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Allegheny (ATI)

Participants
Scott Minder VP, IR
Rich Harshman CEO
Pat DeCourcy CFO
John Sims EVP, ATI High Performance Materials & Components Segment
Bob Wetherbee EVP, ATI Flat Rolled Products Group
Kevin Kramer SVP, Chief Commercial & Marketing Officer
Richard Safran Buckingham Research
Josh Sullivan Seaport Global
Gautam Khanna Cowen and Company
Phil Gibbs KeyBanc
Chris Olin Longbow Research
Jorge Beristain Deutsche Bank
Call transcript
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Operator

Good day and welcome to the Allegheny Technologies Incorporated Third Quarter 2017 Results Conference Call. All participants will be in listen only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator instructions] Please also note this event is being recorded. I would now like to turn the conference over to Scott Minder. ahead. go Please

Scott Minder

the Good today today third Andria. is welcome the and Participating Members to broadcast listen Chief invited Thank this the Rich to XXXX morning Harshman, conference Technologies call. of atimetals.com. at quarter our the call have call. Allegheny been on to call you, in website us and media are This being President conference Wetherbee, are Chairman, Components Finance and Sims, and Vice Chief Senior on Chief & Pat the Products Also Officer. Group; President, Vice Officer; President, call Executive Vice Commercial Kramer, Rolled President, Marketing joining John & Executive and High Executive DeCourcy, Financial Materials Kevin Officer. Group; President, Flat Senior Performance Vice Bob

via connected you screen. this Internet, your on you're should slides to call the see If

dialed the atimetals.com. website, earnings, For slides those After we for third who line will questions. on initial have on are quarter available our open in, comments

During others two the question-and-answer session, be the on considerate to to questions line. please limit yourself of

always, attempt the and on question-and-answer may make to note slide. morning assumptions all subject all conference noted allotted as materially. forward-looking differ reach every and time. that call are to will within the the statements queue various in earnings this results participants release caveats in As we this Please Actual

income, to Lastly, net earnings this loss net in ATI. mean all net call, or references to income, net earnings loss, conference or attributable the

Harshman. Rich Now, is here

Rich Harshman

or morning via ATI. welcome everyone Scott, the you, to you call board. to and great listening to Thank have on on the It's Good internet.

ramp a in and to our results July. with operating and ATI revenues second call continues earnings provided remains margins operating outlook track consistent during XXXX quarter as were on Third The result. commercial aerospace expand quarter the

accounting results third cast business. to Third were charge part and to interim business in non-cash charge related by the was quarter. our completed impairment testing of on This was products adherence as standards based impacted quarter a required goodwill financial XXXX

a businesses robust in several have pipeline, to the we and continue remain castings plans performance years. demand over next financial and XXXX titanium We improve investment our in materially confident to the

High the quarter million a expected in Excluding third than a or profit grew were impairment the of XXXX, the at by is growth. margin impairment Components results prior third X.X% segment Revenue strong goodwill double a about engine excluding driven or share, jet per compared business impairment and digit operating double margins two $X was recorded operating consistently segments, Materials XX% of readily to of sales power loss generation as year-over-year our million quick charge apparent year. $XX the ATI's charge net mix goodwill loss million quarter. the Performance or versus or $X.XX we Net $XXX & next of our look we're operating by of a Taking $X.XX strong The HPMC more sales generating continued including goodwill share. a as charge, products. were results

albeit with our to we and material raw processes. on the to to value oil years and due ramp powerful high business particularly surcharges related to tailwind raw was Products decline million some in we've next and the quarter-to-quarter or raw The continue primarily FRP As directly continue over to optimizing results ferrochrome variation. track need loss year. a a Rolled the strengthen prices, provide segment of remains and aerospace products, increase while in The cost steep continually to out-of-phase of material sales Flat said, long-term operating nickel production earlier material and impact, improving experienced gas $X variation several aerospace should

and remain we ultimately Products improved our opportunities, asset to better Flat Rolled world-class stronger operating on results generate to to identifying performance, addition business In focused sustainable utilize profitability.

view quarter our of six of Slide clearly to and results. up the business ramp segment our on financial the this results jet its HPMC Turning impact engine demonstrates X,

increased XX% engine prior product year consistent growth jet commercial versus Our with the sales quarter's the second rate.

increases margin delivered double-digit This parts. by our business Year-to-date, third sales helping consistent engine, HPMC in and in third prior value due prior increased as of a quarter benefits were impact prior related on to significantly jet product margin a specially period. financial in growth differentiated and an growth year. to mix to segment, and a the XX% engine our translated growth built profit. demand forge compared to for into gains products sales and by generation improvement segment rate also powder results business. year, the our high the compared XXXX Aerospace as year-over-year forgings XXX The these same have we consistently nearly in positive forge segments margin. gain quarter, for evidence versus margins impact this our the XX% XX% increased hot-die the operating and basis the XX% year-over-year points basis HMPC across when is in our including continuing benefited operating to quarters. sales have XXX two components, While the has iso margins the the on a positive year-to-date points growth improve with our significant alloys, alloys including have impressive next operating the our segments This parts In

a increasing aerospace Our meeting amount work. customer and demand preparation success levels hard has not in significant of come without

continuing this by to XXXX equipment we OEM stated business finished aerospace market, of the as short-term and charge and the the we've including construction XXXX equipment. construction demand the specially strong with in impairment construction headwinds, about our long-term and forged continues past contracted outlook non-cash lower part few increases components global modest mining our materials, parts We experience the result. ATI's has which castings. begin energy, their gas, supply into positive very years charge, and to overall is a led parts electrical opportunities forged in face quarter. over I half and for demand The levels Despite remained Outside challenged and markets the including major mining customers in and broad we to and strategic demand move earlier, for castings increase the as demand products first other goodwill for been of quarter, has As several business titanium oil and year-over-year customers in mining the in as range to saw beyond. aerospace a forged for increases equipment. Beginning third of demand in seen industry the

titanium in Turning to Slide leader industry and alloy in powders an ATI nickel, X, used complex specialty aerospace is applications.

powder manufactured increasing capacity titanium alloys powder with via within and These full materials our jet while properties. at desired and processes, to engine make isothermal advanced are customers while alloys, aerospace capabilities advanced performance powder products facilities, alloys based to powder customers vertically and operating our ATI's our maintaining the meet and producing integrated powder strength needs our facilities. capabilities two to for processes. manufacturing Pennsylvania parts our develop in their rotating capacity. added used forged are to producing, Today, continue one nickel one powder We used enhanced characteristics in by thermal our Both -- grow based customers for by in we making

growing satisfy parts stages actions. and currently has powder meet for industry demand our demand additive production the strategic facility anticipate To super growth designed industry all-new of in facility We of ATI to North an final Looking several forward, components. recently proactively and production powder significant and alloy required manufacturing sites materials for the this manufactured on products, advanced nickel aircraft higher and we is in built complex powder taking customer emerging one This and qualifications. existing for Carolina.

We contributing and to the this expect year and first ATI's this to of begin qualifications important of to end profitable by growth complete in operation half XXXX. early XXXX for the in

capabilities. of by XXXX, addition, Board alloys titanium an early In as in produce This When $XX the enable X-X titanium powders expansion primarily supported aerospace million from will facility aerospace recently new market. will standard profitable demand Directors the facility titanium. grade approved ATI's growth our such complete strong alloy standalone powder of

prior ATI with Aviation facility manufacturing joint that located be powder we industry form. to the for and strategic investments manufacturing opportunities. developing announced technologies used R&D and to This summer, industry and further the will pilot converting the meaningful for these whole. material Finally, aerospace eliminates as venture we needed with Taking the step to initial facilities this process markets traditional of that of scale processes melt especially ATI's GE to those novel alloys on ATI's South manufacturing and our focus scaling these production at technical including future will up powder in growing future process well on with on forged together, site demand capabilities and is current profitable and developed array of GE serve aerospace over ATI's forging each our the best and Carolina own. driver existing isothermally the provide for operations growth demand Richburg, of other years. Individually, several ATI along significant ATI's capacity believe of next growing the and are as parts base components the additive the a

by product the were two third relatively $XXX versus achieved Slide to the the sales preceding and surcharges raw material FRP quarters quarters X, the Turning this surcharge mix despite in quarter material We Essentially, quarter. were million. at quarters. in and consistency decreases in raw XXXX lower second higher line with volume sales improvements offset first third segment

demand in and levels, recovery saw oil of we our markets end in major and at including an Looking gas aerospace sales. several in an growth a ongoing used increase

touch moment. on detail more will these a in We in little

$X in Our to great sustainable of based of to quarter. full prices manufacturing surcharge year-to-date in the Work third Flat profitability significant the of in our regardless business conditions been will earlier out-of-face higher this in is of million quarter, segments primarily losses. several cycle. sold progress third fluctuations raw the This Rolled price achieve for In XXXX segment in to lower raw in material material resulted nickel a policy. months years and cost steep XXXX, X% and returning Products has the due for prices the year the falling profitability material A of segment in remains materials for made primarily profitability and at the be loss period this profitability objective selling after surcharge although ferrochrome length resulted operated loss product where prices of or decline in nine at raw segment sales trade the third quarter.

including believe be will segment XXXX. will modestly processing facility We we by the quarter enabled those continuing fourth and in results improvement to raw accordingly. of Rolled ahead, we material prices and operating reduction have quarter are benefits significant and Looking initiatives, Flat cost segment that improved expect Rolled rolling profitability HRPF. this efforts the continue fourth Product results Flat trend to expect show or hot and our benefit our the

and our make segment our in the improvement within ongoing continuous Turning to Slide focus journey that process materials initiatives which by focused improvement improvement Flat ATI solving specific example, to flow. on Products on business These Net goals in growth a maintain projects items continuous the Rolled these people earnings improvement cash once slide We they X, manufacturing the Each be but in of completed. on challenges assured the teams out of products achieved to continues will each involves reduction. of work. ensure raw we our of I and issue, you that of profitability productivity interest pride continue significant can and each most quality cover that its efficient the issues this that team spend complex generate I on progress specific time the of on as and a factories can towards operations needle. will focusing on examples these in laser operating won't call way looking time, progress possible. its for long-term make to we our time couple take specific on improving In high the initiatives our day control. in focus move great of producing cycle each sustainable

as whole the a shape ability attributes. ATI. in discussed, previously us as a produce nickel we’ve facility market a benchmark and for our recognized with products, new XX-inch HRPF value to such range its changer the This quality of superior is quickly high place is sheet consistency As game that for wide gives being coil-sized

we in Flat the business, in products strategic oil in capabilities markets existing for we aerospace to Rolled nickel have In qualification titanium Turning our several we demonstrate to continue gas Products and and ongoing markets. our high aerospace, new customers business OEMs value to efforts our alloy for at and stable times on products a the and two innovative oil to market, largest Rolled customer to on Products our recovery reduce allow to based cases, more overall materials experience and and many long-lead gradual prices. In gas, critical oil their end product In cost. increased suppliers. customers tiered continue related solutions and higher Flat demand, lower

Additionally, HRPF capabilities our position enhanced by leveraging new we ATI to have products. competitive the produce

alloy when As customer tightly Eastern enabled an to material tolerances, for recently amount due nickel to ATI example, use from material. corrosion product yield project The requiring products we've extreme allowing Middle sizable same for the a business order in control received HRPF the a of resistant supplied material. ability its to the higher generate a

moved our from work industry several meaningfully opportunities stage. stage leading update, and HRPF conversion on quarter with increase conversion flow. to evaluation significant customers trial continue of we second our that potential potential to addition, utilization the the can two cash generate have Since In projects the

conduct fourth as able. as will are and We several the quarter communicate more in we information we to expect trials soon

Pat is on our further comment third DeCourcy results. Pat. Here quarter to

Pat DeCourcy

Rich. you, Thank

of XX, was under and the additional to Slide XXX XXXX, XXX liquidity million credit million, or cash available $XX approximately hand facility Turning with revolving X, based as September lending ABL was portion. our on borrowed asset million under

we and growth in million levels. quarter, revolver Within borrowings to higher from the end. the invested before third XXXX, working of by the operations flow off quarter outstanding capital we business production balance in reduced generated intend third new to pay ramp million $XX revolver to managed XX cash even million We the XXXX additional with support as XX continue we year

our expenditures close the The months year. quarter managed to the in first is capital to We nine capital the around the significant be outlook, projects the Company. of Consistent a estimate cash out XXXX we after source quarter in million, work about with in spending fourth of quarter. as be prior working XX various expenditure fourth year we of the highest expect traditionally million to XXX total capital

reduction be we grow This XXX million to Going capital plan has leading cash for this cycle of company, anticipate includes achieved in including expansion. we continues profitable focus. annual year to excluding powder capital the throughout titanium an business In in to forward, end reflects continue the production flow first $XX a and extraordinary from operations to presentation, business. of expenditure industry to million made capital our cash previously XX the discussed major over assets managed modest as expenditures efforts. be evidenced pension transformed profitably approximately utilize Generating the contribution months quarter. we ongoing million, $XXX that growth the required million This nine XXXX, our first ATI working to support our growth

flexibility restoring consistent value liquidity. generating ATI financial We by creating balance long-term on are maintaining and cash returning sustainable strengthening flow, shareholder focused profitability, sheet, and to and our strong

Going objectives. evaluate achieve forward, with we our will and these thoughtfully structure to capital deploy our capital

Now, the I’ll turn Rich. over back call to

Rich Harshman

Thank you, Pat.

the aerospace XXXX, first total sales. Slide sales for ATI the and of were XX% nine of to defense X, months Turning for market

gradually to a gas low largest second continues market oil from recover Our and base.

aerospace of of our engine customers ATI market sales. forgings sales airframe the in of specialty generation engine programs. led our were materials defense next total in engines accounted commercial government represented used to X% sale, differentiated to and sales. grow and Commercial ATI jet XX% total the market more total and customers sales at aerospace jet to by continue Looking XX% detail, for

continue growth this to expect several We years. next over the

focus GEXX the help working Rolls-Royce the OEM We develop execution customer multiple & as fourth increase the such schedule. Geared future LEAP, with this best platform. new engine family. we of market, place quarter, primary that each our In ensure jet third our on engine customers our quarter. Pratt agreements aircraft is Turbofan jet and the can Today, build Whitney on PurePower expand engines in on to and demand to engine the have variants customers Trent world's in We're programs including expect the modestly engines GE levels the content long-term to in and trend of airframe the major Safran

to Products continue optimistic Flat add bear come these existing we're market. airframe titanium our in to As on this value will strategic to use mentioned within Rolled and that projects We're increase fruit to new several actively the and and quarters end earlier, sales sales. high years working our efforts

year-over-year in government government defense growth posted in primarily a the business sales. was Our defense plate and armor countered vehicle quarter. third by in aerospace Growth from decline

several and large industry defense recent in agreement land & applications. We Pratt overtime government due expect to systems applications on aircraft. part the aerospace continue maker sales and FXXX engine our for the We our with growth parts Whitney longer to to the anticipate future term based FXX naval of in increase

Looking were United States, outside sales consistent billion X.X our geographically, made of results in sales directly quarter. at with our the over year-to-date located of second customers the to XX%

We continue and each sectors market to and geographies leveraging our of search in capabilities. and by for technologies growth industry-leading opportunities our major

Moving for ability to growth quarter meet segment to ATI commercial year-over-year aerospace Performance The long-term gearing positioned and the awaited continue and Materials our demand customer increasing generate agreements. new is to existing results aircraft. next from up as XX, global sales is demonstrate aerospace on long ramp High our based future consistently Components margins & for well generation our Slide third higher customers operating

in We’re focused execution the possible. most on and efficient assets leveraging on our way

in other we financial anticipate along customer end our third quarter will to Our with versus lower quarter. results seasonally in quarter titanium fourth markets. modestly improve gradual fourth Materials the expect user airframe segments growth In success ongoing sales total, Components & be in Performance success. the recovery We High

next mix generation five outlook years, to also in could Given year-over-year timing within revenue the quarter-to-quarter next supply transition, variations in we're the growth relatively product dynamics growth we margin chain and that but over to and see and of the operating to industry mindful due expansion we're the the issues our variations. legacy three early confident aerospace occasional

XXXX, Looking we continue rate ramp aerospace for expect next products generation to growth positive XXXX drivers accelerate. ahead to further production the as

industry a XXXX business our casting become nickel some for new our our new alloy facility point XXXX the is This anticipate powder and facility. for certain expenses of products. including production in headwinds tailwinds of addition, growth, elimination to In turnaround a valuable we of most the focal start-up

generate Rolled quarter's a we Moving can sustainably our the have shareholders. journey and underlying loss, profits Despite for third create our flow business the business continuing throughout segment, operating Product our raw material driven cash XXXX. that improved ATI Flat are and fundamentals to

our mix We value versus have on high to the in have as surcharges and financial product We prices further strengthened materials oil capabilities increased improved based titanium products, quarter to leveraging of aerospace penetrate our nickel focus third more markets. and fourth HRPF gas and and the the raw results anticipate the quarter.

of the entered Flat stated a year, in modest show full to return and expect 'XX the segment We quarter as the objective to to Products Rolled fourth a profit profitability for we XXXX, XXXX significant further additional years profitable Products improvements Flat and this growth in a is after several in XXXX steppingstone for and beyond. for losses of business. our business Rolled in

cannot have to most where trade impact. we areas good While we or the can continue progress we on raw make material prices control policies, the

position key productivity intense end improvements improvement focus used maintain on will We and our in enhancing markets. while continuous our

Flat we phase, the In we that to to charge operating the We improvements decline least utilization Flat business. achieve XXXX. to profitability been eliminate price increase Results steep creative made, growth the consistent in quarter solid Based will of fundamentals, summary, business benefit or much ask that the by the a evaluate our quarter the I progress would with our that, more and and agreements has prices, the and for and already more lines sustainable currently Rolled at Products goodwill which in work third was do volatility. one open the in for while Rolled expansion impacts from two raw assets impairment we year-over-year expect reduce negative questions. from trial negatively we impacted With optimistic to to continue raw revenue can In material margin saw Products have potential or rearview in short, quarter's to conversion a fourth first our in operator ATI ways the were on material of quarters non-cash about mirror. future we is like opportunities. the are

Operator

Instructions] We Research. go first Buckingham Our question-and-answer Safran now of question Richard will begin from comes ahead. the session. Please [Operator

Richard Safran

So, profitability the in the and a at profitability this -- return castings. maybe wanted in investment a October release question XXth, 'XX, to on in or John, to said return in issues you the first that you. was I 'XX. I question affecting dive In said XQ, XQ to you into 'XX have breakeven for more near bit

and you if what move So, to the know said if your confidence bit, the I you a meeting go little here? targets could want you the that gives -- maybe could change into in that discuss the you caused right, new to

John Sims

Sure, Rich. to There are we're profitability. as dealing three we sustainable issues business that transition with that

business optimal through are the significant is get change first working learn giving The most represented probably parts from are greatest the to engine related parts amount significant introduction. new efficiency. the largely of business. the from historical and that out mixed to standpoint of require These the parts profitability to part Many challenge that

that. we're way through our Now, working

amount significant people the the We've hired with three training we hiring in in force and labor associates probably years business. is second in last The that business. of that XXX have

profitability. third the significant. revenue is, additional contract increase according. prices part guess raise I in those to the as business as we're expire, improvement bringing And as the we So, as an labor the potential this their operation is is through to the productivity and well opportunity up up part as well contracts up to capabilities quality driving people working negotiate finally, get and peak most

standpoint So, standpoint more now. high parts. to level to right XXXX, we a on learn release new these related But earnings projection we to significant business of to getting that right put a at at expect in shift that was for from near represents from that improvement significantly, look year-over-year. performance I the breakeven as consistent or that's year-over-year as out profit be achieving the And our we think probably in

Richard Safran

to on Okay. you you you expect do wanted ask Rich, under I a By would there? what I discuss flows? talking how been you impact the able be to have mean by for how discuss target Pat, spoke these and could X Slide more what about these agreements are on And things you mean, on have be about and agreements might P&L? something also, give little are mean, you're bit bit out And to that thinking discuss conversion a when? on that you about. the about Could much them? you you on typically us roll I the What there? for could you're -- cash example, these capacity expectations I mechanics what we've margins of things? like about

Rich Harshman

Yes, ask thanks the at Bob going end. I'm comment to Rich. Wetherbee and I'll to add then

Bob Wetherbee

get to questions will let of them try Harshman I to up and I'll here. Good in Rich Four morning, there, clean most Rich.

see potential we target, the probably through to that double the agreements. volume the of terms the conversion months the in to XX HRPF In production at next XX

the volume for the or very pretty HRPF incremental really of add significant terms itself we're In cost. financial seeing, automation high to lends low the incremental impact

us come go we we going end kick to in I sure benefits value quick products the it's move and using tied tires, of were the to trials. evaluation they unit an see then make trials all process HRPF customer and the product small is the we costs application HRPF. So for And they is a And say, into as be, they the the the actually move one about it's that exciting of enables big to they to for. mechanics think the basically what's our lower what then with the for customers with volumes the through as product is

-- that So companies to they coming can they HRPF actually differentiation see that using their coming the product us, HRPF. see get in by people to the end really the the

could some of it’s production of tons adoption applications of fourth see thousand we matter So full next I probably couple rolling the XXXX. in then these quarter, into think through a XXXX the by the with a customer

where XX of the So, the that’s to months. the get for XX next throughputs doubling we the and HRPF

Rich Harshman

Rich when our either Yes, in think consistent been where Products, and in for have it's to been commodities and question been on reliant that with reposition the business calls heavily is from I journey expectations really we all that Flat or asked are right? on I addition fairly meeting investors. largely And -- we've the mean Rolled What on products facilities a due and higher operation, benefit to structure of That’s in challenge the a material domestic than stainless the not imports. have labor been that you costs our cost fact higher competitors, site competitors, higher when single the a and and we're primarily the site since our across commodity movement on production than certainly are side.

into the utilization business the Steelworkers focused the on then last that, to for years going that. or a an and more, expectation. to greater and dynamics the change bargaining So to of some specifically how do So, the for we on single arrangement XXXX commodity reliant income HRPF? for way United the There of right. accomplish be more bullet have business several tax begin next the entered value side? all that structure that new the cost high this and think that’s and How refocus several the collective with the less going over over not we we was, as the back the pays is $XXX our more look emphasis we of we expect I the generate million that have and that assets, business, at That’s all our that mean I was I viewpoint years do side before

the Some and about. work productivity of we reduction continued cost improvement, that is on due that to talked the

differentiated Some of is products. growing into that the

business. other how that assets. that the steel for then primarily the lower the for for make with that leg and of And and on of commodity begin will the focused And opportunities that of load capabilities as finishing we sheet conversion look base and shop additional hot fourth refocus make HRPF product enhance structure that Some comes carbon and for using efficiency a of and important rolling is capacities certain is melt products structure products. that don’t do the cost on, everything the really like cost in that we the the we the

$XX when year cost at the a and available we structure conversion view total we pulling have. think plus business do benefit grow from the other part make, enhancement that’s of look that I a that on the million of capacity the margin $XXX So, and a we we aspects standpoint is leg that the enhanced products that target the as particular IBT. HRPF, million have million of and that of a $XX to That’s both about you

sight opportunities over overall are two So into working we the next two there points to of see there two. more times parties is These at trial these to out parcels very have strategy. we a lines with, There of that The advanced are conversion couple other that Phase. of years more and the that are achieve specific But side. and on just the that. two continue in to part we it's various not work

Operator

of Sullivan next from our Please Global. comes Josh go And ahead. Seaport question

Josh Sullivan

that Whence systems that? here? inventories significant frame backlogs. kind morning, Or how margins aerospace see the the on but we where tipping resized and that, and tipping cadence? help this are with us engine this do delivery OEMs accelerate you where of UTX point point? at But obviously can Clearly, delivering ATI's just down real point you here come casting confirms

Rich Harshman

never last is and we view margin don’t nine today growth what plus a -- XXXX we're mean, right. we next the I think today, will technology five see positions line, that over have growth business you're cost to and we each billion about going the most said a side I with market of the you structures of going $X achieving. by year, base is high cost the the in never years I in months over couple growth think the we've XX% in a next we than have the talked business, I of year in have cost on Yes, next about over performance years we competitive this into different heading of several this place, of I view My year. the to mean, the the that we what mean the the basis operations, where that and first see year revenue our capability of satisfied on from the in be. side, have is, is fact segment which points we which mean where back XXX completely you

to important that we're that attractive capability creating it's market on opportunities of years, other business, should that. in So largest I somewhat than we're some in long-term end five the I strategically chain or that end on there the ATI that. that focused and are get But because and are But be for focused a that be profiles technology there the can that journey we a margin will, on that may And not XX% aerospace we commercial for we working keep we're the mean earnings value faster But overall as the us if four and supply well. growth there think pretax that markets just given business segment. have have. that’s we and

we been quarter-to-quarter, there with every think I what a this is And perfect I we're. performance that for four we What’s and think have are we said and quarters of business our don't So improvement. exit isn't business? and How that overall is the the progress important, more mix But -- before right. the I always we making we I've at from continuing all right, fundamentally supply this, for chain objectives in and cadence are it while, product the consistent quarter's cadence saying progress? -- right. possibilities the look so period changes cadence. And the trailing of variations is

through I think track far quarters. three we're on so

bottom I line the think end points XXXX. as for on as further look basis we're at the the top of as XXXX segment. XXX improvement we track at I growth of will on be at well line couple

Josh Sullivan

this a OEMs or be industry, see choke supply And rates achieve then announced narrow in just on points production any chain this either at Do I headwinds bodies point? the is which some to for might guess. the to the follow-up the you the

Rich Harshman

question. a Yes, great I mean that's

with turns position to I we deal the that and people help answer to positive -- would OEMs, chain but all of So, in we available but that opportunity. the since emergent best to supply through most is competitors really I that question how are customer those capability for they demand chain. way, longer this the it in are with there were them that. do. stresses the a the ATI. we the causes of that to be exist, the and think a and extent mean can where supply a issue, cases in term I the and the And chain, very able OEMs where an on, worked that the short-term being demand, We of answer a that supply also aware the and capacity they In see are see how they we into deal net stress

engine that across the ramp before supply those think look at that’s supply cycle has new at and before, It’s than a multiple this faced. -- have right. been more single I existed in in different never never I that when you have think in of kind global, different chain kind produced challenge So, every that levels challenge, ever yes, chain, a the platforms rate industry years, of XX complicated I a has been it’s that's through

are good. part, strong I and are very the very most improvement, OEM it aware job. I is think Where supply of and they with a to the great for the for working is there's supply OEMs the the address think the and everybody chains and I communication chain think diligently and opportunities issues, within doing

Operator

Our Cowen Company. comes next Gautam go question of ahead. from and Please Khanna

Gautam Khanna

comment through was today could should and it wondering, up, relatedly in year capital I Pat, at follow cash just this next about maybe your what's for free best flow. percentage think if working QX? of subsequent And to one level? extreme the flow you're the how in we assessment walk a payment Does free ramp, that you Does on sales? stay as can drop? your Anything XXXX you going that Maybe of years? expectations And the make pension given cash cash us and just then

Pat DeCourcy

managed quarter, were out managed time. in million. higher working fourth a cash nickel working consistent be leveled working some which We point driver around well of to experienced big in capital costs as Nickel to down. and at the as this percent, of slightly QX. free chrome use capital cash at of expect we expect managed Looking it a $XX We capital the as in flow do out has

raw to least million materials, we at given QX. working stable XX expect generate in capital managed of So out

this on to in on ahead are a $XX year. can Looking into would next million expect we assumptions If have we performance year be end, assets a but good that that go we there pension for into probably the through return our up hold year side, estimate, lot very to total year-to-date. pension million $XX on of next contribution

from So we that driven returns asset down place. earlier being have would our be that’s in estimates superior and substantially by that

the looking hold would in million in performance revenue assumptions for year. in back improvement based well segments year overall if next bump It as step by expect significant very flow to be in driven business. as for. be next $XX our nice well to that’s million Rich year high a Products We our as business. around nice That by us flow over mentioned aerospace $XXX $XX million. but next a end the we would increase earlier Flat growth going next in a as in Rolled the high cash the for for be driven That’s subsequent performance the as primarily higher should margins do be segment, to some would on year current for we So cash years, through free several level up that years

more provide our estimates. this at the but point call, quarter fourth that on guidance and that’s will information in We

Gautam Khanna

And one with revenue engine & content Whitney of the have have what agreements I now on you do on Turbofan. announced of other on one guess And sort you're you Geared Pratt may, if some is. per GT? assessment any

Pat DeCourcy

a we -- we've point but we in that public nothing made time. Nothing at view this that

and So, if see we question will see, think going that about forward. we take what it do and

Operator

ahead. Our next Phil Gibbs Please from question go of comes KeyBanc.

Phil Gibbs

quarter you could Rolled Flat cost business them the on a I the quantify ferrochrome by mismatch question or in third and to the price the you there nickel? of that just magnitude with cost to to got call had hit if to way

Bob Wetherbee

Bob Wetherbee. Good morning, Phil. It's

as range Coming in $X.XX came from to ferrochrome lag $XX effect, in nickel $XX back of the down million the terms and mismatch, range plus from we in terms $X.XX, into $X see the minus. about we're at to all and probably a of that, to inventory down QX came nickel In for $XX into And closer QX but QX. in $X further a million that’s balance or ferrochrome at come that we the down $X.XX. year, the the

closed sure. nickel, QX is So nickel yesterday think pretty aberration year guess for to and we ferrochrome the the we're $X of do see stabilization is go, I how nickel going the it for to much kind but the where And on at trying or just so. $X.XX

is $X QX expectation. So trend positive in the reasonable probably a

Rich Harshman

Phil. Yes,

is, the better of venture impact be add in performance will in we that the other joint The STAL seasonality QX in in QX China.

that, is traditionally we quarter see improve in as that the did overall quarter results help will the to improve and we lower and well. third quarter there segments fourth which The so, expect

Phil Gibbs

Okay perfect. And it's my last question here.

for very, the expected aero. quarter-on-quarter? largely aerospace very near-term you say on to Just Did be you outlook that revenues stable

Rich Harshman

QX, is question? to QX From your that

Phil Gibbs

Yes.

Rich Harshman

question? your that Is

Phil Gibbs

Yes.

Rich Harshman

be in I quarter, and not that think overall they seems fourth and pulls it's will the up quarter. upon improved the happens, dependent be exacerbated every typically and product everything very in but to the probably and modestly only mix

fourth quarter. last fourth history of terms quarter realistic end happened towards year end could So, of there is lot the upon the the how of result month at in specially that -- the we based quarter we're being a of I the in things view think that

there happening think if the way anything if happen I fourth quarter, certain upside they been pulls have here maybe opportunities some recently. that in the

Operator

ahead. question next Longbow Research. of comes go from Our Olin Chris Please

Chris Olin

the material any months? example, perhaps for XXXX Rich, bit could been going what there For new that little penetrate the has Boeing see contract a set opportunities X you talk going Airbus next there environment about can Are for you're the over business? forward? to perhaps other you out or to XX

Rich Harshman

questions. Great

have periodically hear the from or contracts XXXX through every under portion there of the a but a growth Boeing that talking launched is XXXX has the quarter. of agreement. not currently, contract Boeing our about demand, needs maybe been the us from XXXX or from major so to into you think I standpoint, withheld their kind awarded, the mills titanium there that been three turns volume that emerging And in

application application a in product. on us growth work see a the that supply we are are 'XX lead-time ATI with will important long year, targeted Airbus because and also we not to both supplier we for some Airbus, you a and of producing from materials, sheet, XXX for as which a it’s and on for with and of presently excess working Boeing continue we and significant do the So, situation airframe high to very replacement has Airbus, of high In direct 'XX. price X-X cost a of with

Products. There're as time there I time this will Rolled some you that a demand demand see So -- pulls talking to pulls are I long-time, up seeing early we think and Flat more are opportunities XXX -- as XXXX as have think that’s been this ATI pushing. us for real oppose for there a but ATI XXX

opportunity that’s through than opportunity. us really we are. And bigger I initial On the later Airbus, take the Airbus because the expect frankly real Airbus But from we quite expected we think a grow supplier is industry XXXX go towards proposal with to that, would bid, year that’s that with in is of target be think process. should us Airbus the RFQ to a and for is that the on and there a effect, con is a XXXX that we XXXX end for

Chris Olin

first a headwind? quick Just into more like suggest as inventory lot that they're that follow-up. looks perhaps in a it might here, quarter. the long And third, could titanium be bit Does that its XXXX going half. sources Boeing aggressive a airframe be the channel typically of material fourth

Rich Harshman

mean so. I think I don���t

minimum of sanctions that it little they've that’s think the in think agreement. a I have might risk some be risk will over done what the driving buffer we the in reflected our other have we more mean the inventory mitigation that that in a volumes the be I have I contractual be bit, what their don’t think that agreements, just a in increases and possible and I build agreements, volume, know against that case. in our rate then and our suppliers but understanding Russia managed, really XXX I increase will know but I

So and I I don’t are. of discussion good head way. happen the see dialog with it what contractual think stated. Releases year, know We really year mean what we that that’s mean throughout requirements a into I that’s the that given, I requirements right. the are.

we So, in we we the And what in know this how everything see seen know and XXXX. past, and different dramatically also at requirements we've from for the anything quarters don’t are. loaded point contractual quality what time, being the are

Operator

of ahead. next Beristain Please comes question from go Bank. Our Deutsche Jorge

Jorge Beristain

I was your or provide you material kind clients what if the color HRPF? Rich, some industries on on could more are wondering of trialing

Rich Harshman

to do Bob, want you answer that?

Bob Wetherbee

inch. wide higher think, up applications, get that facility that can width-type property the X I carbon, they they're predominantly to and now a traditionally make can Yes, And in our pieces with, very start a Jorge, they interested in double in applications they're many in off it coil. to they get width

strategically with support We're will located HRPF. the the you our So, see areas shale of gas U.S. structural applications. to

from it's after the markets what into the So rewarding markets property, going have of gauge, to width we designed extreme defining what for. we're heavy with are gauge attribute interest people do is the But wide us that region. those are kind control, that so real a and that’s lot seeing

Rich Harshman

doesn’t capabilities advantage we're I the someone And producing efficient and it’s take HRPF. of it. capability the also I necessary capability that are very has agree a and at for you're rolling way on Those right. think it's the unique of capital the entities of looking who hot of really but with the the And those -- slab, very to exist, focused ones have

Jorge Beristain

something high-strength hearing point so deal? not in with there, this assuming out I'm thrown you're I'm not automotive doing automotive at Okay, any

Rich Harshman

-- with primarily players supply at oil that. one to integrated real the to have time but are be focus as and the emerging point market, the there large some don’t capabilities could and gas I that’s think that There markets product is opposed current in there automotive. service opportunities to on this Yes, develops vertically the that corrosion

Jorge Beristain

you or down anyway Does Okay, bringing and while then preclude more guys forward road? venture your the joint possibly in to the that strategy partner totaling. an from equity doing on move sale do there in

Rich Harshman

No.

Jorge Beristain

a and just side. then one-off product a this yesterday that that industry your Could up very treat facing some of dissipate are clients. you more of any heat And by any had on that you rate in you there was and you guys held to talking a ramp aerospace be just if the call comment ramping due that extraordinary would we Can are competitor to trialing high ramp Okay. you as you being about extraordinary -- you sort cost seems chain talk with are about titanium fully? guys maybe incurring that sort expenses the

Rich Harshman

already our own there by down heat a and -- No, was the District. capability at started been we operation shut facility. investing Southern was I Southern year, had issue project treat earlier Irvine, treat our primarily California that this in a Management expanding Air capital California because capacity on had Quality heat mean But there California

any through operations impact pretty without his to team and negative were successfully -- were on or really we that cost. So, John able having on navigate

the So, we I have there on some support casting learning had only to contributed that but this in I which we business, that and beyond. we challenge the we curve, go in have we really reversing that’s think on have the employees as the financial up are is the on to the path And year. XXXX But talked performance front business for brought think about. ramped down of that and outside to

Operator

the back like over This closing to for any concludes our question-and-answer-session. I to turn Harshman conference would Rich remarks.

Rich Harshman

in And your very ATI. you interest on us as for Okay, thank the and joining you continuing for thank always, thank call much, today. all you

Scott Minder

you you, third quarter joining the listeners today. conference all That call. concludes for XXXX thank Thank to us our And Rich.

Operator

Thank concluded. presentation. conference now has for The today's you attending

You may disconnect. now