Allegheny (ATI)

Scott Minder VP, IR and Corporate Communications
Bob Wetherbee Board Chair, President and CEO
Don Newman SVP and CFO
Seth Seifman JP Morgan
Phil Gibbs KeyBanc Capital Markets
Dan Flick Cowen & Company
Josh Sullivan The Benchmark Company
Paretosh Misra Berenberg Capital Markets
Matthew Fields Bank of America
Richard Safran Seaport Global
Chris Olin Tier 4 Research
Call transcript
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Good morning, and welcome to the ATI Second Quarter 2021 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. At this time, I would like to turn the conference over to Scott Minder, Vice President of Investor Relations, Corporate Communications. Please go ahead.

Scott Minder

you. Thank welcome quarter and earnings ATI’s to morning, XXXX second call. Good our is being discussion website. broadcast Today’s on Participating in President are and today’s call Don and Chair, Newman, CEO; President Senior Vice and Bob CFO. Wetherbee, Board messages, will focus slides second and to Bob and but remarks. on refer Don may their quarter our highlights key within certain on are These available slides our website. additional color details our on and provide They results outlook. and remarks, for questions. line we’ll the open prepared our After

subject release to noted a in various and As statements reminder, are earnings forward-looking caveats. presentation. in slide are the and all the These assumptions

I’ll the Now, turn Bob. call over to

Bob Wetherbee

Thanks, Scott.

went we lockdown, COVID-XX a Here over year are a since the the of world into result as pandemic.

much the and our us remote time, tools to Technology better and to the and overall. of the these the skills remember new travel to more in with consumer So flexibility create quickly the lengthy our is and lingering our customers, capture what showcase on returning more the backlog quarters, challenging some four that improvements at we sign program. cost Products structural sustained engine strike aspects travel recently second end airliner I’m innovated we it’s The reflect concluded connections within generated pleased negative United important also associated I’m airframe they period. pandemic-related the to utilizing employees to jet desire see efficiently our that energy infrastructure season. collaboration. trends need. same that or and the We’ll to and the continue summer work provide demand. by from real. the we’ll results significant of drive the quarter bring a thrive that those growing seems to for reawakening changed allowed financial recovery our economic technology savings. uncertainties, At At drives same business. control has Every changed people and more travel worldwide. within of to any we’re in our last to to the our better. With focus it’s is the on form easy customers time, Despite processes ready streamline Rolled confident another SRP millions Ultimately, for backdrop, day improving ATI, things, skies many, the our to to to of Specialty to goods produce current this and digital everything as we Like in At impact markets. Steelworkers

and second Excluding attributed million in Despite the the restructuring share the loss, readily the cost to numbers. aerospace beneath apparent we recovery is strike quarter. earnings headline $XX in per $X.XX the our a reserves, the small lost improvement

compared that cover The minutes. over its points by margins a to were good basis in very basis XX% engine Performance news and year-over-year, or & in few nearly Our segment, Components up High improve first sequentially depth more XXX XXX points revenues XXXX. Don quarter jet Materials product the more HPMC, will saw than

to in leadership strike call incredibly we earnings quarter union April, disappointed first the on discussed that call major we our the chose locations. operating As were SRP at a

ratification. positions ratified maintain during employees the on The continuity four-year to operations allowed agreement a labor XXth. within Our week their to strike. plans returned new robust us represented was Many July of

levels. efficiently their prior production and operations up safely We’re ramping to

any a preferred a some of agreement back speed, reach challenging our to cost partnering care to to facilities customers time. back escalating question, Under to Clearly, pieces this us The now business find materials in to every Also, cover business. related and that will our solution. full required employees have been components We’re strike, compelled trajectory contract, rapidly To care competitive The to customers structure negotiating cost to behind can providing unresolved, and business, SRP inflation. were overage on to on inside and seven of enough we we’d business work was production my comments with want responsible during a need. this the level our be fallen at Product of protecting Left years. to health with by costs offset get imperative. to form to is represented SRP continue appropriately worth were September. and A annual two this are would outside many competition. dedicated to thank business facing employees double be through the at customers ATI, you focused times very close We I X.X%. supplying annual news track many SRP the be to without to have health an thank would strike capped share. for health the inflation the full of amounts. to out expect our is people it? The increase ran who getting that I’ve actions asked the they I take for pricing now on necessary good care stoppage. fast capabilities have our its

sheet year-end stainless First, by to transformation be as the is initiative will XXXX, exit on products completed and planned. standard track

progress our excellent footprint. consolidating on We’re making

facility percentage agreement JSW Second, opportunity Steel utilization signed processing our to convert with provides USA toll asset This meaningful flow. our and increase through multiyear carbon agreement rolling significant a to we Ohio-produced their cash of in slabs Pennsylvania. and long-term a hot a recently steel

world-class control exceptional quality to bring gauge of happy customers. We’re partner with to their JSW our HRPF to the and

production up for the facility. production. conversion in June, at setting in record operating steel the team toll of volume even a the strike month the for of to Congratulations carbon midst ramping currently this We’re

shown underlying demand. and from my On end news excludes of increased the performance up This I portfolio. XX%. all the in are electronics, data to time the key in most the encouraging market our in our and SRP XX%; markets, apples-to-apples sequentially context, So, Using being view provides our the most and a strike most Well, earnings in quarters, markets? an each comparison, removes end which record notably sales what in from of results the impact key in of exception presentation basis, To year-to-year market periods. seeing across QX. is true the of the the of we most comments, major believe that grew compared our for several comparison. in this sales is with markets realistic quarterly we first our up sales defense, ensure energy, referenced end

market, gain is recovery This We programs engine families. platforms, continue largest commercial of principally by to the narrowbody used driven and on engines. momentum AXXX in jet aircraft key AXXX our particularly the

our began our our recovery X As we levels. exceeded the recent the last said times are gains, calls, prior the forgings engine both, the market lead where X year share business recovery to few on Due months ahead forgings to and quarter demand in production. prior the of revenue and

expand the We engine forgings, of growth increased pockets a to MAX the continue jet of XXX on return throughout supply lagged due rates book. growth materials and expect positive production to in inventory as this to The specialty part our has trend become largely chain. order stranded larger

materials Rounding for to sluggish quarter, and will significantly uneven with albeit compared uneven pull, to travel We engines soft. pace, remaining demand for coupled engines. the As to like for form. widebody make to due due commercial out below airframe quarter, XX for narrowbody quarter-to-quarter an the be according first trajectory In inventory, still but discussed the the largely any but expected, product aircraft grew inventory. for widebody materials year. inventory market a prior supply engines, LEAP This this at anticipate of subdued to channel for Rene customer much to is chain our second demand and sales the international were depleting, is aerospace, for specialty year. the continue stranded lag of choppy growth This somewhat to continues increase balance

early We continue catalyst and widebody expect into industry the XXXX rates. as awaits to the increased for trend production XXXX this possibly throughout

low airframe of XXXX, This the partially initially business pressure at primary the Our won customer. begins in production European anticipated OEM will second our newly airframe levels. domestic at half destocking offset

market mentioned a I to As ATI. continues growth earlier, be defense for

serves economic portfolio we any under applications, of almost budget demanding can successful ensuring customers backdrop. wide a or materials broad Our range defense be with

increased growth Our second naval for was U.S. support quarter helicopters. ships heavy-lift driven demand Navy by and to rotorcraft and nuclear products applications

new our UK expect half armored business defense grow a program. armor are in the in seeing titanium We to and return vehicle continue plate of support of XXXX, to second demand

energy added energy growth. the These increases primarily markets. our Asia growth, land-based to this in production Sales We to significant demand Turning turbine civilian largely specialty is increasing. to in customers supported portfolio. gas energy where nuclear experienced

up, energy world the as expected We growth our Looking and see the hospitals as procedures. pandemic diagnostic growth markets. testing the surgeries implant ahead, results perform energy Both in and and elective differentiated increasing mixed from markets were sales continued saw Wrapping return materials lockdowns market’s drives our in medical sequentially. smaller MRI two economic in to increased more improvements applications discussion, reopens we slowly needs.

over quarters, of levels decreased first the from electronics prior sales demand in specialty expect We by record alloy the of increased market, ATI’s the to powders XXXX, improve both Sales grew quarter coming year-over-year. periods. but modestly versus led In MRI.

opening financial questions. the quarter I’ll to With few that, demand Don cover of the third strong thoughts your over he to remain offer for second and a After XXXX. quarter final year. and for these to for before financial results our full in detail provide performance for We products our expect the line turn balance Don? I’ll call outlook the concludes,

Don Newman

second cover QX in a to ATI On and balance our outlook. like areas, I’d the performance, $X.XX Bob. sheet share basis, quarter. lost per Thanks, our our several including reported financial

a associated $X.XX costs of second to to headlines. restructuring quarter. a share $XX have Excluding Company reserves, go performance, of per beyond favorable strike true-up sense our To the true lost million the get you the and in our with small the

the This for where engines As segment broad-based than overall commercial XX% is readily last on the account you we aerospace more two calls, HPMC of business. apparent becoming and our engines, particularly is earnings in more jet in revenues. momentum segment within recovery, gaining told results jet our

As quarters. materials for a in began. pandemic expand, our HPMC. sequentially first Volumes building revenues more on to two accelerated forgings than continue growth increased specialty for Bob the shared, for jet our XX% business the time in since prior as by and demand Underlying meaningfully the whole engine ATI for

key versus the to turbines Asia. by specialty gas in each addition grew revenues materials produced land-based for jet including markets led energy, quarter, of In engines, HPMC’s first end in

increased a by from of benefits nearly third XXX result our increasing utilization, EBITDA production basis asset We notably HPMC’s growth and XXX end quarter growth and compared versus quarter first HPMC XXXX. energy, to points our the anticipate further of jet As and the engine margins points engine profitable increased across key most jet quarter utilization across specialty rates second network. and markets, basis

revenues maintained. expect over executed jet improvements cost incremental structural XXXX robust the margins quarters coming profitable increase We and throughout engine are as

Turning segment revenues from operate segment in unfavorable nearly SRP at QX our also results this and AA&S. noted by quarter, quarter from impacts precision quarter above materials business first clearly to business. $XXX first short-term mix. were quarter the strip marketplace. Sticking line with strike-related prior that the plant Earnings XXX-day robust for removed to the performance, prior SRP AA&S made compete due business No to record-setting while year, to the costs our and Despite million financial levels the with due strike Asia achieved segment, the we adjustments be the resulting It these in were should elevated below to help and rolled long-term more in changes with production below were production that we its levels mix were unfavorable to cost first versus well the impacted largely declined declines. earnings, structure will XXXX outages needed specialty revenue first Earnings revenues continues in costs. SA&C business due the year. from effectively headwinds.

recover SRP expect to in ahead in segment, the we to the begin business Looking August. AA&S

approximately the result production and throughout of with we a inefficiencies anticipate July continuing quarter $XX of third re-ramp, costs. million the the of additional As strike most associated

the Precision the Asian season. expect for business prepare results solid holiday to quarter is year-end device generally its We strongest in Rolled Strip produce seasonal what as manufacturers

It’s quarter. quarter Our SA&C costs were to elevated will year closed and to expenses noting marginally third costs sequential due company corporate worth maintenance lower traditional likely second have that outages. prior earnings prior and compared quarter its in preventive year, business both prior compensation year primarily due foreign to due benefits due and above accruals prior largely exchange Closed were above first prior non-repeating the higher company than were quarter, to to and losses. prior expenses incentive periods. quarter mainly Corporate

declined. They the margins results to to benefit future benefit expect decisive business. quarter while As cost second serve HPMC in limit we’ve return the several continue The when fully growth. our actions year-over-year of the past revenues expected preview line bottom discussed quarters. over to quarters, revenues to offer decremental what a XXXX them segment’s We is year-over-year

While at grew this HPMC with cost earnings structures. many year, XX%. revenues coupled rates were We flat result streamlined largely versus as earnings prior growth production of facilities increasing a segment achieved

improve. However, still we room have to

Some recover. such others aerospace operations facilities North to to still margin quantities our of operate while markets continue as limited schedules large as commercial low at Carolina, produce transactional nickel on powder lower Bakers, products demand due levels,

Now, balance let’s move to the and liquidity. sheet

to recent sheet million our the the any liquidity, throughout cushion including quarter ensure pandemic, taken least As $XXX at our the ample storm. actions we’ve balance profile prioritized has we strike, roughly improve been total the of weather an with of to $XXX ended debt million cash. Despite have and to case

Our quarter’s capital capital higher and elevated working increased, the balances contributed accounts second partially quarter payable levels. from second Accounts to also in inefficiencies. business managed to our inventories receivable strike-related levels due working SRP

as focus production. continue we inventory to on We velocity ramp

half a levels expect second in significantly of of as improve to capital percent sales We the working year. the

pension ahead, to contributing our the plan third pension The minimum we with leverage consistent above our million to to contribution reduce is and benefit is our up improve deposit intent our beyond U.S. exposure. Looking to in funding quarter but long-term $XX and requirements, status profile. defined anticipate

continue actively to debt coming manage we’ll maturity in the quarters. profile our Additionally,

to Before outlook Bob, provide third over want I back full the quarter I turn our update year free our call flow to and cash expectations.

We’ll AA&S we our jet improve, a materials sequential expect increased growth to the cost our said anticipate higher continue efforts. I production SRP segment, benefits. maintenance related outage and business temporary In structure ongoing we see to transformation costs production our also by volumes. in earlier, engine As to to and led due specialty

business maintenance versus negatively higher and SA&C lower its summer the be will revenues Our sequentially impacted traditional by creating outages, second quarter. expenses

earnings increase from to electronics rolled precision Asian sequentially to expect We higher business volumes. our due strip

and will be adjusted HPMC be result tax funding share, our $XX quarter between expect This and reduced our strike-related requirements production outages third segment offset $XX in to million accounting million a labor benefits. agreement, contractual results. post-retirement This a post-retirement AA&S new loss aggregate, maintenance USW gains $X.XX partially and the earnings earnings. noncash approximately quarter we result our we for headwinds. a of gain will In of of breakeven third $XX pretax adjusted As onetime in expense medical gain. will likely excluding per segment from benefit associated be million charge the costs and by excluded medical

XXXX. improve adjusted in able continue to results QX earnings expect production quarter While predict lingering the to not to are in and to ramp, to we in profitability we accurately fourth uncertainties due return aerospace

back the work on breakeven throughout capital anticipate positive disciplined goal year be now at to strike-related the impact, offset working slightly generating meet in cash I’m aggressively diligently of of to earnings strike due the spending full to levels. flow improvements half capital cash positive to continuing free confident negative and We’ll free seeking XXXX. we’ll be flow cash Finally, we year. to impact, our the

its end closing of along I’ll along market for expanding that, accelerate Bob expect the and to shares recovery to a this the path to excited capabilities, call fully leaner remarks. ATI over way. We’re Bob? margins back showcase some turn With and market

Bob Wetherbee

Don. Thanks,

financial quarter solid sequential showed results second Our improvement.

momentum energy, our growth market and recovery will medical made critical, particularly future be portfolio, conditions building segment. our and cost is our our have we’ll programs. that our confident we We rationalize pre-pandemic aerospace The business. in specialty levels, significant in benefit consolidate our to company. Transformation customer for stronger an align create structures track rolled streamlined outsized within upgrade footprint return as ATI, defense, success. at ATI for load. products of even volumes aerospace well-served segment high-growth cost by when be product will HPMC feel changes structural commercial profitable to and forward Improving structure an more and and seeing these our and higher on We’ve electronics. We’re and AA&S order I’m shares

the business cost leaner API more growth-focused structure growth its earns need with important is successfully a company building the success. We’re of with for for and close profitable has out three that I’ll substantial investment we profitable points. SRP and a within compete capital, cost opportunities Company.

portfolio the product and line significant clear We’re with we’re GDP benefits. the well to and our track innovative open a than will the on team, ask term. for our accelerating I’ll achieve markets strategy of long positioned to operator higher With over that, questions. And is in transformation And growth deliver key future.


go question Instructions] from Seifman comes with [Operator The first Please ahead. Seth JP Morgan.

Seth Seifman

Thanks you very year. on if the a was the wondering for the impact of rate second Boeing’s actions about much bit and XXX half good morning. latest latest could I -- talk the anticipated little of

Bob Wetherbee

morning, Yes. Good Seth. is Bob. This

I at material have doesn’t half It think, a look can impact real the the us in of for the year. news. XXX you back

with travel early see seeing ‘XX. continue but still particular have is our at the term albeit late to probably that the what’s But, XXX. expectations, our from we by stabilizing, coming continue levels, business looks near-term and impact nothing forward on the be term. significant monitor not longer going relatively the near low Obviously, to we’re back from OEM any in international as to ‘XX, We going

Seth Seifman

piece is and of between ever the just what very exposure? there, follow-up, of then, I HPMC it, narrowbody specialty of guess, the that exposure widebody I do In kind maybe breakdown non-forging And much. business, Thanks disclose guys if great. you could. Okay, the one materials the

Bob Wetherbee

the always it And move in what obviously When that need system. of the visibility disclose out we it their have and greatest will they product our varies. we they don’t billet, don’t distribution because bar, where rod it it. materials sell goes into a specialty OEM airframe business, on side. The around need depending comes We

clearest have visibility the but actually historically don’t to we an it. So, disclosed you give also answer, haven’t we


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

Phil Gibbs

that $XX not AA&S, the you be, to right? million $XX million to costs. you Is that’s already just said you think On what additional impact going saw. is what addition means, in of

Don Newman

This Don, Yes. Phil. is

is strike million $XX to in incremental event. the the So, of related our QX estimate the cost

think QX, shared of was there million about costs. you that $XX we about If strike-related

So, any news expect we another $XX QX. million in Good don’t QX. is, costs additional in

So, it to you the were two across us. look this the work, million $XX million. customers’ is that employees affected, are Suffice our to very, behind $XX very addressing back plus quarters we’re re-ramping if million, say, and we’re QX, and needs business our represented that QX, and happy burn total $XX getting

Phil Gibbs

balance And What of that had side but what quarter, the expecting to for out to I of the the kind those were the year? chug number some you through you that are me the of the on shift going are of inventory over as second upside. you of surprised thought balance the over inventories in year? inventory, you just inventories expecting

Don Newman

are release a I of Yes. certainly would second in say half healthy year. working is the What the capital we expecting

the business strike. had as good is liked talked We release the about For as during release, it’s news to not we of see specifically, inventory much had deferred, didn’t heavy that accomplish it’s the in but expectation in that QX we the loss. we’d a SRP

just other to And SRP a levels of stainless, shipping would see as be standard standard also of that of expect those clear, in products happening second should to sells in release quite we in we products more a ramp terms the half that the not stainless So, number well. space. quite in see

Phil Gibbs

pension I on billion. right Okay. $X a liability, OPEB now, And think, your and under is net little

You made discretionary a mention of contribution third in making quarter.

OPEB You a and bit quarter, up something returns rates here been also in your in that’s interest little the made favor. on have trued mention and about third getting

too changes As that all pretax Where that go? assuming XXXish, could nothing you look the I’m liability, where ahead, dramatically. could

Don Newman

that ended million net $XXX couple to of an happy last lot so year say a with hundred OPEB billion. and We first, I’m XXXX under are we of million. obligation pension Well, obligation $X of

drop that to we’re can funded that consistent around working several $XX the that’s that the leverage pointing getting and down that status. pension. on So, the pension are we’re path, think on standpoint. to make as pension million years Then, with focused nice irrelevant next handful from a decrease. last see out, about to continuing that’s and achieve obligation it We’ve to going that in committed over a obligation a focus. And over OPEB calls by stay said keeping fully the QX, especially so we the We we’re And that of you’re our focus delevering. we glide

that books believe calculating net also have the We a rates, benefit today, see important some probably are -- around discount of an we’d close pension we obligations. the which if OPEB element and

we if But so, some in $XXX would rate, XX look our obligation. million, XX-K, of Phil. about you give it decrease sensitivities, the discount million points you expect And for $XXX in pension basis will at increase every

So, where working couple are down saw we years. that definitely the the in -- balances them last of from


from The Gautam with ahead. & go Cowen Company. Khanna comes next Please question

Dan Flick

Gautam. is for the questions. on Good This Dan Yes. morning, for Thanks everyone.

jet at what explain quarter? -- quickly So, in could explains next-gen the decline year-over-year engines you the

Don Newman

you think, how Largely it. is to about want mix, I think

Bob Wetherbee


It’s what the that’s mix. I think it is.

Dan Flick

were it. are got lost the or then, those to Great. deferred or going entirely? caught Okay, be they they And delays, sales, strike-related are sales like for up,

Don Newman

not what I -- a there’s sales were of to mix likely it’s up. certainly, But think, with make transactional is more those would going sales, that you see -- of course, in missed business there the every is, And a that. we in the to effort, sales of up that obviously, to do believe, the opportunity make just QX. we’ll amount healthy were make missed

balance that we’ll flow those of and picking does cash sales of be the then up year. in our our guidance our missed some reflect So, for also that the expectation guidance QX expects

Bob Wetherbee

products. comments for about the we a of about stainless through the lot our accelerated. sheet make our then, second Dan, of actually and quarter. those standard on made their distribution out products, exit can up. inventory. The distribution time, a And Clearly, in curve It those or little some that went the color business, our of accelerating I the not to of think, we I going channel, we’re think deplete of at If our same specialty actually that customers exit saw shifted to

So, there’ll see good back should of be in -- ramp there be kind stocks place in we those to get other demand as start places. the to coming

comments I stainless to So, Don’s the but good were Not stuff, feel see orders right. the going about having think, replacement clearly, those of standard for the transactional we specialty, future. the

Dan Flick

you do up So, can be up what made made think in be will QX?

Don Newman

year. I be the up made think, will be what half the made in can of second up


The Josh next The Company. ahead. with question comes Please go Benchmark from Sullivan

Josh Sullivan

Can you’re guys to the about ramp cost the coming have we shows up, quarter you these just can volumes pressures, it long-term new on benefit these here, And you talk just keep are of some to then, out maybe able through curious as a what through. the given Just inflationary you if you inflationary term little of think achieved pressures that the be of materials? versus hold labor, downturn? but clearly bit back some that long

Don Newman

going Don. that. Yes, I’m to sure. -- This address I’ll is

the our So, about in we to One basket able that million. two structural. rate, $XXX believe is is million. capture will And was in run of about in structural $XXX XXXX. that from XXXX to And $XXX think million to think baskets. The of $XXX run rate takeout that about we achieve terms about was million be on $XXX cost way what a is that standpoint million

So, the financial in that’s a giving it our that performance to gift keeps future. comes when

of our is And business. you that’s about as paths it to as products, in also a basket footprints, benefits structural a associated and And other costs basket, the transformation. with the want can $XXX million. Not consolidating incremental SRP us mix that the a and we’ll million costs, like get that just reducing should it from of with improving transformational cost think million our of $XX we’ve we’re transportation And cost guy. with effort, stick about on an $XX first it just as benefits from we’re transformation second flow just there’s we’re you brings from also -- the that benefit The standpoint. course, good savings transformation structural talked benefit that lot imagine,

the into And One the about about so, the going that forward. one that off that going beyond get With project, and I we’ll benefits how to that in reducing transformation reductions thing, future you way, the cost business significantly when that cost add, talk prices. metal volatility of we’re related from to to effort. would efficiencies, by benefit other structures the think we’re

profile. you standard We of expect of be going exit sheet of volatility as our two-thirds gives nickel eliminated stainless of is example, idea that, current the as new with prices, that we for an roughly around nickel to part transformation that Hopefully, SRP.

Josh Sullivan

to secondly, you get upswing volumes way guys us? thank that on to just you detail. all Now for frame leverage And given are you you anything something conversation? utilization we just segments, there shifts that can with of give any frame and guys number way now is the side, the the the then, can where been, is has utilization No, are where or us for to Yes. the various utilization any have, there commercial on on

Bob Wetherbee

three hopefully. or in minutes less, Yes, Josh,

Josh Sullivan

want you there. it Anyway

Bob Wetherbee

would we’re from trough. think utilization, we’ve say, specialty started we’ll SM our see the Clearly, I an I of uptick. the at the materials with probably probably So, bottom -- to business. business, start equipment our

couple rate. to want probably the will slowed utilization at XX% coming I’d projects have on be we but a we effective. we be, say, where two-thirds cost obviously, we’ve in be or But that at probably two. we’re to down. coming crewing our line It SM, adjusted next of So, we’re year in probably the But

higher up. the bit products, I So to that say, that’s a our lever for forge us would little than really On it’s ramp probably.

machining what have a on facility We have inspection. and treat and also based in coming we got see some for to line today in capacity, it’s iso utilization. on capacity probably -- XX% new heat in We Wisconsin the we’ve on. you’re opened going But,

So, there. there should be upside some

little is forward. XX% probably nuclear pretty So, of the got business, SA&C. in In outages. talked at XX%, that some good electronics but upgrades in refinery forgings, have very and we’re business. That’s a going We’ve some stable feeling that space, looking a expansions coming denominator what Obviously, in about terms our summer space, the growth. the there SA&C change rate. to bit there maintenance we for in have But, of kind organic a Don the we with it’s

consumes a kind little bit. it itself of So,

annual us have maintenance. we for to throughout. So, business have it’s good But, stable been a

return I’d a say SRP business. -- safe of should the number but obviously, our it for SA&C. through we’re then, probably So, transformation going And is XX%

So, resetting we the denominator. are

go HRPF, our Clearly, XX%. you are we’re downstream? going through is you talked lot range. we’ve we to see in line the lots If and to your be where in the upside. But, got of which of up to be to at hey, to get XX% quarter. XX%, by we as to fourth said to want a say, me, probably I XX% sight be going today, could about even where of I’d then XXXX,

we’re strip there. to XX% the say, lastly, opportunities So, -- excited probably come in mix could But, what enhancing about I mix rolled we’re predominantly pretty to there’s precision there. our rationalization keep is always which then, electronics XX%. business, driven, would Asian And the really closer

hear? So, hopefully, hoping of minutes three to less, what you were that kind in helps. Is or that

Josh Sullivan

Yes, absolutely. Thank you.


ahead. go Berenberg Paretosh Markets. comes next Please from question The with Capital Misra

Paretosh Misra

AA&S I’m regard me So, bridge in can help other that, year to million for there you announced sales, a year-over-year the in the actions understand you you because was segment, $XXX thinking you large decline restructuring should with revenue, million that right, Because the or for shutdown, last year-over-year on $XXX are a basis, see QX? offsets to math? just of that what

Don Newman


path announced We in And products. path standard second to exit related right. customers basis as we’re absolutely half out in their that want space. part are our see, out of from to standard of sheet, what working on our those to of What year, think, we’re have You we continue some which that release inventory as balances -- to standard of still we the you’d of the million on glide glide an of exit we business, the to with stainless expect I revenue. needs $XXX was sheet stainless out the commodity annual that our about XXXX -- that help meet inventory

start some course, then, standard over that’s that to the from for would some up And Offsetting terms of what sales impact. expect making QX. of in see we in that were SRP a to of the think So, QX strike expect carries a you standpoint, ramp related I to half you’d in as sales the lost that, strike second stainless impact, experienced into specifically see. of

second So, that’s the we talk why the half of really about year.

the about $X, The example, be beneficial Nickel, and other the the related as of revenue in And beneficial impact beginning that entered think, SRP would us has almost an a the a marginally to specifically to us, increase the year year. of $X.XX. in pound metal prices. AA&S terms $X impact to impact at to since we increased is I

terms the in us second to presumably, benefit prices a creates these at half, if actually of that impact that so, remain will levels. sales metal And

Paretosh Misra

it. Got

That’s useful. Okay. very

next the markets the in months, every to this winds that can describe, of as XX you which you’re moving business over context provide commodity So, which plays sales market as quarter, out X are end away from this your mix, the end down? you

Bob Wetherbee

is morning, Good Yes. This Paretosh. Bob.

one we that I think about. would I be think channel there’s and talking markets three

grade. And standard standard about be call, talked A standard the percentage of large stainless. to I’d goes we’ve tend what stainless they gauges, with standard distribution through, So, channels. standard

we’re for in number and You’d automotive the that of go? certainly oil those products, one some away see applications Where gas us the that’s it moving in industrial. general and So, markets issue from.

some space. might and construction building You see the in

in the grades. standard be that in space foodservice tend to those some see You

being what specialty which we focus gas in you’ll then, turbines. into land-based talked So, about future the we for capabilities those space -- electronics. growth, see we We certainly is and defense on talked the us I good core we energy, see the think the and call in today, what And medical about do. of certainly what we aerospace is that clearly, leverage

automotive mix will general business. but future. stuff the well distributors in of and the provide less the distribution and the We our reliant as the the in service So, customers, important industrial because channels an to more always oil be is they away backing on gas, as kind have OEM

Paretosh Misra

Thanks, And it. that. a maybe Got Bob, for last one.

flow cut. back $XX going to the million cash guidance, the Just free

can much most provide if how are versus you Is working EBITDA as wondering the color the parts? that is more capital some like what to Just moving versus -- costs strike-related perhaps?

Don Newman


flow. So, the bridge to The free of guidance you the flow you’re part XXXX, right. what guidance headline about When of in the see you strike a in terms positive is biggest on that new slight revised free breakeven really cash look is impact. cash the at to guidance for

think million expecting not that and would in $XX So, right? If of $XX $XX included largely QX guidance. original been the related, headwind a the our that’s in cash in costs about you have million that QX, million that’s we’re

guidance. course, of initiatives working CapEx our doing discipline some release, to pointing free got to the XXXX a this going then, think set able we’re How that toward, we’ve we capital new we very are to I the we’re now very, working the of are flow with we that. are that and us And cash other -- let’s our goal Now, for Through accomplish feel and offset levers out cash to I our with lot get in it? right be that right managing all confident that pull working black.


Fields question. ahead, with go America, Please with Mr. Bank your of

Matthew Fields

flow just the I cash guidance. to back to go wanted free

pension. of that pension is That -- again, been positive. movement there’s sort contribution. slightly I this lot breakeven before a is And of So just on

said think, going quarter, the you last $XX it basis. to below I million was on required be

a sort million, into just contribution pension required year, you’re actual the all but pension $XX is cash this of what’s pension make going the of the million. $XX voluntary give Can in? to you contribution us, Now,

Don Newman

is you first, an the So glad because question it I’m asked important area.

You’re what laws time, look the at XXXX, contributions change you sheet, told the our million make or is, entered more us what, right. XXXX, we When of $XX we kind was going we’ll requirements hit what which quarter, further whether market it that and pause. changed. and the pension the had on to our and give contributions with the the And not balance And flexible be of said into decision plans. deposited the to $XX to we came balance million, know the to in We liquidity when we’re talked to year the by plans is, pension were the said, deposit we to going opportunity minimum. to around contributions. make we we last about then contribution Then, the as federal in the the plan, presented law, we pension

So, taking the flexibility with of. were the new laws, we advantage

at balance and strike. liquidity ended Now, we sheet, great look in our our We position the we’re and shape.

end to good a of We good the plan. contributions making trend about terms have market discretionary feel in We recoveries. pension

said quarter will another $XX in into around is, definition be planned million we’ve what right. That in flow, XXXX. million total hey, that, XXX% cash From with the to deposited. standpoint expect $XX So, this you’re a deposits QX, free make

cash comparability don’t As we our and reasons, including providing it that have flow talk And pension plan. number flow, cash contributions of cash do define benefit flow peers we of plan. to a free about the free who excludes defined to for

to for clarifies you that think about our pension hopefully, So, how contributions.

Matthew Fields

required is don’t early, the ‘XX? I care And if year, voluntary the this take $XX contribution too the very know for then, in it’s to next but of year, contribution million that’s helpful. No, pension

Don Newman

would. we a plan. But said. is, want right, the on reality I about the work It think really likely to that’s glide But, pension continue to it. We way as We flexibility, down not path. love the our we’re

going drive And funded desire drive the years. future so, those plan to would be our of the contributions to in status what’s number plans our to next to really fully

Matthew Fields

me. then, you. And a Thank for Okay. follow-up

further Your last it’s base a ABL like was on It little limited your borrowing limited looks bit quarter. this quarter.

from limited borrowing squeeze that liquidity to capital, should capital, up working of borrowing of work base, cash by kind you to that way gain trying we base in are As think to can be and meantime? squeeze managed revolver out the you’re expect out working while that back do or managed you trying kind you the

Don Newman

so. as we capacity terms XXXish next capital punch I probably of liquidity our borrowing that think some And for reduce this at overall to, say, right, $XXX available of line effect the or which were have undrawn level being should ABL ABL the liquidity $XXX in is last or will working it end think, at at work quarter. -- million that on from also manage under to But, through think Think will base. balances, managed of -- about XXXX. working of the the of be around and minuses, the million there the you pluses we our year


ahead. with Safran The next Seaport go Richard question Please from Global. comes

Richard Safran

I too how deployment guys capital you hope it’s early bit the I and debt. morning. a is just have one this question not going about just thinking asking start to about

much and continue you you since debt but things longer, cash, improve, been on if do continue you expect to if thinking about towards how this. Specifically, example, not dividends you buybacks? dividends, I I’m to generate while between think were a asked balance mistaken, it’s back, the leaning while were if for are I that, you to reduction? how After about focus a think

an what maybe give you’d thinking on update I a bit current of thought So, us is?

Don Newman

is ability answering you have that cost think obviously, in well. And want do take to allocation, that start, comes And the cash in position. spot. will to about a the to enviable the Rich. capital with place, where of first, business our we’re at going strong flows in run the and put a capital in cash profitability to generate incremental margins increase and a as how that flow ramp, great we’ve to takeouts I’m you We’re much you? question, when available it When really you

would standpoint, to from going Then, to prioritization of a it I approach. way available we’re allocate. balanced have So, ample amount a an is describe the capital

bank deleveraging. prioritizing, are it includes also debt, We pension but includes That the plan.

modest. glide this -- on you element expect We to contributions would And gives position which ramp be I first that flexibility. choose Now, we delevering. about next EBITDA, some debt in cash they’re it’s in path. $XX even pay nicely maturity. quite debt. we’re the near-term think But, don’t be pension, look the That fortunate at profile and already Well, we’re capital the should then maturity down XXXX that Then, recovery to deploy of the our any the our also would to million, us to how growing in to our in if delever at have through really right?

without because to as we’ll balance to I obligation, I pension Phil’s and $XXX to It’s over extraordinary do we so, sheet. done and continue anything million funded healthy cycle, work to growth. fully pointed normal will entered year all contributions having that And that question, years. in on for the it about that continue that course important But, across this down make And also CapEx. out not down. delevering. it’s of be and and the expect of do we we’ve with want derisks we’ll through But, it it the handful invest our And to business next strengthens would the

do this If that, set you and accomplish program those it assets is continue things. think to to And our throughout CapEx One cycle. CapEx we’ve keep is about our program, and to two our we assets healthy. maintain down done

to is The second grow.

capital as to at of healthy that opportunities can at we surprise you returns. lot And organic opportunities, organic inorganic, a look growth very no so, have we they’re there. And typically or deploy

continue at we’ll buybacks? or specific is say, so, radar, we that gave doing in balanced examples strategy share and to in we given to that it equity, around would one, the not point, open be either yet. we that when comes what’s of interest the prioritize would growth Then, combination our would are no, with think best certainly is But we dividend delevering you our the I to this because circumstances. right And in -- interested shareholders. we say, the on it

would I -- on say, the so, to two options. come more those And

versus where of a it on course, the is. buybacks, share depends of dividend preference price as far lot As share

in early a it’s that call. bit so, the make game us for to And

that help does So, you, Rich?

Richard Safran

actually That color. was a quite That me helps bit. Thanks. terrific


be go questioner, one for Tier with Olin Research. Chris X that we And last time will and have ahead. Please

Chris Olin

if tight I feedstock. on I ramp to the want your supply little then specifically and to from the at to melting seems aircraft it looks planned market you titanium next it the months and would as a like channel coming get touch guess, relates to titanium production look we XXXX. that in XX be scrap bit closer back thinking the as aerospace, going about or consider to it’s over get awfully that revert

do in your with the we’ve I or you requirements? ability second So, can guys your guess, And contracts guess, me terms be, pricing feel in comfortable capture of future should seen that, question like serves are remind my like protected other to you of would to you to scrap you some I metallics? how whatnot, scrap

Bob Wetherbee

Yes. Chris, this is Bob.

the terms it’s back the your titanium demand do because widebody In think, first while before situation, market to going a of levels. -- starts see we I than scrap as the how was think, of to gets to it question be increase? I higher XXXX

You’re going than more ramp. narrowbodies widebodies. gradual to lot a see there’s Obviously, that

the first So that’s issue.

the for going it’s stuff. be on structural ramp to think demand slower a I titanium

period of So, get bit narrowbodies strong, a I little mix. on of a for delay us that. but will the and we help we’ll time, Clearly, are work that the think widebody a through

we’re comes that think scrap. I So, that to we access confident back, have sufficient

growth be good going Q-on-Q the increase in HPMC a it’s more we’re of big XX% think, components So, seeing engine space, right? side a spike, to the for engine that general. I versus in gradual in growth

the it you was first think, I going slower. think that that see I So, you’re to question And be had.

side. I a challenge think scrap see -- huge really the we don’t with

day. are obviously we something it’s think I into every

of if is how I of we’re our terms system. lot there’s In closed-loop a a a think big scrap protected, spike?

dealing a price for that or the us on scrap customer customers the tends be so, spikes. the nonissue to contracts, with it are that And in we’re the

that’s to way best look probably it. think, at the I


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

Scott Minder

us We continued XXXX to And conference all you interest your call. who quarter Thank in our second concludes this joined ATI. today. appreciate


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

You disconnect. may now