Q3 2025 ATI Inc (New) Earnings Call

Presentation, you can register your question by pressing Star followed by one on your keypad. If you change your mind. Please press star followed by two.

I'll now hand over to your host David Westin to begin. Please go ahead. Thank you good morning, and welcome to <unk> third quarter 2025 earnings call.

Today's discussion is being webcast online at ATI materials Dot com.

Participating in today's call to share key points from our third quarter results are Kim fields, President and CEO and 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.

Speaker #1: Hello and welcome everyone to the 83rd quarter 2025 results conference call . My name is Becky and I'll be your operator today during the presentation , you can register a question by pressing star , followed by one on your keypad .

Operator: Hello, and welcome, everyone, to the ATI Inc. third quarter 2025 results conference call. My name is Becky, and I'll be your operator today. During your presentation, you can register a question by pressing STAR followed by 1 on your keypad. If you change your mind, please press STAR followed by 2. I will now hand over to our host, David Weston, to begin. Please go ahead.

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

After our prepared remarks, we'll open the line for your questions.

Speaker #1: If you change your mind , please press star , followed by two . I will now hand over to your host David Weston to begin , please go ahead .

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

Those are noted in the earnings release and in the accompanying presentation.

Speaker #2: Thank you. Good morning and welcome to ATI's Third Quarter 2020 earnings call. Today's discussion is being webcast online at ATI Materials.

David Weston: Thank you. Good morning, and welcome to ATI Inc.'s third quarter 2025 earnings call. Today's discussion is being webcast online at atimaterials.com. Participating in today's call to share key points from our third quarter results are Kim Fields, President and CEO, and 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, capabilities, and outlook, and can also be found on our website at atimaterials.com. After our prepared remarks, we'll open the line for questions. As a reminder, all forward-looking statements are subject to various assumptions and caveats. Those are noted in the earnings release and in the accompanying presentation. Now, I'll turn the call over to Kim.

Now I will turn the call over to Kim.

Good morning, everyone and thank you for joining US Q3 was another strong quarter for ATI delivering results ahead of our projections advancing our long term strategy and strengthening our leadership in aerospace and defense. Our teams continue to perform at a high level meeting growing customer needs and driving sustained.

Speaker #2: Com . Participating in today's call to share key points from our third quarter results . Our Kim Fields , President and CEO and Don Newman , Executive Vice President and CFO .

Speaker #2: 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 , capabilities , and outlook , and can also be found on our website at ATI .

Value.

Let's start with a quick overview of our Q3 results.

Revenue was up 7% year over year, once again exceeding $1 1 billion.

Speaker #2: Materials Comm . After our prepared remarks , we'll open the line for questions . As a reminder , all forward looking statements are subject to various assumptions and caveats .

Adjusted EPS was <unk> 85.

10 cents above the high end of our projected range.

Adjusted EBITDA totaled $225 million.

Speaker #2: Those are noted in the earnings release and in the accompanying presentation . Now , I'll turn the call over to Kim .

Excluding approximately $10 million related to the sale of oil and gas rates $215 million of adjusted EBITDA exceeded the high end of our guidance by $5 million.

Speaker #3: Good morning , everyone , and thank you for joining us . Q3 was another strong quarter for ATI delivering results ahead of our projections , advancing our long term strategy and strengthening our leadership in aerospace and defense .

Kim Fields: Good morning, everyone, and thank you for joining us. Q3 was another strong quarter for ATI Inc., delivering results ahead of our projections, advancing our long-term strategy, and strengthening our leadership in aerospace and defense. Our teams continue to perform at a high level, meeting growing customer needs and driving sustained value. Let's start with a quick overview of our Q3 results. Revenue was up 7% year over year, once again exceeding $1.1 billion. Adjusted EPS was $0.85, $0.10 above the high end of our projected range. Adjusted EBITDA totaled $225 million. Excluding approximately $10 million related to the sale of oil and gas rights, $215 million of adjusted EBITDA exceeded the high end of our guidance by $5 million. Adjusted EBITDA margin exceeded 20%, our highest since the pandemic, and almost doubled 2019's margin. Both segments delivered excellent profitability.

Adjusted EBITDA margin exceeded 20%, our highest since the pandemic and almost double 2019 margin.

Both segments delivered excellent profitability, our high performance materials and components segment margins were above 24% and advanced alloys, <unk> solutions segment above 17% driven by strong pricing mix and increasing aerospace and defense content.

Speaker #3: Our teams continue to perform at a high level meeting growing customer needs and driving sustained value . Let's start with a quick overview of our Q3 results .

Speaker #3: Revenue was up 7% year over year . Once again exceeding $1.1 billion . Adjusted EPs was $0.85 , $0.10 above the high end of our projected range .

Cash generated from operations year to date reached $299 million of two.

$273 million improvement from last year.

Speaker #3: Adjusted EBITDA totaled $225 million , excluding approximately $10 million related to the sale of oil and gas rights , $215 million of adjusted EBITDA exceeded the high end of our guidance by $5 million .

We also returned $150 million to shareholders this quarter through share repurchases with a $120 million remaining under our current authorization.

Given this performance and our outlook for Q4, we are raising our full year guidance across the board.

Speaker #3: Adjusted EBITDA margin exceeded 20% . Our highest since the pandemic , and almost double 2019 margin . Both segments delivered excellent profitability . Our high performance materials and components segment margins were above 24% and Advanced alloys and Solutions segment above 17% , driven by strong pricing mix and increasing aerospace and defense content .

Adjusted EBITA for 2025, now forecast between $848 million and $858 million or $28 million increase at the midpoint.

Kim Fields: Our high-performance materials and components segment margins were above 24%, and advanced alloys and solutions segment above 17%, driven by strong pricing, mix, and increasing aerospace and defense content. Cash generated from operations year to date reached $299 million, a $273 million improvement from last year. We also returned $150 million to shareholders this quarter through share repurchases, with $120 million remaining under our current authorization. Given this performance and our outlook for Q4, we are raising our full-year guidance across the board. Adjusted EBITDA for 2025 now forecast between $848 million and $858 million, a $28 million increase at the midpoint. Adjusted free cash flow now forecast between $330 million and $370 million, a $40 million increase at the midpoint. Don will share more details on this in a moment.

Adjusted free cash flow now forecast between $330 million and $370 million or $40 million increase at the midpoint.

Don will share more details on this in a moment.

Speaker #3: Cash generated from operations year to date reached $299 million , a $273 million improvement from last year . We also returned $150 million to shareholders this quarter through share repurchases , with $120 million remaining under our current authorization .

With one quarter left in 2025, I want to highlight three key themes driving ati's continued momentum and future outlook.

First we have strong demand in our core markets with aerospace and defense leading away.

Total A&D revenue rose, 21% year over year in the third quarter fueled by record defense performance and sustained demand in jet engines.

Speaker #3: Given this performance and our outlook for Q4 , we are raising our full year guidance across the board . Adjusted EBITDA for 2025 .

This quarter A&D reached an all time high of 70% of total revenue, marking an important milestone in our strategy.

Speaker #3: Now forecast between 800 and $48 million and $858 million , a $28 million increase at the midpoint . Adjusted free cash flow . Now forecast between 330 million and $370 million , a 40 million increase at the midpoint .

Long term agreements and differentiated materials are supporting consistent growth through 2026 and beyond.

I'll detail what I see in these markets.

Our largest market jet engine now 39% of total revenue grew 19% year over year in Q3 with MRO, representing about 50% of total engine sales.

Speaker #3: Don will share more details on this in a moment . With one quarter left in 2025 , I want to highlight three key themes driving ATI's continued momentum and future outlook .

Kim Fields: With one quarter left in 2025, I want to highlight three key themes driving ATI Inc.'s continued momentum and future outlook. First, we have strong demand in our core markets, with aerospace and defense leading the way. Total A&D revenue rose 21% year over year in the third quarter, fueled by record defense performance and sustained demand in jet engines. This quarter, A&D reached an all-time high of 70% of total revenue, marking an important milestone in our strategy. Long-term agreements and differentiated materials are supporting consistent growth through 2026 and beyond. I'll detail what I see in these markets. Our largest market, jet engines, now 39% of total revenue, grew 19% year over year in Q3, with MRO representing about 50% of total engine sales. Next-generation programs such as LEAP and GTF continue to accelerate, with strong production and aftermarket demand.

Next generation programs, such as leap in GTS continued to accelerate with strong production and aftermarket demand.

Speaker #3: First , we have strong demand in our core markets with aerospace and defense leading the way . Total AMD revenue rose 21% year over year in the third quarter , fueled by record defense performance and sustained demand in jet engines .

You've probably heard Oems make those forecasts in their recent earnings calls.

This sustained momentum supports long term growth for ATI proprietary alloys and forged turbine desks, our order book extend into the mid 2027, underscoring tight supply and the strength of our customer partnerships.

Speaker #3: This quarter and reached an all time high of 70% of total revenue , marking an important milestone in our strategy . Long term agreements and differentiated materials are supporting consistent growth through 2026 and beyond .

As a priority supplier, we've gained additional share and content, where others have faced execution challenges, while maintaining pricing that reflects the value of our capabilities.

Speaker #3: I'll detail what I see in these markets . Our largest market jet engines , now 39% of total revenue , grew 19% year over year in Q3 , with MRO representing about 50% of total engine sales .

Looking ahead, we expect Q4 jet engine revenue growth in the high single to low double digits for.

For the full year jet engine growth is expected to exceed 20%.

With multi decade customer agreements and increasing platform demand ATI is well positioned for continued share gains and profitable growth through this aerospace cycle.

Speaker #3: Next generation programs such as Leap and GTF continue to accelerate , with strong production and aftermarket demand . You probably heard OEMs make those forecasts in their recent earnings calls .

Kim Fields: You probably heard OEMs make those forecasts in their recent earnings calls. This sustained momentum supports long-term growth for ATI's proprietary nickel alloys and forged turbine discs. Our order book extends into mid-2027, underscoring tight supply and the strength of our customer partnerships. As a priority supplier, we've gained additional share in content where others have faced execution challenges while maintaining pricing that reflects the value of our capabilities. Looking ahead, we expect Q4 jet engine revenue growth in the high single to low double digits. For the full year, jet engine growth is expected to exceed 20%. With multi-decade customer agreements and increasing platform demand, ATI is well-positioned for continued share gains and profitable growth through this aerospace cycle. Airframe sales grew 9% year over year and 3% year to date this quarter, supported by the ongoing ramp in Boeing and Airbus production and timing of customer orders.

Airframe sales grew 9% year over year, and 3% year to date this quarter.

Speaker #3: This sustained momentum supports long term growth for ATI's proprietary alloys and forged turbine discs . Our order book extends into the mid 2027 , underscoring tight supply and the strength of our customer partnerships .

Supported by the ongoing ramp in Boeing and Airbus production and timing of customer orders.

Boeing's production rate increase of 42 per month on the 737 and Airbus <unk> hundred 20 target of 75 per month by 2027 signal healthy sustained demand.

Speaker #3: As a priority supplier . We've gained additional share in content where others have faced execution challenges while maintaining pricing that reflects the value of our capabilities .

We expect Q4 airframe revenues to finished modestly above 2024 level as air framers adjust their inventory to production needs.

Speaker #3: Looking ahead , we expect Q4 jet engine revenue growth in the high single to low double digits for the full year . Jet engine growth is expected to exceed 20% with multi-decade customer agreements and increasing platform demand .

ATI has expanded titanium capacity and advanced processing capabilities are driving share gains and improved pricing across OEM platforms, enhancing our mix of higher value structural components and supporting continued margin expansion.

Speaker #3: ATI is well positioned for continued share gains and profitable growth through this aerospace cycle . Airframe sales grew 9% year over year and 3% year to date this quarter , supported by the ongoing ramp in Boeing and Airbus production and timing of customer orders .

Next year, we anticipate high single digit growth in airframe revenues driven by steady production ramps increased ATI content and favorable pricing under new long term contracts that start at the beginning of 2026.

Speaker #3: Boeing's production rate increase of 42 per month on the 737 and Airbus A320 target of 75 per month by 2027 . Signal healthy , sustained demand .

Beyond 2026, and build rates rise ati's airframe business is poised to grow faster than overall industry volumes, reflecting our differentiated titanium portfolio and deep customer alignment.

Kim Fields: Boeing's production rate increase of 42 per month on the 737 and Airbus's A320 target of 75 per month by 2027 signal healthy, sustained demand. We expect Q4 airframe revenues to finish modestly above 2024 levels as airframers adjust their inventory to production needs. ATI's expanded titanium capacity and advanced processing capabilities are driving share gains and improved pricing across OEM platforms, enhancing our mix of higher-value structural components and supporting continued margin expansion. Next year, we anticipate high single-digit growth in airframe revenues, driven by steady production ramps, increased ATI content, and favorable pricing under new long-term contracts that start at the beginning of 2026. Beyond 2026, as build rates rise, ATI's airframe business is poised to grow faster than overall industry volumes, reflecting our differentiated titanium portfolio and deep customer alignment. Defense markets remain exceptionally strong.

Speaker #3: We expect Q4 airframe revenues to finish modestly above 2024 levels as airframes adjust their inventory to production needs . ATI's expanded titanium capacity and advanced processing capabilities are driving share gains and improved pricing across OEM platforms , enhancing our mix of higher value structural components and supporting continued margin expansion .

Fence markets remain exceptionally strong revenue increased 51% year over year and 36% sequentially.

<unk> broad based strength across naval nuclear rotary craft missile and armored vehicle programs.

Our diversified product base benefits from both U S and allied spending growth.

We continue to qualify our new programs entering early production.

Speaker #3: Next year , we anticipate high single digit growth in airframe revenues , driven by steady production ramps , increased ATI content , and favorable pricing under new long term contracts that start at the beginning of 2026 .

Ati's defense business has now delivered three consecutive years of double digit growth.

Outpacing defense spending.

Highlights this quarter include being named supplier of the year by General dynamics U K underscoring customer trust in <unk> performance and reliable delivery.

Speaker #3: Beyond 2026 , as build rates rise , ATI's airframe business is poised to grow faster than overall industry volumes , reflecting our differentiated titanium portfolio and deep customer alignment .

Missile and propulsion programs are expanding rapidly ATI as advanced materials are increasingly specified in fad and Pac three systems, where production is accelerating to meet recapitalization demand.

Speaker #3: Defense markets remain exceptionally strong . Revenue increased 51% year over year , and 36% sequentially , reflecting broad based strength across naval , nuclear , rotary craft , missile and armored vehicle programs .

Kim Fields: Revenue increased 51% year over year and 36% sequentially, reflecting broad-based strength across naval, nuclear, rotary craft, missile, and armored vehicle programs. Our diversified product base benefits from both U.S. and allied spending growth. We continue to qualify on new programs entering early production. ATI's defense business has now delivered three consecutive years of double-digit growth, outpacing defense spending. Highlights this quarter include being named Supplier of the Year by General Dynamics UK, underscoring customer trust in ATI's performance and reliable delivery. Missile and propulsion programs are expanding rapidly. ATI's advanced materials are increasingly specified in A&D and PAC-3 systems, where production is accelerating to meet recapitalization demand. We're also supporting emerging initiatives like Golden Dome, positioning ATI for above-market growth into the next decade. Emergent naval nuclear also contributed meaningfully to Q3 performance, showcasing the resilience and scale of our defense portfolio.

We're also supporting emerging initiatives like Golden them positioning ATI for above market growth into the next decade.

Emergent Naval nuclear also contributed meaningfully to Q3 performance showcasing the resilience and scale of our defense portfolio.

Speaker #3: Our diversified product based benefits from both US and allied spending growth . We continue to qualify a new programs entering early production . ATI's defense business has now delivered three consecutive years of double digit growth , outpacing defense spending .

With expanding qualifications multi year visibility and growing international participation defense is set for continued record performance as modernization and replenishment programs ramp worldwide.

Speaker #3: Highlights this quarter include being named supplier of the Year by General Dynamics UK , underscoring customer trust and ATI's performance and reliable delivery missile and propulsion programs are expanding rapidly .

Adam line A&D remains the foundation of Ati's growth.

My second key theme operational excellence and disciplined execution are the backbone of our performance.

This quarter the team delivered strong productivity gains.

Speaker #3: ATI's advanced materials are increasingly specified in Thad and PAC three systems , where production is accelerating to meet recapitalization demand . We're also supporting emerging initiatives like Golden Dome , positioning ATI for above market growth into the next decade .

Cross Hei, we're delivering what we call the triple threat higher uptime improve first pass yield and expanding manufacturing capabilities.

We have examples across the company.

And our nickel remold operations output increased by double digits.

Speaker #3: Emergent Naval Nuclear also contributed meaningfully to Q3 performance , showcasing the resilience and scale of our defense portfolio with expanding qualifications , multi-year visibility , and growing international participation .

Isothermal flow path heat treat cycle time improved three acts.

Accelerated throughput is lowering costs and freeing capacity for a crucial jet engine products.

Kim Fields: With expanding qualifications, multi-year visibility, and growing international participation, defense is set for continued record performance as modernization and replenishment programs ramp worldwide. Bottom line, A&D remains the foundation of ATI's growth. My second key theme, operational excellence and disciplined execution, are the backbone of our performance. This quarter, the team delivered strong productivity gains. Across ATI, we're delivering what we call the triple threat: higher uptime, improved first-pass yield, and expanding manufacturing capabilities. We have examples across the company. In our nickel re-melt operations, output increased by double digits. In the isothermal flow path, heat treat cycle time improved 3x. Accelerated throughput is lower in cost and freeing capacity for our crucial jet engine products. At our specialty materials business, we also expanded powder atomization capacity by over 25%, improving yield and quality. We expect to see the benefits of this improvement in our first half 2026 shipments.

At our specialty materials business, we also expanded powder atomization capacity by over 25% improving yield and quality, we expect to see the benefits of this improvement in our first half 2026 shipments.

Speaker #3: Defense is set for continued record performance as modernization and replenishment programs ramp worldwide . Bottom line and remains the foundation of ATI's growth .

Speaker #3: My second key theme Operational Excellence and Disciplined Execution , are the backbone of our performance this quarter . The team delivered strong productivity gains across ATI .

Our specialty rolled product business achieved a new record for monthly coil shipments another demonstration of increased throughput and efficiency.

Specialty alloys and components unlocked more than 20% additional capacity in the zirconium sponge process.

Speaker #3: We're delivering what we call the triple threat higher uptime , improved first pass yield and expanding manufacturing capabilities . We have examples across the company in our nickel operations , output increased by double digits in the isothermal flow path .

This was accomplished through standard work and maintenance optimization, requiring minimal capital investment.

As a reminder, ATI is a leading producer of high purity zirconium at scale in the Western World. This material, it's important to national defense energy and aerospace.

Speaker #3: Heat treat cycle time improved three x accelerated throughput is lower in cost and freeing capacity for a crucial jet engine . Products at our specialty materials business , we also expanded powder atomization capacity by over 25% , improving yield and quality .

A small but highly profitable part of our business today with significant growth potential ahead.

Collectively these initiatives have expanded available capacity by roughly 10% with the greatest impact in our differentiated molded products and contribute to our margin gains.

Speaker #3: We expect to see the benefits of this improvement in our first half . 2026 shipments . Our specialty rolled product business achieved a new record for monthly shipments .

These are not just operational wins, they enhance reliability increased asset utilization and drive long term earnings growth.

Kim Fields: Our specialty rolled products business achieved a new record for monthly coil shipments, another demonstration of increased throughput and efficiency. Specialty alloys and components unlocked more than 20% additional capacity in the zirconium sponge process. This was accomplished through standard work and maintenance optimization, requiring minimal capital investment. As a reminder, ATI is the leading producer of high-purity zirconium at scale in the Western world. This material is important to national defense, energy, and aerospace. It's a small but highly profitable part of our business today, with significant growth potential ahead. Collectively, these initiatives have expanded available capacity by roughly 10%, with the greatest impact in our differentiated molded products and contribute to our margin gains. These are not just operational wins, they enhance reliability, increase asset utilization, and drive long-term earnings growth.

Speaker #3: Another demonstration of increased throughput and efficiency . Specialty alloys and components unlocked more than 20% additional capacity in the zirconium sponge process . This was accomplished through standard work and maintenance optimization , requiring minimal capital investment .

By securing additional customer qualifications on new equipment and products. We're building the foundation for <unk> next chapter of performance and profitability.

My third theme this quarter, our strategy investments continue to drive long term value.

Speaker #3: As a reminder , ATI is the leading producer of high purity zirconium at scale in the Western world . This material is important to national defense , energy and aerospace .

Our strategy is working with 70% of revenue now coming from aerospace and defense ATI is firmly focused on our most differentiated high value materials in markets.

Speaker #3: It's a small but highly profitable part of our business today with significant growth potential ahead . Collectively , these initiatives have expanded , available capacity by roughly 10% , with the greatest impact in our differentiated , molded products and contribute to our margin gains .

Our nickel investment expands differentiate capacity at the top of the value chain.

You'll recall, we're the sole source producer for five of the seven most advanced Super alloys in the jet engine.

Before we decided to invest each project undergoes a disciplined review process, requiring projected internal rates of return above 30% and clear alignment with long term customer contracts.

Speaker #3: These are not just operational wins . They enhance reliability , increase asset utilization , and drive long term earnings growth by securing additional customer qualifications on new equipment and products .

Kim Fields: By securing additional customer qualifications on new equipment and products, we're building the foundation for ATI's next chapter of performance and profitability. My third theme this quarter: our strategy and investments continue to drive long-term value. Our strategy is working. With 70% of revenue now coming from aerospace and defense, ATI is firmly focused on our most differentiated, high-value materials and markets. Our nickel investment expands differentiated capacity at the top of the value chain. You'll recall we're the sole source producer for five of the seven most advanced superalloy in the jet engine. Before we decide to invest, each project undergoes a discipline review process, requiring projected internal rates of return above 30% and clear alignment with long-term customer contracts. In many cases, our customers are funding alongside us, reinforcing shared confidence in the demand outlook and guaranteeing needed capacity is in place for the future.

In many cases, our customers are funding alongside us reinforcing shared confidence in the demand outlook and guaranteeing needed capacity is in place for the future we.

Speaker #3: We're building the foundation for ATI's next chapter of performance and profitability . My third theme this quarter , our strategy and investments continue to drive long term value .

We will continue deploying capital with focus and discipline prioritizing differentiated products high return investments and strategic partnerships that sustain ATI leadership and create long term value.

Speaker #3: Our strategy is working, with 70% of revenue now coming from aerospace and defense. ATI is firmly focused on our most differentiated, high-value materials and markets.

I've been recently asked by a few investors whether investing in nickel melt capacity will negatively impact our pricing.

Speaker #3: Our investment expands differentiated capacity at the top of the value chain . You'll recall where the sole source producer for five of the seven most advanced super in the jet engine .

The short answer is no.

Our focus is on our most differentiated products. This is about expanding the competitive moat, while supporting the engine ramp and our customers' ambitious growth targets.

Speaker #3: Before we decide to invest each project undergoes a disciplined review process requiring projected internal rates of return above 30% and clear alignment with long term customer contracts .

In summary, strong aerospace and defense demand a relentless focus on operational excellence and a strategy that is creating long term value resulted in Q3 being ATI strongest quarter of the year.

Speaker #3: In many cases, our customers are funding alongside us, reinforcing shared confidence in the demand outlook and guaranteeing needed capacity is in place for the future.

We're well positioned to extend our momentum to finish 2025 strong.

And with that I'll turn it over to Don.

Speaker #3: We'll continue deploying capital with focus and discipline , prioritizing differentiated products , high return investments and strategic partnerships that sustain ATI's leadership and create long term value .

Kim Fields: We'll continue deploying capital with focus and discipline, prioritizing differentiated products, high-return investments, and strategic partnerships that sustain ATI's leadership and create long-term value. I've been recently asked by a few investors whether investing in nickel melt capacity will negatively impact our pricing. The short answer is no. Our focus is on our most differentiated products. This is about expanding the competitive moat while supporting the engine ramp and our customers' ambitious growth targets. In summary, strong aerospace and defense demand, a relentless focus on operational excellence, and a strategy that's creating long-term value resulted in Q3 being ATI's strongest quarter of the year. We're well-positioned to extend our momentum to finish 2025 strong. With that, I'll turn it over to Don.

Thanks, Kim will provide some additional detail on our financial performance and discuss our outlook for the fourth quarter and full year.

In Q3, we once again delivered results ahead of expectations.

Speaker #3: Ive been recently asked by a few investors whether investing in Nickel Belt capacity will negatively impact our pricing . The short answer is no .

Adjusted EBITDA was $225 million, including a $10 million gain from oil and gas rights sales.

Speaker #3: Our focus is on our most differentiated products . This is about expanding the competitive moat while supporting the engine ramp and our customers ambitious growth targets .

Excluding that EBITDA of $215 million represents a 19% year over year and 6% sequential improvement.

Speaker #3: In summary, strong aerospace and defense demand, a relentless focus on operational excellence, and a strategy that's creating long-term value resulted in Q3 being ATI's strongest quarter of the year.

With margins at 20%.

Or 19, 1% excluding asset sales.

Strong price mix and volume performance, particularly in defense and jet engines drove this outperformance, resulting in nearly $10 million of operational upside versus our prior guidance range midpoint here.

Speaker #3: We're well positioned to extend our momentum to finish 2025 strong . And with that , I'll turn it over to Don .

Speaker #4: Thanks, Kim. I'll provide some additional detail on our financial performance and discuss our outlook for the fourth quarter and full year in Q3.

Don Newman: Thanks, Kim. I'll provide some additional detail on our financial performance and discuss our outlook for the fourth quarter and full year. In Q3, we once again delivered results ahead of expectations. Adjusted EBITDA was $225 million, including a $10 million gain from oil and gas rights sales. Excluding that, EBITDA of $215 million represents a 19% year-over-year and 6% sequential improvement, with margins at 20% or 19.1% excluding asset sales. Strong price, mix, and volume performance, particularly in defense and jet engines, drove this outperformance, resulting in nearly $10 million of operational upside versus our prior guidance range midpoint. Year to date, our sales are up 7% and adjusted EBITDA is up 19% over the prior year, excluding asset sales. This reflects improved mix, cost discipline, and incremental margins, which remain near 50%, demonstrating the leverage of our business model. Segment performance was strong.

Year to date, our sales are up 7% and adjusted EBITDA is up 19% over the prior year.

Speaker #4: We once again delivered results ahead of expectations . Adjusted EBITDA was $225 million , including a $10 million gain from oil and gas rights sales .

Excluding asset sales.

This reflects improved mix cost discipline and.

Incremental margins, which remain near 50% demonstrating the leverage of our business model.

Speaker #4: Excluding that EBITDA of $215 million , represents a 19% year over year and 6% sequential improvement , with margins at 20% or 19.1% .

Segment performance was strong.

H P M C EBITDA margins expanded to 24, 2%.

Up 50 basis points sequentially, and 190 basis points year over year.

Speaker #4: Excluding asset sales . Strong price mix and volume performance , particularly in defense and jet engines , drove this outperformance , resulting in nearly $10 million of operational upside versus our prior guidance range .

N S margins improved to 17, 3% with 290 basis point increase sequentially and a 250 point increase year over year.

Speaker #4: Midpoint year to date . Our sales are up 7% and adjusted EBITDA is up 19% over the prior year . Excluding asset sales , this reflects improved mix , cost , discipline and incremental margins , which remain near 50% , demonstrating the leverage of our business model .

This reflects gains from ongoing transformation and efficiency efforts.

Cash generation also remained strong through.

Through the third quarter, we have generated nearly $300 million in operating cash flow supported by working capital improvements and strong earnings.

We continue to monetize noncore assets, including the oil and gas rights sale and a small noncore machines divestiture, all while keeping capital investments focus.

Speaker #4: Segment performance was strong Hpmc EBITDA margins expanded to 24.2% , up 50 basis points sequentially and 190 basis points year over year . Ans margins improved to 17.3% , a 290 basis point increase sequentially and a 250 point increase year over year .

Don Newman: HPMC EBITDA margins expanded to 24.2%, up 50 basis points sequentially, and 190 basis points year-over-year. AANS margins improved to 17.3%, a 290 basis point increase sequentially, and a 250 basis point increase year-over-year. This reflects gains from ongoing transformation and efficiency efforts. Cash generation also remains strong. Through the third quarter, we have generated nearly $300 million in operating cash flow, supported by working capital improvements and strong earnings. We continue to monetize non-core assets, including the oil and gas rights sale and a small non-core machining divestiture, all while keeping capital investments focused and disciplined. Gross capital expenditures year to date total $188 million. Managed working capital, as a percentage of sales, remains around 36%, with opportunity to improve. We expect a strong finish to the year. The seasonal working capital release and projected strong Q4 performance position us for robust fourth quarter cash generation.

And discipline.

Gross capital expenditures year to date totaled $188 million.

Manage working capital as a percentage of sales remains around 36%.

The opportunity to improve.

We expect a strong finish to the year.

Speaker #4: This reflects gains from ongoing transformation and efficiency efforts . Cash generation also remains strong through the third quarter . We have generated nearly $300 million in operating cash flow , supported by working capital improvements and strong earnings .

The seasonal working capital release, and projected strong Q4 performance position us for robust fourth quarter cash generation.

Now, let's look at our guidance for the fourth quarter and full year.

Building on Jim's comments, we are raising full year guidance to reflect stronger performance and visibility through year end.

Speaker #4: We continue to monetize non-core assets, including the oil and gas rights sale and a small non-core machining divestiture, all while keeping capital investments focused and disciplined.

Adjusted EBITDA eight.

$848 million to $858 million.

Up $28 million at the midpoint.

Speaker #4: Gross capital expenditures to totaled $188 million . Manage working capital as a percentage of sales remains around 36% , with opportunity to improve .

Adjusted EPS.

$3 15 to $3 21.

Free cash flow.

$330 million to $370 million.

Speaker #4: We expect a strong finish to the year . The seasonal working capital release and projected strong Q4 performance position us for robust fourth quarter cash generation .

Capex $216 million to $280 million.

That's unchanged from prior guidance.

Q4, adjusted EBITDA is projected at $221 million to $231 million, a sequential 5% increase excluding oil and gas gains.

Speaker #4: Now , let's look at our guidance for the fourth quarter and full year . Building on Kim's comments , we are raising full year guidance to reflect stronger performance and visibility through year end adjusted EBITDA 848 to $858 million , up $28 million at the midpoint .

Don Newman: Now let's look at our guidance for the fourth quarter and full year. Building on Kim's comments, we are raising full-year guidance to reflect stronger performance and visibility through year-end. Adjusted EBITDA $848 million to $858 million, up $28 million at the midpoint. Adjusted EPS $3.15 to $3.21. Free cash flow $330 million to $370 million. CapEx $260 million to $280 million. That's unchanged from prior guidance. Q4 adjusted EBITDA is projected at $221 million to $231 million, a sequential 5% increase, excluding oil and gas gains. The midpoint of $226 million is driven by continued growth in jet engine forgings, improved price and mix, and sustained strength in defense programs. Turning to margins, based upon our continued strong performance, I expect consolidated margins in Q4 will exceed 19%, and full-year margins will be in the range of 18.5%.

The midpoint of $226 million is.

It is driven by continued growth in jet engine, forgings and improved price and mix.

And sustained strength in defense programs.

Speaker #4: Adjusted EPs $3.15 to $3.21 . Free cash flow $330 million to $370 million . CapEx $260 million to $280 million . That's unchanged from prior guidance .

Turning to margins based upon our continued strong performance I expect consolidated margins in Q4 will exceed 19%.

And full year margins will be in the range of 18, 5%.

At the segment level H P. M. C Q4 margins should continue to increase exceeding Q3 margins of 24, 2%.

Speaker #4: Q4 adjusted EBITDA is projected at 221 to $231 million . A sequential 5% increase excluding oil and gas gains . The midpoint of $226 million is driven by continued growth in jet engine forgings , improved price and mix , and sustained strength in defense programs .

F Q4 margins are expected to be between 16 and 16, 5%.

Consistent with sales mix expectations.

We expect another strong quarter of cash generation supported by collections and improve working capital efficiency.

We are on track for $330 million to $370 million and adjusted free cash flow this year.

Speaker #4: Turning to margins . Based upon our continued strong performance , I expect consolidated margins in Q4 will exceed 19% and full year margins will be in the range of 18.5% .

This is a $40 million increase to the midpoint of the range.

Gross capital expenditures will stay within the planned range of $260 million to $280 million.

Partially funded by proceeds from sale of noncore assets.

Speaker #4: At the segment level, HPMC Q4 margins should continue to increase, exceeding Q3 margins of 24.2%. Arnes Q4 margins are expected to be between 16% and 16.5%, consistent with sales mix expectations.

Don Newman: At the segment level, HPMC Q4 margins should continue to increase, exceeding Q3 margins of 24.2%. AANS Q4 margins are expected to be between 16% and 16.5%, consistent with sales mix expectations. We expect another strong quarter of cash generation, supported by collections and improved working capital efficiency. We are on track for $330 to $370 million in adjusted free cash flow this year. This is a $40 million increase to the midpoint of the range. Gross capital expenditures will stay within the planned range of $260 to $280 million, partially funded by proceeds from sale of non-core assets. Cash generated from sales of non-core assets and businesses totaled approximately $30 million year to date and $76 million in 2024. Our focus remains on high-return, customer-supported investments that enhance mix, margin, and long-term competitiveness. Each quarter this year, we have increased EBITDA, margins, and cash generation.

Cash generated from sales of non core assets and businesses totaled approximately $30 million year to date and $76 million in 2024 are.

Our focus remains on high return customer supported investments that enhance mix margin and long term competitiveness.

Speaker #4: We expect another strong quarter of cash generation supported by collections and improved working capital efficiency . We are on track for 330 to $370 million in adjusted free cash flow this year .

Each quarter. This year, we have increased EBITDA margins and cash generation.

Q4 will build on that performance, creating momentum that we will carry into 2026.

Speaker #4: This is a $40 million increase to the midpoint of the range . Gross capital expenditures will stay within the planned range of 260 to $280 million , partially funded by proceeds from sale of non-core assets .

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

Thanks, Don.

As we shared on September 11th Don has elected to retire from his role as CFO. Following our fourth quarter call, we'll have more to say about Don and his outstanding career next quarter, but I wanted to take a moment now to thank him for his leadership and many contributions that helped put ATI and the strong position we're in today.

Speaker #4: Cash generated from sales of non-core assets and businesses totaled approximately $30 million year to date , and $76 million in 2020 . For our focus remains on high return customer supported investments that enhance mix , margin and long term competitiveness .

The search for <unk> successor is well underway, we're considering both internal and external candidates to identify the best possible leader will share progress on the search in the months ahead for a seamless transition our disciplined financial strategy will continue.

Speaker #4: Each quarter this year , we have increased EBITDA margins and cash generation . Q4 will build on that performance , creating momentum that we will carry into 2026 .

Before we turn to Q&A I want to reflect on what makes ATI, a compelling aerospace and defense story.

Don Newman: Q4 will build on that performance, creating momentum that we will carry into 2026. With that, I will turn the call back over to Kim.

When we began this transformation several years ago ATI served a wide range of products and customers with limited concentration in our most differentiated materials.

Speaker #4: With that , I will turn the call back over to Kim .

Speaker #3: Thanks , Don . As we shared on September 11th , Don has elected to retire from his role as CFO following our fourth quarter call .

Kim Fields: Thanks, Don. As we shared on September 11th, Don has elected to retire from his role as CFO following our fourth quarter call. We'll have more to say about Don and his outstanding career next quarter, but I want to take a moment now to thank him for his leadership and many contributions that help put ATI Inc. in the strong position we're in today. The search for Don's successor is well underway. We're considering both internal and external candidates to identify the best possible leader. I'll share progress on the search in the months ahead for a seamless transition. Our disciplined financial strategy will continue. Before we turn to Q&A, I want to reflect on what makes ATI Inc. a compelling aerospace and defense story. When we began this transformation several years ago, ATI Inc.

Fast forward to today and the transformation is Claire ATI is in aerospace and defense leader with more than 70% of our revenue coming from these high value markets.

Speaker #3: We'll have more to say about Don and his outstanding career next quarter , but I want to take a moment now to thank him for his leadership and many contributions that helped put ATI in the strong position we're in today .

In 2019, our margins were roughly half the 20% we delivered this quarter and our growth rates were more susceptible to price and input cost swings.

Speaker #3: The search for Don's successor is well underway. We're considering both internal and external candidates to identify the best possible leader. I'll share progress on the search in the months ahead for a transition.

They were structurally stronger anchored in differentiated materials long term customer relationships and sustainable pricing power.

Speaker #3: Our disciplined financial strategy will continue before we turn to Q&A , I want to reflect on what makes ATI a compelling aerospace and defense story .

We've made tremendous progress, but we're not finished the path forward centers on three levers.

First strategic pricing and mix optimization demand continues to outpace supply in key markets like jet engines defense and specialty energy, we're optimizing our product mix at our most valuable assets to capture higher value opportunities.

Speaker #3: When we began this transformation , several years ago , ATI served a wide range of products and customers with limited concentration . In our most seamless differentiated materials .

Kim Fields: served a wide range of products and customers, with limited concentration in our most differentiated materials. Fast forward to today, and the transformation is clear. ATI Inc. is an aerospace and defense leader, with more than 70% of our revenue coming from these high-value markets. In 2019, our margins were roughly half the 20% we delivered this quarter, and our growth rates were more susceptible to price and input cost swings. Today, we are structurally stronger, anchored in differentiated materials, long-term customer relationships, and sustainable pricing power. We've made tremendous progress, but we're not finished. The path forward centers on three levers. First, strategic pricing and mix optimization. Demand continues to outpace supply in key markets like jet engines, defense, and specialty energy. We're optimizing our product mix at our most valuable assets to capture higher value opportunities.

Speaker #3: Fast forward to today and the transformation is clear . ATI is an aerospace and defense leader with more than 70% of our revenue coming from these high value markets .

Long term agreements and strategic pricing actions capture the value, we deliver securing the price terms and pass throughs that reflect our differentiated materials and the reliability our customers depend on.

Speaker #3: In 2019 , our margins were roughly half the 20% we delivered this quarter and our growth rates were more susceptible to price and input cost swings .

These long term partnerships also underpins future investments and joint technology development, ensuring we expand capabilities in alignment with customers' needs.

Speaker #3: Today , we are structurally stronger , anchored in differentiated materials long term customer relationships and sustainable pricing power . We've made tremendous progress , but we're not finished .

Our second lever is operational excellence and productivity.

Ross ATI yield and throughput improvements are expanding capacity without adding capital.

Speaker #3: The path forward centers on three levers . First , strategic pricing and mix optimization . Demand continues to outpace supply in key markets like jet engines , defense and specialty energy .

<unk> and process innovation drive efficiency and reliability supporting record margins and cash generation across both segments.

Our third lever is focus and simplification, we apply an 80 20 mindset investing where ATI creates the most value and exiting where we don't.

Speaker #3: We're optimizing our product mix at our most valuable assets to capture higher-value opportunities. Our long-term agreements and strategic pricing actions capture the value we deliver.

Kim Fields: Our long-term agreements and strategic pricing actions capture the value we deliver, securing the price, terms, and pass-throughs that reflect our differentiated materials and the reliability our customers depend on. These long-term partnerships also underpin future investments and joint technology development, ensuring we expand capabilities in alignment with customers' needs. Our second lever is operational excellence and productivity. Across ATI Inc., yield and throughput improvements are expanding capacity without adding capital. Product and process innovation drive efficiency and reliability, supporting record margins and cash generation across both segments. Our third lever is focus and simplification. We apply an 80/20 mindset, investing where ATI creates the most value and exiting where we don't. We're redeploying capital to high-value, high-growth areas. ATI is more agile, more profitable, and better positioned to deliver long-term value. These levers are driving continued margin expansion, strong cash generation, and higher returns on capital.

We're redeploying capital to high value high growth areas.

Speaker #3: Securing the price terms and passthroughs that reflect our differentiated materials and the reliability our customers depend on . These long term partnerships also underpin future investments and joint technology development , ensuring we expand capabilities in alignment with customers needs .

Ti is more agile.

More profitable and better positioned to deliver long term value.

These levers are driving continued margin expansion strong cash generation and higher returns on capital custom.

Customers recognize hei's reliable track record long term contracts and technical expertise reinforced the surety supply our partners count on.

Speaker #3: Our second lever is operational excellence and productivity across ATI. Yield and throughput improvements are expanding capacity without adding capital. Product and process innovation drive efficiency and reliability, supporting record margins and cash generation across both segments.

ATI is foundation is strong we're profitably growing expanding margins and generating robust cash flow trends, we expect to continue well into the next decade.

We're ahead of schedule on our 2027 growth and margin targets and our business model provides clear visibility through 2030 and beyond.

Speaker #3: Our third lever is focus and simplification . We apply an 80 over 20 mindset investing where ATI creates the most value and exiting where we don't .

Even as customers build schedules fluctuate ATI continues to gain share across A&D, optimizes asset base and deliver consistent growth and increasing returns.

Speaker #3: We're redeploying capital to high value , high growth areas . ATI is more agile , more profitable , and better positioned to deliver long term value .

Our differentiated materials technical expertise and integrated capabilities create a durable competitive mode, one that aligns closely with our A&D partners.

Speaker #3: These levers are driving continued margin expansion , strong cash generation and higher returns on capital . Customers recognize ATI's reliable track record , long term contracts and technical expertise reinforce the surety of supply .

Kim Fields: Customers recognize ATI's reliable track record, long-term contracts, and technical expertise, reinforced by assuring supply our partners count on. ATI's foundation is strong. We're profitably growing, expanding margins, and generating robust cash flows, trends we expect to continue well into the next decade. We're ahead of schedule on our 2027 growth and margin targets, and our business model provides clear visibility through 2030 and beyond. Even as customers' build schedules fluctuate, ATI continues to gain share across A&D, optimize its asset base, and deliver consistent growth and increasing returns. Our differentiated materials, technical expertise, and integrated capabilities create a durable competitive moat, one that aligns closely with our A&D partners. We've accomplished a lot, and we're just getting started. With that, let's open the line for your questions.

We've accomplished a lot and we're just getting started with that let's open the line for your questions.

Speaker #3: Our partners count on ATI's foundation is strong . We're profitably growing , expanding margins and generating robust cash flows . Trends we expect to continue well into the next decade .

No.

Thank you if you wish to ask a question. Please press star followed by one on your telephone keypad now.

If for any reason you want to remove your question from the queue. Please press star followed by T. When preparing to ask a question. Please ensure device is unmated likely.

Speaker #3: We're ahead of schedule on our 2027 growth and margin targets , and our business model provides clear visibility through 2030 and beyond . Even as customers build schedules fluctuates , ATI continues to gain share across AMD optimize its asset base and deliver consistent growth and increasing returns .

Our first question comes from Richard Safran from Seaport Research Partners. Your line is now open. Please go ahead.

Thanks.

Speaker #3: Our differentiated materials , technical expertise , and integrated capabilities create a durable , competitive moat , one that aligns closely with our AMD partners .

Ken Dave.

Good morning.

Okay.

Congrats to you on the retirement and thanks for all the help over the years appreciate it.

Speaker #3: We've accomplished a lot and we're just getting started . With that , let's open the line for your questions .

Okay.

Kim.

I heard your opening remarks.

I'm not exactly sure I understand what's changed since two Q2 drives the revised outlook and the guidance increase so.

Speaker #1: Thank you . If you wish to ask a question , please press star followed by one on your telephone keypad . Now , if for any reason you want to remove your question from the queue , please press star followed by two .

Operator: Thank you. If you wish to ask your question, please press STAR followed by 1 on your telephone keypad now. If for any reason you want to remove your question from the queue, please press STAR followed by 2. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Richard Safran from Seaport Research Partners. Your line is now open. Please go ahead.

Maybe you could discuss whats changed in your outlook and you know go into the moving pieces that drove the guidance increase switching to those.

Speaker #1: When preparing to ask your question , please ensure your device is unmuted locally . Our first question comes from Richard Safran from Seaport Research Partners .

Thanks.

Sure. Thanks rich.

So let me start with you know the guidance is reflecting that stronger than expected A&D performance, particularly in defense, we had a tremendous quarter and.

Speaker #1: Your line is now open . Please go ahead .

Speaker #5: Thanks . Kim gave good morning . Thought . Congrats to you on the retirement and thanks for all the help over the years .

[Analyst]: Thanks. Kim, Dave, good morning. Congrats to you on the retirement, and thanks for all the help over the years. Appreciate it. Kim, I heard your opening remarks, but I'm not exactly sure I understand what's changed since Q2 to drive the revised outlook and the guidance increase. Maybe you could discuss what's changed in your outlook and go into the moving pieces that drove this guidance increase we see today. Thanks.

And we see the a and D growth and momentum in third quarter, continuing through the rest of this year and frankly into 2026.

Speaker #5: Appreciated . Okay , so Kim , I heard your opening remarks , but I'm not exactly sure I understand what's changed since Tuku to drive the revised outlook in the guidance increase .

We delivered $225 million adjusted EBITDA excluding.

Excluding the oil and gas right. That's 215, H PMC was over 24% margin and ASP was there was over 17 and you know on those op that operational productivity that I talked about is really starting to flow through and we're seeing that in those margin numbers you know free cash flow continues to be a standout.

Speaker #5: So maybe you could discuss what's changed in your outlook . And , you know , go into the moving pieces that drove this guidance increase we see today .

At $299 million year to date up 273 from last year. So you know as we look at the momentum that we built in the third quarter, we see that we anticipate that strength going into Q4.

Speaker #5: Thanks .

Speaker #3: Sure . Thanks , Rich . So let me start with , you . The guidance is reflecting that stronger than expected and performance , particularly in defense .

Kim Fields: Sure. Thanks, Rich. Let me start with the guidance is reflecting that stronger-than-expected A&D performance, particularly in defense. We had a tremendous quarter. We see the A&D growth and momentum in third quarter continuing through the rest of this year and, frankly, into 2026. We delivered $225 million adjusted EBITDA, and excluding the oil and gas rights, that's $215 million. HPMC was over 24% in margin. AANS was over 17%. That operational productivity that I talked about is really starting to flow through, and we're seeing that in those margin numbers. Free cash flow continues to be a standout at $299 million year to date, up $273 million from last year. As we look at the momentum that we built in the third quarter, we see that we anticipate that strength going into Q4 across A&D and, frankly, continuing into 2026.

Speaker #3: We had a tremendous quarter . And we see the A and growth and momentum in third quarter continuing through the rest of this year .

Cross A&D and frankly, continuing into 2026 now.

So overall strength in markets and strengthen our position and the returns that we're getting on the investments from an operational at mix and pricing.

Speaker #3: And into 2026 . You know we delivered 225 million adjusted EBITDA . You and excluding the oil and gas rights , that's 215 .

Okay.

This next one is from.

Speaker #3: You know , Hpmc was over 24% in margin was was over 17 . And you know , those that operational productivity that I talked about is really starting to flow through .

A somewhat related two part question about nickel and titanium.

You have a lot of single source nickel alloys, I'm talking about things like Rene 65.

Speaker #3: And we're seeing that in those margin numbers . You know , free cash flow continues to be a standout . At 299 million year to date , up 273 from last year .

On the OE side, you're facing rate 52, with borrowing rates 75 at Airbus.

There's the aftermarket demand. So first part what are you doing to manage the smelt capacity you discussed in your opening remarks.

Speaker #3: So , you know , as we look at the momentum that we built in the third quarter , we see that we anticipate that strength going into Q4 across a and D .

<unk> Park.

Kevin I think you recently said ATI is now the number one source of flat rolled titanium products to Airbus.

Speaker #3: And frankly , continuing into 2026 , you know , so overall strength in markets and strengthen our position and the returns that we're getting on the investments from an operational and mix and pricing .

Kim Fields: Overall, strength in markets and strength in our position and the returns that we're getting on the investments from an operational mix and pricing.

What actually does that mean and.

How does that translate eventually to the P&L.

If you would.

Speaker #4: Okay .

[Analyst]: Okay. This next one is a somewhat related two-part question about nickel and titanium. You have a lot of single-source nickel alloys. You know I'm talking about things like Rene 65. On the alloy side, you're facing rate 52 at Boeing, rate 75 at Airbus. There's aftermarket demand. First part, what are you doing to manage this melt capacity you discussed in your opening remarks? Second part, Kim, I think you recently said ATI is now the number one source of flat-rolled titanium products to Airbus. What actually does that mean? How does that translate eventually to the P&L, if you would? Thanks.

Sure sure. So you're right we continue to see a record demand for premium nickel alloys, especially those used in next generation engine products like leap N G T asked.

Speaker #5: This next one is a somewhat related two part question about nickel and titanium . You have a lot of single source nickel alloys .

Speaker #5: You know , I'm talking about things like Renee , 65 on the East side . You're facing rate 52 at Boeing . Rate 75 at Airbus .

As well as defense, which as I just mentioned, we had a fantastic quarter. So we're seeing demand across all of those markets.

Speaker #5: There's aftermarket demand . So first part what are you doing to manage this melt capacity . You discussed in your opening remarks ? Second part .

Market segments are meeting that demand. This year has really been focused around that productivity and reliability higher melt yields more downstream processing at the increased testing capacity airport products business. Those actions are delivering these strong results that you're seeing and how we supported that more than 20% jet engine growth this year.

Speaker #5: Kim , I think you recently said ATI is now the number one source of flat titanium products to Airbus . What actually does that mean ?

As well as our margins at H P. M C over 24%. So we're going to continue to focus on expanding process efficiency and customer co funded projects and as I mentioned in my remarks, these investments well exceed 30% IRR internal rate of return targets.

Speaker #5: And how does that translate eventually to the to the PNL ? If you would . Thanks .

Speaker #3: Sure , sure . So you're right . You know , we continue to see record demand for premium nickel alloys , especially those used in next generation engine products like leap and GTF , as well as defense , which as I just mentioned , we had a fantastic quarter .

Kim Fields: Sure. You're right. We continue to see record demand for premium nickel alloys, especially those used in next-generation engine products like LEAP and GTF, as well as defense, which, as I just mentioned, we had a fantastic quarter. We're seeing demand across all of those market segments. Meeting that demand this year has really been focused around productivity and reliability, higher melt yields, more downstream processing, and the increased testing capacity in our forged products business. Those actions are delivering these strong results that you're seeing and how we supported that more than 20% jet engine growth this year, as well as the margins at HPMC over 24%. We're going to continue to focus on expanding process efficiency and customer co-funded projects. As I mentioned in my remarks, these investments will exceed 30% IRR, our internal rate of return targets, and ensure that supply assurance without adding unnecessary melt capacity.

And ensure that supply assurance without adding unnecessary melt capacity, but at the same time as you said this demand that we're seeing this year is going to continue to grow the other Oems have sat on their earnings call. They are expecting this to continue to build and accelerate through the decade and so we're also looking at solar.

Speaker #3: So, we're seeing demand across all of those market segments, and meeting that demand this year has really been focused around that productivity and reliability.

Speaker #3: Higher melt yields , more downstream processing , the increased testing capacity and our forged products business , those actions are delivering these strong results that you're seeing and how we supported that .

Actively expanding our melt capacity to support that long term growth.

Particularly in these high you know high.

Speaker #3: More than 20% jet engine growth this year , as well as the margins at Hpmc , over 24% . So we're going to continue to focus on expanding process efficiency and customer co-funded projects .

Priority or I'm, sorry proprietary alloys, those hot section al as I talked about two quarters ago, you know those five or seven or not.

Not to standard nickel alloys. So we're doing very purpose built type of capital expansion.

Speaker #3: And as I mentioned in my remarks , these investments well exceed 30% IRR . Our internal rate of return targets and ensure that supply assurance without adding unnecessary melt capacity .

And these projects are being developed in partnership with our customers. They are backed by long term agreements. They have co funding to ensure the new capacity and capabilities align with the future needs of this market and as I mentioned all of these products are well in excess of the 30% target.

Speaker #3: But at the same time , as you said , this demand that we're seeing this year is going to continue to grow . The other OEMs have said on their earnings call they're expecting this to to continue to build and accelerate through the decade .

Kim Fields: At the same time, as you said, this demand that we're seeing this year is going to continue to grow. The other OEMs have said on their earnings calls they're expecting this to continue to build and accelerate through the decade. We're also looking at selectively expanding our melt capacity to support that long-term growth, particularly in these high-priority, or, I'm sorry, proprietary alloys, those hot section alloys I talked about two quarters ago, those five of seven, not the standard nickel alloys. We're doing very purpose-built type of capital expansion. These projects are being developed in partnership with our customers. They're backed by long-term agreements. They have co-funding to ensure the new capacity and capabilities align with the future needs of this market. As I mentioned, all these products are well in excess of the 30% target. It's important to remember those proprietary alloys.

You know it's important to remember those proprietary alloys in many cases, we are sole sourced on those five of seven in the hot section with very very long qualification times and difficult learning curves and are under L case for decades. So we're managing it in the short term both from a productivity standpoint to continue.

Speaker #3: And so we're also looking at selectively expanding our melt to support that long term growth , particularly in these high , you know , high priority or I'm sorry , proprietary alloys .

To improve our output from our current asset base and then in the long term selectively investing purpose built assets for those hot section alloys, where we have those sole sourced and long term agreements.

Speaker #3: Those hot section alloys I talked about two quarters ago . You know , those five of seven not the standard nickel alloys . So we're doing very purpose built type of capital expansion .

And the second question you asked me around Airbus Yeah. That's like I said is a great success story, Yeah, I'll, just remind everybody before COVID-19, we werent shipping anything to Airbus at that time, we just signed our first contract with them. We hadn't even started shipping we went into Covid, Russia, Ukraine was invaded and quickly.

Speaker #3: And these projects are being developed in partnership with our customers . They're backed by long term agreements . They have co-funding to ensure the new capacity and capabilities align with the future needs of this market .

Speaker #3: And as I mentioned , all these products are well in excess of the 30% target . So important to remember those proprietary alloys in many cases , we are sole sourced on it's those five of seven in the hot section with very , very long qualification times and difficult learning curves .

They didn't need to engage and get us up to speed became an imperative and today as I mentioned you know when I say, we're the number one flat roll supplier in the in the industry I'm, starting the product portfolio that we're selling them that means we're the majority supplier today.

Kim Fields: In many cases, we are sole sourced on those five of seven in the hot section with very, very long qualification times and difficult learning curves and are under LTAs for decades. We're managing it in the short term, both from a productivity standpoint to continue to improve our output from our current asset base, and then in the long term, selectively investing purpose-built assets for those hot section alloys where we have those sole source and long-term agreements. On the second question you asked me around Airbus, yeah, that's, like I said, is a great success story. I'll just remind everybody, before COVID, we weren't shipping anything to Airbus at that time. We had just signed our first contract with them. We hadn't even started shipping. We went into COVID. Ukraine was invaded. Quickly, the need to engage and get us up to speed became an imperative.

Speaker #3: And our under Ltas for decades . So we're managing it in the short term , both from a productivity standpoint to continue to improve our output from our current asset base .

The share based contracts allow us to expand that sharing content as they continue to ramp and grow there's mechanisms for pass through for metal inflation tariffs.

Speaker #3: And then in the long term , selectively investing purpose built assets for those hot section alloys where we have those sole source and long term agreements .

And we are effectively starting next year of doubling our Airbus revenue and expanding those margins. So the benefit as you asked you know to the P&L comes through that stronger mix, you know consistent volume expanded content and share and the higher margins from the premium titanium plate and sheet.

Speaker #3: On the second question you asked me around , Airbus . Yeah , that's like I said , is a great success story . You know , I'll just remind everybody before Covid , we weren't shipping anything to Airbus at that time .

Speaker #3: We had just signed our first contract with them . We hadn't even started shipping . We went into Covid , you know , Ukraine was invaded and quickly they need to engage and get us up to speed .

Yeah, I just wanted to mention here Theres been Oh go ahead sorry.

Just on the order of milk comment.

Speaker #3: Became an imperative . And today , as I mentioned , you know , when I say we're the number one flat roll supplier in the in the industry , I'm sorry , in the product portfolio that we're , we're selling them .

Kim Fields: Today, as I mentioned, when I say we're the number one flat-roll supplier in the industry, or I'm sorry, in the product portfolio that we're selling them, that means we're the majority supplier today. These share-based contracts allow us to expand that share and content as they continue to ramp and grow. There are mechanisms for pass-through for metal, inflation, tariffs. We effectively, starting next year, are doubling our Airbus revenue and expanding those margins. The benefit, as you asked, to the P&L comes through that stronger mix, consistent volume, expanded content and share, and the higher margins from the premium titanium plate and sheet. I just want to mention here there's been, oh, go ahead. Sorry.

Are you affected if I understood you right are you effectively saying you're managing to the high margin products.

Is that what we are yeah in both the short and the long term. Yes. We are we are optimizing the mix and so you see that in some of our aero like and and other categories and growth. So we are managing to the highest value mix in the short term and in optimizing the throughput and output and then in the long term putting purpose built.

Speaker #3: That means we're the majority supplier today . You know , the share based contracts allow us to expand that share and content as they continue to ramp and grow .

<unk> assets and partnering with our customers for that.

Terrific all right. Thank you. Thank you.

Thank you our next.

Next question comes from Myles Walton from Wolfe Research. Your line is now open. Please go ahead.

Thanks, Good morning, I was hoping to dig a little deeper into the engine mix that you have going on with MRO being 50% of total engine sales how much of that do you have a sense as in production.

[Analyst]: Just on your melt comment, are you, if I understood you right, are you effectively saying you're managing to the high-margin products? Is that what that meant?

Kim Fields: We are, yeah. In both the short and the long term, yes, we are optimizing the mix. You see that in some of our aero-like and other categories and growth. We are managing to the highest value mix in the short term and optimizing the throughput and output. In the long term, putting purpose-built assets in, partnering with our customers for that.

MRO work of sport and production engines being in road versus auto production engines being tomorrow.

Well for us as I look at our mix, we have a higher content on the Nextgen <unk> engines that are out the leap. The G. T apps. So what we're seeing is continued MRO and continued heavier shop visits where as I've mentioned, you know that those forged this.

[Analyst]: Terrific.

Kim Fields: All right.

[Analyst]: Thank you.

Kim Fields: Thank you.

Operator: Thank you. Our next question comes from Miles Walton from Wolfe Research. Your line is now open. Please go ahead.

That we make are typically the number one place that they're going to start looking if they're they're coming in for either for just a typical upgrade as they're continuing to increase life and efficiency as well as the normal scheduled maintenance visit so I would for us it's mainly the nextgen engines.

[Analyst]: Thanks. Good morning. I was hoping to dig a little deeper into the engine mix that you have going on with MRO being 50% of total engine sales. How much of that do you have a sense is in-production MRO work or in-production engines being MRO'd versus out-of-production engines being MRO'd?

That we had the higher content, that's where those powder alloys and those proprietary alloys that I just talked about really are predominant and it's what drives that increase in efficiency in life and those engines.

Okay.

Kim Fields: As I look at our mix, we have a higher content on the next-gen engines that are out, the LEAP, the GTF. What we're seeing is continued MRO and continued heavier shop visits where, as I've mentioned, those forged diffs that we make are typically the number one place that they're going to start looking if they're coming in for either just a typical upgrade as they're continuing to increase life and efficiency, as well as the normal scheduled maintenance visit. For us, it's mainly the next-gen engines that we have the higher content. That's where those powder alloys and those proprietary alloys that I just talked about really are predominant. It's what drives that increased efficiency and life in those engines.

A lot of the engine Oems are talking to mid teens type growth into next year.

Is that something that would be in line with the level of growth you'd expect in your internet.

Okay.

And markets.

Yeah, I'd say that's in line with how we're thinking about it we do see as you saw there they're sharing and we see that continued growth in demand now.

Not just in the short term, but through the whole decade, and you know because of our L. L. T. A's are long term agreements and our relationships customers. We have very transparent communications. We're aligned these alloys in their hot section being a sole source of proprietary supplier really affords us the opportunity to partner closely.

And to your point, we do see you know the growth is they're saying next year, but also through the decade and then we're looking at investments to ensure that we're continuing to support that.

[Analyst]: A lot of the engine OEMs are talking about mid-teens type growth into next year. Is that something that would be in line with the level of growth you'd expect in your engine in market?

That's great. Thank you.

Thank you.

Our next question comes from Phil Gibbs from Keybanc. Your line is now open. Please go ahead.

Kim Fields: Yeah, I'd say that's in line with how we're thinking about it. We do see, as you said, they're sharing, and we see that continued growth in demand, not just in the short term, but through the whole decade. You know, because of our LTAs, our long-term agreements, and our relationships, you know, customers, we have very transparent communications. We're aligned. These alloys and their hot section being a sole source or proprietary supplier really affords us the opportunity to partner closely. To your point, we do see, you know, the growth, as they're saying, next year, but also through the decade. We're looking at investments to ensure that we're continuing to support that.

Hey, good morning.

Good morning.

So excluding the oil and gas rights you were ahead of the midpoint by about $10 million in the quarter.

For your for your adjusted EBITDA should we think about that based on some of the comments you were providing earlier that maybe half of that is operational and half of that is due to the stronger or.

We're strong.

Defense sales you had in the quarter.

Yeah, I mean, I think that's fair we've done work across all of our our assets defense like I said that was really a bright spot and and the team did a fantastic job we had.

[Analyst]: That's great. Thank you.

Kim Fields: Thank you.

<unk> continues to grow at double digit for us and and you know that pace across missiles nuclear naval and rotary programs, but.

Operator: Our next question comes from Phil Gibbs from Keybanc Capital. Your line is now open. Please go ahead.

But we had some demand come in last last quarter that it's going to continue through the rest of this year and into next year that really allowed us to focus and you saw some of some of the numbers moved around a little bit as we prioritize those shipments to those customers, but we expect that double digit growth in defense to continue.

[Analyst]: Hey, good morning.

Kim Fields: Good morning.

[Analyst]: Excluding the oil and gas rights, you were ahead of the midpoint by about $10 million in the quarter for your adjusted EBITDA. Should we think about that, based on some of the comments you were providing earlier, that maybe half of that's operational and half of that is due to the stronger, or strong, defense sales you had in the quarter?

Into 2026 missiles like systems like that in pad three are continuing to expand and you know we were blending those mature programs. We have with some of these new cutting edge programs like the M. B 75, and the F. 47. So yes comes from both the productivity, which will continue to keep focusing on so.

Should we think about that based on some of the comments you were providing earlier that maybe half of that's operational and and half of that is due to the stronger.

Or strong, uh, defense sales, you have in the quarter?

Kim Fields: Yeah, I mean, I think that's fair. We've done work across all of our assets. Defense, like I said, that was really a bright spot, and the team did a fantastic job. Defense continues to grow at double digits for us, and that pace across missiles, nuclear, naval, and rotary programs. We had some demand come in last quarter that is going to continue through the rest of this year and into next year that really allowed us to focus. You saw some of the numbers moved around a little bit as we prioritized those shipments to those customers. We expect that double-digit growth in defense to continue into 2026. Missiles, systems like FAD and PAC-3, are continuing to expand. We were blending those mature programs we have with some of these new cutting-edge programs like the MB-75 and the F-47.

There. Um,

And that we can keep meeting the demand that you know from an A&D standpoint does continue to to come in very strong.

So Kim.

The defense sales levels overall do you expect those to continue in the fourth quarter with some pulled into the third quarter.

No I mean.

So we did have some.

Some significant shipments from the forging business in the third quarter, and we will see that moderate a bit as we go into the fourth quarter, but as I look forward the strength and momentum of the demand coming from these defense programs are going to continue to build as we come through the fourth quarter and into a into 2026.

Now that said jet engine overall, you will see that uptick in the fourth quarter as like I said, we prioritized some of our assets and shipments in the third quarter for some immediate defense needs that'll start to come back in and it'll be up.

Kim Fields: Yes, it comes from both the productivity, which we'll continue to keep focusing on so that we can keep meeting the demand that, from an A&D standpoint, does continue to come in very strong.

Our assets, um, defense. Like I said that was really a bright spot and and the team did a fantastic job. We had, you know, defense continues to grow at double digits for us and and you know that pace across missiles nuclear Naval and rotary programs. Um, but we had some demand come in last last quarter. That is going to continue through the rest of this year. And into next year that really allowed us to to focus. And, and you saw some of, um, some of the numbers moved around a little bit as we prioritize, those shipments to those customers, uh, but we expect that double digit growth in defense to continue into 2026 missiles like systems like that. And Pack 3 are continuing to expand um and you know we were blending those mature programs. We have with some of these new Cutting Edge programs like the MB 75 and the f47. So um yes comes from both the productivity, which will continue to keep focusing on so that we can keep meeting the demand that you know from

An A and D standpoint does continue to to come in very strong.

[Analyst]: Kim, the defense sales levels overall, do you expect those to continue in the fourth quarter, or were some pulled into the third quarter?

And then lastly.

So Kim. Um,

The net working capital side that was a pretty strong improvement in terms of the free cash flow bridge, where is that coming from predominantly is it is it mostly inventory or is it some some inventory and <unk>.

The defense sales levels. Overall, do you expect those to continue in the fourth quarter or with some pulled into the third quarter?

Kim Fields: No, I mean, we did have some significant shipments from the forging business in the third quarter, and we will see that moderate a bit as we go into the fourth quarter. As I look forward, the strength and momentum of the demand coming from these defense programs are going to continue to build as we come through the fourth quarter and into 2026. That said, jet engine overall, you will see that uptick in the fourth quarter as, like I said, we prioritize some of our assets and shipments in the third quarter for some immediate defense needs. That'll start to come back, and it'll be up.

Payables, just curious on that thanks, so much.

I'll tell you what I'll take that question part of the improvement that we saw in working capital really throughout the year, but especially in Q3 was tied to our management of accounts receivable that we are making progress certainly on the inventory side of the house, we've improved our efficiencies and our intensity.

No, I mean so we did have um some significant shipments from the foraging business in the third quarter. And we will see that moderate a bit as we go into the fourth quarter. But as I look forward, the strength and momentum of the demand coming from these defense. Programs are going to continue to build as we come through the fourth quarter and into, uh, into 2026.

Are you there, but for accounts receivable, we've put in place the securitization facility and that security securitization facility. We did execute some of the AR factoring in the period and so that benefited us.

Now that said jet engine overall you will see that. Um uptick in the fourth quarter as like I said, we prioritize some of our assets and shipments in the third quarter, for some immediate defense needs. That'll start to to come back and it'll be up.

[Analyst]: Lastly, on the networking capital side, that was a pretty strong improvement in terms of the free cash flow bridge. Where is that coming from predominantly? Is it mostly inventory, or is it some inventory and payables? Just curious on that. Thanks so much.

Some of our working capital efficiencies in Q3.

And then lastly um the networking Capital side, that was a pretty strong uh Improvement in terms of the Free Cash Flow Bridge.

But as you take a step back though.

And you look at the full year guidance when it comes to a free cash flow clearly, we're making progress both operationally and the cash that's generated through operations and we are making progress across the working capital.

Where is that coming from predominantly? Is it is it mostly inventory? Or is it some some inventory and uh and payables just curious on that, thanks so much.

Don Newman: I'll tell you what, I'll take that question. Part of the improvement that we saw in working capital really throughout the year, especially in Q3, was tied to our management of accounts receivable. We are making progress, certainly on the inventory side of the house. We've improved our efficiencies and our intensity there. For accounts receivable, we put in place a securitization facility. That securitization facility, we did execute some of the AR factoring in the period, so that benefited some of our working capital efficiencies in Q3. As you take a step back, though, and you look at the full-year guidance when it comes to free cash flow, clearly, we're making progress both operationally and the cash that's generated through operations. We are making progress across the working capital, especially AR and inventory, to improve that part of our cash generation.

Especially <unk> in inventory to improve that that part of our cash generation.

Thank you.

Thank you. Our next question comes from Gautam Khanna from TD Cowen. Your line is now open. Please go ahead.

Hey, Thanks, good morning, and congrats Todd.

Have you put a little longer but congrats.

Well, thank you as well.

A couple of quick questions. You did mentioned in 2026, we expect the airframe.

I'll tell you what, I'll take that. That question. Uh, part of the Improvement that, that we saw in working capital really throughout the year, but especially in Q3 was tied to our management of accounts receivable. Now, we are making progress. Certainly on the inventory side of the house. Uh, We've improved our efficiencies and our intensity there, but for accounts, receivable we put in place a securitization facility and, uh, that security securitization facility. We did execute. Um, some of the the are factoring in the period. And so that benefited, uh, some of our our um, working capital efficiencies in Q3.

Sales to be up high single digit.

Wanted to ask if you had any other preliminary color you could provide.

2026 with respect to other end markets like jet engine.

Maybe if you could just opine generically on incremental margins at H P. M C.

Any any sort of parameters you can give us as we start to pencil in 'twenty six.

We are, uh, making progress across the working capital uh, especially our and and inventory to improve that that part of our cash generation.

[Analyst]: Thank you.

Thank you.

Operator: Thank you. Our next question comes from Gautam Khanna from TD Cowen. Your line is now open. Please go ahead.

Let's say you know as you mentioned you know I'll just I'll talk about the guidance I'll, let Don talk a little bit about the incremental margins, which we do see expanding but for 2026, you know as you mentioned, we're expanding expecting that airframe grow to be to be steady throughout the year, maybe start modestly and grow as we get to the back half of the.

Thank you. Our next question comes from Gotham Cana from TD Cowen, your line is now open. Please go ahead.

[Analyst]: Hey, thanks. Good morning and congrats, Don. I know we had you for a little longer, but congrats for your time as well. Guys, I had a couple of quick questions. You did mention in 2026, you expect airframe sales to be up high single digit. I wanted to ask if you had any other preliminary color you could provide on 2026 with respect to other end markets like jet engine, maybe if you could just opine generically on incremental margins at HPMC. Any sort of parameters you'd give us as we start to pencil in '26?

Hey thanks. Good morning and uh, congrats Don. I know we have you for a little longer but congrats

A year and accelerate them as.

Sir, well, thank you, sir, for your time as well.

The planned increase rates start to take effect.

From an engine standpoint, we do see as I mentioned, you know continued growth and strength in that in that space. You know, we're not giving specific guidance on every market. We wanted to share some things around airframe because there was a lot of questions on that last quarter, but you know as we're finalizing our plans will give official guidance in the first.

um guys, I had a couple quick questions, you did mention in 2026, you expect airframe, uh, sales to be up high single digit and

uh, wanted to ask if you had any other preliminary caller, you could provide

On 2026 with respect to other end markets, like jet engine.

Maybe if you could just go Pine uh generically on incremental margins at hpmc.

Border and share all of those numbers, but you know that said, we are seeing and anticipate demand for jet engine to remain exceptionally strong through next year and into 2027 based on our order book and what we see already today.

Uh, any, any sort of parameters? You'd give us as we start to pencil in 26?

Kim Fields: I'd say, as you mentioned, I'll talk about the guidance. I'll let Don talk a little bit about the incremental margins, which we do see expanding. For 2026, as you mentioned, we're expecting that airframe growth to be steady throughout the year, maybe start modestly and grow as we get to the back half of the year and accelerate as the planned increase rates start to take effect. From an engine standpoint, we do see, as I mentioned, continued growth and strength in that space. We're not giving specific guidance on every market. We wanted to share some things around airframe because there were a lot of questions on that last quarter. As we're finalizing our plans, we'll give official guidance in the first quarter and share all of those numbers.

Don do you want to talk about margins at all I would love to see.

So.

To your point, yes, we've been seeing some really excellent performance around or incremental margins year to date.

Want to talk a little bit about the incremental margins, which we do see expanding, but you know for 2026, you know, as you mentioned we're expecting that airframe growth to be to be steady throughout the year. Maybe start modestly and and grow as we get to the back half of the year and accelerate

We're approaching 50% and so we're really pleased.

um, as the the planned increased rates start to take effect

Pleased with that it's not a surprise to us we've talked in the past about what our expectations were over time when it comes to Incrementals.

The the standing rule that we've shared with or the standing guidance that we've shared with you guys is assumed incrementals live in the 30% to 40% range think about 40%.

Kim Fields: That said, we are seeing and anticipate demand for jet engines to remain exceptionally strong through next year and into 2027 based on our order book and what we see already today. Don, do you want to talk about margins at all?

<unk> aligned to the HPLC expectations, 30% more aligned to the E&S part of the house, but we expected as our mix was improving as price was being captured as efficiencies were being delivered that are incrementals would improve and we've seen that in the first several quarters.

Um, from an engine standpoint. We do see as I mentioned, you know, continued growth and strength, um, in that in that space, you know, we're not giving, um, specific guidance on every Market, we wanted to share some things around airframe, because there was a lot of questions on that last quarter. But, you know, as we're finalizing our plans, we'll give official guidance in the first quarter and, and share all of those numbers. But, you know, that said, we are seeing and, and anticipate demand for jet engines to remain exceptionally strong through next year and into 2027 based on our order book. And, and, and what we see already today

Don Newman: I would love to. To your point, yes, we've been seeing some really excellent performance around our incremental margins. Year to date, we're approaching 50%, and we're really pleased with that. It's not a surprise to us. We've talked in the past about what our expectations were over time when it comes to incrementals. The standing rule that we've shared with, or the standing guidance that we've shared with you guys, is assume incrementals live in the 30% to 40% range. Think about 40% as aligned to the HPMC expectations, 30% more aligned to the AANS part of the house. We expected, as our mix was improving, as price was being captured, as efficiencies were being delivered, that our incrementals would improve. We've seen that in the first several quarters of this year.

As of this year.

And.

The question. The basic question is okay is this a new is this an indicator of a new.

Incremental that we should be modeling too.

I would say at this point.

We would continue to recommend a 30% to 40%.

In the future in the near future I would expect management will share with the with investors analysts that margin needs to be increased to a higher level, but I can tell you from my standpoint, while I'm really happy with the performance, we're seeing when im modeling the business I still use that 30% to.

Don, do you want to talk about margins at all? I would love to. So, um, to your point, yes, we've been seeing some really excellent performance around our incremental margins year to date. We're approaching 50%, and we're really pleased with that. It's not a surprise to us. We've talked in the past about what our expectations were over time when it comes to incremental, uh, you know, the standing rule that we've shared with or the standing guidance that we've shared with you guys is assumed incremental live in the 30% to 40% range.

40% range.

But I do expect that that we will see the improvement that we had indicated at this.

As time unfolds here.

Thanks, guys.

Don Newman: The question, the basic question is, okay, is this a new, is this an indicator of a new incremental that we should be modeling to? I would say at this point, we would continue to recommend the 30% to 40%. In the future, in the near future, I would expect management will share with investors and analysts if that margin needs to be increased to a higher level. I can tell you from my standpoint, while I'm really happy with the performance we're seeing, when I'm modeling the business, I still use that 30% to 40% range. I do expect that we will see the improvement that we've indicated as time unfolds here.

Think about 40% a, as a line to hpmc expectations, 30% more aligned to the ANS part of the house, but we expected as our mix was improving, as price was being captured as efficiencies were being delivered, that are incremental would improve. Now we've seen that in the first several quarters of this year and

Thank you.

Next question comes from Andre <unk> from <unk>. Your line is now open. Please go ahead.

Hey, everyone. Good morning, and Don Congratulations again glad wherever you for one more but.

It's been a pleasure.

<unk>.

Yeah.

So you called out Naval nuclear is one of the main drivers that defense, but maybe could you just give us a status update there on the <unk> supply chain and how things are going there vis vis China.

Yeah. So obviously you know the the news continues to change depending on if we have a trade deal or not but I would say you know from the supply chain side on the Zurich product. It's been very stable, we haven't seen any impacts or anything that is.

The question, the basic question is, okay, is this, is this a new? Uh, is this an indicator of a new uh, incremental that we should be modeling to? Uh, I would say at this point, we would continue to recommend the 30 to 40%, uh, in the future uh, in the near future. I would expect management will share with uh, with investors and analysts. If that margin needs to be increased to a higher level. But I can tell you from my standpoint while, I'm really happy with performance. We're seeing when I'm not modeling the business, I still use that 30 to 40% range and, uh, but I do expect that that we will see the Improvement that we, we've indicated, um, you know, as time unfolds here.

[Analyst]: Thanks, guys.

Concerning from our standpoint, you know I will mention that you know I think I've mentioned this in the past. We've also built stockpiles both both of raw materials as well as finished products to make sure if theres any intermittent impacts that you know as we can see through some of these trade negotiations are that we're able to maintain that and manage that and so.

Thanks guys.

Operator: Thank you. Our next question comes from Andre Madrid from BTIG. Your line is now open. Please go ahead.

Thank you. Our next question comes from Andre Madrid from btig. Your line is now open. Please go ahead.

[Analyst]: Hey, everyone. Good morning. Don, congratulations. Again, glad we have you for one more, but it's been a pleasure. You called out naval nuclear as one of the main drivers at defense. Maybe could you just give us a status update there on the zirconium supply chain and how things are going there vis-à-vis China?

We're in a really good position from the supply chain side of things yeah. When I look at the market, though you know I'm expecting positive momentum as we go into the acute into Q4, we use these last couple of quarters frankly too.

Hey everyone. Good morning. And, uh, don. Congratulations again, glad we have you for 1 more but, uh, but it's been a pleasure. Um,

So you called out Naval nuclear is 1 of the main drivers at defense but maybe could you just give us a status update there on the Zerg supply chain and how things are going there because it be China.

Kim Fields: Yeah. Obviously, the news continues to change depending on if we have a trade deal or not. I'd say from the supply chain side on the zirconium product, it's been very stable. We haven't seen any impact or anything that is concerning from our standpoint. I will mention that I think I've mentioned this in the past, we've also built stockpiles both of raw materials as well as finished products to make sure if there's any intermittent impacts that, as we can see through some of these trade negotiations, we're able to maintain that and manage that. We're in a really good position from the supply chain side of things. When I look at the market, though, I'm expecting positive momentum as we go into Q4.

And upgrade some of our equipment with some customer member customer funded capital because again, our customers are looking at some of our capabilities and seeing tightness with the demand that they've got coming both you know nuclear defense as well as energy gas turbine energy. So you know we we did put.

Upgrades. So we do anticipate to see some of those benefits starting to come through in the demand fundamentals are solid. So we're working on new qualifications in new material to get qualified for those applications as well.

Got it got it and in terms of the stockpiles. If you can share I mean, how much how long of demand does that reflect those stockpiles.

Is it like a year or two like.

I would say we generally on finished product we have oh, almost two years, probably around two years of inventory and on the on the raw material side, we have over a year of materials you have to remember these raw materials are not especially the raw materials reserve, it's not a very.

Kim Fields: We used these last couple of quarters, frankly, to upgrade some of our equipment with some customer-funded capital because, again, our customers are looking at some of our capabilities and seeing tightness with the demand that they've got coming both nuclear, defense, as well as energy, gas, turbine energy. We did put some upgrades, so we do anticipate to see some of those benefits starting to come through. The demand fundamentals are solid. We're working on new qualifications and new material to get qualified for those applications as well.

Hi, and it's only half what so let me clarify that's only half of the raw materials that we put in Jamaica as their product and it's not a very high dollar amount and so we're able to hold large amounts of inventory that raw materials and as I said, you know, we havent had jumped to pull into that or or use any of that were actually you know we're maintaining them.

Haven't seen any impacts or anything that is concerning from our standpoint. You know, I will mention that, you know, I think I've mentioned this in the past, we've also built stock piles, both both of raw materials as well as finished products to make sure if there's any intermittent, um, impacts that, you know, as we can see through some of these trade negotiations, uh, that we're able to, to maintain that and manage that. And so, we're in a really good position from the supply chain side of things. Um, you know, when I look at the market, though, you know, I'm expecting positive momentum. Um, as we go into the into Q4, we use these last couple quarters frankly to, in upgrade some of our equipment, um, with some customer. Customer customer funded Capital because again, our customers are looking at some of our capabilities and seeing, you know, tightness with the demand that they've got coming. Both, you know, nuclear defense as well as energy um, gas turbine energy. So you know, we we did put some upgrades

So we do anticipate to see some of those benefits starting to come through and the demand fundamentals are solid. So we're working on new qualifications and new material um to get uh qualified for those applications as well.

[Analyst]: Got it. In terms of the stockpiles, if you can share, how much, how long of demand does that reflect, those stockpiles? Is it like a year or two?

Managing it.

We haven't seen disruptions this year, there's been good flow.

And it hasn't been threatened as of yet, but again, if there's any bubble or any momentary disruption I think we're in a good position to maintain through that.

Got it, got it. And in terms of the stockpiles, if you can share, I mean how much, how long of demand does that reflect those stockpiles? Like how...?

Is it like a year or 2? Like

Kim Fields: I would say we generally, on finished product, we have almost two years, probably around two years of inventory. On the raw materials side, we have over a year of materials. You have to remember, these raw materials are not, especially the raw materials for zirconium, it's not a very high, and it's only half. Let me qualify. It's only half of the raw materials that we put in to make our zirconium products. It's not a very high dollar amount, so we're able to hold large amounts of inventory in that raw materials. As I said, we haven't had to jump to pull into that or use any of that. We're actually maintaining and managing it. We haven't seen disruptions this year. There's been good flow, and it hasn't been threatened as of yet.

Got it got it thank you and if I could just squeeze one more in I mean, you said MRO was roughly half of engine what was <unk>.

What was that percentage previously.

Pre COVID-19 and whatnot.

Yeah pre Covid I would say you know typically what our rule of thumb was this 20% to 25%.

I would say we generally unfinished product, we have um oh almost 2 years, probably around 2 years of um inventory. And on the on the raw material side. We have over a year of materials, you have to remember these raw materials are not um specially the raw materials for zerk. It's not a very

And you know we've seen that accelerate rapidly and you know I you know all of these things Andre you know as you look at shop visits and.

You know the airlines waiting on planes to get delivered to some of those older planes are staying in service longer I think the other aspect is the Nextgen entered engines are continuing to drive wiping and efficiency. So they're doing upgrade packages. So all of those are coming to bear and again, they all hit squarely into that section.

Kim Fields: If there's any bubble or any momentary disruption, I think we're in a good position to maintain through that.

High and it's only half. So let me qualify this. Only half of the raw materials that we put in to make ours are products. And it's not a very high dollar amount. And so we're able to hold large amounts of inventory in that raw materials. And, as I said, you know, we haven't had to jump to pull into that or or use any of that. We're actually, you know, we're maintaining and managing it. Um, we haven't seen disruptions this year. There's been good flow, um, and it hasn't been threatened as of yet. Um, but again, if there's any bubble or any momentary disruption, I think we're in a good position to, to maintain through that.

And those forged desks that have so much where that basically provides a thrust for the the engine and the plane to get off the ground and so we are seeing like I said, a substantial increase in you know the I won't talk for the Oems are sharing it publicly but they're sharing with us that they're seeing this to continue through the decade as we go forward.

[Analyst]: Got it. Thank you. If I could just squeeze one more in, you said MRO is roughly half of engine. What was that percentage previously, you know, pre-COVID and whatnot?

Got it, got it. Thank you. And if I could just squeeze 1 more in, I mean you said mro's roughly half of engine, what was what was that percentage previously? You know, preco and whatnot.

Kim Fields: Pre-COVID, I would say, you know, typically what our rule of thumb was is 20% to 25%. We've seen that accelerate rapidly. You know all of these things, Andre, as you look at shop visits and the airlines waiting on planes to get delivered. Some of those older planes are staying in service longer. I think the other aspect is these next-gen engines are continuing to drive lifing and efficiency. They're doing upgrade packages. All of those are coming to bear. They all hit squarely into that hot section, those forged discs that have so much wear that basically provides a thrust for the engine and the plane to get off the ground. We are seeing, like I said, a substantial increase. I won't talk for the OEMs.

And these engines, you'll get into their first and second shop visits.

Kim that's super helpful color. Thanks, so much I'll leave it there.

Sure. Thank you.

Thank you.

Next question comes from Simon <unk> from J P. Morgan. Your line is now open. Please go ahead.

Thanks, very much good morning, nice results and nice remarks, and Dan Thanks, Tom Thanks for everything.

So I guess, just starting out you mentioned.

The <unk> business kind of a change in.

The structure of our contract I think something that goes that moves it more towards just recognizing your value add.

On work.

Kim Fields: They're sharing it publicly, but they're sharing with us that they're seeing this continue through the decade as we go forward and these engines get into their first and second shop visits.

Rather than all of the materials.

Is there do you anticipate more.

More happening there and kind of what the what kind of determines.

Yeah. Preco um I would say you know, typically what our rule of thumb was is 20 25%. And you know, we've seen that accelerate rapidly and you know I you know, all of these things. Um Andre you know, as you look at shop visits and um you know, the airlines waiting on planes to get delivered to some of those older planes are staying in service longer. I think the other aspect is these next-gen engines, they're continuing to drive, um, lifing and efficiency. So they're doing upgrade packages. So, all of those are coming to bear. Um, and again, they all hit squarely into that hot section, those forged discs that, um, have so much wear that that basically provides a Thrust for the the engine and the plane to get off the ground. And so we are seeing like you said, a substantial increase and you know, the I won't talk for the oems. They're sharing it publicly but they're sharing with us that they're seeing this to continue through the decade as we go forward. And these engines, you know, get into their

First and second shop visits.

When that happens.

[Analyst]: Kim, that's super helpful color. Thanks so much. I'll leave it there.

When it doesn't.

Hey, Seth it's done so let me take that one yeah, you're right in the quarter, we highlighted because we're wanting to explain the movement. Our jet engine revenue sequentially. We highlighted that we had a contract a particular contract that we had converted from a materials and conversion.

Kim. That's super helpful caller. Uh, thanks so much. I'll leave it there.

Kim Fields: Sure. Thank you.

Sure, thank you.

Operator: Thank you. Our next question comes from Seth Seifman from JPMorgan. Your line is now open. Please go ahead.

Thank you. Our next question comes from Simon from JP Morgan. Your line is now open. Please go ahead.

[Analyst]: Thanks very much. Good morning. Nice results and nice remarks. Don, thanks for everything. You mentioned in the HPMC business kind of a change in the structure of our contract, something that moves it more toward just recognizing your value add on work rather than all the materials. Do you anticipate more happening there and what kind of determines when that happens and when it doesn't?

Sure, which means we would buy the material and convert the material and sell the product to two.

Our customers, we we converted.

At the request of our customer that contract to a conversion only what that means is we don't buy the material. They provide the material and along of the short of that is you have less revenue that you recognize it doesn't negatively impact your bottom line and it can actually be a help to your margins.

Oh, uh, thanks very much, good morning. Uh, nice results and, um, nice remarks and and, uh, don. Thanks, uh, thanks for everything. Um, so I guess just starting out you, you mentioned, um, in the the hpmc business kind of a, a change in, uh, the structure of a contract that I think something that goes that moves it more towards just recognizing your value, add, uh, on on work. Um, you know, rather than all the materials um, is, is there. Do you anticipate more happening there and kind of, what, what kind of determines, um, you know, when, when that happens and you know, when it doesn't

So thats the background there is that a trend well, it's not unusual in our business to have conversion contracts, we don't see a trend that the material contracts Wilson will transition to conversion contracts. It was I would say generally an isolated situation where.

Don Newman: Hey, Seth. It's Don. Let me take that one. You're right. In the quarter we highlighted, because we're wanting to explain the movement in our jet engine revenue sequentially, we highlighted that we had a contract, a particular contract that we had converted from a materials and conversion structure, which means we would buy the material and convert the material and sell the product to our customers. We converted, at the request of our customer, that contract to a conversion only. What that means is we don't buy the material. They provide the material. The long and the short of that is you have less revenue that you recognize. It doesn't negatively impact your bottom line, and it can actually be a help to your margins. That's the background there. Is it a trend? It's not unusual in our business to have conversion contracts.

It shifted over that particular contract that had about a 10 million dollar effect on revenue from Q2 to Q3 that particular contract will be with us through the end of this year. So you'll see that same effect.

In Q4, but no not a trend and no no messaging around this particular change.

Excellent great great. Thanks, and then I think that's probably follows up a little bit on andrea's question, but specialty energy and in the slides you talk about it being kind of a longer term growth market.

In recent years has been a little bit of growth, but not a lot and.

Don Newman: We don't see a trend that the material contracts will transition to conversion contracts. It was, I would say, generally an isolated situation where it shifted over. That particular contract had about a $10 million effect on revenue from Q2 to Q3. That particular contract will be with us through the end of this year. You'll see that same effect in Q4. No, not a trend and no messaging around this particular change.

This year.

And so how do you think about the timeframe for that and is it sort of linked.

Linked to you know should we think about it more linked to development and nuclear energy or anything else.

Conversion structure, which means we would buy the material and convert the material and and sell the the product, to, to our customers. We, we converted, um, at the request of our customer that contract to a conversion, only what that means is, we don't buy the material, they provide the material and the long, and the short of that is, you have less Revenue that you recognize. Uh, it doesn't negatively impact your bottom line and it can actually be a help, uh, to your margins. So, that's the background there. Is it a trend? Um, well, it's not unusual in our business to have conversion contracts. We don't see a trend that the material, uh, contracts will will transition to conversion contracts. It, it was, I would say generally an isolated situation where it shifted over that particular contract ahead of about a ten million dollar effect on revenue from Q2 to Q.

Yeah, I would say, we're going to start to see growth in that market segment next quarter and that's going to continue to accelerate as we go into 2026 for us and you're right to point that out. It's both it's both gas turbine you know and I'd say that is going to be in the immediate the next few.

That particular contract will be with us through the end of this year. So you'll see that same effect in, uh, in Q4. But no, not a trend, and no, no messaging around this particular, uh, change.

[Analyst]: Excellent. Great, great. Thanks. I think this probably follows up a little bit on Andre's question, but you know, specialty energy in the slides, you talk about it being kind of a longer-term growth market. In recent years, there's been a little bit of growth, but not a lot, and down this year. How do you think about the time frame for that? Is it sort of linked to, you know, should we think about it more linked to developments in nuclear energy or anything else?

Quarters, you'll see that'll be what's behind that growth and you'll see that continue to increase we are in the process of developing some new material there in getting qualified and so.

There is significant demand there I'd say on the nuclear side as you said, we're in a unique position where one of the only western suppliers of some of the zirconium in in the tracks are tubing form that is really needed for the commish commercial nuclear facilities globally, and so that business as I mentioned, we did some ups.

Excellent, great, great thanks. And, and then, um, I think this probably follows up a little bit on on Andre's question but, you know, specialty energy in in the slides, you talked about it being kind of a longer term growth Market, um, you know it in recent years has been a little bit of growth but but not a lot and, you know, and down this year. Um, and so, you know, how how do you think about the time frame for that and is it sort of, you know, linked to um you know? Should we think about it more linked to developments in in nuclear energy or or uh anything else?

Grades we put some some capacity freed up some bottlenecks there and so you're we're going to see that continue to grow and I know, they're trying to fast track some of those those nuclear facilities and bring them back online and we're seeing that demand come in now in orders for that today. So both of them, but I'd say you know the gas turbine really being driven by you know.

Kim Fields: Yeah, I would say we're going to start to see growth in that market segment next quarter, and that's going to continue to accelerate as we go into 2026. For us, and you're right to point that out, it's both. It's both gas turbine, you know, and I'd say that is going to be in the immediate, the next few quarters. You'll see that'll be what's behind that growth, and you'll see that continue to increase. We are in the process of developing some new materials there and getting qualified. There is significant demand there. I'd say on the nuclear side, as you said, we're in a unique position. We're one of the only Western suppliers of some of the zirconium in the tracks or tubing form that is really needed for the commercial nuclear facilities globally. That business, as I mentioned, we did some upgrades.

You know driven by the data centers and the demand for energy and for both you know this is a market that we don't spend a ton of time, we talk a lot about aerospace, but you know.

It really leverages, our differentiated materials, our breath of materials or Conium hafnium.

As well as titanium and nickel products and those capabilities you know I know we've mentioned it I probably under emphasize the capabilities of our assets and the flexibility of those to be able to flex into some of these markets where there are very few if if any in the western world that have those.

Kim Fields: We put some capacity, freed up some bottlenecks there. We're going to see that continue to grow. I know they're trying to fast-track some of those nuclear facilities and bringing them back online. We're seeing that demand come in now in orders for that today. Both of them, but I'd say, you know, the gas turbine really being driven by, you know, the data centers and the demand for energy. For both, you know, this is a market that we don't spend a ton of time. We talk a lot about aerospace, but you know, we really leverage our differentiated materials, our breadth of materials, zirconium, hafnium, you know, as well as titanium and nickel products. Those capabilities, you know, I know we've mentioned it.

Yeah, I would say we're going to start to see growth um in that market segment, next quarter and that's going to continue to accelerate as we go into 2026 for us and and you're right to point that out. It's both. It's both gas turbine. Um, you know, and I'd say that is going to be in the immediate the next few quarters. You'll see that'll be what's behind that growth and you'll see that continue to um, increase we are, you know, in the process of developing, some new materials there, and getting qualified. And so um, there is significant demand there I say on the nuclear side as you said we're in a unique position. We're 1 of the only Western suppliers of some of the conium in in the tracks or tubing forms. That is really needed for the Comm commercial nuclear facilities globally. And so that business, as I mentioned, we did some upgrades. We put some, um,

And that product forms. So yes, we are seeing a lot of demand I am very excited about the future for energy for US I do think it's a small part of our business today, but I do see that growing and its a very profitable profitable part of our overall portfolio.

Um, some capacity freed up some bottlenecks there and so you're we're going to see that continue to grow. Um, I know they're trying to Fast Track. Some of those those nuclear facilities and bringing them back online. And we're seeing that demand come in now and orders for that today. So, um, both of them but I'd say, you know, the gas turbine really being driven by, you know, the, um,

Excellent thanks very much.

Yeah.

Thank you. We currently have no further questions. So I'll hand, it back to Kim fields for closing remarks.

Thanks, well. Thank you everybody for the call today as I said, we had a fantastic quarter I'm very pleased with the results that we've demonstrated in the third quarter and the momentum that we see going into the fourth quarter and frankly into 2026, you know next quarter, we'll share our official you know.

Kim Fields: I've probably underemphasized the capabilities of our assets and the flexibility of those to be able to flex into some of these markets where there are very few, if any, in the Western world that have those capabilities in that product form. You know, we are seeing a lot of demand. I'm very excited about the future for energy for us. I do think it's a small part of our business today, but I do see that growing, and it's a very profitable part of our overall portfolio.

Formalized guidance, but just to close on we're going to stay focused on where we're most differentiated those advance advanced materials and forging for aerospace and defense. The next phase is really around growing our content per platform scaling those co funded investments and improving operational leverage.

You know, driven by the data centers and the demand for energy and for both, you know, this is a market that we don't spend a ton of time, we talk a lot about, uh, Aerospace. But, you know, we really leverages our, differentiated materials, our breath of materials or conium hafnium, you know, as well as titanium, and, and nickel products. And, and those capabilities, you know, I know we've mentioned it. I probably underemphasized the capabilities of our assets, um, and the flexibility of those to be able to flex into some of these markets where there are very few if if any in the western world that have those capabilities and that product um form. So you know we are seeing a lot of demand. I I'm very excited about the future. Um, for energy for us, I do think it's a small part of our business today, but I do see that growing and it's a very profitable profitable part of of our overall portfolio.

Yeah, we continue to see that mix grow on A&D is going to continue to grow faster probably than our other markets. As we go into next year and that momentum will continue from Q4 to 2026.

[Analyst]: Excellent. Thanks very much.

Excellent. Thanks very much.

Operator: Thank you. We currently have no further questions, so I'll hand back to Kim Fields for closing remarks.

Thank you. We currently have no further questions so our hand back to Kim Fields for closing remarks.

Over time like I said the bottom line as our transformation is working we're seeing that in both our margins our mix and our overall gross now it's really about compounding that performance for the rest of this year and into 2026. Thank you guys for your time I really appreciate it and I'll talk with you later.

Kim Fields: Thank you, everybody, for the call today. As I said, we had a fantastic quarter. I'm very pleased with the results that we've demonstrated in the third quarter and the momentum that we see going into the fourth quarter and, frankly, into 2026. Next quarter, we'll share our official, formalized guidance. Just to close on, we're going to stay focused on where we're most differentiated, those advanced materials and forgings for aerospace and defense. The next phase is really around growing our content per platform, scaling those co-funded investments, and improving operational leverage. We continue to see that mix grow. A&D is going to continue to grow faster, probably, than our other markets as we go into next year. That momentum will continue from Q4 to 2026. Over time, like I said, the bottom line is our transformation is working.

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

[music].

Yeah.

We continue to see that mix grow. Um an AMD is going to continue to grow faster probably than our other markets as we go into next year. And that momentum will continue from Q4 to 2026.

Kim Fields: We're seeing that in both our margins, our mix, and our overall growth. Now it's really about compounding that performance for the rest of this year and into 2026. Thank you, guys, for your time. I really appreciate it, and I'll talk with you later.

Overtime, like I said, the bottom line is our Transformations working. We're seeing that in both our margins, our mix, and our overall growth. Uh now it's really about compounding that performance, uh, for the rest of this year and into 2026. Thank you guys for your time. I really appreciate it and I'll talk with you later.

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

This concludes today's call, thank you for joining. You may now disconnect your lines.