ATI - Earnings call transcript Q4 2024

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Operator

Hello, everyone, and welcome to the ATI Fourth Quarter 2024 Earnings Call. My name is Becky, and I'll be your operator today. [Operator Instructions] I will now hand over to your host, David Weston, Vice President of Investor Relations, to begin. Please go ahead.

David Weston

Thank you. to Quarter welcome Earnings and morning, ATI's XXXX Fourth Call. Good Don key today's Fields, our and President call in points CFO. President Executive and to CEO; Kim Participating are share from Vice results fourth and Newman, quarter

After also like website on starting attention prepared draw for outlook our our accompanies call. results to Before additional at provide can that your Those presentation and to slides open I be supplemental color we'll prepared our the remarks, this questions. our atimaterials.com. found would on the and remarks, and details line

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

turn Kim. over to the I'll call Now

Kimberly Fields

We us year that ended high note Thanks, going momentum a the a Good Dave. everyone. ATI. QX on gives morning, XXXX. was into for great quarter

XXXX, strong Let year. EBITDA with quarter, for $XXX up fourth and and basis, challenges the $XXX year. billion. above nearly In billion million million, of XX% XX%. highest me revenue to million our almost revenue $X.X margins XXXX headlines performance. contributing up Adjusted Free EBITDA $XXX EBITDA $XXX were cash both last was was was encountered industry our was the share segments $X.X X% first. full year sequentially The with million, On a $XXX than range over Adjusted XX% the was financial the even this we guided flow million. more since up to

is We're in XXXX pace line increases even transformational double-digit to results and that percentage to track. is growth adjusted led confident strategy These top be and demonstrate to performance on better. Our EBITDA. our our margins expanding on

$XXX demand we're drive EBITDA future. the Three Don Number XXXX each areas our remains moments. key one, million. forecasting quarter above will our full our will result, ATI's confidence during build year into get detailed robust. adjusted outlook a these As year, with successive XXXX in

opportunities as customers' of of ramp XXX We're our back, segment push Airbus upside for bouncing ramping comes ATI the industry. every earnings the call. Boeing with out in for seeing with aerospace anxiety in. likely Demand from supply the their track. they comes on steady MAX You're hearing materials as is stability rates. remains

on Our today. are every commercial products flying platform

In QX. QX, more shipped than we

Our are agreements, the growing. Backlog backlog our didn't demand remained steady. drop. upcoming a capacity isn't anticipated continuing indicator It and their flow based reserve through to Remember, are These pure on orders long-term customers needs. of picture. full

revenue year revenue full engine Our X%. up X.X% Jet airframe XXXX year-over-year. was was up

a team total their growth. driver are Our achieved increase the XXXX, fourth In they highest this isothermal of In to quarter, the output ever. ISO quarterly key by forgings was pushes able XX%.

MRO In demand. the GTF addition to heavy and OEM build program driving engine engine also are rates, overhaul

this almost support in XXXX. to ramp We sales XXXX increase and anticipate to in triple of our XXXX, are continuing sales with program another XX%

Our grow were as for our demand year and [indiscernible] and business need advanced continued [indiscernible] allies deliver. our product to the revenue. both of quarter to XX% Combined, United When defense and The exceeded up high-performance honored reliable, business in of our ATI. continues XX% confidence to revenues to fourth demonstrates growth defense million. were materials our turn $XXX they States well. Full Defense

more represent delivering they in year, growing performance full the markets. For than XX%, strong

is put Nuclear continued hafnium, you've demand. the into markets, energy markets, Energy electronics and play. In about resurgence where come us the differentiated A&D in our for heard high-performance In This core materials and addition zirconium our alloys to of niobium ATI talk chips high the aero demand like. and specialty

sales, specialty combined equal which were interesting to fourth our exceed sales to these to quarter note that is with these nearly my Aero we long-term electronics and Operationally, for demand the remember, they ATI mentioned current Generally, the markets key confidence. need products me typically second energy brings defense because It's up to our of predicted and in I significantly. of is just where deliver. driver like And margins to That growth were supply. be.

track, QX them. but occur. correct of reliability issues having are before on and just stronger recovered proactively predict investment to from equipment not continued are the are The AI in us We allowing challenges from and making them technology we being they potential

we improvement us business transactional to, to most. where Our opportunity gives we're want participate in productivity valued where the

all of getting melted, system each flow levels of ATI, things honored when received our announcing parts best. record appreciate that I powder hit to is they quality like of new lot this qualified leading the raise our one team operating One and they're a of newly its heat gain and operations the business's doing, successes. milestones record. as new With quarter, a I we I'm operation hauled times rewarding their to over can all next and best premium celebrate calls most best share. team those billet,

in strive building. final Boeing's optimistic activity third with I we'll be supplier, first stream as to XXXX value the Let's to in And growth call and already the for on guidance early driver my increased to projections. Today's the based seeing. is line key future confidence. meet get am of see as ramping one we're they of an

back increasing from that is publicly forward looking of For XXX to stability. XXXX, XXXX we've something another stated we sign bills X the all increase entering into to. The will been X, always

core. much to increasing seeing half were commitments products. We back and a extend nickel for and scope an of which this Both July, agreements in uptick are differentiated tied both beginning currently build of commitments and new see we the added announced long-term in titanium billion our $X that XXXX. to In sales anticipate of demand signs new

growing We demand believe that upside. tremendous has

is ATI materials, programs air naval, budget forward, the With additional much You've they expected likely vehicles 'XX. $XXX ground billion potentially expectations emerging as defense. $XXX year billion, spending move inputs defense funding of increase by heard and If of growth DoD for that through the peace strength. portion supporting would production increase targeted philosophy fiscal this year around per a or to provides for where evolving our of 'XX benefit as and

Lastly, our goal what the for better than an challenge, with each team to making point, bar a mindset to starting can they each what themselves faced would us met, gives opportunity higher great or set is achieve. strive to the with succeed. true our confidence. they often When that [indiscernible] flowing With From last. surprising be day have me

about and our Don Now XXXX. share for details results the outlook XXXX will

Donald Newman

Thanks, Kim.

had provide also full touch and flow what XXXX Cash year outlook. before profit insights talking Let I on which a was additional through revenue expectations the was anticipated. quarter, highlights from will me some ahead standpoint. line with some we our into of well our in

Revenue guidance. improved expected $X.X by up billion or as was results higher start highlighting demand QX XX% comparing QX That's up sequentially. in key customer Let's $XXX than the it against quarter million and revenue in XX% we for approached our year-over-year. QX.

we a short-term bit weaker shifts to was Mix anticipated requirements. than due in customer

Our IRS of $XXX approximately nonoperational oil guided million tax to adjusted $XXX from It's by credit EBITDA above of the and in was of and clarification to sale gas of adjusted approximately important favorability million. million, QX for rates $XX clarify $XXX range results our million our QX. rules include that

our If $XXX were been predate to in end would the our guided Some guidance, exclude above they underlying that range quarter. of those still million. of to have range. tax the EBITDA those activities of the we the benefits embedded as were items, That's relate adjusted in high not

content, our of We unfavorable an A&D achieved revenue in Full growth offsetting performance year improved increasing and nearly Through and mix highest billion, positive earnings strategy. this several long-term release. in our of despite XXXX performance the reflect our was $X.X execution sales XXXX. noted revenue impacts meaningful ongoing since our a results

roughly year, XXXX. full X% For over the revenue grew

are XXXX almost impacts, HPMC, quarter, In XXXX XX% ongoing ATI's the declined XX.X% X% nearly levels. the to driven EBITDA charges this grew as At address more coming revenue set improved full $X adjusted quarter million across for delivered sequentially year the approaching incentive the over XX%. year. negotiations we've XXX business year. performance. metal as fourth compensation in was targets to Excluding margins margins commercial adjustments than for customer to basis tied by This to points margins We well

basis In on continue the and increase. Those $XX increased and volumes to million strength the sequentially. production A&D of AA&S, aero-like XXX the of IRS as advanced exceeded includes XX% increase our fourth credit. from mix This quarter points margins clarification favorable margins manufacturing from benefits

benefit, this for margins been expectations line with our Excluding AA&S in performance. would and have QX

million a free in our we $XXX As cash for very cash delivering fourth flow. strong anticipated, approximately quarter quarter was

by contained is plan free cash flow originally underlying guidance, been the While expected our It's XXXX. divestitures performance that lower proceeds than full were is our or guidance. from several in range originally of in year we supplemented not within

a of funding we flow capital cash beyond. funded reductions year look quarter of the our and working that $XX customers the was to in million, We year reducing operations build to from XXXX sequentially we Knowing and our manage in from this investment, required. encouraged deliver capital investment In for That by as that, including consistent million in total spend are capacity. XX% direct in improvements this and business on area was cash predictable $XXX more cash-generating by free a was made XX%. the through to included capital

with Our to quarter to with further improved X.Xx profitable reductions X.X this net come ratio sequentially from likely debt growth.

$XXX with quarter million of share XXXX cash to representing returning of repurchase We to continued $XX XXX% in cash We XXXX repurchases. deployed this shares, million flow. free shareholders

our We million. at start XXXX $XXX authorization existing with

helped XXXX. conclusion This a quarter of strong represents for our expectations XXXX shape and

With guidance. that, let's XXXX our to turn

are the grows. exists said aero as to setting rebounds to modest $XXX QX have That business, and adjusted consistently in As chain we the that $X.XX million. of share million account, first guidance into our seasonality, range Taking for the year an we to the with at of $XXX past adjusted range reflect expect subsequently earnings months, several we along per supply equates EBITDA know $X.XX. our half we over to commercial recovery

That how year, delays the last the XXXX. half For unfolding full recovery the we aero with range aligns the this target market have and within XXXX. previous seen ramp over the have for narrowed of we in our

$X the to range XXXX $XXX We million, $X.XX with $XXX for to full at setting adjusted range share. corresponding per million are EPS year of at EBITDA a

provide margins work though expect, XXXX. will pursue our previous you don't year direct unchanged build basis, guidance. targets all and this ongoing guidance on revenue risks Even remain we on for to we and to an eliminate As would for opportunities

cash Turning flow. to free

range setting and million This to we growth. full at improve can year timing managed more $XXX $XXX the within of capital efficiency are We this time million. contemplates how working much range we believe

capital customers. be by We a portion of $XXX are funded $XXX investment may this year, in and million between million assuming which

due disciplined comes of portion proceeds debt a balance plan repurchases. that growth, reliability we U.S. not from in with debottlenecking. and XXXX which reduce based We profitable can our balanced of investing assumptions materially is share current I'm by year we environment support the work guidance QX, repay not will cash. million the today are with to count $XXX and the sheet Note to believe sharing that share to stoppages. a We business the the new on any change to we actions divestitures approach the continue and throughout in are impacted administration

we To several path A&D the summarize, opportunity years we we dynamics encountered for strategy the targets ahead. by continues course outlined last the guide have significant the in XXXX, to quarter, year. for and Despite underpinned industry see the our pursued financial

and customers every that our are to We working to shareholders. day fulfill commitment

back call that, to the With will I Kim. turn over

Kimberly Fields

Thanks, Don.

As the Yes, stable and ahead, seeing we and bullish both markets. about known and unknown. improving. optimistic long-term we're I are our our Operationally, shared, We're deliver. demand there future. risks strategy We're on are

including me the taken U.S.-based experiencing, supply And Let taken in any environment. trade all me dynamic recent we've risk sources. take macroeconomics confidence to predominantly address that well actions. years, mitigate positioned a steps to a We're tariffs give The deliberate action we're minute we're our we've and diversify for manufacturer. to

in expanded purposely have mechanisms We contracts. our pass-through

We to are uncertainty. nimble and experienced responding in

that, with line better success perform know business and in our open As future. for and we challenge, we our make ability our will overcome to let's the strengthens . now your questions. the And each

Operator

first Strauss David Our from Instructions] is Barclays. question [Operator from

David Strauss

year. gave a to steep your It you just you guidance in going the range? EBITDA. get the to to like to So second talk progression -- for through we're you're about need the going guidance half the recovery of the pretty QX looks need Can rest

Donald Newman

at look be by pattern reflects place the start. look to that. some But you removal at around also of happy quarter, I'd sales is XXXX, put our the one it nonrepeating looking at you QX items you're from what through I moments you [indiscernible]. performance to And for say as could Sure. asset down the you would the When QX. some QX QX, It of right. seasonal reflects

to that are the the I about reasonably think pattern there, a position good the show consensus the market that quarters. figures out how . think of expectations through

think of see and which to kind idea EBITDA of So for range get to second about. lift That first to in to then the areas, what pace some to mid-XXXs, million the QX of of on me experiencing we second for of versus expect you XXXs. would QX, you'll I behind would the number in closer would create in the and in a guide half to I recovery will half. is kind the expect midpoint be year, low us, an with in something see kind QX that expect give that half that the $XXX the our would QX. pattern XX-plus the And seasonality you

David Strauss

you helpful. know you nickel Kim, purchased lot potential Canada but a specifically briefly, your Great. I touched of on guys? tariffs the it That's with from And you for Canada.

if tariff mechanism have potentially maybe we that a Canada? in recover see nickel could you on on contracts that the then place your if just in in to So and you do touch

Kimberly Fields

Sure, David.

I about as we commented, you positioned are think mentioned, we well As as tariffs.

We have comes our Canada, less but than from much XX%. said, a portion diversified, you of it's as nickel

it's to and additional lot fact, a that In other processing into probably XX% countries Europe. and is in of for going closer Norway

flexibility X as that or but the premiums us and which think price, I'd the sources. already obviously, situation. nickel, The place So were we say, little and changing pandemic. we of -- X evolving an a about were got bit It's we've pass-through in mechanisms, on in allow multiple had before place, does or surcharges X LME based

close enforce sure we rapid and cost really is took make our our But that inflation, alignment mechanisms that to to seeing we're increase out that in get to saw raw materials. pass came as we opportunity we and any intention in those we through

So and based in be and feel dynamics. to for today. on we're like monitor we good a that place continue we'll the changing flexible

Operator

Our next question JPMorgan. Seth from Seifman is from

Seth Seifman

can that could apart driving forging and side, kind of getting will side maybe b, that back driving I going on at where bit And and a or the how also it. be you of of will of in the And little margin take about the is margins a we be whether areas? and then [indiscernible] execution more products think If titanium in the those kind it is the on kind it's of guess what more progression we in the alloys more that kind when how ascending business. I'm specialty HPMC get can track

Kimberly Fields

Sure.

here it me at add -- let a end. let So and then start color some I'll I'll Don at the take

mentioned you and titanium mentioned You engine.

I'm your here So down broadly get can we it going start I to that narrow make question in answered. sure completely to

about well similar over as We're to that time over think, XXXX. X% go lot we forged I'd as I we've growth a MRO started, lifting is are we is driving where saw lot products for anticipating the section backlog we're the we're with support those that all we across work from highest say accelerated of So our growth materials made their doing them ever, growth, believe, the in got that as the bit XXXX. and well seeing ramp into as as quite say we're of . They've a hot continue you up year visits, visit especially being to as growth is both our MRO, in of of OEMs And different I'd a are production to as of in activity, making I coming, seeing shop engine, lead program. shop partnering disks. of the the we had, and a perhaps that, that forgings. business, upgrades that said, I about that engine think where parts the XXXX

think on just ramp them. full in And run Xx of DTF prepared revenue XXXX, to QX rate I a remarks, for in for the XXXX, XX% increase parts program. year the we mentioned we're run expecting in that increase. rate And up see hit our was I full

this of increase. ISO the is capacity all Again, by broadly being supported

we as to We was had XXXX. said, XX% online. remember, we're hitting an of in fourth you did If that that I ISO output press our ISO rate run overall. upgrade And and full perhaps

And industry well we've as which XXXX. over going bottlenecks we're across around capital qualified is kind training, for increased with so we've board. investment our XX%. see technicians the growth to downstream testing, of minimal continued as been and focusing of an the constraint on investing full ultrasonic that in But And

reducing throughput shop the there. in increasing so And cycle really time,

So overall, strong. engine is demand

see continue from of kind it board, We especially to MRO. across the

say driven think hearing I'm of I demands I'd are their being XX%, of order by XX% MRO kind today. XX%,

titanium. mentioned You

briefly, with EDX have is melter ] do included coming in that's Washington. our that's there online Just titanium that. We new [

We today. customer are We're we approvals. that Because commitments permit asset. on commissioning for have do final waiting

going think And market anxious a that think we're into anticipating going that so at qualifying little and to start as I get XXXX. and to that and looking starts Titanium, ramp, airframe Airbus the very stable, is as we're bit asset. I

on You half as with continue we into heard we anticipate the to get Boeing, XXX, track ramp that their They're and will the of from growth. the back year.

some of an in, look ramping the in keeping is order talked I'm of to starting XXXX activity, that eye we'd see that both airframers we're have area back half and rates see one come year. increasing the in the and the think build and I on wide-bodies, about to activity

for they that come the see in hit into first the we'll [indiscernible] don't rates strong flat on ramp the to that And order about if build anything advertised, know is half wide-bodies they've slightly as little additional half say, of I a want Airframe engines. back and pretty I'd start as going the share demand year the then in. Don, up to sure. and to hopefully margins. So momentum muted, more rate you

Donald Newman

I would be happy do to that.

to can broad-based So said, helping you profile as that look as Seth. growth, at see really XXXX, margin our is our and Kim you engine, impact jet demand which around strong drive of the on

XX% to profile we kind progresses. broad-based in kind And as about that think to all you're XXXX of and that continue we QX for Well, way the see I the for margin that would this think . Number talked I to one, we're those -- going driving our of increase It's margins expect that then XX% the XX% of year the this I see mentioned And demand. we've range. up So see would to north then expansion. HPMC ramp what's in to dynamics seeing about the in past. margin. the

a OEMs. the all have jet position major We engine with of

that's get meaningfully something around we impact. tailwinds rates we build means a So the we're the get in. then builds MRO. our volumes that also going that tailwinds as the increasing and favorable That absorption ramp, our get increasing, are is We around mix wide-body to participate but

talked of north that should XX% believe we've level. be got [indiscernible] reasons and we drive So in that will we've to past [indiscernible] the underlying us the

Seth Seifman

Okay.

was my long That part. a on Great. Okay. question one

morning. there I'll So it for leave this

Operator

from Our TD is Cowen. Gautam next from question Khanna

Gautam Khanna

context pressure broadly? that some led -- does think have ATI. any Does given Was could of incremental a I the wondering follow-up. if that customer pricing And to provide then concessions what speak be those? And specifically we suppliers pretty environment like for to strong pricing as you around to

Donald Newman

Yes.

Let me question. answer that

wouldn't describe concessions. I as First, them

with terms, it's a we had term, imagine, And And all we basis, customers dynamics. just it's having a those of charge we're it's that discussions. on different our related not that on conversations quarter, a many sorts mix, it some Gautam, this of happened portfolio daily As it's have you robust to took LTAs. can we price,

our Now mean addressing period, giving impact or in with contracts a not mind, the you're -- also contracts, keep current does that but those when customers the sometimes changes detrimented contract future. dealing we're value in and it in can

key of it's the of fact, making improving and When quite contrary is matter long about contracts the run. a amendments talk for always us. to our with terms, intent changing it position the we for As

on as about And -- think strong have the our those our customers. around negative don't won't way strength indicator demand our we so that to would for with share of view say, this, the But specifics our we business a demand conversations. this negotiating or I position position,

see way, see something look an This And a just be it. unique of that charge. it this like expect to because be basis. incorrect anywhere a recurring would in is again the it not we wouldn't at in should would also of this circumstances what you to resulted say way interpret that I Don't on would to charge expect

Gautam Khanna

assumes give just curious are stoppage. update far a you us That's you union helpful know the the no negotiation. an guidance follow-up. quick Absolutely, just I on context. I along And yes. work contract on could how was if

Kimberly Fields

They're and sure. so positive Discussions constructive Yes, began very They are Sure. January. ongoing. in far.

So our we remain employees we're that reach going as confident well as competitiveness. an to agreement rewards maintaining that our

basis. I think a sure on good progressing we're we're all weekly needs. dialogue we're making well. they And so having employees of considering a large group that including the They're that are

fair in an so mentioned. again, well We've I any not not guidance. employees looking And our planned as getting once maintaining with contract as work to for a agreement for our to forward for them competitiveness, anticipating I'm that And stoppage. I'm

Operator

Partners. Richard Seaport Our question next from from Safran is Research

Richard Safran

Kim, I long-term about interested you gains. heard We're right, I you mentioned always agreements. something new customers, share think if new in

related X I things. discuss want to So now

And with long-term think agreements impact utilization? how you new First, to that's new capacity customers? then going

Kimberly Fields

Sure.

summer, the in new commitments. in So billion $X we customer announced

couple haven't a large I yet several We're there making up commitments. From of side. look we lot share was publicly. right half that good on in the continuing orders negotiate. that those can't are are a standpoint, about We've of Think locked this I a now. decade contracts that out because we to nickel are about come There at talked rest in the As that that, through of progress. and details them will predominantly

support the are standpoint, in we to a of really lot that be our commitments conversations to going into XXXXs. to customers back our demand half is are that are around we're A get good of capacity coming. But around position decade with this and today really these what a from as

So around we builds. and capacity growth discussions those are expectations starting

rest every the as past, we're decade, with the we're across customer. for on really I say company. has of said, Pratt, program our So the this grown relationships the RTX industry but good in making each just I progress. I'd not with overall mentioned with

relationships, products to gain So we're again continuing, think, that. our next-generation support I and share, working on to to gain capacity aligned is well

Richard Safran

as Okay. had in a mention was in decline thought On didn't defense, And up a quarter, plate, bit and even follow-up, sequentially, armor to XX% but titanium fourth standout that. you the of a XX% an that related you XQ. I

So now more sustainable for we're maybe here. could of if at a I'm sales you looking run more. rate I this discuss bit a defense thought wondering higher

Kimberly Fields

volatility of depending appreciate administration seeing about ramp where some some And I a some very in fourth that anticipate, partners the bring looking that. asking of agree. a of Yes. are some you and their material increase from the quarter in quarter I of came again, where for I goes, defense. to the you're our space We growth rates. geopolitical good do in did have

As enabled vehicles we the well participation on applications. as have mentioned, as you do ground nuclear

years. say I'd about increasing have possibly in been is Congress those $XXX And talking that are very X the -- of billion so fiscal defense next active. both the spending

participate the of go XX%, and programs, to XX% at are earmarked in it's go paper targeted earmarked that white maybe materials that, over into to programs on in. to look that you When we

our think, they're rearmoring pull and Ukraine, where peace given And So we're volatility I well to that as there geopolitical focus of especially we're really through from strength. the is also seeing around seeing on trade this counterparts, conflict. do strong response the some European in whole Russia

We're So did see XXXX. go that up number as we yes, to X% into we go expecting maybe an see uptick.

So well. additional additional fruition, as without come spending. we're that us to tailwind for would growth this be If an expecting see that to that's were additional to and

Operator

from Phil KeyBanc from Our next Capital question Gibbs Markets. is

Philip Gibbs

some fourth of there Kim making in some and out the the in quarter fourth shipments and Don, quarter dated was going [indiscernible] quarter third of some catch-up any third for revenue the perhaps of quarter with the the up deposit? from

Donald Newman

end So back that, out, were I'm is we of that held that in that going toward hurricanes, had production the some recall, short the one. And shipping the up in did bottlenecks, as challenges QX, of was at so and with we to you We to answer if there we end pointed right? had some of was of release that material things The a see yes. that. right some QX. the take some process like operational saw you due Also,

top So yes, that reasons have a standpoint. bit our you would seen QX. line we the of one benefit It's a from say overperformed some of would I

the to our work customers point out end "Hey, seeing we at in QX as We and that. we ship ready engine of wanted by there element want that I of probably in jet also those very was want take is when $XX are confident, because to material of year. the in $XX think the more some positives end become Magnitude, patterns the more probably supply minus. to stoppage But you the top that that to look performance revenue think was And very about and good, side, so the ramp." into QX, in reflected impending terms say, million $XX million the the And something would of range in -- of reflected for intended see on to our and or We in positive. some Part was that it range, million to see line. revenue to started position or of would inventory plus order like order were our that Boeing QX. patterns started chain ended that's another the we of those that to the in way something moved QX from that

those did some to additional if see the of that you're revenue drop involved you have -- dynamics the than to about the the $X.XXX are of We following heat the some revenues we through. with want think billion in have you favorable of it did revenue. still, off less when bottom But quarter mix took QX they those as line, that

Philip Gibbs

was all talked the assume AA&S million And earnings was rights, to positive $XX that credit impact no earnings would that's correct, the benefit revenue with associated about in you if and or from the all EBITDA that when -- gain one, that? and in it. And what and was I oil gas the

Donald Newman

X we're the the $XX for just make talking had sure components, million, So to so about thing. million same $XX the

the rules part a million the that gas So revenue IRS we updated or tax whatsoever. that credits. any corporate the -- mentioned so to represented it million $XX out-of-period as of above-the-line the That recorded to that related related the a not to of but booked was Then changed and They're level credits would have reduction $XX.X to and gain that of been the credits. in gain, was $XX.X million as recognition their those as their oil as related had revenue, other the recorded million AA&S expense. $XX not at

Philip Gibbs

Okay.

oil that and it the credit the would the $X.X million out million, this gain, is IRS was $XX.X correct? remainder, gas of So of $XX have million been and the

Donald Newman

right? for I $X Yes. And gain, But mean, kind strokes. million. gain oil and quarter, gas You got were and rounding numbers, the was the of some broad of we the gas oil the

example the which about the things assets to selling get was For capital, we get $XX gas year, things of into redeploying capital great a million, are redeployment excited one there the more is activities. are by value-added those rates -- of of about the way, full excited it

number. So -- just but that's side a

Operator

is question from from next BTIG. Our Andre Madrid

Andre Madrid

see. let's Don, Kim,

forward? zirconium there, from China before, China. the tariffs risk? this moving your back supply a comes with relation is we possible? that think of if should ways of some diversify should away with X/X [indiscernible] we or you've think especially roughly Looking that's I seeking of see mean on just about even to actively potential what impact How are anything as you Or I

Kimberly Fields

Yes. you. Thank Yes.

of mixture from couple quite between big but sources. and that from material comes not material a a then quarters, So a it other is China

identified other second material receive. some at program that use especially if and sources So yes, our offset difficult been we we to have so to sources becomes have could that working, on the customer with we the identifying

on think be been our customer working that you how the in position some getting able uptick saw on been continues situation prepared we've you to we've material. Do fourth volatile depending of to this was into I tariffs think quarter tariffs, to paying with and this us evolve.

And that the to thing hedge. third to I'd -- a doing physical say going have continue and been we're is we're we place

of are between kind trade forth back bringing this and ahead China. in We ongoing discussions of us material and

get allow the be continue year. going of the the matter to continue the months and It's will and few to the going stop supply if other -- have would a think sources demand. And us here that just production what we've in into is to things, so would I got to but we won't that. I material, offset we're some many to weren't produce. that doing next it pricing It some it fundamentally, and have impact get or do think, -- it's to in maybe able over any volatility

Andre Madrid

reuse? helpful guess on operations but helpful. there And in it's material, material I to your assume depending would strategic any sticking also Super color. be much How I supply. just color you very able are on material the recycled then

Kimberly Fields

because vary That it something is the is does good that materials. It question pushing. we're across a

in from and materials use a from XX% pretty that the about I'd melting recycle XX% it's recycled the of you in stream we percentage to coming high operations So coming our think back say when titanium particular. or are revert in. anywhere

that something, as on high is in very especially side, because demand. On are well very, we've Prices that high is it pushing today. the hafnium really such zirconium been

manufacturers, working supportive revert and back product been chip So so and put been into it good the develop with we they've that recapture we've that to can stream very of manufacturers and precursors activities. recycle the those

On that, side and there's the say nickel pretty we as high I'd recycled rates on loop. pretty a well, robust blend run

Obviously, it's if best customers. at we adjust with I get one on recycled of and materials. decisions those back and made step to XX% the our could to generally, So for be based to try scrap it, from availability we optimizable XX% make anywhere pricing, our any and products from time

So a as yes, to availability. as both a that well standpoint drive cost though, it is green and footprint and something continuing we're standpoint from

Operator

Tanners is Wolfe from question Research. next from Our Timna

Timna Tanners

was is in about into disruptions. wanted operational solidly mirror, to the one them I ask that trickle but the I QX. know of and going you to identified one was rearview there

that operations keep just you the can running? kind smoothly where any remind also, updated of to are So that And us stands? measures ensuring

Kimberly Fields

sure. Sure, I'll take that one.

Let quarter. face me to end productivity. we X then how the our towards seeing that in address of QX more improve to that question we're parts that give an challenges on operations the and status And and in One the secondly, you continually asked there. reliability just update broadly, the is

the first end that [indiscernible] job to to point, is solutions records. nice [indiscernible] engineered the fully behind your that several are experience of these many place talked us put the the are exceed into some the towards we targets And in operational, issues fact, The resolving did them did But and challenges, melt we recover. today. allowing made shop for And of it to us in team at us [indiscernible]. new I difficult a So about QX, stable. the of quarter post

And nice help to continue a did job until as team at and completed. to there The as but in the is well this is track the to progress we outside -- [indiscernible]. restore and repairs you employees second material And expected, the communicated, us putting those are on completed it. as is be get fix ongoing. flowing is mentioned, that processors It the as targeted flow

back both we So be are in on We're expect continuing that stable. and of the online the still quarter. work second to [indiscernible], to those

standpoint, routine a operations. different The we second the in mentioned, and broad time maintenance about you happens maintenance routine point this areas just around all every from of quarter as thinking how are

ago, part asset about is operating guidance, debottlenecking. priority our as an working a recent and isn't into talked maintenance to and and we one reduce with to remaintenance moment incorporated just this and and oil effective downtime mentioned, us to preventative are going growth, an a sold and issues. And of it here reaction into redeploying invest preventive outages big to reliability, you is the the assets This in programs. to for a be the that gas we those that the and some reliability that with for more Don These team rights, ongoing been some has continuing make redeployment always more are broadly, asset

we solutions, so continuing bit occur. of equipment predict in that in and little prepared issues to seems be And allow talked really artificial and when equipment in my engineered us to about we're drifting invest use as a proactively the see to to technology, intelligence, to then those put automation issues remarks, sensors start when which I they eliminate

the records So a of achieving. great teams there's work. lot that of are some I mentioned the

talking this and think quarter, momentum has is the improve a continuing operationally We've focus. been quarter talking We've get and I do each think I there. job. last about about I will doing debottlenecking. we're been is ongoing an team very say nice And been stable the to reliability

You can see through. of these see start some -- coming to results

Timna Tanners

predict. if Europe tariffs if have do you wanted But great how all all I [indiscernible] Europe, think But and That's and been about any know, wanted been wanted we were to the ask just even It's just there know tariffs would really to talking to also a we've yes. the about with like for on will I you Okay. for Europe I to great. get likelihood thoughts ask quickly. on this lot follow-up. tariffs, has hear. I -- those? to resolved retaliatory a And hard be

Kimberly Fields

take second Well, The to I'll hard is predict. question. likelihood your

is the and some of that discussion some I will our from likelihood there administration be tariffs. think President high.

I I've think he's and right, statements. talked as he's indicated that, seen

way position to here I fruition? the our Mexico. to tariffs implemented in talking he think near to that are what So will they and we good those with with do level? similar at Canada and That's be was come about what partners Will hard predict. in a

We've those dual do incoming in place source we materials, have as and those well. mechanisms as as in pass-through far contracts

things so as well very we again, passing making sure contracts. We as language was it And into inflation our through and capture on that important. building tariffs tariff focused like

did horizon. give things I'll in that our be there. few legal nice department, a job some They a could props the on So coming anticipating

able of think the good a is think the and comment do in we're probably one Russia to the I and so position to make to monitoring be Russia relationship the changing world. between respond situation rest frankly, I am the and I'll And U.S. I that a

this on in I'm the continue So not impacts in but out evolves, going there that that significant we're watch how sorry, decade. dynamic could to quarter. is I see that the another to one depending in impacts But don't XXXX. in further quarter, be

Operator

Scott question Bank. next Deuschle is Our Deutsche from from

Scott Deuschle

XXXX a rate of run level we or for CapEx forward going future elevated the should CapEx the is Don, forward? this pull is

Donald Newman

what rate it. for run had very, communicated what expectation been I we've terms you And very asking appreciate wouldn't question. consistent I We've actually, capital the as investment. of in we the

this going really So couple of a a XXX is year to reflection of things.

year. $XXX all, on of of a part that, still average, million First it's a

we track that added of if for you on a a and matter capital or go to for growth to into of going you're whether million the how we calculate presentation maintenance. reliability the not for commitment fact, $XXX schedule call, see you appendix schedule. we're investment As today's shows deck And that and

per that reiterated in out target we million And put is I our XXXX. in year what first that calculation you'll see $XXX in XXXX.

If and million, -- million. $XXX at it the CapEx, believe, for you that it rolling that that we average I XXXX, show, in look $XXX it schedule average, shows million, since is annual rolling $XXX averages

that going be largely through to and and in sales we So range normally though, we're CapEx. put an mind, going we've Keep in that gross into guidance view and was describe is we lot I returning, value We're late to going it the of that as XXXX within that a investment. the higher of from redeploying uses, would million take what capital that are XXXX. absolutely as we're given. the executed above increase proceeds the do asset $XXX CapEx higher you to

of XX% key it's north XXXX we our the profile, that than investments. but from a is asset higher part those the on it's same sales still were expect so in return of And of part same happened strategy. we kind of been which strategy, see and still the proceeds typically It

holding -- it's together. So we're all

you a range average on something future, that you're as the in look we see you expect should pattern into help? as similar spending for going us past keep Does CapEx the of for around out is So annually. what commitment XXXX, to that

Scott Deuschle

that's engine side, healthier to you're jet jet cycle? growth at on most seeing side? engine Or the of the engine you see of growth balance Kim, great. starting are Yes, is And in the just still wide-body on point jet then, narrow-body a the this

Kimberly Fields

more active the As it's been aisle. I on single about think probably it,

are We for end of are OEMs the starting the to some ramp. at had see wide-body some think I last year. ready engine do We've getting pulls. the conversations

probably keep We we're it's visits the had probably again, have shop lifting rates order the times those But coming. MRO. most around programs And and and pools indications this that signal really I our of on up issues the all year say really as the today business would heard a upgrades when that they've history. increased at predominant seeing you their largest demand lead out it forged for look their the with year, shows over products in backlog is

their and kind I'm to they're demand XX%, a they're forecasting OEMs, talking not with is in of next of XX this sharing certainly MRL, from year, drop, years. that not large the And but as few And XX%. the percentage

I that one wide-bodies being the about committed I'm towards So I that if at step see change being airframer step than I would take those talk placed that expect, speak talking preparing about work for And rate to change. start watching, orders just capacity. and we'll firmly like reserve think I to said, least start rather

Scott Deuschle

Just wide-bodies your get incremental get similar if margins a recovery do for are than it to narrow-body higher engine that is that's pretty jet future? then clarify, sense and trying if engine sales official And you just Okay. Or typically the sales gen to similar? to products? wide-body in margin

Kimberly Fields

single-aisle materials those into go that wide-body but versus -- say would very engines, related I the not engines differentiated. are Yes. maybe wide-body as to

to and margin. slight are would powdered that, lot see margins of were make. that to accretive them is a our And A going so in difficult you're so to an we to . alloys expect see that going to materials be uptick those given

Operator

Our Company. next question is from [indiscernible] Benchmark the from

Unknown Analyst

returning as about is that potential just expand do maybe Ukranian helpful comments what you might headline, are market? the obviously, mentioned, there actually then we any I you conversely, reached? see How scenarios just on you for deal be of the versus Russia, think supply the Can should guess, think in what evolve the that from titanium And minerals exotic of titanium [indiscernible] Russia you will

Kimberly Fields

Yes.

I'd about how the and because lots the say So into react the and normalizing market there's of but players coming European forgings. we're perspective, U.S. rate providing and reacts [indiscernible] titanium the relations how at back from looking and talk and may parts specifically at different monitoring and be VSMPO as our they acceptance their we're it, frankly, relations. of

requalification As be have going I things have are that recognize hearing a time. that relations look these going -- were at operations -- that's once have starting be I to normalized work lead to and expertise that there. we help that what is take be of programs, these there no requalification to lot are there's Even And through. the some I'm this longer and it, going there period to to there's to a going progress, is lead

that a standpoint. And high think for and time do take quality some it's so I and online to meet the reramp going standards back to from come

will to and something to there they're that continues for see I need some do see monitor that qualifications term, I be restarting threat. evolve, do and rapidly short able it's operations I we'll it be start to their XXXX, the significant in think get So requalifying. a and But don't redone. expertise significant that how as to think as

us, benefit very something in source large for the from Russia and mean, as stopped it's I far we yes, the purchasing a was past, As us that there. of for away moved nickel

a the into benefits relationship. quality, past. [indiscernible] there good it materials. market They the And a good So some of a again, be supplier could coming back in and were very was providing high

positive So that could us. a be for

the dual to that thing continuing and to trade a chain, we've as believe, supply do we're So to I the resiliency today that around shared couple I think last look tariffs just times say our I'd mention, sourcing at. built, about it thing of supply have derisk another you and and of do sure can all sources learned you've that uncertainty the I lesson and and changing very making players got chain. nimble a the derisked industry at our times. across you've of the stay that and lesson believe and dual in face recent around I

it source, one. on MPO not as And back sure be I or reliance via any [ see ] so the to any other heavy that going a I'm of industry one

not come by if in because lesson it back what to supply firmly going back I think -- -- don't know it go they in, dynamic the I was not may of us has here learned but I'm that to all chain. may normalize, been it's So the

Unknown Analyst

here. in Got I just one it. And last think one

on like do aero-like what the very cycle just lead markets, the long you markets. those look given times nature Just of

Kimberly Fields

I products, times having lead times needs. come global the strongly about are a would globally. say those to believe are the the market. lead those chip obviously, investments those are specialty especially around very there energy with that of production, electronics very U.S. especially nuclear know X and here most standpoint, high long the a from, across X of to energy resurgence grow, continues kind But in demand there's back of And from of nuclear whole lot data months is I on centers demand I the energy, products, and pretty

there. it's said, great. I very I'm So aero-like growth the about excited

times get be continue capacity, the a We're doing do great working is but to very think I more team job. lead long. to

Operator

Thank Q&A session. you. our This concludes

now So closing I remarks. David for back to will hand

David Weston

feel questions, on and and on you day. out fourth any myself to the with follow-up today much free great a time for Investor Thank your to have ] reach team quarter very our Yes. Clay call. Please [ Relations

Operator

This concludes today's call. joining. for you Thank

disconnect You your lines. may now

ATI (ATI) 4 Feb 252024 Q4 Earnings call transcript