ATI - Earnings call transcript Q4 2021

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Operator

Good day, and welcome to ATI Announces Fourth Quarter 2021 Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. is event this note being recorded. Please now Mr. would like to to over conference the turn I Vice Treasurer Minder, Scott President, and Investor Relations. sir. Please ahead, go

Scott Minder

Thank but year available and full and President to highlights is and site. and may Don welcome quarter earnings we'll messages, remarks. and today's are refer Vice our outlook. slides call Web key slides They you. President fourth fourth Wetherbee, remarks, prepared on open in their and within Good results XXXX our our Board will Don details Bob quarter Executive on color certain Chair, site. line to and Participating and the call. CEO; questions. broadcast Web After focus CFO. being provide These additional our ATI's for discussion Bob are on on and our Today's morning, Newman,

statements reminder, caveats. in are noted all a assumptions slide various As release the and forward-looking subject These in presentation. earnings are the to and

to I'll the Now, turn Bob. call over

Robert Wetherbee

Thanks, Scott. us. thanks and Good joining for morning,

well return margins expectations. in and XXXX. the building the third basis, and our in expectations. early performance to a our year the one. quarterly earned was adjusted XXXX fourth continued is Performance the XXXX XXXX highest of what and our bring. foundation will rewarding QX to We the per pandemic's solid share to year. we of team's impact accomplished XXXX accelerated We're largely an profitability doubt share, Our challenging global ebbs the quarter, This our due high exited revenues all to note, rolled laid No and on By markets, year ahead earning On into $X.XX a we a excited and across quarter. flows lot. exceeded on in

lean business year, we've despite XXXX to XX.X%, only full our were of accomplished, a lower EBITDA XXXX. what that's maintaining share structures. revenues. news executed performance confidence details to XX% basis from is continued customers for The minutes, that at Don a will the great And about strong our points strong gives downturn. you in full statement us give cost I wanted transforming below This margins the more team year but emerge while upfront. highest For stronger It's the financial financial performance few XX level the ahead. our

our Let's quarter. in on the we made strategic start the with progress initiatives

we've expenses. contributions will been This glide cash First, to a annual ultimately benefit fully on our pension and fund path eliminate defined obligations.

at XX% progress near. financial working took We're Our obligation. pension to angle XX% an pace in at third another from accelerated The to is eliminate our of every year-end from up funded participation We XXXX. status, significantly saga reduce annuitization. year the We of party ended XXXX. action through end planned this further

$XXX of million cash goal. generating cash liquidity a ago, pandemic. we on focused cash generated our In laser throughout healthy free a excluding been positive we we've quarter, significant We level over uncertainty, the contributions. In of the fourth Next, XXXX total year maintaining to pension and flow. achieve goal face achieved free the flow, that shared of

over ended a with the we result, $X cash As in liquidity. year and billion

the our morning, it's authorized up of price, Directors and the and return our position of of to we to our Third, early strong repurchase stock stock. method $XXX shareholders. announced right strongly current this right we cash a ATI to that time Board million liquidity With that and cash believe

script. All details I well Day us all right, advertise we'll allocation our me our kick take XX targets that virtual join you'll might as event. the on long-term on hope generation upcoming and cash capital line, opportunity share where Scott February this Investor I'll strategy. top our table, While at bottom back the as under to more to that line

strategic our on initiatives. progress Our

we're product make two Lastly, sales We SRP. sheet this targets XXXX. to of exit standard made by updated quarter on midyear we on consolidation ways. you goal transformation stainless and We've toward significant the and continue Specialty our track progress Products progress last what Rolled to call we on our the complete business, footprint in

First, fourth XX% and product this high That's product ago of were a months. big value to SRP effort And are mix no melting new the expanding. benefits stainless standard sales clear, enrichment. products. dwindle. We and the In we're next the to over from stainless inventory deliver amount longer or the a to years from products. difference mix intend Standard quarter, producing few continues remaining be sheet margin several

California. accounts Since They're months. We'll we facility months said would complete With sold remainder consolidation. end, Dan SRP consolidations reduce facilities. SRP unit the the moment, announced footprint five the a In get Second, better. When our the in for even of five. revenues. transformation we've of next majority by the sale, and much poised footprint a ago, the of we've the to those AA&S three we the business Rivera, year we XX in completed Pico this just segment few financials, where share improved will

goals have we defense clear aerospace been strategy a become to leader. an In fourth substantial. in our XXXX, toward achieving especially and progress short, in quarter, has the our and So

we're ATI. market The jet recovery headed. has within predicted core The by about our well expanding in end impacts start engines. as market positive recent I'll long industry's with are our Now talk where begun let's as performance earnest.

growth in XXXX. Our early forgings began

build support through there a in the been increasing materials has excess engine Demand On QX. That side, work lag inventory. OEM back for jet changed rapidly customers rates. as material snap to

low were on customers inventory. Forgings

Here's into this XXXX, orders narrowbody highest expanding since total more November stat, low. are time XXXX engine helps One monthly perspective. production in this ATI focused. and June wide-body an were jet this still production that ramp exclusively almost as of industry's the time for put around rates The that's industry stat engines

in astounding on last the both about gains. months four sign accomplishment? this achieved news LEAP-XB despite year the That's low and especially is of isothermal nearly finance. wide-body this by What's industry and parts horizon Our forgings our sales XXXX for a clear year-over-year, level driven that partially doubled We aerospace with the the ATI. only good share producing

Looking of congratulate strong XXX domestic materials to in to ahead, air with iso-forging narrowbody expect travel continued short-term in a Boeing China. and continue a There's Omicron the blip customers team our our improve, roadmap increase forgings for and to rates to service albeit XXXX production a growth return rates we MAX variant. as at moment the me center XXXX. Global due Wisconsin. Allow excellence negative to in

putting press to achieve in customers all tremendous forward. good achieved press, to commissioned has We'll for The our necessary use fourth iso Our XXXX, be worked going hard customer team qualifications. on results that and this asset. look forward for to lead milestone. strong to return We to you the Thank our celebrate new team. that a investment will outstanding their efforts that

remains are On growth or the We potential levels older we airframes, space still complete XXXX revenue due well subdued, from where at the believe demand in very a low ever we QX commercial least market large to discrete is international near below to point. should positive and market XXXX. travel the effects airframe restrictions a through pandemic travel note, at see that country-by-country. the global to expect rates Moving changing

flat XXXX. essentially demand underlying in We expect

have that few XXXX modest we For ATI, tailwinds our performance. should benefit a

autonomous help from nuclear little our to long and began and timing First, XXXX full largely XXXX. airframe naval airplanes. taxiing defense in the To X%. a time all market accelerating of the use second, were quarterly line periods in sales growth year an business This of electric a sale technology of from from see mixed. market, lead across orders with in comparison than due to timing new the In that defense producer aircraft product XXXX; a normalize sales more up we'll OEM impact European were narrowbody for our Flowform in was mid sectors variations, the prior

the from If X%. you by revenues improved nearly remove Flowform sale, the impact

vehicle growth driven The Our naval by armor. for provide its anticipated ATI will program. are programs in produced as and customers. vehicle Energy expect increased in temporary up jet tanks largely growth. and Defense project military In and key engine led XXXX, AJAX UK nuclear as gap Abrams more of be continued offset Departments ground current recovery products the armor was the the budgets for which of expansion full the by ramps a we funding This than materials, new year

expansive Continued ATI increasingly plays strong role, more funding provide long-term an growth. we'll hypersonics for where

Now let's our and other about leverage applications markets ATI's talk where support that we capabilities aerospace defense critical and capacities.

started gas markets alloy where and and energy energy driven and sales final large by Oil markets the of nickel coast is the of to specialty up off First projects Brazil. pipeline materials decline. generally gas for shipment improved oil were

strong associated also with We demand. increased end user higher and saw activity prices drilling oil

expect quarter, to first discrete and will both largely periods XXXX, quarter be of in to We declined and nickel oil Specialty as for anticipate strong versus more fundamentals fourth sourced sales pipeline offshore gas primary ATI markets project, continue. anticipate pipeline to remain lower two we markets prior be underlying the to the alloy energy tighten. reasons. competitive in we projects market completion the due While

QX project gas anticipate India QX turbine sales XXXX, strong in robust control levels. Asian improving lower; after land-based remain delays. were demand demand results, First, land-based In in from second, Asia, gas and pollution resulting restart projects we to pandemic-induced control India to in turbine reduced pollution underlying from

significantly we for business. saw for demand and hafnium-based materials Asian our electronics ongoing strip smaller demand coupled the grew growth continue. solid Lastly, medical within markets sales rolled precision But with our Electronics are us.

we remained near-term market of impacted existing The strong in installation from current elective Hospitals expect markets solid. Looking underlying demand prior by sharply MRI rebounded for surge, equipment for being hospital and electronics Omicron maintenance medical remain non-COVID-related said, demand medical sales also That ahead, of machines. care. reducing capacity reopened the Medical They resumed modestly surgeries. outlook is new XXXX. year. for

customers forward Looking deliver employees. and and can XXXX ATI shareholders, dedicated our to for what

a XXXX By are ourselves our and winning under markets and positioned you leaner control on aerospace enthusiasm and amazing XXXX, Our with confidence. to the I on bet recovering We're we've a more in team. can and capabilities defense things win. focused my well. company, sense concentrating

financial today, like hear full results I'll hear to virtual With back complete and and want year more for our you long-term plans and our more XX, goals. it outlook. our Don and over come give a that, to Day XXXX Don? on turn what picture you If to on detail February Investor more, QX you of

Don Newman

Thanks, finish Bob. on echo strong our to XXXX. I'll Bob sentiments

and seizing market the as accelerate paying Our efforts years past two we're are we into over off, XXXX. momentum

in it You see can earnings. our

You that can are our It's guidance. see we it clear in our XXXX And executing. sheet. balance in it see you'll

XXXX additional higher High materials color, our $XX the began in to improved improvements. our versus results. up the fourth in & of EPS XX% and increased We sequentially generated of of thanks about Fourth Revenues both year-over-year. about extinguishment Before aerospace we from XXX% a million margins structure a were HPMC over to with prior by impact versus a gains These year-over-year. favorable better million, quarter XX% This to quarter. prior forgings adjustments. QX, look segment rapidly, product earnings item Robust two up what's enrichment precision fourth $X.XX, versus ahead, of this with increased spread early EBITDA and up driven EBITDA starting let's items segment, tax QX Earnings fourth This which benefit additional Asian share the also which was were basis, and HPMC. restructuring than quarter to leaner loss or debt per the of gotten the ongoing XX% more nearly revenues translated provide X% $XX adjusted $X.XX. recovery, and business. Components point, volumes fourth some fourth XX% expanded a Materials million, related us and by rolled include talk quarter starting I'll mix significantly incremental $XXX third cost On in and strip commercial cost illustrate our from by small and The quarter quarter year. structures. Performance the adjusted year-over-year in reported was reflecting with X% charge into a was $X.XX mix segment quarter. periods. included even benefited our

million First, AA&S, nearly up benefits quarter revenue QX, prior end both EBITDA material X% about We prior substantially the customer from prior U.S. government's a benefit continued & across to Jobs credit. Fourth included raw business year generated Solutions, roughly the quarter Aviation prices. and Protection Advanced markets. of against $X Program; versus grew end Alloys Manufacturing or million customer segment's and segment demand about from $X solid related a and units million In higher by year. the second, year. $XX This in

As the a largely Rolled Vandergrift the data finishing specialty a shutdown was at predicted, transformation. the a third facility to demonstrate I'll that our line. was share of AA&S EBITDA lower planned benefit compared of to upgrade our quarter. to of This impact points Products couple Specialty due

First, products made stainless we're production, with fourth standard exit significant up value of that from product seeing sales. high our enrichment. quarter SRP Bob sheet mix the a mentioned XX%

Second, foundation How material Mix year-over-year of for structural The We'll margins a we taking pricing. done raw more improvements, SRP continue delivered XXX%. incremental and does to come. build to savings happen? years that executing team decisive actions and than on this well. cost great job, has

I growth to how results sheet, our in XXXX related balance position few Before comments the I'll XXXX. move to a for us offer and they

recovery, in QX end commercial economic particularly QX. revenues market. steadily First, year our largest reflects across growing considering after in impacts the strike aerospace, a and This SRP increased the

quarter Similarly, XXXX adjusted million high billion note Adjusted change those of $X than were expanded fourth the step in run are we in revenue run expected. mind, on In another fourth of expanded XXXX. And the XX.X%. and us Our keep lower points XX.X%, puts across margins QX, higher XXXX QX than ended annually. roughly eclipsed rate also $X in sales. rate as margins basis at our brought QX margins a quarter. EBITDA XXX annual EBITDA year revenue north those a $XX at delivered EBITDA billion margins margins.

be XXXX flow the with capital cash generated flow and balance cash over the reduced sneak and spending for cash over liquidity. on Building year, pension cash flows, business. the along improved our ended available strong. and sheet ended across to billion inventory growth, working our Day contributions. $X This, balance free quarter discipline, Turning XXXX peek, to catalyst Investor positive the us sheet capital $XXX of pushed managed improving free of team goal the Bob's overall will with in and fourth We The and we excluding million returns. deleveraging of shareholder well for

Now pension.

about pension $XXX executing pension This we million many $XXX drop the $XX strong where our is market help XXX glide with or have We status talked times funded obligation meant. XX% net to XXXX of we XXXX. path. million, We ended XX%, increased increase million contributions. from point a we a at of started investment a Plan so interest quickly? from a that the funded solid market basis the did improvements status in strategy modest accomplish from beginning XXXX. and planned enhanced By How rates returns, what

Our than paying end consistent moments. the at approach see from the plant is in also of items the We assumptions. to I'll improvement reducing benefits changes off. pension light few financial These tunnel. unfavorable favorable offset actuarial share can XXXX a participation more this the in

our dilution Board note for convertible stock. offset authorization As work to we and tool received Bob XXXX. of mentioned to our great earlier, million July of from to in value a potential XXXX up we in as will increasing repurchase $XXX be shareholder This maturities

increased past over ratio months, our XX we the adjusted have In XXX the Xx. rapidly X.Xx to basis EBITDA improved metrics improved alone, our from we've fourth EBITDA leverage points by quickly. quarter debt net as Lastly, to

As our decline continue a this to earnings improve, metric XX-month target trailing Xx. of steadily should toward

The growing due in added market and is demand. increasing encouraging. strong part customer broader our market recoveries, confidence in the positions to and Our is aerospace clarity

we cash year result, in flow XXXX can a to the earnings coming believe full EPS. addition As guidance, we free that quarter's provide and

results booked benefits. in impact earnings will business. to credit higher in not from In Asian from by tempered $X product strip the our QX. are the when rolled the offset segment We This holiday and space raw to repeat Let's on included HPMC modestly lower The material by to be to volumes, markets. also of the increased aerospace expected Year is compared segment, lower quarter commercial expected anticipate New customer to partially likely be flat strong QX quarter growth mix fourth first million the precision AA&S our related in commercial that start outlook the of Lunar sequential earnings for our with XXXX. partially

Beyond individual quarter few segment to are drivers, our items temper likely results. additional a first

input material in production especially due improving overall nickel, This scrap rising are levels. for large levels. demand ramp and to is costs, part aerospace to First, prime the near market

of As we come an modernize majority inputs scrap continue technologies, to increasing sources. our our melt from

marginally We and financial normal have QX headed seen news virus. to The absentee rates back modest. be the QX the appear is will impact higher absentee due early that rates the to in Omicron good

Next, corporate including benefit expenses. Aviation EPS, puts to our mentioned several the to and from base range expect travel XXXX earnings midpoint Jobs per we diluted $X.XX range than share, taking aggregate, be into the along elevated of and levels, transformation unique adjusted $.XX costs after Manufacturing incentive to account should of I adjusted compensation an business The with increase In QX higher due the in that ongoing cents Program. us items higher earlier.

are safe fighting every quarantine job haven't exposures. Our our their our day. I chains. It's significant people we and following hard supply disruptions thank teams to we're And winning leadership battle to for their doing team going, work. a great keeping production a while related had our keeping staffing mitigate our and or levels To date, local operations protocols

outlook by year, the For full giving you handful items. the I'll for of thoughts discrete start my a on

a we as anticipate prior and to cash largely for XXXX. paying in be in $XX between savings complete footprint are to $XX to These expected remaining taxes several cost cash expect XXXX taxpayer to related million of years. $XX year, We the relate to the transformation. our business XXXX. structural don't we to be savings roughly next expect million jurisdictions actions million U.S. by $XX mid million consolidation in Similar to achieve foreign additional SRP connected These to

the funded in of close decrease the of retirement $X should significant from benefit levels. XXXX by XXXX, result a our increase status As about expense pension at million

expense anticipate to around by our million, Finally, about of a $XX decrease XXXX be we million driven interest debt actions. $X

On part to plans. voluntary of our status. target required into plan benefit the cash defined balanced in increased allocation no anticipate our roughly flow as pension we contributions million strategy, contributions as U.S. side, That funding $XX make said, expect capital we we

requirements, engine-related similar $XXX to expect estimates. million including increase capital We our reflects XXXX between projects $XXX jet future XXXX The and required growth funding spending, initial production in million to share gains. meet

Lastly, as ongoing efficiency of improving as capital our efforts. we sales part levels working a of anticipate percent managed

due expected it's that managed the to markets, XXXX. increase working support to However, in modestly production ramp growing dollars likely capital will

So, where full earnings for diluted of any per does year We profitability position return us the share $X.XX repurchases. that to the with in anticipate of year? stock excluding XXXX, $X.XX, a impact to

put me Let around OEM increasing production caveats assumptions on our assumes both guidance. a at XXXX large, The guidance and narrowbody global rates few aircraft producers.

full new tensions or outlook things from we on geopolitical assume also plans our include deploying control. proactively globe. disruptions or impacts are around year and that our of quarter COVID mitigation related around neither control what We the outside to first focused the significant can We're

flow, free anticipate million. Looking at cash generating we XXXX at least $XX

contributions. are capital Our in XXXX or growth voluntary pension pension excludes a contributions to allocation decision. guidance voluntary leverage, any decision any invest Like reduce

while the for reducing year have that flexibility to We and I'll to was pension the by conclude of XXXX growth a recovery achieve saying funding obligations strong objectives. ATI. needed our expect to maintaining in pivot as luxury of XXXX,

there. supplier. aerospace we performance to I to And We ended up can year February be to to at what our ability you to We're success expect poised journey. our from our defense on the see the high and Day transform profitable go point. showcased and guidance, a exciting a premier for Our for We're our from Investor future to promises invite us into as our ATI. hear XX our virtual of and vision way an for in you confident execute. to efforts join

Now to back over I'll call turn Bob. the

Robert Wetherbee

just team told XXXX to great a quarter. us performance. Last you XXXX a worked We growth. We That we It get we're didn't momentum. great was with happen. with as Don. gives a Thanks, strong here with pivoting running begin concluded executing strong hard start I It quarter, to fully.

on We're jet firmly we're Now growth our our engines, strong seeing that several market of smaller end markets. trajectory. along in largest with

got help our basis. a have through customer's to shares offset productivity. the and tools market increased. high we're needs pricing We've at fulfill level timely And Our executing on to inflation a

us is enables cash balance a with strong This allocation fund plans strategic part our Our as ample balanced of approach. liquidity. and growth sheet capital to

got we and markets recovering first achieve. And ready can for a Our and the show are we you we're We've Operator, winning well question. amazing we're wait win. positioned to to can't team. what capabilities

Operator

you. Thank

session. We with will Safran now And the go Seaport question Richard Please Instructions]. [Operator come begin ahead. the will question-and-answer first Global. from

Richard Safran

you? Thanks. Scott, How morning. good Bob, are Don,

Robert Wetherbee

Good morning, Rich.

Richard Safran

An interesting quarter.

The run the like and rate on first ask says implies that question earnings what to 'XX. to about or I'd is QX QX

have may this opening I Don, with your remarks. Now, missed

for [ph]. what the discuss why You there? go lower much you you got you're and expecting XXXX QX? scrapping over more QX we about saw just the But in could in cadence dynamics be to quarterly versus earnings Could

Don Newman

Sure.

around context in how you about some you kind give XXXX. walk first of fulsome the more me And then QX QX. I'll then thinking and the $X.XX through Let we're delivery

items kind normal as QX. $X.XX that in are course certainly measures expect are that in we're So a but of They're outcome QX, a in our that at highlighted first, QX, earlier $X.XX delivery. and But all in proud couple there look I we very, a discussion very unique our the you business, business, repeat on in of fantastic to in wouldn't QX. of to

related thing that we so course as fourth share QX, with typically but the in in $X.XX pull a benefit kind about happens, in we our is you'd quarter business. that tax notification receive done It's precision of to authority. strip rolled from want recorded the Asian QX. more normal taxing That out $X.XX as that to was And you start item per the one

expect be coincidentally, credits And So represent something another per QX. to repeat would There's the customer that $X.XX that QX. we won't also repeat I also, would wouldn't noted that in share. that in that and

to off about that in So back you starting gives you think look would $X.XX like. $X.XX, it point better QX performance a QX, what solid take

between to $X.XX And rather $X.XX to so QX. QX highlights midpoint of our $X.XX for range QX growth that compared $X.XX than and

As I QX. items think about you also there a note couple the noted to conversation, are in earlier of as

we volume and First expecting QX of are all, price improvements see to QX. from to

business guide some do would headwinds to have Omicron that say expect quarters I my to rate QX, you short term, material short-term impact related the still not We what together, stretch. two an be there. in to the any compare by So I would we expected things in be it the like But good when a which impact. absentee Also mentioned scrap, dialog.

do expecting see significant was improvement year basis. for our EPS We're profitability. $X.XX that guiding a we're to. an context bigger how So the In want to kind full we is on think what picture Clearly, results $X.XX do to guided the that's QX about to Then of year adjusted about full XXXX. the some to to QX. which in has XXXX, at you remember to with $X.XX

is, You talked a we there right? about in And are cadence, recovery markets. the would I what highlight end our in

assumption is probably to And $X.XX, about throughout is safe out Rich, the way you to seeing a a we kind growth general works math we the $X.XX expected of at guidance some at think, so in a the with the it as growth full would way we look our And the I our think and I year. And throughout year, be relatively midpoint year. of the to think midpoint steady growth and profitability started QX of about go. are expect as where

here. context hopefully So that's helpful

Richard Safran

It is, of course.

expand what your accomplish what question structure. if I'm like et to opening know in have, objective last is what on quickly, you 'XX, and here you here cetera. just with the expect So end to your could capital broadly you remarks for about levers looking -- you I'd talk

So if to you talk could little that bit? just maybe a

Don Newman

would to. Yes, I love

And of have where you $X what to $XXX XXXX. almost sheet, about got ourselves choices very great position balance a over and progress think our we're do see allocation, balanced healthy number the view to that pension where a balance made well we one approach. delever obligation. that a into continue million capital. coming billion delevering and in purposely to approach. I strategy really should in we're do that? a put XXXX. as our And mean Well, of our want we you in continue We've to that what going in activity path liquidity. a is We glide to in We're balanced in allocate around to sheet as is position capital phenomenal very it cash, As going XXXX, We attacking we by begin

we'll that So do delevering.

for area for key growth. us is Another investing

around right now, so our organic is primarily growth focus CapEx. And with

captured about around of think to think at you $XXX way the that's and take Rich, be now. advantage million. gains Growth about guidance If we've business is the range ramp XXXX, to CapEx, to XX% hitting participate our going really to of us in for CapEx the share we guided that pointed toward $XXX CapEx that growth that And million about CapEx. of is CapEx that right allow our will

this believe we've like you're is back another right an quarter efficient our announced, to And repurchase, seeing key of strategy. element deliver And highlighted our the use. repurchase Returning shareholders announcement to that we investors. stock And our stock another so then key that that's is use capital capital that's important a program. to very now, way with to

And element key our of strategy. so that's another

all execute really of capital opportunities, another, capital. it's whether or if organic our to and in on position want and we're around the and not strategy, are return one able between you take to choosing growth, putting That's were to delevering as a you'd but balanced is allocation. capital describing ourselves you where step what objectives back remember a our So what allocation you

Richard Safran

you. Thank

Operator

from come go will The question next Please ahead. with Seth Seifman JPMorgan.

Seth Seifman

narrowbody was main little Thanks production you very bit I talk much wondering two rates, on you especially if the about good where programs? and are on could morning. a

Robert Wetherbee

morning. Good

a kinds So rates. go questions, I the of lot we necessarily would But I think answer that of not not the what into as forging build say we the on you those starting side, always is pipeline. to is in the give orders we there's produced inventory which actually

rates the rate continue production that up to the going see We going up. the same at are demand

So ahead the production XX XX to intersect is. going X probably months trend line's of to what months the ahead,

is would trend the tracking line I the talking increase major our So say are to narrowbody about. of guys what

greatest supply we disruption some on billet there's of supply us other discussed from for telling path. think think disrupted by been for narrowbody forgings I a that's the a billet engine the the business. where some people. But the our we're we reasons I chain to that in questions the little do And We press. on on bit in track. our the forgings in forgings, bellwether are probably about various and directed get And is the for side business

lines are trend So lining up.

Seth Seifman

do is talked see I there of some And you've opportunities you proceeds, Okay. of share mentioned might you there shorter term the that the then realizing share and narrowbody the have Are about the investment as be some that out going year you next gain side? know ramp those. gains on particularly -- toward

Robert Wetherbee

historically through with what for demand. called I the we've Yes, come opportunities emergent think performance will us

OEMs can. adjusted as to are going have pressure relatively And the sitting the demand is most think the the be their supply builds a to supply they of capture it because increasing through chains is the fast I as the obviously, of there chain and pandemic. unprecedented themselves ramp,

be going it's as chain to So the we go forward. entire supply exciting for

were really heat treating really the emergent having coming in going We give about iso press of a good pandemic, talked about positioned For I the fourth position remain We think online to will the morning pandemic. facility We demand. the couple and in Wisconsin. from this we of that. delayed during investments recovery start of preferential us, feel That we terms a feel said ready. that right well for us

other We stumble. ready people when will be

us of And opportunity an gives so that emergent I think demand. more for the

of it major the [ph] their do they feels place, going most they're ramp pretty As were hit takes the but let positions contracts targets. ramp whatever the so going think supply pre-pandemic, base I in that comfortable into contractual to last have to

So that's perform. our opportunity to

Seth Seifman

And last then could one. one with up I Thanks. if Great. quick just follow

later you year? treating Within the convert are guidance, Don, how comes you that the this to

Don Newman

how we say are shares treating the of terms it? in you when So outstanding

Seth Seifman

exactly. Yes,

Don Newman

Yes.

even first, the point what outstanding, think But XXX we this the still So, count, roughly the And that are our we're would including, share course, the when assume diluted basic about that's do million you about we is in all in I in will fully had repurchase of still assume we're of at share And shares then year, guidance, XXX outstanding. it shares. million though assuming place, shares. convert. program shares of

we'll share as or there with So are guys quarter I to under If so that's calculations. adjust would there when year. each you what modeling repurchase are in think program, shares you understand it EPS brought that the comes shares share to the about obviously, when you're how your it

Seth Seifman

much. it. Got you Thank very

Operator

Strauss The ahead. Please with will go David Barclays. from next come question

Joshua Korn

This Hi. is Good on morning. Josh Korn David. for

in year, for you much So regarding next are oil assuming higher oil what prices? for XXXX, guidance and the the gas given

Robert Wetherbee

Yes. Good morning. This is Bob.

flow be India us uptick we There's see In smaller we an That into in in lines emissions to we in more of slower much to terms also tight, opportunity uptick. the, products have projects today nickel plants I that is it's part oil reserves. still call think but of good There's in pipe of will oil the go it's make gas, it we oil for oil And And that be. two challenging demand on for and it in gas. then demand their talked call umbilicals, lower. of used in into about our huge elements I based what be some to products commentary. aerospace say the the a it gas. part I the see power States uptick and we and and the a go than clad gas in United and XXXX. think business of was wouldn't that the defense. desulfurization and going the with coal-fired to flue-gas relatively And in We

there. But we energy more see should So that's the an specialty on uptick side.

demand on that's modest but tight market. going in market the I So say would be based growth, the continued nickel a going it's on to

Joshua Korn

the anything you. higher spend on left transition Thank Okay. for to then the And value-add within product? there is else CapEx

Don Newman

Yes, is Don. this

CapEx, is in even largely bit that's maybe spending as additional yes, for better. a unfolding XXXX plan. the expected our on SRP. being So executed includes or transformation it And to finish Everything

there. that's yes, So included

Joshua Korn

you. Thank Okay.

Operator

ahead. will The come Gibbs Please with Markets. Phil next question Capital go KeyBanc from

Philip Gibbs

morning. Good Hi.

Robert Wetherbee

Phil. Hi,

Philip Gibbs

pricing think normal Is couple overall than of bigger that line? just driver in, in pricing, XXXX don't you've about we changing should How the over we gained some the too know that kicking talk years. a in business it awards year? I the given terms of things about of a bottom bit, new hitting that might had over and this much years, be but and last the

Don Newman

down think segments, break the have two Good the by it I way. morning, to Phil. you between

Philip Gibbs

morning. Good

Don Newman

there, form, think product I mix next alloys, we platforms. on generation better enrichment see And performance, will generation next continued high

the we'll get goes mix and that. product So that pricing with

You'll still that to continue see growth.

there still value get we're I about is The see segment, that a on to mix higher about third going thing into we side, you'll the probably enrichment. transactional. of products, AA&S get as think the it

doing in all got LTAs of we're terms inflation So and there. through. it some pass tight in some almost the our material of material significant that really market good have pass certainly upside And the through, and then

-- longer hard stainless differentiate for in throughout participating still mix, we in alloys will that in business we're It still say clearer product think due we're the different I we're sure. like lot business. tightness out XXXX market almost become helps the would And from a that metrics sheet XXXX. because I sometimes to that So opportunities the now no the pricing good of in. of it's to But there's programs and the feel price

Philip Gibbs

Okay.

it there guide some sound be benefit shares, should and there's the of in from --? pricing like So does mix

Don Newman

Yes, bit. a little

I think that's right.

so for it's of so the far With balance we've go the going there. who year, the to knows price but nickel had, good where strength that

Philip Gibbs

we've bit aerospace. are And at you've Boeing cooling rhetoric to fill current the then obviously, in of time the because see I any where risks emergent channel? in years those periods, And Is market And take just of some do or apparent kind then, swirl in side, like seen on different the global before. the other this a Russian think process to potential those maybe past the of other a geopolitical than time always XXX conversations, gap? inventory the has demand enough got

Robert Wetherbee

if you. Yes, good with it's all Don, that right take one, question. I'll

by would kind downturn monitor in as just [indiscernible] You would it start pandemic I the speculate quickly. to the saying of move we to and of closely. what we It's the solution reference Russian hard any is situation, learned

the non-rotating actually question. call is you the your had Now our HPMC Advanced walk and as affect through closely would with Probably both really that most positives say nickel risk and I supply in segment and in mostly made we few on We'll because side. things backdrop of closely of But And on. can we the the we scrap you're a have and alternatives. always side nickel how And But AA&S some think. what And products right of manage & I'd you're risks It other we source that's right. we be segment. the working that. units our material. parts that for segment, have Solutions it's the very watch Alloys that kind risk you wouldn't

were those something that I to some the on terms of in some happen. titanium like ones of upsides think if probably and other opportunities, there's space

do close watching we're the closely. to control we the proven So they it. think can very something two it's years. that We balanced approach. But we I and it a over organization's adapt. last We assess And it's can and what stay

Philip Gibbs

And then for last question just Don.

within effective after or this And your the but the XXXX, raw what for the terms effective how pretty year about corporate year? you minus corporate also cash rate? the was tax tax that piece, strong then a plus are In material I know expectations rate of thinking you EPS number? gave

Don Newman

way to low. rate corporate think be about the Yes, to extremely the is going tax it's

cash million on fully in to taxes Federal for $XX the range, I and think side be the I shared $XX million we that to we're expect reserved U.S. purposes.

for effective organization. an rate expect low really So tax overall the I extremely

of before are just and to -- leave to might base the helpful think think going on the be we we're inflation questions a geopolitically, managing how activities on I bit the the on and market in theme guidance of So just price. touch how little some around that about it too there's inflation

with think quickly costs to those monitoring supply I job sure that input the competency The But managing those as dynamics. all has one efficiencies being think a world, extremely we and focused our good hit efficiencies job has also that an organization believe is an we thing getting I we're highlight. through been where offsetting us at around doing in offset. volatility our it's improving that making important have price terrific done from thing has through that very one reacting way chain happening in is team right our dynamics, period-to-period. proactive the successful team core to we've adjustments price, And for inflation very on to what's a is done the

letting thanks add So for me that.

Philip Gibbs

appreciate I Don. Thanks, it.

Operator

Khanna will Cowen. question next with ahead. The from Please come Gautam go

Gautam Khanna

Hi. Good morning, guys.

Robert Wetherbee

Good morning.

Don Newman

morning. Good

Gautam Khanna

I two have questions.

some constraints have And on the of is Raytheon wondering, might comments not you heard that to seeing those perhaps a much I And they're in then speculating and think just and are you First, it's follow guys how the what that supply was to point out forgings forgings casting happen? up. output a competitors will space? chain. prime you Boeing them? pinch do castings of your or the Or other or in wondered, point and is be commented contractors I relate

Robert Wetherbee

issue question, product separate good casting a I in Gautam. line is right, say All that not anymore. would we're and

we that too much luckily. So don't of see activity

the perspective, On on from operations. our XX% I comes a not forging advantage billet. off product, depending we definitive us clear, vertically real supply side, what of integrated ATI the own chain of either. start on our do of I’d statement. back with part application, the the would we're -- is the And to say It's Depending

signal press one a a competitors our they're the directed that chain on and other to advantage we XX% So would we're about that [ph] the close is that's response. from coupled of comes to And billet pretty is working say supply see I buy a But and yes, open certainly us. supply.

So time into that. any powder I a think bumps, restarting you billet then And we're capacity, little run can disruption somebody seeing right. is from

our overcome. of some seeing not of challenges totally we're those are working kinds we supply but to that unexpected, in customers So chain, hard things the with

Gautam Khanna

might this five on that nickel emergent the strike on change the just months how that like Metals seeing or at a you now follow confer Okay. share out or Reading billet that, Corp. Carpenter demand you little bit. are now, Special actually of it? And or got for then for press commission has mentioned Does to right up does

Robert Wetherbee

question. good Yes,

So emergent opportunities of supply seeing yes, to chain others. question simple the due answer to we're is your disruptions

to through think shift strategy are have I part agreements. the of have in as we're long-term supplier, to of our as trusted opportunities transformation move our is this a more been position, there Part obviously we relationships. great ourselves, but

I think and So hot that Rolled rolling the lot of new business, demand. coupling, our as gauges, widths the a disruption, capabilities; Products we this melt of finishing, tighter and to to wider the especially business see Specialty there's sheet with transformation our with for pull

So term we sustain feel segment. our demand Specially the able like there's in we'll in to Products AA&S emergent longer that Rolled business be

and trying it take seeing it. we're we're yes, of So advantage to

Gautam Khanna

Last Bob. one, might, I if

that achievable. XXX You've on in million of Anything as told us the plus to guys Investor Day, to but tune in the being mentioned you have past, view? changed EBITDA

Robert Wetherbee

first color. say go ask and But no. I’ll to then I'll add Don

Don Newman

do things, those I can they're want potential an would few in see performance. have I over what and of generation that times about of And think I've our our we understanding past. no. And it the you talked like value the -- in color we're XXXX that we're margins importantly, extended period XX, trying share February with help right. a line think of you’re how more absolutely of part time? would about important the comes in you to When extended profitability also can time? cash of things on XXXX. understand see that where growth about over on of over And because a and we yields the really talk we shared about extended our to we number And business period in how are think our relative track the joking top to metrics I the hopefully with to is you a to conversion then about cash, opportunity about kinds time. add aside, at track. you How information, we of do guys in And to bit business. say going the long-term All cash were period

we're and on time So those to spend with more. going all topics attendees the some

Gautam Khanna

Great.

to forward it, guys. Looking

Robert Wetherbee

All Gautam. right. Thanks,

Operator

The go The Josh next ahead. question with Company. Please will come Benchmark Sullivan from

Joshua Sullivan

morning. Good Hi.

Robert Wetherbee

Good morning, Josh.

Joshua Sullivan

on S&P the that heavy due understand levels? higher labor needs hit curious a that I capturing year about you're about the Omicron specialized So guys production this access? is especially any headcount? see talking labor in QX, just about Do you in incremental areas emergent you're what rate you demand, lift throughout there, How the and to the tight markets but as what to then those seeing

Robert Wetherbee

Right.

Pennsylvania, Wisconsin, and to decline. think about and really issue regional. And what going And Omicron think that I it's me West, with about up So about went going and respect starting you very make challenge in appreciate short has company, are the challenge it’s man, the impact about sure think to the we East we kind we but Oregon, you we're the but who's supervisors think to and our the are thing to to through, very it’s fight much crew opportunity really commitment seeing the a So first of Carolinas, hey to been our And say, dealing have? also term. regional, it. the asking right? daily come it, absenteeism for it's So they're I they're about a safely, started line we we're about because operating kind that been of right? the see we through and working in

Now asked question about the labor. you

how into years the take, operation. over amount you last X,XXX a people depending over Probably XXX give and a XXX few hire operating have XXXX, our of of course X,XXX, between a guide, against base we'll investments as or to tremendous automation brought the Our on of count.

in So reliable again, was -- it's of impact of short-term progress. increase. XX% And training the kind Omicron

see really are and jobs quite I'd covet. it's It's should So not kind But not aerospace where jobs recedes, retail cycle or But now. jobs, huge again, we are people distribution These are the as people we and warehousing. track. it on great in especially of through a that issue. also say like that. or back be defense working we're we're that that hiring

So obviously, recruiting a And we're to from I committed competitive. think good we're globally base. remaining

So about to pricing offset hope there's that always with, deal issues helped, be we think I with we tension. that as any there. should trends that we And inflationary certainly, able constructive Josh.

Joshua Sullivan

thinking going there filling was about was Yes, demand, And thinking emergent the then just think have up on that's come organic isothermal Maybe this that versus you the curious versus what we together? built you're designed demand on how should online, what the about? forging great. fourth to coming all you're how just originally guys that's utilization

Robert Wetherbee

Yes.

the then the had want with Every it's So fully. always that a And fully, automated, use treating new more great it it. higher came it's heat isothermal more a it, we complex combination leader press quality they reliable. consistent, more more wants because operating use and consistency stuff capacity to that issue, of some to productivity, the good not but to

in So then what fully new it optimize we is see the running asset, what normally is on press oldest across coming, happens recovery assets most one invest maintenance sure make the is product it's or optimal those each for the should to And our tends you'll be either we kind product that be to of mix mix. utilized. that's the sure make peak ready to

we'll the they That's be customer committed of call reduced were it. I unit just why to all necessary to demand, utilization period qualifications during the pretty expect of that good So particular getting fast. pretty done this

pretty utilized will less get utilization. So we press feel but probably efficient highly then say less I be and would our good,

Joshua Sullivan

the one that naval just of through should nuclear 'XX? timing how 'XX material, then the last And cycle time think just and of on we

Robert Wetherbee

think the growth. see are doing on nuclear thing you'll more Americans continued their the certainly cycle British some with XXXX-XXXX, I and thinking, submarines. they're positive Australians naval through poll. The The There’s

that benefit the think starting will poll for I us. see to that. we're And

aside see increase And with continued long kind say into be that. way the I'd XXXX. naval The XXXX upward of those, I the pretty year, through Don commitments a lift. as past think So years was one here. multiple real you'll should cycle is But be a the is talking about should increase the the leading defense of one the positive second nuclear through the that aerospace growth when

Operator

The go Paretosh Markets. Berenberg ahead. with question will Capital Misra come next Please from

Paretosh Misra

Hi. my guys. question. for Good morning, Thanks taking

half the or customers? headwind, even those year a could So risk that metal a through Is next that be quite in that strong. pass of to year prices this have revenue realize I you that your been second though

Robert Wetherbee

I think predict prices, hard to Paretosh. nickel it's

we're XXX our basis is would of doing I working think that of our the improving up today face I the as intensity we're on Probably or sales. we say had single that We intensity. down things the the is biggest and reduction inventory. risk focused point process one over or in inventory percentage a inventory reducing use of

that So our us. we as little for goal is need help WIP to have as will

accelerate And help it accelerate less will getting I think mitigate the to stainless is forward. going the reduction. But between that, help transformation do and doing away we've we travel takes because risk had and it I single in historically footprints we we're of everything that less got area. locations, will possible. say would can us sheet we're out actually doing the that business greatest the

we're like moving there. we So I direction in think the feel right

Paretosh Misra

headcount about then enough. of should we incremental the moving and in increase parts? some the given think Fair how margins And the through XXXX, some year

Don Newman

is Don. I'll that take Sure. question. This

in margins margins around tailwinds going There's about XXXX. to time And it. to First, forward, as come incremental also pointing of half potential we potential you that time. from out headwinds our think experience second had a the can fantastic incremental you're up

were up XX% to to I is guidance in some range. be We're we'll what XX% that you like with want past, with think that long given going that is other you do in might the XX% incremental. stick and little really strong, extremely the margins it this term, quarter through would quarters want the this which to quarters where to But incremental have a they to I we've goal. cycle of have XX% short bit stick really

Operator

Mr. session. go Scott over like turn any question-and-answer I remarks. to ahead. Please would closing to Minder the for our back concludes conference This

Scott Minder

Thanks.

XXXX where long-term Web targets. Don and today. mentioned, hold again can on concludes This Investor Day business on how site, our financial event found to expand Thanks fourth a More and we for call. joining virtual XX, Bob February information quarter our strategy to provide plan be us on As atimetals.com. we'll attend earnings our the on

Operator

concluded. now you Thank has for today's conference presentation. The attending

disconnect. now You may

ATI (ATI) 2 Feb 222021 Q4 Earnings call transcript