Danny Greenfield - VP, IR and Corporate Communications Rich Harshman - Chairman, President and CEO Pat DeCourcy - CFO and SVP-Finance John Sims - EVP, ATI High Performance Materials and Components Segment Bob Wetherbee - EVP, ATI Flat-Rolled Products Group Kevin Kramer - SVP, Chief Commercial and Marketing Officer

Richard Safran - Buckingham Research Josh Sullivan - Seaport Global Michael Gambardella - J.P. Morgan Jorge Beristain - Deutsche Bank

Thank you, Keith. Good morning, and welcome to the Allegheny Technologies conference call for the fourth quarter and full year 2016.

This conference call is being broadcast on our Web site at atimetals.com. Members of the media have been invited to listen to this call.

Participating in the call today are Rich Harshman, Chairman, President and Chief Executive Officer; Pat DeCourcy, Senior Vice President, Finance and Chief Financial Officer; John Sims, Executive Vice President, ATI High Performance Materials and Components Segment; Bob Wetherbee, Executive Vice President, ATI Flat-Rolled Products Group; and Kevin Kramer, Senior Vice President, Chief Commercial and Marketing Officer. All reference to net income, net loss, or earnings in this conference call mean net income, net loss or earnings attributable to ATI.

If you have connected to this call via the Internet, you should see slides on your screen. For those who have dialed in, slides are available on our Web site atimetals.com.

After some initial comments, we will answer the questions. During the question-and-answer session, please limit yourself to two questions to be considerate of others on the line.

As always, we will make every attempt to reach everyone in the question-and-answer queue within the allotted conference call time. Please note that all forward-looking statements this morning are subject to various assumptions and caveats as noted in the earnings release and on the slide.

Actual results may differ materially. Here is Rich Harshman.

Thank you, Dan. Good morning to everyone on the call or listening on the Internet.

Fourth quarter performance shows the early results of the strategic decisions we have been implementing over the last few years. As a result, ATI's High Performance Materials and Components segment's operating profit improved to 11.3% of sales, and Flat-Rolled Products segment achieved a near breakeven quarter after four years of operating losses.

Our largest market at 51% of 2016 sales is Aerospace and Defense. We are into the transition to the next generation aircraft and jet engines from the legacy models, and ATI is benefiting.

ATI sales for the commercial jet engine applications increased 13% in 2016 compared to 2015. While sales for airframe applications were essentially flat, titanium mill product shipments remained healthy.

During the last several years we have enhanced our capacity and capabilities to make the products that support our customer's needs for next generation engine platforms. Our facilities are qualified.

This available capacity enhances our competitive position and our capabilities to create value for our customers and our shareholders over the long-term, and we are. Fourth quarter 2016 results demonstrates steady improvement in operating earnings.

This improvement is being driven by revenue growth and improved product mix, primarily in the aerospace and defense markets, and significant cost reduction and restructuring actions that have been taken throughout ATI over the last several years. The improvement is impressive given the fact that demand from our second largest end-market oil and gas remains depressed, specifically 2016 sales to the oil and gas market decreased by 48% compared to 2015 and by 63% compared to 2014.

2016 has been a period of transition for ATI as we made difficult decisions and took significant actions to improve our cost structure and lay the groundwork for sustainable long-term profitable growth. Turning to slide four, at the beginning of 2016 we set important objectives that needed to be accomplished during the year.

These objectives were the expectation that ATI sales to the aerospace and defense market would be greater than 50% and the significant mix improvement due to next generation engine ramp. The data is in.

2016 sales to the aerospace and defense market was 51% in 2016. This was achieved through our long-term supply agreements with key strategic customers and through progress made on our operational excellence and continuous improvement efforts, which enabled share gains and improved our ability to quickly respond to emerging demand.

Revenue mix from -- revenue from our mix of differentiated jet engine alloys grew by 55% compared to 2015. This includes shipments to our own forging operations as well as to other forgers who are our direct customers.

Our High Performance Materials and Components segment is well positioned for profitable growth over the next five years, driven primarily by strong and growing demand from the commercial aerospace -- from commercial aerospace, especially the next generation platforms. We also expect to see improved market conditions from the oil and gas market as we move over the next several years.

Regarding our Flat-Rolled Products segment, we said that challenging market conditions required tough decisions. At the end of 2015, which was the third consecutive year of losses in the FRP segment, we noted that structural market conditions and global competitive factors required a dramatically different approach to return this business to sustainable profitability.

After extensive strategic review and analysis, we took actions to lessen our dependence on commodity Flat-Rolled products by reducing our exposure to commodity stainless steel sheet and exiting the grain-oriented electrical steel business. From mid-2015 continuing into the first quarter of 2016, we faced the most difficult labor contract negotiations in more than 20 years.

Our objectives throughout these negotiations were straightforward. For our Flat-Rolled Products business to be viable, we needed a labor agreement that was more flexible and competitive to the realities of the market.

After a seven-month work stoppage, we were able to achieve important changes in the new agreements, all of which helped to improve the segment's cost structure. In addition, we have restructured the Flat-Rolled Products management organization and significantly reduced the number of salaried employees, in line with a smaller, more focused Flat-Rolled Products business.

We had said that we expected the Flat-Rolled Products segment to be modestly profitable in the fourth quarter. In October, we updated this to say we expected the segment to return to profitability in 2017.

As can be seen in the earnings release the Flat-Rolled Products segment was near breakeven in the fourth quarter 2016, a significant improvement from the previous quarters. As we look at the next several years, the Flat-Rolled Products segment is positioned to benefit from growth in high-value products, including the benefits from the STAL expansion as well as improved business conditions in key markets, including oil and gas, chemical process industry, hydrocarbon process industry, defense, capital goods, and we believe the seemingly renewed focus on the importance of U.S.

manufacturing. Turning to slide five, the commercial aerospace ramp continued throughout 2016, especially for our next generation jet engine products.

For all of ATI, 2016 sales to aerospace and defense reached 51% of total sales compared to 41% of sales for 2015. Jet engines accounted for 28% of sales, airframe represented 15% of sales, and sales to government Aerospace and Defense were 8% of sales.

ATI sales to the oil and gas market were down nearly 50% in total in 2016 compared to 2015. This impacts both our High Performance Materials and Components segment as well as our Flat-Rolled Products segment.

In the oil and gas market we are seeing some early signs of improving demand from our customers, not yet a trend, but indicative of a market that has nowhere to go but up. At $50 a barrel, sentiment has improved and we have seen an increase in order quotation requests.

Actual orders have picked up modestly at this point. Most customers remain cautions.

Some large products such as pipelines have begun to move forward after being put on hold for the last several years. At this time, our visibility into this important market is limited and our order backlog remains soft, but we are seeing signs of cautious optimism.

The reduction in sales to the electrical energy market as depicted on the slide is mostly due to our exit from the grain-oriented electrical steel business, which is electrical distribution. We continue to pursue global power generation and pollution control opportunities.

The automotive market remains strong for several of our high-end Flat-Rolled Products. Lower sales compared to 2015 results from our reduced exposure to commodities stainless used in exhaust components.

Demand for our nickel-based alloy and specialty alloy strip and precision-rolled strip continues to be strong from the global automotive market. Our medical business is good, and has consistently been and continues to be about 5% to 6% of our sales.

It consists of titanium alloys, nickel-based alloys, specialty alloys, and zirconium and niobium alloys primarily for knees, hips, and MRI machines. Turning to slide six, as a result of our transition and restructuring actions in 2016, our product mix began to change.

Let's focus on the arrows. Total sales of nickel-based alloys and specialty alloys, as expected, were flat in 2016 compared to 2015.

Recall that in 2015 we shipped a large amount of nickel-based alloy plate for an oil and gas pipeline that was not repeated in 2016. Sales of titanium and titanium alloys and precision forgings and casts are a larger part of our product mix, while commodity products were a smaller part of our product mix.

Slide seven tells a meaningful story. Note the top and bottom lines.

The high-performance Materials and Components segment has achieved significant operating profit improvement on relatively flat sales. The reasons, sales for commercial jet engine applications increased, and the jet engine product mix improved as our next generation jet engine mill products shipments grew and achieved record levels.

In addition, our isothermal and hot-die forged presses' operating rates improved to near record levels. We took initial actions in this segment to improve the cost structure by changing the business units from individual silos into more aligned, cohesive, efficient customer and market-focused business.

We also idled or consolidated three facilities as noted on the slide and as we have previously discussed. Operating profit improved, even though demand from the oil and gas market, the segment's second-largest market remained depressed.

Segment sales to this market were 57% lower in fiscal year '16 compared to fiscal year 2015. Our titanium investment casting business is growing and has a strong order backlog.

However, we continue to struggle to keep up with ramping demand as a result of the learning curve associated with the introduction of new parts and the startup of our $30 million capacity expansion completed in early 2016. While our delivery performance has improved throughout 2016, much work remains to keep up with the growing demands of our customers.

Our people are dedicated, engaged, and committed, and we are making progress. But not yet as quickly as we or our customers need.

We are supplementing the resources at this business with expertise from other parts of the ATI, as well as from external sources. I'm confident that we are providing the required resources, building the necessary skill set, and implementing the robust business processes that will result in sustainable and improved delivery performance for our customers as we move through 2017 and beyond.

Slide eight also tells a meaningful story. Note the top and bottom lines again.

On relatively flat sales the Flat-Rolled Product segment has made good progress towards achieving profitability. As previously stated, Q4 2015 and Q1 2016 operating results were negatively impacted by the work stoppage.

We made some tough decisions to return this segment to sustainable profitability and we will continue to do so. Our strategy has been to reposition and structure our Flat-Rolled Products business to be a leaner, more streamlined and cost competitive business that is more focused on differentiated products with higher technical barriers to entry that serve global markets with attractive long-term growth prospects.

All of these actions are integral to our goal of positioning our Flat-Rolled Products business to be a cost competitive innovative technology-based and market-driven specialty materials business that can be consistently profitable through business cycle and which enhances the strengths of ATI in the marketplace. This strategy is focused on enriching the segment product mix and optimizing the current asset base including taking advantage of the unique capabilities of our hot rolling and processing facility.

Fourth quarter 2016 results were better than we had expected and communicated in October. At that time market segment was negative.

We heard from many of our customers that many intended to reduce inventory at the end of the year. A few things changed.

First, the adjustment to the fairgrounds surcharge and higher fairground prices resulted in higher stainless steel surcharges in January as compared to December. Second, consumer and business conference both rebounded in November according to the conference Board.

As a result of these factors our customers ordered more than originally expected resulting in and better-than-expected fourth-quarter sales. Same as steel shipments increased by 10% and high-value shipments increased by 3% both compared to the third quarter 2015.

We also saw early benefits from our cost reduction and restructuring actions taken in the segment. Turning to slide nine, ATI is no longer a stainless steel company with some specialty metals.

Today over 50% of ATI's total revenue is generated from the aerospace and defense market. We expect continued growth from this market.

Commodity stainless sheet sales were only 11% of total sales in 2016 and grain oriented electrical steel is no longer part of our product mix. We have a new presence in defense.

I believe that API has historically under participated in the defense market. In July 2015 we refocused our defense market sector team, increased its resources and established an office in Washington DC headed by an experienced ATI Vice President.

We are beginning to gain traction on many fronts. This is a long-term strategy but one that will provide opportunities for growth especially for our Flat-Rolled products segment.

We're focused on the defense programs that best fit ATI's capabilities. ATI's name and capabilities are better known today than ever within the DoD and with the primes in their Tier 1 suppliers.

A recent success ATI 425 alloy is now qualified for a critical helicopter blade application. This is a good beginning for this alloy which is the proprietary titanium alloy that ATI developed.

Its superior performance and manufacturing cost advantages made a compelling argument for material substitution. We have increased our participation in the aero defense market with new contract wins including on the joint strike fighter.

Oil is now $50 a barrel or above. This price is expected to drive demand in orders from the oil and gas market which has been depressed for more than two years; ATI's position to benefit from improving U.S.

manufacturing and capital investment. And finally because of the actions taken primarily in 2016, our cost structure is in much better position to provide more consistent shareholder returns during the cycle of our business.

Now I'd like to ask Pat DeCourcy, ATI's Chief Financial Officer to discuss our results and financial position. Pat?

Thanks, Rich. Turning to slide 10; we reported fourth quarter 2016 sales of $796 million and net income attributable to ATI of $10 million or $0.09 per share.

Fourth quarter 2016 results include $29 million of pretax restructuring charges including $13 million for additional high performance materials and components, segment closure-related actions at the Rowley Utah, Frackville PA, and Albany Oregon titanium operations and $16 million for Flat-Rolled Products segment closure-related costs at the Midland and Baghdad PA facilities and for additional Flat-Rolled Product severance charges. Excluding these restructuring costs and above normal income tax benefit, the net loss attributable to ATI was $4 million or $0.04 per share.

At December 31, 2016 cash on hand was $230 million and available liquidity under our asset-based lending facility was approximately $310 million. Cash provided by operations in the fourth quarter 2016 was $68 million as we improved our used of managed working capital.

Managed working capital improved by $53 million in the fourth quarter bringing the total 2016 improvement to $92 million. Capital expenditures were $202 million in 2016.

We expect 2017 capital expenditures to be approximately $125 million including 2016 carryover and approximately $40 million for the expansion of our 60% owned Chinese joint venture STAL. Beyond 2017, we continue to expect capital expenditures to average no more than $100 million annually for the next several years.

We are at the end of our extraordinary capital expenditure cycle that has transformed and modernized ATI. We expect to pay off our short-term debt of our 100 million that is due later this year.

Cash generation from operations remains a key focus at ATI. As earnings improved in 2017 and beyond, the resulting annual free cash flow after necessary capital expenditures will be used primarily to reduce debt, improve the funded position of the company's defined benefit pension plan, and improve liquidity.

We are focused on creating long-term shareholder value by returning ATI to sustainable profitability, strengthening our balance sheet and restoring and maintaining financial flexibility and strong liquidity. As announced in December 2016 in support of these objectives, ATI Board of Directors decided to suspend a quarterly dividend beginning with the fourth quarter of 2016.

Suspending the quarterly dividend which saves nearly $35 million annually provides additional liquidity and financial flexibility as we enter 2017 and the later stages of ATI's transformation. We have received several questions on the dilutive effects of our 2016 convertible notes on EPS.

Please contact us if you need additional information on this subject. Turning to slide 11; we currently expect 2017 pretax retirement benefit expense to be about $71 million or approximately $23 million lower than 2016.

This is due primarily to higher pension assets and liability management actions we've taken. We expect to make an additional $135 million cash contribution to the U.S.

qualified pension plan in 2017. The liability management actions that we've taken some of which are listed here significantly reduced the participants in our pension plan and we plan to continue to take action including evaluating additional alternatives to reduce our liability and related administrative costs.

Now I will turn the call back over to Rich.

Thank you, Pat. Turning to slide 11, we've used this slide before and we will continue to use it because we think it tells a very important story.

The next generation rate ramp has begun and the transition to next generation from legacy is driving ATI's performance. Slide 11 shows how we view this aerospace cycle.

The white area shows the number of legacy jet engine. The green area illustrates the projected number of next generation jet engines expected to be delivered.

Beginning in 2016 and growing until the end of the decade, there is a pronounced difference in the spread between the declining demand for OEM legacy products compared to the growing demand for the next generation products. As you can see by 2020 nearly -- the chart is nearly all green.

This slide demonstrates the significant mix shift taking place in our aerospace business, growing demand for our differentiated next generation alloys as well as growing demand for our isothermal and hot-die forging and titanium investment castings. Most important for ATI through the end of the current decade the OEM build schedules show five new next generation airplanes and eight new next generation engines.

We have improved content on nearly all of the next generation airplanes and engines listed as compared to the legacy engine programs being replaced. This content is secured by long-term supply agreements that run into the next decade or some time we have provided you information on the jet engine backlog according to the latest information available the backlog stands at 22,314 engines.

Now we turn our focus on the engine delivery schedule. We show a third-party schedule some of you may be more positive, some may be less positive, either way that build schedule represents significant growth opportunity for ATI.

As a reminder, as we have consistently stated we base our long-term projections on what we view as a conservative view of the single aisle build rate at 42 airplanes per month for both Boeing and Airbus. And as everyone on the call knows, Boeing and Airbus has announced a significantly higher build rates into the future through the end of the decade.

Turning to Slide 13, growth through relentless innovation here is another key metric of ATI's differentiation and growth. Listed our four differentiated mill products are being used in a significant way on the CFM Leap and Rolls-Royce Trent X WB jet engines.

The nickel-based super alloys listed on this slide are ATI differentiated since one is an ATI proprietary alloy, one is a legacy alloy and we are the only supplier currently capable of meeting the required properties in large billets and one is exclusive to ATI under a long-term supply agreement, and one product is supplied either by ATI or only one other supplier. These mill products are generally forged into parts through either the hot die or isothermal forged processes.

We use the alloys at our ATI forge products business to produce jet engine forged parts or sell the milled products to other forgers who have technical and qualified manufacturing capabilities to produce the required parts. In 2016 sales of these products increased by 55% compared to 2015 and reached record levels.

As shown on this slide, revenue both internal to our forging operations and external to other forgers reached nearly $200 million in 2016. Our schedules indicate further strong growth for these differentiated alloys in 2017 and through the end of the decade.

Demand is driven by the next generation delivery schedules shown on the previous slide. I'll highlight one of our four key differentiated products.

Power metal alloys. We get questions on additive manufacturing particularly 3D printing and our position in the powder supply chain.

ATI is a leader in producing titanium-based alloys, nickel-based alloys and specialty alloy powders. We are in innovator in specialty metal powder production development -- product development and in the powder to part process.

We produce critical jet engine rotating parts through our nickel-based alloy integrated powder to isothermal forged process which is a large and growing business for ATI. We are one of two independent integrated producers of powders to isothermal forging.

We are increasing our position in this market. We also produce net-shaped parts through our integrated powder the height hot isostatic process or hip; the next frontier for our innovative powders and additive manufacturing including 3D printing.

The powder processes essentially the same. We are qualified for many of the complex titanium alloys that are being used to develop 3D-printed titanium parts for jet engines.

Right now, powders for 3D printing is in the development stage. We anticipate future benefit and significant growth from additive manufacturing over the next five years.

Our new nickel-based power metals facility in North Carolina is on track, and we are preparing for the startup and for the qualification process to begin shortly. In summary, our differentiated powder-to-isothermal forge process is a large business for us today, and we expect significant growth to run at least through the end of the decade.

Power metals to 3D printing is in the innovation and development stage, not just for aerospace but across many of our strategic markets. We anticipate strong growth to begin over the next several years, and to continue well into the future.

Our value proposition resides in Material Science, the science of staying ahead by developing innovative products for the next generation. The aerospace transition taking place from legacy to next generation is happening now at ATI.

We will continue to innovate. We also know that today's specialties are tomorrow's commodities, so relentless innovation is critical to providing sustainable long-term value for our customers and shareholders.

In summary, we are focused on returning ATI to sustainable profitable growth, and building a business that has a strong balance sheet, and is capable of generating strong cash flow. This requires making decisions and taking actions that place priority on innovation and the differentiated products that create value for our customers and shareholders over the long term.

It requires our businesses to be lean and efficient while creating great opportunities for our people. The restructuring actions that we have been implemented over the last year, whilst difficult, are integral to returning ATI to sustainable profitability.

In our High Performance Materials and Components segment we expect to increase the pace throughout our operations, driven primarily by the increasing demands from the commercial aerospace market. In 2017, we expect high-performance Materials and Components segment revenue to grow about 10%, and segment operating profit to be in the low teens as a percentage of sales.

We expect to benefit from our lower cost sponge mix in the second half of 2017 as a remaining titanium sponge produced at Rowley works through inventory. In our Flat-Rolled Products segment, 2016 results reflect the ongoing rightsizing and restructuring activities.

The segment is making progress towards achieving sustainable profitability. As we continue to reposition this business to a higher value product mix, we expect shipments of our specialty coil and plate products to improve in 2017, and to benefit from the HRPF capabilities, particularly for our 48-inch wide nickel-based alloy sheet.

In 2017, we expect the Flat-Rolled Products segment to achieve sequential sales growth through the first two quarters of 2017. However our visibility into the second half of 2017 remains cautious, and market conditions remain challenging in certain key end markets.

We expect the Flat-Rolled Products segment to reach low single digit operating profit level as a percentage of sales in 2017. Operator, may we have our first question, please.

Rich, Patrick, Dan, good morning.

Good morning, Rich.

Good morning, Rich.

So first off, Rich, in your opening remarks, and it went a little quick, you talked about some of the indicators you know like consumer confidence, things like that, improvement that drove 4Q results. Could you discuss what your leading indicators you look at internally and what they're telling you about '17?

What they're telling you? And if you would, could you go through your key aerospace end markets and discuss how you see them trending in '17?

For example, is OE going to grow in line with new technology build rates, aftermarket notably? And more importantly I was interested on defense since you highlighted that in your remarks.

Yes, well, there's a lot of embedded questions in there, Rich, but we'll do the best we can. I'm going to start really with the latest comment, and that's on defense, and I'm going to ask Kevin Kramer, who -- and Kevin is really at the forefront here of working with our defense market sector team on how we're strategizing, and more importantly what we think, not only about 2017, I think there is growth in 2017 in defense for ATI, but the comments I made are really -- it's a long-term evolving strategy over the next three to five years and beyond, but Kevin, could you just spend a couple of minutes talking about defense?

Sure. And again, good morning, Rich, and as Rich had mentioned earlier…

Good morning.

Good morning. We established an office a little over a year ago in Washington D.C.

headed up by Cherry Hartford [ph], and really what we've decided that we have to have a better presence at the DoD with all the primes, with all the platform offices, as well as the labs. So when we look at the opportunities on ground systems, nav sea, nav air force, munitions, ammunitions, missile systems, we really have a very wide array of materials and components to meet the opportunities.

As I'm sure you know, the defense cycle is a long cycle, but having a relevant presence against all those touch points I just mentioned, we're very optimistic as to the future across both high performance as well as Flat-Rolled for ATI.

And Rich, on commercial aerospace I think as we look –- because your question is more focused on 2017, I think as we look at 2017, the primary growth driver for us is really new builds, right? I mean, it's -- spares is there, the application of spares both from a mill product standpoint as well as from a parts standpoint, primarily forgings are there, but that's really not going to be -- and it's a good market, right, I mean, it's not a weak market, and it really depends on what platform you're on, quite frankly, the single is always really the big driver of spares demand.

But as we look at and think about 2017 it's really the new build. It's really the new engine platform.

It's the LEAP, it's the XWB. We have significant content on both of those platforms as compared to their predecessor platforms.

The CFM engine build rate is still strong obviously. And there is where you'll see some of the spares going, and continuing to grow.

So I think it's really -- and the reason why we spent so much time really talking and focusing the comments on the differentiated next generation platforms is those are the real drivers on a year-over-year comparative basis. When you look at isothermal forging, and when you look at alloys like ATI 718Plus, Rene 65, and the powder alloys, those are largely going into the new platforms, which are the ones that are in the highest growth trajectory because of the nature of the backlog.

And that's really going to be the big driver, not only quite frankly in 2017, but also beyond. Now, that does not diminish the importance of the legacy platforms.

I mean, there is still a significant demand on the legacy platforms especially on the milled product side and also on the forging side. Those are part and parcel to the long-term supply agreements that had been awarded over the past two to three years.

And in every case we, at least at a minimum, held our own in terms of what our share of that demand was. And in many cases we actually grew our participation in those markets.

So I kind of look at it as an overall balanced approach, not only with the legacy platform but more importantly with the next generation platforms. And as you've heard me and us say before, if you're not on those platforms now, if you don't have the product to support the demand that's there now you're missing out on this cycle, because there is no time to recall or anything like that.

The ramp is here, it's upon us, and it's real. Just broadly on the oil and gas market, just to supplement some comments that I made.

I think the approach we've taken is really to be very conservative. I think if there is an opportunity for us, if there is a difference in how the 2017 market plays out in oil and gas it's a stronger likelihood that there is upside than there is downside for us.

There is especially in the second half of 2017. We're at such a low level that it's hard to get lower where we're at.

Not to say that you obviously can't get below zero, but we had a little bit more than zero. But I think that's a potential to be a real surprise in the market especially in the second half of the year.

And I also think the comments that are coming out about what the new administration, about the focus on the importance of American manufacturing welcome. I mean we've had that attitude and belief forever.

And I hope it's not just words, I hope it's followed through with actions, we'll see. But that I think as it all plays out, I think if anything I think that I view that more as a long-term play as well.

I think '17 could benefit from some of that. Once again maybe as things get rolling into the second half of the year, but I think it's really '18 and beyond for that.

Okay, thanks. And staying on aerospace just real quickly here, Rich, I thought I heard you in your remarks say that your guide assumes narrow-body rates of 42 per month.

I think you're also aware that Boeing is planning on raising rates to 47 a month this year on the narrow-body again. So do I take that to mean that if Boeing hits 47 a month maybe there's a little bit of upside here to your guide if they hit that rate?

And also, is there any -- is your guide assume same level of conservatism on any of the wide-body rates as well, Boeing staying stable at 12, but maybe on the A350, that sort of thing?

Yes, all of our planning process is really off of the current production rate. So that not only pertains to '17, but also -- we do a five-year detailed plan.

It assumes the continuation of the current build rates through that period. I know there is some speculation maybe that given that on a relative basis the weaker demand profile of the wide-body that maybe the two OEMs will have a hard time sustaining the current announced build rate or in the current build rate on the wide-body.

We'll see. I mean, a lot can change there, but I think to the extent that that gets lowered it's from the standpoint of our position in the market it's more than offset by the upside potential if the single aisles are built at more than 42 a month.

Which I think given the backlog and the macro I think the general consensus is supportive of what the two OEMs have announced in terms of future build rate increases on the single aisle. So we're being purposefully conservative.

We're not purposefully conservative in terms of how we think about our capacity. If that capacity and the demand is there at a higher level we have the capability and the capacity to allocate to that stronger demand, not only in 2017, but beyond.

Good morning.

Good morning, Josh.

Hey. Can you just comment on some of those, with the new presidential administration here, obviously a lot of trade-related initiatives, are there any specific ones that you're looking at, or is there any way to quantify how they might impact ATI?

Yes, we've been fairly consistent for a very long time that in our view that what needs -- the primary focus should really be on enforcing the existing trade agreements that are in place, including the requirements of being a participant in the WTO. And I think that that has not happened quite frankly, regardless of who has been in the Whitehouse over the past 12 years or longer.

And I think if you do that, from our perspective, we are pleased about the decision of TPP. We spend a lot of time looking at and analyzing TPP, and did not think that it was a good, fair trade agreement for American manufacturers.

And so we support that. I think that any time that trade is discussed we're not advocating protectionism.

What we have always advocated going back to before my predecessor, actually going back 30 years, to Dick Simmons when he was the leader -- the chairman and CEO of Allegheny Ludlum is when you talk about trade and you talk about global trade there are two F-words when you talk about trade, and it's fair and free, so there's two. And I think in many cases the advocacy of free trade did undermine, especially U.S-based manufacturers.

And we think that the change in tone and the recognition of that is important. I think it's a journey.

I don't think that that happens overnight. I don't think that that's going to be a big impact on the first quarter or maybe even the first half or maybe even 2017.

But I think from a long-term strategy standpoint I think it is a very positive development for American manufacturers. We support it.

We're not new supporters into that. We're not jumping on the bandwagon, it's something that we have been arguing for and supporting for more than a generation.

Great, thank you. Then just one on aerospace, where do you think you are on the learning curve right now and how does that progress over 2017 as it relates to the high-performance margins?

Are you talking about the segment in total or are you talking about investment castings?

Both or just how it's going to…

Yes, I think on a total basis, we're pretty good at what we do. We've been doing it for a long time.

We know how to make forgings, we know how to make milled products, we have outstanding people, not only on the technical side but on the operational side. We have an outstanding asset base.

I think that the biggest need -- now when you get into new products, and you get into new alloys, and you get into new parts, especially on the forging side, there is obviously a learning curve. You go through that learning curve when you move from a fat forging into a streamlined forging or a slim-line forging.

So depending upon where you are in the history of that new part introduction you go through a learning process. But I think there we're in a very good shape.

I think the biggest challenge we have and that we've had is really on the investment casting side because of, not only the nature of some of the new parts, but also some of the more established parts and the volume that has been put in at the timeframe that you're really ramping up on everything else. So we have struggled with that.

I'm going to ask John Sims to really comment more specifically about where he thinks we are on the investment casting side and any other comments he wants to add. John?

Yes, thank you, Rich. Hi, Josh.

On the investment cast side I guess in general, as Rich said, from a milled product powder forging side I would say we're qualified and rate capable. On the investment casting side we're probably in general about 50% through the learning curve from the new product introduction.

And in the world of investment castings, learning curve is a defined part of the agreements that we have. A certain number of parts make up what we define as the learning curve.

So we're about 50% of the way through there. Important for us to remember on the investment casting side is, prior to 2015 that business, from a mix standpoint, was predominantly airframe, which are smaller parts, generally a little easier to make.

That dramatically changed in 2015 with the engine ramp, to where today the majority of our parts are engine-related, which are typically larger, far more complex castings with a more difficult learning curve. So that in combination with our capacity ramp, the new product introduction as well as some other supply chain issues that have occurred over that time as we drop in orders, et cetera.

That's been primarily our challenge as we work our way through that. But as Rich said, making a lot of progress there, and we anticipate continued progress as we work through 2017, and become rate capable on those programs.

Yes, thanks John. One other thing to put everything in perspective, I mean we are spending a significant amount of time, and effort, and resources on supporting the rate ramp at the casting business, when you look at it from an ATI perspective, it's about 5% of our total revenue.

So, we are spending much more time than what the size of the business is, and that's important to us because of the impact that it has on our customers in their programs.

Okay, thank you.

Thank you.

Thanks.

Yes, good morning.

Good morning, Mike.

Good morning.

I have a question, first of all, congratulations on all the restructuring. I know it's been quite a lot of work over the years and good progress and keep it up.

Thank you.

In terms of transforming the company from you know, basic commodity stainless steel with some specialty to more higher value-added product mix, but you talked about the front administration in terms of the benefit for workers in the U.S. and you are certainly going to benefit from that, and maybe some of your customers start to benefit in terms of increasing demand, but -- and the other side of it, your business right now in terms of total sales is about 41% of our sales get exported overseas.

Could you give us an idea what percentage of those exports are aerospace, defense, which maybe less likely to retaliatory trade actions and how do you think that's all going to play out in terms of your export activity versus say, you know, some parent countries taking an aggressive reactionary stands to Trump's trade policies?

Yes. Mike, first of all, thank you for your comments, and I know you followed ATI for a long time, going back to you know, one of the legacy companies, Allegheny.

So, your comments are appreciated. That's a great question.

And I think when you really look at our direct export sales, it is predominantly aerospace. You know, it is 90% aerospace of those numbers.

So what do we really export direct, I mean some of that is actually produced outside the U.S. right, I mean a significant part of that.

So, and when I answered the question about what gets produced in the U.S. that gets exported outside the U.S.

it is predominantly 35% of the total is produced in the U.S. and exported outside of the U.S.

The rest of that 6% is manufactured outside of the U.S. and a large part of that's in China with the STAL joint venture, which is primarily for Chinese market alone, but not all necessarily.

Some of that gets exported out of China into other Asian countries, specifically. So, of the 35%, 90% is aerospace, right?

And it's -- there it is primarily, not totally, but primarily jet engine. So, what else do we export outside of the U.S?

What do we consider more of the global products that are serving end markets? Oil and gas is a global market.

Is it subject to competition from other countries? Yes, absolutely it is.

And it will continue to be so. The medical sales is a global market, right?

MRIs are sold globally. It's a subject to competition from China, from European producers?

Yes, absolutely. But you compete there, it's not just necessarily price, it's quality, it's capability.

I mean, some of these products are going inside the human body, so you don't mess around. Actually a significant part of what we make in the U.S.

outside of aerospace that we export; we export into China, and it's actually for nickel super alloys for large industrial gas turbines, right, land-based turbines. And a lot of that demand is really -- China is probably our biggest end market for that product and has been over the last couple of years and continues to grow, because that's a strong market for IGTs.

And the capability of making that from alloy specification standpoint and a structural standpoint is very hard to do. I mean, it's basically a jet engine that doesn't fly.

So, we have actually been growing that business. So I think that we have people all over the world.

We kind of have a good idea, you know, the international organization reports to Kevin Kramer they work as shared servers to supports the activities of Bob Wetherbee's business and John Sims business. So it's an ATI resource.

We are really focused on what the opportunities are in the market, where the growth is, who the competitors are. Does a stronger dollar impact us in some markets?

Yes, it does, which is why it's very hard, if not impossible to export successfully and profitably a commodity type product from a U.S. manufacturing base.

That's why we focus on the differentiated markets with high technical barriers to entry that are growing and are global. And we are not immune to the competitive factors that exist anywhere in the world, but we also don't run away from it.

So you feel -- bottom line is you feel pretty confident at any kind of retaliatory trade actions that foreign countries take, probably wouldn't affect you because of the emphasis on aerospace?

Yes, I mean it's hard. You know, how do you replace -- when the airplanes get build, right, the supply chain is pretty defined.

When you look at the backlog that exist now, the supply chain is pretty well defined as who is qualified, who has the capabilities of making those, to bring on a -- and we see that -- why it's so critical for us to get up to speed [technical difficulty] on the casting side.

Just a housekeeping question, and now I will let someone else ask the question. Were there any changes for 2017 and your pension discount rates are returns on asset assumptions?

No changes, Mike. We are consistent with the year-over-year.

Okay. Great, thank you.

Thank you, Mike.

Hi, good morning guys. Just following up on the Trump question, there has also been some talk about discouraging imports of raw materials and favoring -- essentially taking away tax breaks on imported raws.

If you could just comment, could that be a potential short-term negative for your titanium business now that you switched back to using imported sponge, and could you comment does Rowley have switchability, how quickly could that facility to be brought back on if the cost differential widened again? And secondly, your long-term contracts out there with those suppliers you have recently renegotiated, what is the duration?

Yes. Well, there has been a duty on imported sponge forever.

It's a 15% duty on sponge that gets imported into the U.S. I think that you know, look I mean, I think that as we move beyond the general comments into specifics, I think that there will be you know, lot of listening and a lot of comments in terms of -- fundamentally I don't think there is any desire to do anything for manufacturers who necessarily have to import because we don't have -- I mean, for example where is nickel mined in the U.S?

So, I think there will be a thoughtful analysis of what trade agreements and laws are put in place, and the fundamental purposes, right, to grow the U.S. economy, it's not the harm to U.S.

economies. So we will stay in touch and in tune with that, but of the things that I kind of worry about and focus on that necessarily isn't one of them as we did say when -- at the time that we idled the Rowley facility, it is an idling that is designed to enable us to restart it on a relatively quick basis, certainly within a year, if market conditions require that, or support that.

And we have the capability of doing that in order to meet our demands until it would be restarted, we have inventory as part of the supply agreements. We have consigned inventory on the continent that supports our needs for that period of time, but I'm not anticipating that would really be required.

We haven't commented publicly on the lens of the supply agreements other than they pretty -- they extend into the next decade.

Okay, got it. And just on the Flat-Rolled, I'm surprised given all your earlier anecdotal commentary about green shoots in the U.S.

economy that you are still guiding to, it sounds like very low single-digit EBIT margins for Flat-Rolled. Could you just comment if there is upside risk to that forecast?

Well, yes, I mean we -- you know, it's depended upon a lot of market conditions; oil and gas is one that I think probably presents the biggest upside in terms of Flat-Rolled. And anyhow we still make Flat-Rolled stainless.

So it's less of significant plus today than it ever has been, but the competitive factors and the global supply and demand equation on that, were there significant global excess supply and excess supply really in the U.S. is not lost on.

So, if there is an opportunity to outperform in Flat-Rolled, I'm sure Bob and his team will do it.

Okay. With that, we would like to thank everybody for joining us on the call today.

And as always, thank you for your continuing interest in ATI.

Thank you Rich, and thanks to all of the listeners for joining us today. That concludes our conference call.