ATI Inc.

Key points from our fourth quarter results are Kim Fields, President and CEO, and Don Newman, Executive Vice President and CFO. Before starting our prepared remarks, I would like to draw your attention to the supplemental presentation that accompanies this call. Those slides provide additional color and details on our results and outlook and can also be found on our website at atimaterials.com. After our prepared remarks, we'll open the line for questions. As a reminder, All forward-looking statements are subject to various assumptions and caveats. These are noted in the earnings release and in the accompanying presentation. Now, I'll turn the call over to Kim.

Thanks, Dave. Good morning, everyone. Q4 was a great quarter for ATI. We ended the year on a high note that gives us momentum going into 2025. Let me share the financial headlines first. In the fourth quarter, revenue was up 12% sequentially to $1.2 billion. Adjusted EBITDA was $210 million above our guided range of $181 to $191 million. On a full year basis, revenue was nearly $4.4 billion, our highest since 2012, up 5% even with the challenges we and the industry encountered this year. Adjusted EBITDA was $729 million and EBITDA margins were almost 17%, with both segments contributing strong performance. Free cash flow for 2024 was $248 million, up more than 50% over last year. Our top line growth and expanding margins led to double digit percentage increases to adjusted EBITDA. These results demonstrate that our transformational strategy is on track. We're confident in our performance, and 2025 is on pace to be even better. As a result, we're forecasting our 2025 adjusted EBITDA will build each successive quarter during the year, with our full-year outlook above $800 million. Don will get into these details in a moment. Three key areas drive our confidence in ETI's future. Number one, 2025 demand remains robust. You're likely hearing it in our customer's earnings call. Boeing is bouncing back, ramping with the 737 MAX on track. Airbus remains steady with opportunities for upside as they push their ramp rates. We're seeing stability as anxiety comes out of the supply chain. Demand for ATI materials comes from every segment of the aerospace industry. Our products are on every commercial platform flying today. In Q4, we ship more than Q3. Yet our backlog remained steady. It didn't drop. Backlog isn't a pure indicator of the full demand picture. Remember, through long-term agreements, our customers reserve their capacity based on anticipated upcoming needs. These orders are continuing to flow and are growing. Our full year 2024 airframe revenue was up 4.5% year over year. Jet engine revenue was up 9%. Our isothermal forgings are a key driver of this growth. In 2024, the team was able to increase iso pushes by 32%. In the fourth quarter, they achieved their highest quarterly total output ever. In addition to OEM build rates, MRO and the GTF engine overhaul program are also driving heavy engine demand. We are continuing to ramp our support of this program with sales in 2024 almost triple 2023 sales and anticipate to increase another 50% in 2025. Our defense business continues to grow as well. Full year revenues were up 22% to $490 million. When the United States and our allies need reliable, high performance, advanced materials, we're honored they turned to ATI. The continued growth of our defense business demonstrates both demand for our products and confidence in our ability to deliver. Combined, aerospace and defense exceeded 65% of fourth quarter revenue. For the full year, they represent more than 62%, delivering strong performance in growing markets. In addition to our core A&D markets, you've heard us talk about aero-like. This is where the differentiated ATI materials come into play. In the electronics and specialty energy markets, continued demand for high performance chips and the resurgence of nuclear energy put our hafnium, niobium, and zirconium alloys in high demand. Generally, long-term demand for these products is predicted to exceed current supply. It's interesting to note that our combined electronics and specialty energy sales in the fourth quarter were nearly equal to our defense sales, which I just mentioned were up significantly. And remember, we call these markets arrow light because of the growth and margins they typically deliver. That brings me to my second key driver of confidence. Operationally, ATI is where we need to be. We are on track, not just having recovered from the challenges of Q3, but being stronger from them. The continued investments we are making in equipment reliability and AI technology are allowing us to predict potential issues and proactively correct them before they occur. Our productivity improvements give us the opportunity to participate in transactional business where we want to, where we're valued most. One of the most rewarding parts of leading our team is getting calls when they hit a new record. I received a lot of those calls this quarter. announcing things like record levels of premium quality heat smelted, milestones in powder billet, best flow times all over the system, and newly qualified operations as we gain share. With our team operating as one ATI, each business's best can raise the next operation to its new best. I appreciate all they're doing, and I'm honored to celebrate their successes. Let's get to my third and final key driver of confidence. I am optimistic for the future based on growth activity we're already seeing. Today's 2025 guidance is in line with Boeing's projections. And as an early in the value stream supplier, we'll be one of the first to see increased pull as they strive to meet ramping build rates. For 2026, Boeing publicly stated that the 787 bills will increase from five to seven, another sign of increasing stability. The 777X is entering back into service something we've all been looking forward to. We are beginning to see signs of this increasing demand for titanium and currently anticipate seeing an uptick in the back half of 2025. In July, we announced $4 billion in new sales commitments, much of which were tied to our differentiated nickel products. Those commitments added new scope and long-term agreements that both build and extend our core. We believe that growing demand has tremendous upside. You've likely heard of the emerging DOD budget inputs evolving around the philosophy of peace through strength. With additional funding targeted to potentially increase defense spending by as much as $200 billion, or $100 billion per year for fiscal years 25 and 26, if they move forward, it is expected that a portion of this increase would benefit production programs where ATI provides materials, naval, air, and ground vehicles, Supporting our expectations for growth and defense. Lastly, our team gives me great confidence. With each goal met, they strive to set the bar higher, often surprising themselves with what they can achieve. When faced with an opportunity or a challenge, our mindset is what would have to be true for us to succeed. From that starting point, the ideas start flowing, making each day better than the last. Now, Don will share details about our 2024 results and the outlook for 2025.

Thanks, Kim. Let me provide some additional insights into the quarter, which was well ahead of our expectations from a revenue and profit standpoint. Cash flow was in line with what we had anticipated. I will also touch on some full year highlights before talking through our 2025 outlook. Let's start by highlighting key results for the quarter and comparing against our guidance. Revenue approached $1.2 billion in Q4, up $122 million, or 12%, sequentially. That's up 10% year over year. Q4 revenue was higher than we expected as customer demand improved from Q3. Mix was a bit weaker than we anticipated due to short-term shifts in customer requirements. Our adjusted EBITDA for Q4 was approximately $210 million, above our guided range of $181 to $191 million. It's important to clarify that our adjusted results include approximately $18 million of non-operational favorability from sale of oil and gas rights and clarification of tax credit rules by the IRS in Q4. Some of those tax benefits relate to activities that predate the quarter. If we were to exclude those items, as they were not embedded in our guidance, the underlying adjusted EBITDA would have been in the range of $192 million. That's still above the high end of our guided range. We achieved this positive performance despite several offsetting unfavorable impacts noted in our earnings release. Through meaningful growth in sales and an increasing mix of A&D content, our results reflect improved performance and the ongoing execution of our long-term strategy. Full year 2024 revenue was nearly $4.4 billion, our highest revenue since 2012. For the full year, revenue grew roughly 5% over 2023. Excluding metal impacts, full year 2024 revenue grew nearly 9% over 2023 levels. We delivered almost 17% adjusted EBITDA margins across the business for the year. At 17.9% this quarter, margins are approaching the targets we've set for the coming year. In HP&C, fourth quarter margins declined 230 basis points sequentially to 20%. This was driven by more than $6 million in charges to address ongoing customer commercial negotiations. as well as adjustments to incentive compensation tied to ATI's improved performance. In AANS, our fourth quarter margins increased 150 basis points sequentially. Those margins exceeded 16% as the mix and strength of A&D and Arrow-like volumes continue to increase. This increase includes $10 million of favorable benefits from clarification from the IRS on the advanced manufacturing production credit. Excluding this benefit, margins for AA&S would have been in line with our expectations and Q3 performance. As we anticipated, our fourth quarter was a very strong quarter for cash, delivering approximately $400 million in free cash flow. While full-year free cash flow is within the range of our guidance, underlying performance is lower than we originally expected in 2024. It's been supplemented by proceeds from several divestitures that were not originally contained in our plan or guidance. Knowing that, we are encouraged by the reductions we made this quarter in managed working capital, reducing sequentially from 40 to 31%. We look to build on our improvements in free cash flow this year to deliver a more consistent and predictable cash generating business in 2025 and beyond. In the area of capital investment, our total spend for the year was $239 million, including $17 million of capital that was funded by customers through direct investment in capacity. That funding was included in cash from operations as required. Our net debt ratio improved sequentially from 2.2 to 1.6 times this quarter, with further reductions likely to come with profitable growth. We continued returning cash to shareholders this quarter with $70 million of share repurchases. We deployed $260 million in 2024 to repurchase shares, representing 105% of 2024 free cash flow. We start 2025 with our existing authorization at $590 million. This quarter represents a strong conclusion of 2024 and helps shape our expectations for 2025. With that, let's turn to our 2025 guidance. As we have said consistently over the past several months, we expect the first half of the year to reflect modest recovery as the commercial aero supply chain rebounds and subsequently grows. Taking that into account, along with seasonality we know exists in our business, We are setting our adjusted EBITDA guidance range for Q1 at $170 to $180 million. That equates to an adjusted earnings per share range of 55 to 61 cents. For the full year, we have narrowed our range within the previous target for 2025. That aligns with how we have seen this market recovery and the delays in the aero ramp unfolding over the last half of 2024. We are setting the full year 2025 range for adjusted EBITDA at $800 to $840 million, with a corresponding range of EPS at $2.80 to $3 per share. As you would expect, we will work all year to pursue opportunities to eliminate risks and build on this guidance. Even though we don't provide direct guidance for revenue and margins on an ongoing basis, our previous targets remain unchanged for 2025. Turning to free cash flow, we are setting the full year range at $240 to $360 million. This range contemplates how much more we believe we can improve managed working capital timing and efficiency within this time of growth. We are assuming between $260 and $280 million in capital investment this year, a portion of which may be funded by customers. We are investing a portion of the proceeds from our 2024 divestitures to support profitable growth, reliability, and de-bottlenecking. $150 million in debt comes due in Q4, which we plan to repay with balance sheet cash. We believe we can continue to reduce share count throughout the year with a disciplined and balanced approach to share repurchases. Note the guidance I'm sharing today is based on the assumptions that actions of the new U.S. administration will not materially change the current business environment, and that we are not impacted by any work stoppages. To summarize, the path we outlined last quarter, underpinned by the strategy and financial targets we have pursued for several years, continues to guide our course for the year. Despite the dynamics the A&D industry encountered in 2024, we see significant opportunity ahead. We are working every day to fulfill that commitment to our customers and shareholders. With that, I will turn the call back over to Kim.