ATI Inc.

online at atimaterials.com. Participating in today's call to share key points from our first 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. It 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, and thank you for joining us. Q1 was an excellent start to 2025 for ATI. Continuing the strong momentum we built in the fourth quarter, Our focus is firmly on execution and our results reflect that. Demand remains strong in our core aerospace and defense markets. Customers continue to turn to ATI for our differentiated products, recognizing us as a critical supplier in their value chain. Our ability to deliver high quality consistently at scale has led to expansion of long-term contracts and increased share positions across key platforms. Before we discuss our growth drivers, let's look at the Q1 results we announced this morning. Revenues grew 10% year over year, exceeding $1.1 billion for the quarter. Adjusted EBITDA reached $195 million, surpassing the top end of our guidance range by $15 million. Adjusted earnings per share came in at 72 cents, again, beating the top of our guidance range of 55 to 61 cents. And last week we reported that 1,000 USW represented employees in our AA&S segment ratified a six-year labor agreement. This is a good outcome for ATI and our team. It brings long-term labor stability to a critical part of our operations and sets the foundation for continued success. Don will walk through the financials in greater detail shortly, but the takeaway is clear. ATI started the year strong. We're confident in our position, particularly given the sustained strength in A&D demand. At the same time, we're staying prudent amid the recent trade-related uncertainty affecting the industrial markets. As such, we're maintaining our full-year 2025 guidance for adjusted EBITDA and free cash flow as we monitor how the environment evolves. Our capital deployment reflects that confidence. We continue to prioritize returning value to the shareholders. In Q1, we repurchased shares worth $70 million in line with our plan. Looking ahead, we intend to repurchase as much as $250 million in the second quarter, effectively pulling forward our full-year buyback program. We see clear value in our current share price and recognize the opportunity to capture it. Now turning to the evolving trade and tariff environment, we recognize this is top of mind for many. While the headlines continue to shift, we remain confident in our view that ATI is uniquely positioned to navigate the evolving tariff and trade landscape. Here's why. One, ATI is a US-based producer with the majority of our production footprint located domestically, even as we serve global aerospace and defense programs. Two, we have a flexible, diversified global supply chain. While certain raw materials must be imported due to the lack of domestic availability, our sourcing strategy allows us to adapt our supply chain to maintain quality and manage costs effectively. And three, our customer contracts are built to handle volatility. Many include built-in mechanisms like pass-throughs and surcharges to help offset inflation, raw material swings, and tariff costs. I'm pleased to report that to date, these tools are working as intended, preserving income and limiting financial exposure. We're actively deploying all available levers, including duty drawback programs, defense-related exemptions, and ongoing operational efficiencies to mitigate remaining impacts. Let's talk about the tariffs announced in 2025 and currently in effect, including those paused. These represent approximately $50 million in annual cost exposure prior to offset. Thanks to these mitigation offsets, we anticipate minimal impact on our full-year earnings, allowing us to reaffirm our current guidance. From a demand standpoint, tariffs are having little effect on the aerospace and defense markets. Both airframers have recently reaffirmed robust backlogs, and ATI continues to see strong engine material orders. with no cancellations or back push outs. On the industrial side, which represents approximately 20% of our total business, some customers are taking a wait and see posture. That impact, if any, would be confined to our AANS segment. To illustrate how ATI creates value, particularly in A&D, consider a recent example. In Q1, we renewed a profitable sole source contract for an advanced alloy co-developed with a major engine OEM. This material is critical in MRO applications due to its unique performance characteristics. This agreement extends well into the next decade and reinforces ATI's role as a trusted partner in delivering high performance materials for the most demanding applications. Commercial jet engine remains our most strategic end market accounting for 37% of total Q1 revenue. Sales in this area grew 35% year over year. Our alloys for the rotating components in the hot section of the current and coming generation engines are essential. We're the sole source supplier for five of the seven alloys found in the hot section, secured under long-term contracts that extend well into the 2030s and even 2040s. Our relationships span all three major commercial engine manufacturers. As engine production ramps up, ATI is growing with it. We're proud to earn contract extensions and increase share by consistently delivering innovation, quality, and scale. Beyond engines, our airframe business is also growing, representing 18% of Q1 revenue. Our titanium capabilities are in high demand. We've just recently finalized a major new contract with the leading airframe OEM, Establishing ATI is one of their top suppliers for flat products. In defense, our momentum continues to build. We are well positioned across a variety of funded platforms. We've recently qualified a new material for a long-term classified program, and our R&D pipeline has strong backing from the U.S. government and our allies. Our defense sales grew 11% year-over-year in the first quarter. The bottom line, our strategy is working. We're increasing yields. strengthening reliability, expanding capabilities, and unlocking capacity through de-bottlenecking. The investments we have made in press, forging, and downstream assets for testing and finishing are translating into higher output, improved reliability, and enhanced customer value. With strong order rates and a robust backlog, the message from our customers is clear. They need our products and ATI is delivering. Since 2020, we've been executing our growth strategy to focus on high-value A&D applications. This transformation is evident in our results. In Q1, A&D represented 66% of our total revenue. We are pleased to announce that effective today, ATI's Global Industry Classification Standard, or GICS code, has been reclassified to aerospace and defense. This reclassification validates our strategic evolution and provides greater visibility of ATI as a world-class A&D supplier. All of this is made possible by our ATI team, who continue to deliver high-quality products safely, on schedule, and at scale. It's the result of strategic focus, operational discipline, and execution. Our customers are gaining momentum, and with them, so too is ATI. With that, I will turn it over to Don.

Thanks, Kim. I'll provide additional insights into our first quarter performance and then look ahead to the Q2 and full year outlook. We finished the quarter well ahead of expectations from a revenue and profit standpoint. Revenue in the first quarter was approximately $1.14 billion, an increase of 10% year over year. You may recall that we expected a modest sequential decline in sales and earnings this quarter, driven by some accelerations in seasonality as we completed Q4. Our guidance also considered anticipated slow recovery for commercial aero customers, particularly airframe, and expected seasonal timing and defense. Even with all of that, our adjusted EBITDA at $195 million was $20 million higher than the midpoint of our Q1 guidance. That's 11% favorable. Strong operational performance in both segments and robust customer demand drove results. Our consolidated adjusted EBITDA margins were 17%, reflecting HPMC margins of 22.4% and AANS margins of nearly 15%. In HPMC, margin increases were driven by the building strength in our A&D core, which is 92% of Q1 segment revenues. HPMC margins were up 240 basis points sequentially and 400 basis points year over year. Even more than we expected, positive pricing and demand powered the step-up in margins. Solid, reliable production from our key melt and forging assets support enhanced sales, and improve absorption. We expect greater gains in the coming quarters. In AANS, we expected a sequential step back in first quarter margins due to the timing of above the line tax reserve releases and 45X manufacturing credits in Q4 2024. As anticipated, margins were down 140 basis points sequentially. Year over year, AA&S margins were up 90 basis points. Segment results this quarter exceeded our expectations. We realized timing benefits in specialty role products as our team worked with customers to mitigate risks and accelerate deliveries during our ongoing labor negotiations and the dynamic tariff environment. The SRP business also generated substantial gains in conventional energy centered on a prioritized project delivery. Congratulations to our team for delivering under a tight schedule, supporting our customers when they needed us most. Turning to cash flow, Q1 pre-cash flow usage was $143 million. That was a lower cash burn than Q1 2024 and modestly favorable to our 2025 estimates. Better than expected performance, was supported by improvements in cash used in operations and lower capex. We expect to be cash flow positive for each remaining quarter of the year as we drive a tightened cycle for working capital and profitable growth. With that, let's turn to our 2025 outlook. As we look ahead, many of our core assumptions in our outlook remain consistent. We are encouraged by the progress we see in A&D. At the same time, we appreciate that some customers still anticipate inventory drawdowns next quarter, largely tied to airframe sales. That keeps our first half outlook balanced. This timing is compounded by near-term uncertainty on the transactional side of the business as the world economy adjusts to the new norm of increased tariffs. With those conditions in place, we expect Q2 to look like the first quarter with more ramp and recovery expected later this year. For the second quarter, we are setting our guidance range for adjusted EBITDA at $195 to $205 million. That equates to an adjusted earnings per share range of 67 to 73 cents per share. For the full year, we strive to balance positive signals of A&D demand and growth with conservatism tied to non-A&D markets such as industrials. We are affirming our full-year adjusted EBITDA guide of $800 to $840 million. We are increasing our full-year EPS guidance to a range of $2.87 to $3.09 per share. This higher view of 2025 EPS is thanks to the benefit of the accelerated share repurchases Kim highlighted as we plan to reduce total share count ahead of our previous schedule. Let me add some color about how we are thinking about the top line mix and adjusted EBITDA margin so that you can better model our outlook. As we shared, A&D continues to show strength, especially in jet engine and defense. Based upon customer demand signals and Q1 performance, we expect full year 2025 jet engine sales to grow between 15 and 20% over 2024 levels. Defense, which grew 11% in Q1, also remains robust. We expect to maintain a growth rate in the upper single digit percentages for full year 2025. Overall, we anticipate AMD sales will grow 12% to 14% in 2025 as momentum in jet engine and defense combines with modest airframe growth. Energy growth is expected to more than offset lower year-over-year sales in industrials and other areas impacted by lower U.S. demand and China's slowed economy. Our EBITDA margins are expected to continue to improve during the year. We anticipate full-year consolidated 2025 adjusted EBITDA margins to be in the range of 18%. Consolidated Q2 margins should be similar or modestly better than our Q1 performance of 17%. Margins should expand in the second half of the year as A&D sales continue to grow. At the segment level, in the second half of the year, we anticipate HPMC margins to exceed 24% and AANS margins to be in the range of 15 to 16%. These margin expectations exclude potential impact of tariff pass-throughs. Stock prices for many A&D businesses have been impacted by recent volatility. Yet our conviction around the opportunity for ATI value creation has never been stronger. Compare the contractually covered profitable growth in our forecast with our stock's current valuation multiple. We are compelled to invest in ourselves, returning even more cash to shareholders this coming quarter than previously planned. At this stock price, how can we not? In the second quarter, we expect to buy back as much as $250 million in shares. moving notably ahead of our previously planned timeline. The strength of our balance sheet and our confidence in current liquidity and favorable cash generation fuel this acceleration. With this confidence, we are reaffirming our full-year free cash flow range of $240 to $360 million. Our full-year CapEx range remains at $260 to $280 million, with continuing opportunities emerging for customer funding of these investments. The CapEx range includes redeployment of cash generated from sale of non-core assets of businesses in late 2024. To summarize, we remain on track for profitable growth. We'll adjust and be agile as the world around us changes. The underlying strength of our A&D end markets coupled with highly differentiated, contractually secure products in high demand guide our course for the future. We are on or ahead of schedule to deliver every day for our customers and our shareholders. With that, I will turn the call back over to Kim.