ATI Inc. (ATI) Earnings Call Transcript & Summary

Hello. And welcome to Annual Meeting of Shareholders. Please note that today's broadcast is being recorded. It is now my pleasure turn the meeting over to Diane Creel, Chair of ATI Board of Directors.

Thank you, and good morning, ladies and gentlemen. I'm Diane Creel, Chair of the Board of Directors of Allegheny Technologies Inc. It's 11:00 a.m. and in accordance with the notice of meeting, I call to order the 2020 annual meeting of stockholders of ATI. Today's virtual meeting is a live audio webcast. As previously announced, ATI chose to conduct today's meeting in a virtual only format in light of ongoing national health concerns. We believe in engaging with you, our stockholders, and under the current circumstances, this technology provides the greatest opportunity for your participation in today's meeting regardless of your physical location. We will conduct the meeting in accordance with the agenda and the rules and procedures of conduct that are available in the file section in the lower left corner of the meeting center. Before the business of the meeting begins, I would like to make certain introductions. Participating in today's webcast are Bob Wetherbee, ATI's President and Chief Executive Officer and a member of the Board of Board; Elliott Davis, ATI's Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary. Mr. Davis will act as Secretary of this meeting. Also participating and representing the company's independent auditors is [ Kevin Pickles ], a partner of Ernst & Young LLP. If questions arise during the discussion period then Ernst & Young should appropriately address, he will be glad to respond. Finally, Amanda Skov, the company's Assistant General Counsel and Assistant Secretary is also present and has been duly sworn to perform the duties of the inspector of elections. I would also like to welcome the other members of ATI's Board of Directors who are participating in today's meeting in a listening mode. I would like to ask Mr. Davis to report on the mailing of the notice of this meeting and the presence of a quorum.

Thank you, Ma'am Chair. This meeting is held pursuant to the printed notice dated March 24, 2020, that was mailed commencing on that date to each stockholder of record as of March 9, 2020. A list of stockholders entitled to vote at this meeting has been available for at least 10 days prior to this meeting in accordance with Delaware Law. All documents concerning the call and notice of the meeting will be filed with the records of the meeting. The count of shares present immediately before the meeting began, indicated that 118,047,798 shares of the company's common stock were present in person or by proxy. This is approximately 93% of all shares entitled to vote at this meeting. A quorum is present at the meeting.

Since the meeting has been duly called and a quorum is present, the meeting is ready to transact business. The polls for each matter to be voted on at this meeting are now open at 11:04 a.m. today, May 8, 2020. If you have not voted or wish to change your vote, you may do so by clicking on the link provided online. Any stockholder who has already voted and does not want to change that vote may not take any further action at this time. Will the Secretary please introduce the 4 matters for stockholder consideration.

Thank you, Madam Chair. The matters for consideration by the stockholders today are: one, the election of 3 directors; two, a vote to approve the company's 2020 incentive plan; three, an advisory vote regarding the 2019 compensation of the of the company's named executive officers; and four, ratification of the selection of Ernst & Young LLP as independent auditors for 2020. These matters are described in detail in the proxy statement. The results of the advisory vote are not binding on the company.

Thank you, Mr. Secretary. We will now allow a few moments for any remaining online voting. [Voting]

I now declare the polls closed for the matters voted on at this meeting as of 11:06 am today, May 8, 2020. Will the Secretary please report the preliminary results of the voting.

Thank you, Madam Chair. The inspector of elections has counted the ballots and proxies and has reported the following: a total of 118,047,798 shares of the company's common stock are present at the meeting in person or by proxy. These preliminary voting results are as follows. With respect to the election of directors, the 3 nominees named in the proxy statement for this meeting received the highest number of votes cast. The company's 2020 incentive plan is approved. In an advisory vote, the stockholders have voted to approve the 2019 compensation of the company's named executive officers. And the stockholders have voted to ratify the selection of Ernst & Young LLP as independent auditors for the year 2020. These voting results are preliminary. Final results will be reported on a Form 8-K to be filed with the SEC next week. The final report of the inspector of elections will be filed with the records of the meeting. Madam Chair, that concludes my report of the preliminary results of the voting.

Ladies and gentlemen, this concludes the official portion of our meeting, and I declare the meeting to be formally adjourned at 11:07 a.m. today, May 8, 2020. I will now turn the meeting over to Bob Wetherbee.

Thank you, Diane. Over the past year, my first as President and CEO of ATI, we've taken a fresh look at our strategy, our product offerings and our operations. The work has set the direction for our future, starting with a clear vision. ATI is solving the world's challenges through material science. At these uncertain times where we face many challenges, it's helpful that we start from a position of clarity and strength. We know who we are as a company, and we're already on the path of sharpening our focus, optimizing our assets and positioning ATI for a strong future. While certainly, much has changed since the onset of COVID-19, I'd like to take a moment to remind you of 3 things that remain unwavering. First, our team. Everything we do starts with the safety of our people. Our team's extraordinary support for each other's health and welfare has allowed us to maintain on-time delivery of the mission-critical parts and materials our customers need, and to adapt to changing demand. I thank them for their commitment and steadfast support. We've led through difficult times before and while these current challenges are clearly unprecedented, we have an experienced leadership team that understands the need for quick and decisive actions to transform the business. Guided by our core values, we're taking the actions necessary to emerge from this crisis stronger and better positioned for profitable growth. Second thing that we're unwavering about is our Board. And I appreciate the ongoing support and counsel of our Board Chair, Diane Creel, and each member of ATI's Board of Directors. Their extensive domain knowledge has helped us position our company for success and to adapt to these changing conditions, serving as excellent stewards as we manage through the short term and preserve our long term potential for growth. And lastly, our commitment. ATI is a great company with unique capabilities, great people and extraordinary technology. Our strategic approach keeps us constantly pointed to achieving our vision. As shareholders, you've chosen to invest in us, and we understand and appreciate the responsibility that, that brings. We're committed to creating value for you. Knowing where we want to go and what we want to achieve helps us to take hard actions now to emerge strong for the long term. Thank you for your support. We look forward to achieving ATI's long-term success together. And that concludes my remarks. So I'll go ahead. We have at least 2 questions that have come in, and I'll answer them for today's meeting, if that's okay, Madam Chairman -- Chairperson.

Yes, that's great, Bob. Thanks.

All right. First question was about the Section 232 tariffs that we were pursuing in support of a joint venture in our standard stainless business as well as any implications of that. Those exemptions were -- requests were actually denied. But they're actually somewhat -- we're disappointed that the commerce department denied those tariff exclusion requests. But -- and we firmly believe we meet the criteria. But we've already taken action. Candidly, at the end of March, we announced that we were closing the line. So that's done for us. We expect to kind of wrap that up mid-summer. It's unfortunate. I think our employees deserve better and tariffs are certainly a blunt instrument when used the way they were used. But we don't anticipate any additional idlings, a little less utilization in our hot rolling and processing facility. And we are engaged with our joint venture partner to discuss the implications of what now with the joint venture. So I think there were like 3 questions in there. Hopefully, I answered all 3 of those at 1 time. The other question we got was based on our earnings announcement earlier this week. It's been a very busy week here at ATI and our communication activity. We announced that we had taken action to reduce about $125 million in costs through the course of the year. And the question was, help me understand a little bit as to where those are and how you're achieving that. The principal #1 issue that we're dealing with is really managing our capacity. It's the plant idlings. We're going through a series of either rolling idlings, where we're down 1 week out of 4 or 2 weeks out of 6. Now we're doing furloughs, both short term and long term, taking advantage of the legislation that was part of the CARES Act to help our employees through that difficult time. And in some cases, we've had layoff. It depends on our product line and certainly, the business that we're dealing with. And we're also dealing with salary and 401(k) benefit adjustments that we've deployed here in May. We certainly understand the hardship that, that's creating for our employees. But we recognize we're actually in the process of preserving jobs by doing that. And then lastly, between a combination of reducing our corporate expenses, kind of looking at our nonessential, what's the mission-critical stuff, what are we really working on and the third-party services that we do. The bottom line in our cost reduction program, it's all about matching our capabilities, our cost structure, our inventory with this new reality of demand. So that's been the guiding light through that. Are there any other questions, Amanda? Okay. Madam Chair, that ends the Q&A section.

Thank you, Bob. Our program for today has concluded. We thank you for attending today's meeting. And we thank you for your continuing interest in ATI.

This concludes the meeting. You may now disconnect.