ATI (ATI) 6 Aug 242024 Q2 Earnings call transcript

Hello, everyone, and welcome to the ATI Second Quarter 2024 Results Conference Call. My name is Seb, and I'll be the operator for your call today. [Operator Instructions] I will now hand the floor over to David Weston, Vice President of Investor Relations to begin the call. Please go ahead.

Thank you. to Quarter welcome Earnings and morning, ATI's XXXX Second Call. Good at is being discussion atimaterials.com. webcast Today's online Participating in and to results Newman, today's call Vice are second from Executive Kim quarter our Fields, and President President CEO; Don share and CFO. key points

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

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

Now the I'll to Kim. turn over call

Thanks, Dave. Good morning, everyone.

represent performance. three execution Let's strong another dive in. What me are here quarter and ATI's key most, highlights. the results quarter excites of second

reached in increase XX% growth. highest categories. revenue strategic revenue a First, our reflecting in their sales billion, Nearly sequential decade. Quarterly aero-like $X.X and level nearly A&D

most A&D expansion. percent. In guidance hit XX% range. track valued. EBITDA end our revenues mix differentiation strong our Adjusted markets at XX-plus third, $XXX EPS in of mix putting aero-like of came target and toward XX% where is our strategic of on A&D quarter, this our sales comes guidance, results. total, upper our the $X.XX of end us Second, financial markets, high the adjusted at And of revenues and A&D our million, up from exceeding made

Let three points. main these So to what is me break results? down it driving

position of commitments visits are the in and And premiums opens Customers the available has up. that in nickel, our and discussions preferred added decade the capital demand broadened facing parts rest products Interest increasingly the secure need slot when line. available while of Farnborough clear. they it for XXXXs. about customers To Air still why for with about At this shop for near-term Show, for multiple First, supplies to their and offering it's investing? beyond looking historic We're their titanium wide-body they are ramp any levels spare capacity. investing high for surging was currently They're demand. guarantee into supporting demand. the

announced products we for also million add jet commitments $X not engines. July, surpassing but support $XXX billion, incremental and targets late primarily sales year high-value new XXXX commitments per annual revenue. for In only in our XXXX nickel financial approximately These

far succeed. supplier sustained demand as of confidence Some our them in engine XXXX, customers' as to jet help these a is ATI extend long-term commitments reflecting and

one as we and executing team, are Second, ATI delivering.

clearly is specialty Our million, quarter, second strategy XX% paying to $XXX sequentially by market off. In engines grew ATI's nickel. over the end largest jet driven

quarterly the production challenges resolve recent last Titanium more through and industry increase planned XX% reaffirmed ATI more beyond. the this to a cycle, XXXX than As and most That's reporting quarter as million. year. their increased all-time for in over OEMs high and for follow revenue another airframe $XXX will growth sequentially its increases XX%

done And to Rolled the off. second that to Their Specialty a products work military ground to the paying work team by I'd led a capacity sales titanium sequentially and strong for Our exotic continued key expanded used demand success. factor plate this rose demand increased melt Defense is in X% in is vehicles. here, recognize tremendous take for for titanium position. alloys they've like hard armor earn

see prior demand turbines building energy gas nuclear up versus and consumption. increased electricity XX% quarter. Specialty We for was the for

well the confident future. this We expect positioned market third, sustained global possible. more we're and demand And upside end as future the for for in foreseeable

melt across flow to our We system are costs, optimizing and debottleneck ship. productivity our operations reduce path, from to drive

year. optimizing nickel demonstrates benefits these to [ One year, ATI melt turnaround actions have integrated approach. the see implementing results Since hard significantly takes from plans to optimize of the specialty on of chemical increased times, to great and together focus work, expect ] work, customers' a and end pride serve of we we materials strength lot represent the job being flowing and last to the faster, It's by our output. increasing the team. business the great see melt Our towards able production experts These our units of across standard collaborating improving throughput needs. Great team to the in work

me? important adjusted that price. and optimizing seeing future. of impact the second in capturing reflecting the on both mix AA&S, sequentially we products Overall, In tougher telling revenues are this HPMC, level volumes. segments. X% of Rolled the are impacts XX% product we achieved Specialty quarter, shipment in for the the of the effectively In EBITDA grew success We over well now margins We're equally What's and positioned transformation.

hand to with And over that, I'll it Don.

some financial benefits Thanks, Kim. through really sustained about line. shared is strategy, me our of and walk What QX of then related QX seeing headlines bottom add results. some the you operating strikes outlook. color improvements to Kim delivered the to our and our I'll demand

than Both toward aerospace in in improvement sequential of and aero-like of revenue, mix increasing contributed sales overall A&D track first XX% totaled Drilling and airframe. our target is the XX% margin in quarter. our were segments mix Putting The highlighting engine end That's the and to those A&D growth markets. in, XX% more us XX%. our jet and QX area growth year-over-year on our markets QX of defense XX% expansion. in core growth revenue XX% in sequentially.

also The A&D line, improvement segment so, of revenue sales line to AA&S. AA&S level record From XX% XX% the the continuing segment segment quarter QX may perspective, which and total but its Aero-like thanks bottom total engine in markets. mix mechanisms. Jet growth. for were growth upward created That's a movement. quarter experienced period, XX% by in X% and sequentially of sales Metal our of year-over-year. movements QX Aero-like revenue a HPMC affect of sales pass-through year-over-year for grew saw given representing XX% revenue. sequentially. defense mix of led A&D second A&D revenue grew derisking top XX% headwinds and XX% our overall a with from AA&S airframe. less in for A&D X% in XX% and HPMC segment QX, accounted the X% that for We That ATI, growth masked underlying for in

EBITDA of margin XX.X% threshold operational largely increased improved margins mix the were an improvements. Overall largely XXX on the segment basis adjusted to above Adjusted to HPMC XXX points and XX% mix. due back and QX That's in EBITDA sequentially points from of increase basis XXXX.

margins is inefficiencies new incurred XXX We debottleneck our our employees. are expert team and assets. being XX% while strategy have than of trained production to our existing of hourly members reflects workers those hired the more This year-to-date. QX HPMC part segment in by leverage

production. leveraged also That the incremental have short to brings term in firms We accelerate cost. third-party staffing

second HPMC were experience. mix, the employees the margins XX.X% half in better sales. AA&S year the largely reflecting increased of increase in strong become progressively gain second and A&D margins production through will the new as quarter will titanium

As historical in stable first It's Cash improve. cash is expected, to months operating cycle. certain second continues from remained XXXX. also our Cash of an the an $XXX activities six by the industrial markets improvement million positive provided generation improvement That's over quarter. of year-to-date.

reduced flow and We improve more billion We with delivered With are to pleased We year. leverage. QX lies believe in production this opportunity liquidity as cash trending $XXX inventory positive ahead stronger improved $X than almost second total more cash cash continue liquidity, lean this comes generation flows. the and free the million cycles on and closed quarter in of hand. cash our we with out including

cash second generation. quarter in with decreased the net that to ratio Our debt continue will a profitability trend increasing and X.Xx, our

look while the cash second share guidance holding ranges Now our free guidance ahead midpoint flow our range. half of let's EBITDA to for the year. full We're the of and year earnings per adjusted raising

diversity markets. making in [ and and our efforts. We the ] of in year. in on strengthened expect growth second debottlenecking see and ongoing enduring base This We're we have drives our the aero-like meaningful expanding defense half in growing progress the jet to demand output

we adjusted the be per $XXX range EBITDA EPS estimate estimate $XXX year, adjusted the will of We $X.XX in in range million full will For be share. year $X.XX to million. full to the of

ranges $XXX cash with to capital increase We million at of for million. in million free cash metric. year-over-year CapEx this and are midpoint free important an expenditures $XXX our $XXX cash between $XXX The free full year to the estimated XX% flow maintaining represents flow million flow and range

QX HPMC margins QX to level, will from expand AA&S will QX overall QX EBITDA margins insight remain XXXX. and QX longer-term growth. increasing XXXX XX% potential core and our growth. into view. The performance. segment For and anticipate again from as reach to QX guidance demand to XX% production year-end. We support and by and growth EBITDA levels another quarter increase we how the estimate balance in half to our and $X.XX sequentially and second the On million. we year for of the million adjusted confident third QX a quarter, our remain EPS be We on profitability the the range A&D will in full targets. the increased the share in to margins per $XXX adjusted We and markets XXXX of in $XXX mid-teens clear provide near-term sequential view outlook between ATI in reflected in will of Ongoing $X.XX see adjusted robust

things In targets, terms keep of two those XXXX and XXXX in mind.

revenue sales $X.X with include commitments $XXX announced EBITDA. along million in not That new First, incremental related was our the reflected recently roughly billion $XXX annual in targets. in million

deployed to Second, reached throughput $X.X lead with times. quarter. our billion newly backlog capabilities increased this even and Backlog our grow, continues reducing

XX% forgings. second the a Importantly, up backlog HPMC, in in X% including increase in quarter is

transformation cash intended. growth, disciplined and driven margins, strategy are value That's performance and deployment. robust and capital by expanding Our delivering the generation creation

to Our on a of forward and for lot upside beyond with trajectory XXXX to. track remains look

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

Don. Thanks,

addition for well specialty to the three wide-body exceeding results power our our aerospace one, demand in our Our particularly meeting our and positioned where we're our down approaching. and ramp the titanium; third, underscores are leadership performance today most. and and comes Today's for differentiated strong reflect strategy and commitments; that's nickel two, in valued defense things: to disciplined customer products, execution, the fast materials of

every And to go like they're challenging today Thank the work. close commitment quality Their for pushing, it back employee a hard work The you innovating reported producing possible, quo. foundation are of by again. what's and delivering their to our with results exceptional and They're I'd what we discovering status always to culture day, injury are we and to zero they the the work. then the on your products hard focus do every thanks recognizing possible, perseverance. team's highest do.

indeed are perform. proven We to

let's the that, line your open With questions. for

Seth at question Seifman first Our Instructions] JPMorgan. comes [Operator from

I wanted to ask.

new it's ramp-up You that of and titanium, online. all guys clear spoke coming the in about is your capacity

We potential down. do parts slowing quarter, we delays think other there production ramp though, availability know one of about the supply the suppliers people of other During we about think things impact widebody you made of about When how in interiors. the there, other terms your are heard ramp on titanium from on chain? the by some XXX the in going like

a going answering Don. this I'm is to Seth, So question. take shot at your

all, business from steps to significant the see some orders. But in business you're and through that an in that things. of of risks some of a slot. purposeful it up, in our a says, very have well Number good to markets some do slot a we what when one, aero-like. or in think, continuing I demand aerospace typically job of of I like we've And see "Hey, business our a and customer that seen key because as indicates around on to as couple to we we've defense that our that indicates of also we demand done, First other comes scattered And terms our pushouts broad-based take that business, tied derisks our talking and if standpoint opens about. demand, want items the diversifying are the it

engine us looks upon or being with manufacturers. that a all meaningful what particular to single-threaded And we example, have we've airframer, for is major from got the more dependent of like now diversified away business

business of quite gives well. our or you when confidence I XXXX. that's whether it's supporting think It about XXXX So lot outlook, XXXX, us a our also think

seeing we're So something basis. what a that share to current that's I would regard in on

the then just follow-up a maybe side. And on engine

the time productive. of But there of You new the progression of side half maybe think progression announced we'll from frame in kind period. talk mid-single-digit about about and kind about your you more of rates second assume of as up work maybe the When the new this could pace planning of growth talk the business we just engine Farnborough. if spoke that that at the see on improvement become to you and employees business, you I ramps about over pickup start the the course there. as the kind

we some conversations all, see certainly our it on that just And continuing signals. these are jet basis. to at So it. strong customers wasn't the first -- a by it's Farnborough, regular are -- reinforced OEM of are very, with happening very way. Farnborough engine It's

we demand as see how far to there. As expand continuing

to of that is signals major by they those demand of we've from the That positive coming that folks or engine across heard good manufacturers. around We're they pretty broad-based and all demand and and rather supply the engine seeing some pretty think unique the who way, profile, made very see GE. chain run how towards I like a them. feedback the GE, strong some announcements they're going -- not clear meet statements to demand

it. there's about build a we and we airframers headlines rates, that because drivers think that's driver all And driver. read a from of think to the One the key couple about

there growth called engine on that However, the And is driving certainly of business. this MRO the side demand thing is MRO.

our positions to at ramp build just we hearing our align XXXX situation to we're monitor. change step as growth, sustained and triggered, to are do from seeing as we're certainly seeing the think some create for for another them as regard, we couple going engine. change that we and create whether not and think to. but they that triggers up of customers, we a So that's demand. That's In in it's are a look XXXX I collectively that expect there's rates the what going it's when demand, step in airframe, we And

are the growth is items the current suspect positive off XXXX related two those we step the rates. limitations deck, we're certification cleared good triggers see XXX potentially FAA build circumstances, two on really a the Those in change expecting will then and the to the When are the a that what under way. dropping

think Does And kind of make we about see the we'll your be some to positive so that at adjustments that point, how question? we reassessing answer need trajectory business and to of if our that.

Gautam from Khanna Cowen. next from Our is question TD

and don't that, shallower hear risk of on these is or the do I ramp as in was selling fact, mill -- are one lot are you about that being wondering, do opposed concerns that plan. consumed you're the products build being the visibility you according fidelity to right guys used guys have But consumed? and/or rates ramp inventory shipping any aerospace of like downstream actually products as now whether obviously, have are a to to or we the destock a -- because the the a used

our I as customers. you're we think aligned pretty here, with stay asking closely

mentioned, as customers. insights almost of we happening days. to And process true have each changing some so our and we what what's and do signals that weekly Don these of a forecasting And with there active about very each backlog is demand part, is with talk

airframe targeted areas more insight slightly do with both defense destocking I It's haven't emphasize, or we quarter-to-quarter. into our our that just at any to said, very inventory we other around plate, couple there's have other aerospace a air your And framer titanium pushouts. seen that. And customers, might and maybe I question, some as or any absorb one So specific as than that look think markets, would plate of frankly, more be capacity. been we those Don smoothing

pushouts. not Although honest we to have you, seen be with any

chain maintaining a in and customers. there's by momentum the think commitment supply all to the I smoothing the

closely together. we're working pretty So

of other side, as hot just section. our engine the go the know products you most into on the I'd directly mention, thing So

heard And so strong around the from of couple visits. weeks, that in shop and there's last really you've others demand MRO

had if on over MRO And their several of much visits those lot of demand are some ramping increased And work higher has accelerating to and Xx in work significant a those MRO GTF next up past. a shop that so some you that, the products seen with aircraft that we then the that the cases, those layer on as into partner ground. they on in years go visits, of driving the them and top through meet challenges in we've that are

lastly, on, risk for We the in supply say source couple customers ago. contracts I'd may level weeks of are chain. competitors to did looking we to customers do the our want I either to as And performing from a touch not single new sign of diversify share gain be wave or our there their announcement continue look to and through where

do parts and moving any may company, the seeing but not in particular smoothing pretty of adjusting we're we're where lots levels respond we in is a one pretty inventory where area. demand to things nimble I'm need out. there, And as to stay high and So we close. as be

Our Bank. next Deutsche from Deuschle question is from Scott

you Don, here? the medical but markets sorry Or second in you this, an assumptions out and there? half? trough markets incremental us are non-A&D more if on update the half those I Or cyclical for to expecting your still you the conservatism second are missed in industrial any embedding give can

should. touch as the -- so about when industrial, don't aerospace the to have lot just of sure spend It's talking that mind, defense a if I Now thinking. as benefit and I'll both, well because of clear, talk you I time be want we that about on you you to our make the as aero-like core. we

through continue as some of expecting going continued in be growth side that the business broad-based see aero-like, of that's and second We're beyond. well terms energy on XXXX half, healthy, to In the that medical specialty, would to our as electronics.

And industrial in starting the to reduce time. pullback over saw second that's you softening know, that end we've part we those transformation. continuing of the something of a certainly terms portfolio, our half of It's last year, our been as In around and markets. a of part

stabilization saw haven't of And in about guidance, and industrial in we've And started see like encouraging is it significant half. those example, turn in end the in have for so in meaningful what before really second around gas, become we in haven't because and end was you stable second growth that any as markets. that's go to that way. see assumed to built what we we've got -- those think what we other started recovery But for parts oil the it our starts half around markets QX is to being we any to not our portfolio those assumed

So that the aero-like robust growth is is in you're and our really seeing line such outcomes, you're line. seeing really guidance aerospace because really our robust some bottom very and defense strong some of encouraging that and XX% about and driving top business

Same by we if way, Rolled in little a talked be and thing Asia. Precision business about true would drilled Strip in the our bit

our to that of And pretty that -- issue enough have the about the talk not at we there, the China, flattish. general time diversifying is to the other performance same industrial job the increase a just of really with like with tied again, really the And good guys that's our stable, selling economy. Sometimes I done it's pretty we've Chinese talking lethargic industrials but portfolio, largely seen it outside of the think we're mix sales that's and business. parts

growth -- million really our nice, it are it's part accretive year margins, of probably produces a profile. our and $XXX it's so steady, which but And revenue, in generating around not

very ATI it's their then, Don, price of from clear companies the that that Day, than is the it seeing in taking numbers. in more Investor large else they're the no price at taking I said of results becoming industry think one amounts and the other is they're And and you

is question still my them? guess are, ATI then that taking more I from And more price is at that is, true HPMC? if particularly through why isn't you So it flowing

one say to Well, understand is, tough let we company answer What would all company. me to it all, another this I it's of compare way. first

markets, there overlap I results in businesses differences the same offer company in In some time, believe, customer talking, and are right? differences and in it's end the our differences, term, a growth different. every how are has the products in differences that long bit You're in in, at ultimately industry, base but perform that in Differences short the rates offering, term.

are that say So share we're getting to we you How is -- areas see of like answer we quite in your do I are we specific titanium. Well, all, how fair are And what the would that strongly price. that that? of absolutely our getting first things price question, specific price. does know getting

you price. keeping have of -- would in of the drill side the our you business around both in business, on seen you that there side to as portfolio we pace and it we at HPMC as the believe titanium increases see well that. our titanium performance meaningful with If portfolio, look offerings comes are out AA&S that when anybody absolutely the And

for of nickel have the side terms On side, applications, HPMC, we for example, engine so I nickel think absolutely price. gotten in we know

the getting to there's is in Now keep that mind. something we're price

affect We so increases LTAs your the see you when price those are has can of of a those financials. significant hit company that timing LTAs amount a and

What there's I address the that? active. by Well, customer over length have with of really and down a We've various though expire pricing opportunity even of can an existing LTAs. sit those even time. very lot been to LTAs When to very, we do mean LTAs in

also And with that, do renewals. by way, we so the

is new be know it comes coming that of coming. in higher we what when 'XX getting part and form some in price might 'XX, It's other increase contract in that pricing. so cases, begins And the is that cases, in we're that with of

So way. that very fair beyond its share we're that, increases. confident our getting on we're And that's of pricing transactionally, then

and on core that's Now of aerospace part that business. our the defense

significant specialty to pricing more characteristics. has and value we share sell in that medical that unique end opportunity we and in for we adding electronics. and the neem have bring in price aero-like seen and getting markets, of space. fantastic customers understand like we And our energy very product. And ] [ also half We're a It a things our fair our it's

that about we know It's we're just fair portfolio. this our across we in -- share our that we getting are it. increases believe and volume believe not business, getting strongly we So

Our Safran Seaport next at Partners. question comes Research from Richard

you bit ask mean from said talked about to so -- Farnborough, and you bit forgings -- a press which more it RTS was and I capacity. solutions. want share a to this it's really gains doubling wanted I about The where also I ask you forgings So more solutions increasing, forgot or release about

Now you a with had agreement long-term Pratt.

example, is about capacity making about RTX's at comments So are ones, for the forging Are that increasing they you? ATI? thinking really investments to increase capacity

Richard. So this I'll take one,

So contracts that significant while GTF agreements, a supporting we don't and quarter talk first about earnings any the shop are visits. shared or I specific customer in we the accelerated call partner it's

the working very across closely that optimize all the all of of work and to the we full chain So look saying, assets them how with and different together we value assets have. we're do to

And the so year. forging shared our last I output our I participation in think and call plan to double next that is

help a on and to support work. accelerate we path help that so are them And

to them working and inspection overall. other and quarter The is there, thing mention, machining by the already and not just to for been Xx our though, I our I'd for the the XX% important last and increase output we've with by ultrasonic on, challenges capacity again GTF XX% this but this mentioned industry

to partner, do believe them we work the kind our so that very safety, may being we grow the continue together bottlenecks as I that issue capacity new We're going in with participation. are close done testing come. is help seeing grow have that's to but any and offset increased bottleneck work of is together have excess continue relationship we're or work continuing we and a ensure to protocols them that with any a find to opportunities industry and to to to and good, which inspection and

of just about $X products, XX% as announcement just -- of made As from on your an billion a of XX% ago, that is aside, couple to comes weeks forge earlier products. that, we probably forged sales the that question,

million. your Don, guide, $XX roughly And just up took quickly, EBITDA you

guide flow You left your intact. free cash

have up just go just they there's why in was I as half? -- about capital wondering thinking if maybe some working if Just well. conservatism wondering second headwind other you you're the or that's

conservative I Straight would in conservatism. -- it's more be guidance and at our was even general, would -- we the and guide rising. and you to period in get look that when and into up, -- tend the We Rich, -- QX current had call full around that but EBITDA so flow want We our guide, EBITDA past send it when we the ignore year message guidance. not didn't negative our cash overperformance free rolling a the to between that clearly, by correlation

is more it When I a to point our do points. flow, on data comes our the fact. see year-over-year. year-to-date. -- than really positive basis, some cash when clear. we quite we million cash have One performance data good So free really you look guide $XXX annualized is That an from improving but positive at cash operations and

we're efficiency, encouraging. is really inventory that in seeing improvement is thing Another meaningful our which a

flow but range? or our majority in fair your some you is, and generated cash So flow Don. in the flow don't free question news, good tighten raise is the some QX, in cash say QX free your What Why would free is range of I all that's QX. cash

not this that felt we it point the that cash guidance right because moment where range at getting it is at interpret to have free thing that halfway But in the so through keep in would delivering target flow after was. we the something range be point, of this year, are mind. at the And certainly the softening our that we that do middle belief absolutely in of

cash in in Keep at that of midpoint XX% the year-over-year flow. mind, an increase free guidance, Rich, it's

of increase, it point are right Again, deliver, accomplish the data well. lot is be that, it to pursuing. And progressing to there you going a It's that direction but but we does the hopefully, one are we're delivering and And in improvement things yes, that things where a you the give that. that's on need we good that just to what so acknowledge team significant really is significant need?

Strauss question is at Barclays. David next Our from

year-over-year, far couple but quarters, the how comp year. the numbers. about up know a titanium way the capacity relatively range. ask easy actually last in ask sequentially expansion was of titanium It lot terms looks to like to about titanium wanted that a -- it I itself tight manifesting relative really has in we're Just was through been the wanted of last in a revenue to

-- this to restarting of just online. still the of actually terms know manifested to the itself -- point? capacity still new How existing come at So the in capacity? has is that's much But that I come

add But from I'll of take a a benefits. may let back a -- actually other that, for just production end. Kim David, the at and so standpoint, all, people's something step for shot at second, first me answering

increasing we're capacity There's melt baskets. XX%. So two titanium by our

and about. The first XX% assets. David basket asking existing that's is tied is XX%, to That off of is production what

is hit second really process, in The something XXXX basket budget, on but on until time, and that's doesn't XXXX.

first -- a of quarter rate, has roughly That facility That budget. million on So $XX between really, of contribute the standpoint, the should, XX% underpins restart in EBITDA. million on schedule. has $XX run really that From has the been was to million. It restart cost ramped on a XX%. has that production most $XX the at facility and let's focus well. gone It really

ramping. been has That

of QX don't that expect we so rate into until basket this full we hit related run benefit the year. to the to get And XX% of

titanium. that in mix. price an titanium of I we think, contract we largely very of pick confident price, are the performance, our look there's We've which to is, that capturing the titanium at very on you capacity when revenue increasing is described. where indication -- seen contribute see And average growth is up overall do going and under magnitude So volumes on and which clear our I remain

I we've there goes, depending it as things And all I add, if product what or seen, extended through on to that they're times forge part. path would flow is David, a think as cycle is to lead move going times

particularly see If are side, X through. can airframe flow-through deck, the Slide come you you just on titanium the seeing look the around see that growth at we to you AA&S in starting and

products. forged and especially we've are or through little longer as that the moves as times talking through [ put -- On side, we And a about, those bottleneck HPMC more around they SAM ], bit multiple at as cycle there's melt melt -- been bring new materials work testing talked price the to the about in of that as got you've on -- those eliminate -- down and bottlenecks. online Monroe step. and brought first capabilities relieve as some come then And new we is that's the we've well then

And see on so the the fourth progressing well. to and we're continuing said, anticipate do as that's the HPMC of in quarter, Don we impact side, that to that,

line I in second half a you're to just with assuming really The there. relatively understand, gone, like it margins And which a sounds but in strong, the it's follow-up QX, going be as margins -- was AA&S titanium thinking you of the AA&S around your it's will run half. just upside could to that kind and believe I of margin Kind if in second walk AA&S. the accretive free of through lot

appreciate because I bit. question a asking clarify you good to that it's us for

So strong AA&S year-over-year from really and significant sequentially. margin performance first, quarter, so the uptick in XX.X%,

let's So right? a from XX.X% that about standpoint, think you should sustainment bit. a unpack little it how So

AA&S one to to more shifting concentrated aerospace of all, of the AA&S, incredibly the mix. where first that has the benefits and job almost that that end good deliver and business of overall market to share -- in was team The the an was point healthy. done was XX.X% helped at XX%. grew So very It XX% of XX revenues. defense That A&D

a bit drill little If that just on in perspective. a you for

been and So that in OEMs, when it a over about incredibly last from value-add, more quarter, we've not moving moving two away there's going this they're would the from portion done. Specialty strong, AA&S. right distributors through saw products, opportunities. business units, business continue to business exposure, transforming is is more away and This you instead been hit we business, Rolled think AA&S, are of years have and through selling SRP, large and XX% Products a selling growing ago direction, a toward A&D which that mid-teens to push few higher-margin commodity They

encouraging. So that's

less noted revenues create especially the at our in really changes to it but to et through looking actually include year-over-year. also in the do Well, rates of I much in the been about? driving have when your math about term. pretty of you online. guys derisk to What understand, wonky deck our talking the It's line executing that you're transformation mechanisms but that's you're to QX revenue year-over-year. our impacts, did sensitivity We reduced mechanisms. or see now an we portion sequentially, But near that is the scripted Well, we've some looking the think prices that call, at our margins, I year-over-year cetera. metal us can we've it's impact allow bottom that customers. am did the growth incremental certainly that that the margins, They things We one we to have important other pass-through you it answer through like doesn't question. and my can pass see But in pass-through business.

So me let the chase. here, to cut

and for you to reduction the year-over-year $XX when pass-through that a million actually at AA&S lesser EBITDA into look was So QX reduction overall lift about a in the there margins business. served -- revenues degree, QX

let so it. And rightsize me

if math, the of performance, about okay, XX.X% well, to and element said, AA&S out ran part you the go I If stripped that of would XX.X%. that

right in have the delivering to that think from to how in QX we going project, when future some in to the a kind some the did AA&S there AA&S through QX, think pass-throughs. be numbers, quarter. XX% replicate challenging EBITDA going forward? where margins of strong closer look it it's you of you I think team did the really Part has should QX. rich mix be I with -- to perform QX I'll I that is way Then mix those of do my about where elements in honest, of to for about view So good something

that say is, hey, think thought around Does XX%. I'm actually when help? my So saying, I I mid-teens,

Absolutely terrific color.

Our next question is from from Andre Madrid BTIG.

know bit how I demand in kind much growth just but engine a it that to kind to out out the moving of and it in see contribute in little to jet how contributed a of MRO Q&A, anticipate called wanted and further bit you little I much you forward? And parse remarks the the quarter?

that take question. I'll

So it's significant.

from we don't with amount through. heard full go -- or of into this. about coming have a typically have all MRO start it say significant earnings newbuild let have talked it I'd does their we've me of visibility part there's We of -- so You've customers a don't MRO our an calls, historically, in engine.

hot I ramp rates XX%, look historically As the demand I it's the that and they And OE OEMs XX%. all engine well disks And when for MRO sometimes and as closer in we -- engine, the the order at mentioned, they place. continue increased we seeing our either into today, both our go that. well pace than and look forgings But higher being as in book, to the with the XX%, estimate as to section, can keep the be we forgings as the when across the our of are at demand as shop materials visit. products

like could and into the I'd to capacities outlook demand both currently heavy talking say portion. than been upside our you give hard on for we upside, talking sides more bottlenecks But that. forecast about, there are the more does as there's So is more we've precise and frankly, a continue our if It's seem very we it's with today. put customers, number to our reduce and increase significant to demand me and a it

And then to year? make guess, winter was is out? first do hafnium half storm business. to But balance the this know dampened Or that you or expect kind up electronic of the kind I of the to moving the of I the pivoting being of outage. pushed side the in of

every tell gap. all in everything washing is working forth, on around side. Demand provide our our the me -- so electronic needed few, these chip at very the two or day. say it I the can purity bought is one is maybe the chip appliance of very So in in that machines will and in And of has that getting a just to Oregon business a world us team overwhelming close electronic smarter out manufacturing. is for scale one hard and I that new that the that can produce

X. as investments coming see those are into two we're our that online working. the some hafnium. right And outputs X, capacity got we of quarter. Phase We also We've that So just to Phase ongoing on working Phase X We've come anticipate increasing got and we are fourth now. that's

standpoint space industry, I really thing very, high is, in temperature, here to other into addition their component that very used important for other with us. being hypersonics these that and critical a into high very temperatures. several hafnium is that One industries electronics, of I'd strength think really goes kind rockets second from that's space the mention stage The maintain for it goes a a industry material at

told world only we're pull And a customers couple withstand so are hafnium of that's the that that And another supply we've continuing of that on the to make type that application. that again, the purity that been maintain. quality and to ones by in we're able

mentioned, we're We've doing -- I as more phases. One is ongoing we'll two So investments. be got today.

in and our working is out to team included those our output CapEx are very contemplated and of very increase capacities. guidance. hard All But that and we're hard, working there

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

in count So And specifically? all of more at the locations what head hiring? were expect you production do XXX, quarter? increase that in the was And that

I'll that, take a at Phil. stab

are two the XX-XX the the in Carolina, I'd all year. XX-XX can first probably in that half So businesses, look the down is you XXX Wisconsin. of say across up

of assets continuing capacity, really but we we the outputting the are lot minimum get that X have of today melt activities. looking are story. since looking just how step can this talked as melts ground about, one capacity how takes We increase we've hire lot debottleneck that's on downstream at a of the a increase put and in these And capital here. our new do we assets and we saying, to years some the debottlenecking we're is talked saying, about output at to We've this and And place.

So we ships. are adding

We crews. are adding

of for the Those forged about jet about In that's that parts. we're take or to X case folks expanding Level Level Xx. ultrasonic for protocols get products. inspection talked capacity X qualified inspector that the engine required six the a months to We

the we're very productivity. year working that. that good hard row But more This X,XXX been a we're really at getting and we've is anticipating throughput in -- are added, we or So we've third probably employees.

from industry. the in You're hearing it the other some of OEMs

we're and You things the talked a there. about doing little GTF bit

we half the are learning get we into of will continue back seeing we the and that come year and get the benefits through, of So the up starting as to that curve.

Don, do some you on to want that? color add

call. in the the the cost, It that I the incremental helpful little dimensionalize talked a to about about think cost how just earlier be to and might bit inefficiencies

how were to it So in new learned the the not expert quite teach COVID The exist methodologies. we exited -- as a production inefficiencies expert excellent well. that investment our additional how up processes doing We to learning, current our employees way. new setting in to But do we transitory right? for heads to is and us, employees, become at

a employees, second that So is to tied quarter. specifically half first that the not XXX number,

margin how inefficiencies for of the that HPMC. But in about should you think dollar the magnitude XX.X% carried that we

probably and we inefficiency, largely be expect about is, that -- long behind would And million the way Don? those costs would quarter. it think QX. by $XX in between A going to us, the fair terms think with in inefficiencies us higher be I of that, is, of probably well, how is that $X question to million

it. so the additional And training guidance our costs to related contemplates these heads and inefficiency and

a just And for me. follow-up

would this Regarding you wins new maintaining morning are when are arena, considering your you kind targets, nickel show XXXX square in that that the how alloy you air increasing the Or of that? up? financial

prior of math. a encompassed. mix quite I we're rational pointed million that We here being $XXX there? to we but I revenue How it a million already result incremental would officially products every add sales year be you've the guide, that as guidance year. expect a know are that are say richer is $XXX is The million do nickel our we thing jet get strong. the added new done be these engines. what range. changing these not So And toward commitments, is will roughly It's margin to said our Phil $XX would

XX% to range, expect of would something million, think good incremental million and the times placeholder typical we So $XXX in I EBITDA. a higher use margins $XX than is XX%,

$XXX at in irrational you on do. to If which of to million thing for that you think XXXX. the to I previous XXXX EBITDA we an range, million layer don't that's guidance $XXX guided

that targets, or a FAA the it's generally to we adding as think of XXXX couple worth do for rates. are And by point two are there and about we current But XXXX points triggers Now are triggers believe is our way, those limits data one the that. we targets, more and that the look on XXXX conservative. XXX the build

will look that I it's would outlook those when the At be our be But see would fresh pulled, is and if say to would latest I appropriate it XXXX for -- those performance are we're those. expect QX So a us targets, them. another we'll would we two give opportunity triggers at XXXX talk to numbers, again, latest, going what and be adjust full when assess year probably about that, we our to performance. talking about the

to exhausted some squeeze know just approval. see effectively if and here, think more the needed don't your that one Board I I was Can it comment you're talked on buyback. just it I about, in was think last there I but

the one. You're That's have for stand here to cash flow pretty obviously going months. we free on that? XX good my do next last Where

I'll one. take that Yes,

program completed that ahead time. We've to have capital in to are would want expecting the we -- I is capital that very cash at a flow. quarter rhythm deploying get That's the we're of the don't includes going my that first, So a shareholders. amount be largely Board, and of our point. we point I healthy to returning generate your fourth current to cash consistent deployment to to strategy what but current

of pretty is shareholders. Board Our supportive capital to returning

repurchases. Our bias has been toward share

the So in think the share repurchase last seen program don't I you've ATI organization.

Board the the will topic take sure a So I'm in as coming quarters. up that

hand I'll the for closing David remarks. back Weston This to session. now concludes the floor Q&A

to follow-up Thank and to have We Relations day. thank great you any call please you, appreciate With a questions, the today. with your joining that, out our team. reach Investor ATI attention for