ATI Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Adjusted EBITDA: $284 million, a 37% increase year-over-year, exceeding guidance by $29 million.

Revenue: $1.3 billion, up 11% year-over-year, with a record backlog of $4.4 billion (up 18% year-over-year).

Adjusted EBITDA Margin: 22.6%, an increase of 440 basis points year-over-year.

Adjusted Free Cash Flow: $69 million for the quarter, totaling $143 million for the first half, a $193 million improvement compared to the prior year.

Full Year Guidance: Adjusted EBITDA midpoint raised to $1.160 billion (35% growth), adjusted EPS midpoint to $5.04 (56% growth), and adjusted free cash flow midpoint to $575 million (51% growth).

2Strategic Updates and Business Highlights

AA&S Segment Performance: Transformed into a durable earnings engine, with underlying EBITDA margins reaching approximately 22%, up from 14% a year ago. Focused on higher-value aerospace, defense, and specialty energy applications.

HPMC Segment: Remains a key growth platform, with performance in line with expectations despite some shipment delays due to qualification timing. Confidence in growth trajectory remains strong.

Capacity Investments: New facilities in Chihuahua, Mexico, and an EB2 titanium furnace are expected to enhance production capabilities, with nickel capacity projected to increase by 15-20% by early 2028.

Market Dynamics: Strong demand for qualified capacity and differentiated technology across all end markets, particularly in aerospace and defense.

3Forward Guidance and Outlook

Q3 2026 Expectations: Anticipated adjusted EBITDA of $305 million to $315 million, with continued strength in pricing and mix, particularly in aerospace and defense.

Full Year 2026 Outlook: Adjusted EBITDA guidance raised to $1.135 billion to $1.185 billion, with expectations of continued margin expansion and strong cash flow generation.

Long-term Growth: Confidence in sustained growth driven by structural improvements in AA&S and ongoing demand in HPMC.

4Bad News, Challenges, or Points of Concern

HPMC Shipment Delays: Qualification timing issues at new facilities have shifted some shipments into future periods, impacting short-term revenue recognition.

Specialty Energy Decline: Revenue in this segment declined 6% as production was prioritized for defense orders, indicating potential volatility in this area.

Market Risks: Ongoing geopolitical tensions and trade restrictions, particularly regarding hafnium and zirconium, could impact supply chains and pricing.

5Notable Q&A Insights

Cash Flow Conversion: Management indicated that while EBITDA is increasing, cash flow conversion may be impacted by timing of receivables and inventory buildup for future demand.

AA&S Margin Potential: Management expressed confidence in maintaining AA&S EBITDA margins in the mid-20% range, supported by structural changes and a favorable mix towards aerospace and defense.

Airframe Market Outlook: Expected mid- to high single-digit growth in airframe revenue, with normalization of inventories and alignment with OEM build rates.

Incremental Capacity Decisions: ATI is prioritizing maximizing existing asset productivity before making new capacity investments, ensuring that new projects meet internal return thresholds. Overall, ATI reported strong financial performance in Q2 2026, driven by strategic transformations in its business segments, while maintaining a cautiously optimistic outlook for the remainder of the year and beyond.