ATI Inc.

Good morning and welcome to the Allegheny Technologies fourth quarter and full year 2019 earnings 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. Please note this event is being recorded. I would now like to turn the conference over to Scott Minder, Vice President, Treasurer, Investor Relations. Please go ahead.

Thank you, Andrew. Good morning, and welcome to the Allegheny Technologies' fourth quarter and full year 2019 earnings 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, Segment Executive Vice Presidents John Sims and Kim Fields, Don Newman, 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 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. We will attempt to get everyone in the queue within the allotted call time. 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 would like to turn the call over to Bob.

Thanks, Scott. Good morning, and thanks for joining us. Before we get started today, I want to welcome our new CFO, Don Newman, to his first ATI quarterly call and to thank our retiring CFO, Pat DiCorsi, for a dedicated and distinguished ATI career. Don brings a wealth of multi-industry financial experience, including from his most recent role as the CFO of Stelco, and from nearly seven years as CFO of Headwaters Inc., a leader in the building and construction materials industry. Throughout his career, Don has focused on business growth, effective capital allocation, and transformation. We look forward to his contributions to ATI, and you'll hear directly from Don later in the call. I'm going to start today by reviewing our focus in 2019 and the significant progress we've made on our strategic imperatives and then move to our expectations to maintain this momentum in 2020. First and foremost, we continue to be an industry leader in on-time delivery of high-quality materials and components. Our successful aerospace ramp execution has earned us customer commitments that will generate future profitable growth for many years. This linkage to execution was clear as we extended several aerospace and defense-related long-term agreements, earning increased market share and most. We continue to leverage our materials science capabilities and unique process technologies to expand our business with new and existing customers. We're confident that this will continue in 2020 as we finalize the next set of long-term contract extensions and capitalize on new opportunities. Federal Products achieved its third straight year of profitability. This was despite the negative impacts from Section 232 tariffs as well as elevated retirement benefit expense related to 2018's pension asset declines. While we fell short of our 2019 expectations in this segment, we were profitable. We remain focused on improving our cost structure, continuously improving our operations and driving profit growth in specialty products. We took significant steps in 2019 to further strengthen our balance sheet. First, we extended and upsized our asset-based lending agreement to ensure ample liquidity through 2024. Second, we reduced gross debt by $150 million in the fourth quarter, which will lower interest expense by roughly $9 million annually starting in 2020, and resulted in a corporate credit rating upgrade. Finally, we further reduced risk associated with our U.S. defined benefit pension plan through a $95 million annuitization of approximately 1,800 retirees in the third quarter and contributed approximately $145 million to our U.S. defined benefit pension plans during the year. Reducing pension liabilities remains a top priority. We're actively assessing options as part of our capital allocation and liquidity management process while ensuring that we are well prepared and taking the necessary actions to handle the uncertainty stemming from the 737 MAX production suspension. 2019 was a year of strategic change and progress at ATI. We have a highly skilled and committed leadership team with a mix of ATI veterans and experienced newcomers and I'm highly confident that our progress will continue in 2020. Let's move on to slide four and a high-level overview of our 2019 results. Starting with the full year, ATI generated solid earnings per share and net income growth. This was aided by the sales of non-core assets. Revenues increased year over year in both operating segments despite challenging market conditions. Total segment operating profit declined versus the prior year as an increase in HPMC, driven largely by the performance of our specialty materials businesses, was offset by a decrease in FRP. As previously discussed, this decline was primarily due to higher retirement benefit expenses, weaker standard stainless market conditions, and a bumpy start to the year in our Asian precision rolled strip business known as STAL. In the fourth quarter, excluding special items, ATI increased earnings per share by 20% versus the prior year. This growth was driven by operating profit improvements in both segments, including increased sales volume in the HPMC segment. In the face of commercial aerospace industry uncertainty and despite regulatory challenges, in the fourth quarter, we generated year-over-year growth in earnings per share free cash flow and revenue. We focused on the things that we could control and we made significant progress on our strategic imperatives. Going forward in 2020, we're better positioned for long-term profitable growth and industry-leading execution on multiple aircraft and engine production ramps, including the 737 MAX when it returns to the skies. The long-term fundamentals driving aerospace demand are still strong. So enough from me this morning. John, Kim, and Don will cover the business and financial results in more detail, starting with John for the HPMC segment.