ATI INC Q1 FY2026 earnings call

• Delivered strong first quarter performance with revenue $1.15 billion, adjusted EBITDA $232 million, up 19% YOY. - Order backlog grew 10% sequentially to $4.1 billion. - Disciplined execution improving throughput, yields, and production flow. - Strategically allocating capacity to highest value opportunities in aerospace, defense, and specialty energy. - Renewed five-year agreement supporting Naval Nuclear Program. - Advanced alloys and solutions segment achieved margins in high teens. - Recognized as General Dynamics Land Systems 2025 Supplier of the Year for high-performance titanium plate and sheet for ground armor.

Revenue was $1.15 billion. 69% attributed to aerospace and defense. Adjusted EBITDA was $232 million, up 19% year-over-year. Adjusted EBITDA margin reached 20%, up more than 300 basis points year over year. Adjusted free cash flow was $75 million. Defense revenues grew 9% year over year and on track for mid-teens growth in full year 2026. Aerospace jet engine sales grew 12% year over year, full year outlook for revenue growth in mid-teens. Specialty energy revenue grew 22% year over year, driven by nuclear and land-based gas turbine markets.

• Raised full-year adjusted EBITDA guidance to $1,010,000,000 to $1,060,000,000, midpoint $1,035,000,000, 20% growth YOY. - Adjusted EPS range $4.20 to $4.48. - Adjusted free cash flow range $465 to $525,000,000, midpoint $495 million, $115 million higher than 2025. - Second quarter 2026 adjusted EBITDA expected $245 to $255 million, EPS range 98 cents to $1.04. - Aerospace and defense markets showing robust demand, momentum building through the year.

• Monitoring geopolitical developments in the Middle East, primarily watching demand impacted by fuel price, MRO activity levels, and aircraft retirements. - Helium supply monitoring as a small portion of costs, but with alternatives available. - Energy cost monitoring and management through pass-throughs, natural gas hedges, and other innovative projects.

Q: About aftermarket of business, how it performed in first quarter and impact of Middle East.

A: Aftermarket strong in aerospace, especially jet engine. No impact seen from Middle East, demand strong.

Q: Source of adjusted EBITDA guidance increase.

A: Confidence in defense and jet engine business, contracts securing.

Q: Expand on pricing and HP margins.

A: Constrained market, differentiated materials, tight backlogs, price and mix driving margin.

Q: Planned or anticipated capacity additions.

A: Titanium and nickel investments on track.

Q: Benefit from Cameco contract in first quarter.

A: Little benefit in Q1, prospective.

Q: Split of backlog across end markets.

A: About three-quarters in HPMC segment.

Q: Jet engine percent of sales and future shift.

A: Around 40% now, likely to increase.

Q: Missiles as part of defense exposure.

A: Small portion but accelerating.

Q: Tariff outlook.

A: Passing through tariffs, working on refund policy.

Q: Debottlenecking initiative and nickel alloy capacity.

A: Progressing well, output and quality improved.

Q: Incrementals by segment.

A: Consolidated incremental margin around 40%, HPMC and A&S segments differing.

Q: Supply side angle of Middle East impact.

A: Monitoring helium supply, no cost impact seen.

Q: Acceleration of A&D growth rate.

A: Will start to see in Q2.

Q: Commercial aftermarket jet engine revenue.

A: Heavily weighted towards next-gen.

Q: Core driver for military growth.

A: Naval nuclear, exotic alloys.

Q: Managing and prioritizing line time for assets.

A: Prioritizing capacity to highest margin markets.

Q: Specialty energy growth.

A: Mid-teens full year, lumpy but driven by land-based gas turbines and nuclear.