Q1 2026 ATI Inc Earnings Call

April 30, 2026

Speaker #1: Hello everyone. Thank you for joining us, and welcome to ATI's first quarter 2026 earnings call. After today's prepared remarks, we will host a question-and-answer session.

Operator: Hello, everyone. Thank you for joining us. Welcome to ATI's First Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to David Weston. Please go ahead.

Speaker #1: If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to David Weston.

Speaker #1: Please go ahead.

Speaker #2: Good morning and welcome to ATI's first quarter 2026 earnings call. Today's discussion is being webcast at ATImaterials.com. Joining me today are Kim Fields, President and CEO, and Rob Foster, Senior Vice President and CFO.

David Weston: Good morning, and welcome to ATI's Q1 2026 earnings call. Today's discussion is being webcast at atimaterials.com. Joining me today are Kim Fields, President and CEO, and Rob Foster, Senior 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. These are noted in the earnings release and in the accompanying presentation. Now I'll turn the call over to Kim.

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 ATImaterials.com.

Speaker #2: 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. These are noted in the earnings release and in the accompanying presentation.

David Weston: 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. These are noted in the earnings release and in the accompanying presentation. Now, I'll turn the call over to Kim.

Speaker #2: Now, I'll turn the call over to Kim.

Speaker #3: Good morning and thank you for joining us. We're off to a great start in 2026. We delivered strong first-quarter performance by driving higher-quality revenue, expanded margins, and improved cash flow.

Kimberly Fields: Good morning, and thank you for joining us. We're off to a great start in 2026. We delivered strong Q1 performance by driving higher quality revenue, expanded margins, and improved cash flow. This quarter demonstrates that the ATI model is working. We're prioritizing the right volume, expanding margins, and converting demand into earnings and cash flows. Q1 results exceeded the high end of our guidance, supported by disciplined operational execution and richer mix. Demand across our core markets remains robust, and we continue to grow alongside our customers. I'll highlight the quarter's results. Revenue was $1.15 billion, in line with expectations, with 69% attributed to aerospace and defense. Adjusted EBITDA was $232 million, up 19% year over year and above the high end of our guidance.

Speaker #3: This quarter demonstrates that the ATI model is working. We're prioritizing the right volume, expanding margins, and converting demand into earnings and cash flows. First-quarter results exceeded the high end of our guidance, supported by disciplined operational execution and richer mix.

Speaker #3: Demand across our core markets remains robust, and we continue to grow alongside our customers. I'll highlight the quarter's results. Revenue was $1.15 billion, in line with expectations.

Kimberly Fields: Demand across our core markets remains robust, and we continue to grow alongside our customers. I'll highlight the quarter's results. Revenue was $1.15 billion, in line with expectations, with 69% attributed to aerospace and defense. Adjusted EBITDA was $232 million, up 19% year over year and above the high end of our guidance. Adjusted EBITDA margin reached 20%, up more than 300 basis points year over year.

Speaker #3: With 69% attributed to aerospace and defense. Adjusted EBITDA was $232 million, up 19% year over year and above the high end of our guidance.

Speaker #3: Adjusted EBITDA margin reached 20%, up more than 300 basis points year over year. Adjusted free cash flow was $75 million, a meaningful improvement from last year and a clear indicator of strong cash discipline.

Kimberly Fields: Adjusted EBITDA margin reached 20%, up more than 300 basis points year over year. Adjusted free cash flow was $75 million, a meaningful improvement from last year and a clear indicator of strong cash discipline. This performance reflects more than favorable market conditions. It signals a fundamentally stronger ATI. What sets us apart today is the improved quality and resilience of our earnings. We are strategically allocating capacity towards our highest value opportunities in aerospace, defense, and specialty energy. That shift is driving better mix, stronger pricing, and more consistent execution. Order activity continues to be strong, with our order backlog growing by 10% sequentially to an all-time high of $4.1 billion. Additionally, lead times are extending for our most differentiated products, superalloy nickels, premium quality titanium, isothermal forgings, and exotic alloys. This is a key point. This is not short-cycle demand.

Kimberly Fields: Adjusted free cash flow was $75 million, a meaningful improvement from last year and a clear indicator of strong cash discipline. This performance reflects more than favorable market conditions. It signals a fundamentally stronger ATI. What sets us apart today is the improved quality and resilience of our earnings. We are strategically allocating capacity towards our highest value opportunities in aerospace, defense, and specialty energy.

Speaker #3: This performance reflects more than favorable market conditions. It signals a fundamentally stronger ATI. What sets us apart today is the improved quality and resilience of our earnings.

Speaker #3: We are strategically allocating capacity towards our highest-value opportunities in aerospace, defense, and specialty energy. That shift is driving better mix, stronger pricing, and more consistent execution.

Kimberly Fields: That shift is driving better mix, stronger pricing, and more consistent execution. Order activity continues to be strong, with our order backlog growing by 10% sequentially to an all-time high of $4.1 billion. Additionally, lead times are extending for our most differentiated products, superalloy nickels, premium quality titanium, isothermal forgings, and exotic alloys. This is a key point. This is not short-cycle demand.

Speaker #3: Order activity continues to be strong, with our order backlog growing by 10% sequentially to an all-time high of $4.1 billion. Additionally, lead times are extending for our most differentiated products, super alloy nickels, premium-quality titanium, isothermal forgings, and exotic alloys.

Speaker #3: This is a key point. This is not short-cycle demand. It is tied to long-term contracts, production schedules, and well-funded programs, giving us strong visibility into future performance.

Kimberly Fields: It is tied to long-term contracts, production schedules, and well-funded programs, giving us strong visibility into future performance. This momentum accelerates throughout 2026. Operationally, our disciplined execution is delivering results. Across ATI, we are improving throughput, increasing yields, and streamlining production flow, particularly in melting, forging, and downstream processing. That demand strength is most valuable when we convert it to deliveries, and that's where execution is making a difference. Across operations, we are unlocking capacity through productivity. Weekly output at our primary melt facilities increased by more than 15% year over year. We achieve record shipment levels across multiple product lines in both segments, and we continue to improve flow through forging, testing, and finishing operations. These structural operational improvements are being driven by better equipment reliability, tightened product quality control, and targeted investments in the highest return areas of the business.

Speaker #3: This momentum accelerates throughout 2026. Operationally, our disciplined execution is delivering results. Across ATI, we are improving throughput, increasing yields, and streamlining production flow. Particularly in melting, forging, and downstream processing.

Speaker #3: That demand strength is most valuable when we convert it to deliveries, and that's where execution is making a difference. Across operations, we are unlocking capacity through productivity, weekly output at our primary melt facilities increased by more than 15% year over year.

Kimberly Fields: Across operations, we are unlocking capacity through productivity. Weekly output at our primary melt facilities increased by more than 15% year over year. We achieve record shipment levels across multiple product lines in both segments, and we continue to improve flow through forging, testing, and finishing operations. These structural operational improvements are being driven by better equipment reliability, tightened product quality control, and targeted investments in the highest return areas of the business.

Speaker #3: We achieve record shipment levels across multiple product lines in both segments, and we continue to improve flow through forging, testing, and finishing operations. These structural operational improvements are being driven by better equipment reliability, tightened product quality control, and targeted investments in the highest-return areas of the business.

Speaker #3: Combining this execution with the strong market demand provides the foundation to raise our full-year adjusted EBITDA guidance by $35 million. Bringing the midpoint to $1 billion, $35 million.

Kimberly Fields: Combining this execution with the strong market demand provides the foundation to raise our full-year adjusted EBITDA guidance by $35 million, bringing the midpoint to $1.035 billion. This represents 20% growth year over year. Our full-year outlook is now adjusted EBITDA of $1.01 to 1.06 billion. Adjusted EPS of $4.20 to $4.48. Adjusted free cash flow of $465 to 525 million. Our outlook reflects continued strength across our core markets, focused execution, and confidence in our ability to convert demand into earnings and cash flow. Importantly, a significant portion of this growth is already embedded in our $4.1 billion order backlog and long-term contracts, providing strong visibility into the H2 outlook.

Speaker #3: This represents 20% growth year over year. Our full-year outlook is now adjusted EBITDA of $1 billion, $10 million, to $1 billion, $60 million. Adjusted EPS of $4.20 to $4.48.

Speaker #3: Adjusted free cash flow of $465 to $525 million. Our outlook reflects continued strength across our core markets, focused execution, and confidence in our ability to convert demand into earnings and cash flow.

Kimberly Fields: Our outlook reflects continued strength across our core markets, focused execution, and confidence in our ability to convert demand into earnings and cash flow. Importantly, a significant portion of this growth is already embedded in our $4.1 billion order backlog and long-term contracts, providing strong visibility into the H2 outlook. Like others in the industry, we're closely monitoring the geopolitical developments in the Middle East.

Speaker #3: Importantly, a significant portion of this growth is already embedded in our $4.1 billion order backlog and long-term contracts, providing strong visibility into the second-half outlook.

Speaker #3: Like others in the industry, we're closely monitoring the geopolitical developments in the Middle East. The primary areas we're watching are demand impacted by fuel price, MRO activity levels, and aircraft retirements.

Kimberly Fields: Like others in the industry, we're closely monitoring the geopolitical developments in the Middle East. The primary areas we're watching are demand impacted by fuel price, MRO activity levels, and aircraft retirements. We've seen no material impact on demand or our order activity. There have been no changes to our order books or requests for delivery deferrals. In fact, last week I personally had several calls from customers eagerly emphasizing they'll take any capacity that opens up. With our record backlog and the ability to redeploy assets to support multiple differentiated markets, our portfolio is designed for this kind of dynamic environment. Turning to defense, revenues grew 9% year over year and are on track for mid-teens growth in full year 2026. Our materials support a broad range of platforms across air, land, sea, and missile systems, with accelerating demand across key programs.

Kimberly Fields: The primary areas we're watching are demand impacted by fuel price, MRO activity levels, and aircraft retirements. We've seen no material impact on demand or our order activity. There have been no changes to our order books or requests for delivery deferrals. In fact, last week I personally had several calls from customers eagerly emphasizing they'll take any capacity that opens up.

Speaker #3: We've seen no material impact on demand or our order activity. There have been no changes to our order books or requests for delivery deferrals.

Speaker #3: In fact, last week, I personally had several calls from customers eagerly emphasizing they'll take any capacity that opens up. With our record backlog and the ability to redeploy assets to support multiple differentiated markets, our portfolio is designed for this kind of dynamic environment.

Kimberly Fields: With our record backlog and the ability to redeploy assets to support multiple differentiated markets, our portfolio is designed for this kind of dynamic environment. Turning to defense, revenues grew 9% year over year and are on track for mid-teens growth in full year 2026. Our materials support a broad range of platforms across air, land, sea, and missile systems, with accelerating demand across key programs. I am pleased to share that we have renewed a 5-year agreement supporting the Naval Nuclear Propulsion Program.

Speaker #3: Turning to defense, revenues grew 9% year over year, and are on track for mid-teens growth in full year 2026. Our material support a broad range of platforms across air, land, sea, and missile systems, with accelerating demand across key programs.

Speaker #3: I am pleased to share that we have renewed a five-year agreement supporting the Naval Nuclear Program. This agreement is projected to generate $1 billion in revenue over the contract term, at attractive aero-like margins.

Kimberly Fields: I am pleased to share that we have renewed a 5-year agreement supporting the Naval Nuclear Propulsion Program. This agreement is projected to generate $1 billion in revenue over the contract term at attractive aero-like margins and more than doubles annual revenue over the prior contract. Q1 marks the third consecutive quarter our Advanced Alloys & Solutions segment has achieved margins in the high teens, well ahead of plan. It reflects the success of our strategy to focus on differentiated products, driving stronger value capture and sustained margin expansion. The most notable evolution in recent months is the acceleration of missile-related demand. Q1 revenue in missiles and missile systems more than doubled year-over-year as customers are scaling production and replenishing inventories. We have seen a meaningful increase in customer inquiries and order activities tied to the production ramps, even in advance of program funding.

Kimberly Fields: This agreement is projected to generate $1 billion in revenue over the contract term at attractive aero-like margins and more than doubles annual revenue over the prior contract. Q1 marks the third consecutive quarter our Advanced Alloys & Solutions segment has achieved margins in the high teens, well ahead of plan. It reflects the success of our strategy to focus on differentiated products, driving stronger value capture and sustained margin expansion.

Speaker #3: And more than doubles annual revenue over the prior contract. Q1 marks the third consecutive quarter our advanced alloys and solutions segment has achieved margins in the high teens, well ahead of plan.

Speaker #3: It reflects the success of our strategy to focus on differentiated products, driving stronger value capture, and sustained margin expansion. The most notable evolution in recent months is the acceleration of missile-related demand.

Kimberly Fields: The most notable evolution in recent months is the acceleration of missile-related demand. Q1 revenue in missiles and missile systems more than doubled year-over-year as customers are scaling production and replenishing inventories. We have seen a meaningful increase in customer inquiries and order activities tied to the production ramps, even in advance of program funding.

Speaker #3: Q1 revenue in missiles and missile systems more than doubled year over year, as customers are scaling production and replenishing inventories. We have seen a meaningful increase in customer inquiries and order activities tied to the production ramps.

Speaker #3: Even in advance of program funding. Our materials, titanium, nickel, and hafnium, are vital to missile platforms like Tomahawk, PAC-3, and THAD. These materials are used for structural applications and propulsion systems where high-temperature performance, strength, and durability are required.

Kimberly Fields: Our materials, titanium, nickel, and hafnium, are vital to missile platforms like Tomahawk, PAC-3, and THAAD. These materials are used for structural applications and propulsion systems where high temperature performance, strength, and durability are required. This is a small percentage of our business today, but provides an opportunity for accelerated growth and strong visibility ahead. Our execution is also being recognized by our defense customers. In high performance titanium plate and sheet for ground armor, we were honored to be named General Dynamics Land Systems 2025 Supplier of the Year. Selected from over 2,500 suppliers, this award recognizes our execution on key programs, including the XM-30 prototype. This distinction reflects not only the quality and performance of our materials, but also our team's speed, adaptability, and coordination. We appreciate the recognition and congratulate the ATI Specialty Rolled Products team for their outstanding work.

Speaker #3: This is a small percentage of our business today, but provides an opportunity for accelerated growth. And strong visibility ahead. Our execution is also being recognized by our defense customers.

Speaker #3: In high-performance titanium plate and sheet for ground armor, we were honored to be named General Dynamic Land Systems 2025 Supplier of the Year. Selected from over 2,500 suppliers, this award recognizes our execution on key programs including the XM30 prototype.

Kimberly Fields: In high performance titanium plate and sheet for ground armor, we were honored to be named General Dynamics Land Systems 2025 Supplier of the Year. Selected from over 2,500 suppliers, this award recognizes our execution on key programs, including the XM-30 prototype. This distinction reflects not only the quality and performance of our materials, but also our team's speed, adaptability, and coordination. We appreciate the recognition and congratulate the ATI Specialty Rolled Products team for their outstanding work.

Speaker #3: This distinction reflects not only the quality and performance of our materials, but also our team's speed, adaptability, and coordination. We appreciate the recognition and congratulate the ATI Specialty Role Products team for their outstanding work.

Speaker #3: Turning to aerospace, fundamentals remain strong. Commercial aerospace continues to be supported by increasing build rates and significant aircraft backlogs. We are encouraged by progress at both Boeing and Airbus and our well-positioned across these platforms.

Kimberly Fields: Turning to aerospace, fundamentals remain strong. Commercial aerospace continues to be supported by increasing build rates and significant aircraft backlogs. We are encouraged by progress at both Boeing and Airbus and are well-positioned across these platforms. Airframe performance reflects timing and supply chain phasing. Customer schedules, backlog, and production plans support a H2 ramp. We remain confident in our full year outlook with revenue growth in the mid to high single digits. Within aerospace, jet engine is our largest and most important growth market. Jet engine sales grew 12% year over year, supported by both OEM production and aftermarket demand. The full year outlook for revenue growth remains in the mid-teens. This is driven by high fleet utilization, increasing shop visits, and continued growth in engine platforms like LEAP and GTF.

Speaker #3: Airframe performance reflects timing and supply chain phasing. Customer schedules, backlog, and production plans support a second-half ramp. We remain confident in our full-year outlook with revenue growth in the mid to high single digits.

Kimberly Fields: We remain confident in our full year outlook with revenue growth in the mid to high single digits. Within aerospace, jet engine is our largest and most important growth market. Jet engine sales grew 12% year over year, supported by both OEM production and aftermarket demand. The full year outlook for revenue growth remains in the mid-teens. This is driven by high fleet utilization, increasing shop visits, and continued growth in engine platforms like LEAP and GTF.

Speaker #3: Within Aerospace, jet engine is our largest and most important growth market. Jet engine sales grew 12% year over year, supported by both OEM production and aftermarket demand.

Speaker #3: The full-year outlook for revenue growth remains in the mid-teens. This is driven by high fleet utilization, increasing shop visits, and continued growth in engine platforms like LEAP and GTS.

Speaker #3: Our materials are vital in the most demanding parts of these engines, where performance and reliability are essential. We supply six of the seven most advanced jet engine nickel alloys.

Kimberly Fields: Our materials are vital in the most demanding parts of these engines, where performance and reliability are essential. We supply 6 of the 7 most advanced jet engine nickel alloys. This remains a capacity-constrained market where our differentiated capabilities allow us to capture both share and value. Finally, in specialty energy, strong momentum continues. Revenue grew 22% year over year, driven by nuclear and land-based gas turbine markets. We recently extended our long-standing partnership with Cameco through a new 5-year agreement, reinforcing ATI's role as a trusted supplier within the global nuclear supply chain. This $250 million agreement includes meaningful improvements in product mix and pricing. More broadly, our advanced materials portfolio, including highly engineered specialty alloys like zirconium and hafnium, supports specialized applications across energy, defense, and space. Performance requirements in these markets are ever-increasing and levers the unique capabilities of ATI.

Speaker #3: This remains a capacity-constrained market, where our differentiated capabilities allow us to capture both share and value. Finally, in Specialty Energy, strong momentum continues. Revenue grew 22% year over year, driven by nuclear and land-based gas turbine markets.

Kimberly Fields: Revenue grew 22% year over year, driven by nuclear and land-based gas turbine markets. We recently extended our long-standing partnership with Cameco through a new 5-year agreement, reinforcing ATI's role as a trusted supplier within the global nuclear supply chain. This $250 million agreement includes meaningful improvements in product mix and pricing.

Speaker #3: We recently extended our longstanding partnership with Camico through a new five-year agreement. Reinforcing ATI's role as a trusted supplier within the global nuclear supply chain.

Speaker #3: This $250 million agreement includes meaningful improvements in product mix and pricing. More broadly, our advanced materials portfolio including highly engineered specialty alloys like zirconium and hafnium, supports specialized applications across energy, defense, and space.

Kimberly Fields: More broadly, our advanced materials portfolio, including highly engineered specialty alloys like zirconium and hafnium, supports specialized applications across energy, defense, and space. Performance requirements in these markets are ever-increasing and levers the unique capabilities of ATI. Bringing it all together, our strategy is delivering measurable results. We delivered a strong Q1 with higher earnings, expanded margins, and significantly improved cash flow.

Speaker #3: Performance requirements in these markets are ever-increasing, and leverage the unique capabilities of ATI. Bringing it all together, our strategy is delivering measurable results. We delivered a strong first quarter with higher earnings, expanded margins, and significantly improved cash flow.

Kimberly Fields: Bringing it all together, our strategy is delivering measurable results. We delivered a strong Q1 with higher earnings, expanded margins, and significantly improved cash flow. Our customers are ramping, our backlog is growing, and our portfolio is aligned with the most attractive, highest value markets, especially in A&D and specialty energy. With strong core market demand and record backlog, we are confident in our increased full-year outlook. $5 billion of revenue at 20% plus margins is in clear sight, with an increasing share converting into earnings and free cash flow. That performance enables us to reinvest in the business, create value, and return capital to shareholders. We are focused on execution and raising the bar for performance. I'll now turn the call over to Rob.

Speaker #3: Our customers are ramping our backlog is growing, and our portfolio is aligned with the most attractive, highest-value markets, especially in A&D and specialty energy.

Kimberly Fields: Our customers are ramping, our backlog is growing, and our portfolio is aligned with the most attractive, highest value markets, especially in A&D and specialty energy. With strong core market demand and record backlog, we are confident in our increased full-year outlook. $5 billion of revenue at 20% plus margins is in clear sight, with an increasing share converting into earnings and free cash flow. That performance enables us to reinvest in the business, create value, and return capital to shareholders.

Speaker #3: With strong core market demand and record backlog, we are confident in our increased full-year outlook. $5 billion of revenue at 20% plus margins is in clear sight, with an increasing share converting into earnings and free cash flow.

Speaker #3: That performance enables us to reinvest in the business, create value, and return capital to shareholders. We are focused on execution and raising the bar for performance.

Kimberly Fields: We are focused on execution and raising the bar for performance. I'll now turn the call over to Rob.

Speaker #3: I'll now turn the call over to Rob.

Speaker #2: Thanks, Kim. The first quarter delivered strong results, exceeding our plan despite typical scheduled seasonal maintenance. Looking ahead, we see robust demand across our aerospace and defense markets.

Rob Foster: Thanks, Kim. The Q1 delivered strong results, exceeding our plan despite typical scheduled seasonal maintenance. Looking ahead, we see robust demand across our aerospace and defense markets. Momentum is building through the year, supported by favorable trends in price, mix, and volume in our highest performing markets. Our strong positive free cash flow generation in Q1 puts us in great position to generate positive cash flow in every quarter of 2026. Q1 revenue was $1.15 billion, driven by 6% growth in aerospace and defense. Within that market segment, jet engine sales increased 12%, airframe revenue declined by 9%, and defense-related revenue grew by 9% compared to the prior year. Specialty energy revenue increased by 22% year over year. Q1 adjusted EBITDA was $232 million, up 19% over 2025.

Speaker #2: Momentum is building through the year, supported by favorable trends in price, mix, and volume in our highest-performing markets. Our strong positive free cash flow generation in Q1 puts us in great position to generate positive cash flow in every quarter of 2026.

Speaker #2: Q1 revenue was $1.15 billion. Driven by 6% growth in aerospace and defense. Within that market segment, jet engine sales increased 12%, airframe revenue declined by 9%, and defense-related revenue grew by 9% compared to the prior year.

Rob Foster: Q1 revenue was $1.15 billion, driven by 6% growth in aerospace and defense. Within that market segment, jet engine sales increased 12%, airframe revenue declined by 9%, and defense-related revenue grew by 9% compared to the prior year. Specialty energy revenue increased by 22% year over year. Q1 adjusted EBITDA was $232 million, up 19% over 2025. This was $11 million above the midpoint and $6 million above the high end of guidance.

Speaker #2: Specialty energy revenue increased by 22% year over year. Q1 adjusted EBITDA was $232 million, up 19% over 2025. This was $11 million above the midpoint, and $6 million above the high end of guidance.

Rob Foster: This was $11 million above the midpoint and $6 million above the high end of guidance. Q1 consolidated EBITDA margin percentage was 20.1%, as we realized a richer mix from 80/20 initiatives and other portfolio rationalization actions. Adjusted free cash flow was $75 million compared to a use of $143 million in Q1 last year. This is a $218 million improvement year over year. Managed working capital as a percentage of sales at the end of Q1 was 34.8%, which is a 110 basis point improvement over Q1 2025. Capital expenditures were $55 million, including $21 million funded directly by customers. All key growth projects remain on schedule and on budget. Margins in both segments came in above our outlook this quarter.

Speaker #2: Q1 consolidated EBITDA margin percentage was 20.1%, as we realized a richer mix from 80/20 initiatives and other portfolio rationalization actions. Adjusted free cash flow was $75 million, compared to a use of $143 million in Q1 last year.

Rob Foster: Q1 consolidated EBITDA margin percentage was 20.1%, as we realized a richer mix from 80/20 initiatives and other portfolio rationalization actions. Adjusted free cash flow was $75 million compared to a use of $143 million in Q1 last year. This is a $218 million improvement year over year. Managed working capital as a percentage of sales at the end of Q1 was 34.8%, which is a 110 basis point improvement over Q1 2025. Capital expenditures were $55 million, including $21 million funded directly by customers.

Speaker #2: This is a $218 million improvement year over year. Managed working capital as a percentage of sales at the end of Q1 was 34.8%. Which is 110 basis point improvement over Q1 2025.

Speaker #2: Capital expenditures were $55 million, including $21 million funded directly by customers. All key growth projects remain on schedule and on budget. Margins in both segments came in above our outlook this quarter.

Rob Foster: All key growth projects remain on schedule and on budget. Margins in both segments came in above our outlook this quarter. HPMC reported 24.9%, a 250 basis point increase over 2025. AA&S was 18.1%, a 320 basis increase over 2025. Both segments were powered by improvements in price and mix across our aerospace and defense and specialty energy markets. This proves the structural work to expand our margins is working. As Kim mentioned, we're increasing our full year guidance across all key financial metrics.

Speaker #2: HPMC reported 24.9%, a 250 basis point increase over 2025. AANS was 18.1%, a 320 basis increase over 2025. Both segments were powered by improvements in price and mix across our aerospace and defense, and specialty energy markets.

Rob Foster: HPMC reported 24.9%, a 250 basis point increase over 2025. AA&S was 18.1%, a 320 basis increase over 2025. Both segments were powered by improvements in price and mix across our aerospace and defense and specialty energy markets. This proves the structural work to expand our margins is working. As Kim mentioned, we're increasing our full year guidance across all key financial metrics. For Q2 2026, we are positioned for adjusted EBITDA of $245 to 255 million, which equates to an EPS range of $0.98 to $1.04. At the midpoint, this represents a 20% increase in adjusted EBITDA over Q2 2025.

Speaker #2: This proves the structural work to expand our margins is working. As Kim mentioned, we're increasing our full-year guidance across all key financial metrics. For the second quarter of 2026, we are positioned for adjusted EBITDA of $245 to $255 million.

Rob Foster: For Q2 2026, we are positioned for adjusted EBITDA of $245 to 255 million, which equates to an EPS range of $0.98 to $1.04. At the midpoint, this represents a 20% increase in adjusted EBITDA over Q2 2025. This 8% sequential increase at the midpoint in guidance is driven by the strength of price and mix, particularly within A&D. For the full year, we are raising our adjusted EBITDA guidance to a range of $1,010 million to $1,060 million.

Speaker #2: Which equates to an EPS range of 98 cents to $1.04. At the midpoint, this represents a 20% increase in adjusted EBITDA over Q2 2025.

Speaker #2: This 8% sequential increase at the midpoint in guidance is driven by the strength of price and mix, particularly within A&D. But the full year, we are raising our adjusted EBITDA guidance to a range of $1 billion, $10 million, to $1 billion, $60 million.

Rob Foster: This 8% sequential increase at the midpoint in guidance is driven by the strength of price and mix, particularly within A&D. For the full year, we are raising our adjusted EBITDA guidance to a range of $1,010 million to $1,060 million. The midpoint of $1,035 million is a 20% increase over full year 2025 as we continue to execute strong operational performance and capture increased demand for our products in aerospace, defense, and specialty energy. These earnings translate to a full year adjusted EPS range of $4.20 to $4.48. Turning to adjusted free cash flow, we are raising the midpoint of our range by $35 million, setting the range between $465 million and $525 million.

Speaker #2: The midpoint of $1 billion, $35 million, is a 20% increase over full year 2025 as we continue to execute strong operational performance and capture increased demand for our products in aerospace, defense, and specialty energy.

Rob Foster: The midpoint of $1,035 million is a 20% increase over full year 2025 as we continue to execute strong operational performance and capture increased demand for our products in aerospace, defense, and specialty energy. These earnings translate to a full year adjusted EPS range of $4.20 to $4.48. Turning to adjusted free cash flow, we are raising the midpoint of our range by $35 million, setting the range between $465 million and $525 million.

Speaker #2: These earnings translate to a full-year adjusted EPS range of $4.20 to $4.48. Turning to adjusted free cash flow, we are raising the midpoint of our range by $35 million.

Speaker #2: Setting the range between $465 and $525 $495 million midpoint is 115 million higher than 2025, a 30% increase year over year. This is driven by our projected $35 million increase in earning.

Rob Foster: The $495 million midpoint is $115 million higher than 2025, a 30% increase year-over-year. This is driven by our projected $35 million increase in earnings. We look forward to continuing gains in cash flow efficiency throughout the year. Our CapEx range remains consistent with our prior guidance. Gross CapEx investments of $280 to 300 million will be partially offset with customer-funded CapEx of $55 to 65 million. As we previously stated, returning capital to shareholders is a priority for ATI. In Q1, we repurchased $75 million in shares. We see share repurchases as the most efficient and effective way to return capital to shareholders.

Speaker #2: We look forward to continuing gains in cash flow efficiency throughout the year. Our CapEx range remains consistent with our prior guidance. Gross CapEx investments of $280 to $300 million will be partially offset with customer-funded CapEx of $55 to $65 million.

Speaker #2: As we previously stated, returning capital to shareholders is a priority for ATI. In the first quarter, we repurchased $75 million in shares. We see share repurchases as the most efficient and effective way to return capital to shareholders.

Rob Foster: In Q1, we repurchased $75 million in shares. We see share repurchases as the most efficient and effective way to return capital to shareholders. We increased our share authorization by $500 million in Q1, with the total remaining authorization now at $545 million. With strong and increasing free cash flow, share repurchases remain a priority. Now turning to end markets.

Speaker #2: We increased our share authorization by $500 million in Q1, with a total remaining authorization now at $545 million. With strong and increasing free cash flow, share repurchases remain a priority.

Rob Foster: We increased our share authorization by $500 million in Q1, with the total remaining authorization now at $545 million. With strong and increasing free cash flow, share repurchases remain a priority. Now turning to end markets. We see strong demand in our major end markets and confidence in our outlook remains unchanged. In jet engines, our largest end market, we see growth rates in the mid-teens for the full year 2026 as we leverage price and mix to our advantage. In airframe products, we see mid to upper single-digit growth, with most of the growth occurring in H2 of the year as OEM production rates increase and customer inventory balances normalize. In defense products, we see growth rates in the mid-teens. Our A&D sales mix will continue to be a significant portion of our sales volumes.

Speaker #2: Now turning to end markets. We see strong demand in our major end markets, and confidence in our outlook remains unchanged. In jet engines, our largest end market, we see growth rates in the mid-teens for the full year 2026 as we leverage price and mix to our advantage.

Rob Foster: We see strong demand in our major end markets and confidence in our outlook remains unchanged. In jet engines, our largest end market, we see growth rates in the mid-teens for the full year 2026 as we leverage price and mix to our advantage. In airframe products, we see mid to upper single-digit growth, with most of the growth occurring in H2 of the year as OEM production rates increase and customer inventory balances normalize. In defense products, we see growth rates in the mid-teens.

Speaker #2: In airframe products, we see mid to upper single-digit growth. With most of the growth occurring in the second half of the year, as OEM production rates increase and customer inventory balances normalize.

Speaker #2: In defense products, we see growth rates in the mid-teens. Our A&D sales mix will continue to be a significant portion of our sales volumes.

Rob Foster: Our A&D sales mix will continue to be a significant portion of our sales volumes. Aerospace and defense sales are in line to represent more than 70% of sales for full year 2026. Moving to specialty energy, we continue to evolve this business into a model of sustainable and profitable growth. We're leveraging long-term contracts with accretive A&D-like margins and are targeting mid-teens growth for the full year 2026.

Speaker #2: Aerospace and defense sales are in line to represent more than 70% of sales for full year 2026. Moving to specialty energy, we continue to evolve this business into a model of sustainable and profitable growth.

Rob Foster: Aerospace and defense sales are in line to represent more than 70% of sales for full year 2026. Moving to specialty energy, we continue to evolve this business into a model of sustainable and profitable growth. We're leveraging long-term contracts with accretive A&D-like margins and are targeting mid-teens growth for the full year 2026. As we have previously mentioned, we strategically prioritize aerospace, defense, and specialty energy using 80/20 and allocating differentiated production capacity to capture further growth within these high-value markets. Sales for our industrial, medical, and electronics are trending down by low to mid-single digits for the full year 2026. Looking forward to adjusted EBITDA margins, we see continued margin expansion in 2026, with full year consolidated margins in the range of 20%+.

Speaker #2: We're leveraging long-term contracts with accretive A&D-like margins and are targeting mid-teens growth for the full year 2026. As we have previously mentioned, we strategically prioritize aerospace, defense, and specialty energy.

Rob Foster: As we have previously mentioned, we strategically prioritize aerospace, defense, and specialty energy using 80/20 and allocating differentiated production capacity to capture further growth within these high-value markets. Sales for our industrial, medical, and electronics are trending down by low to mid-single digits for the full year 2026. Looking forward to adjusted EBITDA margins, we see continued margin expansion in 2026, with full year consolidated margins in the range of 20%+.

Speaker #2: Using 80/20 and allocating differentiated production capacity to capture further growth within these high-value markets. Sales for our industrial, medical, and electronics are trending down by low to mid-single digits for the full year 2026.

Speaker #2: Looking forward to adjusted EBITDA margins we see continued margin expansion in 2026, with full-year consolidated margins in the range of 20% plus. We exceeded our margin outlook in Q1 due to favorable mix and price, and Q2 margins are tracking to be similar, expanding above 20% in the second half of 2026.

Rob Foster: We exceeded our margin outlook in Q1 due to favorable mix and price. Q2 margins are tracking to be similar, expanding above 20% in H2 2026. In H2, sales, profits, and margins will be lifted by price increases and mix under LTAs. At a segment level, full year margins for HPMC will be in the range of mid-20s and AA&S in the upper 10s. Full year consolidated incremental margins will average 40%, with H2 margins outpacing H1 margins due to LTA pricing and mix. As stated, HPMC incremental margins are typically higher than AA&S, reflecting sales mix and end market pricing dynamics. Both are general guidelines that fluctuate by product, end market, and customer, serving as primary indicators of ATI's future growth. To summarize, we are off to a strong start and remain confident in our outlook.

Speaker #2: In the second half, sales, profits, and margins will be lifted by price increases and mix under LTAs. At a segment level, full-year margins for HPMC will be in the range of mid-20s and AANS in the upper teens.

Speaker #2: Full-year consolidated incremental margins will average 40%, with second-half margins outpacing first-half margins due to LTA pricing and mix. As stated, HPMC incremental margins are typically higher than AANS, reflecting sales mix and end market pricing dynamics.

Rob Foster: As stated, HPMC incremental margins are typically higher than AA&S, reflecting sales mix and end market pricing dynamics. Both are general guidelines that fluctuate by product, end market, and customer, serving as primary indicators of ATI's future growth. To summarize, we are off to a strong start and remain confident in our outlook. We are focused on delivering consistent performance. We are well-positioned to execute and deliver, meeting and exceeding the expectations of our customers and shareholders.

Speaker #2: Both are general guidelines that fluctuate by product and market and customer, serving as primary indicators of ATI's future growth. To summarize, we are off to a strong start and remain confident in our outlook.

Speaker #2: We are focused on delivering consistent performance. We are well positioned to execute and deliver, meeting and exceeding the expectations of our customers and shareholders.

Rob Foster: We are focused on delivering consistent performance. We are well-positioned to execute and deliver, meeting and exceeding the expectations of our customers and shareholders. Kim, I will turn the call back over to you.

Speaker #2: Kim, I will turn the call back over to you.

Rob Foster: Kim, I will turn the call back over to you.

Speaker #1: Thanks, Rob. We are off to a great start. We are executing well and building momentum in 2026, supported by strong demand, differentiated products, and consistent execution.

Kimberly Fields: Thanks, Rob. We are off to a great start. We are executing well and building momentum in 2026, supported by strong demand, differentiated products, and consistent execution. Let's open the line for questions.

Speaker #1: Let's open the line for questions.

Speaker #3: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press *1 to raise your hand.

Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, please press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Your first question comes from the line of David Strauss with Wells Fargo. Your line is open. Please go ahead.

Speaker #3: To withdraw your question, please press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #3: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of David Strauss with Wells Fargo.

Speaker #3: Your line is open. Please go ahead.

Speaker #4: Thanks. Good morning.

David Strauss: Thanks. Good morning.

Speaker #1: Good morning.

Kimberly Fields: Good morning.

Speaker #5: Morning. Good morning.

David Strauss: Morning. Wanted to ask about the aero aftermarket piece of your business, Kim. You know, maybe size that for us, how it performed in Q1, and if you're seeing any sort of impacts, you know, out of what's going on with, you know, with the Middle East and higher fuel or, you know, how you're thinking about that business from here.

David Strauss: Morning. Wanted to ask about the aero aftermarket piece of your business, Kim. You know, maybe size that for us, how it performed in Q1, and if you're seeing any sort of impacts out of what's going on with with the Middle East and higher fuel or how you're thinking about that business from here.

Speaker #4: One to ask about the aftermarket piece of your business, Kim. Maybe size that for us, how it performed in the first quarter, and if you're seeing any sort of impacts out of what's going on with the Middle East and higher fuel or how you're thinking about that business from here.

Speaker #1: Sure. Sure. So aftermarket continues to be very strong. Across the aerospace, especially in jet engine, where we're continuing to see both MRO, shop visits, upgrade packages driving demand, and as I look at our lead times, we did talk a bit about our backlog and our lead times.

Kimberly Fields: Sure, sure. Aftermarket continues to be very strong across the aerospace, especially in jet engine, where, you know, we're continuing to see both MRO shop visits, upgrade packages driving demand. You know, as I look at our lead times, we did talk a bit about our backlog and our lead times. Those are moving out substantially based on that demand that's coming in. You know, like others in the industry, you know, we're continuing to monitor what's happening there in the Middle East. We're not seeing any impact to our business, no changes in demand or the deferrals or any disruption to the order book.

Kimberly Fields: Sure, sure. Aftermarket continues to be very strong across the aerospace, especially in jet engine, where we're continuing to see both MRO shop visits, upgrade packages driving demand. You know, as I look at our lead times, we did talk a bit about our backlog and our lead times. Those are moving out substantially based on that demand that's coming in. You know, like others in the industry we're continuing to monitor what's happening there in the Middle East.

Speaker #1: Those are moving out substantially based on that demand that's coming in. Like others in the industry, we're continuing to monitor what's happening there in the Middle East, but we're not seeing any impacts to our business, no changes in demand or the deferrals or any disruption to the order book.

Kimberly Fields: We're not seeing any impact to our business, no changes in demand or the deferrals or any disruption to the order book. In fact just over the last week the conversations I've been having with customers, the first thing they say is if there is any openings that come, that they want them, and they will contract and commit to them. Demand's very strong across the board. As you saw, that backlog went up to $4.1 billion, our highest level ever.

Speaker #1: In fact, just over the last week, the conversations I've been having with customers—the first thing they say is, if there are any openings that come, they want them, and they will contract and commit to them.

Kimberly Fields: In fact, you know, just over the last week, you know, the conversations I've been having with customers, the first thing they say is if there is any openings that come, that they want them, and they will contract and commit to them. Demand's very strong across the board. As you saw, that backlog went up to $4.1 billion, our highest level ever. And, you know, it really reflects that sustained demand. You know, as we look forward, you know, the things that I'm looking at and thinking about are, you know, changes to possibly retirements due to fuel-driven demand.

Speaker #1: So demand's very strong across the board, as you saw, that backlog went up to 4.1 billion. Our highest level ever. And it really reflects that sustained demand.

Kimberly Fields: and it really reflects that sustained demand. You know, as we look forward the things that I'm looking at and thinking about are changes to possibly retirements due to fuel-driven demand. Frankly, as we go forward, those type of retirements are going to be in those legacy, less fuel-efficient engines, and the shift will accelerate towards the next generation platforms like LEAP and GTF, where our content's roughly 2x where we are on the legacy engines.

Speaker #1: As we look forward, the things that I'm looking at and thinking about are changes to possibly retirements due to fuel-driven demand, but frankly, as we go forward, those types of retirements are going to be in those legacy less fuel-efficient engines, and the shift will accelerate towards the next generation platforms like LEAP and GTF, where our content's roughly 2X, where we are on the legacy engines.

Kimberly Fields: Frankly, as we go forward, those type of retirements are gonna be in those legacy, less fuel-efficient engines, and the shift will accelerate towards the next generation platforms like LEAP and GTF, where our content's roughly 2x where we are on the legacy engines. That will continue, I think, to sustain that MRO demand as we go forward. You know, stepping back and just looking at it all, demand's strong, the backlog's growing, and we're not seeing any near-term impacts from the conflict.

Speaker #1: And so that will continue I think to sustain that MRO demand as we go forward. So stepping back and just looking at it all, demand's strong, the backlog's growing, and we're not seeing any near-term impacts from the conflict.

Kimberly Fields: That will continue, I think, to sustain that MRO demand as we go forward. You know, stepping back and just looking at it all, demand's strong, the backlog's growing, and we're not seeing any near-term impacts from the conflict.

Speaker #4: Great. Thanks. And quick follow-up. Rob, I guess the guidance increase, especially on the adjusted EBITDA side, what is the source of that? It sounds like you kept the margin forecast for the segments about the same place.

David Strauss: Great. Thanks. Quick follow-up, Rob. I guess the guidance increase, especially on the adjusted EBITDA side, what is the source of that? It sounds like you kept, you know, the margin forecast for the segments about the same place. I guess where is the source of the, you know, the uplift in the EBITDA guidance?

David Strauss: Great. Thanks. Quick follow-up, Rob. I guess the guidance increase, especially on the adjusted EBITDA side, what is the source of that? It sounds like you kept the margin forecast for the segments about the same place. I guess where is the source of the the uplift in the EBITDA guidance?

Speaker #4: I guess where is the what is the source of the uplift in the EBITDA guidance?

Speaker #5: Yeah, we're really confident in where the guide is at. We're seeing the strength primarily within the defense and jet engine business. So I didn't change the guide for the full year, right?

Rob Foster: Yeah. We're really confident in where the guide is at. You know, we're seeing the strength, you know, primarily within the defense and jet engine business. I didn't change the guide for the full year, right? We're still in the mid-teens for jet engine and defense, you know, low to mid-teens. I'd say my bias is towards the upper end of that guide. It's really the defense business and the jet engine business and the contracts that we're securing give us the confidence.

Rob Foster: Yes. We're really confident in where the guide is at. You know, we're seeing the strength primarily within the defense and jet engine business. I didn't change the guide for the full year, right? We're still in the mid-teens for jet engine and defense low to mid-teens. I'd say my bias is towards the upper end of that guide. It's really the defense business and the jet engine business and the contracts that we're securing give us the confidence.

Speaker #5: We're still in the mid-teens. For jet engine and defense, low to mid-teens. But I'd say my bias is towards the upper end of that guide.

Speaker #5: So it's really the defense business and the jet engine business, and the contracts that we're securing give us the confidence.

Speaker #4: Okay. So HPMC.

David Strauss: Okay. HPMC.

Speaker #5: Not just HPMC. We've got contracts defense for our defense business in both of our segments. We're securing the contracts. And the full-year guide, like I said, I have confidence in that higher end of the low to mid-teens, the bias is towards the higher end of that defense business for both HPMC and AANS.

Rob Foster: Not just HPMC. We've got contracts, you know, for our defense business in both of our segments that, you know, we're securing the contracts and the full-year guide. You know, like I said, I have confidence in that higher end of the low to mid-teens. The bias is towards the higher end of that defense business for both HPMC and AA&S.

Rob Foster: Not just HPMC. We've got contracts for our defense business in both of our segments that we're securing the contracts and the full-year guide. You know, like I said, I have confidence in that higher end of the low to mid-teens. The bias is towards the higher end of that defense business for both HPMC and AA&S.

Speaker #4: Got it. Okay. Thanks very much.

David Strauss: Got it. Okay. Thanks very much.

Speaker #3: Your next question comes to the line of Richard Safran with Seaport Research Partners. Your line is now open. Please go ahead.

Operator: Your next question comes to the line of Richard Safran with Seaport Research Partners. Your line is now open. Please go ahead.

Speaker #6: Thank you. Good morning, everybody. I was very interested in your comment and the slides and opening remarks about pricing and HP margins. I want to know if you could expand on that.

Richard Safran: Thank you. Good morning, everybody. I was very interested in your comment in the slides and opening remarks about pricing, and HPMC margins. I want to know if you could expand on that and maybe talk a bit more about pricing and why in the midst of an OE ramp where the model is typically to see a step down in price, you're actually going in the opposite direction.

Speaker #6: And maybe talk a bit more about pricing and why in the midst of an OE ramp where the model is typically to see a step down in price, you're actually going in the opposite direction.

Speaker #1: Yeah. So, Rich, when we shared over our past that we don't really see a differentiation between OE versus MRO, that our parts we make a disk and we're not always have clear visibility to which use it's going to.

Kimberly Fields: Yeah. Rich, you know, when we shared over our past that we don't really see a differentiation between OE versus MRO, that our parts, you know, we make a disc and we're not always have clear visibility to which use it's going to. You know, really what you are seeing is that price and that mix is a material driver in the Q1 here. We see that continuing to accelerate as we go through the year. Really where that's coming from is, you know, there, you know, this is a constrained market. We're doing the most differentiated materials. You know, our backlogs are moving out for those differentiated materials on the engine side to 1 year plus now. In some cases, titanium PQ is almost to 2 years.

Kimberly Fields: Yes. rich when we shared over our past that we don't really see a differentiation between OE versus MRO, that our parts we make a disc and we're not always have clear visibility to which use it's going to. You know, really what you are seeing is that price and that mix is a material driver in the Q1 here. We see that continuing to accelerate as we go through the year. Really where that's coming from is there this is a constrained market.

Speaker #1: And so really what you are seeing is that price and that mix is a material driver in the first quarter here. And we see that continuing to accelerate as we go through the year.

Speaker #1: And really where that's coming from is this is a constrained market. We're doing the most differentiated materials our backlogs are moving out for those differentiated materials on the engine side to a year plus.

Kimberly Fields: We're doing the most differentiated materials. You know, our backlogs are moving out for those differentiated materials on the engine side to 1 year plus now. In some cases, titanium PQ is almost to 2 years. You know, we're seeing that tightness in these contracts as we're reviewing them. They're getting embedded. We're getting price. It's reflecting the value of what we supply. It's not just short term, based on scarcity, but it's long term and contractual, and it's getting built in.

Speaker #1: Now, in some cases, titanium PQ is almost up to two years. So we're seeing that tightness in these contracts as we're reviewing them. They're getting embedded.

Kimberly Fields: You know, we're seeing that tightness in these contracts as we're reviewing them. They're getting embedded. We're getting price. It's reflecting the value of what we supply. It's not just short term, based on scarcity, but it's long term and contractual, and it's getting built in. It's coming through all kinds of sources. There's step-ups, there's escalators, there's price resets given where markets have moved. You know, alongside that, we've talked a lot about increased content on these platforms and expanded scope. You know, we're still getting calls today where there are others in the supply chain that may not be able to meet the full demand and are struggling to meet that level that our customers are looking for, and we're picking up share gains as well.

Speaker #1: We're getting price. It's reflecting the value of what we supply. It's not just short term, based on scarcity, but it's long-term and contractual. And it's getting built in.

Speaker #1: And it's coming through all kinds of sources. There's step-ups. There's escalators. There's price resets given where markets have moved. And alongside that, we've talked a lot about increased content on these platforms and expanded scope.

Kimberly Fields: It's coming through all kinds of sources. There's step-ups, there's escalators, there's price resets given where markets have moved. You know, alongside that, we've talked a lot about increased content on these platforms and expanded scope. You know, we're still getting calls today where there are others in the supply chain that may not be able to meet the full demand and are struggling to meet that level that our customers are looking for, and we're picking up share gains as well.

Speaker #1: We're still getting calls today where there are others in the supply chain that may not be able to meet the full demand, and are struggling to meet that level that our customers are looking for.

Speaker #1: And we're picking up share gains as well. And again, in those situations, we're able to capture a large portion of the value that we're creating to continue that ramp and helping them meet their commitments.

Kimberly Fields: Again, in those situations, we're able to capture a large portion of the value that we're creating to continue the ramp and helping them meet their commitments. You know, as I look through, it's a structural shift. It is in HPMC, but it's also on the AA&S side. I just wanted to add. You know, that is a structural shift, and it's been deliberate around our portfolio management. You see it in some of our other end markets and some of the reductions and not growing in those non-core markets because we're really focusing, especially in our exotic alloys, on those differentiated markets where we can capture the value that we're really providing, particularly in aerospace, especially in defense and specialty energy.

Speaker #1: And so, as I look through, it's a structural shift. It is an HPMC, but it's also on the AANS side, and I just wanted to add that it is a structural shift, and it's been deliberate around our portfolio management.

Speaker #1: You see it in some of our other end markets and some of the reductions and not growing in those non-core markets because we're really focusing, especially in our exotic alloys, on those differentiated markets where we can capture the value that we're really providing particularly in aerospace, especially in defense and specialty energy.

Kimberly Fields: You see it in some of our other end markets and some of the reductions and not growing in those non-core markets because we're really focusing, especially in our exotic alloys, on those differentiated markets where we can capture the value that we're really providing, particularly in aerospace, especially in defense and specialty energy. A lot of great work by the team and you'll see that continue to accelerate, and it'll be even more pronounced in the H2.

Speaker #1: So a lot of great work by the team and you'll see that continue to accelerate and it'll be even more pronounced in the second half.

Kimberly Fields: A lot of great work by the team and you'll see that continue to accelerate, and it'll be even more pronounced in the H2.

Speaker #6: Okay. Thanks for that. Now, second, the part no secret to Department of War has been pressing industry for additional capacity. At the same time, we're seeing a rate ramp in aerospace which you've been talking about.

Richard Safran: Okay, thanks for that. No secret the Department of Defense has been pressing industry for additional capacity. At, you know, at the same time, we're seeing a rate ramp in aerospace, you know, which you've been talking about. I want to know if you'd be willing to discuss planned or anticipated capacity additions and then, you know, maybe comment on when they might come online. Thanks.

Richard Safran: Okay, thanks for that. No secret the Department of Defense has been pressing industry for additional capacity. at at the same time, we're seeing a rate ramp in aerospace which you've been talking about. I want to know if you'd be willing to discuss planned or anticipated capacity additions and then maybe comment on when they might come online. Thanks.

Speaker #6: I want to know if you'd be willing to discuss planned or anticipated capacity additions and then maybe comment on when they might come online.

Speaker #6: Thanks.

Speaker #1: Sure. So defense is has been very strong in the first quarter. And I know we've guided to low to mid-teens, but as Rob just shared, our bias is to the upside on that.

Kimberly Fields: Sure. You know, defense is has been very strong in Q1, and, you know, I know we've guided to, you know, low to mid-teens, but as Rob Foster just shared, we, you know, our bias is to the upside on that. To your point, we're seeing very strong demand, you know, across our whole portfolio, and, you know, as we look at the capacity to meet that, especially in missiles, that's been an area that's really upticked from inquiries, order placements, even in advance of that funding by the Department of Defense. As we look at capacity, you know, we've announced previously our titanium investment, our nickel investment is in progress. Both of those two are both on track and on schedule to come online.

Kimberly Fields: Sure. You know, defense is has been very strong in Q1, and I know we've guided to low to mid-teens, but as Rob Foster just shared, we our bias is to the upside on that. To your point, we're seeing very strong demand across our whole portfolio, and as we look at the capacity to meet that, especially in missiles, that's been an area that's really upticked from inquiries, order placements, even in advance of that funding by the Department of Defense.

Speaker #1: And so to your point, we're seeing very strong demand across our whole portfolio. And as we look at the capacity to meet that, especially in missiles, that's been an area that's really upticked from inquiries, order placements, even in advance of that funding by the Department of War.

Speaker #1: But as we look at capacity, we've announced previously our titanium investment, our nickel investment is in progress. Both of those two are both on track and on schedule to come online.

Kimberly Fields: As we look at capacity we've announced previously our titanium investment, our nickel investment is in progress. Both of those two are both on track and on schedule to come online. Nickel remelts will be this year. The primary VIM melting will be online next year. Titanium, we're already in qualifications for premium quality engine. Both of those are on track, and we're in good position.

Kimberly Fields: Nickel remelts will be this year. The primary VIM melting will be online next year. Titanium, we're already in qualifications for premium quality engine. Both of those are on track, and we're in good position. I think, you know, as we think about some of the missile, some of the nuclear naval applications, we've got capacity in place to support that ramp as we go forward. Now that said, you know, as we go and think about some of our other exotic alloys or our isothermal forgings, which has consistently been over 2 years' worth of backlog, that's an area that we'll continue to have conversations with our customers and make sure that we're aligned with them. We're not at a stage to announce any new significant projects today. We are talking with those customers.

Speaker #1: Nickel remount will be this year and then the primary VIM melting will be online next year. And titanium, we're already in qualifications for premium quality engines.

Speaker #1: So both of those are on track and we're in good position. I think as we think about some of the missile, some of the nuclear naval applications, we've got capacity in place to support that ramp as we go forward.

Kimberly Fields: I think as we think about some of the missile, some of the nuclear naval applications, we've got capacity in place to support that ramp as we go forward. Now that said as we go and think about some of our other exotic alloys or our isothermal forgings, which has consistently been over 2 years' worth of backlog, that's an area that we'll continue to have conversations with our customers and make sure that we're aligned with them.

Speaker #1: Now, that said, as we go and think about some of our other exotic alloys or our isothermal forgings, which has consistently been over two years' worth of backlog, that's an area that will continue to have conversations with our customers and make sure that we're aligned with them.

Speaker #1: We're not at a stage to announce any new significant projects today. But we are talking with those customers. We have very strong close relationships with regard to the capacity planning, how they're seeing that landscape change and I do believe though, as you look forward, defense is going to be an important growth market for us for 2026 and beyond.

Kimberly Fields: We're not at a stage to announce any new significant projects today. We are talking with those customers. We have very strong, close relationships with regard to capacity planning, how they're seeing that landscape change, and I do believe, though, as you look forward, defense is going to be an important growth market for us for 2026 and beyond.

Kimberly Fields: We have very strong, close relationships with regard to capacity planning, how they're seeing that landscape change, and I do believe, though, as you look forward, defense is gonna be an important growth market for us for 2026 and beyond.

Speaker #6: Thank you.

Richard Safran: Thank you.

Speaker #1: Thank you.

Kimberly Fields: Thank you.

Speaker #5: Your next question comes from the line of Scott, Deuschle. With Deutsche Bank, your line is now open? Please go ahead.

Operator: Your next question comes from the line of Scott Deuschle with Deutsche Bank. Your line is now open. Please go ahead.

Speaker #7: Hey, good morning. Rob, did AANS see any benefit from this new Cameco contract in the first quarter? And if not, when should we start to see that benefit flow through the P&L?

Scott Deuschle: Hey, good morning. Rob, did AA&S see any benefit from this new Cameco contract in Q1? If not, when should we start to see that benefit flow through the P&L?

Speaker #8: Yeah. Thanks, Scott. There wasn't much benefit accrued into the Q1. That's really going to be a prospective benefit. And as Kim mentioned, that's going to be some of those exotics that zirconium and hafnium and we're really making structural changes in that business.

Rob Foster: Yeah. Thanks, Scott. There wasn't much benefit accrued into the Q1. That's really gonna be a prospective benefit. As Kim mentioned, that's gonna be, you know, some of those exotics, the zirconium and hafnium. You know, we're really making structural changes in that business. What you're gonna see is, you know, I'll call it more aero-like margins starting to come through. That's going to go into the AA&S segment and benefit that segment here for the foreseeable future.

Rob Foster: Yes. Thanks, Scott. There wasn't much benefit accrued into the Q1. That's really going to be a prospective benefit. As Kim mentioned, that's going to be some of those exotics, the zirconium and hafnium. You know, we're really making structural changes in that business. What you're going to see is I'll call it more aero-like margins starting to come through. That's going to go into the AA&S segment and benefit that segment here for the foreseeable future.

Speaker #8: And what you're going to see is I'll call it more arrow-like margins, starting to come through. So that's going to go into the AANS segment.

Speaker #8: And benefit that segment here for the foreseeable future.

Speaker #7: Okay. And then, are you seeing firm purchase orders today that support the second-half ramp in airframe sales, or are those purchase orders expected to come a little bit closer to the second half?

Scott Deuschle: Okay. Are you seeing firm purchase orders today that support the H2 ramp in airframe sales, or are those purchase orders expected to come a little bit closer to H2?

Speaker #1: Now, as you think about our airframe story, as I shared, we're looking at it as a story of really two halves. The first half of the year, which, as I shared at the last call, is going to be flattish as that inventory normalization continues to align more closely with production orders.

Kimberly Fields: Now, as you, as you think about our airframe story, you know, as I shared, you know, we're looking at it as a story of really two halves. The H1, which, as I shared at the last call, is gonna be flattish, as that inventory normalization continues to align more closely with production orders, and we are expecting to see that acceleration and ramp in the H2. Based on our. These are all contract-driven, and our orders are typically placed around 12 to 18 months. You know, most of those orders and certainly all the forecasts have been shared with us, and we are aligned to those. Even in the last week, I've had conversations and reconfirmed.

Kimberly Fields: Now, as you, as you think about our airframe story as I shared we're looking at it as a story of really two halves. The H1, which, as I shared at the last call, is going to be flattish, as that inventory normalization continues to align more closely with production orders, and we are expecting to see that acceleration and ramp in the H2. Based on our. These are all contract-driven, and our orders are typically placed around 12 to 18 months.

Speaker #1: And we are expecting to see that acceleration and ramp in the second half. Based on our—these are all contract-driven. And our orders are typically placed around 12 to 18 months.

Speaker #1: And so most of those orders and certainly all of the forecasts have been shared with us. And we are aligned to those. And even in the last week, I've had conversations and reconfirmed.

Kimberly Fields: You know, most of those orders and certainly all the forecasts have been shared with us, and we are aligned to those. Even in the last week, I've had conversations and reconfirmed. As many, I won't speak for our customers, but they've come out and re-reaffirmed that they're sticking to those targets and build rates. We have strong visibility based on these relationships and contracts to those backlogs and shipments. We feel confident where we are today. It is not short cycle buying.

Speaker #1: And as many, I won't speak for our customers, but they've come out and reaffirmed that they're sticking to those targets and build rates. And so we have strong visibility based on these relationships and contracts to those backlogs and shipments.

Kimberly Fields: As many, I won't speak for our customers, but they've come out and re-reaffirmed that they're sticking to those targets and build rates. We have strong visibility based on these relationships and contracts to those backlogs and shipments. We feel confident where we are today. It is not short cycle buying. Most of this long-term agreements allow us that visibility and alignment. We've been talking, you know, in some cases since last September around what they were gonna be looking for as we went into the year, and we have frequent updates with them. Again, we're 9 to 12 months ahead of the production schedule. Most of those forecasts are all in, and most of those orders are already booked and in our books.

Speaker #1: So we. Confident where we are today. It is not short cycle buying. Most of this long-term agreements allow us that visibility and alignment. And we've been talking in some cases since last September around what they were going to be looking for as we went into the air and we have frequent updates with them.

Kimberly Fields: Most of this long-term agreements allow us that visibility and alignment. We've been talking in some cases since last September around what they were going to be looking for as we went into the year, and we have frequent updates with them. Again, we're 9 to 12 months ahead of the production schedule. Most of those forecasts are all in, and most of those orders are already booked and in our books.

Speaker #1: So again, we're nine months to 9 to 12 months ahead of the production schedule. So most of those forecasts are all in. And most of those orders are already booked and on our books.

Speaker #1: And our contracts, just to remind everyone, have most of them have minimum quantities. And frozen order windows where changes can be made and we're rapidly approaching where the rest of the year, the back half of the year will be frozen.

Kimberly Fields: You know, our contracts, just to remind everyone, have, you know, most of them have minimum quantities and frozen order windows, where changes can be made, and we're rapidly approaching where the rest of the year, the back half of the year, will be frozen.

Kimberly Fields: You know, our contracts, just to remind everyone, have most of them have minimum quantities and frozen order windows, where changes can be made, and we're rapidly approaching where the rest of the year, the back half of the year, will be frozen.

Speaker #7: Great. Thank you.

Scott Deuschle: Great. Thank you.

Speaker #5: Your next question comes from the line of Andre Madrid with BTIG. Your line is now open. Please go ahead.

Operator: Your next question comes from the line of Andrew Metodiev with BTIG. Your line is now open. Please go ahead.

Speaker #6: Yep. Thanks for taking my question. Good morning, everyone.

Andrew Metodiev: Yep. Thanks for taking my question. Good morning, everyone.

Andre Madrid: Yep. Thanks for taking my question. Good morning, everyone.

Speaker #8: Good morning. Looking, you made a comment, backlog is the highs have ever been over $4 billion right now. I mean, could you give us a split as to how that looks across all the different end markets you play in?

Kimberly Fields: Morning.

Andrew Metodiev: Looking, you know, you made a comment, backlog is, you know, the highest it's ever been, over $4 billion right now. I mean, could you give us a split as to how that looks across all the different end markets you play in?

Andre Madrid: looking you made a comment, backlog is the highest it's ever been, over $4 billion right now. I mean, could you give us a split as to how that looks across all the different end markets you play in?

Speaker #1: Yeah. So yes. The backlog is at the highest level ever. Just almost a year's worth of business and as I've shared in the past, it really needs to be taken in conjunction with our lead times, which, as I just mentioned earlier, they are moving out substantially based on demand coming in.

Kimberly Fields: Yeah. Yes, the backlog is at the highest level ever, just almost a year's worth of business. You know, as I've shared in the past, it really needs to be taken in conjunction with our lead times, which, as I just mentioned earlier, they are moving out substantially based on demand coming in. We're at a year plus, and from forgings and PQ billet, titanium PQ, it's close to 2 years. You need to look at both of those together. We are seeing those extend. As I look at the distribution, I would say about three-quarters of that is in our HPMC segment, given the strong demand in jet engine.

Kimberly Fields: Yes. Yes, the backlog is at the highest level ever, just almost a year's worth of business. You know, as I've shared in the past, it really needs to be taken in conjunction with our lead times, which, as I just mentioned earlier, they are moving out substantially based on demand coming in. We're at a year plus, and from forgings and PQ billet, titanium PQ, it's close to 2 years. You need to look at both of those together. We are seeing those extend.

Speaker #1: And so we're at a year-plus and from forgings and PQ billet titanium PQ, it's close to two years. So you need to look at both of those together.

Speaker #1: We are seeing those extend. As I look at the distribution, I would say about three-quarters of that is in our HPMC segment, given the strong demand in jet engine.

Kimberly Fields: As I look at the distribution, I would say about three-quarters of that is in our HPMC segment, given the strong demand in jet engine.

Speaker #6: Got it. Got it. That makes sense. And then looking at jet engines, pretty impressive rose to about 41% of total company sales in the quarter.

Andrew Metodiev: Got it, got it. That makes sense. You know, looking at jet engine, pretty impressive, you know, rose to about 41% of total company sales in the quarter. I guess, you know, should we expect this to grow any higher as a percent of sales? Kind of in a similar vein too, you know, with the rebound of airframe in the H2, I mean, just how should we expect, I guess, the percent of titanium sales to shift going forward?

Andre Madrid: Got it, got it. That makes sense. You know, looking at jet engine, pretty impressive rose to about 41% of total company sales in the quarter. I guess should we expect this to grow any higher as a percent of sales? Kind of in a similar vein too with the rebound of airframe in the H2, I mean, just how should we expect, I guess, the percent of titanium sales to shift going forward?

Speaker #6: I guess should we expect this to grow any higher as a percent of sales? And kind of in a similar range too, with the rebound of airframe in the second half, I mean, how should we expect, I guess, the percent of titanium sales to shift going forward?

Speaker #1: Yeah, so jet engine, as you said, it's about 40% of our market today. This is where some of our most differentiated capabilities are, both for nickel alloys as well as our isothermal forgings.

Kimberly Fields: Yeah. Jet engine, as you said, it's about 40% of our market today. This is where some of our most differentiated capabilities are, both for nickel alloys as well as our isothermal forgings. As we look at jet engine, I mean, that could, you know, jet engine and aerospace, let's just say aerospace in total, that could go up another point or two. A&D, you know, is around 69%, 70%. Those are going to continue to grow, and that's going to be intentional. You know, we're prioritizing, as I said, that valuable capacity to those highest value opportunities, where we're able to get long-term contracts and margins are the strongest.

Kimberly Fields: Yes. Jet engine, as you said, it's about 40% of our market today. This is where some of our most differentiated capabilities are, both for nickel alloys as well as our isothermal forgings. As we look at jet engine, I mean, that could jet engine and aerospace, let's just say aerospace in total, that could go up another point or two. a&d is around 69%, 70%. Those are going to continue to grow, and that's going to be intentional.

Speaker #1: As we look at jet engine, I mean, that could jet engine and aerospace, let's just say aerospace in total, that could go up another point or two.

Speaker #1: A&D is around 69, 70 percent. Those are going to continue to grow. And that's going to be intentional. We're prioritizing, as I said, that valuable capacity to those highest value opportunities where we're able to get long-term contracts and margins are the strongest.

Kimberly Fields: You know, we're prioritizing, as I said, that valuable capacity to those highest value opportunities, where we're able to get long-term contracts and margins are the strongest. You know, as I look at that A&D mix is going to continue to go higher, which will help us continue to drive higher margins as long as along with stronger value creation. I would expect that we're going to be above 70, and it could trend up. Jet engine may be up a couple points as well.

Speaker #1: So as I look at that, A&D mix is going to continue to go higher, which will help us continue to drive higher margins as long as along with stronger value creation.

Kimberly Fields: You know, as I look at that, you know, A&D mix is going to continue to go higher, which will help us continue to drive higher margins as long as along with stronger value creation. I would expect that we're going to be above 70, and it could trend up. Jet engine may be up a couple points as well. As far as titanium sales, I think it's, as I said, with airframe sales, H1's going to be somewhat flat, and it will start accelerating through H2. We will start to see some of that titanium SQ that typically goes into the airframe start to increase.

Speaker #1: So I would expect that we're going to be above 70, and it could trend up. Jet engine may be up a couple points as well.

Speaker #1: As far as titanium sales, I think, as I said, with airframe sales, the first half is going to be somewhat flat, and it'll start accelerating through the second half.

Kimberly Fields: As far as titanium sales, I think it's, as I said, with airframe sales, H1's going to be somewhat flat, and it will start accelerating through H2. We will start to see some of that titanium SQ that typically goes into the airframe start to increase. What I would anticipate you'd see more substantial increases for airframe in 2027, and certainly as the wide body start to gain in their ramp and build rates. The one area that we are seeing quite a bit of demand, though, for titanium is in defense.

Speaker #1: So you will start to see some of that titanium SQ, that typically goes into the airframe, start to increase. But what I would anticipate you'd see more substantial increases for airframe in 2027 and certainly as the wide body start to gain in their ramp and build rates.

Kimberly Fields: What I would anticipate you'd see more substantial increases for airframe in 2027, and certainly as the wide body start to gain in their ramp and build rates. The one area that we are seeing quite a bit of demand, though, for titanium is in defense. It does go into structural applications that are used, you know, for high temperature and performance. That we are seeing now, and it's starting to come into our mix. You may see that uptick here through the year as well. There's a couple key markets drawing on that, I would say you'd probably see much stronger titanium sales growth in 2027.

Speaker #1: The one area that we are seeing quite a bit of demand, though, for titanium is in defense. It does go into structural applications that are used for high-temperature and performance.

Kimberly Fields: It does go into structural applications that are used for high temperature and performance. That we are seeing now, and it's starting to come into our mix. You may see that uptick here through the year as well. There's a couple key markets drawing on that, I would say you'd probably see much stronger titanium sales growth in 2027.

Speaker #1: And so that we are seeing now, and it's starting to come into our mix. And so you may see that uptick here through the year as well.

Speaker #1: So there's a couple of key markets drawing on that. But I would say you'd probably see much stronger titanium sales growth in 2027.

Speaker #6: Got it. Got it, Kim. That's incredible color. Thank you so much. I'll leave it there.

Andrew Metodiev: Got it. Got it. Kim, that's incredible color. Thank you so much. I'll leave it there.

Andre Madrid: Got it. Got it. Kim, that's incredible color. Thank you so much. I'll leave it there.

Speaker #5: Your next question comes from the line of Miles Walton with Wolf Research. Your line is now open. Please go ahead.

Operator: Your next question comes from the line of Myles Walton with Wolfe Research. Your line is now open. Please go ahead.

Speaker #7: Thanks. Good morning. Kim, last quarter, you talked about the missiles as a percent of your defense exposure. Can you remind us where that is now given what seems to be a constant doubling of revenue?

Myles Walton: Thanks. Good morning. Kim, last quarter, you talked about the missiles as a percent of your defense exposure. Can you remind us where that is now, given what seems to be a constant doubling of revenue? Are you party to the 7-year frameworks? Are they trying to lock in your supply for a longer than normal duration?

Speaker #7: And then are you party to the seven-year frameworks? Are they trying to lock in your supply for a longer-than-normal duration?

Speaker #1: Yeah. So missiles is one of those markets that we're seeing really meaningful uptick in demand and inquiries. It is a small portion of our revenue, as you referenced, but the rate of acceleration is really what's notable there.

Kimberly Fields: Yeah. Missiles is one of those markets that we're seeing really meaningful uptick in demand and inquiries. It is a small portion of our revenue as you, as you referenced, but the rate of acceleration is really what's notable there. Yeah, we've seen that increase inquiries, order activity, as I mentioned. Folks are placing orders because of the lead times that we've got. They're placing orders in advance of that total funding that's come through just based on the replenishment needs for, you know, our military and missiles and munitions. The programs that we're on, you know, that really require the performance materials that we have are PAC-3, THAAD, Tomahawk, all substantially, you know, been advertised. You know, they're up 3, 6, 10X as they're trying to build the supply chain.

Kimberly Fields: Yes. Missiles is one of those markets that we're seeing really meaningful uptick in demand and inquiries. It is a small portion of our revenue as you, as you referenced, but the rate of acceleration is really what's notable there. Yes, we've seen that increase inquiries, order activity, as I mentioned. Folks are placing orders because of the lead times that we've got. They're placing orders in advance of that total funding that's come through just based on the replenishment needs for our military and missiles and munitions.

Speaker #1: We've seen that increase inquiries, order activity. As I mentioned, folks are placing orders because of the lead times that we've got. They're placing orders in advance of that total funding that's come through.

Speaker #1: Just based on the replenishment needs for our military, missiles, and munitions. So the programs that we're on, that really require the performance materials that we have are PAC-3, FAD, Tomahawk, all substantially been advertised.

Kimberly Fields: The programs that we're on that really require the performance materials that we have are PAC-3, THAAD, Tomahawk, all substantially been advertised. You know, they're up 3, 6, 10X as they're trying to build the supply chain. We're really working with those folks in the supply chain to increase and align our capacity to those needs. It's really across a couple key areas. I talked about titanium, our premium quality titanium, our exotic alloys like zirconium, hafnium, and niobium, and that's continuing to drive this uptick.

Speaker #1: They're up three, six, 10X as they're trying to build the supply chain. And we're really working with those folks in the supply chain to increase our and then align our capacity to those needs.

Kimberly Fields: We're really working with those folks in the supply chain to increase and align our capacity to those needs. It's really across a couple key areas. I talked about titanium, our premium quality titanium, our exotic alloys like zirconium, hafnium, and niobium, and that's continuing to drive this uptick. Yes, it grew triple digits. I expect that'll continue to grow at that rate to become a meaningful part of the portfolio, both from a growth and margin perspective. Just to remind you know, right now we've kind of laid out their low- to mid-teens growth for the year, but I would say my bias is to the upside given just the recent activity here in the last 1 month to 6 weeks.

Speaker #1: And it's really across a couple of key areas. I talked about titanium, our premium quality titaniums, our exotic alloys like zirconium, hafnium, niobium. And that's continuing to drive this uptick.

Speaker #1: And yes, it grew triple digits. I expect that'll continue to grow at that rate. To become a meaningful part of the portfolio, both from a growth and margin perspective.

Kimberly Fields: Yes, it grew triple digits. I expect that'll continue to grow at that rate to become a meaningful part of the portfolio, both from a growth and margin perspective. Just to remind you know, right now we've kind of laid out their low- to mid-teens growth for the year, but I would say my bias is to the upside given just the recent activity here in the last 1 month to 6 weeks.

Speaker #1: Just to remind you, right now, we've kind of laid out their low to mid-teens growth for the year. But I would say my bias is to the upside given just the recent activity here in the last month to six weeks.

Speaker #7: Okay. And Rob, can you just remind us of your tariff outlook for 2026 after all the changes in 232? Where we are, positive, negative?

Myles Walton: Okay. Rob, can you just remind us of your tariff outlook for 2026 after all the changes, IEEPA and Section 232, where we are, positive, negative?

Speaker #1: Yeah. Just to jump in there. So yeah, for tariffs, we've kept right now, we're status quo. We've got pass-throughs for all of our contracts.

Kimberly Fields: Yeah, just to jump in there. Yeah, for tariffs, we've kept, you know, right now we're status quo. We've got passthroughs for all of our contracts. Any tariffs that we're still experiencing, we're passing those through. Clearly, given the administration, we're still trying to work through what may be a refund policy, although I'll be honest, there has not been a lot of progress in that regard. We're continuing as those come in. We've got alignment with our customers and we're able to, we are recovering any tariffs that we're seeing.

Kimberly Fields: Yes, just to jump in there. Yes, for tariffs, we've kept right now we're status quo. We've got passthroughs for all of our contracts. Any tariffs that we're still experiencing, we're passing those through. Clearly, given the administration, we're still trying to work through what may be a refund policy, although I'll be honest, there has not been a lot of progress in that regard. We're continuing as those come in. We've got alignment with our customers and we're able to, we are recovering any tariffs that we're seeing.

Speaker #1: So any tariffs that we're still experiencing, we're passing those through. Clearly, given the administration, we're still trying to work through what may be a refund policy, although I'll be honest, there has not been a lot of progress in that regard.

Speaker #1: So we're continuing, as those come in. We've got alignment with our customers, and we're able to and we are recovering any tariffs that we're seeing.

Speaker #7: Okay. Thank you.

Myles Walton: Okay. Thank you.

Speaker #5: Your next question comes from the line of Gautam Khanna with P.D. Cohen. Your line is now open. Please go ahead.

Operator: Your next question comes from the line of Gautam Khanna with TD Cowen. Your line is now open. Please go ahead.

Gautam Khanna: Hey, thanks. Good morning, guys.

Speaker #6: Hey, thanks. Good morning, guys.

Speaker #8: Good morning.

Rob Foster: Good morning.

Speaker #6: I was wondering if you could opine on where we are on that debottlenecking initiative that you announced about three-quarters ago. And if you could characterize kind of what percentage of your nickel alloy capacity is being utilized at this point and how that might change over the next six to 18 months.

Gautam Khanna: Was wondering if you could opine on where we are on that debottlenecking initiative that you announced, about 3 quarters ago. If you could characterize kind of what percentage of your nickel alloy capacity is being utilized at this point and, you know, how that might change over the next 6 to 18 months. I'm just curious how close to 100% utilization you're at. Thanks.

Gautam Khanna: Was wondering if you could opine on where we are on that debottlenecking initiative that you announced, about 3 quarters ago. If you could characterize kind of what percentage of your nickel alloy capacity is being utilized at this point and how that might change over the next 6 to 18 months. I'm just curious how close to 100% utilization you're at. Thanks.

Speaker #6: I'm just curious how close to 100% utilization you're at. Thanks.

Speaker #1: Sure. So I think the debottlenecking you're talking about is in our primary nickel melting. There is some other work that's going on downstream, but I think that's what you're referring to on the nickel side.

Kimberly Fields: Sure. I think, I think the debottlenecking you're talking about is in our primary nickel melting. There is some other work that's going on downstream, but I think that's what you're referring to on the nickel side. That's progressing very well. I shared, you know, in my prepared remarks that we've seen a 15% uptick in output. Maybe more importantly, we've seen a significantly improved product quality control parameters. Not only are we getting more output, but we're also making a higher percentage of material that doesn't need to be reworked or have any additional steps taken to make it ready for delivery. We are well ahead, I will say, walking through the plants. They are doing a phenomenal job.

Speaker #1: And so that's progressing very well. I shared in my prepared remarks that we've seen a 15% uptick in output, and maybe more importantly, we've seen significantly improved product quality control parameters.

Speaker #1: So not only are we getting more output, but we're also making a higher percentage of material that doesn't need to be reworked or have any additional steps taken to make it ready for delivery.

Kimberly Fields: Not only are we getting more output, but we're also making a higher percentage of material that doesn't need to be reworked or have any additional steps taken to make it ready for delivery. We are well ahead, I will say, walking through the plants. They are doing a phenomenal job. Quite frankly, this was in advance and in preparation for the capital investment that I shared around our remelt assets that are going to be coming online here towards the end of the year in Q4. It'll be just in time.

Speaker #1: And so we are well ahead I will say, walking through the plants. They are doing a phenomenal job and quite frankly, this was in advance and in preparation for the capital investment that I shared around our remelt assets that are going to be coming online here towards the end of the year in the fourth quarter.

Kimberly Fields: Quite frankly, this was in advance and in preparation for the capital investment that I shared around our remelt assets that are going to be coming online here towards the end of the year in Q4. It'll be just in time. Like I said, we are rapidly working on how we increase productivity through our remelt operations across our system to take advantage of that increased primary melt. There's still some work to do. As I look, you know, you said, you know, how we think about that over the next 6 to 18 months. I do think we are already seeing upticks. You're seeing that both in output, and mix in pricing as well, 'cause we really are focusing that in our highest valued products.

Speaker #1: And it'll be just in time. Like I said, we are rapidly working on how we increase productivity through our remelt operations across our system to take advantage of that increased primary melt.

Kimberly Fields: Like I said, we are rapidly working on how we increase productivity through our remelt operations across our system to take advantage of that increased primary melt. There's still some work to do. As I look you said how we think about that over the next 6 to 18 months. I do think we are already seeing upticks. You're seeing that both in output, and mix in pricing as well, 'cause we really are focusing that in our highest valued products.

Speaker #1: But there's still some work to do. And so as I look, you said how we think about that over the next six to 18 months.

Speaker #1: I do think we are already seeing upticks. You're seeing that both in output and mix and pricing as well. Because we really are focusing that on our highest valued products.

Speaker #1: But as I'm looking forward, you'll see the first uptick in the beginning of next year where we really are unleashing call it 5% or so more volume through the operations.

Kimberly Fields: As I'm looking forward, you'll see the first uptick in the beginning of next year, where we really unleash, you know, call it 5% or so more volume through the operations. We've got the primary melt that's coming in at the end of next year, which I've talked about is kind of that 8% to 10% uptick that will continue to allow us to take advantage of all the, all the improvements and all of the investments that we're making. From an overall, I'd say we are being selective and deliberate in how we're directing our capacity. We're going after the hardest to make, most differentiated products. You know, I talked a lot about those six of seven alloys that in five of those cases, we're the only ones making those today. We are prioritizing that.

Kimberly Fields: As I'm looking forward, you'll see the first uptick in the beginning of next year, where we really unleash call it 5% or so more volume through the operations. We've got the primary melt that's coming in at the end of next year, which I've talked about is kind of that 8% to 10% uptick that will continue to allow us to take advantage of all the, all the improvements and all of the investments that we're making. From an overall, I'd say we are being selective and deliberate in how we're directing our capacity.

Speaker #1: And then we've got the primary melts that's coming in at the end of next year, which I've talked about is kind of that 8 to 10 percent uptick that will continue to allow us to take advantage of all the improvements and all of the investments that we're making.

Speaker #1: So from an overall, I'd say we are being selective and deliberate in how we're directing our capacities. We're going after the hardest to make, most differentiated products I talked a lot about those six or seven alloys.

Kimberly Fields: We're going after the hardest to make, most differentiated products. You know, I talked a lot about those six of seven alloys that in five of those cases, we're the only ones making those today. We are prioritizing that. You're seeing it in the margin uplifts, but we're continuing to drive those bottlenecks and finding meaningful capacity through the work that the team's doing, and frankly, the learning curve improvement of our employees as we continue to move up that base and people get more experienced and learn our operations.

Speaker #1: That in five of those cases were the only ones making those today. And so we are prioritizing that. You're seeing it in the margin uplifts.

Kimberly Fields: You're seeing it in the margin uplifts, but we're continuing to drive those bottlenecks and finding meaningful capacity through the work that the team's doing, and frankly, the learning curve improvement of our employees as we continue to move up that base and people get more experienced and learn our operations.

Speaker #1: But we're continuing to drive those bottlenecks and finding meaningful capacity through the work that the teams doing and frankly, the learning curve improvement of our employees as we continue to move up that base and people get more experienced and learn our operations.

Speaker #6: Thanks. And Rob, I just wanted to get your opinion on incrementals by segment. I remember Don used to talk about 40% and 30% respectively.

Gautam Khanna: Thanks. Rob, I just wanted to get your opinion on incrementals by segment. I remember Don used to talk about 40% and 30% respectively, HPMC, AA&S. Is that what you think we should be penciling in over the next, you know, year and a half, two years, whatever?

Speaker #6: HPMC, AA&S. Is that what you think we should be penciling in over the next year and a half, two years, whatever?

Speaker #8: Yeah. So I'll break it down. But first, I'll start with the consolidated look. For the full year, 2026, modeling in something close to that kind of 40% consolidated incremental for the full year.

Rob Foster: Yeah. I'll break it down. But first I'll start with the consolidated look, you know, for the full year, you know, 2026. You know, modeling in something close to that kind of 40% consolidated incremental for the full year is how I'm thinking about it. If you double-click and unpack that by segment, I think what you'll see is, you know, margins on the incremental basis kind of drifting higher from the HPMC segment and maybe a bit lower from the AA&S segment for the overall composite of about 40%. That's an improvement from where we've been historically. If you think about where we would historically guide, it was in the mid-30s to maybe the upper end of 40. I think we're now, you know, pretty confident in that 40% year-over-year incremental margin on a consolidated basis.

Rob Foster: Yes. I'll break it down. But first I'll start with the consolidated look for the full year 2026. You know, modeling in something close to that kind of 40% consolidated incremental for the full year is how I'm thinking about it. If you double-click and unpack that by segment, I think what you'll see is margins on the incremental basis kind of drifting higher from the HPMC segment and maybe a bit lower from the AA&S segment for the overall composite of about 40%.

Speaker #8: It is how I'm thinking about it. And if you double-click and unpack that by segment, I think what you'll see is margins on the incremental basis kind of drifting higher from the HPMC segment and maybe a bit lower from the AA&S segment for the overall composite of about 40%.

Speaker #8: And that's an improvement from where we've been historically. If you think about where we would historically guide, it was in the mid-30s to maybe the upper end of 40.

Rob Foster: That's an improvement from where we've been historically. If you think about where we would historically guide, it was in the mid-30s to maybe the upper end of 40. I think we're now pretty confident in that 40% year-over-year incremental margin on a consolidated basis.

Speaker #8: I think we're now pretty confident in that 40% year over year incremental margin on a consolidated basis.

Speaker #6: Gotcha. And any view on 27 with that framework?

Gautam Khanna: Gotcha. Any view on 2027 with that framework?

Speaker #8: Yeah. I won't talk about 2027 other than from a model standpoint, we have the guidance out there from 2027. And I'm very familiar with that guidance.

Rob Foster: Yeah. You know, I won't, you know, talk about 2027 other than, you know, from a model standpoint. You know, we have the guidance out there from 2027, I'm very familiar with that guidance. I was part of the team working with Don and Kim that prepared that.

Rob Foster: Yes. You know, I won't talk about 2027 other than from a model standpoint. You know, we have the guidance out there from 2027, I'm very familiar with that guidance. I was part of the team working with Don and Kim that prepared that. overall my confidence is really high in our ability to get into that guide range. If you, if you look at the H2 run rate here, which we're thinking about you'll see if you connect the dots that that puts you know, well within the range.

Speaker #8: I was part of the team working with Don and Kim that prepared that. And overall, my confidence is really high in our ability to get into that guide range.

Rob Foster: Overall, you know, my confidence is really high in our ability to get into that guide range. If you, if you look at the H2 run rate here, which we're thinking about, you know, you'll see if you connect the dots that that puts you know, well within the range. The point I wanna make is we're not gonna stop growing. You know, I think what I would say is I have a bias towards the upper end of that 2027 guide for EBITDA dollars and the consolidated margin percentage.

Speaker #8: And if you look at the second half run rate here, which we're thinking about, you'll see if you connect the dots, that that puts you well within the range and the point I want to make is we're not going to stop growing.

Rob Foster: The point I want to make is we're not going to stop growing. You know, I think what I would say is I have a bias towards the upper end of that 2027 guide for EBITDA dollars and the consolidated margin percentage.

Speaker #8: So I think what I would say is I have a bias towards the upper end of that 2027 guide for EBITA dollars and the consolidated margin percentage.

Gautam Khanna: Thank you, guys.

Speaker #8: But we'll go through yeah, we'll go through our normal process and you can expect an update sometime in the Q4 timeframe.

Rob Foster: Yeah, we'll go through our normal process, and you can expect an update sometime in the Q4 timeframe.

Rob Foster: Yes, we'll go through our normal process, and you can expect an update sometime in the Q4 timeframe.

Speaker #6: Great.

Gautam Khanna: Great.

Speaker #9: Your next question comes from the line of Seth Safeman with JPMorgan. Your line is now open. Please go ahead.

Operator: Your next question comes from the line of Seth Seifman with JPMorgan. Your line is now open. Please go ahead.

Seth Seifman: Hey, thanks very much and good morning. I wonder if you could talk a little bit about the supply side angle of things that are going on in the Middle East, when we think about upward pressure on anything in your cost base, whether that's energy costs or any particular inputs or the availability of any inputs, anything you're monitoring, and any way maybe in particular to think about the way that you can pass through higher energy costs.

Speaker #6: Thanks very much. And good morning. I wonder if you could talk a little bit about the supply-side angle of things that are going on in the Middle East.

Speaker #6: When we think about upward pressure on anything in your cost base, whether that's energy costs or any particular inputs or the availability of any inputs, anything you're monitoring and any way maybe in particular to think about the way that you can pass through higher energy costs?

Speaker #1: Yeah. So as we coming COVID, supply chain monitoring, I think, has become one of the strengths that we have. I'm sure every company does as well.

Kimberly Fields: Yeah. As we, you know, COVID, supply chain monitoring, I think, has become one of the strengths that we have. I'm sure every company does as well. We are monitoring a couple things. We have not seen any uptick, so there's been no impact to date. I will say, one key input is helium that goes into our processes, so that I know, several of the suppliers have started to export that from the US. We're monitoring that closely. It's a small portion of our cost, so it's not critical, and we do have alternatives that are readily available. That's one area that we're paying attention to, mainly from a, you know, just Middle Eastern supply and transport aspect.

Kimberly Fields: Yes. As we COVID, supply chain monitoring, I think, has become one of the strengths that we have. I'm sure every company does as well. We are monitoring a couple things. We have not seen any uptick, so there's been no impact to date. I will say, one key input is helium that goes into our processes, so that I know, several of the suppliers have started to export that from the US. We're monitoring that closely. It's a small portion of our cost, so it's not critical, and we do have alternatives that are readily available.

Speaker #1: So we are monitoring a couple of things. We have not seen any uptick. So there's been no impact to date. But I will say one key input is helium that goes into our processes.

Speaker #1: So that I know several of the suppliers have started to export that from the US. And so we're monitoring that closely. It's a small portion of our costs.

Speaker #1: So it's not critical. And we do have alternatives that are readily available. So that's one area that we're paying attention to, mainly from a just Middle Eastern supply and transport aspect.

Kimberly Fields: That's one area that we're paying attention to, mainly from a just Middle Eastern supply and transport aspect. From an energy cost standpoint, we are seeing, other impacts outside of just what's happening with the Middle East, but data centers and other things that are providing and putting more pressure on some of the electrical pricing and other things. We've got multiple mechanisms to deal with that.

Speaker #1: From an energy cost standpoint, we are seeing other impacts. Outside of just what's happening with the Middle East, but data centers and other things that are providing and putting more pressure on some of the electrical pricing and other things.

Kimberly Fields: From an energy cost standpoint, we are seeing, other impacts, you know, outside of just what's happening with the Middle East, but, you know, data centers and other things that are providing and putting more pressure on some of the electrical pricing and other things. We've got multiple mechanisms to deal with that. One, you know, we do pass through all of those inflationary costs through in our contracts, we've got protections and mechanisms to do that. We manage natural gas hedges that we have become more conservative with as we look out 12 to 18 months, and in some cases, even longer than that.

Speaker #1: And so we've got multiple mechanisms to deal with that. One, we do pass through all of those inflationary costs through in our contracts. And so we've got protections and mechanisms to do that.

Kimberly Fields: one we do pass through all of those inflationary costs through in our contracts, we've got protections and mechanisms to do that. We manage natural gas hedges that we have become more conservative with as we look out 12 to 18 months, and in some cases, even longer than that. That again, allow us not to control it, but to allow us to stay aligned with those mechanisms, from an inflation indexing standpoint, so that we're able to stay flat and aligned to what those costs are.

Speaker #1: We manage natural gas hedges that we have become more conservative with as we look out 12 to 18 months and in some cases even longer than that.

Speaker #1: That, again, allow us not just to control it, but to allow us to stay aligned with those mechanisms from an inflation indexing standpoint so that we're able to stay flat and aligned to what those costs are.

Kimberly Fields: That again, allow us not to control it, but to allow us to stay aligned with those mechanisms, from an inflation indexing standpoint, so that we're able to stay flat and aligned to what those costs are. Then there's some other innovative ideas and things that we're pursuing, projects we're pursuing around energy and energy generation that long term may come into play as we think about how we wanna manage those costs. Today, no impact from the Middle East and what's happening there from a cost standpoint. We'll monitor a couple of those things, but so far it's been very stable. Energy cost is something that even before what's happened over in the Middle East has been on our agenda and something that we've been working on.

Speaker #1: And then there's some other innovative ideas and things that we're pursuing projects we're pursuing around energy and energy generation that long-term may come into play as we think about how we want to manage those costs.

Kimberly Fields: Then there's some other innovative ideas and things that we're pursuing, projects we're pursuing around energy and energy generation that long term may come into play as we think about how we want to manage those costs. Today, no impact from the Middle East and what's happening there from a cost standpoint. We'll monitor a couple of those things, but so far it's been very stable. Energy cost is something that even before what's happened over in the Middle East has been on our agenda and something that we've been working on.

Speaker #1: But to date, no impact from the Middle East and what's happening there from a cost standpoint. And we'll monitor a couple of those things, but so far, it's been very stable.

Speaker #1: And then energy costs is something that even before what's happened over in the Middle East has been on our agenda and something that we've been working on.

Speaker #6: Great, great. That's super helpful. And then just maybe thinking a little bit about the cadence—obviously, a lot of demand, and so high confidence in the revenue outlook for this year.

Seth Seifman: Great. Great. That's super helpful. Just maybe thinking a little bit about the cadence, obviously a lot of demand, you know, high confidence in the revenue outlook for this year. The A&D growth rate and in particular, also the jet engine growth rate, I guess should be accelerating from here. Should we look for some of that acceleration in Q2? Is that something that's going to be more H2-weighted?

Seth Seifman: Great. Great. That's super helpful. Just maybe thinking a little bit about the cadence, obviously a lot of demand high confidence in the revenue outlook for this year. The A&D growth rate and in particular, also the jet engine growth rate, I guess should be accelerating from here. Should we look for some of that acceleration in Q2? Is that something that's going to be more H2-weighted?

Speaker #6: The A&D growth rate and in particular also the jet engine growth rate, I guess, should be accelerating from here. Should we look for some of that acceleration in Q2, or is that something that's going to be more back halfway to?

Speaker #1: Yes. You will see that acceleration. It's going to be sequentially stepping up as we go through the year. So you'll start to see it in Q2.

Kimberly Fields: Yes, you will see that acceleration. It's gonna be sequentially stepping up as we go through the year. You'll start to see it in Q2. It's coming through, as you said, in both demand, in enhanced mix, and expanded content, as well as price. You'll see that coming through. We are being very deliberate around how we allocate our resources, our capacity. You know, you'll probably see that those impacts more heavily weighted towards our margin and EBITDA line, more so than the revenue line as we go through the year and we continue to pivot our mix and portfolio to support those high-value markets.

Kimberly Fields: Yes, you will see that acceleration. It's going to be sequentially stepping up as we go through the year. You'll start to see it in Q2. It's coming through, as you said, in both demand, in enhanced mix, and expanded content, as well as price. You'll see that coming through. We are being very deliberate around how we allocate our resources, our capacity.

Speaker #1: It's coming through, as you said, in both demand, in enhanced mix, and expanded content as well as price. And so you'll see that coming through.

Speaker #1: We are being very deliberate around how we allocate our resources, our capacity, and so you'll probably see that those impacts more heavily weighted towards our margin and EBITDA line, more so than the revenue line as we go through the year and we continue to pivot our mix and portfolio to support those high-value markets.

Kimberly Fields: You know, you'll probably see that those impacts more heavily weighted towards our margin and EBITDA line, more so than the revenue line as we go through the year and we continue to pivot our mix and portfolio to support those high-value markets.

Seth Seifman: Great. Very helpful. Thanks.

Speaker #6: Great. Very helpful. Thanks.

Seth Seifman: Great. Very helpful. Thanks.

Speaker #9: Your next question comes from the line of Pete Skibitsky with Alembic Global. Your line is now open. Please go ahead.

Operator: Your next question comes from the line of Peter Skibitski with Alembic Global Advisors.

Peter Skibitski: Good morning. Kim, going back to the start of the Q&A, you were talking to Dave about the impact of higher jet fuel prices on, you know, potentially driving the retirement of legacy aircraft. I just wanted to get the sense, if we think about commercial aftermarket for jet engines, is your revenue at this point on the newer jet engines aftermarket, is that, you know, the same or above the aftermarket revenue for legacy jet engines, or are we not there yet? Just wanted to get a sense of where we are sort of in the cycle for you.

Speaker #10: Hey, good morning. Hey, Kim, going back to the start of the Q&A you were talking to Dave about the impact of higher jet fuel prices on potentially driving the retirement of legacy aircraft.

Peter Skibitski: Good morning. Kim, going back to the start of the Q&A, you were talking to Dave about the impact of higher jet fuel prices on potentially driving the retirement of legacy aircraft. I just wanted to get the sense, if we think about commercial aftermarket for jet engines, is your revenue at this point on the newer jet engines aftermarket, is that the same or above the aftermarket revenue for legacy jet engines, or are we not there yet? Just wanted to get a sense of where we are sort of in the cycle for you.

Speaker #10: I just wanted to get a sense—if we think about commercial aftermarket for jet engines, is your revenue at this point on the newer jet engines' aftermarket?

Speaker #10: Is that the same or above the aftermarket revenue for legacy jet engines, or are we not there yet? I just wanted to get a sense of where we are sort of in the cycle for you.

Speaker #1: Yeah. I would say it's heavily weighted towards the next gen. We've got twice the content as I've shared in the past. A lot of these next-gen engines are still in the life cycle of an engine in the early cycle, so there's upgrade packages, durability packages, and we're seeing that demand on top of the OEM build rates and just the first round of shop visits that leap and others are starting to hit.

Kimberly Fields: Yeah, I would say it's heavily weighted towards the next gen. We've got twice the content, as I've shared in the past. You know, a lot of these, you know, next gen engines are still in the life cycle of an engine in the early cycle, so there's upgrade packages, durability packages. We're seeing that demand on top of the OEM build rates and just the first round of shop visits that LEAP and others are starting to hit. Those are all coming together. There is more revenue and demand, you know, that is more heavily weighted, so it is a very favorable trend for us as we accelerate into those next gen engines.

Kimberly Fields: Yes, I would say it's heavily weighted towards the next gen. We've got twice the content, as I've shared in the past. You know, a lot of these next gen engines are still in the life cycle of an engine in the early cycle, so there's upgrade packages, durability packages. We're seeing that demand on top of the OEM build rates and just the first round of shop visits that LEAP and others are starting to hit. Those are all coming together.

Speaker #1: And so those are all coming together. So there is more revenue and demand that is more heavily weighted. And so it is a very favorable trend for us as we accelerate into those next-gen engines and those legacy engines.

Kimberly Fields: There is more revenue and demand that is more heavily weighted, so it is a very favorable trend for us as we accelerate into those next gen engines. Those legacy engines for those materials, what we find is our assets are very fungible, so they're very useful in other markets like specialty energy, which uses similar materials, similar capabilities and are required for those, which is it's basically an engine on the ground.

Kimberly Fields: Those legacy engines, you know, for those materials, what we find is our assets are very fungible, so they're very useful in other markets like specialty energy, which uses similar materials, similar capabilities and are required for those, which is, you know, it's basically an engine on the ground. Between specialty energy and some of these defense applications we were just talking about, we're able to pivot to those high value, very differentiated capabilities into those other markets as we, as they start to retire some of those legacy planes.

Speaker #1: For those materials, what we find is our assets are very fungible. And so they're very useful in other markets like specialty energy which uses similar materials, similar capabilities, and are required for those which is basically an engine on the ground.

Speaker #1: And so between specialty energy and some of these defense applications we were just talking about, we're able to pivot to those high-value very differentiated capabilities into those other markets as we as they start to retire some of those legacy planes.

Kimberly Fields: Between specialty energy and some of these defense applications we were just talking about, we're able to pivot to those high value, very differentiated capabilities into those other markets as we, as they start to retire some of those legacy planes.

Speaker #10: Okay. Great. I appreciate the caller. Just one last one for me. On the defense growth this year, I'm trying to obviously, missiles is growing really fast.

Peter Skibitski: Okay, great. Appreciate the color. Just one last one for me. On the defense growth this year, I'm trying to obviously, missiles is growing really fast. It's still small. I'm trying to get a better sense for the core driver for you in military. It seems like recently the shipyards are showing a lot of improvement in throughput. They, you know, hiring more people, supply chain is improving in shipyards. Is it, is it the exotics for you within defense, the zirconium for, you know, the nuclear navy? Is that the biggest muscle mover for the military growth, or are there other factors as well?

Peter Skibitski: Okay, great. Appreciate the color. Just one last one for me. On the defense growth this year, I'm trying to obviously, missiles is growing really fast. It's still small. I'm trying to get a better sense for the core driver for you in military. It seems like recently the shipyards are showing a lot of improvement in throughput. they hiring more people, supply chain is improving in shipyards. Is it, is it the exotics for you within defense, the zirconium for the nuclear navy?

Speaker #10: It's still small. I'm trying to get a better sense for the core driver for you in military. And it seems like recently the shipyards are showing a lot of improvement in throughput.

Speaker #10: Hiring more people, supply chain is improving, and shipyards. So is it the exotics for you within defense that zirconium for the nuclear navy? Is that kind of driving is that the biggest muscle mover for the military growth, or are there other factors as well?

Peter Skibitski: Is that the biggest muscle mover for the military growth, or are there other factors as well?

Speaker #1: The nuclear, or the naval nuclear, is our largest contributor when you look at our overall defense sales, as you mentioned. It's very long-cycle, funded programs.

Kimberly Fields: The Naval Nuclear is our largest contributor when you look at our overall defense sales. As you mentioned, it's very long cycle funded programs. They're looking to expand that capability. I shared that new Naval Nuclear contract that we just signed, which is about 2x the revenue over the next 5 years than we had in the past contract. As you said, we're seeing strong growth in that area. That is an area that we're continuing to invest in. It is predominantly coming from those exotic alloys, zirconium, hafnium, some nickels as well. So it does translate to a little bit into our HPMC business as well, but predominantly the AA&S. You're seeing that with the margin accretion that you've seen over the last three quarters.

Speaker #1: They're looking to expand that capability. I shared that new naval nuclear contract that we just signed which is about 2X the revenue. Over the next five years, and we had in the past contract, and as you said, we're seeing strong growth.

Speaker #1: And in that area, and that is an area that we're continuing to invest in. It is predominantly coming from those exotic alloys, zirconium, hafnium, some nickels as well.

Speaker #1: So it does translate to a little bit into our HPMC business as well. But predominantly, the ANS and you're seeing that with the margin accretion that you've seen over the last three quarters.

Kimberly Fields: So it does translate to a little bit into our HPMC business as well, but predominantly the AA&S. You're seeing that with the margin accretion that you've seen over the last three quarters.

Speaker #10: Okay. Great. Thanks so much.

Peter Skibitski: Okay, great. Thanks so much.

Speaker #9: Your final question comes from the line of Samuel McKinney with KeyBank Capital Markets. Your line is now open. Please go ahead.

Operator: Your final question comes from the line of Samuel McKinney with KeyBanc Capital Markets. Your line is now open. Please go ahead.

Speaker #10: Hey, good morning. Thanks for getting me in.

Samuel McKinney: Hey, good morning. Thanks for fitting me in.

Speaker #11: Good morning.

Kimberly Fields: Morning.

Speaker #10: Just given the rich margins that you guys get in defense aero, can you just talk to us a little bit about how you're thinking about managing or prioritizing line time on some of these assets that can serve both the defense and commercial aero in the context of the OEM build ramp?

Samuel McKinney: Given the rich margins that you guys get in defense aero, can you just talk to us a little bit about how you're thinking about managing or prioritizing line time on some of these assets that can serve both the defense and commercial aero in the context of the OEM build ramp?

Speaker #1: I'm sorry. It cut out a little bit. Could you repeat that question?

Kimberly Fields: I'm sorry, it cut out a little bit. Could you repeat that question?

Speaker #10: I said given the rich margins that you get in defense aerospace, can you talk to us about how you're thinking about managing or prioritizing line time on some of these assets that can serve defense or commercial in the context of the OEM build ramp?

Samuel McKinney: I said, given the rich margins that you get in defense aerospace-

Kimberly Fields: Yeah

Samuel McKinney: Can you talk to us about how you're thinking about managing or prioritizing line time on some of these assets that can serve defense or commercial in the context of the OEM build ramp?

Kimberly Fields: Yeah

Speaker #1: Yes. So as we thought, as you said, we are prioritizing capacity and line time as you called it. And what we find typically is jet engine is our highest margin business, although that's been rapidly shrinking.

Kimberly Fields: Yes. As we thought, as you said, we are prioritizing capacity and line time, as you called it. You know, what we find typically is jet engine is our highest margin business. Although that's been rapidly shrinking. You know, as we think about defense and specialty energy, we're seeing both of those start to accelerate very quickly given the tightness of the market and the differentiated nature of the materials that we're using. Obviously some of these military programs are priorities, and so we're continuing to make sure that we're aligning our capacity and we can support those. We are, again, with those long-term contracts, having conversations around what are the forecasts, what are those needs, so that we're making sure that we're also prioritizing our jet engine customers.

Speaker #1: As we think about defense and specialty energy, we're seeing both of those start to accelerate very quickly given the tightness of the market and the differentiated nature of the materials that we're using.

Speaker #1: So, obviously, some of these military programs are priorities. And so we're continuing to make sure that we're aligning our capacity and we can support those.

Kimberly Fields: Obviously some of these military programs are priorities, and so we're continuing to make sure that we're aligning our capacity and we can support those. We are, again, with those long-term contracts, having conversations around what are the forecasts, what are those needs, so that we're making sure that we're also prioritizing our jet engine customers.

Speaker #1: But we are again, with those long-term contracts, having conversations around what are the forecasts, what are those needs, so that we're making sure that we're also prioritizing our jet engine customers.

Speaker #1: What you are seeing, though, and where you will see through the rest of the year, and we've kind of talked about down low to mid-single digits, is in our medical, electronics, our overall industrial applications.

Kimberly Fields: What you are seeing, though, and where you will see, through the rest of the year, and we've kind of talked about down low to mid-single digits is in our medical electronics, our overall industrial applications. We are de-emphasizing those and moving the capacity to those other two higher markets, higher margin markets.

Speaker #1: We are de-emphasizing those and moving the capacity to those other two higher markets. Higher margin markets.

Speaker #11: Yeah. That all makes sense. And then next one, you called for mid-teens. Revenue growth in specialty energy this year, but that's off the back of a 20-plus percent increase in the first quarter.

Samuel McKinney: Yeah, that all makes sense. Next one, you called for mid-teens revenue growth in specialty energy this year, but that's off the back of a 20+% increase in Q1. If you could just give us a little more color about both what's exciting for you in that market and the rationale for the softer comps that you're implying later this year.

Samuel McKinney: Yes, that all makes sense. Next one, you called for mid-teens revenue growth in specialty energy this year, but that's off the back of a 20+% increase in Q1. If you could just give us a little more color about both what's exciting for you in that market and the rationale for the softer comps that you're implying later this year.

Speaker #11: So if you could just give us a little more color about both what's exciting for you in that market and the rationale for the softer comps that you're implying later this year.

Speaker #1: Sure. With specialty energy, as you said, we delivered strong performance in the first quarter. And as you said, we are saying mid-teens for the full year.

Kimberly Fields: Sure. With specialty energy, as you said, we delivered strong performance in Q1. As you said, we are saying mid-teens for the full year. You know, as you look at that growth, it's gonna be somewhat lumpy as the orders come in in an intermittent, kind of, chunky fashion. It's being driven by really two core areas. The first being the land-based gas turbines. You know, demand is continuing to be driven there based on data centers and energy security. That's really going to tap into our high-performance nickel alloys, where, as I just mentioned, you know, we're very well-positioned with our capabilities and differentiation. The second is the nuclear. We just talked about that. We've got the Cameco agreement that I talked about in my prepared remarks.

Speaker #1: As you look at that growth, it's going to be somewhat lumpy as the orders come in and an intermittent kind of chunky fashion. But it's being driven by really two core areas.

Speaker #1: The first being the land-based gas turbines, demand is continuing to be driven there based on data centers and energy security. And that's really going to tap into our high-performance nickel alloys.

Kimberly Fields: That's really going to tap into our high-performance nickel alloys, where, as I just mentioned we're very well-positioned with our capabilities and differentiation. The second is the nuclear. We just talked about that. We've got the Cameco agreement that I talked about in my prepared remarks.

Speaker #1: Whereas I just mentioned, we're very well positioned with our capabilities and differentiation. The second is in nuclear. We just talked about that. We've got the Cameco agreement that I talked about in my prepared remarks.

Speaker #1: We're seeing strong demand from that as well. Both with life extensions and refueling cycles. And that's really focused around zirconium, nickel, and hafnium. So as we think about it, it's going to be somewhat lumpy.

Kimberly Fields: We're seeing strong demand from that as well, both with life extensions and refueling cycles, and that's really focused around zirconium, nickel, and hafnium. As we think about it's going to be somewhat lumpy. We do see growth as we go through the year, but we had a great Q1. Again, those orders come in in a larger size and they also deliver in larger chunks.

Speaker #1: We do see growth as we go through the year, but we had a great first quarter. But again, those orders come in in a larger size and they also deliver in larger chunks.

Speaker #11: Okay. Thanks, Kim.

Samuel McKinney: Okay. Thanks, Kim.

Kimberly Fields: Sure.

Speaker #12: Sure.

Speaker #1: We have reached the end of the question and answer session. I will now turn the call back to Kim Fields for closing remarks.

Operator: We have reached the end of the question-and-answer session. I will now turn the call back to Kim Fields for closing remarks.

Speaker #12: All right. Thanks, everyone, for your time and for your continued interest in ATI. Just to wrap up today, our message is clear. ATI is executing at a high level in a strong demand market.

Kimberly Fields: All right. Thanks everyone for your time and for your continued interest in ATI. Just to wrap up today, our message is clear: ATI is executing at a high level in a strong demand market. We're expanding margins, we're generating meaningful free cash flow, and we're continuing to strengthen our position in the most attractive aerospace and defense markets. Our teams are focused on delivering for our customers, capturing the opportunities in front of us, and driving long-term value for shareholders. We look forward to updating you next quarter. Thank you.

Speaker #12: We're expanding margins. We're generating meaningful free cash flow. And we're continuing to strengthen our position in the most attractive aerospace and defense markets. Our teams are focused on delivering for our customers and capturing the opportunities in front of us and driving long-term value for shareholders.

Speaker #12: We look forward to updating you next quarter. Thank you.

Kimberly Fields: We look forward to updating you next quarter. Thank you.

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

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