Allegheny (ATI) 23 Jul 192019 Q2 Earnings call transcript

Good morning, and welcome to the Allegheny Technologies Incorporated Second Quarter 2019 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 note this event is being recorded.

I would now like to turn the conference over to Scott Minder, Vice President, Treasurer and Investor Relations. sir. ahead, go Please

President, call Good XXXX welcome is conference website John in on Andrew. and Wetherbee, Technologies Executive Chief being the second our Officer; the Participating atimetals.com. quarter Sims, call. Kramer, Chief Products; at are Commercial Segment; Senior Pat Chief morning you, Fields, Executive Vice Bob to President and Performance Senior Financial Vice Executive President, Components President, & Allegheny High and broadcast Officer; DeCourcy, Kevin and President, today Thank This Vice Vice Finance Officer. Marketing Materials Kim call Flat and Rolled

If slides call on this via see screen. you should you’ve connected your the to internet,

we in, are for who those line our will questions. you For remarks, available open slides of the website. dialed on prepared After our

limit the to session, During to others. for allow two please yourself Q&A time questions

who in reach are forward-looking to We noted as various everybody, a try to shown and all subject would will that Please statements this on question. the release like slide. earnings caveats note and to ask assumptions

would like to to I call the Bob. over turn Now,

everyone, thanks Thanks, morning and Good for joining Scott. us.

in of The segments to and significant results reflected growth our our objectives. enabling meet over quarter demonstrated components results. critical our quantities high quarter time, Year-over-year quality sequential deliver production on revenue improvement increasing XXXX ability and to their second first a both materials customers

quarter. sequentially headwinds. expanded business year operating increased basis, raw segments a declined segment both very profit year-over-year in primarily Those On headwinds strong profit operating operating due and quarter Segment second driven a reduced materials. by volumes prior versus to

in it the to second covers quarter share four, my slide we've results initiatives. detail, on progress and of made that team to on several Turning our outlook appropriate financial perspective the thought I strategic our before

ramp grown for powder gains including quality jet our a First, reliable we've engine we OEM. share the the processes principally time nickel to billet manufacturing in execute performance, our and market recent high over due aerospace production and to on continue delivery large

volume qualified continues year increase fully XXXX, to We're for Show expect pace Paris incremental principal and to requirements by to recent our industry on in these The the strengthened the volume confidence a and industry's MAX. future related be completely be the engine end growth aerospace additional on API, the and Boeing XXX Air in XXXX. current ramped despite up an challenges

XXX to haven't significant any Boeing, or change on book Briefly order experienced the to date, MAX we backlog related our situation. to

aisle for We and quantities in and single jet double continue satisfy both engine materials airframe aircraft higher increasing industry's to produce production. demands to the

Safran, production discussions on with any in and XXX Based MAX reduced negative Boeing impacts rates or GE recent meaningful fourth or LEAP-XB quarters. third we financial the don't expect from

situation monitor concert manufacturing update our and to directions, We in the instructed. if when and have customers' latest schedules ensure the information our we'll that continue to we with

global The we XXX to MAX one very it's a important it's healthy is in programs ATI. engine supply an of important also remember airframe clearly and program many market. But for that

profitability despite policies. Second global make continue material ongoing segment flat uncertain sustainable the our products to item with for trade roll we towards raw this and volatility progress morning,

Our in for product pipeline products quarter, a alloy large ship and mix a of as improved nickel in gas the initial we projects began America. quantities the oil to second Latin

non-core sheet, opportunities. we strategic our Third balance assets item to our divestiture as process for this as morning, improve several review work identified

cash. we announced yesterday operations Portland million completed forging sale that for Lebanon we second our quarter, the million the cast in Indiana cash completed of and raising $XX of sale $XXX business located we the and had our industrial Kentucky, In in in products

and million Eddy on third total of $XX linked in proceeds, quarter related a held and New to in close $XX gas long expected sale to for sale the the announced in properties that's sale million rights we a million County, Additionally, oil quarter. $XX to including our second Mexico of

recent $XXX drilling use strategic result We value consistent significantly a to as pension in and these developments with through ATI grew strengthen directional increased approximately and balance levels. million with to properties technologies. priorities. of cash assets reducing funding proceeds intend In these our our sheet, debt obligations The of to sales total, provide legacy primarily these overall

made our improving can our see you three our second us in quarter; business through of to our on and As we the goals. results, tangible priorities strategic bringing progress closer

relevant call experience. second and Before results, delve my team deeper members into and ATI with to I'm quarter board over the to business two to new I our pleased industry significant turn welcome

who David is Haas Whitney. Carr markets a energy industry growth capital assessments global industry with in true deep guiding Conoco at risk strong while an allocation, and aerospace and at Phillips. thoughtful Maryann experience expert And veteran is is for well-known Pratt

I'll extremely The is board of to breadth shareholders. and domain we depth to in now drive to call the the value turn helpful ATI’s over our to as deliver more expertise us discuss I'll segment to in more return HPMC John your to up of the without Sims wrap take throat and John? the questions. detail. my in frog call its the end results at

Bob. Thanks

as five. segment cost rebounded second quarters material solid slide a HPMC from The a discussed and by billet first operational issues as impacted or availability to had powder raw previously headwinds. well quarter Turning

In operating operating versus our the X% expectations. year-over-year defense by by margins growth aggregate, and in increases jet our our aerospace one markets, that year revenues sales rates airframe by sales, a led after product and to substantial revenue grew sequential were were Our engine growth pause. and XX% ahead return in which HPMC to a defense growth prior in of and profit quarter led driven

metal points and forging products lower XXXX prior grew profit lingering increased by raw operating material as driven operating headwinds in and year, well demand. the defense were mix strong basis operational an business to Segment compared cost margins first unfavorable largely aerospace versus and but due by XXX quarter increased, margins quarter as to units. Second exceptionally XXXX, when product our

first closed since As assets call. HPMC quarter Bob segment highlighted, the two earnings our sales significant

the carbon steel alloy of industrial finalized our $XX forging forging facilities applications. two for for in non-aerospace in operations low we the million cash, and sale First, primarily independent production June produce

cast Second, we titanium $XXX markets, commercial produces of the million in castings engines July business airframes. products and completed primarily in business for used and for in defense jet sale cash. investment aerospace late This our

together, Taken about these of company cash for sales will generate on make the progress improvement $XXX enabling initiatives. balance ATI, further sheet million to its

will end and accretive markets. businesses and primarily technologies, focus science to unique operating will and and our capabilities that as result leading intensify These our segment a core material on we specialty transactions process forging materials be our immediately leverage defense serving aerospace margins

results to expect financial due to units. forging third solid business in prior we excluding to divested modest improve mill when quarter compared growth relatively specialty year-over-year earnings incremental businesses, year, the and ahead, our products on Looking sales

continue These associated gains share and driven iso-thermal billet forging powder demand titanium gains by emerge are for aerospace our to and ongoing and products. our nickel in industry defense growth, to due

Jet engine products likely changes to internal in sales aircraft growth accommodate the their be second driven by is objectives. aisle our of for half inventory year programs to the customers management double uneven anticipated demand

further possible in quarterly customer to this work to XXXX in with expand XXXX. expect much on ATI impact and the this will as as business minimize We

shutdown to business decline We sequentially anticipate in and of Millersburg revenue profit due the segment seasonality operations. operating to third our normal quarter maintenance impact a negative and Oregon related planned

which major chart second HPMC aerospace by pie sales slide compared accompanying XX% X% total grew six, the and by quarter led and year, sales, were to to the table segment’s submarket. growth defense segment up market each Turning year, by with and ongoing our in show the revenues prior strong market versus expansion by prior in

Commercial jet primarily OEM engine for to due revenue those ATI demand aisle production aircraft. single particularly to support especially growth and increased for materials needed engine

double versus they double for digit a quarter straight to to significant Commercial at ensure airframe requests production prior meet rate customers targets. the can our and single that sales aircraft year fourth aisle emergent demand due their expanded

the other over as also increased XX% rotorcraft sales, quarter nuclear defense and There straight defense second and prior military for versus U.S. product year the spending. the market their by increase naval countries the led by

second smaller will construction other products including balance remain energy for of likely demand medical in the year. markets the our HPMC anticipate in mining our and demand the medical, in of while and in construction customer improvements market soft half sales mining. and However, contracted and We energy several XXXX,

ATI on our summary, executing we and aerospace and the base to sales markets In defense demand to are rapidly while continue satisfy requirements grow growing emerging to needs. customers our

MAX we mentioned to Bob have the As experienced not date. negative impact from any XXX grounding

Kim talk to the will products. collateral about now I over call to turn

John. Thanks

call. the to segments second quarter quarterly further in will by addition later product financial I In and provide detail some revenue SRP market on the review,

So to financial on now slide turning seven. highlights

parts timing a the the first and second in material impacted soft return our a SRP by raw mismatch was segment As in quarter business. quarter of in profitability demand certain anticipated, surcharges that after our to

by Second driven quarter that went energy project increased applications our into volumes market. in revenues oil into marine Latin with X% pipeline large grew high by primarily for and segment, America sequentially of the value the scrubber a products

consumer our were in slow JV due electronics from strong line in sales stemming customers XXXX, the results. sales to in defense start increase demand with to quarter and product Aerospace a first launches. an new After primarily China stalled rebounded

HRPF. carbon their world customers on by And as provided the with pulling benefits to lastly, NLMK steel volumes class increased USA’s continue and conversion value ATI end our

customers. an as We benefit well expect NLMK and our this relationship to and grow as end over time ATI USA

operating factors. at quarter segment compared due the the to several profits, second million Looking quarter XX by increased to first

a specialty primarily due oil and provided which demand volume the from first, significant gas earnings. were products our for quarterly market, uplift to The the up increased sales to

the material timing for ferrochrome the nickel the increased temporary from business as mismatch raw and Second, prices both benefited quarter. and surcharges

a utilization to joint asset produced cost at benefit and HRPF. for conversion improved venture provided USA our the A&T including Third, NLMK Stainless products absorption volumes all total

included first finally, line for venture, a in loss with AT&T was joint second the quarter which And results Stainless the modest quarter.

about talked imported be subject to section JVs slabs we've in to XX% the tariffs. past, continue the XXX As the

position continue ventures solutions to as options cash return look pursuing profitability. as partners to The ATI term and alternatives near-term a other longer slab for well to to our neutral joint at achieve with sources

the the science through Revenues strategic anticipate capabilities. customers in in process third expected continued continued profitability are sequentially in to to and deliver due strength the value material, ATI where markets, product operations our its U.S. and that end ahead and to knowhow differentiation total. segment the quality quarter, Looking for can we increase

also joint increase begin to We trade We our expansion. in continued conservatism in the utilization from recent the quarter commodity customers as contributions uncertainty. from the headwinds U.S. venture facility see to softness expect anticipate of due driven that stalled second markets versus to continued our the attribute we the to our increased

raw prices versus related to third also mismatches be will timing surcharge the ferrochrome profits operating quarter Segment lower second quarter. likely the material impacted negatively by in

weeks and offset to provide recent in Although rising prices may a nickel ferrochrome values. have been a lower partial

leading and has levels. been full focused team unique differentiated flat first reshaping end exposure products achieve to XX The Our the the appropriate end balancing been days a to on sustainable our growth assets team rolled by business has profit focused provide that products market of can value the markets. set commoditize and on

to conversion generation, volume to doing utilization, manage market In to our ATI balance its team the end third helps additionally, continues but increase asset seek cash so, ultimately we HRPF grow And which our to maximize strengthen sheet. volatility. party

asset total share steady participation making gas namely conversion in and markets, the and of in as rates. aerospace and areas defense, increasing end evidenced our higher and are progress enhanced key high volumes products, several value segments oil and by We utilization through key

I We our trends free tighter our product coming better to enhance in gauge leveraging capacity new of the at to quarters. other product value continue customer and continue high address produce expect alloys to that and HRPF up business And value needs by these facilities. the the

increasing detail. for segments targeted to especially After most now titanium products Turning growth led The advanced markets related systems. product increase being sales nearly high versus additional for mainly sales revenue and was which slide by increases of The sales. jet the prior armor first This engine land aerospace dynamics due our plate year. the growth. provides general value quarter, volumes XX% defense latter defense are year-over-year XX% in major year-over-year eight, second end in and to FRP quarter the in those

increased gas that Sales year, and large pipeline year prior project. a included for offshore a production comparison to FRPs oil strong largest end market also versus

going more by sales mainly driven the smokestack to regulations IMOXXXX grew reduce for for vessels. Marine scrubbers markets XX% emissions the energy to ocean by the than Our demand due

more And than value with products, quarter of market Quickly our consumer their by finally, alloy high increased joint and prior stainless our by as specialty products. customers filled year electronics and by revenue stall XX% the nickel sales sales product venture new product looking to at strong at increased tablet handset versus pipelines models. a sales led

the But decreased deliberate industrial high reallocation value this total titanium armor was from applications lower support prior the versus sales in quarter our of our plate to in business. Second increase due value year. capacity to

commodity of appliances our as products by our stainless second markets, for experienced sluggish driven standard demand particularly Sales quarter. end in aggregate automotive decreased and the XX% straight

results summary, behind quarter. the significantly prior tailwinds first In and due and both FRP profits sales compared XXXX. in in the benefit second segments to expenses were XXXX quarter profits raw year, to more substantial material improved Operating increased retirement mainly operating

cash initiative. is team a building the generate making great sustainably the and on to broader business Overall, is profitable corporate significant progress that flow fund

products to focus and emphasize, on capabilities. continue markets We value unique that that our

we benefits by working rolling and right have And volatility. hot and assets markets, melting the that minimize risk to the cost will associated structure lean we to their balance ensure the driven to continue always, achieve are and a goals. we utilization these commodity As provided we

hand Pat DeCourcy performance about over call our quarter the I'll and and financial detail Now to for third provide year. our the an in on outlook quarter full update to talk second more

Kim. Thanks,

an expect we we XXXX. no portion of million $XXX second There on business Turning borrowings ALB borrowing ABL growth. on to agreement of credit our despite hand quarter cash were revolving ABL. borrow with did the the to progress working of significant in quarter end, under capital asset at slide continues under million and be and lending not approximately ended or Managed nine, our the facility to capacity area based $XXX available

As a XX% managed by at improved basis percentage XXX capital sales, of the year-over-year ending working quarter points [ph].

on at basis year We area point expect XXXX, a end this building further improvements decrease in year-over-year in XXX XXXX.

of the to $XX to million in full defined expect for Shifting contribute our XXX and still plan contributed benefit total year million XXXX. we to pensions, pension U.S. approximately the quarter, a

our to We contributions. continue legacy our to beyond annual obligations take actions pension to reduce our exposure cash

will sales to We this XXXX action third in over area of anticipate a people. generated annuitization quarter our reduce plan We since by progress funds part pension further expect our event our next levels. portion improve significant to quarters the of This the this over participant complete third using by the in in several asset participation XXXX ongoing pension year. by recent funding

pace million $XX We expenditures year-to-date. quarter total capital with previously capital Second to communicated line million our meet expectations were target. XXXX and expenditures in $XX remain on

improved Bob and these to discussed reduce These call, deployment cash. further including funds debt the million with funding earlier of helped businesses As $XXX business in further pension John on ATI the to transactions our and priorities, reshape sale non-core results. Combined, improvements. us our drive and to corporate capital provide assets portfolio overall financial approximately enables

fund cash $XXX we least We excluding contribution. divested of these full result XXXX sales, in businesses cash. year pension year at adjustments to a full updated and annual million for to end $XXX free with financial As year the outlook, asset our expect million flow our approximately increasing are be guidance now

XX. the I and year third will on our an financial full quarter for Turning now Slide update to results. provide expectations

we HPMC quarter the on revenues increase digit year adjusted segment focusing results. low-to-mid third to versus segment, by a single First, prior percent expect

the second by their inventory end For engine somewhat the rate demand We as a due should quarter third XXXX as second sales order slightly customers well product by growth large from market to tightly of be approximately year-over-year manage to driven to products. jet reference, the versus XX half in patterns their for year quarter desire million businesses. uneven anticipate revenues divested slow reduced for XXXX, segment lower

and points higher to operating due to mainly base. expand forging increase year, and margins higher volumes a to XXX materials operating on anticipate We approximately by segment year-over-year corresponding basis versus prior profits revenue

half For the revenue XXXX of full now X% divestitures. X% the moderate second year full reducing anticipate somewhat to business to increase year, adjusted growth results we approximately for XXXX in the to versus

to carry quarter’s third the quarter. into expect fourth the rate We growth over

We prior segment full margins with higher in XXXX year-over-year year with for are operating corresponding profit guidance maintaining levels. our line year

JVs modestly anticipated third of operating quarters, Despite continued sales. stalled the decline driven growth, predict segment, by and expected by due raw revenue lower to quarter, at of profit our the higher results fourth profitable levels driven expected. third profitable timing we a to segment In expansion sequential albeit we the surcharges sales FRP previously along than costs. to of mismatch ferrochrome in our value lower higher the and anticipate Shifting products volume is slightly the maintenance growth with material

through This maintained sequential if rise decline nickel the in may is prices be August. moderated current

profits JV we to stalled expand. For revenues operating expect the full and year, to continue

We our to volumes. quarters. and earnings markets fourth product flat carbon also served the see continue end commodity on remain and sales are value business drag soft products likely conversion will U.S. segment driven momentum third a The the be in continued to positive high by in and

to environment, range. our Due may a softer material segment raw somewhat we believe uncertainty be that year communicated our profits operating previously demand below full and

While material predict will values confident we again fourth and are we to we quarters, each time, at profitable full that working to not be quarter our in are year the of are targets. third able achieve fourth raw diligently we this and

now will to the back hand over Bob. call I

of increasing toward strengthen use ongoing closing, financial quarter progress aircraft. with million results to debt. sheet solid ramp double a reducing will and due We aerospace assets single we to strategic primarily by Pat. strong pension to $XXX and funding production non-core second continued intend part Thanks initiatives significant that large about on sales in cash generated In for proceeds our made ATI generate aisle that the balance our execution

laser for providing to employees. are and shareholders I providing calls, with where board of let's unlocking a value on ATI, focused Scott? inviting work look forward the on to safe all our progress earnings they're facets our updates our and call and open future our environment that, up team and management improving for questions, Our relentlessly

session. Instructions] begin Khanna The of Cowen will question Company. Please & question-and-answer We [Operator the first ahead. now go from Gautam comes

morning good and guys. Thanks

Good morning, Gautam.

flat I'm the -- understand are performance or you And the granularity operating for mean revised just but are the just also prior XX actually to and Do the range? margins So guidance rolled trying Does Wanted for have the is guys a guide it to year. profit on ask XX what's that high out, changed? same now the EBIT at more then divested assets standing down? was to that flat. guide what's changed? is

rolled Sure. expect that here, On to below it's predict point but due difficult range flat products, do to time, Gautam. be we in at material to raw this movements

you So those we But than on it guide be products. the we lower will when raw flat have to modestly more rolled previous update prepared clarity materials. is for

the the But in expect for anticipated we the our performance we be and estimates. our improvement original when below fourth On third exit margin year side, and expect over do that year-over-year XXXX slightly the be that rate will increased high revenue at quarters, we to margins we do XXXX.

So in in quarter running at we're X% high the the at we'd quarter the first X% where the guide been high to of single looking digits. a versus -- second and

takes in just revenue casting on assumption. elaborate how much business, assets going now out, that the But divested the out to Okay. are our to relative point, exactly that

turn the was So about of and in of the in into for small at position the profit that back $XXX loss total to it the expected was revenue first for year. expected part it a was million year, to year the half business a be

guidance mechanics know now for these updated the that. the things, is just exiting so two you Okay of

Yes…

sense… a get to Trying

XXX half It the points. margins be second right. in will accretive That's to about basis

Okay.

with grand. flat XXXX by the high year XXX for flat XXXX, so of And margins full accretive subtraction, guidance flat, a with is versus addition performance in rule, that

That's correct.

reduced versus then the a So slightly isn't that view prior.

is, It modest.

that. No was it's it is get on -- the thing what's the ask I problem. going jet there and offense. it sound anything to customer second engine like doesn't I there, the -- And I was about is the going

and When there I’m close that curious, nickel any sort going the of if us to to what start does that in kick signing. on if could So you can and quantification billet on you of is just you're the give elaborate specifically there? opportunity contract

for I through actions radar. to customer something this is us, the would as This decided year, of granularity inventory inventory to this going I internally unusual XXXX. Gautam, capture kind I our that's had out XXXX it on to wasn't into -- resulted that and customers It's cycle. not given hi go Yes, take provide John. planning actions as some we experience of in you for can. something a given guess, those The shift particular move that's while some demand us I'll

our it's does significant in So not things, have it's scheme Pat of talked -- it modest impact not on but grand about. that some as the guidance

it's this a something concerned not it's for So at we're point, terribly us. about just shift

does it us. have some So on impact

billet all year. nickel and in continue the discussions We had the at with comments, the increase rates this beginning see his of said earlier and finish we'll out Bob contract. we we we that of the On next the have that to to the to customer the ramping relative with are how question, discussed discussions achieve customer, we as to at the anticipate as demand point works year, ramping

guys. Thank you

Strauss The ahead. next comes from go Please Barclays. David question of

Thanks. Good morning.

David. Morning,

on the so so free XXX flow the now just in versus are you're know I taking the to prior, down, $XX up million XXX, roughly cash forecast, we you set level I'm proceeds, divestiture free from down includes side. seeing XXX the, want now flow on $XXX cash Pat million which XXX, so

divested David. lower Yes that's add We're the It's contribution well also businesses those some $XX driven then correct, businesses. by million. down and about as earnings

still still capital to working Okay, what similar was prior? it view

improvement the last expected It the building is, yes, year. half significant back the year, of from on improvement in

out back to generated in year. inventory going half cash the the of see we're of So

still questions. the the the annuitization the then, you're correct? some sale size year, couple is a about that talking this of And about proceeds, towards year. using Okay. you're same on, contribution guess here on proceeds And later I this The pension talking talked the then the of asset you but pension of side, about

involves That's million roughly. probably it XXXX quarter here. would transaction third participants the about correct. It's close And be in annuitized $XXX and that

then And soon, Okay. on side the your… contribution

full contribution used of cash honed level for we’re we contributions, we that asset that to but expected that sales in haven't for on the yet. of additional the year, XXX indicating, we that could make a the base attribute purpose, Same be portion level contribution some number exact could million,

Okay. Thank I'll get you. in the back queue.

comes The from Safran Buckingham go Group. ahead. next of Research question Richard Please

Hey, good morning everyone.

Good morning, Richard.

this And clear was may you. John, be hoping you could up. I this for

the talk and I production So in about release think in the maintaining your Max. remarks, on would current you levels

was Now XQ its of ramping ahead it release or in results, the up Boeing to in XX that XXXX. noted a planning anticipating MAX month

So assumption their that's was. what internally, at planning least

to assumption Boeing's I So lead supplier. long want on take your item a get as planning

would you would up to pressure that going support month that to currently at know shipping level, know that the the ramping if at know end and rate be on of a is XXXX, You prior put now. I and a Boeing you're right ramp to XX you month, before think you up XX

You know cause XXXX right? think I know sort might of expectations. given the case? Am the lead If does that there change Is Boeing's some you assumption to to be your so, you time involved.

The appreciate obviously daily that it. describe way an would our the with I here's customers. Rich. Well We're question, I communication

customers. we and with conversations airframe have that the you now. having based know side. we based we and is have best forecasts the the that outlook we the backlog we're engine was on And we the that's best And based the right the on gave so side right on both the on know are And now

that see at is can for So and balance reflected, time, that we we in that point reflected what gave this I you. We that's view gave that the an of see guidance and you XXXX. think in was guidance don't Bob for the impact

later I have says there's say think of Boeing going like wait change to other you what to and tomorrow, hear on to beyond the to view. any if know engine that some see to that, we're you makers

I the numerous conversations reminded supply that I is XXX to think, conversations John, structure. the add be just Yes to had they're intense a I not think continuing airframe that, always to showing we had base. titanium just on that with But

the on say, really affecting collective So a I the that's aerospace industry that experience would concerted maintain effort consistent the us. really during and MAX the upturn are to And chain is rate the at supply to smooth base making the not supply based our issue that much. such in a very supply chain and visible rate, us the XXX healthy not as that downturn healthy,

has the before, is about believe, from we the John And month will I As that months said away believes the MAX industry forging think to six within know and I XX window. that you it's Bill think assembly away. the situation return service

We're seen the days chain. and have not and engine knee seeing the and bad who ups supply every days reactions have jerk on in good that we're So demand. you prior of people might downs still in other commercial out there, there are

supply ready and smooth producers. paramount think consistently basis, engine is for on I to being the engage a So

So..

I engines know that fact content ship and was Yes there largest kind on. airplane. set I of of that titanium Okay. I it's the one was your you’re focused intensive per it on. of wasn't kind on a focused that

that’s was times the I so lead here. focused what And on

F-XXX me the if compare could have and XXX turbo engines, for and you could that you on So and the out have know the if fan for engines, the LEAP. the Pratt and content just know to the let you're gear on of I and – with contrast, I’m on GTF, shift wanted the I’d go on to limb a second focus I F-XX aircraft like on that kind here. to going

impact of and just various might overall So, how that as the sense your of I'm programs trying contract just a the ramps, get profitability to EBIT Pratt margins?

over over share on directionally, obviously more has those LEAP the say programs and obviously, you expanding us PWXXXX expanding expect that not for that, -- we're qualifications contribute of is do the within to Rich, to we as the in you, that improve is complete. on question. kind the going we side, give probably geared Pratt the to going give that years that. I time, geared detail. before, going program next but turbo turbo fan, you other they're two the long-term, But thank with would level The as more are we've significantly that, of of the the content and I'm see I that that don't We on on than market working have would said cumulative Well, with them -- to for content and we're fan, the both

you. Okay. Thank

Capital comes Markets. question next Please ahead. KeyBanc of Gibbs from The Phil go

Hey, good morning.

Good morning, Phil.

I about I the a if were $XXX it. can't were a balance, targets? sales Can billion performance the about indeed in at you for margin. it bit now. we just like Investor those talk think below about tell Clearly, average, right the but hived on I you've high mean, seems corporate and $X million really talking off longer-term XX% little Day,

lot to the should thinking because So back assuming know things we how do be issue But the with low on you can in around plus now. tend look a that backlog? that's XXs $X.X track months, that, short-term and we they're Or moving to how right high the move about XXs, XXXX, to gets XX next XX% Boeing a I get billion given margin? at do around a

Pat. take is I'll revenue this piece. the Phil,

was when for on total So targets, million of in divested to XXXX it out our businesses. long-term look we $XXX about revenue the

John then targets. to I'll that of take have you'd your margin have about target. out talk So And

Pat's Yeah, right. Phil, I think

we're ways that we to recoup going have divested. obviously, revenue to the So the look revenue to on side at

an on coming would think say next firm, side. that, are to pricing going we're side, that the couple about contracts on we years on due the that. margin that there have are share I the several the also have confident but that major that very not On impact only that's side, of we are over And

we'll So we we're guidance you looking completed. forward in are some give to first XXXX of some to as of those and able those quarter certainly be the better think, maybe

you're you positive be And clear, thinking just to impact. say when impact,

think impact. do I positive

Yeah, thank you.

you're there you So that? mean, firm, when to say is by standing you upside John, or XX%

the with Well, in least me, expectations on that have room I the here XX%. based it's would say at I

million a there plan, in is at $X assets a those. more you on of and a on actions, and also tape it, some side, quarter. the sales tariff expecting basis, last, the to took [Indiscernible] or hitting Okay, denied? been lot that's here, a Thanks. the effectively was the has sufficient call P&L divested of that $XXX close hit this that And be -- least Should exemption million What's then month the helpful. then the we a about in strategic seeing through from half of or regarding strategic while

Fields go is. first you couple then little to flavor All and joint right, a the give to it the turn over Phil. where more questions handle venture on Kim Good I'll and

in in of close close else anything divestitures, oil So the year. the the balance additional terms we've But of this last cast We have don't announced yesterday to of we products. for the of really the and gas. hopper beyond got piece that, the

consideration kind in as well IBT the of In $X about as depreciation of the and utilization we of the worthy terms think HRPF. of obviously, about around hit, financial million the I through the a I of get are which other sort There's think the JV itself. the things two one look at benefit million $X down venture cash announced I'd things get joint venture, we is joint the to impact that that on

cash So the about a it's in $X million quarter. drag

Our cash break even. to is target to get that

of the for for a inch wide XX stainless customers. our see flow strategic benefit still we having path asking it. still They're Candidly,

next alternatives available the best and neutral And so to we for then, to are position find option. get looking a obviously

about you through going color your work Kim, that? in some life to on JV to you we So think what's the as as add do

Sure.

just so -- from we're this the we target aren't to period any our we XXX will with to with longer. in get look the position work as that Section until as to So in as the and the cash minimize continue is for said, to tariffs impact to place ways XXX neutral Bob partner

an XX Bob part inch said, As customer's portfolio. the product wide is important of our

strategic part an our And offering. so and it's important of

looking. are we so, And

inch been calls, some although we market buying are some isn't really our there's material for there other slab. competitors, trialing think I XX from a

as We partners options longer support continue and for last we are week, so can talking, our then customers. term that in situation. we are solutions that working supply we this through evaluating And our with recently through lastly, as as to work to

is there a think solution I Yes, here.

the certainly a I think, it's upside through for long-term. find to uncertain at huge investment this and that the trade business have to look very There's a moment. we create opportunity we're route we really making just the at environment

or Thanks. crazy, Uncertain

I'll let you choose the words.

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pulling Right. still partner the for is and it's this yes, Yes, product challenge we're in the still a product, high environment politically fact of it's the quality customer our trade. that engaged. piece. think still correct I But that on is But a

we're are here. the can't, desire But a honor customers. our track we to domestically we we if respecting a always source and we our commitments meets needs that that of if solution administration's our do We realists And, customers, make we're find the it. can we'll the shot That's giving and to record.

was to as think up that morning to I in So -- do want that. trade wake to But the when sure bed. same we went the continue it's making policy yeah, we the we

is what think we're collectively that's through. working -- I industry So, the all

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

Hey, morning. good

morning, Good Josh.

feel about you the most on where hand, and Where it do talk do think negotiations isothermal aerospace you powder just gains? Can on side, side, contract is the confidence the the have you long-term side? maybe the strongest biggest those you

you And compensate think based on that of then argue performance can based some your can pricing maybe volumes you little that you higher you is the gains, on more? assumption or do a mentioned just

engine engine right it actively contracts airframe Yes. answer going negotiating to because turn over of guidance now, it the have both the end I'm on which the to I XX% to Kevin and gave, the Phil Josh, $X year the talk we'll we're better is the lot, why side, view side. to a airframe probably thanks question Then get I'm about a that billion that updating I Pat. on that and toward to going

say we ago than different -- when contract negotiating we're was that contracts several have very it environment four I pricing this cycle today were that in negotiated. is have would now. the we contracts years these that The to five

We're from demand seeing some we're standpoint, those programs. uplift evaluating a our within So standpoint. also share market

ramp, share And with probably with objective about our Bob we most their some quality. earn strategic there's the ship So for chains. on trying gains the it to we work that talk our ship. how supply on the in and on we important aerospace about factor customers right in built with grow to balance as talked that into and they're customer executing time that's We the every we there order opportunities

And a then guys next do confidence and to jam they we reputation the have have are call. call. enough, that get they're establish when We absolutely gives the it we customers that a if in that they the we

do that. we to So try

season I an So general, you lot contract working seeing airframe in we're And would the of we're a now. it's that's provide us, on market. the on. of aerospace color not in just And let what activity unprecedented Kevin right side. some I'll kind say for But

good Sure. morning. Josh,

process, Specifically global support on before, on for regard with people continue a to various basis. is be the through the ATI the Airbus, supply able ConBid. we've we quality chain, as reviews like rate to We've looking progress shared opportunity across gone on products make Airbus as range to bar, the we're trying on for across Europe and billet, ourselves some value titanium as as United full regionally across opportunities supply as plate. States regard position to with product add that to to well and of well Asia, plate, the readiness,

continues. process the So

and some balance of fourth quarter. Again, expect positive hopefully the quarter additional through meetings have we feedback. in the We feedback to provide the third

granularity. Great. the evolving? give the is more carbon idea relationship then timeline? that conversion flat one How rolled side And maybe much that on what capacity Really, just NLMK an us on they how relationship, on can can absorb, of appreciate really you

this is so -- is this Hi, Kim.

mean, they have We're I I their and strong. to resolved So yes seem needs. is said so mean ramp we we -- flat continuing partnership supply to will continue issue -- their that up. --

And got logistics and in so in place, systems -- handling, material we've processing place.

are And and ramp process the that year. ramping we we volume up. second rest so the of than the the in the quarter in We through of in we continue did anticipate to to more first, shipped

then NLMK a to issue, really customers to that markets and operationally So be get with we acceptance this will working is able is ramp ramp. penetration in the their

positive So that in direction. -- seems to be a it's moving very

think it's the they well. going performance getting with from very the using in off customers great and quality getting I feedback they're it that are the applications HRPF. and We're the

along very well. moving that's So

Lynch. The America comes next go of from Merrill question ahead. Bank Timna Tanners Please of

to understand. is half first to of really more, tone second Hey, good definitely was morning. half. the on just first to quarter And I wanted question, the ask just high improved be level call going

into second level commentary, first better It trending more high segments go add across. through we're quarter just seems so quarter. clearly the And as the the I than clearly, is across and value like

think can Thanks. revenues? just that inefficiencies that be is how is can a of divested But versus call second the in you tone is much and cost much a much seems conference year? of of into three just to you much things like or half relieved How growth. give this top of be us of terms how that subdued more next we How sticky reasons level changes is that much the that of high head the as

seeing the have we're half. do the as more a this that engine just is jet We anything first move goals. So, in internal opposed management that to Pat. Tim, of right major that has second say I'd inventory area is negative to OEM large some the

seeing that most probably of So, back there this move call on That's more what the morning. XXXX a the from this half of change you're we're hearing is into year. significant here the

pricing down for at decline attributable modest a When roll we're be can you just again, quarter. ferrochrome the to modest is third products, look and the flat saying decline

on material us So raw side. that's an to the impact

in end soft markets those second the of we some anticipated. And half than or softer are

guess automotive related. those And thing. can which kind that and ones, of then and things mainly housing You are appliances around

decline a modest of just market more conditions. that's So more to related the

-- that added have would I

Okay.

little is plus divestiture more right. I think, a talked about topline. the $XXX shifting to do think minus a Timna, issue I divestiture million -- or color. Just the it's Pat of the demand

So that, the reindex bit is of metrics. a little

I fourth our fourth trade, what's has really appliances, conservatism, think the automotive, on that customer quarter apprehensive. base going quarter in

then maintenance that's year going we'll side, probably mean, to advantage just the QX let's softer, commitments move that. stainless seeing, FRP the historically. on of the be in some to to long-term -- this things we've side different take because, I done proactively time market's outages than our we're actually So not if of

it's So I and And go long so this price issue. $XXX. at the going is to related forecast think my but, to we are been seeing how nickel $XXX on, on to base historically think to the forward conservatism nickel, love trade I speak. I'd

do think think I those in where So, I wind upside QX? where up, there's do. all of us things kind I that -- for

Boeing's demand aerospace play uncertainty a of out. lot issues think emergent I in to resolve will well. as the will continue think situation And I

it's care our of So that uncertainty control making into a view I in we QX conservatism either and going or we're more taking of that cash uncertainty. the into of pragmatic we're going that level taking things right sure think the the we can got spot

Okay. That's super helpful.

should and the little long? portion you some big for that around to a question, don't more LATAM for how a give much pipeline, duration is One off. small of just big order drop Just talk color the continue follow that, up of on rolled Imminently big so flat that how side. surprised can the we you by get about when bit us the

or over when not the stand And will then seems same this whether divested. thin rolled to feet, separate flat this be the own is rolled flat with questions whether a lines, keep on could can along coming be the not years. And and answer up the business of be core or its it

wondering $XXX target EBIT in if there? in breakeven looking a I the thinking there's be for are you it just still Thanks. So or was enough it change the past? to any think million, Is

and on the alloy going kind nickel of to Kevin through question back strategically Kim your talk FRPs to talk let role good and good. second I'm the within Okay, Both and question come I'll questions. ATI. of

great. Okay,

that. the are of So in shipping the process current America we Latin projects,

ship pipeline. the continue projects into to that year. this will in the fourth quarter We There's additional of

So, as this a the know, space, gas is of lumpy business. type in you fairly oil and

the But we've last come very do much XX have pipeline and we months. as win they groups. projects opportunity more these than had robust You as or a in

We will continue to work on that.

time, we're to we the great grow on customers will We can't funnel. the wins feedback again, and from come it, And those service. as in. continue But anticipate manage getting as you continuing win, the that to we're over average when product

win and positive to are that so this very space. we'll continue Kevin? encouraged And in we

one Yes, of we're type nickel what is additional is capability, HRPF's the clad the primary benefit again, projects. comment because us on finding for

proposition well Kim with as So different a to conversation have really as value up, look the long start we oils value as our nickel partners. as firm start we as help to with all drives said, that major into XXXX, these facilitate a really projects the different sheet length to something to fabricating way

thanks And then Kevin -- and Kim.

is question, I million believe the was, terms $XXX business Timna, to of We potential is we're get the doable. In other our and backing think the to of answer not. still the long-term the question are that target, we off

are what doing Now it question. we really the about is

about, sight utilization the of that close we're XX% the business we we number in which do are not HRPF titanium, So, to products relationship. that believe to nickel, growing can drive line Kim continued with as growth specialty, across to a stainless, what our as value talked products the leveraging the as as NLMK have get, driving is, we one well

think terms I that reduce that. to to a the we the need it created that to the up derailed HRPF the there, volatility, stainless can got not And clearly, to pursue as as of we inventory. our side venture giving had but the time, a both exposure we're the load team metal the We shop, by it's in the great the but management with well our there President, over for on volatility opportunities base minds And little continue and what that provide our potential. stainless was Tsingshan we do joint to and for minimize as load exposure on base nickel are have other we think that I in the pricing

our After of shareholders end out delivering near-term. to for of possibility I day, the drive the and are do we've of us shareholder let within said meet going value here the accountable we'll all a the needs of the that's and we're more that think probably doing both. hold to that value to customers at we that, decade, within I think our FRP. And

So, of the be period I and do our thing judge. for think us next here the will results let time

will Berenberg. question from Paretosh last Misra come of Please go ahead. The

you. Thank

back the HRPF what's going facility your Just I missed and I this, to utilization current but apologize rate? if

is Yes, XX%. current rate utilization our about

you the year. like some expect Got it. through And that directionally sounds improvement

looking are you get by target this of the to end any to year? So

Yes.

mid-term over material Bob NLMK the our got joint the the conversations between the and target XX%. And said, venture, place longer we've So be relationship the and near-term, we're that specialty continuing growth the would then in space I think in situation planned as get down XX%, to the tariffs, with XX. end this have this plans, close By to our end we'll again, of by some which to of that drive maybe of slowed year. to the the probably slightly over the given be year that than

could last than so Understood. quick it And you'll that? meet first or $XX still you then at the little guidance the if or million one bit I about think CapEx one, lower half, just year ask running a full be might your in

half we -- the treat for the do new We press some the up do and second to the heat in expansion. meet year in still commitments guidance. we No, have projects Cudahy, full large iso-thermal expect

to our targets. full So we're meet year on track

turn Bob to to for like apologies our that would over all and I cannot conference to get Okay any remarks. the Weatherbee questions. the closing we back

call today. about Appreciate demonstrating your we in forward Thanks interest All our Great look on days. questions. right. to us Thank progress joining XX for you. ATI and in the

participants Bob, That joining today. us conference you and and Thank call. thank listeners quarter second for XXXX to you all our the concludes

Once again conference has ended. the

your disconnect Thank you. may lines. You