Q3 2026 ATI Inc Earnings Call

October 29, 2026

Operator: Hello, everyone. Thank you for joining us, and welcome to ATI's Q3 2026 Results Conference 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 Rob Rengel, Vice President of Investor Relations. Please go ahead.

Speaker #1: Hello everyone. Thank you for joining us, and welcome to ATI Q3 2026 results conference call. After today's prepared remarks, we will host a Q&A session.

Speaker #1: If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. I will now hand the conference over to Rob Rengel, Vice President of Investor Relations, please go ahead.

Rob Rengel: Good morning, and welcome to ATI's Q3 2026 Earnings Call. Today's discussion is being webcast at atimaterials.com. Joining me are Kim Fields, Board Chair, President, and CEO, and Rob Foster, Senior Vice President and CFO. Before beginning 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. They can also be found on our website. As a reminder, all forward-looking statements are subject to various assumptions and caveats. These are noted in the earnings release and presentation. After our prepared remarks, we will open the line for questions. Now, I will turn the call over to Kim.

Speaker #2: Good morning, and welcome to ATI's Q3 2026 earnings call. Today's discussion is being webcast at ati-materials.com. Joining me are Kim Fields, Board Chair, President, and CEO; and Rob Foster, Senior Vice President and CFO.

Speaker #2: Before beginning 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.

Speaker #2: They can also be found on our website. As a reminder, all forward-looking statements are subject to various assumptions and caveats. These are noted in the earnings release and presentation.

Speaker #2: After our prepared remarks, we'll open the line for questions. Now, I'll turn the call over to Kim.

Kim Fields: Thank you, Rob. Good morning, everyone, and thank you for joining us. ATI delivered another strong quarter, exceeding the high end of our adjusted EBITDA guidance by $13 million. Today, we are raising our adjusted EBITDA guidance by $35 million for the year, which includes an improved Q4 outlook. This is the third increase this year following last quarter's $125 million increase. Our continued outperformance reflects the growing contribution of the structural improvements we have made across the business. Demand remains strong across all of our key end markets, with sales growth both year-over-year and sequentially this quarter. Slide 4 highlights our key results. Revenue increased 26% year-over-year to $1.4 billion, up 13% sequentially. Within that increase, jet engine revenue grew 39% year-over-year and 19% sequentially, driven by higher production of next-generation engines and continued demand for our differentiated products.

Kimberly Fields: Thank you, Rob. Good morning, everyone, and thank you for joining us. ATI delivered another strong quarter, exceeding the high end of our adjusted EBITDA guidance by $13 million. Today, we are raising our adjusted EBITDA guidance by $35 million for the year, which includes an improved Q4 outlook. This is the third increase this year following last quarter's $125 million increase. Our continued outperformance reflects the growing contribution of the structural improvements we have made across the business. Demand remains strong across all of our key end markets, with sales growth both year-over-year and sequentially this quarter. Slide four highlights our key results. Revenue increased 26% year-over-year to $1.4 billion, up 13% sequentially. Within that increase, jet engine revenue grew 39% year-over-year and 19% sequentially, driven by higher production of next-generation engines and continued demand for our differentiated products.

Speaker #1: Thank you, Rob. Good morning, everyone, and thank you for joining us. ATI delivered another strong quarter, exceeding the high end of our adjusted EBITDA guidance by 13 million dollars.

Speaker #1: Today we are raising our adjusted EBITDA guidance by 35 million dollars for the year, which includes an improved Q4 outlook. This is the third increase this year following last quarter's 125 million dollar increase.

Speaker #1: Our continued outperformance reflects the growing contribution of the structural improvements we've made across the business. Demand remains strong across all of our key end markets, with sales growth both year over year and sequentially this quarter.

Speaker #1: Slide 4 highlights our key results. Revenue increased 26% year over year to 1.4 billion dollars, up 13% sequentially. Within that increase, jet engine revenue grew 39% year over year and 19% sequentially, driven by higher production of next-generation engines and continued demand for our differentiated products.

Kim Fields: Adjusted EBITDA was $328 million, up 46% year-over-year. This was our highest quarterly result since 2007. Adjusted EBITDA margin expanded 300 basis points to 23%. Adjusted EPS increased 72% to $1.46. Backlog was near an all-time record at $4.3 billion, up 20% from a year ago. Combined with extended lead times for our most differentiated products, backlog provides visibility and confidence in our outlook. Adjusted free cash flow was $80 million in the quarter, bringing year-to-date cash flow to $223 million, up $73 million or 49% from the same period last year. For the second quarter in a row, AA&S delivered record performance with EBITDA margin of 25.8%, up 850 basis points from a year ago. This durable performance reflects a full quarter of improved contracts and a richer A&D mix.

Kimberly Fields: Adjusted EBITDA was $328 million, up 46% year-over-year. This was our highest quarterly result since 2007. Adjusted EBITDA margin expanded 300 basis points to 23%. Adjusted EPS increased 72% to $1.46. Backlog was near an all-time record at $4.3 billion, up 20% from a year ago. Combined with extended lead times for our most differentiated products, backlog provides visibility and confidence in our outlook. Adjusted free cash flow was $80 million in the quarter, bringing year-to-date cash flow to $223 million, up $73 million or 49% from the same period last year. For the second quarter in a row, AA&S delivered record performance with EBITDA margin of 25.8%, up 850 basis points from a year ago. This durable performance reflects a full quarter of improved contracts and a richer A&D mix.

Speaker #1: Adjusted EBITDA was 328 million dollars, up 46% year over year. This was our highest quarterly result since 2007. Adjusted EBITDA margin expanded 300 basis points to 23%, adjusted EPS increased 72% to $1.46.

Speaker #1: Backlog was near an all-time record at 4.3 billion dollars, up 20% from a year ago. Combined with extended lead times for our most differentiated products, backlog provides visibility and confidence in our outlook.

Speaker #1: Adjusted free cash flow was 80 million dollars in the quarter, bringing year-to-date cash flow to 223 million dollars, up 73 million dollars or 49% from the same period last year.

Speaker #1: For the Q2 in a row, AA&S delivered record performance with EBITDA margin of 25.8%, up 850 basis points from a year ago. This durable performance reflects a full quarter of improved contracts and a richer A&D mix.

Kim Fields: The segment's jet engine sales increased 45% sequentially, reflecting the benefit of ATI's interconnected jet engine flow path. AA&S's performance reflects the transformation of the business. We exited lower-value commodity stainless steel products and applied 80-20 to focus resources on higher-value aerospace, defense, and Specialty Energy products. Aerospace and defense now accounts for approximately 45% of AA&S sales, compared with 18% in 2021. Along with long-term agreements at improved pricing, these changes have created a more durable earnings profile and position AA&S for profitable growth. Turning to slide 5. HPMC sales grew approximately 20% year-over-year, supported by strong demand for nickel and titanium. Q3 segment margin was 23.2%. At the beginning of this year, HPMC began ramping production of a new alloy following a contract win. This is the sixth of seven advanced alloys used in the hot section of a jet engine.

Kimberly Fields: The segment's jet engine sales increased 45% sequentially, reflecting the benefit of ATI's interconnected jet engine flow path. AA&S's performance reflects the transformation of the business. We exited lower-value commodity stainless steel products and applied 80-20 to focus resources on higher-value aerospace, defense, and Specialty Energy products. Aerospace and defense now accounts for approximately 45% of AA&S sales, compared with 18% in 2021. Along with long-term agreements at improved pricing, these changes have created a more durable earnings profile and position AA&S for profitable growth. Turning to slide five. HPMC sales grew approximately 20% year-over-year, supported by strong demand for nickel and titanium. Q3 segment margin was 23.2%. At the beginning of this year, HPMC began ramping production of a new alloy following a contract win. This is the sixth of seven advanced alloys used in the hot section of a jet engine.

Speaker #1: The segments jet engine sales increased 45% sequentially, reflecting the benefit of ATI's interconnected jet engine flow path. AA&S's performance reflects the transformation of the business.

Speaker #1: We exited lower-value commodity stainless steel products and applied 80/20 to focus resources on higher-value aerospace, defense, and specialty energy products. Aerospace and defense now accounts for approximately 45% of AA&S sales, compared with 18% in 2021.

Speaker #1: Along with long-term agreements and improved pricing, these changes have created a more durable earnings profile and positioned AA&S for profitable growth. Turning to slide 5, HBMC sales grew approximately 20% year over year, supported by strong demand for nickel and titanium.

Speaker #1: Q3 segment margin was 23.2%. At the beginning of this year, HBMC began ramping production of a new alloy following a contract win. This is the sixth of seven advanced alloys used in the hot section of a jet engine.

Kim Fields: We qualified the alloy and moved it into production in just 9 months. A strong example of the technical expertise that helps us win business and expand our share. ATI is now one of only two producers worldwide making this alloy. The additional cost from the production ramp reduced HPMC's Q3 margin by approximately 200 basis points versus our plan. We have made meaningful progress through the ramp, and we expect the remaining impact to be behind us by year-end. This is a near-term cost of bringing a valuable new product into production. In return, this alloy expands our content on next-generation engines and positions HPMC for meaningful growth and improved profitability over time. Now on slide 6. Based on our year-to-date performance and strong backlog, we are raising our full-year adjusted EBITDA and adjusted EPS outlook.

Kimberly Fields: We qualified the alloy and moved it into production in just nine months. A strong example of the technical expertise that helps us win business and expand our share. ATI is now one of only two producers worldwide making this alloy. The additional cost from the production ramp reduced HPMC's Q3 margin by approximately 200 basis points versus our plan. We have made meaningful progress through the ramp, and we expect the remaining impact to be behind us by year-end. This is a near-term cost of bringing a valuable new product into production. In return, this alloy expands our content on next-generation engines and positions HPMC for meaningful growth and improved profitability over time. Now on slide six. Based on our year-to-date performance and strong backlog, we are raising our full-year adjusted EBITDA and adjusted EPS outlook.

Speaker #1: We qualified the alloy and moved it into production in just 9 months. A strong example of the technical expertise that helps us win business and expand our share.

Speaker #1: ATI is now one of only two producers worldwide making this alloy. The additional cost from the production ramp reduced HBMC's Q3 margin by approximately 200 basis points versus our plan.

Speaker #1: We've made meaningful progress through the ramp, and we expect the remaining impact to be behind us by year-end. This is a near-term cost of bringing a valuable new product into production.

Speaker #1: In return, this alloy expands our content on next-generation engines and positions HBMC for meaningful growth and improved profitability over time. Now on slide 6, based on our year-to-date performance and strong backlog, we are raising our full-year adjusted EBITDA and adjusted EPS outlook.

Kim Fields: We now expect full-year adjusted EBITDA of $1.19 billion to $1.2 billion, with a midpoint of $1.195 billion. That is a $35 million increase from our prior outlook and represents 39% full-year adjusted EBITDA growth from 2025. The higher outlook reflects continued strength in AA&S and stronger Q4 profit expectations in both segments. AA&S is benefiting from durable contract pricing and a stronger aerospace and defense mix. We are also seeing improved pricing for differentiated hafnium and zirconium products. HPMC is expected to improve sequentially as production efficiencies increase and the new alloys production process matures. We continue to expect full-year consolidated adjusted EBITDA margins in the low 20% range and consolidated incremental margins of approximately 50%. The Q4 will be our strongest quarter of 2026 for sales and profit. Our outlook reflects committed customer schedules, contracted pricing, and planned shipment timing. Turning to slide 7.

Kimberly Fields: We now expect full-year adjusted EBITDA of $1.19 billion to $1.2 billion, with a midpoint of $1.195 billion. That is a $35 million increase from our prior outlook and represents 39% full-year adjusted EBITDA growth from 2025. The higher outlook reflects continued strength in AA&S and stronger Q4 profit expectations in both segments. AA&S is benefiting from durable contract pricing and a stronger aerospace and defense mix. We are also seeing improved pricing for differentiated hafnium and zirconium products. HPMC is expected to improve sequentially as production efficiencies increase and the new alloys production process matures. We continue to expect full-year consolidated adjusted EBITDA margins in the low 20% range and consolidated incremental margins of approximately 50%. The Q4 will be our strongest quarter of 2026 for sales and profit. Our outlook reflects committed customer schedules, contracted pricing, and planned shipment timing. Turning to slide seven.

Speaker #1: We now expect full-year adjusted EBITDA of 1.19 to 1.2 billion dollars, with a midpoint of 1 billion 195 million dollars. That is a 35 million dollar increase from our prior outlook and represents 39% full-year adjusted EBITDA growth from 2025.

Speaker #1: The higher outlook reflects continued strength in AA&S and stronger Q4 profit expectations in both segments. AA&S is benefiting from durable contract pricing and a stronger aerospace and defense mix.

Speaker #1: We are also seeing improved pricing for differentiated hapnium and zirconium products. HBMC is expected to improve sequentially as production efficiencies increase and the new alloys production process matures.

Speaker #1: We continue to expect full-year consolidated adjusted EBITDA margins in the low 20% range and consolidated incremental margins of approximately 50%. The Q4 will be our strongest quarter of 2026 for sales and profit.

Speaker #1: Our outlook reflects committed customer schedules, contracted pricing, and planned shipment timing. Turning to slide 7, elevation is our operating model for converting strong demand, improved commercial terms, and targeted investments into higher earnings, margins, and cash flow.

Kim Fields: elevATIon is our operating model for converting strong demand, improved commercial terms, and targeted investments into higher earnings, margins, and cash flow. It helps us increase output from the assets we already own and apply expertise across ATI. One recent example is a project to recover and reuse a critical raw material that has become increasingly difficult to source. Historically, this material could not be reclaimed and reused. Our team brought together ATI's melting and manufacturing capabilities, metallurgical expertise, and processing assets to develop a solution. We are now recovering enough material to support most of our ongoing operating needs. That lowers cost and helps secure supply for our customers. We expect this project to generate several million dollars in annual savings beginning in 2027. This is the kind of benefit elevATIon enables, combining capabilities across ATI to solve emerging industry challenges and improve our performance.

Kimberly Fields: elevATIon is our operating model for converting strong demand, improved commercial terms, and targeted investments into higher earnings, margins, and cash flow. It helps us increase output from the assets we already own and apply expertise across ATI. One recent example is a project to recover and reuse a critical raw material that has become increasingly difficult to source. Historically, this material could not be reclaimed and reused. Our team brought together ATI's melting and manufacturing capabilities, metallurgical expertise, and processing assets to develop a solution. We are now recovering enough material to support most of our ongoing operating needs. That lowers cost and helps secure supply for our customers. We expect this project to generate several million dollars in annual savings beginning in 2027. This is the kind of benefit elevATIon enables, combining capabilities across ATI to solve emerging industry challenges and improve our performance.

Speaker #1: It helps us increase output from the assets we already own and apply expertise across ATI. One recent example is a project to recover and reuse a critical raw material that has become increasingly difficult to source.

Speaker #1: Historically, this material could not be reclaimed and reused. Our team brought together ATI's melting and manufacturing capabilities, metallurgical expertise, and processing assets to develop a solution.

Speaker #1: We are now recovering enough material to support most of our ongoing operating needs. That lowers costs and helps secure supply for our customers. We expect this project to generate several million dollars in annual savings beginning in 2027.

Speaker #1: This is the kind of benefit elevation enables. Combining capabilities across ATI to solve emerging industry challenges and improve our performance. Slide 8 gives a summary of our core markets.

Kim Fields: Slide 8 gives a summary of our core markets. All four key end markets show strong growth, both year-over-year and sequentially. These customers need qualified capacity, differentiated technology, and certainty of supply. ATI has built durable advantages in each of these areas through proprietary materials, specialized manufacturing processes, and complex customer qualifications. Those advantages support stronger commercial terms, long-term agreements, and attractive opportunities to invest in additional capabilities and capacity. Jet engines remains ATI's largest and most important growth market. Revenue increased 39% year-over-year and 19% sequentially, reflecting strength in both OEM production and aftermarket. There has been some discussion about whether retirements of older aircraft could pressure MRO demand. ATI serves both demand streams. The disc forgings we make go into new engines and are also used as replacement parts in MRO, with comparable margins across both.

Kimberly Fields: Slide eight gives a summary of our core markets. All four key end markets show strong growth, both year-over-year and sequentially. These customers need qualified capacity, differentiated technology, and certainty of supply. ATI has built durable advantages in each of these areas through proprietary materials, specialized manufacturing processes, and complex customer qualifications. Those advantages support stronger commercial terms, long-term agreements, and attractive opportunities to invest in additional capabilities and capacity. Jet engines remains ATI's largest and most important growth market. Revenue increased 39% year-over-year and 19% sequentially, reflecting strength in both OEM production and aftermarket. There has been some discussion about whether retirements of older aircraft could pressure MRO demand. ATI serves both demand streams. The disc forgings we make go into new engines and are also used as replacement parts in MRO, with comparable margins across both.

Speaker #1: All four key end markets show strong growth both year over year and sequentially. These customers need qualified capacity, differentiated technology, and certainty of supply.

Speaker #1: ATI has built durable advantages in each of these areas through proprietary materials, specialized manufacturing processes, and complex customer qualifications. Those advantages support stronger commercial terms, long-term agreements, and attractive opportunities to invest in additional capabilities and capacity.

Speaker #1: Jet engines remains ATI's largest and most important growth market. Revenue increased 39% year over year and 19% sequentially, reflecting strength in both OEM production and aftermarket.

Speaker #1: There has been some discussion about whether retirements of older aircraft could pressure MRO demand. ATI serves both demand streams. The disc forgings we make go into new engines and are also used as replacement parts in MRO with comparable margins across both.

Kim Fields: The fleet transition from legacy engines to next-gen engines creates a significant growth opportunity for ATI. Next-generation engines use our differentiated materials to operate at higher temperatures and pressures, and our content on these platforms is more than double our content on legacy engines. We are seeing that opportunity in our results. Demand for our jet engine products continues to strengthen. We now expect full-year jet engine revenue growth in the low to mid 20% range, up from our prior expectation of high teens growth. Just last week, a key engine OEM told us that if we doubled our current production for them today, they would take it all. We hear that kind of demand signal consistently. In airframe, revenue increased 11% year-over-year and 14% sequentially. At the beginning of the year, we expected airframe demand to build as the year progressed, with stronger growth in the H2.

Kimberly Fields: The fleet transition from legacy engines to next-gen engines creates a significant growth opportunity for ATI. Next-generation engines use our differentiated materials to operate at higher temperatures and pressures, and our content on these platforms is more than double our content on legacy engines. We are seeing that opportunity in our results. Demand for our jet engine products continues to strengthen. We now expect full-year jet engine revenue growth in the low to mid 20% range, up from our prior expectation of high teens growth. Just last week, a key engine OEM told us that if we doubled our current production for them today, they would take it all. We hear that kind of demand signal consistently. In airframe, revenue increased 11% year-over-year and 14% sequentially. At the beginning of the year, we expected airframe demand to build as the year progressed, with stronger growth in the H2.

Speaker #1: The fleet transition from legacy engines to next-gen engines creates a significant growth opportunity for ATI. Next-generation engines use our differentiated materials to operate at higher temperatures and pressures, and our content on these platforms is more than double our content on legacy engines.

Speaker #1: We're seeing that opportunity in our results. Demand for our jet engine products continues to strengthen. We now expect full-year jet engine revenue growth in the low to mid-20% range up from our prior expectation of high teens growth.

Speaker #1: Just last week, a key engine OEM told us that if we doubled, our current production for them today they would take it all. We hear that kind of demand signal consistently.

Speaker #1: In Airframe, revenue increased 11% year over year and 14% sequentially. At the beginning of the year, we expected Airframe demand to build as the year progressed, with stronger growth in the second half.

Kim Fields: That is exactly how the year is unfolding. We saw a clear uptick in demand in the Q3, and momentum is building into the Q4. Our committed backlog and strong orders for Q4 support our confidence in continued growth through year-end. We remain confident in our full-year outlook for mid to high single-digit airframe revenue growth. Defense delivered another strong quarter and remains one of ATI's most important long-term growth opportunities. Revenue increased 6% year-over-year and 6% sequentially, building on the 36% year-over-year growth of the Q2. This was our highest-ever revenue in defense. Missile demand is strengthening, with multiple inquiries for our titanium, nickel, and niobium products to support strategic platforms, including Tomahawk, THAAD, and PAC-3. We continue to expect high teens defense revenue growth for the full year.

Kimberly Fields: That is exactly how the year is unfolding. We saw a clear uptick in demand in the Q3, and momentum is building into the Q4. Our committed backlog and strong orders for Q4 support our confidence in continued growth through year-end. We remain confident in our full-year outlook for mid to high single-digit airframe revenue growth. Defense delivered another strong quarter and remains one of ATI's most important long-term growth opportunities. Revenue increased 6% year-over-year and 6% sequentially, building on the 36% year-over-year growth of the Q2. This was our highest-ever revenue in defense. Missile demand is strengthening, with multiple inquiries for our titanium, nickel, and niobium products to support strategic platforms, including Tomahawk, THAAD, and PAC-3. We continue to expect high teens defense revenue growth for the full year.

Speaker #1: That is exactly how the year is unfolding. We saw a clear uptick in demand in the Q3, and momentum is building into the fourth.

Speaker #1: Our committed backlog and strong orders for Q4 support our confidence in continued growth through year-end. We remain confident in our full-year outlook for mid to high single-digit Airframe revenue growth.

Speaker #1: Defense delivered another strong quarter and remains one of ATI's most important long-term growth opportunities. Revenue increased 6% year over year and 6% sequentially. Building on the 36% year over year growth of the second quarter.

Speaker #1: This was our highest ever revenue in defense. Missile demand is strengthening, with multiple inquiries for our titanium, nickel, and niobium products to support strategic platforms, including Tomahawk, BAD, and PAC-3.

Speaker #1: We continue to expect high teens defense revenue growth for the full year. Specialty energy revenue increased 49% year over year and 36% sequentially, as we shifted production to meet customer needs.

Kim Fields: Specialty Energy revenue increased 49% year-over-year and 36% sequentially as we shifted production to meet customer needs. As we discussed last quarter, our flexible assets allow us to balance production between defense and Specialty Energy demand. Specialty Energy is largely driven by commercial nuclear demand, which continues to outpace supply. Demand for industrial gas turbines also remains strong. We continue to expect mid-teen Specialty Energy revenue growth for the full year. Overall, demand remains strong across all our markets, and our differentiated positions are translating into growth. ATI delivered another strong quarter, and we have raised our full-year outlook for the third time this year. We expect the Q4 to be even stronger. Rob will walk through the financial results and our updated outlook.

Kimberly Fields: Specialty Energy revenue increased 49% year-over-year and 36% sequentially as we shifted production to meet customer needs. As we discussed last quarter, our flexible assets allow us to balance production between defense and Specialty Energy demand. Specialty Energy is largely driven by commercial nuclear demand, which continues to outpace supply. Demand for industrial gas turbines also remains strong. We continue to expect mid-teen Specialty Energy revenue growth for the full year. Overall, demand remains strong across all our markets, and our differentiated positions are translating into growth. ATI delivered another strong quarter, and we have raised our full-year outlook for the third time this year. We expect the Q4 to be even stronger. Rob will walk through the financial results and our updated outlook.

Speaker #1: As we discussed last quarter, our flexible assets allow us to balance production between defense and specialty energy demand. Specialty energy is largely driven by commercial nuclear demand, which continues to outpace supply.

Speaker #1: Demand for industrial gas turbines also remains strong. We continue to expect mid-teens specialty energy revenue growth for the full year. Overall, demand remains strong across all our markets, and our differentiated positions are translating into growth.

Speaker #1: ATI delivered another strong quarter, and we've raised our full-year outlook for the third time this year. We expect the Q4 to be even stronger.

Speaker #1: Rob will walk through the financial results and our updated outlook.

Rob Foster: Thanks, Kim. I will start with the Q3 performance, dig into segment results, and close with the supporting details for our updated guidance. As shown on slide 9, we delivered strong overall results. Adjusted EBITDA exceeded the high end of our guidance. We also expanded consolidated margins and generated solid cash flow. These results reflect the strength of ATI's differentiated portfolio and the earnings power of our business model. Q3 revenue was $1.4 billion, up 26% year-over-year. Aerospace and Defense led the revenue growth and accounted for nearly 70% of our total revenue in the quarter. Within A&D, jet engine sales increased significantly, reflecting the next generation in production ramp, supported by high-temperature nickel superalloys and favorable pricing. Q3 adjusted EBITDA was $328 million, up 46% year-over-year.

Speaker #2: Thanks, Kim. I'll start with the Q3 performance. Dig into segment results, and close with a supporting details for our updated guidance. As shown on slide 9, we delivered strong overall results.

Speaker #2: Adjusted EBITDA exceeded the high end of our guidance. We also expanded consolidated margins and generated solid cash flow. These results reflect the strength of ATI's differentiated portfolio and the earnings power of our business model.

Speaker #2: Q3 revenue was $1.4 billion. Up 26% year over year. Aerospace and defense led the revenue growth and accounted for nearly 70% of our total revenue in the quarter.

Speaker #2: Within A&D, jet engine sales increased significantly, reflecting the next-generation production ramp, supported by a high-temperature nickel superalloys and favorable pricing. Q3 adjusted EBITDA was $328 million.

Speaker #2: Up 46% year over year. This was $18 million above the midpoint and $13 million above the high end of our guidance, reflecting stronger pricing and mix in our A&S segment.

Rob Foster: This was $18 million above the midpoint and $13 million above the high end of our guidance, reflecting stronger pricing and mix in our AA&S segment. The step change we are seeing in AA&S margins was partially supported by the Naval Nuclear contract award and strength in Specialty Energy, contracted revenue streams that are durable and sustainable. Q3 consolidated adjusted EBITDA margin was 23%, up 300 basis points year-over-year. Year-to-date adjusted free cash flow was $223 million, an improvement of $73 million from the prior year period. Q3 adjusted free cash flow was $80 million, reflecting strong cash generation while continuing to fund our growth investments. We are achieving our objective of generating positive adjusted free cash flow in every quarter this year. Managed working capital was 32.9% of sales at quarter end, 140 basis points improvement sequentially. Capital expenditures were $93 million in the quarter.

Speaker #2: The step change we are seeing in A and S margins was partially supported by the naval nuclear contract award and strengthened specialty energy. Contracted revenue streams that are durable and sustainable.

Speaker #2: Q3 consolidated adjusted EBITDA margin was 23%. Up 300 basis points year over year. Year-to-date adjusted free cash flow was $223 million. An improvement of 73 million from the prior year period.

Speaker #2: Q3 adjusted free cash flow was $80 million. Reflecting strong cash generation while continuing to fund our growth investments. We're achieving our objective of generating positive adjusted free cash flow in every quarter this year.

Speaker #2: Managed working capital was $32.9% of sales at quarter end. $140 basis points improvement sequentially. Capital expenditures were $93 million in the quarter. Through the Q3, year-to-date, total capex was $217 million.

Rob Foster: Through the Q3 year-to-date, total CapEx was $217 million. Customer-funded capital was $48 million over the same period. All key growth projects remain on schedule and on budget. Now on slide 10, I will review segment performance. AA&S sales increased 34% year-over-year to $702 million, driven by several factors, including stronger demand, price, and mix, primarily in Aerospace and Defense and Specialty Energy. Segment margin expanded by 850 basis points to a record 25.8%, reflecting stronger pricing and volumes and a more favorable mix. On pricing, we continue to see a favorable pricing environment for our hafnium and zirconium products. Our AA&S segment once again led the outperformance in the quarter. AA&S is fundamentally a different business today. Our results over the past two quarters are a strong proof point of our progress.

Speaker #2: Customer-funded capital was $48 million over the same period. All key growth projects remain on schedule and on budget. Now on slide 10, I'll review segment performance.

Speaker #2: A and S sales increased 34% year over year to $702 million driven by several factors, including stronger demand, price, and mix, primarily in aerospace and defense and specialty energy.

Speaker #2: Segment margin expanded by 850 basis points to a record 25.8%, reflecting stronger pricing and volumes and a more favorable mix. On pricing, we continue to see a favorable pricing environment for our half humans zirconium products.

Speaker #2: Our A and S segment once again led the outperformance in the quarter. A and S is fundamentally at different business today. Our results over the past quarters are a strong proof point of our progress.

Rob Foster: The results reflect the improved earnings profile of AA&S, supported by long-term contracts, stronger pricing, and a favorable mix of Aerospace and Defense sales. HPMC sales increased 20% year-over-year to $721 million, supported by strong demand for our differentiated jet engine materials. Segment margin was 23.2%, impacted by the cost associated with ramping commercial production of our sixth nickel-based superalloy. The impact was about 200 basis points in the quarter versus our target. We view these near-term costs as a worthwhile investment in an alloy that will support next-generation engine platforms for decades. We made meaningful progress through the learning curve for our new superalloy in the Q3, with only a modest residual impact anticipated in the Q4. Our confidence in HPMC's long-term margin potential remains unchanged. Moving to slide 11 for our forward-looking assumptions.

Speaker #2: The results reflect the improved earnings profile of A and S, supported by long-term contracts, stronger pricing, and a favorable mix of aerospace and defense sales.

Speaker #2: HPMC sales increased 20% year over year to $721 million. Supported by strong demand for our differentiated jet engine materials. Segment margin was 23.2%, impacted by the cost associated with ramping commercial production of our six nickel-based superalloy.

Speaker #2: The impact was about 200 basis points in the quarter versus our target. We view these near-term costs as a worthwhile investment in an alloy that will support next-generation engine platforms for decades.

Speaker #2: We made meaningful progress through the learning curve for our new superalloy in the Q3, with only a modest residual impact anticipated in the Q4.

Speaker #2: Our confidence in HPMC's long-term margin potential remains unchanged. Moving to slide 11, where our forward-looking assumptions. In the Q4 of 2026, we anticipate adjusted EBITDA of $345 million to $355 million translating to an adjusted EPS of $1.51 to $1.57.

Rob Foster: In the Q4 2026, we anticipate adjusted EBITDA of $345 million to $355 million, translating to an adjusted EPS of $1.51 to $1.57. At the midpoint, adjusted EBITDA increases 51% compared with the Q4 2025 and 7% sequentially. We anticipate consolidated adjusted EBITDA margin to expand in the Q4 compared to the Q3, with sequential profit improvement in both segments. In AA&S, we expect Q4 margins to remain in the mid-20% range, supported by durable contracted pricing and mix, especially in Aerospace and Defense. In HPMC, we see margin improvement compared to the Q3 level as we anticipate sequential cost improvements related to the production efficiencies I discussed. Turning to slide 12. Our full-year outlook reflects the Q3 outperformance led by AA&S and stronger Q4 profit expectations in both segments.

Speaker #2: At the midpoint, adjusted EBITDA increases 51% compared with the Q4 of 2025 and 7% sequentially. We anticipate consolidated adjusted EBITDA margin to expand in the Q4 compared to the Q3, with sequential profit improvement in both segments.

Speaker #2: In A and S, we expect Q4 margin to remain in the mid-20% range supported by durable contracted pricing and mix especially in aerospace and defense.

Speaker #2: In HPMC, we see margin improvement compared to the Q3 level as we anticipate sequential cost improvements related to the production efficiencies I discussed. Turning to slide 12, our full-year outlook reflects the Q3 outperformance led by A and S and stronger Q4 profit expectations in both segments.

Rob Foster: We see stronger volume overall and a more favorable mix, mainly from jet engines. We are raising our full-year adjusted EBITDA guidance to a range of $1 billion to $1.2 billion. The midpoint of the range represents a 39% increase over prior year and a $35 million increase versus our prior full-year EBITDA guidance. Keep in mind that this raise follows the $125 million raise to our full-year outlook from just a quarter ago. This outlook translates to a full-year adjusted EPS range of $5.17 to $5.23. We continue to see full-year consolidated adjusted EBITDA margins in the low 20% range, and we continue to expect full-year consolidated incremental margins in the range of 50% year-over-year. We see the Q4 as our strongest quarter of 2026 for both sales and profit. To be clear, we are converting durable demand into margin expansion and cash generation.

Speaker #2: We see stronger volume overall and a more favorable mix, mainly from jet engines. We are raising our full-year adjusted EBITDA guidance to a range of $1 billion, $190 million to $1 billion, $200 million.

Speaker #2: The midpoint of the range represents a 39% increase over prior year and a 35 million increase versus our prior full-year EBITDA guidance. Keep in mind that this raise follows the $125 million raise to our full-year outlook from just a quarter ago.

Speaker #2: This outlook translates to a full-year adjusted EPS range of $5.17 to $5.23. We continue to see full-year consolidated adjusted EBITDA margins in the low 20% range.

Speaker #2: And we continue to expect full-year consolidated incremental margins in the range of 50% year over year. We see the Q4 as our strongest quarter of 2026 for both sales and profit.

Speaker #2: To be clear, we are converting durable demand into margin expansion and cash generation. At the segment level, we now see A and S full-year EBITDA margin in the low to mid-20% range and increase versus last quarter.

Rob Foster: At the segment level, we now see AA&S full-year EBITDA margin in the low to mid 20% range, an increase versus last quarter. The uplift is supported by stronger volume with mix shifting toward aerospace and defense, as we've discussed. We continue to see full-year EBITDA margin for HPMC in the mid 20% range, and we remain as confident as ever in the upside potential for HPMC's future margin. Turning to adjusted free cash flow, we are maintaining the midpoint at $575 million, with a range of $550 million to $600 million. The midpoint is $195 million higher than the 2025 free cash flow, a 51% increase year-over-year. In this period of growth, our inventory levels will be temporarily elevated, given the new assets we are bringing on to support capacity. We expect inventories to normalize over time.

Speaker #2: The uplift is supported by stronger volume with mix shifting toward aerospace and defense as we've discussed. We continue to see full-year EBITDA margin for HPMC in the mid-20% range and we remain as confident as ever in the upside potential for HPMC's future margin.

Speaker #2: Turning to adjusted free cash flow, we are maintaining the midpoint at $575 million with a range of $550 to $600 million. The midpoint is $195 million higher than the 2025 free cash flow, a 51% increase year over year.

Speaker #2: In this period of growth, our inventory levels will be temporarily elevated given the new assets we are bringing on to support capacity. We expect inventories to normalize over time.

Rob Foster: Let me emphasize, our technical expertise allows us to ramp more efficiently than others. Already in the Q4, we are seeing improved inventory velocity as we work up the learning curve with our new alloys and facilities. We also see strong profit conversion in the Q4. Our capital deployment strategy is unchanged. Our gross CapEx range remains consistent with prior guidance at $280 million to $300 million. Customer-funded CapEx of $55 million to $65 million will be a partial offset. Share repurchases remain a priority for deploying incremental free cash flow. We view them as the most efficient way to return capital to shareholders. As of the end of the Q3, we deployed $70 million for repurchases, with $425 million remaining under our current repurchase authorization. Overall, we delivered a strong Q3 and expect an even better Q4 and full year.

Speaker #2: Let me emphasize, our technical expertise allows us to ramp up more efficiently than others. Already, in Q4, we are seeing improved inventory velocity as we work up the learning curve with our new alloys and facilities.

Speaker #2: We also see strong profit conversion in the Q4. Our capital deployment strategy is unchanged. Our gross capex range remains consistent with prior guidance at $280 to $300 million.

Speaker #2: Customer-funded capex of $55 to $65 million will be a partial offset. Share repurchases remain a priority for deploying incremental free cash flow. We view them as the most efficient way to return capital to shareholders.

Speaker #2: As of the end of the Q3, we deployed $70 million for repurchases with $425 million remaining under our current repurchase authorization. Overall, we delivered a strong Q3 and expect an even better Q4 and full year.

Rob Foster: We look forward to seeing you at Investor Day on 12 November, where we will share how ATI's differentiated capabilities, specialized manufacturing processes, and organic investments position us for sustained profitable growth. Kim, back to you.

Speaker #2: We look forward to seeing you at Investor Day on November 12, where we'll share how ATI's differentiated capabilities, specialized manufacturing processes, and organic investments position us for sustained profitable growth.

Speaker #2: Kim, back to you.

Kim Fields: Thanks, Rob. ATI delivered another strong quarter. We raised our full-year outlook for the third time this year, and we expect an even stronger Q4. Growth is broad-based, with record AA&S margins and strengthening demand in jet engines and airframe. We are focused on executing against that demand and carrying our momentum into 2027. Now let's open the line for questions.

Kimberly Fields: Thanks, Rob. ATI delivered another strong quarter. We raised our full-year outlook for the third time this year, and we expect an even stronger Q4. Growth is broad-based, with record AA&S margins and strengthening demand in jet engines and airframe. We are focused on executing against that demand and carrying our momentum into 2027. Now let's open the line for questions.

Speaker #1: Thanks, Rob. ATI delivered another strong quarter. We raised our full-year outlook for the third time this year. And we expect an even stronger Q4.

Speaker #1: Growth is broad-based with record AANS margins and strengthening demand in jet engines and airframe. We're focused on executing against that demand and carrying our momentum into 2027.

Speaker #1: Now, let's open the line for questions.

Operator: Thank you. We will now begin the question-and-answer session. Please limit yourself to one question. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, 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 Richard Safran with Seaport Research Partners. Richard, your line is open. Please go ahead.

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

Speaker #3: To withdraw your question, press star 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. Your first question comes from the line of Richard Saffron with Seaport Research Partners.

Speaker #3: Richard, your line is open. Please go ahead.

Richard Safran: Thank you. Good morning. I have a question, and if it is okay, I have a follow-up. This could be for both of you. Kim, optically, there seems to be a bit of a contradiction between what I heard about from your opening remarks and about demand signals, and yet we have a slower-than-expected ramp at Airbus, and we all know Boeing recently just did a reset. I think that destocking is on the minds of a lot of people, and the impact to ATI. Simply put, do you see the potential here for destocking or an OE inventory correction? If no, maybe you could discuss why the difference between what the OEs are saying and what you are saying about demand signals. Thanks.

Speaker #4: Thank you. Good morning. I have a question, and if it's okay, I have a follow-up. But this could be for both of you, but Kim, on optically, there seems to be a bit of a contradiction between what I heard about from your opening remarks and about demand signals.

Speaker #4: And yet we have a slower-than-expected ramp at Airbus and we all know Boeing recently just did a reset. So I think that destocking is on the minds of a lot of people.

Speaker #4: And the impact to ATI. So I mean, simply put, do you see the potential here for destocking or an OE inventory correction? If no, maybe you could discuss why the difference between what the OEs are saying and what you're saying about demand signals.

Speaker #4: Thanks.

Kim Fields: Thanks, Rich. Yes, I have read some of that and heard some of that. From our perspective, we are not seeing any change or impact to our demand or order book, including going into 2027. As you said, from ATI's perspective, we stay very closely aligned with our customers on their schedules and their material needs. We talked earlier in the year, the airframe inventories are largely normalized at this point. Customer orders are very closely aligned right now with their production schedules, and I do not see any signs of any kind of inventory changes that are coming. If I just go back, at the beginning of the year, we talked about this was going to be a story of two halves, and the H1 being relatively flat and then accelerating as we go into the H2, and that is what we are seeing.

Kimberly Fields: Thanks, Rich. Yes, I have read some of that and heard some of that. From our perspective, we are not seeing any change or impact to our demand or order book, including going into 2027. As you said, from ATI's perspective, we stay very closely aligned with our customers on their schedules and their material needs. We talked earlier in the year, the airframe inventories are largely normalized at this point. Customer orders are very closely aligned right now with their production schedules, and I do not see any signs of any kind of inventory changes that are coming. If I just go back, at the beginning of the year, we talked about this was going to be a story of two halves, and the H1 being relatively flat and then accelerating as we go into the H2, and that is what we are seeing.

Speaker #1: Thanks, Rich. Yes, I have read some of that and heard some of that. And from our perspective, we are not seeing any change or impact to our demand or order book including going into 2027.

Speaker #1: And as you said, from ATI's perspective, we stay very closely aligned with our customers on their schedules and their material needs. We've talked earlier in the year.

Speaker #1: The airframe inventories are largely normalized at this point. Customer orders are very closely aligned right now with their production schedules, and I don't see any signs of any kind of inventory changes that are coming.

Speaker #1: I'd say if I just will go back at the beginning of the year, we talked about this was going to be a story of two halves.

Speaker #1: And the first half being relatively flat and then accelerating as we go into the second half. And that's what we're seeing. With our material our materials ordered well in advance of it being used in the production and so again, that alignment is really important.

Kim Fields: Our materials order well in advance of it being used in the production. So again, that alignment is really important, and those orders are already on our books. We are seeing that acceleration, as you saw, airframe was up 11% year-over-year, but maybe more importantly, up 14% sequentially. So, I do think that the normalization of inventory is largely behind us. We do have good alignment with the production rates. Maybe the other thing to point out is our materials go and feed into multiple programs at these airframers, and there are some other, the A350 and other platforms that are continuing to step up and ramp. So what I see as I look forward is opportunities for continued growth as we go through the rest of this year into next year.

Kimberly Fields: Our materials order well in advance of it being used in the production. So again, that alignment is really important, and those orders are already on our books. We are seeing that acceleration, as you saw, airframe was up 11% year-over-year, but maybe more importantly, up 14% sequentially. So, I do think that the normalization of inventory is largely behind us. We do have good alignment with the production rates. Maybe the other thing to point out is our materials go and feed into multiple programs at these airframers, and there are some other, the A350 and other platforms that are continuing to step up and ramp. So what I see as I look forward is opportunities for continued growth as we go through the rest of this year into next year.

Speaker #1: And those orders are already on our books. And we're seeing that acceleration, as you saw, airframe was up 11% year over year, but maybe more importantly up 14% sequentially.

Speaker #1: And so I do think that the normalization of inventory is largely behind us. We do have good alignment with the production rates. And maybe the other thing to point out is our materials go and feed into multiple programs.

Speaker #1: At these airframers and there are some other the A7 and other platforms that are continuing to step up and ramp. And so what I see is I look forward as opportunities for continued growth as we go through the rest of this year into next year.

Operator: As a reminder, please limit yourself to one question. The option to rejoin the queue by pressing star one is available. Your next question comes from the line of Seth Seifman with JPMorgan. Seth, your line is open. Please go ahead.

Speaker #3: As a reminder, please limit yourself to one question. The option to rejoin the queue by pressing star 1 is available. Your next question comes from the line of Seth Safeman with JP Morgan.

Speaker #3: Seth, your line is open. Please go ahead.

Seth Seifman: Hey, thanks very much. Good morning. I wanted to ask about within AA&S, we have seen some really outstanding performance. When we think about the sustainability of that over time and both any headwinds that might be coming from unique goodness in this year, as well as tailwinds from the good performance in the business and the new contracts that you are signing. We have seen significant increases in the margin guidance for this year. So how do we think about the sustainability of that?

Speaker #4: Hey. Thanks very much. And good morning. I wanted to ask about within AANS, we've seen some really outstanding performance when we think about the sustainability of that over time.

Speaker #4: And both any headwinds that might be coming from unique goodness in this year as well as tailwinds from the good performance in the business and the new contracts that you're signing, we've seen significant increases in the margin guidance for this year.

Speaker #4: So how do we think about the sustainability of that?

Rob Foster: Thanks, Seth. Let me remind you that, we fundamentally structurally changed that segment. That transformation started a couple of years ago when we exited the commodity standard stainless business. Over time, we've transformed that business. We've really done that through three different pillars. Number one, from a pricing and commercial contract standpoint, we've really worked to lock in some of that, specifically aerospace and defense work and some of those other markets that were more core to ATI. We've done a good job from a pricing and commercial standpoint to really align ourselves with some of these LTA and these long-term durability opportunities. We've also transformed from a mix standpoint. When I think about the transformation, if you look back in 2021, AA&S was 18% aerospace and defense, compared to 45% aerospace and defense here as we exited Q3.

Speaker #2: Thanks, Seth. Yeah, so let me remind you that we fundamentally structurally changed that segment. And that transformation started a couple of years ago when we exited the commodity standard stainless business.

Speaker #2: And over time, we've transformed that business. And we've really done that through kind of three different pillars. Number one, from a pricing and commercial contract standpoint, we've really worked to lock in some of that specifically aerospace and defense work and some of those other markets that were more core to ATI.

Speaker #2: So we've done a good job from a pricing and commercial standpoint to really align ourselves with some of these LTA and these long-term durability opportunities.

Speaker #2: We've also transformed from a mixed standpoint. And I think about the transformation. If you look back in 2021, AANS was 18% aerospace and defense, compared to 45% aerospace and defense here as we exited Q3.

Rob Foster: We've done a lot of mix shift work to that segment. In addition, we've worked a lot on the productivity and efficiency, enabled through our elevATIon operating model. We've really transformed that business. If you look at where we were just last year in that high teens and then where we've transformed, most noticeably here in the second quarter when we stepped up to that mid-20s. The business is structurally transformed, and we now see the full year 2026 margins in that low to mid-20% range with Q4 in the mid-20s. Overall, I feel that this segment is sustainable and durable and will remain in that mid-20s range for the foreseeable future.

Speaker #2: So we've done a lot of mixed shift work to that segment. In addition, we've worked a lot on the productivity and efficiency enabled through our Elevation operating model.

Speaker #2: So we've really kind of transformed that business. And if you look at where we were just last year, kind of in that high teens, and then where we've transformed, most noticeably here in the second quarter when we stepped up to that mid-20s.

Speaker #2: The business is structurally transformed. And we now see the full year 2026 margins in that low to mid-20% range. With Q4 in the mid-20s.

Speaker #2: So overall, I feel that this segment is sustainable and durable. And we'll remain in that kind of mid-20s range for the foreseeable future.

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

Speaker #3: Your next question comes from the line of Gautam Kanna with TD Cowan. Gautam, your line is open. Please go ahead.

Gautam Khanna: Yes, thanks. Good morning, guys. I was wondering if you could give us some color, this year, next year or the following year, on pricing opportunities at HPMC, given what you described as pretty tight supply-demand environment. Then just relatedly on the ramp of these alloys that you mentioned dampened margins by 200 bps relative to your plan. I just wanted to be clear on what the actual plan was for the quarter, just so we can calculate what the normal underlying should be. Was it just 200 basis points higher, or would it have been 200 basis points higher or even more than that? Thank you.

Speaker #4: Yes, thanks. Good morning, guys. I was wondering if you could give us some color this year, next year, the following year on pricing opportunities at HPMC given what you described as pretty tight supply demand.

Speaker #4: Environment. And then just relatedly on the ramp of these alloys that you mentioned, dampened margins by 200 bips relative to your plan. I just wanted to be clear on what the actual plan was for the quarter.

Speaker #4: Just so we can calculate what the normal underlying should be. Was it just 200 basis points higher or was it would it have been 200 basis points higher or even more than that?

Speaker #4: Thank you.

Kim Fields: Sure. Thanks. As I look at pricing, this quarter, the uplift was about two-thirds price and mix and about one-third volume. We are starting to see the benefit of those contract resets and some of the other work that we were talking about earlier in the year. I do see that continuing as we go forward. We do have several contracts that will come up for renewal. I think the other important thing, as you mentioned, in this quarter, we are continuing to win new business as well. That sixth alloy in the hot section that we won earlier this year, and we have already increased our share on that, continues to expand our content in these markets and give us opportunity to capture both volume as well as mix and price uplift. As you said, this quarter, we had a solid quarter in HPMC.

Kimberly Fields: Sure. Thanks. As I look at pricing, this quarter, the uplift was about two-thirds price and mix and about one-third volume. We are starting to see the benefit of those contract resets and some of the other work that we were talking about earlier in the year. I do see that continuing as we go forward. We do have several contracts that will come up for renewal. I think the other important thing, as you mentioned, in this quarter, we are continuing to win new business as well. That sixth alloy in the hot section that we won earlier this year, and we have already increased our share on that, continues to expand our content in these markets and give us opportunity to capture both volume as well as mix and price uplift. As you said, this quarter, we had a solid quarter in HPMC.

Speaker #1: Sure, sure. Thanks. So yeah, as I look at pricing, this quarter, the uplift was about two-thirds price, about one and mix and about one-third volume.

Speaker #1: So we are starting to see the benefit of those contract resets and some of the other work that we were talking about earlier in the year.

Speaker #1: I do see that continuing as we go forward. We do have several contracts that will come up for renewal. I think the other important thing, as you mentioned, in this quarter, we're continuing to win new business as well.

Speaker #1: And that six alloy in the hot section that we won earlier this year and we've already increased our share on that continues to expand our content in these markets and give us opportunity to capture both volume as well as mix and price uplift.

Speaker #1: As you said, this quarter, they had a solid we had a solid quarter in HPMC. It was up 20% year over year. And EBITDA increased, but as you said, that margin came in about 200 basis points below what our plan was.

Kim Fields: It was up 20% year-over-year and EBITDA increased. As you said, that margin came in about 200 basis points below what our plan was. That would have been about another $15 to $20 million of additional EBITDA that we would have saw if we had ramped quicker. I think the important thing to remember, as I mentioned, is we won this business at the beginning of this year, moved that alloy from qualification into production in just 9 months. That really speaks to the technical capabilities of the team and the hard work that is going on there, because qualifying these advanced engine alloys are very demanding, and that is what creates the significant barrier to entry and the moat competitive advantage around our business. For that alloy in particular, we are one of only two that are producing that worldwide.

Kimberly Fields: It was up 20% year-over-year and EBITDA increased. As you said, that margin came in about 200 basis points below what our plan was. That would have been about another $15 to $20 million of additional EBITDA that we would have saw if we had ramped quicker. I think the important thing to remember, as I mentioned, is we won this business at the beginning of this year, moved that alloy from qualification into production in just nine months. That really speaks to the technical capabilities of the team and the hard work that is going on there, because qualifying these advanced engine alloys are very demanding, and that is what creates the significant barrier to entry and the moat competitive advantage around our business. For that alloy in particular, we are one of only two that are producing that worldwide.

Speaker #1: So that would have been about another 15 to 20 million dollars of additional EBITDA that we would have saw if we had ramped quicker.

Speaker #1: But I think the important thing to remember, as I mentioned, is we won this business at the beginning of this year and moved that alloy from qualification into production in just nine months.

Speaker #1: And that really speaks to the technical capabilities of the team, and the hard work that's going on there. Because qualifying these advanced engine alloys are very demanding.

Speaker #1: And that's what creates the significant barrier to entry and the moat to competitive advantage around our business. For that alloy in particular, we're one of only two that are producing that worldwide.

Kim Fields: Today, we now produce all six of those advanced alloys in the hot section that are coming from non-captive suppliers. No other company can make that claim. These engines are designed for decades of service, and that ramp impact is really a temporary impact that is supporting a growth opportunity that spans decades.

Kimberly Fields: Today, we now produce all six of those advanced alloys in the hot section that are coming from non-captive suppliers. No other company can make that claim. These engines are designed for decades of service, and that ramp impact is really a temporary impact that is supporting a growth opportunity that spans decades.

Speaker #1: And today, we now produce all six of those advanced alloys in the hot section that are coming from non-captive suppliers. No other company can make that claim.

Speaker #1: So these engines are designed for decades of service. And that ramp impact is really a temporary impact. For that's supporting a growth opportunity that spans decades.

Rob Foster: Gautam, the way I think about it is that 200 basis points of margin compression was really costs associated with the inefficiencies of that ramping. As we think about it transitioning into Q4, we expect that to be less than a quarter, but it is going to be fully behind us as we exit 2026. We do think that these are near-term, and as Kim mentioned, this is going to enable us to be in a position that is going to have three-plus decades of profitable growth opportunities. There are some near-term costs here in Q3, significantly abating here as we go into Q4 and then getting fully behind us. That is going to be a good thing, though, overall. It is a good investment. Unfortunately, it is causing some near-term margin compression.

Speaker #2: And Gautam, the way I think about it is that that 200 basis points of margin compression was really kind of cost associated with the inefficiencies of kind of that ramping.

Speaker #2: And so as we think about it transitioning into the fourth quarter, we expect that to be less than a quarter. But it's going to be fully behind us as we exit 2026.

Speaker #2: So we do think that these are kind of near-term and as Kim mentioned, this is going to enable us to be in a position that's going to have three plus decades of profitable growth opportunities.

Speaker #2: So there are some near-term costs here in Q3. Significantly abating here as we go into Q4 and then getting fully behind us. That's going to be a good thing, though, overall.

Speaker #2: It's a good investment. Unfortunately, it is causing some near-term margin compression. But as I said, we expect that to be fully behind us as we exit Q4.

Rob Foster: But as I said, we expect that to be fully behind us as we exit Q4.

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

Speaker #3: Your next question comes from the line of Miles Walton with Wolf Research. Miles, your line is open. Please go ahead.

Myles Walton: Thanks. Good morning. Kim, you made a comment about an anecdote with an engine OEM saying that they would take twice your capacity if you had it today. I guess, is there a specific area where your engine products, the pull is the highest? If I just look at your engine products in aggregate, it is taking you 5 years to double your output. So I am not trying to take the comments literally, but more from a perspective of how quickly do you think you grow your engine products sales, and do you actually think it accelerates from the pace that you have had over the last 5 years, which is what it took to double the sales? Thanks.

Myles Walton: Thanks. Good morning. Kim, you made a comment about an anecdote with an engine OEM saying that they would take twice your capacity if you had it today. I guess, is there a specific area where your engine products, the pull is the highest? If I just look at your engine products in aggregate, it is taking you five years to double your output. So I am not trying to take the comments literally, but more from a perspective of how quickly do you think you grow your engine products sales, and do you actually think it accelerates from the pace that you have had over the last five years, which is what it took to double the sales? Thanks.

Speaker #5: Thanks. Good morning. Kim, you made a comment about an anecdote with an engine OEM. Saying that they would take twice your capacity if you had it today.

Speaker #5: I guess, is there a specific area where your engine products the pole is the highest? And if I just look at your engine products in aggregate, taking your five years to double your output.

Speaker #5: So I'm not trying to take the comments literally, but more from a perspective of how quickly do you think you grow your engine products sales?

Speaker #5: And do you actually think it accelerates from the pace that you've had over the last five years, which is what it took to double the sales?

Speaker #5: Thanks.

Kim Fields: Yeah. So that comment, our materials and our forgings go into both MRO and new engine production. Today, it is about 50/50 between the two, and that has been consistent since the pandemic. Just to share with folks, for us, when we make a forging and send that to the customer, we do not know if it is going into a new engine build or into the MRO stream. For us, it is the same part, it is the same price, it is the same margin. So to your point, I am thinking here around the 5-year growth standpoint. I do see continued growth as we go forward. We have got very strong positions. Rob just made that point with the six alloy. Many of those, five of those were sole source supplies.

Kimberly Fields: Yeah. So that comment, our materials and our forgings go into both MRO and new engine production. Today, it is about 50/50 between the two, and that has been consistent since the pandemic. Just to share with folks, for us, when we make a forging and send that to the customer, we do not know if it is going into a new engine build or into the MRO stream. For us, it is the same part, it is the same price, it is the same margin. So to your point, I am thinking here around the five-year growth standpoint. I do see continued growth as we go forward. We have got very strong positions. Rob just made that point with the six alloy. Many of those, five of those were sole source supplies.

Speaker #1: Yeah. So that comment, our materials and our forgings go into both MRO and new engine production. Today, it's about 50-50 between the two. And that's been consistent since the pandemic.

Speaker #1: And just to share with folks for us, when we make a forging, we and send that to the customer, we don't know if it's going into a new engine build or into the MRO stream.

Speaker #1: And so for us, it's the same part. It's the same price. It's the same margin. And so to your point, I'm thinking here around the five-year growth standpoint.

Speaker #1: I do see continued growth positions Rob just made that point with this six alloy. Several many of those five of those were sole source supply.

Kim Fields: As these next-gen engines continue to grow, continue to hit their shop visits and those major shop visits where they are replacing the discs and the hot section parts, we will see that continued growth. This quarter, very strong growth, 39% year over year. We did raise our guide that we anticipate low to mid 20% as we go through the rest of this year. But I do think that continues to grow as we go forward just based on the conversations I am having with our customers, their expectation both of upgrade packages and shop visits of that next generation alloy and engines coming in. I would have to take a look at it. We are not providing any forward guidance today on that growth.

Kimberly Fields: As these next-gen engines continue to grow, continue to hit their shop visits and those major shop visits where they are replacing the discs and the hot section parts, we will see that continued growth. This quarter, very strong growth, 39% year over year. We did raise our guide that we anticipate low to mid 20% as we go through the rest of this year. But I do think that continues to grow as we go forward just based on the conversations I am having with our customers, their expectation both of upgrade packages and shop visits of that next generation alloy and engines coming in. I would have to take a look at it. We are not providing any forward guidance today on that growth.

Speaker #1: So as these next-gen engines continue to grow, continue to hit their shop visits and those major shop visits where they're replacing the discs and the hot section parts, we'll see that continued growth.

Speaker #1: This quarter, very strong growth. 39% year over year. We do we did raise our guys that we anticipate low to mid-20% as we go through the rest of this year.

Speaker #1: But I do think that continues to grow as we go forward. Just based on the conversations I'm having with our customers, their expectation both of upgrade packages and shop visits of that next generation alloy and engines coming in.

Speaker #1: So I'd have to take a look at it. We don't have we're not providing any forward guidance today. On that growth. But I would say that this growth that we've had over the last year we don't see that abating and demand continues to be very strong as we look at next year.

Kim Fields: But I would say that this growth that we have had over the last year, we do not see that abating, and demand continues to be very strong as we look at next year. We will share some more of that, and I will take that question when we get to Investor Day, and we will share more of our outlook over the next three to five years, and we will answer that question more fully.

Kimberly Fields: But I would say that this growth that we have had over the last year, we do not see that abating, and demand continues to be very strong as we look at next year. We will share some more of that, and I will take that question when we get to Investor Day, and we will share more of our outlook over the next three to five years, and we will answer that question more fully.

Speaker #1: We'll share some more of that. And I'll take that question when we get to investor day. And we'll share more of our outlook over the next three to five years and we'll answer that question more fully.

Operator: Your next question comes from the line of David Strauss with Wells Fargo. David, your line is open. Please go ahead.

Speaker #3: Your next question comes from the line of David Strauss with Wells Fargo. David, your line is open. Please go ahead.

David Strauss: Great. Thanks. Morning, everyone. With AA&S margins at these levels, in a similar range as HPMC, could you just talk about margin differential between jet engine and airframe or structural? I was under the impression engine is much higher margin, but maybe that is not the case. If you could just touch on that. And any thoughts, Rob, maybe on the CapEx plan from here? As we look beyond this year, should we think relatively stable as a percent of sales or any framing you could do there? Thanks.

Speaker #4: Great. Thanks. Good morning, everyone. Now with AENS margins, at these levels, on a similar ranges, HPMC, could you just talk about kind of margin differential between jet engine and kind of airframe or structural?

Speaker #4: I mean, I was under the impression engine is much higher margin, but maybe that's not the case. If you could just touch on that.

Speaker #4: And any thoughts Rob, maybe on the capex plan from here? Is it as we look beyond this year, should we think relatively stable as a percent of sales or any framing you could do there?

Speaker #4: Thanks.

Kim Fields: Well, I will take the H1 as we think about the margin differentials, and I will let Rob talk a little bit about the capital and our outlook there. Historically, what you said would be true. Engine has been the most accretive and the highest value product for us. But what I would say has happened, since we came out of the pandemic, is those margin differentials have compressed. A lot of it comes down to, we are seeing strong demand, as you mentioned, in airframe. We are seeing strong demand in defense. We are seeing strong demand in Specialty Energy. Those products are made on the same assets, those fungible assets that can be directed towards different product flows. Customers recognize that, and I think that is unusual.

Kimberly Fields: Well, I will take the H1 as we think about the margin differentials, and I will let Rob talk a little bit about the capital and our outlook there. Historically, what you said would be true. Engine has been the most accretive and the highest value product for us. But what I would say has happened, since we came out of the pandemic, is those margin differentials have compressed. A lot of it comes down to, we are seeing strong demand, as you mentioned, in airframe. We are seeing strong demand in defense. We are seeing strong demand in Specialty Energy. Those products are made on the same assets, those fungible assets that can be directed towards different product flows. Customers recognize that, and I think that is unusual.

Speaker #1: Great. Well, I'll take the first half as we think about the margin differentials. And I'll let Rob talk a little bit about the capital and our outlook there.

Speaker #1: Historically, what you said would be true. Engine has been the most accretive in the highest value products for us. But what I would say has happened since we came out of the pandemic is those margin differentials have compressed.

Speaker #1: And a lot of it comes down to we're seeing strong demand as you mentioned in airframe. We're seeing strong demand in defense. We're seeing strong demand in specialty energy.

Speaker #1: And those products are made on the same assets. Those are fungible assets that can be directed towards different product flows. And so customers recognize that.

Speaker #1: And I think that's unusual. It's different than it's been in the past that they've had to think about these other market demands coming into these assets.

Kim Fields: It is different than it has been in the past, that they have had to think about these other market demands coming into these assets. Early on, I think I shared that story, that some of our customers were a little caught off guard when they heard our lead times, which are very extended. I shared some of that. PQ titanium is about 20 months, and iso forgings are out more than 2 years. So they recognize that if they want that capability and that capacity, that they have to look at higher pricing to get on those assets and get that capacity. Now, that said, that is also what is helping to drive, and I will let Rob get into capital, but that is also driving this investment and focus by customers at bringing customer capital, co-funding to that capital, so they have access to that limited, differentiated capabilities that we provide.

Kimberly Fields: It is different than it has been in the past, that they have had to think about these other market demands coming into these assets. Early on, I think I shared that story, that some of our customers were a little caught off guard when they heard our lead times, which are very extended. I shared some of that. PQ titanium is about 20 months, and iso forgings are out more than two years. So they recognize that if they want that capability and that capacity, that they have to look at higher pricing to get on those assets and get that capacity. Now, that said, that is also what is helping to drive, and I will let Rob get into capital, but that is also driving this investment and focus by customers at bringing customer capital, co-funding to that capital, so they have access to that limited, differentiated capabilities that we provide.

Speaker #1: And early on, I think I shared that story that some of our customers were a little caught off guard when they heard our lead times, which are very extended.

Speaker #1: I shared some of that. PQ titanium is out 20 months and ISO forgings are out more than two years. So they recognize that if they want that capability and that capacity that they have to look at higher pricing to get on those assets and get that capacity.

Speaker #1: Now, that said, that is also what's helping to drive and I'll let Rob get into capital. But that's also driving this investment and focus by customers at bringing customer capital co-funding to that capital so they have access to that limited differentiated capabilities that we provide.

Kim Fields: You have seen, we have announced several of those projects. We have not announced all of those projects. I think that is continuing with the recent acquisition announcement, where customers are looking at that differentiated, important capacity and products to help support their ramp, and they are investing in that. That is what we have been talking about here for the good part of a year now. But, Rob, I will let you talk a little bit about our outlook as we think about capital.

Kimberly Fields: You have seen, we have announced several of those projects. We have not announced all of those projects. I think that is continuing with the recent acquisition announcement, where customers are looking at that differentiated, important capacity and products to help support their ramp, and they are investing in that. That is what we have been talking about here for the good part of a year now. But, Rob, I will let you talk a little bit about our outlook as we think about capital.

Speaker #1: And so you've seen we've announced several of those projects. We haven't announced all of those projects. I think that's continuing with the recent acquisition announcement where customers are looking at that differentiated important capacity and products to help support their ramp.

Speaker #1: And they're investing in that. And that's what we've been talking about here for the good part of a year now. But Rob, all that you talk a little bit about our outlook as we think about capital.

Rob Foster: Yeah. We are not going to be doing formal updated guidance for the longer term. I will be giving some additional color and context here at the upcoming Investor Day on 12 November. But what I can say is how I am thinking about it, and the way I am thinking about organic growth is I definitely see a pipeline of really interesting projects for us. But we are going to be very disciplined as we go through our approach. First, we are going to be looking to unlock efficiencies that already exist. elevATIon is going to be that business model that we use to unlock all of the capacity that already exists on our existing footprints and assets. The second part of that discipline is we are going to be looking for alignment with our customers, and generally, that comes through either a capital commitment and customer-funded capital or contracts.

Speaker #2: Yeah. So we're not going to be doing formal kind of updated guidance for the longer term. I'll be giving some additional color and context here at the upcoming investor day on November 12th.

Speaker #2: But what I can say is how I'm thinking about it. And the way I'm thinking about organic growth is I definitely see a pipeline of really interesting projects for us.

Speaker #2: But we're going to be very disciplined as we go

Speaker #6: go through our approach. You know, first we're going to be looking to unlock efficiencies that already exist. You know, Elevation is going to be that business model that we use to unlock all of the capacity that already exist on our existing footprints and assets.

Speaker #6: You know, the second part of that discipline is we're going to be looking for, you know, alignment with our customers. And generally that comes through either a cap— capital commitments and customer-funded capital or contracts.

Rob Foster: We're going to be very disciplined as we go through the organic growth process. I can say the areas that are the most intriguing to us right now are the areas that ATI has a differentiated moat and differentiated capability, such as nickel superalloys, premium quality titanium, hafnium, and zirconium areas, isothermal forging. We've already announced CapEx projects within the nickel superalloys and the PQ titanium. The areas that are interesting, as I said, would be those differentiated moats. More information to come, but I can say that we don't have any plans for any monolithic assets. We're going to be very disciplined. We're going to be very rational and aligned with our customers, and more information to come.

Speaker #6: So we're going to be very disciplined as we go through the organic growth process. And I can say the areas that are the most intriguing to us right now are the areas that, you know, ATI has a differentiated moat and differentiated capability, such as, you know, nickel superalloys, premium quality titanium, titanium and zirconium areas, isothermal forging.

Speaker #6: So we've already announced CapEx projects within the nickel superalloys and the PQ titanium, you know, the areas that are interesting, as I said, would be those differentiated moats.

Speaker #6: So more information to come, but I can say that we don't have any plans for any monolithic assets. We're going to be very disciplined.

Speaker #6: We're going to be very rational and aligned with our customers, and more information to come.

Operator: Your next question comes from the line of Pete Skibitski with Alembic Global. Pete, your line is open. Please go ahead.

Speaker #7: Your next question comes from the line of Pete Skibitsky with Alembic Global. Pete, your line is open. Please go ahead.

Pete Skibitski: Yeah, thanks. Good morning.

Speaker #6: Yeah, thanks. Good morning.

Rob Foster: Morning.

Speaker #8: Morning, Kim. Kim, can you maybe update us on how things are progressing at the new facility in Mexico? And then also the new— with the new furnace in Richland, I think they were kind of— you had some sticking points there last quarter.

Pete Skibitski: Kim, can you maybe update us on how things are progressing at the new facility in Mexico, then also with the new furnace in Richland? I think you had some sticking points there last quarter. I don't think they're related to the issue this quarter with the nickel alloys. But could you maybe update us on how things are progressing there, productivity-wise?

Speaker #8: I don't think they're related to the, the issue this quarter with the nickel alloys, but can you maybe update us on how things are progressing there, you know, productivity-wise?

Kim Fields: Sure, Pete. You are right, they are not related to each other. This quarter was really around that ramping of that new product line that we won earlier this year. Both of those are making good progress, and we remain on plan to our milestones. On the Mexico side, we shipped about 25% of the deferred revenue that I talked about in Q3, and we expect to ship the balance of that in Q4. If you remember, the revenue was around $30 to $40 million that we deferred from the second quarter, so that is about $10 million last quarter and Q3, and then the rest of it this year. I think the positive thing is that we will leave this year at a run rate that matches or slightly exceeds what our original footprint was as we enter 2027. The team has done a fantastic job.

Kimberly Fields: Sure, Pete. You are right, they are not related to each other. This quarter was really around that ramping of that new product line that we won earlier this year. Both of those are making good progress, and we remain on plan to our milestones. On the Mexico side, we shipped about 25% of the deferred revenue that I talked about in Q3, and we expect to ship the balance of that in Q4. If you remember, the revenue was around $30 to $40 million that we deferred from the second quarter, so that is about $10 million last quarter and Q3, and then the rest of it this year. I think the positive thing is that we will leave this year at a run rate that matches or slightly exceeds what our original footprint was as we enter 2027. The team has done a fantastic job.

Speaker #9: Sure, Pete. Yeah, and you're right, they're not related to each other. This quarter was really around that ramping of that new product line that we, that we won earlier this year.

Speaker #9: But both of those are making good progress and we remain on plan to our milestones. On the Mexico side, we shipped about 25% of the deferred revenue that I talked about in Q3.

Speaker #9: And we expect to ship the balance of that in Q4. If you remember, the revenue was around $30 to $40 million that we deferred from the second quarter.

Speaker #9: So That's about $10 million last quarter and third quarter, and then the rest of it this year. You know, I think the positive thing is that we'll leave this year at a run rate.

Speaker #9: That matches or exceeds, slightly exceeds what our original footprint was as we entered 2027. And so, you know, the team's done a fantastic job.

Kim Fields: They tripled output this last quarter. They are, like I said, well on track to our plan. As we look at EB2 in Richland, the furnace in Richland that you talked about, we are making progress there, but not all of those qualifications are complete. We expect the qualification of most of our standard quality products to be done by the end of the year and will be in production as we go into next year. Those more technically demanding engine alloys are going to continue through qualification into 2027, with us completing those qualifications as we get into mid-2027 timeframe.

Kimberly Fields: They tripled output this last quarter. They are, like I said, well on track to our plan. As we look at EB2 in Richland, the furnace in Richland that you talked about, we are making progress there, but not all of those qualifications are complete. We expect the qualification of most of our standard quality products to be done by the end of the year and will be in production as we go into next year. Those more technically demanding engine alloys are going to continue through qualification into 2027, with us completing those qualifications as we get into mid-2027 timeframe.

Speaker #9: They tripled output this last quarter. They are, like I said, well on track to our plan. As we look at EV2 in Richland, the furnace in Richland that you talked about, we're making progress there, but not all those qualifications are complete.

Speaker #9: We expect the qualification of the standard— of most of our standard quality products to be done by the end of the year and will be in production as we go into next year.

Speaker #9: Those more technically demanding engine alloys are going to continue through qualification into 2027, with us completing those qualifications as we get into the mid- 2027 timeframe.

Kim Fields: Again, just to remind everybody, this is important because we built that furnace in Richland to give us flexibility to allow us to make both standard quality as well as that very highly differentiated PQ titanium, and give us flexibility to be able to meet the needs of engine products as well as defense. Those go into defense products too. I think the bottom line, though, is they are on track. They are making good progress. We will leave this year with the majority of that behind. Mexico will completely be at run rate. In fact, it will be higher than our original footprint, and then our titanium qualifications in Richland will be well ahead.

Kimberly Fields: Again, just to remind everybody, this is important because we built that furnace in Richland to give us flexibility to allow us to make both standard quality as well as that very highly differentiated PQ titanium, and give us flexibility to be able to meet the needs of engine products as well as defense. Those go into defense products too. I think the bottom line, though, is they are on track. They are making good progress. We will leave this year with the majority of that behind. Mexico will completely be at run rate. In fact, it will be higher than our original footprint, and then our titanium qualifications in Richland will be well ahead.

Speaker #9: And, you know, again, just to remind everybody, this is important because we built that furnace in Richland to give us flexibility to allow us to make both standard quality as well as that very highly differentiated premium quality titanium alloy.

Speaker #9: And gives us flexibility to be able to meet the needs of engine products as well as defense. And so those go into defense products.

Speaker #9: And so, you know, I think the bottom line though is they're on track. They're making good progress. We'll leave this year with the majority of that behind.

Speaker #9: Mexico will completely be at run rate. In fact, it'll be higher. than our original footprint. And then our titanium qualifications in Richland will be well ahead.

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

Speaker #7: Your next question comes from the line of Scott Duschel with Deutsche Bank. Scott, your line is open. Please go ahead.

Scott Deuschle: Hi, good morning. Can you comment on whether the forging business has much wide-body exposure? If so, what you are seeing in terms of wide-body forging lead times and the progress you are making on ramping output there? Then for Rob, can you be any more precise on the margin you are expecting at HPMC for Q4? Thank you.

Speaker #6: Hi, good morning. And can you comment on whether the forging business has much widebody exposure? And then if so, what you're seeing in terms of widebody forging lead times and the progress you're making on ramping output there?

Speaker #6: And then for Rob, can you be any more precise on the margin you're expecting at HPMC for the 4th quarter? Thank you.

Kim Fields: Sure, Scott. Yeah, wide-body is starting to pick up. I think I talked about last quarter that we started to see some emergent orders with materials going into the air framers, in particular, opportunities to grow our product content and our share around those landing gear alloys that are very complex and difficult to produce and allow us to use our differentiated capabilities. On the forging side, we do have wide-body exposure primarily through the engine side. Just to remind you, engines of our A&D segment or A&D revenues, it is about 40% of our overall company. So most of our exposure is going to come from those large engines for the wide-bodies.

Kimberly Fields: Sure, Scott. Yeah, wide-body is starting to pick up. I think I talked about last quarter that we started to see some emergent orders with materials going into the air framers, in particular, opportunities to grow our product content and our share around those landing gear alloys that are very complex and difficult to produce and allow us to use our differentiated capabilities. On the forging side, we do have wide-body exposure primarily through the engine side. Just to remind you, engines of our A&D segment or A&D revenues, it is about 40% of our overall company. So most of our exposure is going to come from those large engines for the wide-bodies.

Speaker #9: Sure, Scott. Yeah, widebody is starting to pick up. I think I talked about last quarter that we started to see some emergent orders with materials going into the airframers, in particular opportunities to grow our product content and our share around those landing gear alloys that are very complex and difficult to produce and allow us to use our differentiated capabilities.

Speaker #9: On the forging side, we do have widebody exposure primarily through the engine side. You know, just to remind you, engines of our A&D segment or A&D revenues, it's about 40% of our overall company.

Speaker #9: And so most of our exposure is going to come from those large engines for the widebodies.

Rob Foster: Scott, in terms of how we see the HPMC Q4 margins, we see that mid-20s range. So we are going to see a sequential step-up from Q3 to Q4 that would land us in the mid-20s for the HPMC segment in Q4.

Speaker #6: And Scott, in terms of how we see the HPMC Q4 margins, we see that mid-20s range. So we're going to see a sequential step up from Q3 to Q4 that would land us in the mid-20s for the HPMC segment in Q4.

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

Speaker #7: Your next question comes from the line of Samuel McKinney with KeyBanc Capital Markets. Samuel, your line is open. Please go ahead.

Samuel McKinney: Hi, good morning, Kim and Rob.

Speaker #10: Hi, good morning, Kim and Rob. Morning. Morning. The AANS margins took another meaningful step upward. First, can you just confirm that the 3rd quarter represents the first full quarter of shipping under the new naval nuclear contract?

Kim Fields: Morning.

Kimberly Fields: Morning.

Rob Foster: Morning.

Samuel McKinney: The AA&S margins took another meaningful step upward. First, can you just confirm that the Q3 represents the first full quarter of shipping under the new Naval Nuclear contract? Second, any more color you can provide us around the incremental margin impact that that had on overall AA&S, given the continued segment mix shift to A&D?

Speaker #10: And second, any more color you can provide us around the incremental margin impact that that had on overall AANS, given the continued segment mix shift to A&D?

Kim Fields: Well, good morning. Yes, this is the first full quarter we have on that new contract. I would say this step-up also encompassed demand coming from our commercial nuclear customers as well. You saw a significant step-up year over year in our Specialty Energy of 49%. That was being driven by both gas turbines as well as those commercial nuclear customers. Both of those, as well as increased demand exceeding supply around that zirconium and hafnium products that we talked about last quarter.

Kimberly Fields: Well, good morning. Yes, this is the first full quarter we have on that new contract. I would say this step-up also encompassed demand coming from our commercial nuclear customers as well. You saw a significant step-up year over year in our Specialty Energy of 49%. That was being driven by both gas turbines as well as those commercial nuclear customers. Both of those, as well as increased demand exceeding supply around that zirconium and hafnium products that we talked about last quarter.

Speaker #9: Yeah, good morning. So yes, this is the first full quarter we have on that new contract, but I'd say this step-up also encompassed demand coming from our commercial nuclear customers as well.

Speaker #9: You saw significant step-up year over year in our specialty energy of 49%. That was being driven by both gas turbines as well as those commercial nuclear customers.

Speaker #9: And so this— both of those as well as increased demand exceeding supply around that zirconium and hafnium products that we talked about last quarter.

Rob Foster: Yep. As you think about the margins there, as we talked earlier, the sustainability of these, we expect the mid-20s for Q4. From an incremental, we guided the full year incrementals to about 50%, but seeing the AA&S segments a bit above the 50% level for the full year. Overall, AA&S is very well-positioned for sustainable profitability in this mid-20s range.

Speaker #9: You want— yep. And as you think about the margins there, as we talked earlier, you know, the

Speaker #6: sustainability of these, you know, we expect the kind of mid-20s for Q4. And from an incremental, you know, we guided the full year incrementals to about 50%.

Speaker #6: But seeing the A&S segment a bit above the 50% level for the full year. So overall, A&S is very well positioned for sustainable profitability in this kind of mid-20s range.

Operator: Operator, we have time for one final question before Kim closes the call. Copy that. Your final question comes from Andre Madrid with BTIG. Andre, your line is open. Please go ahead.

Speaker #10: Operator, we have time for one final question before Kim closes the call.

Speaker #7: Copy that. Your final question comes from Andre Madrid with BTIG. Andre, your line is open. Please go ahead.

Andre Madrid: Yep. Thanks, Kim, Rob. Appreciate the time. Real quick, I kind of wanted to stick on Specialty Energy. Can you maybe just parse out the bigger moving pieces there for us to really understand what's driving growth? I understand commercial energy is, nuclear energy is probably the largest moving piece there right now. Can you talk more to the IGT contributions in the quarter and maybe in the long term as well as you see it moving out? I guess beyond that, I want to go back to jet engine and maybe talk about some of the demand trends you've been seeing. Obviously, it looks pretty robust. It remains around half of what you guys are doing on jet engine. Is there any kind of slackening related to higher fuel prices from the Iran war, or are you not seeing that as upstream yet?

Speaker #10: Yep. Thanks, Kim, Rob. Appreciate the time. Real quick, I kind of wanted to stick on specialty energy. You know, how can you maybe just parse out the bigger moving pieces there for us to really understand what's driving growth?

Speaker #10: I understand commercial energy is— nuclear energy is probably the largest moving piece there right now. But also Can you talk more to the IGT contributions in the quarter and maybe in the long term as well as you see it moving out?

Speaker #10: And then I guess beyond that, I want to kind of go back to JetEngine and maybe talk about some of the demand trends you've been seeing obviously looks pretty robust.

Speaker #10: It remains around half of what you guys are doing on JetEngine. But is there any kind of slackening related to higher fuel prices from the Iran war, or are you not seeing that as upstream yet?

Kim Fields: Okay. Great, Andre. Yes. So on Specialty Energy, as you said, I mentioned they had a great quarter, up 49% year over year, 36% sequentially. So strong customer demand. As you said, the majority of that is the nuclear energy, but demand remains healthy in both the commercial nuclear and the industrial gas turbine. So we're seeing demand coming from both sides. I think part of what you saw in this quarter is that our fungible, flexible assets allow us to balance production between Specialty Energy and defense as our customer orders and their needs evolve. So that can lead to some quarter-to-quarter variability in shipments, we talked a little bit about that last quarter, as we manage that capacity based on customer orders and priorities. But Specialty Energy growth continues, and our underlying demand view of the market has not changed.

Kimberly Fields: Okay. Great, Andre. Yes. So on Specialty Energy, as you said, I mentioned they had a great quarter, up 49% year over year, 36% sequentially. So strong customer demand. As you said, the majority of that is the nuclear energy, but demand remains healthy in both the commercial nuclear and the industrial gas turbine. So we're seeing demand coming from both sides. I think part of what you saw in this quarter is that our fungible, flexible assets allow us to balance production between Specialty Energy and defense as our customer orders and their needs evolve. So that can lead to some quarter-to-quarter variability in shipments, we talked a little bit about that last quarter, as we manage that capacity based on customer orders and priorities. But Specialty Energy growth continues, and our underlying demand view of the market has not changed.

Speaker #9: Okay, great, Andre. Yeah, so on specialty energy, as you said, you know, I mentioned they had a great quarter, up 49% year over year, 36% percent.

Speaker #9: You know, sequentially. So, you know, strong customer demand. As you said, the majority of that is the nuclear energy, but demand remains healthy in both the commercial nuclear and the industrial gas turbines.

Speaker #9: So we're seeing demand coming from both sides. I think part of what you saw in this quarter is that our fungible flexible assets allow us to balance production between specialty energy and defense as our customer orders and their needs evolve.

Speaker #9: So that can lead to some quarter-to-quarter variability in shipments. We talked a little bit about that last quarter as we manage that capacity based on customer orders and priorities.

Speaker #9: But, um, Specialty energy growth continues, um, you know, and our underlying demand view of the market has not changed. So we continue to expect mid-teens growth for the full year there.

Kim Fields: We continue to expect mid-teens growth for the full year there. On the jet engine side, as you said, and we can talk a little bit more about that, we haven't seen any impact from those fuel prices, something that clearly that we're paying attention to. But as I mentioned, that comment from the customer that we had just last week, engine demand continues to grow and be strong. What I'm seeing is coming from both the new engine as well as the MRO. As I said, for us, those forgings that we make and those materials that we send go into both demand streams. So we don't necessarily know any specific part or shipment, which direction that's going. So for us, it's the same part, same price, same margin. We have not seen a step down in demand as we're looking at that.

Kimberly Fields: We continue to expect mid-teens growth for the full year there. On the jet engine side, as you said, and we can talk a little bit more about that, we haven't seen any impact from those fuel prices, something that clearly that we're paying attention to. But as I mentioned, that comment from the customer that we had just last week, engine demand continues to grow and be strong. What I'm seeing is coming from both the new engine as well as the MRO. As I said, for us, those forgings that we make and those materials that we send go into both demand streams. So we don't necessarily know any specific part or shipment, which direction that's going. So for us, it's the same part, same price, same margin. We have not seen a step down in demand as we're looking at that.

Speaker #9: Now on the jet engine side, as you said, and we can talk a little bit more about that, we, we have, you know, we haven't seen any impact from those fuel prices.

Speaker #9: Something that, you know, clearly that we're paying attention to. But as I mentioned, that comment from the customer that we had just last week, you know, engine demand continues to grow and, and be strong.

Speaker #9: And, and what I'm seeing is coming from both the new engine as well as the MRO. As I said, for us, the— those forgings that we make and those materials that we then go into both demand streams.

Speaker #9: And so we don't necessarily know any specific part or shipment, which direction that's going. So for us, it's the same part, same price.

Speaker #9: Same margin, and we have not seen a step down in those in demand as we're looking at that. As that we're talking, you know, with our customers.

Kim Fields: As we are talking with our customers, they are looking at both the MRO, and even if aircraft start to be retired because of higher fuel costs, the next-gen engines are actually. That transition is beneficial for ATI because those next-gen engines have 2 times the content of those legacy engines. So those really pull into those differentiated materials as well as those isothermal forgings, which are 2 of those highly differentiated spaces that Rob just talked about.

Kimberly Fields: As we are talking with our customers, they are looking at both the MRO, and even if aircraft start to be retired because of higher fuel costs, the next-gen engines are actually. That transition is beneficial for ATI because those next-gen engines have 2 times the content of those legacy engines. So those really pull into those differentiated materials as well as those isothermal forgings, which are 2 of those highly differentiated spaces that Rob just talked about.

Speaker #9: You know, it's. You know, they're looking at both the MRO, and even if, you know, aircraft start to, you know, be Retired because of higher fuel costs.

Speaker #9: You know, the next-gen engines are actually— that transition is beneficial for ATI because those next-gen engines have 2 times the content. Of those legacy engines.

Speaker #9: And so those really pull into those differentiated materials as well as those isothermal forgings, which are 2 of those highly differentiated spaces that that Rob just talked about.

Operator: We have reached the end of the Q&A session. I will now turn the call back to Kim Fields for closing remarks.

Speaker #7: We have reached the end of the Q&A session. I will now turn the call back to Kim Fields for closing remarks.

Kim Fields: Great. Thank you everyone for joining us and for your questions. As we have been talking about today, we see strong demand across the markets that we serve. The differentiated capabilities really position ATI to capture that demand. I think that is what you saw with that strong lift across all of our markets. We are focused on executing well and converting that demand into earnings and cash and finishing 2026 strong, and then continuing to build on that progress in 2027. Thank you.

Kimberly Fields: Great. Thank you everyone for joining us and for your questions. As we have been talking about today, we see strong demand across the markets that we serve. The differentiated capabilities really position ATI to capture that demand. I think that is what you saw with that strong lift across all of our markets. We are focused on executing well and converting that demand into earnings and cash and finishing 2026 strong, and then continuing to build on that progress in 2027. Thank you.

Speaker #9: Great. Thank you everyone for joining us and for your questions. Yeah, as we've been talking about today, we see strong demand across the markets that we serve and the differentiated capabilities really position ATI to capture that demand.

Speaker #9: And I think that's what you saw with that strong lift across all of our markets. We're focused on executing well and converting that demand into earnings and cash and finishing 2026 strong and then continuing to build on that progress in 2027.

Speaker #9: Thank you.

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