesterday that we had completed the sale of our cast products business for $127 million in cash. Additionally, we announced the sale of our long-held oil and gas rights on properties in Eddy County, New Mexico, for a total of $91 million in proceeds, including $29 million related to a second quarter sale and $62 million linked to a sale that's expected to close in the third quarter. The value of these properties grew significantly as a result of recent developments in directional drilling technologies. In total, these assets sales provide ATI with approximately $250 million in cash. Consistent with our strategic priorities, we intend to use these proceeds to strengthen our balance sheet, primarily through increased funding to legacy pension obligations and reducing overall debt levels. As you can see through our results, we made tangible progress on three of our strategic priorities in the second quarter, improving our business and bringing us closer to our goals. Before I turn the call over to my team to delve deeper into our second quarter results, I'm pleased to welcome two new ATI board members with significant and relevant industry and business experience. David Hess is an aerospace industry veteran who is well known for thoughtful capital allocation while guiding strong growth at Pratt & Whitney. And Mary Ann Kha is a true expert in global energy markets and risk assessments with deep industry experience at ConocoPhillips. The breadth and depth of the domain expertise in ATI's board is extremely helpful to us as we drive to deliver more value to our shareholders. I'll now turn the call over to John Sims to discuss HPMC segment results in more detail. I'll return with the frog in my throat at the end of the call to wrap up and take your questions. John? Thanks, Bob.