ATI (ATI) 2 Feb 222022 Q4 Earnings call transcript

Good morning. My name is Lauren and I'll be your conference operator today. At this time, I would like to welcome everyone to the ATI Q4 2022 Earnings Call.

All lines have been placed on mute to prevent any background noise. A supplemental slide presentation to accompany the prepared remark can be found on the company's website. there'll question-and-answer remarks, speaker's the be session. a After instructions] [Operator

your like over Vice the At may Investor this to turn would I begin you Tom, the time, call to Tom and FP&A. conference. Relations President, Wright,

and Thank and you. ATI's XXXX in will on and calls. and Don earnings President today's broadcast Newman, welcome CFO. call discussion Vice being Wetherbee, website. Don fourth and and our Board is Chair, quarter on Today's our fourth morning year Good full and Bob key to Participating President are Executive messages. focus Bob CEO; quarter highlights

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

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

Now the Bob. to I'll call turn over

achieved the Thanks, thanks a billion second strong. topped milestone. rate for year We the once ended revenue, revenue, row, quarterly in ended at higher of ATI's $X and Good a we in XX% billion. We That's a morning quarter full joining the XXXX. year us. Tom. $X this run again than

headlines. midpoint our in and on and defence is in out team fourth strength continued key commitments better driven November $X.XX set every aerospace getting guidance. In million. our four the execution markets. meeting one; surpassed day. core $XXX what The and of We're summarized of EBITDA delivered expertly quarter, was our markets. shows our I've our robust adjusted do. executing performance by We're against This we're Adjusted to results. Today it of we we EPS the Headline laser-focused achieving in

Adjusted earnings deeper will ATI $XXX few free of XXX We $X.XX. point per XX% financials XXXX. generated year sales flow. the adjusted in $XXX share was million full dive basis Don a increase into and almost a basis, was over On EBITDA in million or minutes. cash

Headline two.

transformation business we projected. our our the Our It with deliberate optimizing team, delivering comes to discipline. capabilities our and actions and down results are

add color team. me with a starting here Let little our

frontlines began, we X,XXX for the the were war XXXX As on new the hiring of members nearly talent, year. during team

with accelerating. Now we're on in largely our workforce focused place,

is learning curve, team now from up Our and Their to jobs flexibility. grow day. proficiency moving the to job one gain cross-qualifying every quickly multiple productivity

join to say, work To those employees, performing to We look a for our team, your decision entire new X,XXX together forward focused I efforts. and great ATI. you and to hard you made thank

You driving ATI's are success.

to we're increase and capabilities; titanium our velocity. output, efficiency increasing opportunity. two nickel existing inventory it things; comes increase on first, our optimizing up, operational melt, second, When and to footprint focused we're Next to

We're operating to times that few Some specifically. just controlled titanium tragic of a lead XX more supply titanium XX process today. our invasion chain. with Ukraine to to significant on a in product An this grown most color disrupted of ago global of have leads weeks is titanium the weeks, Russia's situation Titanium weeks the has years. disciplined use eight outcome opportunity capacity. structurally entry order quarters from optimal

by plans for our applications quarter, to our defence titanium using and Last XX% we shared near-term melt assets. capacity aerospace increase existing

CapEx that requires baseline. guidance. nominal upward near-term increase over commitments It by increasing contracts, in here based in word less is than capacity, plan XX%, overwhelming XXXX this the revising on the XX%. $XX only not we'll by just we're we're included CapEx, That's million, Now customer which our

was ingots a quickly. the great responding melt first there It melting ago. a We've team the last shop Oregon, see on. restarted is hands Put busy safely and feels It demand output. been a we're my in XX Clearly, week. out responding and is to actually few the growing weeks It's days.

first ramp half and this to the through start year. we'll production in expect half of We from to XXXX second of the that see capacity benefits

On investment of demand. produce long-term this increase brownfield end ATI's to that, further are ability on track the committing XXXX. crucial by capital capacity is milk is ingots meet our provided estimates. previously within investment first of to significant This to well. top long-term Customers titanium of the announced to as capacity It's the to titanium scope brownfield previously

get anyone call these to of but placing likely Those There's people if true soon. for for increasingly orders it, you're for soon. my beyond. are signed this you those to advice and and contracts days, up aren't the very know in people little XXXX capacity and that that's XXXX you to little remaining titanium is about probably unspoken There's very speaking listening some that's

Some of XXXX. early our have customer and started product lines commitments in bookings actually

tight a it's market. So

Full in first furnace rolled anneal specialty Pennsylvania, the This pass. next The optimizes finishing track coils qualification streamline and footprint produce is state-of-the-art our the production and will products bright days. business come nearly after. on capabilities anneal customers footprint provides new operating furnace soon and with sheet XX to flow consolidation our complete. in production Vandergrift, significantly at We're bright transformation to

especially third in defence aerospace My we're and our today; markets, headline performing growing core.

the last well XX to XX% fourth of period to mix and leader an aerospace its same sales, is over our aerospace way. year. attributed points and quarter, increased defence overall the product to repositioning In total Our on defence up

markets we've really Those to you is A&D well way on to create for generate growth compared have earlier. opportunity north XX% offer our XX% made premium of higher go our good In half the and markets. a shareholder reality for and great see I and we clarity, guys to by margins is Why we're with rates The this the great and back and discussed value. ATI cash products shot we've provide important? commoditized and of goal to These factors product continues mix think XXXX. progress

term efforts chain to for This the and jet order were inventory. to We this year-end engine quarter-over-quarter supply near that across noting term. primarily QX. supply airframe increase versus was shutdowns accentuated flat worth the intentional and the reliability industry's the sales recalibrations chain longer control by planned It's to in attribute

strong a first to resume expect quarter. growth in We trend the

climbed our aerospace The of of fourth markets momentum segment, QX increased is and sales over by XX% HPMC XX% the Year-over-year, Total across products sales defence total commercial HPMC enterprise. profitable to driving in prior our the growth aerospace XX%. quarter. sales segment core In comprised in year. HPMC by revenue compared the

The reflects sales versus grew higher the In prior levels. XXX% as over commercial growth expanded margins XXX engine higher as AA&S segment, basis by year. aero products operating operating EBITDA well strong points. jet of next-gen margin sales the

a and increase sales XX% Total sales. along in me, XXXX, a AA&S ongoing QX segment's to points year margins off. total improvement, transformation A&D our by of is full XX% with versus were indication the of over you, improved over basis clear our that that mix revenue. hopefully benefits EBITDA transformation, drove XXX to efficiency This paying

those headwinds our a Headline only general good number business, little get four, our end continues XX% more we're modest of of our AA&S minor The news, transformation, and markets. due and some in to industrial portion to experiencing portion headwinds. impact to construction, smaller. that a recessionary is see mining exposed the segment than softness We

portion much than a past. in the smaller That's

lot near-term there. face our to of uncertainty in Rolled There's Asian continue We a softness business. Precision Strip

business until even signals, we to remain positive What we'll see we're contract trend. modestly levels be see upward say a this at forecasting While I demand current for or ready up. when we can Asian sure, some clear picks

Okay.

on we're into the website. XXXX. XXXX our see prior commercial heading rates. engine industry seen a of in aerospace, XXXX markets and year, in doubled our to These in quick sales XX% from XXXX. significant ramp production review earlier, found we has be an what go most as Let's astounding accompanying the X mentioned decades. sales airframe grew several on slides I ATI's Slide versus jet this the ramp can In

analysts, growth Recovery at airframe commercial call the pleased But market to both the some With we've ATI we'd report for I'm throughout weeks. two in XXXX. has inflection of is looking signals changing. been market indicate recent lagged aerospace point. at catalysts. that's positive engine seen critical watching a We've ahead, to for

been that India that, mega Chinese toward we've December's to side, the awaiting clarity increased demand. future from Add MAX narrow-body a inventory. declaration reducing Authorities step XXX the Aviation big order is On on a fourth January announced week, to approved number MAX is XXX one. MAX the to in return line Everett, Boeing just this service. Washington. in then growth assembly And catalysts, are These

two. Airlines and earlier reinforces The been resurgence on growth than XXXs catalyst, exactly watching second a wide-body on good of XXX even we anticipating, the United order what side. Boeing XXX was production number we've news front signal been little Positive this we've clearly the expected. of for

to We accelerate expect XXXX. ATI product throughout shipments airframe

a term, going new products XX% global spending in In our markets, demand significant level sales record other for for quarter of QX Defence near ATI into vehicles. to core versus growth fourth seeing ATI. armor titanium of the grew opportunities defence, the of In XXXX, continues In create XXXX. we're military like

Navy's by applications. fleets increase and rotorcraft for and support the for sequential carrier driven The shipments was military largely submarine increased accelerated

strong subsectors aircraft. vehicle defence military armor XXXX expect We and well in sales to these be as ground as

sending saw us the Allied the of most think tanks support I Ukraine. Nations news of to

of I defence have of quickly terms think things how one it's in more materials. for demand reminder just escalated

the that demand we're the sustained government. to be signals for multiple based expect that years We on from all getting federal

applications adjacent and we aero-like color markets, core A&D with A This Slide medical our energy, more little We're includes to these on presentation to accompanying too. critical characteristics. growth expertise of our is on electronics. X leverage addition the website. In seeing specialty in these markets, our about

the guidance. walk turn to I'll call Don to and through now over financials

So conclude that I'll Q&A. to into take be back us and after

I'll the QX areas share on our and conference. XXXX the X targets shared year during ATI's of full our results; and outlook; XXXX performance. Thanks Today, two, Bob. on investor updates One, XXXX three, details

with our start Let's QX of highlights performance.

shifting of were QX, our over second noted, Aerospace QX QX with only up quarter with our consecutive billion product we're total track in in XXXX. marked up, on Bob points revenue Not are basis sales up that's of As value-add. to QX from X,XXX revenue. and strategy sales XX% from and in defence mix $X XX%

margin of range. were EPS higher XX.X% margins levels EBITDA compared was sales QX $X.XX, quarter midpoint to XXXX mix, Fourth $X.XX the XX.X% increased cost production Value-add to expansion. percentage the in XXXX. diligent guidance our all than management contributed QX and

I'll performance, the our further As as a into them. takeaways highlight we few see key we dig of

differentiated where in clearly First, we are the are can valued in most. sales numbers, as growing you our see the markets

improving we're profitability. Secondly,

the benefits significantly Our reflects business adjusted transformation. EBITDA of higher our

impact nearly adjusted Full year EBITDA revenue EBITDA XXXX. that increased below on an of to full XXXX Full XX% million year adjusted was from is XXXX $XXX XX% Compared increase million XXXX and million, $XXX year $XXX XXXX, the levels. nearly That's basis reflect XX.X%. focus cost points higher points of continued XXXX. than transformation, and basis better were structural XXX our and mix significant margins These on and price EBITDA XXX reductions improvement. XXXX than improvements

million dampened Those else year-over-year workers. million operating volatility prices, typically $XX margin and zero better and to incentives percentages we since hired little tariff metal efficiencies contributed in revenues trained incentives, to delivered Otherwise, by margin have to gains nearly new the percentage growth, the COVID profits. volume performance metal even Pass-through even way, offset X,XXX due or we in What COVID they helped as in would $XX refunds. increased generate XXXX.

also $XX $X from generation XXXX, adjusted XXXX flow of to million. our million is $X.XX million. compared creation. We higher to of EPS flow is guidance share that $XXX per up than cash XXXX. cash cash In generated value free It $X.XX, XXXX recognize than in our free of was we significantly greater key

Third, working progress managed with creation, value to share capital We at and working I contributors the ended want XX% two CapEx. revenue. on of year to capital

were outperforming hitting hit and improvements. operating and we working the future us the in sooner to be than to capital planned. the liquidity, working additional cash expected amaze, XXXX targeting and continue that our of shared XX% in I quarter, teams XXXX. by benefited XX% target end to low target capital It and for XXs Last XXXX generation The positions expectations

to and signal pull another $XX QX, In into to payments in discipline. forward advanced One to strong When note capital. titanium strict demand. customers comes to production approximately lock of continue This served it QX. nickel XXXX XXXX slots. This on their of working million is we cash maintain more flow made

in expenditures approximately $XXX totalled Capital million XXXX.

expect supply $XXX due We payments. the Even minute. delays chain accrued The items accrued XXXX at million This CapEx million we last we into year-end. to capital equipment will was a roll XXXX timing conference. items target resulting capital to investor $XX also that More of keep CapEx. so, our on in set and in February's for within

net foundation stable in available more highlight which provides million The to balance takeaway out $X.X the of key basis. funded close debt the our million to billion fourth liquidity. ABL sheet. sheet, the with includes facility. under at goal delever value comes now ratio $XXX of year, the of creation. and headway cash balance XX% it Xx was for beginning the X.Xx XXXX on That down XXXX, at a closed to pension, The are $XXX strong on our from great We a GAAP we than When

liability Our broader Increases and million negative asset was XXXX end that XXXX net of company returns by returns. accounts negative $XXX at rates $XXX the discount in the financial down markets. offset at in the contributions, in for in The of reflect What pension asset end drop million, the XX% XXXX. liability? pullback from

want I the returns to clear, discount period can pension remain from be executing glide on we but period, rates Asset and path. focused change to

we Our same, strategy and advancing. the are remains

completion X.X million roughly an we average In for cash share. $XX.XX our million We per of are buyback stock repurchased a $XXX near XXXX, price current shares cost of program. at of

We remaining Board million have on $XX the approved program. current

let's about Now outlook. full talk XXXX year

targets will driven be is on markets. clear a painted picture X of demand of year for and of growth see website. it presentation on captured Bottom our growing markets. another You'll the line robust, Bob XXXX, The Slide there. accompanying our meaningful by strong our

we supply While capturing pricing challenged chain successfully us, XXXX offsetting efficiencies. the impact and in actions, inflation and pass-throughs offset through

While a still slowing the XXXX. inflation and supply seems normalizing, in of chain uncertainty to is is degree expected be

we achieve similar in believe success quick With action, factors. and we well deliberate practiced offsetting negative and can the taking team

not returns the to additional last actuarial The and The the expense benefit pension our That's due in increase which $XX within and XXXX. rates is million to net to contributions in earnings discount include million increase Postretirement asset expense, will XXXX $XX million plan. expense OPEB impact $XX XXXX. changes shared the costs, largely negative estimated will call. in in range

XXXX this As $XX another of XXXX contribution a $XX voluntary matter earlier of fact, in contribution we million on made planned million planned. our as week,

tremendous XXXX, XXX Since have We participants years. and total recent the there on than fewer now progress are in more than declined active plan made XX% participants. pension have

also voluntary transactions contributions executed numerous made have the net liabilities, out annuitization and to worked We plan.

clear objective, impacts. glide a the path pension have to We execute strategy eliminate

Now of share. in what the increased We for postretirement Nonrecurring visibility a in $X to year-over-year. includes XXXX EPS postretirement expense $X.XX growth $X.XX increase. per the of are items range the XXXX expect XXXX expectations can adjusted from EPS EPS in XXXX? That to be and impact impair expense our underlying

and the earnings. Removed from refunds increasing the the equation year-over-year EPS underlying our That's incentives, impacts incremental XX% the of postretirement line the guidance. midpoint expense, XXXX result, of bottom about at COVID is tariff roughly

full we $XXX expect Now million. thinking $XXX between generation? how cash be to year are flow XXXX We about and million free cash

As million $XXX I cash free XXXX. shared, we generated in of

closer prepaying flow $XXX for where million, to of guided. by customers adjust roughly for forward free Now production the $XX cash pulled XXXX That previously cash slots. to brings our million we

Now impact XXXX. of the think about

than midpoint range million present remove cash been guidance. XXXX let's Our the you free flow consider impact is $XX higher free the once have cash than growth. the understand of QX. to the XXXX higher the would in Again, of noise prepayments essentially customer at flow underlying the XX% XXXX

XXXX, cash working expect saw That or be in million is $XXX to level. solid magnitude target our from of We to impact make take. XXXX, In Overall, improving we managed expect working managed cash XXXX, on capital dynamic XX% XX% we in a similar overall growth capital hitting progress our working to period. XXXX. working the during efficiencies use made a improvement in give capital capital incremental we

of XXXX in $XXX million the below over to at the range including $XX We the we The still high $XXX placeholder million CapEx capital is XXXX. XXXX conference. expenditures shared from million, investor into of range be anticipate million carried will end our our $XXX

managing condition. spend assets are our ready are carefully We ensure capital ramp maintenance in to

melt largely target capital we XX% want reminder, I brownfield includes as from is this CapEx growth production And contracts. do of existing project the committed that returns XX% under titanium incremental to projects. greater reinforce on assets. a or and existing for XXXX Our increase expansion capacity

talk Let's QX. about

we the consumer in and core in markets first quarter, continued softness demand. see strength industrial our For continued and

Our QX exist COVID-related impacted Those could business be into to Rolled Asian Asian as continue by well. challenges. Precision likely for Strip conditions business will the

It levels. is expense important create additional to remember postretirement that earlier XXXX roughly quarter the incremental relative to I $X.XX will of mentioned XXXX each in expense

$X.XX range $X.XX EPS share. the QX in to expect We of to be per

Excluding incremental than postretirement expense, is modestly the QX EPS benefit the range XXXX. better

the in unfolds, recovery expected obviously Precision year and business Rolled is in growth, Performance Asian second capacity ramp our continued added reflecting half. sales as to the Strip

into context levels. customers. price pass-throughs outlook, let go related extended from XXXX XXXX prices to to Metal generally some I the in you me Before give increased metal

year Remember, jump end million generate that we full estimate that at between outlook. annual margin to investor to XXXX. XXXX dilutive revenue In X% minimal and rate our million XXXX are shared billion to $X.XX into percentages. grow over revenue helpful conference, compound a bring our pass-through would our overall represented pass-through be XX% from the We top might as That typically XXXX I $XXX thought expected $XXX levels. revenues now XXXX at of range. XXXX the to of profits we we see generally revenues to and

range. top in pricing positive Last continued markets, I many quarter, key to expected added indicators be see end end including that of in we shared strength at and CAGR business, opportunities that We the our our capacity.

on this growth targets, will from we update XXXX seen XXXX share for result a XXXX assumes $X.X growth will upside of that the prices, revenue CAGR XX% save you moderated a period. metal that levels not levels going roughly our I can we I are XX% in potential, the foresee to elevated potential that While the to Note additional that XXXX math we've lately. the not billion. CAGR to

XX% Our XXXX remain margin XX%. at percentage targets to

with and/or materials The defence, XXXX, its in well expand day. current growth levels. we'll ultra-performance and that are Benefits as These another improved but of as growth ongoing our should energy, higher should mix sales be well volumes as aerospace drive for well. to and ramp save discussion beyond alloys transformation from advanced percentages forces expected margin accretive

opportunity growth trajectory, with see shareholders. capital Given allocation, we significant value our for create coupled our disciplined to

back over turn And call with the that, I to Bob. will

agree I in with Thanks, well a completely of they to well XXXX opportunity Don. for on as as the get year fact were as positioned of us. that's ATI significant front you preparation the growth go and it.

Our strategic orders, faster a day at work. every efforts in across capabilities us markets, in already with increasing put and strong running and ATI. capacity position team equipment, the The hard ready;

We're momentum. Now meet on our our and produced team we're the We're them. more of forward our specifically, targets. of XXXX exceed to that building We're More extremely proud looking results. accelerating proud come. to even I'm XXXX to

perform. proven are We to

first for Operator, we're ready the question.

[Operator first from comes Instructions] Global. question Safran Our Seaport from Richard

gathering margins. time not going said, based be and 'XX. Bob, correct And in wanted to how Don, impact get 'XX, continue be also we may if alloy some is forward. going a be accretive going to that what looks to on sales right? if what the this are remarks, on going like of to to me as it I and affect wondering for Is look titanium opening sense I'm in if trying as well. titanium you and your I'm mix you follow your margins wrong, to I'm up I'm to from

mix, to and unfold our Yes, And would in be Yes, far XXXX accretive build we Don. timing we're you now and will short to to as as answer. this it seeing continue titanium through that XXXX. increases expect our momentum the goes, it margins. as I'll give is

since and might compare IP, defence, longer the your you selling bit going And margins comments margins. the if and take own And defence how wanted you view a could that think impact on how you your here, defence on growth, I that's thinking to materials, with you're about second know reshape where to I'm wondering about how portfolio little just you're commercial mix.

take I'll Yes. A couple one first. questions the of last in there.

margins metal But same to exotic the they'll think because tends commercial defence manage I will more titanium time, margins the common capacity. going and aerospace grades the the for approach nickel our that's in differentiation over over some grades. think aero units of same specifications, time, commercial how more to for be I we're basic about have

In ground and terms going and fleets, about are feel what's than long-term We in of to the the benefiting, submarine benefits those excited naval carriers, we're vehicle with we of see defence the opportunities, other on sales. tragedy well program, positioned expect the ACAS driving programs. we huge in that's are Ukraine

Certainly, the for Firepower Abrams heavy We've that. gotten next-generation more exciting see of Mobile the titanium Protected out the things, that's all awards some about tank including military vehicles from there. and user excited and reasons, that's vehicles, We're We lightweight then activity those is a coming. kinds space.

we We commercial put kind up versus a of between crosses of space lifetime little picking defence the right? what but and defence, term, see in and longer is we opportunities over in commercial bit our hypersonics, in but kind really defence see space

those bring you term that put long it's mid-teens end kind materials and the So of things to on for product. value a the differentiated based growth really double-digit again, together, all

the platforms bottom that positioned that I -- and Richard? well So and we line, for lots hope does help, mission-critical of U.S. feel all.

does. it Of course, Appreciate it.

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

XX% because Is brownfield I this involve XX% remember that brownfield mentioned Does XX%. had the couple ago. debottlenecking, a you was rescoping the titanium from months of the

this moving Or to is XX%? staying is So at XX%? this

It's additive mix. to the total

change expect not the to get out what we of investment. does brownfield it So

is total our XX%. is you're actually So to capacity up -- going to closer right,

math You right. did the

on the order-wise big. going are be it. lead items So we're books excited about to time long really The it's that

exciting is to ramp them, is there short-term that week, were we our from We're the so to out pretty customer strong, underway. XX% last on demand the we strong why commitments capacity raised has which see hands the really or been and and the it's demand been the actually put XX%. happy the have number And

added is capacity you customer commitments. all supported this by And feel

seeing about to We moving from been what it's a have the talk we're the and lot And commit commitments to it phase in those on market. based do. the of it made

think interest it. I and market, the show lead and out reality to is demand the last to our days, we're XXXX lots seeing times the stretching probably coming of XX the in of are

simple customers So We many answer committed yes. and feel the committing cases, are capacity. is the have in the to

Do quarter those million you've that it cash next was year? you these million like tailwind now, of fourth a as that $XX in involve some mentioned? is commitments the prepayments sounded So to it $XX million those $XX against headwind become ship a

wouldn't it I call a headwind.

give have you to Do it back?

I it, flow reality at willing The as are expected way that have is, that the is QX. is what's prepayments order is the the we been into cash Phil Well, one, look demand would strong market. those reserve customers accelerated to how in to slots. the happened in number has their that to in hit would make that's XXXX indicator to

our flow us that million. at for necessarily a Clearly, for midpoint in by when the didn't $XX that XXXX, cash look look We take set don't at respect down excuse me, creating XXXX. we guidance Now you divot as at XXX. we

blip. way the the strong XXx said takeaway that, I that our payments advanced on demand, not at those it demand it strongest which can in -- make already the that look you and We that's keep. truly the we a call, is are but and again, this think is customers, So to

from need seeing to and are materials, here. it's our customers a going sustained for Our increase

JPMorgan. Seth is question next Seifman from Our from

how start in asking asking HPMC. the about start I off about profitability drop-through off should want think we to XXXX. And the in

'XX year Some How and of looked low moving mid-XXs that in expected whether think progression, quarters to across we more little last quarter years. kind weighted XX% to XXXX. or it's than were to from the kind back-end others out bit the stronger even in lighter that this a of than about the

Yes.

with headwinds. some north the note what of easiest to did additional margins XXXX, in I forward incremental expense XX%, about We think is intact. $XX is still I talked that's expect shared. about the to that, we've it going of We is, think I've million create that way that postretirement going earnings think

also margins. specific, roughly the is to The basis for up more overall than will that due to good It for to HPMC is bit point the overall not to the news for headwind that dilutive XX margins This going business. make basis we're point the a postretirement. XX but

you that business. seeing more the think next-gen about strong are that Now and in The we is as growth products changing get more sold. HPMC, there's mix when we're of being that

So see I expansion -- that believe the ourselves kind margins in said time of on think into still range that our frame. we expect about expect you I in that track should mid-XXs, which we low the to kind to see talked HPMC for continued XX conference, investor we of to in accomplish and

guess, should moving think of it then XXXX or extent the on where of airframe And more a I the it's Excellent. but you Okay. we XXX, main you to in at now and seeing? the the demand coming growth -- place you're be on about are broad-based, can in other And the for a you we driver guess, that touch talked Or And much is more growth most I guess -- little toward the about should think that I higher -- on side. catalysts AA&S? that on rates, is about increased titanium, then more we broad-based? think coming drivers? the Boeing the incremental bit titanium

couple of a there, questions Seth. Yes, in

question. I think the

The near-term first was impact. titanium one around

while a from go first final half, we're half. be it to the the ramping to here melt in in little product takes So and up to back going

Don line you. get revenue from additional estimate good would So is melt from a top for of XXXX there million, this that line out million perspective, $XX $XX we'd in probably a expect let me top

for XX-XX X. the second in I part. think the AA&S between and clearly, half, asked It's half, the then second HPMC, most XX in you could be it titanium And probably about yes, the

So it of lot can ways. different go a

if comfortable feel you're So modeling it, I the segments. X XX-XX between

that set of think I the first was questions.

reapportionments was resort I done principal what still the from titanium the we're say they're XXX not their hard People flowing to around demand. share want. get would And is supply with and they chain from reaffirmed Russia, working part that up for material issue sources. have second The prior the or

VSMPO guys a integrated And very is business. are alternative the the remember You so not integrated.

still chain. there's think, in I supply to lot done, be So a that work of

of So for venture we took little speak did It still that. But our just continuing. customers. from while obviously our we're we part to I exited customers. Russian the can't for with joint seeing our us it and a exit that

that. do So it's they unusual not would that

more The OEM on widebodies certainly, in terms more has repositioned agnostic wide-body our the been phenomenon has them good. we're benefiting from relationship there. term wide-body in shortfall, been the in which general, we're to with and Europe's Airbus as we've of the the been supplying. U.S. that and our we're good And but the in mix short

probably that I see see. wide-body coming XXXX I I time then ways And catalyst demand, quickly, very, the is, that times the long frame of we're is stuff. XXX that the the enters know into general, say it's lead So would very I yes, some service. chains. think I in But think before verge on it a to in realignment given of we catalyst early supply think XX starting of that

conservative we about by And are the across general. XXX our when excited looking bodies bodies, little XX those in more pretty we're guidance widebody did of board than a thought. estimates guidance we our So XXXX long-term narrow wide on XXXX,

coming all excited So about we're pretty catalysts together. the

Khanna Gautam Cowen. from question comes next from Our

wanted ask last so how How about you quoting right has airframe to times X products, jet aerospace And are various guys your on over engines? the you that changed I months? out far now. lead

Yes.

from a the kind question, done team us the aligning but a pandemic key good still distributors gone the part, are COVID job OEM shift more of as that's for distributors, So was a months, key so excellent part, demand. important last thing on they're six of closely an with during has one

So we and getting as our are direct percentage aerospace signals in few of defence. than a more a mix

commitments. commit order their path, some so to They have positive. it and of visibility, do make flow not, or get and are today, would believe pipeline. been we to program on XXXX, the they that So that's a fairly have part sure into customers entry and they those say, QX the depending controlled of kind I want orders products against willing

XXXX. more of still in you fast. slots those could some are get type I flat milk products Now would of things say titanium the QX But going probably

then early that But general So North QX out products Carolina melting around. I'll come mill specialized our probably into the not XXXX, and XXXX. alloy let of of more if -- XXXX

and gone. where So was the could X and were bid and XXXX, in in where that and days it, those know X weeks, order XXXX, obviously we I quarter X X we place X quarters you were right? was X ago, -- ago? ago, that So an are months to quarters

yes, I time say depending So weeks would really the XX, product. lead XX is on the average XX,

Wow.

over coming like curious any long-term any it -- way? Okay. do that even for have this as just they meaningful good renewal year? LTAs Is pricing in for guys how for you up sounds move like renewal. higher, I'm contracts And a environment And next the on pricing come is to

I yes, in major -- don't XXXX. believe layered any ones kind don't are we have We have in. They of any

XXXX, most out, transition to Most the those probably to of the that XXXX year pricing few of have those have and other of big are numbers we major OEMs first So kinds pass-throughs. will go XXXX, inflationary or quite contracts. XXXX, be XXXX, a

have is And market people up or market. it's have relationships, for in the who price. the say significantly would contractual don't spot I commitments don't long-term pricing

advantage So that of we're taking opportunity.

well I there the pricing as on So pass-through think opportunities demand. both raw fundamental just are material as

Yes.

has Where one, up urgently? Okay. from besides guys? just other more supply the want with and little go ahead moved opportunity. you to a lock who OEMs Boeing -- Have on And last Airbus heard you VSMPO

XXX of great in Yes. a been final have to this of moment celebration history enjoying I and week delivered. in being proud was Seattle was that. part It great a earlier

I think moving -- I are do think all the OEMs urgency. with

think I recovery the widebody board the is driving across that.

important It's specifications. I a stuff have as chain, issue. But think we'll complex fine. supply and as buy is months, very I be redirecting, yes, started. do complex over over complex they think last think Oh, here just I everything a to this and the going it's X simple not It's

really lot been call a from advantage it. I lot for talked take demand, I've a great clarity a more to of about customers in to with We urgency. Officer, and and to that's get on to go. And of they're urgency talking a a Anytime a able on there's of Chief get be it, but our I Fields. a to trying Kim position it along customers Operating working basis, There's everywhere we're reason with phone customer regular

Our next question is from David Strauss from Barclays.

Is for in guidance your there any capital assumed deployment XXXX?

when could you capital specific? deployment, you be David, say So more

in cash buyback, or share debt anything the you to Yes. assumed paydown I -- gave? guidance returning or guess,

Yes.

One, So say couple in to We've about X and would elements I come for CapEx. guide so us, our when deployment, at that there's the a leg we mind. million capital CapEx the what for One have on stool. X to is we million would to second talked focused is I things of growth. of stool of XXXX about primarily there's $XXX that that course, us, delevering highlight. think kind legs investing That's, on about and then to that $XXX is

to This and plan. We One contributions making and that this contribution. we're have foremost, is the contribution week. a the year, pension we made first pension million earlier actually $XX voluntary

that is for So XXXX. the of out way

We to in imminent have really other have And we we don't to with. debt that we're for maturities contribution any then planned $XX XXXX. another going actions, of deal have have million debt terms that

capital We've $XXX extraordinarily shares. our any required So of is left And bank we that. program. to million plan of shareholders. And third got XXXX, or are don't XXXX, repurchased million out $XX planned. to there's then important -- returning comes it me, that leg, repayments that that to $XXX the That's is excuse on take anything million to of debt term like sort. no when about or nothing loans anything of ABL us. course, we I In

put in unfolds. So generate program healthy up going we'll our the a of very that as of be very, And early to to share finish continue repurchase a to expectation capital shareholders flow work amount continues to cash that to will XXXX. is it we're expecting aero then, course, and feature. a ramp And we're be and so that going returning money that we're to important thing us, to

repurchases after the timing the wouldn't beyond of we anything into fact the So share read because program, the at approved that existing an that existing not remainder this board program. of hope finish I point, helps. I of additional but approval be the would up has

Yes, sure. question then conversion. a on And longer-term free cash flow

around XX% you're somewhere EBITDA. cash looks So so, net income or XXXX, like on conversion in XX% XX% to the targeting close on -- probably free flow

XXXX, before blocks target is where are around of free somewhere looks $XXX conversion, like think million, -- flow targeting cash so, building flow you've talked it you're EBITDA. free the What there? cash XX% out the or I $XXX million in about some million $XXX maybe

Yes.

So to on touch I'm happy that.

math right, way. by Your the is

last cash the ground the over And conversion of a and XX%. the than everything But starts -- of conversion, going of couple is, our do generation into take range is on in by course, greater years. to cash cash XXXX XX% profitability. in stake significant you and in you what's you with back happen that If that we're We've way, right guidance cash improvement, EPS metric the now. made

in increased efficiency and to working a capital. our is key managed Our expected significantly. the profitability going is -- That's to part. increase We're play unlocking has

that XX%. when in that So progress improve efficiency. working continue in our to make at we hit capital to XXXX a going on target huge We're step already and

to Another spending. is be important part of it capital CapEx, going

and still a spend is million. at I $XXX XXXX, as between time million. probably $XXX rate down. get to and depreciation million to that point the be And close expect at depreciation our shared rate to will by expect And somewhere be going our I would XXXX, and And edge capital our we what spending our holds $XXX between I what CapEx about year, capital to so is of midpoint our this spending you now previously look range has

that's well. So as helpful

those blocks some expect, that be way, conversion going all which to comes when building I cash taxpayer, so to the to be least when this cash cash helpful frame, of metric. the at XXXX improving -- expect And in it we're period still time out that also to is the in are a by I conversion. limited in

Timna Wolfe from from Research. Our final question is Tanners

talked question is we aerospace first defence. a The about really -- lot and

markets. end deemphasized. the probe you they're constructive specialty on of So some sound more should I other know positive on just I the we But energy. side,

So you've wondering little IRA a any benefit the that for color and and if of quantified just on timing. more

the hearing from on your with more what then contrast industrial cautious And we're others. headwinds side,

Why and I'd be on Why helpful. to HX? for So the you're earlier? color HX love That that recovering. more confident get a demand not timing why little in really China would

or you that take me Do you in lot the one. Don a to on first China, There's one, the want right. want All to do.

do it. happy No, I'm to Sure.

as the more far is of there's The significantly. COVID. As downside restrictions, off course, China the headwinds, have fallen

creating And in that that more in headwinds in kind seeing seen so latter China seeing those circumstance. and saw COVID our We're QX. we're that business what we a and -- in broad cases we are actual the have of

QX. in think a of down I we've a step seen early bit

be that headwind current it's based We're first that is go going away. pace expectations to of our with upon And to things, half. -- the we'd us just like see in the

than it's going first trajectory, to the that. But half. and cases we And is that an sense tell abundance our COVID you I in our recover is for it the could business the we're roll. ready be quicker the how much Now business us view take caution planning. can to of

That's right.

That's I want line. thing is it see think we the it. before the bottom to we forecast

there's Let's years. see market because it last lot a materialized ups of that downs of over the been in couple and

Timna, gas in I think your other question, around and particular. oil and was energy

come think things, and and various subsea systems. growing alloy I clad, systems, offshore with or Nickel That's subsea things the specialty for yes, deepwater see strength specialty, oil the and energy, we we gas strong. the continues see specialty back to side the subsea, the definitely

continue lots specialty in activity the civilian technologies, actually in We back. side, next-generation see coming to is of nuclear

gas I coal we've terms a fuel those say, we market how in although bit to of And history price Asia. plants of little pretty goes long nickel kind down with applications. with would and optimistic they purchase. want in desulfurization about up the of that a feel So had And

about sure asked timing. and bottom you candid, we double-digit But through are States. and actually high XXXX I reduction good specialty we those say, serving. about the we're digits, is it low haven't see it of an came. upside To outside A kind we That lot the come growth factored inflation growth, opportunities will to markets that line pretty for act feel United be with single impact the energy markets would in. would of be if not I'm continued

So impact probably us. a not for big such

if could I Okay. And sneak more one in.

what prices, mentioned means sourcing. couple material if that exploded. can explain know Does talked of is I anymore ongoing you? times You a that matter even restoring you've outlook lines, the and and little in just moly past, same the about for slides molybdenum more I or from a the trends wonder in benefits those you along

right. All

the X a in That's molybdenum, we Timna, pass-through, not There's through Let's I pretty risk. and about see. there, you're today. getting think to care work On take that with pass like material couple it good. we molybdenum. always hard But

up. goes and team think kind done good always I what has the of in an of issue But a of it's fast terms job pattern how that. it

So that's kind of number one.

was your second around reshoring. think question I

first obvious the aerospace. and is one So in commercial

common the purchases. years, but say China, Second and other were I we less had like places commodity, various more last that purchases obvious seen material we're moving one to Russia, medical wouldn't space in few sources. over standard the is more

that and the positive think That's of the go to there's go a particular activity Obviously, lot we building provide I of see the actually huge us. chip space. that been also supply -- some of think materials lately, surety of into the in interested in a manufacturing. is supply you're Phoenix into reshoring. activity you that I have specific chain for electronics manufacturing We're the precursors been if seeing surety you'll if And it's quality. chain, some the chip

think electronics I X So those are examples. good between other probably medical, and

we materials come another, alloyed in everything one do the think all brought out input we growing is a of sensitivity ingredients I alloying or supply chains shape historically And lot then And materials work the has -- make near-term China. world. those from form to that over and of of

of been focus or reshore you do shore near those we've how kind things. really some So on to of able

some on. a hopefully, So else of good to couple going examples where that's give you color that's on

hand remarks. is And I now Wright Thank now you. session. For Q&A closing the That end of to back over Tom will the

joining replay will of A our us be on earnings quarter Thank website. the call fourth call. for ATI concludes This you available this today.

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

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