ATI Inc.

Hello and welcome everyone to the ATI fourth quarter and full year 2025 results conference call. My name is Becky and I will be your operator today. All lines will be muted throughout the presentation portion of the call with a chance for Q&A at the end. If you wish to ask a question in this time, please press start followed by one on your telephone keypads. I will now hand over to your host, David Weston, to begin. Please go ahead.

Good morning. and welcome to ATI's fourth quarter 2025 earnings call. Today's discussion is being webcast at atimaterials.com. Joining me are Kim Fields, President and CEO, Rob Foster, Senior Vice President and CFO, and Don Newman, ATI's retiring CFO, now Senior Advisor to the CEO. Before starting our prepared remarks, I would like to draw your attention to the supplemental presentation that accompanies this call. Those slides provide additional color and details on our results, capabilities, and outlook, and can also be found on our website at atimaterials.com. After our prepared remarks, we'll open the line for questions. As a reminder, all forward-looking statements are subject to various assumptions and caveats. These are noted in the earnings release and in the accompanying presentation. Now, I'll turn the call over to Kim.

Good morning, everyone, and thank you for joining us. Before I begin, I'd like to welcome Rob Foster as ATI's new Chief Financial Officer. Rob brings deep operational experience, strong financial discipline, and proven leadership to this role after more than a decade at ATI. He has been a trusted financial partner of mine since 2019, and I'm confident he will help lead ATI into its next phase of profitable growth. I also want to thank Dom Newman for his leadership over the past six years. Under Don's tenure, ATI completed a successful transformation, expanding margins, strengthening cash flow, and sharpening our focus on differentiated aerospace and defense markets. Don will share highlights from our 2025 performance shortly. Turning to our results, the fourth quarter capped a very successful full year. We exceeded profit and free cash flow expectations, expanded margins, improved operational reliability, and deepened our customer relationships. We are entering 2026 with momentum across our core markets in aerospace and defense. Let me start with the key results in the fourth quarter. Q4 revenue was $1.2 billion. Adjusted EBITDA was $232 million above the high end of our guidance range. Adjusted EBITDA margin was 19.7%, an increase of 180 basis points from Q4 2024, demonstrating continued progress toward our 2027 margin goals. For full year 2025, revenue was $4.6 billion, up 5% year-over-year, driven by 14% growth in aerospace and defense. Adjusted EBITDA exceeded $859 million, up 18% year-over-year. Adjusted EPS was $3.24, up 32% from 2024. Adjusted free cash flow totaled $380 million, up 53% from 2024, also exceeding the high end of our guidance. We returned $470 million to shareholders this year, representing 124% of free cash flow. These results reflect disciplined execution, strong pricing, and favorable mix driven by our most differentiated products. Given our confidence in customer demand and our ability to execute the ramp, we are guiding to $1 billion of adjusted EBITDA at the midpoint of our guidance range for 2026. 16% increase year over year. There are three key reasons we are confident in this outlook. First, aerospace and defense demand continues to be strong entering 2026. Commercial aerospace demand is accelerating across narrow body and wide body platforms. Next generation engines continue to gain share. Airframes and engines rely on ATI's proprietary alloys, forgings, and specialty materials. We're seeing a step change increase in order activity beyond what we would normally see in seasonal first quarter strength across both long term agreements and transactional demand. Within A&D, full year engine sales grew 21%. As fleets transition from legacy to next gen engines, ATI's content per engine is increasing. With these newer platforms moving into service, we also see aftermarket demand growing. Together, These dynamics create compounding growth that strengthens our position year after year. A clear example of the growth we've seen is isothermal forging deliveries to Pratt & Whitney, where ATI's content has grown 6x from 2023 to 2025, with further growth ahead. This is largely in support of Pratt's GTF accelerated shop visit program. As a priority supplier to our key aerospace customers, we continue to gain share and expand content as customers increasingly value on-time delivery, execution, quality, and reliability, particularly in areas where other suppliers have experienced constraints meeting ramp-up requirements. In defense, demand remains strong and diversified, with increasing governmental spend across naval, air, missile, and ground systems. ATI's annual defense revenue grew 14% year-over-year, with missiles up 127%, driven by sustained demand for alloys like C-103 and titanium 6-4 across multiple programs. In 2025, aerospace and defense represented 68% of our full-year revenue, up from 62% in 2024. With forecasted double-digit growth in jet engines alongside continued strength in defense and airframe demand, this mix will continue to increase over time. Beyond aerospace and defense, specialty energy is emerging as a meaningful growth driver for ATI, delivering 9% year-over-year growth in Q4. While it remains a smaller portion of our portfolio today, the growth is supported by multi-year customer commitments. The business is ramping as demand for AI-driven power infrastructure accelerates across nuclear and land-based gas turbine markets. We recently renewed a long-term specialty energy contract that expanded our share by more than 20%, establishing ATI as their majority supplier and further strengthening our visibility and pricing position as this demand cycle continues to build. ATI's differentiated capabilities in zirconium, capneum, and other exotic alloys position us as a preferred and increasingly key supplier. The second thing driving our confidence, ATI's growth is anchored in proprietary products and long-term agreements that expand share, improve mix, and secure enhanced pricing. Turning to slide six, I'm pleased to announce that ATI is now producing six of the seven most advanced jet engine nickel alloys, with the remaining alloy produced exclusively by the OEM. We're expanding our proprietary portfolio and reinforcing ATI's competitive moat on the key components of next-generation engines. These products are supported by long-term agreements that secure volume, pricing, and returns, and align capital deployment with customer demand. Very few suppliers can match our capabilities at scale. Number three, capital discipline and operational execution remain central to our strategy. As I've shared in the past, our top priority is unlocking capacity through productivity, yield improvements, de-bottlenecking, and equipment reliability. In 2025, these actions delivered measurable results, including double-digit increases in remelt output, significant cycle time reductions in downstream heat treats, and increased equipment uptime, all without significant incremental capital. When we do invest, projects are secured with long-term customer commitments, often a decade or longer. Many include direct customer funding, enhancing predictability, and increasing returns above our 30% return threshold. And each investment is evaluated holistically to ensure durable pricing and protect long-term returns. In 2026, capital investment net of customer funding will be in the range of $220 to $240 million. with growth CapEx focused on proprietary engine alloys and high return opportunities. This CapEx guidance includes investment in our nickel melt system, including a new primary melt BIM furnace, along with the previously announced remelt equipment. We are modernizing and upgrading our melting systems, expanding capability, improving quality, and delivering operating efficiencies for our differentiated engine alloys our customers rely on. The new capacity will come online in the second half of 2027. Contract backed with customer cofunding, these projects target a run rate of about $350 million of incremental nickel revenue by bid 2028. Our targeted phase investment strategy is focused on differentiated nickel capability, not broad capacity expansion. These commitments reflect strong demand for ATI's proprietary hot section alloys and customers' willingness to partner with us to secure essential supply. 2026 is off to a strong start. Incremental operational improvements are already underway, and we see tangible opportunities to streamline processes, reduce costs, and expand margins. As an operations leader at heart, I know the value created by integrating our capabilities and delivering as one ATI. And I'm confident that opportunity remains firmly within our control. I'll now turn the call over to Don.