ATI - Earnings call 4 2023

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Unknown Analyst

Hello, everyone, and welcome to ATI's Fourth Quarter 2023 Earnings Call. My name is [ Nadia ], and I'll be coordinating the call today. [Operator Instructions] I will now hand over to your host, Dave Weston, Vice President, Investor Relations, to begin. Dave, please go ahead.

David Weston

Good morning, and welcome to ATI's Fourth Quarter 2023 Earnings Call. Today's discussion is being webcast online at atimaterials.com. and to Bob points CEO; Wetherbee, Newman, Vice call Quarter our and today's Executive are results Board President in share from key Fourth Don Participating CFO. Chair and

on I It outlook, Before starting to supplemental also and details provide they that presentation on like slides found draw this Those color your can the call. would our accompanies additional our atimaterials.com. attention to our website remarks, at prepared and our results be of year-over-year financial both important change to our all is we'll the as announced and that outlook prepared and sequential in we open well After line comparisons data, as January policy note results a XX. for on remarks, pension questions. our accounting reflect and

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

call Now to I'll over turn the Bob.

Robert Wetherbee

morning, our Good and one, we shareholder of two, with We're growth. and executing benefits Number markets Dave. we're delivering to line. significant strong a in of ahead. strategy bottom would success sustainable advantage, inventory generation we're business strong Thanks, and for sharpening today. the year growth well in customer our The results years overcoming on growth. positioning three, around Number [indiscernible] our leadership, operational commitments. our shifting challenges QX another aerospace we show of uncovering opportunities positioned said everyone. culture management. we're continued new long-term summary our doing what announcing [indiscernible] end This defense do. marked and best we're Number cash

revenue of quarter It take we is strength execution we'd the Fourth highest million, my in of our starting our and first do? Sixth into was It and deeper in of a shows enterprise, point. it our to Aerospace defect. delivered our driven row across XX% Quarter, ATI and What is meeting we the these, dive continued with commitments Let's EBITDA That's $X important team our it said Quarter sales. results. does starts in billion. which adjusted of $XXX In what XXXX do to with by exceeding each

adjusted guidance. of share above our per quarterly $X.XX the midpoint November of Our earnings was

efficiency year adjusted pension the during Full million year the high end including in What of strong flow? and range. level. For targeted management cash drove $XXX above guidance ATI direction. this momentum the operational It inventory our cash was benefits EBITDA XXXX, the improvements. defined building speed million. philosophy, the initiatives us $XXX actions free and Purposeful full operating flow at We're our was significant of gives our That's year.

XX% outlook. Process XX%. a jet isothermal overall. for by share is forging and engine critical major XXXX, points a of revenues flow alloys yield up me Production aerospace up demand. as XX% revenue powder titanium we is line to high-value niobium up a hafnium, space launches product time commercial defense We XX%. made XX% is delivering engine increased year. and And of down those great process Let a and what record jet is output proof support key few for

they strong people. All from of built the momentum XXXX, foundation these There's to is comes our we're examples and upon. are harnessing that compared illustrate XXXX

go is a great guys this effort. for mean, drive a team. crazy a for and a have I We just I my moment script second. team off

to consciously of efforts leaders XXXX. we're fundamentals takeaway is today heart. second Their of Our We are team Thanks in growth-related faced of We and operate. meaningful The and the results member inventory to supply to lead and Sufficient encourage that those and and how and made upstream that people a incredibly are ramped efficiency My operate meet appreciated. My who shifting is titanium the asking ramping incoming management materials A&D efforts we that lot operational Inventory across very much differently. more at the means shipping, every our at a exciting our Uncertainty reducing challenges comprehensive. to speak operational critical team operation from requires team industry. to the our issue reliability has cushion from accomplished a lot. the melting the drive we're them. of demand every times. assets. remains for

You'll [ over that of only restarted XX% rate by converted end to run expanded production additional titanium full in revenue. ] this [ our XXXX titanium amount in this mind, significant second has XXXX, targeting we year. of up capacity levels. the be XXXX, year, date, XX% capacity recall over on XXXX will late of to Washington this achieve that Keep expansion baseline. XXXX will XX% expanded When mill ], half for of total track Richland's capacity. of Richland We're a a our of portion full QX the have mill in melt been We're the first XXXX. By to in is at titanium

for melt long the of growth long cycle. be our tends and potential be investment to is at of rest defines philosophy operations. Our start the time the Melting a to a lead

We crucial. parts, Forward-looking customers we our decisive. work now. Clearly, flow to through melt benefits and is is that to and it address aren't we That's seeing which can't the of so if to finished bottlenecks our our are going competitive advantage. why

addressing forging one give billet how new we're example North biggest, in of coming me press a the you QX. Let in online of Carolina a great is

target significant in us clear and of XX% give focused an in in We emphasize QX. additional COO, projects while opportunity take In her and within opens in converting We planned bottleneck line more [indiscernible] on Equipment capital resolving its increased the encounter. We maintenance titanium announced and already both investment at pushed affect ramp, capital dimensionalized Fields, As me up to spend. longer. be billets. improve Under capacity slides the sight the and in our The previously late is President works, ended results disappointed is Fourth of accelerating finding a will this rounding in progress [indiscernible] shipments expect of will reliability we in XXXX are this half to we performance. of cycles note. Don is in we in significant don't toward lower. unplanned effort nickel. We're that support Kim I ATI space. and step-up Quarter outages our team this sales. made working another These removing driving each capital-efficient to inventory, the capacity leadership, QX to speak, a our to champion of or is downstream added the advantage sales efficiencies. was of This managed operational idle didn't second that XXXX. a if the flow, few XX%

and As not doing is learned our we lost We've results. We're committed in lot. our team. better yielding performance taking not on indicates, free flow to even cash XXXX. where to We're action, we're that be, yet want a work and that's tangible

means inventory will the growth can key priority trajectory locked for The extended achieve. this time. what Our far management stage a we set quite some improvements for remain in process

of demand the our the end This Looking proven and Arctic takeaway and First defense, the Quarter quarter brings fundamentals QX is lower ATI with ahead. Fourth unique XXXX. of We're and me storm, profitable third will industrial top add growth that clarity should within well with performance influence from strong third is ATI or Quarter, the support in today. we're capturing. metal January-specific more continued In and brings outages years magnitude prices XX% Don from in in positioned XX% to forward, in last challenges. to year. up the growth sales our key speaks mind QX, growth guidance. What points you final inputs. keep Northwest headwinds weather-related above our mainly markets XX It and my of working enduring continuing achieved aerospace markets through from

We to our and years. jet the expect by year-over-year. to that that and critical X% demand. Fourth shipments ATI's capture Quarter to how expansions highlights next melt meet sequentially also over ability are engine increased XX% capacity continue It several

continued and at materials continue a for growth We ongoing remains million airplane jet predominantly in highs. of elevated XXXX engine for spares builds airframe Quarter saw OEM beyond, Third We're significant little ATI surpassed to historic long term, to doesn't $XXX shipments Second linear as in driven Demand then in titanium, First by stabilizes the acceleration expect rates in grow Airframes fashion. demand. We rises It's row. the a in sometimes choppy. generally Quarters market synced a ramp. to of and process medium of over there. XXXX. This growth but airframe build It the the rates build and getting

about think steps, a gentle to stair nice You hill. necessarily not got

our likely in deal with. and lot mind. Before I impact leave been been years any topic has long-term for actual reaching monthly don't about adjusts thinking our it keep the has aerospace, help its to the above projections. expect narrow-body recent rate significant One, XX implications. Three on rates, of broadened how growth if to Uncertainty and expectations, disruptions still wide-bodies address are our It's we're XXX market in build directional based potential position let materially headlines. recent the a narrowbodies of Even we XXXX. of have long-term reality commercial the targets reasons. market industry that norm diminish in points near-term our build to is me We the

overall ramp saw in away narrow-body the disruptions and in peak we record still wide-body early achieve And innings the still we're build years Second, rates. remember, sales. airframe titanium and from third, XXXX of several

materials by prior business naval Aerospace ground growth grew armor. Overall, defense to grow this sequentially a driven the and XX% at and in rotorcraft, At propulsion fly, and in increase was and military titanium ATI's roll U.S. Moving beyond pace. Sales allied shipments broadly float by of XX% and continues title Defense year-over-year. commercial expanded serving versus The XXXX, we vehicle year. ATI, navies aerospace. significant XX% segment. ATI

every serve, for it we're customers rates trend, and let's strong markets, for for term. recipe long with positioned the we the right up the frames well Increasing success minute. for So add in that's for build product engines results. the almost a positive a delivering defense here and

defense. demand great isn't just aerospace Now to and limited

industrial and that money, so excited makes years investing a It's than forward our past. even support the night expansion partner, tremendous It's together. remain portfolio have soft. heart can ] ATI now markets returns. of smaller used good their really more and together. In work they than portion unique is confluent success to markets, $XX in great conditions achieve these devices. will stents news million You've that They're what in announced transitory The so in is to in customer are where [ Late their month, to high. related That last ATI's barriers airline life-saving entry heard capacity conversion investment material me melt and in our talk investment and are ATI we and the they're the infrastructure. that confidence product materials remains affect about look our demand the we an customers and great. with this triple about

said remain I actions lower the needed As as taking this We near-term product adjusting the to our with to focused on last operationally structure portfolio quarter, optimize our align toolkit using mix. XX/XX we're cost demand.

to details Now I'll about our to over performance. turn financial it share Don

Donald Newman

ATI. great the revenue off capped a since QX year Bob. Thanks, quarterly for XXXX. QX We delivered highest

ended XX%, the of an also our delivering as important adjusted threshold margins with EBITDA longer-term over margin year We a the toward adjusted consolidated XX% EBITDA range. targets progress in of we

the to With free our to and We business, profitability let's of end taken years improve come. will range. related strengthen the into sheet the also that pensions, jump cash high derisk performance. our established, The our flow delivered above for actions guidance balance

our higher than adding were with sharing consolidated customer pass-through reflect the Those and do year. of X% have contracts. full our not increased Our entirely demand. risk underlying X% figures XXXX volatility recent customers we strength years, our the for QX growth up lowered by sales to mechanisms and In

and period pass-throughs reduce As those revenues in create margins fluctuation risk, period. to they from

QX created a XXXX, XXXX the metal year in the of year full had than X% revenues and declines and pass-through in X% lower revenue for nickel, XXXX. Those As prices in pass-through QX growth most result headwinds XXXX, year-over-year in same full periods respectively. notably decline and of

A&D expanding performance. representing XX%. sequentially in segment and segment continues Fourth were year-over-year. strength the its a consistency XX% Fourth The QX Foundation. segment markets, segment. end In sales. built EBITDA margin driven the of on XX.X%, this on HPMC Quarter sustained focus Quarter and AA&S margins the of Our nearly and by delivered XXXX affirm segment's in Revenue aerospace total our Quarter, Fourth HPMC's increased and defense in

better our to annuitized billion $X.X roughly of to pension transferring qualified obligations. obligations the obligations, the pension fully QX pension were current the from to segment row, match Quarters behind up performance. put X higher near-term in We the XX% that's retired expect we while pension lead In a which underway. the liabilities a this For accounting benefit stronger And entitled. This continue after XX% a slower third they to do our future QX will party. We margin us. decisive transformation in industrial defined qualified in A&D this in sales changed benefit XX%, segment operating the receive expect our funded to defined this those mix, QX, that we in challenges policy benefits We gross with trend XXXX. beyond stabilizing from QX are of declines in improving employees financial demand, remaining balance QX. accomplished to worked are industrial demand, That's and cash sheet, sales in sales reflecting took a ensuring recovering we expansion, and What action XXXX? performance. Richer we What actions, and volatility earnings, through flow. reduced of We XXXX. increased benefits

pension Our complete. path is glide substantially

boil Let the down pension of changes. me impacts the financial

First, decreased XXXX $XX our million annual from run to pension actions. rates annual roughly these expense prior

Second, pension our element another are transformational plans XXXX, of of be efforts, billion In our $X.X no cash on revenue. pension before in in XX% qualified majority the the adjusted The meaningful we the future. required margins posted actions above of just will EBITDA to transformation. roughly contributions

XX% made Strong revenue XXXX drive out at back growth on $XXX still and of are core of strong progress ramping in the roughly cash capital, We that to with and sales. year level significant stages cash expanding result was to the excellence that in free Quarter expansion. our in early our We increasing generation. capabilities in for focus all, flow far continue markets we we mid-teen margins above will capacity, our closed margin full ending reducing XXXX the The Fourth operational managed million Now just the Best and performance. and working exceed are of year. demand performance.

were expenditures XXXX Fourth $XX authorization cash our buybacks. another capital total repurchased for promised, $XX the the $X.X At share November in million We As approximately liquidity. XXXX authorization announced our $XXX investor with We we in year completing for XXXX. and million update, million of billion in $XXX shares in full ended of $XXX Quarter, million. million

robust. regarding investor our those today Our net outlook. strong update will half. rate I'm and also from shared debt assets let's and second half in XXXX from We Added of XXXX thoughts. melt second ratio to forming. a talk the EBITDA in What improved At Aerospace sharing debottlenecking and both November, efforts capacity benefit titanium Defense adjusted with is titanium. very earnings run see to in about X.Xx. With Aero I life reach that, the our color demand consistent remains XXXX restarted nickel We'll outlook.

step Cash discipline stabilized expect demand second and we take industrial momentum. to today, XXXX shared we've expected the in the As our another of recovery half XXXX. QX, in capital as builds upward is generation and in

XXXX. earnings for expect to what and and drivers cash these discuss Let's flows in

the to of $X.XX earnings XXXX of $X.XX. in Quarter I in from the EPS the bridge to outlook. you share in $X.XX We this to QX First be want range the to expect midpoint per of

sequential the to change of $X.XX in tax is income EPS First, expense. attributed

a result the of As valuation in a will rate at That starting our we more improved XXXX. our released tax reserves taxes performance, means provision of XXXX. normalized at we asset end

provision in of to of effective expense provision XXXX. income expect X% taxes rate As tax rate we XX.X% we at a in income and between a XX.X% result, XXXX. an approximately contrast, at By

temporary Pacific Second, EPS impact outage We're expect now full Northwest in by operation on facility. $X.XX. Oregon negatively the in had Millersburg, and the impact January's extreme QX will weather our a back winter

QX. in impact financial similar a expect We

strong. the earnings. and for metal result were in outlook operations us late melt broader is balance Third, and our Those Demand outages negative the EPS our meaningful decrease financial behind on impacts largely end impact outages mid-January. in negative in key our in year Fourth measures. in is Asian core will on experienced improvement remains Quarter. brighter, and the sequential markets at tied to QX by HPMC the precision business rolled fourth, $X.XX very The in strip given processing materials sale QX And business. of to Full seasonality

build. deliver As in customer position us continue long-term to to agreements we and agreements continue and closed we in out and aerospace That through great opportunities. defense as backlog grow XXXX, a puts to market

XXXX. As our this our and earnings into confident growth sustained a capacity increases capabilities generation we expand, in will are cash translate profitable and

$X.XX XXXX share $X.XX range related to share. per for earnings to There current a Our are is our full few year of guidance. items per note

titanium earnings half earnings XXXX revenue and increase, restarted melt second especially of in full rate. to assets We expect as incremental hit run the

our press conditions and the contribute of production will bottlenecks typically guidance. such at as are removing Bob QX's Oregon from be our Arctic as volumes expected the efficiencies behind XXXX billet on revenue As new Impacts focus adding for half noted, We operations year. provide the progresses. to don't us second

However, we expect continued growth XXXX. in do strong

we percentage in Excluding single-digit range sales anticipate upper metal grow year-over-year. will the impacts,

of million in to the full [ free under the Annual greater foundation in buybacks of our our flow strong to us than increase a be At million. point me $XXX.X year. Average be adjusted in puts Let $XXX that few of XX%. This assumed are shares $XXX.X targets expected for range of $XXX on million, XXXX. interest the guidance, the $XXX EBITDA program. XXXX expense is range year EPS will million year-over-year cash for the million items $XXX The in is outstanding anticipated cash out million Depreciation a to adjusted ]. that's full a to in expected current range to drop million other and of of you be in expense shares bridge XX% $XXX and to conversion reflects to XXXX. midpoint QX allow book in deliver

free range flow million. due we our $XXX Our would significant to that net between taxes also be to in paid don't I and carryforward of $XXX assumes cash XXXX note expect shields. loss million CapEx cash operating

target XXXX, we financial I to update are provided $X back XXXX earnings growth than targets confident billion to that, beyond With XXXX investor in XXXX. in and a of in than deliver ability in billion adjusted XX% $X Looking increase and more We with exceeding XXXX Bob. call EBITDA the billion November. project to we very XXXX. top at our by turn organic from adjusted the will revenues over our line more $X We

Robert Wetherbee

marks I'll to another tired yet happen. that. I get strong end just Today, Don. year. a saying great Thanks, of don't performance think ever This doesn't

people across The driving the results entire defense confidence. hard-working give but signals you Our Aerospace the these is There's incredible day. are complicated ATI tremendous and we're end to demand. and enterprise clear, always a complex two industry, every at the day, of times. it team. aren't living me the Thank things

markets. The first, of the the defense and fundamentals aerospace

are customers orders year projections it. is our supporting challenges, their call. and but honored great shaping up and we arms growing better. partner, turning XXXX was their QX first be XXXX have to and their some Our has into their around a earning extraordinary commitments. be demand even We're performance to

that second gives deliver. The to thing ability our confidence, me

our to material disciplined technologies and accelerate results. Our executing with are in bottlenecks business. We're sharpening the science best process operational in capabilities the resolving and efficiency our advanced advantage, our

billion goals. exceeding on is puts sales next billion achieve to team and us X here the competitive years. XXXX committed a EBITDA trajectory of within and We're win. and XXXX $X on Our our focused strong $X to This in

We With open the are for that, line Operator, question. for first perform. the ready we're questions. proven let's to

Operator

of JPMorgan. to first Instructions] Our Seifman question is [Operator Seth

Seth Seifman

do back is Quarters we debottlenecking in out going to kind A&S the make I and the some guess, of that to now correct? the that's And might the airframe that levels dynamics is how Wanted of It playing forward. to of some looked the saw through of of decent like around the way bottlenecks that getting me the there X I the sequentially QX. were going to things this happen year? a improve in recovery some see year? And down in first amount sort sales are of the sure understood you

Robert Wetherbee

Sure, Seth.

I question you the you saw picking strong bucket think incredibly think defense I also about sales aerospace, in you're up. the is to asking throw probably what defense in have QX

different ] same some twist all require that's covering that the and titanium of it they're we're sure running grades process make of we low to predominantly some So whether titanium, debottlenecking process through [ where and path nickel make we're seeing or is that the required, times. slightly control being pH plate equipment some

when going is through aerospace. working to we're I we're that. forward, see think the back. are for airframes growth look through I mean The continued So very order the strong But year. you

defense I was think QX QX. activity up overall, of mixed I with was heavy pretty that in kind think the just

Seth Seifman

Okay.

So the rather decline as the shift in we should directing of where shift you're A think a airframe? sort more about in capacity. that a than of

Robert Wetherbee

In the Quarter. Fourth

before. they I remember, like see go to true. months that and of stairstep return Yes, up. of We kind booking think was you'll lead when yet. we XXXX, These strength that's the were it XX the guys, about airframe times, talked QX

obviously, emergent, So with. to is big trying some defense programs got and the demand they've deal somewhat they're

it's strength the side how see orders fell But of So quarter. of disrupting business. airframe the a term, we the matter just the of long the don't anything into

where of the we're In spending time moment. lot debottlenecking at that's fact, a

Seth Seifman

in year? just about significant in guess, profile with do First cash And about of outflow of think the we cash flow, a that Quarter the this typical returning I impact then, of the does And the year? you terms a pretty think sort way

Unknown Executive

Generally, think that similar, quarter is take one. to you're I'll Seth, pattern going to going magnitude I an to see be the the from but quarter, improvement.

inventory for and that? do a mean a we seasonality I use ramp by the level. builds with has beginning saw the or typically cash some that the We effect amount capital our managing improving heavy of as spent we're of ending throughout We've Our the what at energy of we're XX% that year year. the So of of how measuring significant expect inventory. positioning inventory

$XXX not still cash but as going to a our was QX use see be use you're to last rather, something in XXXX, you you generation going year could see QX from heavy quarter it's $XX in a be by of of marginal less in in $XXX a a range you for progress expect as million, probably I year, of you're when of saw through would see the I'll year. million. think as we range cash last year, So saw about definitely going million. the the to I use what improvement than Then generation. last

better going see QX, And in QX the quarter levelized be expect in do it's better you for cash in not Xx a X will I little XXXX know as level. use models, continue past you is we're as going when to probably and it's us. then your And it to then example, the cash levelizing to as going where that generation that, You're that to what think at still business. increase long-term bit because that generation heavy we've better look you to of because the should in cash get for out a you to we But business. I be get saw, strong

Seth Seifman

And then one last here.

X.XX. on of a $XXX to guess, that. on of the balance sheet and end deployment looking generate about Just the the follow-up I million year piece at the about

might is year. on opportunities use some of other balance If you million $XXX there at necessary about the to cash balance the it have million still the year? of course over increase be the the deployment? end Or you for Is that this sheet $XXX have the buyback,

Donald Newman

Yes.

that. about talk let's So

holding lot value don't bank, a go you become We organic in and of intend again not spend we've cash goal work. CapEx cash capital. clear for Our balances on okay? the to We really been them see We to $XXX is on to building balance sheet. that with we million and through want about on XXXX. in today, X really, to shared our guys growth destinations a

take of might I executed to we maturities we use debt. a actions don't mean modeling of the have think doesn't think you're It million we program. when chunk are execute delevering we annuitization parties. We took for assume any our XXXX. debt In step your in third to cash our is pension at some $X.X a billion gross I that that reduce terms forward money point, as really the But huge before to year, not not scheduled the even about $XXX XXXX would transferred Well, way in it. to the delevering, repurchase delevering after share it of end leaves significant over

you'll share there done a a high $XXX a with And the for high priority what done We're to some It's current liquidity down talk for cash cash say, to uses our right? current that operating the is we're going Board. Now your returning after things from healthy Don, it's for Board. million will When in leases to position. to other statement would program, do to really guys like program, our financing number, our is priority cash pay shareholders high about, But with $XX and going shareholders. listen, core of team. Clearly, that some be you in They're management are we refine a our priority see your we're of are that. I question million the more section. repurchases, our Seth, wondering? just is, some you're capital of the to about Is what kind our

We have million never that be $XXX program anticipated last the current will the program.

you So as think appropriate. can you that interpret

Operator

question Gautam Cohen. TD to Khanna And next the of goes

Gautam Khanna

QX on a to the could HPMC. with at respect was guidance if point I AMS wondering finer and EBITDA you put segment

Donald Newman

Yes.

relative the to So about certainly, that levels remarks, how gives you performance. of that in think sense shared to prepared you with QX of a the bridge my I

that that think range, decrease are $X.XX the you from $X.XX causing in EPS. that to So segments we're about in bridge the seeing of some both impacts

severe impact of the look $X.XX the impact in of impact of get When AA&S Oregon another and our at about QX. that in in in hit let's So to seeing we're $X.XX specifics. facility, you roughly weather Arctic QX, pattern that business

side So translation the of that's the expect and for of every million back to means you penny million A&S should on $X earnings. EBITDA again, about EBITDA every $X for

note that do honest, as ] that. STAL you huge of [ math the allow Lunar the of that York the literally elements that do as to a happens to that And on It's not then there's we drivers, year. element far be every bridge. one So is other New

that's sequentially. a penny so And

that that's into So of into HPMC refine the how Then you think bake about you will the outages your play. where melt can really STAL. numbers. on That just house, those side

the That million So $X.XX we that's debit there's HPMC that be of with noted selling the of in plus created an $X.XX outages, EBITDA. it or minus we material don't because QX. on I equates have that otherwise about meant that $XX would about those side to house

Does that So an that? think kind help to how of you that about does you give Gautam? idea of

Gautam Khanna

weaken there the nickel just because and does. are wanted STAL It is that come specifically Are sequentially mean I you beyond you the does. surcharges seeing beyond make sure of $X issue? you to impact STAL Arctic prices sequentially being or actually the anything the that over and markets plus million have what in, Is only I the impact? have just et you EBITDA as It rolling weather seeing cetera. prices highlighted? what

Donald Newman

Yes.

minimum, a the good One, a potentially the to of where guide I has business. color QX were and think terms of demand couple volumes industrial standpoint, the it's a A&S from I of That think we kind QX. a part at from the indicator benefits. is in has to see of pleased up stabilized, flat for

would see is of typically some see from dramatic. of due what potentially Another in, did QX is mean price up but not in increase QX that you orders prices. industrial softening, to a thing coming would that negative impact We when to demand benefit firming that us

revenues. through drag not drag into I'm we pass-through QX, our headline to sides answer in And your truly I movements for that kind see would a metal not there into marginal example, QX. There are question. to kind I you but going those prices, And that going of won't headline that globally. But probably to figures. they're AA&S softened odds effect, of don't price so a have do see related that as other certainly marginal metal in some number and be

Gautam Khanna

have the trick asking of I beyond if could just that. liberty ones And two

that language some I did correct? is $X.X but targets not $X EBITDA. billion First, think I billion the around to billion, was Is in curious, range was the still correct? change, $X there XXXX

Donald Newman

the 'XX the Neither Yes. period. 'XX targets have changed nor

Gautam Khanna

the these if outages or could And on what on planned unplanned? Was weren't conveyed around the Good. planned, specifically they Investor you if were outages, on then why were these And this plans? Okay. HPMC they And elaborate melt maintenance just Day? happened?

Robert Wetherbee

Yes.

think the yes, -- I question.

and I was Or was think related about pretty get failure? problem you put training some an XX% through melt issues a and where but would do it operator is different you that or unplanned, XX-XX still how equipment some side, kind on electrical issues. just and/or I going get of pieces, much we're the it crewing

quick. So -- those about it -- XX% any but was today. melt unplanned and pretty pretty melt, and And important happened much was is met

press. Usually, planned with for in we issue that outage a about dealt certainly week. other we was a The those particular do

And lot we we need We to at get so I we different to a think this it X of of outage needed as took outages to you about this the right? We places, was kind but it And do it challenge recognize weeks bottleneck, to specifically X.X pushed it. quickly. occurred that do could. we we to want got recognize the where far as one, be. the have

for So some we be of we of probably but of see that end the it that's XXXX that's wasn't the planned think to And down So year, we a of fair of are. But reality I on beyond the be years. X, it why maintenance to was week weeks, did needed X impact in going take these conveyed that at of. had you question. it. we ensure did they we something people part We what that we maintenance it for thought again, cycles less make the and to and right? the other where yes, we industry for need we're X are down X, can -- top where And an sure

Operator

Richard The Seaport next question to of goes Safran Partners. Research

Richard Safran

also Is the contribution some bit of market little that I is part look I'm at contracts to And VSMPO due XXXX. increases assuming titanium. wonder relatively that expand not this 'XX most a a about the Is remarks share comes how way of I And your you the to here. correct? on have assuming opening titanium a trying question if that is to accretive the get And of I'm in could sense titanium also, capacity margin and to margins. new I'm pickup. it? on

Robert Wetherbee

for to them X questions See, out like there's I Richard, have in peel there you.

So the that's I think of is of we're seeing decade. That we customers that respond. 'XX true, if right? balance June the in you go would the us from to 'XX XXXX, what contracts and seeing, back to announced $X.X or long-term We're carry billion

into go already XXXX. of times you If out June middle lead XXXX, to our the however, back part of were

we're So these that's seeing strong why kicking in. as are half second very this orders

doesn't Our to don't a capacity doing melt what Oregon order. anything from through those flowing We cast we're have orders. specific that or is in

So is we material that flowing, working. see everything

think some fair of We're source. benefit cases, more Russian your getting it. feel one we've share we're of the the seen leaving I that. was we than So everyone questions our else seeing In of supply

So that's part of the answer to your question.

kind we're We've been titanium nickel, much the we be in think to future. airframe heavy we're less more I debottlenecking I can. going of everywhere balanced -- think historically

our some require that. some of and processes processes slightly debottlenecking. The to have we are address So different,

to next of in wide-body think for now wide-bodies weather demand to came couple of to month going I demand, terms years. it's is clearly a of XX doing about us probably the in say, over we where the would probably 'XX, point to XX, kind XX going to go go were I

of to and So lot the market yet time. activity the defense that's of through same for real kind titanium at We're of the seeing is come. a coming strength

of probably about A, big half about think is just is XX% defense. would say it when big rest of XX%, the think and and the titanium is I ATI, B probably you the So related you

home the Richard Don, So mid all here with. help of want that hit -- the next you of the had kind is him questions, years. did growth we I some could as to that hitting think, part you year into of couple

Donald Newman

asked, just short answer you space Sure. is It I think a One, product The of add us. things. couple I accretive an Why don't Rich, is yes. titanium is for accretive.

I think regard shared what The second you maybe that the And asked to to also can in Bob around capacity. add was I question, capacity.

titanium So on talked we existing of have adding melt capacity XX% assets. we're our about repeatedly

in idea XXXX. And how so of an seeing staged to kind of give you we're that

guys of you we way back to like the targets even in build XX% relative $XXX run might have to XX% you something is to $XXX our add and that is The that rate. of melt want rate share we expected looks revenue revenue that gave, a to So in what said excess what to sense a closer to margin. we think it capacity, this go capacity of of run million assume related at original increase about million and

So those still hold. numbers

be I We've we the at think run them, half like? What upside time. strong there but is really part that This being first when share reason. hit right But rate? half question may some of will the relative second that then the do is XXXX that about the does a half. look talked of to to we second the

in as the from them idea half second that would I these XX% XX-XX, want gives standpoint, change half. the to -- seeing half from is of they're but expect of be building we'd capacity here, first income contribution you that it for be kind going step you an know we're XX% statement mixing if the of what about the see you run math assets, expecting think split we will, maybe I'm in be half. we that to and to and an it so at And from rate

that's So hopefully, helpful.

Richard Safran

appreciate I it. Yes,

Now over just the issues that you. chain I the your impression quickly, get supply real are much for pretty from slides

going the I I constraints just we've chain no set seen? to wanted your margins sales you longer by to are manageable. supply From think and expectations. said standpoint, be impacted

Robert Wetherbee

No. ATI? In

Richard Safran

Correct.

Robert Wetherbee

the designed The nickel issues. have to the originally the a shift We quality issue was press That's important. over process different And to to behind a puzzle, using the good was of sure bottleneck add the couple in ] step us. you're was why billet. to around first an be temperature, Yes. making titanium you titanium, they're part, you press. [ a to to different testing make from pieces when billet It think

us. behind that's So

or certification are eat X around melt being we issues that issues do out all think melting hard are the we think long. within working. One than and of what we I'd contracted amounts we with We're I huge training requirements, money makes there to ramp for quickly. that about in our That's talked talk titanium, kinds with of about investing services melting. marketplace other breathe which is call there which not I services guidance. are what it in the contracted significant why

inspection the ultrasonic other some the with Some people like and activities that of of on is in under that market. aerospace as of are in rest the that see going some kind

buy affects failure manage what couple they feel other of We supply we that those had out The a points XXXX. that some need it there I had can we are facility and the think But where things issue is contracts get are we're our have the a within in we very there problem has to in confident ship we a failure, control OEMs other -- with single those they've of are that Texas extrusion us. parts of some chain. bill And supply execute major to where chain of part our directed there. of and

Operator

goes to Wolfe next Research. Timna The Tanners question of

Timna Tanners

from questions Two us.

Just to understand clarify and outlet.

could could if So that? term, on actions to short just Is align comment you long elaborate the wanted lower taking operationally term, explain demand. about to see if with that just you

Robert Wetherbee

Yes.

construction kind a it, of gas, think nickel X is softness some I bit and me in make sure we related really space. the for And that about amount to activities of there places. industrial residential to I like the in comment. pipe was of markets. the capacity We're that clad was to AA&S seeing oil little right make projects everybody, the, of markets that's the industrial also want We the Brazil, in call of those it the basically segment in there. our got

it's places, obviously So direct on going but mostly we and go that distribution watch destocking have in today products the the sell although segment then some space. is we still some stabilized, in key. And those vast engineered it's of the think, we the that what the majority we AA&S see is inventory OEM into I channel,

that they're getting for helps. Is shoots green signs life but looking headwinds we the any not for, that hopefully, seeing are there, So what some worse. are But And still Timna? you're of QX. and

Timna Tanners

or some Yes. be could so about there. about if material trying just I'm how tweaks they changes we're to big talking think

Robert Wetherbee

They're Yes, in the weak ]. [ that's category. tweak

would So they're and cost people whenever kind say of and crewing with them wouldn't your thing. it you're call But modest involve and doing structure, I because necessarily you shifts can dealing tweaks best. that at

I results, be most to by for QX. just matter It's should of show a think been up the taken. which them. in them already have

Timna Tanners

it. Got

Okay.

question the impact. about So was metal next price the just

The I because want shift last that in big look in mean, commodity a year. but price change understand bulk nickel better year, it if to the the was at nickel. of I the year you So of first half just for prices, was terrible that

think Or you So we think the impact said was how QX just price thinking about it -- impact forward, should about we that for for going weighted? the since of annualized rather just changes about should future? more metal

Donald Newman

like first when down the that saw mind, prices to the half their changes massive range. saw XXXX So levels. saw my slide sure get continued then per But nickel we latter to in in really pound XXXX, back I I'm that stable, of -- you half, make to step sync QX and we're not recalling XXXX, just relatively in really $X to meaningful

little to effect is the listeners in of metal. focus I the pass-through. in a of way business, think that And terms is where the there's our one lag about area So really bit our around a of

really a to our contracts. pass-through various So good our done has adding job team mechanisms

that revenues then XXXX. I result, of Case of case, could this prices to the prices revenues nickel metal metal were material Ukraine retraced our before they Now increase they -- back decrease. increase as kind that I'm or the in because where prices range And call to our as a million end in move okay? talking last $XXX before the went to revenues, the in our we retraced up, pass-through so shared go XXXX around, were where prices pass-through we in at see those and have the and point, inflated metal saw invasion. year's of

pass-through million of in that If we the begun revenues, here's plus don't going direction. We now, our about and would I revenues $XXX $XXX then lower about lot be, know, same what the expect million we're our they are than Timna, impact million, or QX at XXXX pass-through $XX And that reversal as into lift thinking. to level so revenues our of prices negative saw go metal our the other that XXXX. saw you minus, pass-through has on of a think probably we I in about will saw revenues in remain

impact have trying to in. a and your to in important sure our to question you there's significant rates, But not it's know, pass-through. of feel bottom as get Does help line make an you As that that you're because revenue, answer our changes thing you? for growth built a for underlying

Timna Tanners

a Yes, so. I follow helpful reminder. up, that's think but can definitely We

Operator

goes Leshock Michael KeyBanc Capital of Markets. ] next The to [ question

Unknown Analyst

are But strength, elevated I commercial now? right there's maybe ask be then you some aerospace, would aftermarket on that you wanted helpful. strong within of the right if more way seeing talk any broadly obviously, or the to within there frame of that duration some MRO could And side platforms now. the pockets demand that aftermarket that to could

Robert Wetherbee

give I'll right. All it a try.

are And right? spares seeing our spares, is -- XX% And so engine predominantly of aftermarket our ours is jet about so elevated mix. it's Historically, demand. we

go XX%. want there's individual from And much each engine individual today, say you I you -- think have but don't platform, have a each to kind to to reasons to engine look too by And platform. we've it's almost about of said couple closer for different of at it I it.

and MD-XX extended different out airport think of widely the in different narrow-bodies. I just of some is in with of put anytime it's kits major plane. being cycle engines from they while there's conditions you're Everybody side, The extended see going say, kind make and are use And and the thing. more for next also terms an maintenance more the they to where planes and that's wide-body before issues more narrowbodies a think the there be to they're have in a where the the all other issues point and sandy because commitment GTF, are get discussed the of I looking are desert. engines. There's major narrow-body there's you And their desert right? people different versions are to that overhauls in that reaching

foreseeable programs of all will So to that but kind mean the some the do for terms the think of see revert here for we spares, future. us, trends in I back engine

going there's I of it enough spares out. elevated for, outside to say, think a gets all drivers the that of couple would norm think level I years, that's sorted keep I

Tom Wright

don't Hopefully, I'm MRO. much ahead. really that Go We in sorry. Yes. helps. have

Unknown Analyst

very No, I lastly to on helpful. that's inventory ask just wanted management.

How do a What just do of you and you're throughout moving your you underlying XXXX given that. inventory some inventory the had there You pieces level outages frame with progressing on the see the that commercial Is aerospace that? touched ramp. targeting or turns? way

Unknown Executive

management specifically So that frame working in piece Understanding let inventory, general. capital not but thinking about of capital. it just me managed for inventory the primary we're how is

getting So here to working XX% managed down target. the closer we good our our much end overall year, made of really the at to capital progress much, some

to down we as the a it year. not historically XXXX, really tapped to way hard have cash. you about about that we think working want drain so on done it not the it's you think not build to As are Keep is during very our inventory

to see in that clear area. So improvement should year-over-year that you is and effort a expect

In by to and terms the managed working at what expect we we're possibly and are capital, year XX% XXXX the target going of it. expecting end the marginally we that below overall and from of very

you? that's Does so describe would help And that it. how I

Unknown Analyst

does. Thank you. it Yes,

Operator

of question goes next The Company. Josh the to Sullivan Benchmark

Joshua Sullivan

Just that follow-up to as inventory question. of kind a

do mentioned to in the like think developments prepared inventory what digested. the customer hold customers' developments looks are you narrow-body willingness your narrowbody is these On build remarks, you and

supply customers an the talked the the curious inventory about But of I'm and OEMs chain for One your opportunity issue to are levels. up. actually is thoughts catch what about

Robert Wetherbee

fair Yes, question.

the in of European seeing moment, side of we're lot airframe or or not system at right? noise, I in engine system on think lot in U.S. engine the the the that's airframes, the and behavior any not certainly a But programs, there's terms change in system buying on whether a side. the of noise patterns

the more need effect spares GTF supply guys the want us engine is don't the they Certainly, want don't to be positive I be of to or the think in spares disruption the laggard, for having who either. for those around a bottleneck the materials.

particular. a they get I are to position. activity of the ahead. There's us, also producers. And broadened tremendous we're a market engines let we've applications, or materially working whether But influx helicopters think there, France our rotorcraft for up of engine in defense not from [ any ], seeing lot it's there's

So true airliner it. powers every flies that's we've And always ever we than said every before. in that love more engine today that

bottleneck ultimate supply when I themselves the the companies think I -- sort these out, sort do big out. to going So companies. in They're today, great wants capabilities. are have be They themselves chain. And think to nobody they

Joshua Sullivan

maybe on just one nickel then And the powder market.

think focus powder you isothermal of like? forging how mentioned gives the lot a I I nickel was but a look titanium here, know highlight. does market

Robert Wetherbee

all titanium about the kind mean really that topic strong. up. good about nickel talking are it. I conversation X it's we been Yes, on feel great been programs has ramping of really we've powder, of We're normally, in some but Yes.

the much in yield to covers in XX%, can be to get have we I some your But obviously, the the we term, issues think short yields medium strong. continues capacity that and up on short we've focusing that term. been pretty of it

single and of just I alloy to occurring especially the supplier when single and that us opens points the think market, an it in these more. you for of of us are look on if a do there's at gives door failure nickel opportunity the some side, we're the point not failure

years. potential So we share growth volume actually see couple next not the growth only there of but in

be our with capacity going to it to So and because don't system. have improvement the see growth the there. going and we tight But relationships be excess to in think customer a both our process taking -- I in steps is move lot we're always to want it's of tight

David Weston

This Weston. is Dave

the I'd with call. and will reached here Relations the assist team for you thanks, think coordinating to website. our A earnings that our on available I for follow-up we've is us like time. today. ATI questions our have. And thank any call, you may conclude to window Fourth joining be Quarter everyone, does This our replay of Investor

and day. you, have thank a So great

ATI (ATI) 1 Feb 242023 Q4 Earnings call transcript