ATI Inc.

What they do

ATI produces nickel-based alloys, superalloys, titanium, and specialty alloys in forms such as plate, sheet, and strip, as well as highly engineered components and advanced metallic powder alloys. The company operates in two segments: High Performance Materials & Components (HPMC) and Advanced Alloys & Solutions (AA&S). HPMC focuses on jet engine materials and components, serving the aerospace & defense market with about 92% of its revenue. AA&S produces specialty alloys for extreme environments and serves aerospace & defense, specialty energy, conventional energy, electronics, and industrial markets.

Revenue drivers

• Aerospace & Defense (overall) — Largest end market, representing approximately 68% of total sales, with fiscal 2025 sales up 14%.
• HPMC - Commercial jet engines — Nearly 68% of HPMC revenue from commercial jet engine products; main source of sales and EBITDA growth.
• HPMC - Defense products — Fiscal 2025 sales growth of 24%; defense comprises almost 11% of HPMC total sales.
• AA&S - Aerospace & defense — Fiscal 2025 sales to A&D increased 15%, now about 41% of AA&S total revenue.

Recent performance

For Q2 2026 (quarter ended June 28, 2026), ATI reported sales of $1.26 billion, up 11% year-over-year, and net income attributable to ATI of $151.0 million, up 50% from $100.7 million in Q2 2025. GAAP diluted EPS was $1.09, up from $0.70. Adjusted EBITDA was $284.4 million, or 22.6% of sales, up from $207.7 million (18.2% of sales) a year ago. For the first half of 2026, sales were $2.41 billion and net income attributable to ATI was $269.2 million. Fiscal 2025 full-year sales were $4.59 billion, with net income of $404.3 million and adjusted EBITDA of $859.3 million (18.7% of sales).

Strategy

ATI's strategy is to grow in aerospace & defense, particularly commercial jet engines, leveraging its materials science and advanced process technologies. The company is investing in capacity and qualifying assets for next-generation jet engines and airframes, with long-term supply agreements. HPMC is focused on maximizing jet engine materials and components growth, while AA&S is increasing its aerospace & defense mix. Management also cites transformation initiatives and cost actions, as evidenced by restructuring and transformation-related charges in 2026.

Risks

• Cyclical demand — Demand from aerospace and other end markets is cyclical and could fluctuate due to economic downturns, overcapacity, currency fluctuations, and substitute materials.
• Commercial aerospace concentration — A significant portion of sales depends on commercial aerospace, and any failure to meet exacting performance or delivery requirements could hurt results.
• Build rate changes — Changes in projected build rates for aircraft or engines could reduce demand for ATI's products.
• Geopolitical and market risks — International conflicts, terrorism, and political conditions can affect airline profitability and demand for air travel, impacting ATI's aerospace sales.

Outlook

Management raised full-year 2026 guidance in the Q2 2026 earnings release. They now guide adjusted EBITDA of $1,135M-$1,185M (up from $1,010M-$1,060M), adjusted EPS of $4.90-$5.18 (up from $4.20-$4.48), and adjusted free cash flow of $550M-$600M (up from $465M-$525M). For Q3 2026, they expect adjusted EBITDA of $305M-$315M and adjusted EPS of $1.31-$1.37.