ATI Inc. Q4 FY2025 earnings call

• Fourth quarter capped a successful full year with revenue of $1.2 billion, adjusted EBITDA of $232 million (above guidance), adjusted EBITDA margin 19.7%. Full year 2025 revenue $4.6B, up 5%, adjusted EBITDA over $859M, up 18%, adjusted EPS $3.24, up 32%, adjusted free cash flow $380M, up 53%. • Confident in 2026 outlook due to strong aerospace and defense demand: commercial aerospace demand accelerating, next-generation engines gaining share, aftermarket demand growing. • ATI now producing six of the seven most advanced jet engine nickel alloys, supported by long-term agreements. • Capital discipline and operational execution key, with investments in proprietary engine alloys and high-return opportunities, targeting $220M-$240M net CapEx in 2026.

For the fourth quarter, revenue was $1.2 billion. Full year 2025 revenue was $4.6 billion, up 5% year over year, driven by 14% growth in aerospace and defense. Aerospace and defense represented 68% of full-year revenue in 2025, up from 62% in 2024. Jet engine sales in A&D grew 21% in 2025. Specialty energy had 9% year-over-year growth in Q4 2025. Adjusted EBITDA in Q4 was $232 million, with full-year adjusted EBITDA exceeding $859 million, up 18% year over year.

• Guiding to $1 billion of adjusted EBITDA at midpoint of range for 2026, 16% increase year over year. • Full-year 2026 adjusted EBITDA guidance $975M-$1.025B, midpoint $1B. • Adjusted free cash flow target $430M-$490M, midpoint $460M, 21% increase year over year. • Q1 adjusted EBITDA guidance reflects seasonality, with full-year adjusted EPS range $3.99-$4.27. • Gross CapEx $280M-$300M, partially offset by customer funding, net CapEx $220M-$240M.

Q: How to think about new capacity expansion with customer support, and ROI?

A: These agreements are around security of access to highly constrained differentiated materials. Customers have right of first refusal, and we can flex to support other business. Customer capital helps drive robust returns above 30% threshold.

Q: Update on airframe growth visibility?

A: Airframe inventories are rightsizing, anticipated to be normalized by 2026, with modest improvement in order rates and demand in second half, influenced by Boeing's ramp.

Q: Parse defense revenue growth drivers?

A: Defense up 14% in 2025, expecting mid-teens growth in 2026. Naval nuclear ~35%-40%, missile ~20% of defense. Winning new content on PAC-3, THAAD using C103 material and titanium 64.

Q: Update on 2027 guidance and share gains in 2026?

A: Confident in 2027 guidance but not providing immediate update. In 2026, share gains in defense, jet engine, and specialty energy due to peers' challenges and proprietary materials.

Q: Airframe growth projection and backlog?

A: Airframe growth mid to high single digit, guided based on OEM production schedules. Backlog just under one year of revenue, lead times for proprietary materials extended, expecting backlog to increase with productivity improvements.

Q: VIM capacity add and pricing outlook?

A: Adding VIM capacity, targeted for $350M incremental nickel revenue by mid-2028. Pricing assumptions in 2026 guidance consider market movement, with roughly 50% pricing and 50% volume contributing to EBITDA growth.

Q: Headcount and staffing for 2026?

A: Stable headcount, with some open positions for new capacity, supported by current experienced workforce. ISO forging has high demand, lead times out beyond 18 months, with growth expected in MRO, upgrade packages, etc.