Q1 2024 ATI Inc Earnings Call

Lydia: Hello all, and welcome to ATI's first quarter 2024 earnings call. My name is Lydia, and I'll be your operator today. If you'd like to ask a question during the Q&A, you can do so by pressing the star followed by 1 on your telephone keypad. I'll now hand you over to Dave Weston, Vice President of Investor Relations. Please go ahead. Thank you. Good morning.

Hello, and welcome to Ati's first quarter 2024 earnings call.

Lydia: My name is Lydia and there will be your operator today.

Lydia: If you'd like to ask a question during the Q&A you can do side by pressing star followed by one on your telephone keypad.

Lydia: I'll now hand, you over to Dave Watson, Vice President of Investor Relations. Please go ahead. Thank.

Dave Watson: Thank you good morning, and welcome to Ati's first quarter 2024 earnings call. Today's discussion is being webcast online at hei materials Dot com.

David Weston: Thank you. Good morning, and welcome to ATI's first quarter 2024 earnings call. Today's discussion is being webcast online at atimaterials.com. Participating in today's call to share key points from our first quarter results are Bob Wetherbee, Board Chair and CEO; Kim Fields, President and COO.

Dave Watson: Participating in today's call to share key points from our first quarter results are Bob Wetherbee Board Chair and CEO.

Dave Watson: Kim fields, President and CFO.

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

Dave Watson: Don Newman Executive Vice President and CFO.

Dave Watson: Before starting our prepared remarks, I would like to draw your attention to the supplemental presentation that accompanies this call.

Dave Watson: Those slides provide additional color and details on our results and outlook and can also be found on our website at ATI materials Dot com.

Speaker Change: After our prepared remarks, we'll open the line for questions.

David Weston: As a reminder, all forward-looking statements are subject to various assumptions and caveats. These are noted in the earnings release and in the accompanying presentation. Now, I'll turn the call over to Bob.

As a reminder, all forward looking statements are subject to various assumptions and caveats.

Speaker Change: These are noted in the earnings release, and then in the accompanying presentation.

Speaker Change: Now I'll turn the call over to Bob.

Robert S. Wetherbee: Thank you, Dave. Good morning, everyone. In the first quarter of 2024, our leadership team focused on the things within our control, acting with urgency and a forward-looking perspective. The results reported today reflect those efforts. This morning, I'll summarize the three key points I want you to take from our performance. Point number one:

Robert S. Wetherbee: Thanks, Dave.

Speaker Change: Everyone.

In the first quarter of 2020 for our leadership team focused on the things within our control acting with urgency and a forward looking perspective.

Robert S. Wetherbee: The results reported today reflect those efforts.

Robert S. Wetherbee: This morning, I'll summarize the three key points I want you to take from our performance.

Robert S. Wetherbee: Point number one.

Robert S. Wetherbee: Q1 financial results surpassed expectations. We delivered adjusted earnings per share for the quarter of 48 cents, exceeding the top end of our estimated range. Revenue was over $1 billion for the seventh consecutive quarter.

Robert S. Wetherbee: Q1 financial results surpassed expectations.

Robert S. Wetherbee: We delivered adjusted earnings per share for the quarter of 48 exceeding the top end of our estimated range.

Robert S. Wetherbee: Revenue was over $1 billion for the seventh consecutive quarter.

Robert S. Wetherbee: Our Advanced Alloys and Solutions segment led the way, achieving a 14% EBITDA margin in Q1. This reflects double-digit sequential growth in the electronics and medical markets, and strong A&E Sales and Specialty Growth Fund. In addition, our Oregon team delivered an accelerated recovery from January's Pacific Northwest storm-related outbreak. It really was a great performance across the state.

Robert S. Wetherbee: Our advanced alloys, <unk> solutions segment led the way achieving a 14% EBITDA margin in Q1.

Robert S. Wetherbee: This reflects double digit sequential growth in the electronics and medical markets.

Robert S. Wetherbee: Strong A&D sales in specialty rolled products.

Robert S. Wetherbee: In addition, our Oregon team delivered an accelerated recovery from January specific northwest storm related outages.

Speaker Change: It really was a great performance across the segment.

Robert S. Wetherbee: We expected the high performance materials and components segment to be down in the first quarter given the late year production outages we discussed in our last quarterly call. The good news is that those impacts are fully behind us, and the business is leveraging the ramping melt rates and new billet forge press capacity. Equally important, our forged products business unit racked up another great quarter, that's two in a row delivering the highest revenue in their history.

Speaker Change: We expected the high performance materials and components segment to be down in the first quarter given the late year production outages, we discussed in our last quarterly call.

Speaker Change: The good news is those impacts are fully behind us and the business is leveraging the ramping melt rates and new billet Forge press capacity.

Speaker Change: Equally important our forged products business unit wrapped up another great quarter.

Speaker Change: Best join a row, delivering our highest revenue in their history.

Robert S. Wetherbee: All of this sets the stage for strong sequential growth and segment EBITDA margins back above 20%. Our commitment to managing working capital intensity delivered significant first quarter improvements in free cash flow over the prior first quarter. And we fully executed our share repurchase authorization of $150 million, directly sharing the benefits of our strong performance with our shareholders.

All of this sets the stage for strong sequential growth in segment EBITDA margins back above 20% in Q2.

Speaker Change: Our commitment to managing working capital intensity delivered significant first quarter improvements our free cash flow over the prior year first quarter.

Speaker Change: And we fully executed our share repurchase authorization of $150 million directly showing the benefits of our strong performance with our shareholders.

Robert S. Wetherbee: Point number two, demand for ATI aerospace and defense, as well as aero-like products, remains robust, although the percentage of A&E sales dipped slightly below 60% in the quarter due to near-term order patterns and the impact of the Kewport outages.

Speaker Change: We did what we said we would do and what we needed to do in Q1.

Speaker Change: My number two demand for ATI aerospace and defense as well as Arrow light products remains robust.

Speaker Change: The percentage of A&D sales dipped slightly below 60% in the quarter due to near term order patterns and the impact of the Q4 outages the composite of A&D and airline business remained above 75%.

Robert S. Wetherbee: The composite of A&D and AeroLite business remained above 75%. We're confident sales in the coming quarters will put us back on the trend line to our target of 65% AMD sales. ATI's market position is very broad, significantly more diverse than before the pandemic. We produce for every commercial airframe and every jet engine program. The struggles with the 737 MAX and the resulting impact on near-term LEAP-1B engine deliveries have been widely publicized. However, the impact on ATI is meaningless; any impact is more than offset by demand to support the geared turbofan accelerated overhauls, elevated engine spares, and increased defense and commercial space activity.

Speaker Change: We're confident sales in the coming quarters will put us back on the trend line to our target of 65% and sales.

Speaker Change: Aci's market position is very broad significantly more diverse than before the pandemic, we're producing for every commercial airframe and every jet engine program.

Speaker Change: The struggles with the 737, Max and the resulting impact on near term leap one b engine deliveries how much publicized.

Speaker Change: The impact on ATI is not meaningful.

Speaker Change: Any impact is more than offset by demand to support that gear turbofan accelerated overhauls elevated engine spares and increased defense and commercial space.

Robert S. Wetherbee: And for clarity, the revised lower 737 MAX and LEAP 1 V orders are reflected in our 2024 full-year guide. Our focus is firmly on end markets and premium products, where our differentiated capabilities and materials are most highly valued. Point number three, we're increasing our 2024 DPS guidance driven by strong demand. Improved Operational Stability at a Healthy Price. We maintain our expectations for both top and bottom line growth in the second half.

Speaker Change: And for clarity the revised lower 737, Max at least one <unk> orders are reflected in our 2020 for full year guidance.

Speaker Change: Our focus is firmly on end markets and premium products, where our differentiated capabilities in materials are most highly valued.

Speaker Change: Point number three we are increasing our 2024 EPS guidance driven by strong demand.

Speaker Change: Improved operational stability and a healthy pricing environment.

Speaker Change: We maintain our expectations for both top and bottom line growth in the second half.

Robert S. Wetherbee: Our operations are performing at rates that support the second half guidance. Kim will share more color on this in a moment. As we leave the first quarter and look ahead to the strong outlook for Q2 and the rest of 2024, we've reached an ideal intersection of effective strategies: top line growth and bottom line performance. ATI is proven to perform and well positioned. With that, I'll turn the call over to Kim, and return later in the call for a few closing comments. Kim?

Speaker Change: Our operations are performing at rates that support the second half guidance.

Speaker Change: Kim will share more color on this.

Kimberly A. Fields: All of them.

Kimberly A. Fields: As we leave the first quarter and look ahead to the strong outlook for Q2 and the rest of 2024.

Kimberly A. Fields: We've reached in the ideal intersection.

This strategy topline growth and bottom line performance.

Kimberly A. Fields: ATI has proven to perform and well positioned for the future.

Kimberly A. Fields: With that I'll turn the call over to Kevin and return later in the call for a few closing comments Ken.

Kimberly A. Fields: Thanks, Bob. I'm excited about HEI's future and look forward to continuing executing our strategy. We've invested a lot in this strategy, and I'm confident in our direction. Thank you for your leadership and vision. Looking ahead, let's add a little color on the strengths of the markets and why I'm confident in meeting the guidance for the year. First, let's answer the question on everyone's mind.

Kevin: Thanks, Bob I'm excited about <unk> future and look forward to continue executing our strategy. We've invested a lot in this strategy and I'm confident in our direction. Thank you for your leadership and vision.

Kevin: Looking ahead, well have to add a little color on the strength of the markets and why I'm confident in meeting the guidance for the year.

Kevin: First let's answer the question on everyone's mind.

Kimberly A. Fields: How are the 737 MAX challenges and resulting build rate reductions affecting ATI? Let me emphasize that this is not impacting our orders in any meaningful way. As you will hear in Don's guidance, what we do see is strong underlying market demand that overcomes any 737 max inventory burndown and LEAP-1B build rate reduction. We are getting signals that further into the year, we'll see order increases to support 2025 wide body build rates. We are very connected with our customers, and they recognize the importance of smoothing the impact to not derail the momentum that's been built. With today's lead time, if you jump out of line, you'll face up to 12 to 18 months of waiting for material when you get back in line and reorder.

Kevin: How are the 737, Max challenges and resulting build rate reductions affecting ATI.

Kevin: Emphasize this is not impacting our orders in any meaningful way as you will hear in <unk> guidance.

Kevin: But we do see a strong underlying market demand that overcomes any 737, Max inventory burn down and leap <unk> build rate reduction.

Kevin: We are getting signals that further into the year, we will see order increases to support 2025 wide body build rates were very connected with their customers and they recognize the importance of smoothing the impact to not derail the momentum that's been dealt.

Kevin: With today's lead time, if you jump online youll see its up to 12 to 18 month wait for material when you get back in line to reorder in the meantime, there is plenty of demand for mothers until the 737 Max gets back on track and returns to a significant growth rate.

Kimberly A. Fields: In the meantime, there is plenty of demand from others until the 737 MAX gets back on track and returns to a significant growth rate. Last summer, we announced $1.2 billion in sales commitments. These orders are ramping now. Additionally, we're seeing opportunities for emergent demand and expanded share positions as customers eliminate single points of failure and move business from underperforming suppliers to those who perform, like ATI. Today, our customer base is more diverse than before the pandemic. ATI provides content to all major engine and airframe OEMs.

Kevin: Okay.

Kevin: Last summer, we announced $1 $2 billion in sales commitments.

Kevin: These orders are ramping now additionally.

Additionally, we're seeing opportunities for emergent demand and expanded share positions as customers eliminate single points of failure and moved business from underperforming suppliers to those who perform like ATI.

Kevin: Today, our customer base is more diverse than before the pandemic hei provide content to all major engine and airframe Oems.

Kimberly A. Fields: The other large airframer in Toulouse is very busy these days, and we've significantly grown our position in certain products, upwards of 50% share, as they look to diversify their titanium supply chain away from Russian sources. We're seeing very strong demand for engines too. Across the board, higher shop visits are driving up spares demand, especially for the hot section materials and parts we produce. This continues to pace closer to 40% overall demand versus the 20 to 25% we've seen historically.

Kevin: The other large air frame or until it is is very busy these days and we've significantly grown our position in certain products upwards of 50% share as they look to diversify their titanium supply chain away from Russian sources.

Kevin: We're seeing very strong demand and engines to across the board higher shop visits are driving up spares demand, especially for the hot section materials and parts we produce.

Kevin: This continues to pace closer to 40% overall demand versus the 20% to 25% we've seen historically.

Kimberly A. Fields: We're actively supporting the GTF accelerated overhauls and parts replacement. This multi-year replacement plan is driving GTF foraging demand up 25% in the back half versus last year, and we see further growth in this important program in 2025 and beyond. Another strong market is defense.

Kevin: We're actively supporting the GTS accelerated overhauls and parts replacement.

Kevin: This multiyear replacement plan is driving GTS forging demand up 25% in the back half versus last year.

Kevin: And we see further growth in this important program in 2025 and beyond.

Kevin: Another strong market as defense defense armor plate continues to grow due to Abrams re armoring packages and foreign military sales.

Kimberly A. Fields: Defense armor Plate continues to grow due to Abrams rearmoring packages and foreign military sales. We enjoy a strong supply position on the UK's AJAX vehicle program, and we're winning new programs like the U.S. Army's new armored fighting vehicle, which has double the ATI content versus previous designs. The robust demand we are experiencing across most of our markets creates pricing opportunities as well. We anticipate seeing these wins hit the bottom line in the back half of the year.

Kevin: We enjoy a strong supply position on the UK Ajax vehicle program, and we're winning new programs like the U S. Army's new armored fighting vehicle, which is double the hei content versus previous designs.

The robust demand we are experiencing across most of our markets creates pricing opportunities as well.

Kevin: We anticipate seeing these wins hit the bottom line in the back half of the year. This.

Kimberly A. Fields: This potential is built into our updated guidance. Space provides significant opportunities for high growth, leveraging our material science capabilities. Commercial launch firms are targeting 100 launches this year, which provides a strong start to our new long-term agreement.

Kevin: This potential is built into our updated guidance.

Kevin: These provide significant opportunities for high growth leveraging our material science capabilities.

Kevin: Commercial launch firms are targeting 100 launches this year, which provides a strong start to our new long term agreements.

Kevin: In fact every business at ATI participates in this market and our material and parts are being designed into next generations of rockets delivering strength at high temperatures for critical components.

Kimberly A. Fields: In fact, every business at ETI participates in this market, and our material and parts are being designed into the next generations of rockets, delivering strength at high temperatures for critical components. It may be a small percentage of our revenue today, but it is on track to double this year. The business is going where we want it to go. ATI's products are in every major OEM aircraft and engine program.

It may be a small percentage of our revenue today, but it is on track to double this year.

Kevin: The business is going where we wanted to go.

<unk> products are in every major OEM aircraft and engine program bottom line.

Kevin: Strong customer demand across our markets.

Kevin: Now, let's talk operations.

Kevin: I'm confident we are operating at the rate needed to meet this demand and our 2020 for guidance.

Recently, we commissioned a new 12500 ton billet price capable of processing, both nickel and titanium.

Kimberly A. Fields: Bottom line, we have strong customer demand across our market. Now, let's talk about operations. I am confident we are operating at the rate needed to meet this demand in our 2024 guidance. Recently, we commissioned a new 12,500 ton billet press capable of processing both nickel and titanium. This deep bottlenecking investment gives us maximum flexibility and is a key enabler to achieving our 2025 targets. Another example, Forge Products is in the process of qualifying products on our fourth isothermal press.

Kevin: This debottlenecking investment gives us maximum flexibility and is a key enabler to achieving our 2025 targets.

Kevin: Another example.

Kevin: <unk> products is in the process of qualifying products on our fourth isothermal press.

Kevin: A major control system upgrade brought this asset up to best in class and increases our ISO forging capacity by up to 40% over the first half of 2020 for these.

These are both great examples of Debottlenecking, our nickel and titanium value streams.

Kevin: Last with the increased industry focus on quality testing and inspection capacity has been very tight.

Kimberly A. Fields: A major control system upgrade brought this asset up to best in class and increased our ISO forging capacity by up to 40% over the first half of 2024. These are both great examples of debottlenecking our nickel and titanium value streams.

Kevin: Have substantially expanded our ultrasonic inspection to support the increased testing requirements and relieve a critical industry supply chain bottleneck.

Kevin: By the second half are testing capacity will triple.

Kevin: This goes a long way to addressing the urgent need of our customer base.

Kevin: Our team is firing on all cylinders and their hard work really shines through in this quarter's results were operating at the rates needed to meet our second half guidance I'm confident we're taking the steps needed to have increased capabilities and capacity, so will reach or exceed our stated 2025 targets.

Kimberly A. Fields: Last, with the increased industry focus on quality, testing and inspection capacity has been very tight. We've substantially expanded our ultrasonic inspection to support the increased testing requirements and relieve a critical industry supply chain bottleneck. By the second half, our testing capacity will triple, and this goes a long way to addressing the urgent needs of our customer base. Our team is firing on all cylinders, and their hard work really shines through in this quarter's results.

Kevin: Before I conclude I want to thank our teams every day they are focused on safely delivering for our customers.

Kevin: As you can see their efforts are paying off as we achieved solid financial returns for our shareholders. We appreciate all their hard work.

Kimberly A. Fields: We're operating at the rates needed to meet our second-half guidance, and I'm confident we're taking the steps needed to have increased capabilities and capacity so we'll reach or exceed our stated 2025 targets. Before I conclude, I want to thank our teams. Every day they are focused on safely delivering goods to our customers. As you can see, their efforts are paying off as we achieve solid financial returns for our shareholders. We appreciate all their hard work. With that, I'll turn it over to Don for details on this quarter's results and the outlook for the second quarter of 2024.

Kevin: With that I'll turn it over to Don for detail on this quarter's results and the outlook for the second quarter in 2024.

Donald P. Newman: Thanks Kim.

Let me start by noting that hei continues to deliver on commitments to our shareholders.

Donald P. Newman: First quarter adjusted EPS exceeded the high end of our guidance range in a meaningful way.

Donald P. Newman: We also delivered noteworthy improvement to cash performance year over year.

Donald P. Newman: We use that liquidity in the first quarter to repurchase $150 million of stock.

Donald P. Newman: We are also raising full year earnings and free cash flow guidance to reflect expected performance. There are three areas I want to cover today.

Donald P. Newman: Q1 showed continued improvement in our ramping demand environment second we anticipate a meaningful increase in sales and earnings in Q2 and third our expected performance in the second half of the year as well aligned to delivering 2025 financial targets.

Donald P. Newman: Let me start by noting that ATI continues to deliver on commitments to our shareholders. First Quarter Adjusted EPS exceeded the high end of our guidance range in a meaningful way. We also delivered a noteworthy improvement in cash performance year over year. We used that liquidity in the first quarter to repurchase $150 million of stock. We are also raising full-year earnings and pre-cash flow guidance to reflect expected performance. There are three areas I want to cover today.

Donald P. Newman: Let's start with color on the first quarter.

Donald P. Newman: The E&S segment delivered stronger than expected performance in the first quarter, including revenue growth of 7% over fourth quarter 2023, as well as adjusted EBITDA margins of 14%.

Donald P. Newman: First, Q1 showed continued improvement in a ramping demand environment. Second, we anticipate a meaningful increase in sales and earnings in Q2. And third, our expected performance in the second half of the year is well aligned to delivering our 2025 financial targets. Let's start with color on the first quarter.

Donald P. Newman: Aerospace medical and electronics drove this sequential revenue increase.

Donald P. Newman: As expected certain industrial end markets remained soft continuing a trend started in 2023.

Donald P. Newman: Conventional energy sales increased due to a nonrecurring product delivery.

Donald P. Newman: The AANF segment delivered stronger than expected performance in the first quarter, including revenue growth of 7% over fourth quarter 2023, as well as adjusted EBITDA margins of 14%. Aerospace, Medical, and Electronics drove the sequential revenue increase. As expected, certain industrial end markets remain soft, continuing a trend started in 2023. Conventional energy sales increased due to a non-recurring product delivery.

Donald P. Newman: Beyond this singular events, we continue to expect recovery of industrial demand in the second half of the year.

Rach P&C melt outages in late 2023 led to lower first quarter sales and unfavorable mix as well as lower earnings and margins.

Donald P. Newman: But the outages are behind us.

Donald P. Newman: Now rates are where we need them to be to hit our targets.

Donald P. Newman: Here I want to call out the team's efforts to improve <unk> performance.

Donald P. Newman: One has historically been a quarter of seasonal cash burn.

Donald P. Newman: Cash used in operating activities this quarter was $99 million.

Donald P. Newman: Beyond this singular event, we continue to expect recovery of industrial demand in the second half of the year. For HPMC, melt outages in late 2023 led to lower first quarter sales and an unfavorable net, as well as lower earnings and margins. But the outages are behind us.

Compare that to the first quarter of 2023, when we used $285 million for operating activities.

Donald P. Newman: That's a $186 million year over year improvement.

Donald P. Newman: Working capital management and in the absence of pension contributions led to the favorable change.

Donald P. Newman: Good progress to date, but we still have many opportunities to unlock when it comes to cash conversion.

Donald P. Newman: Melt rates are where we need them to be to hit our target. Here, I want to call out the team's efforts to improve CAD performance. Q1 has historically been a quarter of seasonal cash burn. Cash used in operating activities this quarter was $99 million.

Donald P. Newman: We are putting that cash to good use.

Donald P. Newman: Q1, we repurchased $150 million of our stock completing the program our board approved last November.

Donald P. Newman: Executing the program early in the year refresh strong liquidity and a stable balance sheet.

Donald P. Newman: Compare that to the first quarter of 2023, when we used $285 million for operating activity. That's a $186 million year-over-year improvement. Working capital management and the absence of pension contributions led to the favorable change.

Donald P. Newman: It also reflects confidence in our improving operating cycle and cash generation profile.

Donald P. Newman: We closed the first quarter with more than 9000 $50 million of total liquidity, including nearly $400 billion of cash on hand.

Donald P. Newman: After executing the share buyback.

Donald P. Newman: Our net leverage ratio was two eight times at the end of the quarter and should continue to improve because of cash generation and increasing profits.

Donald P. Newman: Good progress to date, but we still have many opportunities to unlock when it comes to cash conversion. We are putting that cash to good use. In Q1, we repurchased $150 million of our stock, completing the program our board approved last November. Executing the program early in the year reflects strong liquidity and a stable balance sheet. It also reflects confidence in our improving operating cycle and cash generation profile. We closed the first quarter with more than $950 million of total liquidity, including nearly $400 million of cash on hand.

Donald P. Newman: Looking beyond Q1, we remain committed to delivering maximum value as we've won invest for growth to delever the balance sheet and three return capital to our shareholders.

Speaker Change: With that let's talk about our Q2 outlook and our updated expectations for 2024.

Speaker Change: To provide greater clarity into our financial outlook.

Speaker Change: We have added an estimated range for adjusted EBITDA to complement the guidance we offer for adjusted earnings per share.

Speaker Change: Yeah.

Speaker Change: Demand for ATI products remained strong, particularly in the A&D in Aero life markets.

Donald P. Newman: That's after executing the share buyback. Our net leverage ratio was 2.8 times at the end of the quarter and should continue to improve because of cash generation and increasing profits. Looking beyond Q1, we remain committed to delivering maximum value as we 1. invest for growth, 2. deliver the balance sheet, and 3. return capital to our shareholders. With that, let's talk about our Q2 outlook and our updated expectations for 2024 to provide greater clarity on our financial outlook. We have added an estimated range for adjusted EBITDA to complement the guidance we offer for adjusted earnings per share. Demand for ATI products remains strong, particularly in the AMD and Arrow light market.

Speaker Change: When combined with the improved operational performance and production capacity that Kevin highlighted.

Speaker Change: The expectations for future performance are compelling.

Speaker Change: For the second quarter, we estimate adjusted EPS will be in the range of 54 to <unk> 60 per share.

Speaker Change: We expect adjusted EBITDA in the second quarter.

Speaker Change: To be between 170 and $180 million.

Speaker Change: Where is that growth coming from.

Speaker Change: Sales growth in our core end markets.

Speaker Change: Post outage debottleneck production levels and stable industrial demand.

Speaker Change: Expected strength in the second quarter carries over to the full year.

We expect full year adjusted EPS to be in the range of $2 30 to $2 60 per share.

Speaker Change: At the midpoint of the range that is a 13% increase from the full year guidance provided last quarter.

Speaker Change: We also narrowed our guidance range by 10 to reflect confidence in our ability to deliver.

Donald P. Newman: When combined with the improved operational performance and production capacity that Kim highlighted, the expectations for future performance are compelling. For the second quarter, we estimate adjusted EPS will be in the range of $0.54 to $0.60 per share. We expect Adjusted Eve at dawn the second quarter to be between $170 and $180 million. Where's that growth coming from? sales growth in our core and market. Post Outage Deep Bottleneck Production Levels and Stable Industrial Demand.

Speaker Change: Adjusted EBITDA for the full year is expected to be in the range of $700 million to $750 million.

Speaker Change: This strong performance and improved outlook carries over to cash flows.

Speaker Change: We have increased our full year free cash flow range by $15 million from previous guidance.

Speaker Change: The new range is $260 million to $340 million.

Speaker Change: The $300 million midpoint represents an 82% increase from 2023 free cash flow of $165 million.

Speaker Change: We are not changing our capex range.

Donald P. Newman: The expected strength in the second quarter carries over to the full year. We expect full year adjusted EPS to be in the range of $2.30 to $2.60 per share. At the midpoint of the range, that is a 13 cent increase from the full year guidance provided last quarter. We also narrowed our guidance range by 10 cents to reflect confidence in our ability to deliver. Adjusted EBITDA for the full year is expected to be in the range of $700 to $750 million.

Speaker Change: It remains at $190 million to $230 million.

Speaker Change: I know my audience. Most of you have already done the math regarding what this guidance indicates for the second half.

Speaker Change: The messages that we anticipate strong earnings margin and cash generation momentum as we exit 2024 and focus on delivering our 2025 financial targets.

Speaker Change: With that I will turn the call back over to Bob.

Robert S. Wetherbee: Thanks, Dan.

Robert S. Wetherbee: Today's call is may 22nd as Ati's CEO those of you in materials science like we are no. The 22 is the atomic number for titanium so I guess that's fitting.

Donald P. Newman: This strong performance and improved outlook carries over to cash flows, where we have increased our full-year free cash flow range by $15 million from previous guidance. The new range is $260 to $340 million. The $300 million dollar midpoint represents an 82% increase from 2023 free cash flow of $165 million. We are not changing our CapEx rate.

Robert S. Wetherbee: Since being named CEO in August of 2018, it's been a privilege to collaborate with our team to develop ATI strategy and guide our efforts to execute on that strategy to the benefit of shareholders customers and employees.

Robert S. Wetherbee: Almost from day, one I've got great counsel from our directors to build a succession plan for whenever the time was right.

Donald P. Newman: It remains at $190 to $230 million, and I know My Audience. Most of you have already done the math regarding what this guidance indicates for the second half. The message is that we anticipate strong earnings margin and cash generation momentum as we exit 2024 and focus on delivering our 2025 financial target. With that, I'll turn the call back over to Bob.

Robert S. Wetherbee: Been doing that.

Robert S. Wetherbee: A strong team across the enterprise that.

Robert S. Wetherbee: That includes investing and Kim fields, she's learned and let each business unit within ATI.

Robert S. Wetherbee: Strengthening our operations and championing our growth.

Robert S. Wetherbee: Can be equally invested herself in the development experience in the development of our A&P strategy.

Robert S. Wetherbee: Our deliberate succession plan is paid off she's ready to become <unk> next CEO.

Robert S. Wetherbee: On July 1st.

I'm really pleased for her and she has earned it and.

Speaker Change: And I'm excited for ATI, and as executive Chairman I might be stepping away from the day to day.

Robert S. Wetherbee: Thanks, guys. Today's call is my 22nd as ATI CEO. Those of you into material science like we are know that 22 is the atomic number for titanium.

Speaker Change: But I will support him in whatever with units.

Speaker Change: As I reflect on the last six years, it's been a great run.

Speaker Change: Some days it felt a lot more like a sprint in Iran.

Robert S. Wetherbee: So I guess it's fitting. Since being named CEO in August of 2018, it's been a privilege to collaborate with our team to develop ATI's strategy and guide our efforts to execute on that strategy to the benefit of shareholders, customers, and employees. Almost from day one, I got great counsel from our directors to build a succession plan for whenever the time was right. We've been doing that, building a strong team across the enterprise. That includes investing in Kim Fields.

Speaker Change: But a little more geopolitical and market uncertainty than anyone could have anticipated came along but we've used every opportunity to our advantage.

Speaker Change: Yeah to be clear the best days of value creation at ATI are ahead.

My confidence in <unk> future is driven first by the strength of the aerospace and defense market demand.

Speaker Change: This robust growth is expected for the balance of the decade.

Speaker Change: Second hei positioned in our core markets with a very broad customer and end use application base.

Robert S. Wetherbee: She's learned and led each business unit within ATI. Strengthening our operations and championing our group, she can be equally invested herself in the development experience and the development of our AMD strategy. Our deliberate succession plan has paid off. She's ready to become ATI's next CEO in July. I'm really pleased for her, and she's earned it, and I'm excited for ATI. And as Executive Chairman, I might be stepping away from the day to day, but I'll support Kim and whatever way she wants. As I reflect on the last six years, it's been a great run.

Speaker Change: Third our capabilities our extraordinary.

Speaker Change: Our operational advantages formidable.

Speaker Change: And our velocity speed.

Speaker Change: Speed and a defined direction is accelerating.

Speaker Change: That's a great position for sure.

Speaker Change: I'm extremely proud to have led the team that has transformed ATI and positioned us strongly for the future.

Speaker Change: And we really have a great team thanks to them for all we've accomplished together.

Speaker Change: We are and will continue to be.

Speaker Change: Proven to perform.

Speaker Change: With that let's open the line for questions.

Thank you.

Please press star followed by the number one if you'd like to ask a question and ensure your devices on muted likely when it <unk> anticipate.

Robert S. Wetherbee: Some days it felt a lot more like a sprint than a run, but a little more geopolitical and market uncertainty than anyone could have anticipated came along, but we've used every opportunity to our advantage. Yet, to be clear, the best days of value creation at ATI are ahead. My confidence in ATI's future is driven first by the strength of the aerospace and defense market demand. This robust growth is expected for the balance of the decade.

We kindly ask that you limit yourself to one question and one follow up finally.

Speaker Change: Our first question today comes from Michael Michelle I'll Keybanc. Your line is open. Please go ahead.

Speaker Change: Yeah.

Michael Michelle: Hey, good morning, Bob Congrats on number 22.

Speaker Change: Thank you.

Michael Michelle: I wanted to start here on the commercial aerospace side I know the 737 Max is incorporated in guidance then it sounds like you have ample room to mitigate some of the near term challenges across.

Robert S. Wetherbee: Second, ATI is positioned in our core markets with a very broad customer and end-use application base. And third, our capabilities are extraordinary. Our operational advantage is formidable, and so are our velocities. It's a great position to be in, for sure. I'm extremely proud to have led the team that has transformed ATI and positioned us so strongly for the future. And we really have a great team. Thanks to them for all we've accomplished together. We are and will continue to be proven to perform. With that, let's open the line for questions.

Michael Michelle: Across your whole portfolio, but wanted to ask on how long it would take for subdued Max build rates to meaningfully impact the API.

Michael Michelle: So hypothetically if boeing's rates stayed the same for another year, what would the impact look like on 2025 numbers for ATI and are there are there ways to mitigate that if the 737 issues become a longer term issue.

Operator: Thank you. Please press star followed by the number one if you'd like to ask a question and ensure your device is unmuted locally when it's your turn to speak. We kindly ask that you limit yourself to one question and one follow-up only. Our first question today comes from Michael LeShock of KeyBank. Your line is open, please go ahead.

Speaker Change: Well, hi, so I think I'll take this one Bob so just to give you a little bit of color you know as we mentioned there's been minimal impact on us and primarily because it's more than offset by demand across all our other programs. So even if it was.

Robert S. Wetherbee: As you said you know further out in multiple quarters forward as we're looking at it you know a couple of things are true. One is wide wide body demand is starting to ramp which has much higher titanium content than the 737, Max which is more of an aluminum plane.

Michael David Leshock: Hey, good morning. And Bob, congrats on number 22. Thank you.

Michael David Leshock: I wanted to start here on the commercial aerospace side. I know the 737 MAX is incorporated in guidance, and it sounds like you have ample room to mitigate some of the near-term challenges across your whole portfolio, but I wanted to ask how long it would take for subdued MAX build rates to meaningfully impact API. So hypothetically, if Boeing's rates stayed the same for another year, what would the impact look like on 2025 numbers for ATI, and are there ways to mitigate this if the 737 issues become a longer-term issue?

Robert S. Wetherbee: The engines.

Robert S. Wetherbee: Graham is kind of across the board, we're seeing really strong demand on all of those programs engine spares and MRO visits are up which are you know some Oems are predicting increases in that as well, we're a key part of the DTF overhauls and.

<unk> parts replacement and thats going to be elevated for several years as.

Robert S. Wetherbee: As we work with them to help lower their Eog's and lastly, you can't forget the leap <unk> has just as much jet engine content in titanium as the one b and that is continuing to grow and we anticipate that so as we said in the near term minimal impact and we anticipate that.

Kimberly A. Fields: Well, hi, so I think I'll take this one, Bob, you know, so just to give you a little bit of color, you know, as we mentioned, there's been minimal impact on us, primarily because it's more than offset by demand across all our other programs. So, you know, even if it was, as you said, further out and multiple quarters forward, you know, as we're looking at it, you know, a couple of things are true.

Robert S. Wetherbee: For many quarters out that we're going to be in good shape.

Speaker Change: Got it that's really helpful and then.

Speaker Change: On industrial demand just wanted to get your take on what gives you confidence in a second half recovery and what are the moving pieces that youre seeing in the industrial side. Thanks.

Kimberly A. Fields: One is, you know, wide body demand is starting to ramp up, which has a much higher titanium content than the 737 MAX, which is more of an aluminum plane. The engine programs kind of across the board, we're seeing really strong demand on all of those programs, engine spares, and MRO visits are up, which are, you know, some OEMs are predicting increases in that as well. We're a key part of the GTF overhauls and parts replacement, and that's going to be increased for several years as we work with them to help lower their AOGs.

Speaker Change: Yeah. This is Don I'll take that question.

Donald P. Newman: Really we've talked about.

Donald P. Newman: For a while now about our expectations that industrial is going to recover.

Donald P. Newman: In the second half of the year.

Donald P. Newman: And what we're looking at is signals within the individual.

Donald P. Newman: And markets that make up our industrial and <unk>.

Donald P. Newman: I would say is this last quarter, we saw some positives and oil and gas some of those are recurring some are not.

Kimberly A. Fields: And lastly, you can't forget that LEAP 1A has just as much jet engine content and titanium as the 1B, and that is continuing to grow, and we anticipate that. So, as we said in the near term, minimal impact, and we anticipate that for many quarters out, we're going to be in good shape.

Donald P. Newman: But we are seeing some indications from an order a book quarter.

Donald P. Newman: Volume standpoint that that there's positive trends so what it does is it gives us.

Donald P. Newman: Great confidence that our expectation for Q2 is still strong.

Donald P. Newman: Additionally to that that we've seen recoveries in Asia demand with our Asian precision rolled strip business and.

Donald P. Newman: Got it. That's really helpful. And then on industrial demand, just wanted to get your take on what gives you confidence in a second half recovery and what are the moving pieces that you're seeing on the industrial side.

Donald P. Newman: Stability.

Donald P. Newman: Industrial's overall.

Speaker Change: Great. Thank you.

Speaker Change: Our next question comes from Richard Safran of Stifel.

Donald P. Newman: Thanks. Yeah, this is Don. I'll take that. That question. You know,

Richard Tobie Safran: Please go ahead.

Donald P. Newman: Now, this is Don. I'll take that question. You know, really, we've talked for a while now about our expectations that the industrial sector is going to recover, largely in the second half of the year. And what we're looking at are signals within the individual and markets that make up our industrial sector. And what I would say is that in this last quarter, we saw some positives in oil and gas. Some of those are recurring; some are not.

Richard Tobie Safran: Good morning, Bob Congrats to you.

Richard Tobie Safran: Okay. Thanks, Rich for you and then I have one for you Don.

Speaker Change: Any time Bob.

Speaker Change: Kim could you expand a little.

Kimberly A. Fields: More on this wide body demand you you were mentioning.

Kimberly A. Fields: In your opening remarks is that coming from both Boeing and Airbus and is it possible could you discuss the 787 orders does it that you're getting right now I mean is it supporting higher rates than what we're seeing right now given your lead times.

Speaker Change: Thanks for thanks, Rich I appreciate the question.

Kimberly A. Fields: Yeah.

Speaker Change: There's been some obviously the $3 50, they've come out and stated higher rates is there going forward and I got to take everyone back the material lead times for these for these programs are 12 to 15 months out. So we are starting to see and talk with our customers and we're very aligned with them.

Donald P. Newman: But we are seeing some indications from an order, a book order volume standpoint that there are positive trends. So, what this does is it gives us great confidence that our expectation for Q2 is still strong. In addition to that, we've seen recoveries in Asia demand for our Asian precision rolled strip business and stability in industrials overall.

Speaker Change: So we're starting to see that demand is they're talking to us around how do we ensure that the material flow is gonna be available as they start to ramp up.

Unknown Attendee: Good morning, Bob, congratulations to you. I have a question for you, and then I have one for you, Don.

Unknown Attendee: Thanks. Thanks, Rich.

Robert S. Wetherbee: I appreciate the kind of the question. Um, yeah, you know, there's been some, you know, obviously, the 350. They've come out and stated higher rates as they're going forward. And, you know, I got to take everyone back to material lead times for these programs are 12 to 15 months out. So, you know, we are starting to see and talk with our customers. We're very aligned with them. So, we're starting to see that demand as they're talking to us around.

Speaker Change: As you said the 787 has continued to ramp and so we started having those conversations that that side and we anticipate seeing those orders being placed to get into the lead time for the second half of this year as we gear up for shipments into 2025.

Speaker Change: No.

Speaker Change: Okay.

Speaker Change: Okay. Thank you for that.

Speaker Change: Don just a quick.

Speaker Change: Quickly could you go over.

Speaker Change: Discuss a bit about how you're thinking about capital deployment now you know given that you used up the.

Speaker Change: You know the $150 million in the first quarter up one point in time I think you were talking about M&A also Sofia include a bit of a discussion about that in your answer thanks.

Robert S. Wetherbee: How do we ensure that the material flow is going to be available as they start to ramp up? As you said, the 787 has continued to ramp. And so we've started having those conversations with that side, and we anticipate seeing those orders being placed to get into the lead time for the second half of this year, as we gear up for shipments into 2025.

Speaker Change: Sure happy to do that.

Speaker Change: We've talked many times about our balanced.

Speaker Change: Balanced capital deployment strategy, we're focused on three elements Bryan the business Delevering and returning capital to shareholders.

Speaker Change: That.

Speaker Change: That those three priorities and the balance around them is not expected to change.

Donald P. Newman: Okay, thank you for that. Don, just quickly, could you go over and discuss a bit about how you're thinking about capital deployment now? You know, given that you used up the 150 million in the first quarter. One point, Tom, I think you were talking about M&A also. So if you include a bit of a discussion about that in your answer, thanks. Sure, happy to do that.

Speaker Change: Youre pointing out that we did.

Speaker Change: Fully consumed the authorization that we had for share repurchases and in Q1.

Speaker Change: $150 million so.

Speaker Change: Are we expecting to do additional additional share repurchases. This year would be a fair conclusion of the question that you're asking the short answer to that is.

Donald P. Newman: You know, we've talked many times about our balanced capital deployment strategy, and we're focused on three elements, growing the business, de-laboring, and returning capital to shareholders. That those three priorities and the balance around them is not expected to change. But you're pointing out that we have.

Speaker Change: We have clearly prioritize returning capital to shareholders since early 2020 to.

Speaker Change: Repurchase almost $400 million of our shares.

Speaker Change: We are very fortunate position, where we expect to have healthy cash generation.

Speaker Change: Just have to look at the targets that we've shares and so that coupled with our strong balance sheet and liquidity rich. We're in a great position to continue to make choices. So what does that mean for maybe an additional share repurchase program. This year and the short answer on that is.

Donald P. Newman: I'd like to start by saying that we fully consumed the authorization that we had for share repurchases in Q1 with $150 million. So are we expecting to do additional share purchases this year? A fair conclusion to the question that you're asking. The short answer to that is, we have clearly prioritized returning capital to shareholders. Since early 2022, we've repurchased almost $400 million of our shares.

Speaker Change: I don't want to get ahead of my board, but I would point out that our board has been extraordinarily supportive of this of this balanced capital deployment strategy and prioritizing return of capital to shareholders I would not expect that the $150 million program. We just completed.

Donald P. Newman: We are in a very fortunate position where we expect to have healthy cash generation. We just have to look at the targets that we've shared. So that, coupled with our strong balance sheet and liquidity, Rich, we're in a great position to continue to make choices. So what does that mean for maybe an additional share repurchase program this year? And the short answer on that is, I don't want to get ahead of my board, but I would point out that our board has been extraordinarily supportive of this balanced capital deployment strategy and the prioritizing return of capital to shareholders.

Speaker Change: <unk> will be the last program quite the contrary.

Speaker Change: In terms of M&A and thanks, a lot and our bias has been yes.

Speaker Change: Our bias on an on growing the business and investment has really been toward organic investment and we've got a long list of great projects that provide robust returns.

Speaker Change: And we don't see that changing it doesn't mean that we're not interested in M&A, but I can tell you the hurdles that we have internally hurdles in terms of very close adjacencies overlap to our current business return profiles those kinds of things.

Donald P. Newman: I would not expect that the $150 million program we just completed will be the last program; quite the contrary. In terms of M&A, you know, our bias on growing the business and investing has really been toward organic investment. And we've got a long list of great projects that provide robust returns, and we don't see that changing. It doesn't mean that we're not interested in M&A, but I can tell you the hurdles that we have internally, hurdles in terms of very close adjacencies overlap with our current business, return profiles, those kinds of things, you know, they're very robust.

Speaker Change: They're very robust so if we were to do any sort of acquisition. It would it would certainly be a it.

Speaker Change: It would be challenged.

Speaker Change: To hit our internal.

Speaker Change: Internal targets it isn't something that we are putting great emphasis on our priority we have a great business to run that's growing with cap with Capex and is going to provide the the returns and the targets that we've shared with the market and so we're happy with where we're at but it is.

Speaker Change: But I will tell you it's nice to have choices and it goes back to your original question capital deployment or are starting.

Donald P. Newman: So if we were to do any sort of acquisition, it would certainly be, it would be challenged to hit our internal targets. It isn't something that we're putting great emphasis on or priority on. We have a great business to run that's growing with CapEx and is going to provide the returns and the targets that we've shared with the market. And so we're happy with where we're at, but it is, I will tell you, it's nice to have choices.

Speaker Change: Starting objective.

Speaker Change: With our capital deployment strategy and focus on cash generation rich was to put us in a position where we can make healthy choices for our shareholders.

Speaker Change: And that and that's something that I think youre starting to see.

Speaker Change: Thanks, a lot.

Speaker Change: Our next question comes from David Strauss of Barclays.

David Egon Strauss: Please go ahead.

David Egon Strauss: Thanks, Good morning, Bob do you want to offer my congratulations as well and.

Donald P. Newman: And it goes back to your original question, capital deployment. Our starting objective with our capital deployment strategy and focus on cash generation, Rich, was to put us in a position where we could make healthy choices for our shareholders. And that's something that I think you're starting to see.

David Egon Strauss: That's wishes going forward.

David Egon Strauss: Thanks, David.

David Egon Strauss: I appreciate it.

Speaker Change: Of course.

David Egon Strauss: I guess the first question for you Don.

Donald P. Newman: The EPS guidance increase obviously some of that is the lower lower share count, but beyond that what what actually changed since we didn't have an EBITA.

David Egon Strauss: Our next question comes from David Strauss of Barclays. Please go ahead.

David Egon Strauss: Expectation before that sort of guidance before this I guess what changed what got better in terms of.

David Egon Strauss: Thanks. Good morning.

David Egon Strauss: I wanted to offer my congratulations as well and best wishes going forward. Thanks, David. I appreciate it.

David Egon Strauss: And markets are or maybe break it out by business E&S H P M.

David Egon Strauss: What has improved versus when you gave initial guidance.

Donald P. Newman: I guess this first question is for you, Dawn. The PS guidance increase, obviously, you know, some of that is a lower share count. But beyond that, what actually changed? Since, you know, we didn't have an EBITDA expectation before this or guidance before this, I guess, what changed, what got better in terms of end markets, you know, or maybe break it out by business and FHPM, what what is improved versus, you know, when you gave initial guidance? Yeah.

Speaker Change: Yeah starts with our Q1 performance being better than expected.

Speaker Change: And so that was helpful helpful in getting comfortable with raising the guidance, but really it's starting with.

Speaker Change: Two pretty key items. One is continued strength of demand in our core end markets aerospace and defense and Aero like and.

Speaker Change: That strength is reinforcing our.

Speaker Change: Growth, especially in the second half of the year and our business and growth that we expect is going to carry to 2025 and beyond so seeing that that continued strength.

Donald P. Newman: Yeah, it starts with our Q1 performance being better than expected. And so that was helpful in getting comfortable with raising the guidance. But really, it's starting with two pretty key items.

Speaker Change: Demand was helpful. Another thing that that I would point to that has increased our expectations of the business are tied to our debottlenecking activity.

Donald P. Newman: One is the continued strength of demand in our core end markets, aerospace and defense, and aero-like. And that strength is reinforcing growth, especially in the second half of the year, in our business, growth that we expect is going to carry to 2025 and beyond. So seeing that continued strength of demand was helpful. Another thing that I would point to that has increased our expectations of the business is tied to our de-bottlenecking activity.

Speaker Change: And of course, Thats related to production and as we saw successes in the first quarter around our debottlenecking efforts and seeing improved slow around.

Speaker Change: No.

Speaker Change: Products that are melted and then seeing those progress through our production cycles through finishing and getting out the door very positive trends that we see there.

Donald P. Newman: And of course, that's related to production. And as we saw successes in the first quarter with our de-bottlenecking efforts and seeing improved flow around products that are melted and then seeing those progress through our production cycles through finishing and getting out the door. Very positive trends that we see there. And so that's what I would point to. We've got some additional debottlenecking efforts in the second half that will continue to add incremental EBITDA to the business. And so those are the primary drivers.

Speaker Change: And.

Speaker Change: So that's what I would point to we've got some <unk>.

Speaker Change: Additional debottlenecking focus that our efforts rather in the second half that will continue to to.

Speaker Change: Incremental EBITDA to the business and and so those are the primary drivers.

Speaker Change: Okay great.

Speaker Change: And you've talked about.

Speaker Change: Second half of the year recovery in your industrial end markets, mainly pointing to.

Donald P. Newman: And you've talked about, you know, the second half of the year recovery and then your industrial end markets. I mainly point to Well, on gas. If that doesn't materialize, how much risk is there to your guidance? Are we at the low end of the EPS range? If the, you know, if industrial production just kind of holds where we are today, does that put us at the low end? Or are we outside that range? Thanks. Yeah, the magnitude of, you know, if that were to happen.

Speaker Change: Oil and gas if that doesn't materialize how much risk is there to your to your guidance or are we at the low end of the EPS range if the.

Speaker Change: If industrial just kind of holds where we are today is does that put us at the low end or are we outside the range.

Speaker Change: Yes, the magnitude of that were to happen. It wouldn't have a significant significant effect on the guidance are performing against the guidance that we shared today.

Donald P. Newman: Yeah, the magnitude of you know, if that were to happen, it wouldn't have a significant significant effect on the guidance, or us performing as guidance that we shared today, it would be marginal, I would say to the even our guidance of 725. And so I would still expect with stable industrial, stable being defined as kind of where we were in Q1, I would expect pretty high confidence in our ability to deliver on the guidance that's on the table today. Thanks very much. The next question comes from.

Speaker Change: It would be marginal I would say to you.

Speaker Change: EBITDA guidance.

Speaker Change: 25, and so.

Speaker Change: I would still expect with stable industrial.

Speaker Change: Stable being defined as kind of where we were in Q1 I would expect.

Speaker Change: The high confidence in our ability to deliver on the guidance that's on the table today.

Speaker Change: Thanks very much.

Speaker Change: The next question comes from Scott <unk> of Deutsche Bank. Your line is open.

Scott: Hey, good morning.

Scott: Good morning, good morning.

Scott: Hey, Kim reading between the lines on the prepared remarks, it sounded like ATI, maybe recently expanded its role with Pratt and its work scope on the GTS I guess did I read that right and is there any additional context you can add so.

Scott Duchot: The next question comes from Scott Duchot of Deutsche Bank. Your line is open. Hey, good morning.

Scott Duchot: Thanks, Scott. Yes, you did.

Kimberly A. Fields: Thanks, Scott, Yes, you did you did read that right you know I'd say ATI is part of the solution there.

Kimberly A. Fields: You did read that right. You know, I'd say ATI is part of the solution there. We've got a great relationship that's only grown through the pandemic.

Kimberly A. Fields: Got a great relationship that's only grown through the pandemic and you know it started with us partnering that with him on Diego angles scan testing protocols and practice and helping them work through both what is was necessary and then how to streamline that so that it didn't create more bottlenecks in the supply chain from.

Kimberly A. Fields: And, you know, it started with us partnering with them on the angle scan testing protocols and practice and helping them work through both what was necessary and then how to streamline that so that it didn't create more bottlenecks in the supply chain from an industry standpoint. And second, as I mentioned, we are partnering with them, and we are part of the solution in helping them address the GTF issue and the accelerated overhauls that they're driving.

Kimberly A. Fields: An industry standpoint, and second as I mentioned, we are partnering with them and we are part of the solution with helping helping them address the GT app issue.

Kimberly A. Fields: The accelerated overhauls that there they're driving I think.

Kimberly A. Fields: I think it was mentioned during the earnings call that material flow is really going to be the key, and we're partnering with them to accelerate that flow through parts. I talked a little bit about our investment in ultrasonic inspection and testing, and again, that's in conjunction with helping to to help support them really accelerate bringing those back down. You didn't ask, but as we look at our guidance, that is something that we did anticipate some of that incremental work in terms of scope.

Kimberly A. Fields: It was mentioned during the earnings call material flow is really going to be the key and when partnering with them to accelerate that flow through parts.

Kimberly A. Fields: A little bit about our investment in ultrasonic inspection and testing them and again, that's in conjunction with helping to to help support them really to accelerate bringing those args back down.

Kimberly A. Fields: Just you didn't ask but as we look at our guidance that is something that we did anticipate some of that incremental work in their entire terms of scope, but as we look forward you know I'd say my bias and you've probably heard you're hearing dons bias as well is to the upside of the range because.

Kimberly A. Fields: But as we look forward, I'd say my bias, and you're probably hearing Don's bias as well as to the upside of the range, because clearly, if we're able to move quicker and as we work with them, they'll want to do that as well and get those planes back up in the air and back in service.

Kimberly A. Fields: Clearly, if we're able to move quicker and as we work with them they'll want to do that.

Kimberly A. Fields: They want to do that as well and get those planes, but back up in the air and back in service.

Kimberly A. Fields: Okay, can you say what specific parts you're selling to them now? Is it powder metal or more forged products? Just trying to understand, more specifically.

Speaker Change: Okay and can you say what specific parts you're selling into them now is it is it powder metal or more forged products just trying to understand more specifically, yes, no. So theyre powdered model I think they've shared this publicly that they are through their joint venture provide that material to our forged products group. So we're making.

Kimberly A. Fields: Yeah, no, so they're powdered metal. I think they've shared this publicly that they, through their joint venture, provide that material to our forged products group. So we're making the forged parts. And you know, just as an overview, we are typically participating with all of our engine OEMs in the hot section of those parts. So the HPT and HPC discs and so forth.

Speaker Change: In the forged parts and you know just as an overview. We are typically participating with all of our engine Oems in the hot section of those pilots, so that HPT and HBC desks and so forth.

Kimberly A. Fields: So again, as you look at overhauls, both the powdered metal situation they've got but also just from the expanded overhauls that say they're bringing these planes in that they may want to do some additional work so that they don't have to come back in again as soon. Both of those opportunities are hitting us. Okay, great. And Kim, are you able to say if ATI was one of the new sources of supply for titanium that Collins Aerospace recently signed on?

Speaker Change: Again as you look at overhauls, both from the powdered metal situation they've got but also just from the expanded overhauls and it says they're bringing these planes and that they may want to do some additional work so that they don't have to come back in again as soon.

Kimberly A. Fields: Both of those opportunities are hitting us.

Speaker Change: Okay, Great and Kim are you able to say of ATI was one of the new source of supply for titanium that Collins Aerospace recently signed on.

Kimberly A. Fields: Well, what I can say is RTX is a long-term customer. We are partnering. We've grown our business over this time. I don't usually get into specifics about specific contracts and customers. But you know, this example of the GTF we just talked about is a great example of where we are continuing to grow our business with them. And, as I said, we've got a great partnership with them.

Kimberly A. Fields: Well, what I can say is Archie acts as a longtime customer we're partnering we've grown our business over this time I don't usually get into specifics about specific contracts and customers, but you know. This example on the GTS. We just talked about is a great.

Kimberly A. Fields: An example of where we are continuing to grow our business with them and as I said, we've got a great partnership with them.

Speaker Change: Great. Thank you.

Kimberly A. Fields: The next question comes from Chris Olin of Northcoast Research. Please go ahead. Your line is open.

Christopher David Olin: The next question comes from Chris Olin of North Coast Research. Please go ahead. Your line is open. Hey, good morning.

Christopher David Olin: Hey, good morning.

Christopher David Olin: I wanted to ask a little bit more about the titanium market share and maybe focus on the Airbus supply chain sourcing strategy. So it looks like the Canadian government officially exempted Russian titanium imports from that sanctions list. And that decision confused me, but I guess what I was really confused about was the [inaudible]. You know, I guess what I'm curious about is kind of your views on what's been going on lately with the contract movement or lack thereof, and does the less breaking off of contracts from Airbus hurt the Northwest titanium capacity expansion strategy? And I guess, Bob, as one of your last acts as CEO, I'm wondering if you're going to Thanks.

Christopher David Olin: And when they go out.

Christopher David Olin: I wanted to ask a little bit more about the titanium market share and maybe focus on the Airbus supply chain sourcing strategy. So it looks like the Canadian government officially exempted the rush in titanium imports from that sanctions list and that decision confuse me, but I guess, what I was really confused was the.

Christopher David Olin: Confused why it was the customer behavior, because it looks like some of the suppliers.

Christopher David Olin: Europe and Canada.

Christopher David Olin: Under the Airbus umbrella really either did not have any intention of breaking away from Washington supply or adhering to what everybody had officially saying so.

Christopher David Olin: I guess.

Christopher David Olin: What I'm curious about is kind of your views on what's been going on lately with the contract movement or lack thereof and does D.

Christopher David Olin: Oh.

Christopher David Olin: Fewer breaky off of contracts from Airbus hurt the northwest.

Christopher David Olin: At Genie capacity expansion strategy.

Christopher David Olin: And I guess finally.

Robert S. Wetherbee: Let me deal with the last question. I don't have any more records, but I'm going to hang on.

Christopher David Olin: Bob just one of your last active as CEO I'm wondering if you're going to throw away Youre Bryan Adams Records as a protest of these exceptions from Canada.

Robert S. Wetherbee: Hello, the Canadians, friends, right. So I would say, let me start with kind of the broader picture and kind of work down the color around that. Right. So I think your question was, you know, how do you see Russian supply and the risk to those investment investors? I think our operations in the Pacific Northwest, going to come online, customers have committed across the board, give us a great capability to marry up with our other titanium melting processes. And so I think that we don't see any risk with that. It certainly gives us a lot of flexibility, both in terms of the input materials, as well as the alloys and the end users.

Robert S. Wetherbee: [laughter] well, let me deal with the last question first I don't have any more records.

Robert S. Wetherbee: On the digital for sure.

Robert S. Wetherbee: Hello, the Canadians brands right. So.

Robert S. Wetherbee:

Robert S. Wetherbee: I would say, let me start with kind of the broader picture of kind of works out like color around that.

Robert S. Wetherbee: Right. So I think your question was how do you see Russian supply and the risks.

Robert S. Wetherbee: Ashwin.

Robert S. Wetherbee: I think our operations in the Pacific Northwest come online customers have committed across the board gives us a great capability to marry up with our other titanium melting and so I think we don't see any risk with that.

Robert S. Wetherbee: It certainly gives us a lot of flexibility both.

Robert S. Wetherbee: Both in terms of the input materials as well as the alloys.

Robert S. Wetherbee: So it's a very broad capability, and we look forward to that. I think if you look at the overall supply chain, you know, what's going on, perhaps in Canada, I don't think the Russian material in the supply chain has been totally consumed yet. You know, it's still working its way through. It's not zero.

Robert S. Wetherbee: And so it's a very broad capability and we look forward to that and I think if you look at the overall supply chain whats going on perhaps in Canada.

Robert S. Wetherbee: I don't think the Russian material.

Robert S. Wetherbee: In the supply chain has been totally consumed yes, it's still working its way through its not zero, it's probably gonna take into 2025 to do that.

Robert S. Wetherbee: It's probably going to take until 2025 to do that. I think we have to recognize that it's important to the national interest of the U.S., the Canadians, and the Europeans to build airplanes. And that's what they're going to do. They're going to have to build airplanes. And so that's going to be their first priority, and that's what you see in some of the exemption activities. But it's going to be spotty, spotty kind of stuff.

Robert S. Wetherbee: I think we have to recognize its importance to the national interest of the U S. The Canadians Europeans to build airplanes and thats, what theyre going to do they're going to have to build airplanes.

Robert S. Wetherbee: That's going to be their first priority and that's what you see in some of the exemption activities is but it's going to be spot spotty kind of stuff because I think the vast majority of the.

Robert S. Wetherbee: I think the vast majority of the supply chain is being filled by the incumbents. We certainly are saying that, and I think all of our competitors around the world are saying the same thing. But think back to the experiences and learnings over the last two years in the supply chain and what's going on, right? Number one is this commitment to eliminate single points of failure. So where people relied on sole sources, perhaps out of Russia, probably not going back to that. Number two is the requalification issues, right?

Robert S. Wetherbee: The supply chain are being filled by the incumbents. We certainly are seeing that I think all of our competitors around the world are saying the same thing, but think back to the experiences and learnings over the last two years of the supply chain and what's going on right number. One is this commitment to eliminate single points of failure, so where people.

Robert S. Wetherbee: <unk> sole sources, perhaps out of Russia, and I've gone back to that.

Robert S. Wetherbee: Number two is the recapped re qualification issues right think about the effort over the last two years to requalify and here we are heading into the start of our wide body demand increase so who's going to take real risk on their ramp.

Robert S. Wetherbee: Think about the effort of the last two years to requalify, and here we are heading into the start of a wide-body demand increase. So who's going to take a real risk on their ramp, you know, to switch supply when they've gone to great pains over the last two years to put it in place? So I think that's, I can't speak directly for Airbus and their strategy, but I would say that's the apparent strategy that they're on because they're acting like they've made the move and they're sticking to it.

Robert S. Wetherbee: Switch supply when they have gone to great pains over the last two years to put it in place. So I think that I can't speak directly for Airbus and their strategy, but I would say that's the apparent strategy.

Robert S. Wetherbee: Because they are they are acting like they've made the move and they're sticking to it.

Robert S. Wetherbee: But the titanium industry needs to perform and meet the need aside give need to go back to another source that's on our daily mantra.

Robert S. Wetherbee: You know, but the titanium industry needs to perform and meet the need. Let's not give the need to go back to another source. That's our daily mantra. And, you know, I think the OEMs are wanting to be, they want a level competitive playing field, but boys, you got to be reliable. As Kim said earlier, every CEO on calls in the last few weeks. [inaudible] For the balance of the decade, major OEMs would go back to Russian supply in a big way.

Robert S. Wetherbee: And I think the Oems are wanted to be one of the level of competitive playing field, but boy is it got to be reliable as Ken said earlier every of every CEO on calls in the last few weeks.

Robert S. Wetherbee: Talked about the importance of material flow. So I don't think they take the situation lightly, but I do think there'll be spot situations, where the industry that doesn't have the right capability or the right capacity at the right time, where youll see.

Robert S. Wetherbee: Material flowing but I would put it at low to no risk for.

Robert S. Wetherbee: For the balance of the decade that the major Oems would go back to Russian supply in a big way can't predict politics.

Robert S. Wetherbee: You can't predict politics, but you can certainly predict the economy. And I think they're committed to doing what's right for their customers to build the planes, and the reliable flow of high-quality material that's been qualified over and over again in the US and Europe is going to be their priority.

Robert S. Wetherbee: But you can certainly predict economics.

Robert S. Wetherbee: I think theyre committed to doing what's right for their customers to build the claims and reliable flow of high quality material. That's been qualified over and over again in the U S and Europe is going to be the priority. So let's.

Robert S. Wetherbee: So, let's see, did I answer all the questions that Chris had? I think I did. Brian Adams is still on my Rolodex. And if you say the Tardwax is going strong, then we go from there.

Speaker Change: Let's see did I answer all the questions, Chris and I think I did cause it Bryan Adams.

Speaker Change: Rolodex.

Speaker Change: Non stop.

Speaker Change: Then we go from there.

Christopher David Olin: Okay, thanks a lot. I appreciate it. Go listen to Summer 69 in your retirement.

Speaker Change: Okay. Thanks, a lot I appreciate it go listen to <unk> 69 in her retirement.

Seth Michael Seifman: Our next question comes from Seth Seifman of J.P. Morgan. Please go ahead; your line is open.

Speaker Change: Alright, thank you.

Speaker Change: Our next question comes from Seth Sigman.

Seth Michael Seifman: Nathan of J P. Morgan. Please go ahead your line is open.

Seth Michael Seifman: Hey, thanks very much. And good morning, everyone. And, you know, let me add my congratulations to Bob and congratulations to Kim as well.

Seth Michael Seifman: Hey, thanks, very much and good morning, everyone.

Seth Michael Seifman: Let me add my congratulations Bob and congratulations to him as well.

Seth Michael Seifman: I wanted to ask, maybe starting off about HBMC profitability, you talk about some lower shipments of high-value aerospace parts, and we attribute some of that to outages. Were there more timing issues in the quarter rather than outages? And then how do you expect this to bounce back, and does that lead to a margin back above?

Seth Michael Seifman: I wanted to ask maybe starting off.

Seth Michael Seifman: Sure.

Seth Michael Seifman: Starting off about the.

Seth Michael Seifman: Each PMC profitability.

Seth Michael Seifman: You talked about some lower shipments of high value aerospace parts, and we attribute some of that too.

Seth Michael Seifman: Outages were there more timing.

Seth Michael Seifman: Timing issues in the quarter, rather than outages and then how do you expect this to bounce back and does that lead to a margin back above 20%.

Seth Michael Seifman: In the second quarter for for HPLC.

Donald P. Newman: Sure, let me cover that. First of all, the primary driver for the lower revenues in Q1 was really tied to the melt outage impacts from that Q4 set of events and the impact that it had on our inventory positions for Q1. So as we have those outages behind us, we're expecting, of course, to be back up to production levels, and we are seeing that. Not just expecting it, we're seeing it. And then we take another step upward in terms of our de-bottlenecking activity. Add to all of that, if you're talking about HPMC, some of the things that Kim had talked about around forging.

Speaker Change: Sure, but let me cover though so.

Seth Michael Seifman: First of all the primary driver for the lower revenues.

Speaker Change: Q1, we're really tied to the melt outage impacts from that Q4 set of events and.

Speaker Change: The impact that it had on our inventory.

Speaker Change: Inventory positions for Q1.

Speaker Change: So as we have that those outages behind us we're expecting of course to be back up to the production levels and we are seeing that not just expecting it we're seeing it.

Speaker Change: And then took another step upward in terms of our debottlenecking activity.

Speaker Change: Add to all of that if you're talking about H P. M C.

Seth Michael Seifman: The things that came and talked about around four games.

Donald P. Newman: When you talk about forgings, you have to remember they've had two running quarters in a row where they set all-time records for their revenue. In addition to that, we started the fourth isothermal press, and we have added sonic testing, which was a bottleneck in the business.

Seth Michael Seifman: Can you talk about forgings you have to remember they've got two running quarters in a row, where they've set all time records on their revenue. In addition to that we have we've.

Seth Michael Seifman: <unk> the fourth Isothermal press and we have added Sonic testing and those that Sonic testing was a bottleneck in the business. So as you look forward to Q2 in the second half of the year for AGM HPLC Youre seeing a lift in volumes.

Donald P. Newman: So, as you look forward to Q2 and the second half of the year, for HPMC, you're seeing a lift in volumes. You're seeing – and that's due to debottlenecking as well as production efficiency. Don't forget the new assets that are coming online. We talked about the Albany, Oregon facility that we restarted in 2023, that that would be ramping up and really hitting income statement run rates in the second half of the year. That's a good guy.

Seth Michael Seifman: We're seeing.

Seth Michael Seifman: That should have debottlenecking as well as production efficiency don't forget the new assets that are coming online we've talked we've.

Seth Michael Seifman: We've talked about the Albany.

Seth Michael Seifman: Oregon facility that we restarted in 2023, but that would be ramping up and really hitting income statement run rates in the second half of the year, that's a good guy and.

Donald P. Newman: And then, you know, just the general overall efficiencies that we're going after in HPMC. And then, just one more thing, if you'll bear with me. As you think about the volume increase, where is it happening? Well, it's happening in aerospace and defense and aero light.

Seth Michael Seifman: And then.

Seth Michael Seifman: Just the general overall, the efficiencies that we're going after.

Seth Michael Seifman: H P M C.

Seth Michael Seifman: <unk>.

Seth Michael Seifman: And then just one more thing if you're if you bear with me as you think about the volume increase where is it happening what's happening in aerospace and defense and Aero right. Those are our richest margin product offerings and so that's going to be beneficial to margins so volume increases greater.

Donald P. Newman: Those are our richest margin product offerings. And so, that's going to be beneficial to margins. Volume increases, greater efficiencies, great mix-up impacts, and faster flow. Those all set the stage for answering your question.

Seth Michael Seifman: Cnc's, great mix impacts and faster flow.

Seth Michael Seifman: Those are those all set the stage for answering your question what the heck is going to happen with HPLC margins. The good news is they are going up we expect bi.

Donald P. Newman: What the heck is going to happen with HPMC margins? The good news is they're going up. We expect that, you know, certainly in Q2, HPMC margins will be back below the 20% level. And as the year progresses, we would expect that those margins, you know, in the Q3 and Q4 kind of timeframe would be in the 23% range, which is right in line with the targets that we have for 2025, which, as you know, are low 20s to mid 20s for HPMC.

Seth Michael Seifman: Certainly in Q2, we're going to see H PMC margins back above the 20% level and as the year progresses, we would expect that those margins.

Seth Michael Seifman: In the Q3, and Q4 kind of timeframe would be in the 23, 23% range, which is right in line with the targets that we have for 2025, which as you know are low twenty's to mid twenties for H P. M C. Now.

Donald P. Newman: Now, if we're going to talk about margins, I want to also just give you a sense as to how we think about margins in the broader business. And so, if you think about ATI consolidated, our experience this last quarter was 14.5% EBITDA margin. And I would expect that with each passing quarter, our consolidated EBITDA margins would be increasing. And, you know, for the overall business, our 2025 targets are EBITDA margins in the 18 to 20% range.

Seth Michael Seifman: If we're going to talk about margins I wanted to also just give you a sense as to how we're thinking about margins in the broader business and so if you. If you think about hei consolidated so where our experience. This last quarter was 14, 5% EBITDA margin.

Seth Michael Seifman: And I would expect that with each passing quarter, our consolidated EBITDA margins would be increasing.

Seth Michael Seifman: For the overall business, our 2025 targets.

Seth Michael Seifman: Our EBITDA margins in the 18% to 20% range, where we exit 2024 is an important point and.

Donald P. Newman: Where we exit 2024 is an important point in terms of our ability to close the gap and hit that 18 to 20% margin target. So how should you think about our expected margin exit rate for Q4 of this year? I would expect the consolidated EBITDA margins to be in the range of 16.5 to 17%. And, of course, we're targeting 17%. Delivering 17% as the Q4 exit EBITDA margin really sets us up well to hit our 2025 range of 18 to 20%. So, hopefully, that's helpful.

Seth Michael Seifman: In terms of our ability to to close the gap and hit that 18 to 20% to 20%.

Seth Michael Seifman: Margin target. So how should you think about our expected margin exit rate for Q4 of this year I would expect the consolidated EBITDA margins to be in the range of 16, 5% to 17% and of course, we're targeting 17%.

Seth Michael Seifman: In our business so.

Seth Michael Seifman: At delivering 17% as the Q4 exit EBITDA margins.

Seth Michael Seifman: Really sets us up well to hit our 2025.

Seth Michael Seifman: <unk> of 18% to 20% so hopefully that's helpful.

Seth Michael Seifman: Yes, that was great. And yeah, that was such a robust answer. I'll leave it at one for this morning. Thanks very much.

Speaker Change: Yes that was great and yeah. Our those are such a robust answer I'll leave it at one for this morning, thanks very much time.

Timna Beth Tanners: Thank you. Our next question today comes from Timna Tanners of Wolf Research. Your line is open.

Speaker Change: Okay.

Speaker Change: Thank you. Our next question today comes from Timna Tanners of Wolfe Research. Your line is open.

Timna Beth Tanners: Yeah, hey, good morning. Can you hear me? Okay.

Timna Beth Tanners: Yeah, Hey, good morning can you hear me okay.

Timna Beth Tanners: Yes, we got you loud and clear, Kimba. Okay. Thank you.

Timna Beth Tanners: Yes got you loud and clear Timna.

Timna Beth Tanners: Okay, great. Bob, congrats on a great run. And it seems like it's been like, I don't know, yesterday that you just started, but it's great to see all your progress. I wanted to just ask about CapEx and capital allocation. So on CapEx, I know you've done a really good job of de-bottlenecking and having bite-sized kinds of growth. But just want to know is that, you know, how much more runway do you have for de-bottlenecking?

Timna Beth Tanners: Okay, Great and Bob Congrats on a great run and it seems like it's been like.

Timna Beth Tanners: But yesterday that you just started but it's great to see how your progress I wanted to just ask about Capex and capital allocation. So on Capex I know you've done a really good job of Debottlenecking and having bite size kind of growth, but just wanted to know is that how much more runway do you have a debottlenecking how much more can you continue to kind of.

Timna Beth Tanners: How much more can you continue to kind of do these bite-sized increases in growth that way? What inning are we in there? And then, second question, just a little bit more on the buybacks. Is this, you know, a good pace to expect going forward? Is there an opportunistic element to your buyback where, you know, you look at the share price, or do you just look at a steady amount over time?

Timna Beth Tanners: Do these bite sized up increases in growth that way it does and what inning are we in there and then second question just a little bit more on the buybacks is this you know a good cadence to expect going forward is there an opportunistic element to your buyback where you know you look at the share price or do you just look at a steady amount over time. Thanks again.

Donald P. Newman: Thanks.

Timna Beth Tanners: Yeah.

Donald P. Newman: I'm sure let me take that in terms of CAPEX and debottlenecking. First, I want to reinforce that the growth that we're seeing in the business and the really strong trajectory that we're sharing a part of today is all built on the CapEx guidance that we've shared with the market up to this point. Our plan is we expect to average $200 million in CapEx each year between now and through 2027, plus or minus.

Speaker Change: Sure. Let me, let me take that in terms of of Capex and Debottlenecking first I want to reinforce.

Speaker Change: The growth that with that.

Speaker Change: That we're seeing in the business and the really strong trajectory that we're that we're sharing a part of today.

Speaker Change: Is all built on the Capex guidance that we've shared with the market up to this point. Our plan is we expect to average $200 million of Capex each year between now and through 2027 plus or minus.

Donald P. Newman: So in terms of de-bottlenecking and what the opportunities are, I would say we're nowhere near, really fully exhausting the opportunities and improving the production efficiencies and flows in our business. And I think that it's fair to say that those opportunities exist throughout the business. And it starts with melt.

Speaker Change: So in terms of Debottlenecking and what are the opportunities I would say we're nowhere near.

Speaker Change: Really fully exhausting the opportunities and improving the operate the production efficiencies and flows in our business and I think that it's fair to say that those opportunities exist throughout the business and it starts with melt and so unlocking the melt capacity.

Donald P. Newman: And so unlocking the melt capacity, like we have been working on, and we saw significant, significant steps forward in Q1. You know, that's the first step in really unlocking the bottlenecks in this business. So it's very, very exciting. You know, talking about effectively free capacity. And, you know, whatever the bottlenecking investments that we're making and support of, you know, increasing this flow is subsumed in our capex guidance that I just mentioned, so it's not incremental to it.

Speaker Change: Like we are.

Speaker Change: We have been working on and we saw significant significant steps forward in Q1.

Speaker Change: That is the first step and really unlocking the bottlenecks in this business. So it's very very exciting and I talked about.

Speaker Change: Effectively free capacity.

Speaker Change: And what.

Speaker Change: Whatever debottlenecking investments that we're making.

Speaker Change: In support of <unk>.

Speaker Change: The increasing this flow is subsumed in our Capex guidance that I just mentioned, so it's not incremental to it.

Speaker Change: And then could you repeat your question around share buybacks.

Donald P. Newman: Oh, sure. Yeah, it was more about, you know, what's the cadence that we might want to expect? Or does your board think about it in terms of a steady state or opportunistic?

Speaker Change: Oh sure Yeah. It was more about what's the cadence that we might want to expect or does your board think about it in terms of the steady state or opportunistic.

Donald P. Newman: I would say a combination. And what we try to do with our board is really look at things on an annual basis based upon our plan, liquidity, and cash generation. We make a recommendation to the board in terms of a level of CapEx, delevering, and share buybacks that balance the deployment strategy I've talked about. And so it's typical to talk to the board about that earlier in the year. And that's what we did this year too.

Speaker Change: I would say a combination when we tried to do with our board is.

Speaker Change: Really look at things on an annual basis based upon our planned liquidity and cash generation, we make a recommendation to the board in terms of the level of Capex delevering and share buybacks that balanced deployment strategy I've talked about.

Speaker Change: So it's typical to.

Speaker Change: To talk to the board about that.

Speaker Change: Earlier in the year and that's what we did this year actually we accelerated a little bit and.

Donald P. Newman: Actually, we accelerated it a little bit and did it at the end of last year, and that worked out extremely well. We repurchased shares early enough in Q1 before the run-up in our stock. That probably saved us $15 to $20 million because of being proactive on that, Timna. In terms of being opportunistic, the short answer there is, yes, we would expect to be opportunistic and to have a cadence. opportunistic, you know, this is a great example. So we expanded the 2024 program of $150 million that was originally planned to be executed late in the year. Well, we pulled that forward for a number of reasons, a number of really good reasons.

Speaker Change: At the end of last year.

Speaker Change: And that worked out extremely well we've.

Speaker Change: We repurchased shares early enough in Q1 before the run up in our stock probably saved us $15 million to $20 million because of that.

Speaker Change: Proactive on that Timna in terms of being opportunistic the short answer there is yes, we would expect to be opportunistic and to have a cadence opportunistic.

Speaker Change: This is a great example, so we.

Speaker Change: We expanded the 2024 program of $150 million that was originally planned to be executed late in the year, while we've pulled that forward for a number of reasons and a number of really good reasons.

Donald P. Newman: You know, now that we're seeing this very healthy cash generation profile for the rest of the year, we would go back to our board and have conversations with them around the topic with them. Should we, should we allocate more capital for additional share repurchases this year? But, you know, it is important to remember, as we think about capital deployment and cash generation. The idea of having a balanced employment strategy is not a one-off, one year or two-year kind of strategy. So capital investing for growth, investing for D levers, and returning capital to our shareholders is something that is a continuation of our. Okay, thanks again.

Speaker Change: Now.

Speaker Change: We're seeing this very healthy cash generation profile for the rest of the year.

Speaker Change: We would go back to our board and and have conversations around them around the topic with them should we should we allocate more capital for additional share repurchases this year, but.

Speaker Change: It is important to remember as we think about capital deployment and cash generation.

Speaker Change: The idea of having a balanced deployment strategy is not a one off one year or two year kind of strategy. So cap investing for growth investing for de levers and engine and returning capital to our shareholders is something that is a continuation in our business.

Speaker Change: Okay, Thanks, again and best of luck.

Timna Beth Tanners: Okay, thanks again, and best of luck.

Speaker Change: Thank you.

Speaker Change: And our next question comes from Gautam Khanna of Cowen. Please go ahead. Your line is open.

Gautam J. Khanna: And our next question comes from Gautam Khanna of TD Cowan. Please go ahead; your line is open.

Gautam J. Khanna: Hey, Thanks, Good morning, guys and congrats Bob.

Gautam J. Khanna: And Kim.

Gautam J. Khanna: Yeah. Thanks, Kevin it's been a quick six years, that's for darn sure, but I'm confident yes.

Gautam J. Khanna: Hey, thanks. Good morning, guys, and congrats, Bob.

Gautam J. Khanna: <unk> and <unk>.

Gautam J. Khanna: Yeah, it's been quick and I was just thinking I finally stopped calling your wrench and now you're leaving.

Speaker Change: [laughter] well.

Robert S. Wetherbee: Yeah, thanks, Gautam. It's been a quick six years, that's for darn sure, but I'm confident.

Speaker Change: Our camp Bob.

Speaker Change: Yeah.

Speaker Change: [laughter] exactly who knows what will happen, but hey.

Speaker Change: I wanted to I wanted to just revisit what you said in your prepared remarks on 737 in Destocking and I was wondering if you could maybe I missed it but.

unknown: [inaudible]

unknown: Yeah, it's been quick. And I was just thinking, I finally stopped calling you rich. And now you're

Speaker Change: Blissett Lee has there.

Speaker Change: This has had no impact on lead times nickel billet.

Speaker Change: On your titanium airframe shipments et cetera is that true.

Speaker Change: Through like there's just.

unknown: Well, those you don't call Kimbob, I think.

Unknown Attendee: It's entirely you have seen a change in the schedule but.

unknown: Exactly. Who knows what will happen?

Speaker Change: It's been entirely offset by the other programs is that a fair characterization.

Robert S. Wetherbee: Hey, I wanted to just revisit what you said in your prepared remarks on 737 and D-Stock. I was wondering if you could, maybe I missed it, but explicitly stated there that this has had no impact on lead times, nickel billet, on your titanium airframe shipments, etc. Is that true? Like there's just You have seen a change in the schedule, but it's been entirely offset by the other programs. Is that a fair characterization?

Speaker Change: Yeah. So you raised the question on two different alloys series and they have slightly different answer so I'll take the titanium side and I'll, let cam add the color on the nickel side, because I think.

Speaker Change: It is important to differentiate the two.

Speaker Change: When it comes to titanium you know the 737 Max as much as we love. It. It really is much more of a an aluminum intensive vehicle as they say.

Speaker Change: And so I would say the uptick in the wide body space you know.

Speaker Change: More than offsetting the downside on the seven.

Speaker Change: 737, so I would say what we see at the moment is stability in the order pattern from the guys in Seattle.

Robert S. Wetherbee: ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, So yeah, a little bit down on the three seven, starting to see the up on the wide body. So the message on titanium, I think in air structures in the United States is stable with an upward bias. And so we haven't seen it go down. We've just seen it stabilize, but we are definitely seeing interest in the second half, which is also an indication of the build rates of 2025, given the lead times of, you know, 12 to 15 months.

Speaker Change: So, yes, a little bit down on the three seven.

Speaker Change: Turning to see up on the wide body. So the message on titanium I think in the air structures in the United States is.

Speaker Change: Stable with an upward bias and so we haven't seen it go down.

Speaker Change: We've just seen it stabilize but we are definitely seeing.

Speaker Change: Interest in the second half, which is also an indication of the build rates of 2025, given the lead times of 12 to 15 months. So we are seeing that activity.

Robert S. Wetherbee: So we are seeing that activity. It helps when the A350s are going to go to 12 from 10, that'll be exciting, and we are looking forward to the day when they deliver 10 787s a month, and so we're starting to see that activity. So that's kind of the titanium story, Ken, do you want to fill in Gautam's question?

Speaker Change: It helps when.

Speaker Change: <unk> hundred <unk> are going to go to 12 <unk>.

Speaker Change: Then that'll be exciting.

Speaker Change: We are looking forward to the day when they deliver 10 $787 a month and so we're starting to see that activity. So that's kind of the titanium story Kim you want to fill in guidance question on the nickel side sure, yes, because that kind of leads us to the engine side and you know in the leap one be and as I mentioned.

Robert S. Wetherbee: question on the nickel side. Sure, yeah.

Kimberly A. Fields: Sure, yeah, because that kind of leads us to the engine side and, you know, and the LEAP 1B. And as I mentioned, there have been some, some modifications, and we're staying aligned with our customers.

Kimberly A. Fields: You know there has been some some modifications and you know we're staying aligned with our customers, but as we look at it it's more of a modern modifying of the growth, but we're still seeing growth and so you know instead of maybe 20% to 25% growth is closer to like 10, or 10% to 15% growth that we're going to continue.

Kimberly A. Fields: But as we look at it, it's more of a moderating of the growth, but we're still seeing growth. And so, you know, instead of maybe 20 to 25% growth, it's closer to like, 10 to 15% growth that we're going to continue to see from the LEAP program overall. Overall, and that includes LEAP 1A and the 1C for that matter.

Kimberly A. Fields: You see from the Leap program overall and that includes that leap, one am and the onesie for that matter.

Kimberly A. Fields: When you look, you know, as we look out over these different programs, as I mentioned, there are a couple things happening. The wide body is bringing the Rolls Royce demand forward. And so they're looking at, you know, some of their large engines and how they support that. So there's a lot of activity there. And then the GTF overhauls, you know, obviously, they want to get through that overhaul and replacement as fast as possible.

Kimberly A. Fields: When you look you know as we look out over these different programs as I mentioned there are a couple of things happening the wide body is bringing the rolls Royce demand forward and so they're looking at some of their large engines and how do they support that so theres a lot of activity there and then the GTS.

Kimberly A. Fields: Overhauls.

Kimberly A. Fields: Obviously, they want to get through that overhauling, our placement as fast as possible and so that's ramping very quickly.

Kimberly A. Fields: And so that's ramping very quickly, and any capacity that we have that can go to helping them move through that program quicker is going to be used. So, yeah, we don't have a lot of concern as we look at this more slight modification of that 1B ramp rate, and everything else seems to be very robust and growing.

Kimberly A. Fields: Any capacity that we have that can go to to helping them move through that program quicker is is going to it's going to be used so.

Kimberly A. Fields: Yeah, we don't have a lot of concern as we look at this it's more.

Kimberly A. Fields: Modification of their that one be ramp rate and.

Kimberly A. Fields: Everything else seems to be very robust and growing.

Kimberly A. Fields: And just as a follow-up, Kim, what are the nickel billet lead times at this point? I think last quarter we were thinking over 60 weeks. Is that fairly consistent? Yeah, we do have

Speaker Change: And just as a follow up Kim.

Speaker Change: Nick what are the nickel billet.

Speaker Change: Lead times at this point I think.

Kimberly A. Fields: Last quarter, we were thinking over 60 weeks is that fair.

Speaker Change: Really consistent.

Nick: Yes, we do have some there are some products that are over 70 weeks I do think you know Don mentioned some of the work that we're doing on productivity and Debottlenecking and so I'd say, it's yeah. It's about 12 to 15 months still but we are working and we are seeing some capacity increases that are allowing us.

Kimberly A. Fields: Pull some of those orders in and frankly use those to react to emergent demands that our customers are having that they need to get a little bit further up in line to help them out. So we're still in that same range. We do have some investments coming on that'll help that lead time, but it's still kind of in that 12 to 15 month range.

Speaker Change: Q.

Speaker Change: Paul some of those orders in and frankly, using those to react to emergence demands that our customers are having that they need to get a little bit.

Kimberly A. Fields: Further up in line just to help them out. So we're still in that same range. We do have some investments coming on that'll help help that lead time, but it's still kind of in that comp and 15 months.

David Weston: Thank you. We have no further questions, so I'll turn the call back over to Dave Weston for any closing comments.

Paul: Thanks, a lot guys.

Speaker Change: Thanks, Adam.

Speaker Change: Thank you we have no further questions. So I'll turn the call back over to T. J Watson for any closing comments.

David Weston: Yes, thanks, everyone, for your time today. Please reach out to our investor relations team today with any follow-up questions. And with that, thank you very much again, and have a great day.

Speaker Change: Yes, thanks, everyone for your time today, please reach out to our Investor relations team today with any follow up questions and with that thank you very much again and have a great day.

Operator: This concludes today's call. Thank you for joining us. You may now disconnect your line.

Speaker Change: This concludes today's call. Thank you for joining you may now disconnect your lines.

Speaker Change: [music].