ATI Allegheny

Scott Minder VP, IR & Treasurer
Robert Wetherbee President, CEO & Chairman
Donald Newman SVP, Finance & CFO
Richard Safran Seaport Research Partners
David Strauss Barclays Bank
Philip Gibbs KeyBanc Capital Markets
Seth Seifman JPMorgan Chase & Co.
Gautam Khanna Cowen and Company
Joshua Sullivan The Benchmark Company
Paretosh Misra Berenberg
Matthew Fields Bank of America Merrill Lynch
Call transcript
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Good day, and welcome to the ATI Third Quarter Results Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Scott Minder, VP, Treasurer and Investor Relations. Please go ahead.

Scott Minder

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

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

to Now the call I'll turn Bob. over

Robert Wetherbee

Thanks, overcame strike It expectations. quarter, our Scott. Good disruptions, pandemic-induced the morning, X returned and that and third thanks month in inherent challenges of we for ahead This transformation. joining a X-plus was feels significant us to to today. business months the no great profitability small labor in we as report achievement,

transformation end of our Our significant business in recovery success is due and in and parts to of markets, our ATI rates team. efforts accelerated the diverse equal restructuring the perseverance

Our what from recovery financial commercial achieve the and the agreement, earnings line strike-related foundation. winning our the recent can pivot factor years. our gains. to you X as on the were per challenges high share of through positive operates has costs on $X.XX collective adjusted utilization We're past new from accelerates the capturing at as aerospace excited gain per growth. line We're to managing $X.XX. begun lingering Flowform well and when levels. our what by improve team the including benefits from and bottom of I'm share business about strike, to overcoming new the the top EPS we settling We're proud We've winning tightly solidifying share labor business by net impacts and our the divestiture. our bargaining in as quarter the costs third Products accomplished,

I'll market, update a by our and on strategic into performance dig provide I few a of outlook end Before initiatives. our progress

We another resulting gain sold took million. we transformation. million, business ongoing on Flowform business nearly a our First, sale of $XX for step $XX in our in

business synergies, to a market, long-term linked volumes serves future. its broader invest little success its had were material will to material placed few ATI. owner the the rather primarily While for There and specific science. this was it our connection be than The new defense better program to

and used of so Second, we've our built financial don't cash successfully variability I'll to here, foundation due upon increase voluntary significantly were flexibility. favorable want same debt notes and Don's due my support taking markets proceeds debt XXXX. A by volatility time, highlights to reduce limit portion comments. the in our lot by XXXX. a steal pension firm steps the of I We financial advantage. redeeming maturities these we notes contribution. added in earnings our flow and We new to extended XXXX a tapped At to

interest and As of by actions, levels a improve. quarter million decrease these $X about annual expense pension result will third funding

great streamlining Kim promoted continuing material since next XXXX, in This Operating one leading December XXXX. business effective and we Officer as doing to the execution January visible a recognizes as our both she's to Fields become businesses, Kim's Third, ATI, step in serving aligning role serve flows. segments. been journey Chief the accelerating a officially job

generation better positioned leadership. to As improve markets margins her recover and asset under cash expand utilization and increases, we're

contract Products we are It last September, structure. strike. includes paths. term. flow on one progress This be The on we've in a to say a The now July, our back began meet competitive rates employees, track, Products end moment. strong on job we sheet Specialty Lastly, to December reached to cost X.X-month make business to Together, team I'm hard important positioned I'll and announced production streamlining contributions our Specialty ending did taking ATI's accelerating that SRP long we a have standard to continue successful upgrading ramped our plans of that Rolled an to largely getting SRP stainless we exit high-value Rolled when production X actions deliberate efforts more signed customer that to material is pleased transforming the in on by closing their business, representative low-margin rewards our concurrently employees to create their pre-strike facilities SRP's demand. union working strategically back to outstanding that we're overall with products. the agreement levels, exception address. success. In and with for Those safely track.

on decision chronically our a given History might temporary sheet costs. fixed stand with current demand. strong exit this where margins high is we us, the low standard products a in reminds highly business stainless to You wonder cyclical and upswing market

the has to commitment due impacts. but extended X X wavered, Our months by exit to line to our strike-related time hasn't

First, aerospace customers. the for slow qualification SRP It across backlog created us operations. also caused destined product activities strike to strategic significant

facilities a second recovery quarter I closure, offer better preferred by market will capture current have to the advantage would upside. extend of operations take a stay to on quarter conditions at we'll line. select a committed a savings customers near-term original XXXX. and our economic As X. slated result, We're position our valuable few for into for time slowed The or be accelerating where the

over long overall be to our the economics let So place. the clear, remain attached favorable in run me transformation

to outlook return demand We're market. Momentum Turning recovery. third evidence levels. as clear pre-pandemic volumes by and performance building of our seeing quarter to is

end largest market market, our was fourth share row. expansion engine grew with demand with quarter in a our demand jet by our coupled narrowbody start This forgings the across for In for gains. XXXX market, product unevenly portfolio. the continues driven engines, Expansion commercial aerospace. Let's

sales volume Our QX support In Specialty increases somewhat. our LEAP-XB engine XXX expected production declined ramp. forgings, results contrast the to jet MAX included initial to sequential Materials

of jet material engine point, clear customers' inventories our inventory are that low that a appears it exist. nearing While pockets it's

widespread production materialize. believe year-end manage desire predict We soon, be We inventory customer inventory increases there's these will tightly stockpiles rate to as also fully depleted levels. OEM

next hesitancy wane few to the patterns underlying order to reflect over customer once and expect We again. demand quarters

Aerospace. Commercial on Lastly,

Our recovery for efforts airframe associated with business; second, new OEM reasons: SRP agreement. Year-over-year orders and post-strike sequentially our our sales long-term in business European expanded increasing first, the X airframe declined.

third continue on expect QX remain market low and the We levels Despite rates XXXX performance, quarter on travel this international XXX the horizon. in aerospace to and at recover there's slowly as good deliveries more news hold. mixed into

recovery form of passenger again customers skies. displaying accelerated retirements. travel, fleet global Delta COVID cargo the increased in variant once As volumes are returning and This trends the higher the impact domestic international travel is already restrictions strong to ease, slows and market

sales the timing shipment growth the Moving to defense term? programs the of term, jet U.K., growth. the sequentially, Revenue in ATI the highly business. Year-over-year engine largely sale and vehicle in in due helicopter Flowform to land-based and strong. new programs. our Longer of defense declined was military near U.S. What's for Titanium driving market. customer armor expansion and we remain the growth confident

from programs materials our stems a advanced range from production opportunities can and that benefit and confidence Our development of capabilities. new wide

occurred travel of exploration Materials Advanced demand higher energy. large a in is for and Solutions in in project in energy GDP of for products and our specialty our alloy for land-based & energy the both segments. rates clearly. growth Global Turning environmentally continued as Sustainability In our as production our outlook energy oil and will In gas and more nickel markets Components destined South drive sequentially production The gas segment, Alloys generation in shipped Performance significant growth transmission friendly High technologies. increase demand we strong solid. & offshore segment, nickel turbine year-over-year trends America. markets. near-term This to saw used business Asia. energy waters most will well produced We and and

All served our unique of these are best high-performance materials. with

used our in levels expand sequentially our sales increased implant Let's QX, In demand and materials inventory surgery by year-over-year. market customer driven medical we medical, trends with continue low and elective wrap volumes. these grew to post-pandemic discussion biomedical likely and and electronics. In up for applications expect Increased lower was other Electronic China end of required within constraining, electronics capacity previous the strong. facility, production the available sales Rolled quarter, very Precision MRI-related our record-setting within to allocations to include and quarter compared for key but materials. still Strip markets The for were demand last year, products. the levels critical strong

outage confidently Oregon Underlying We our remains planned facility. I'll maintenance QX continue. ATI's at by up demand for saying future. electronics also strong my opening wrap had bullish on a customer and should comments I'm

locked growing market our We're aggressively We've cost-structure share. are improvements. end in Our markets recovering.

to ourselves team our We win. the and It's on executing for Don have our financial ATI. as horizon. and proud in of aerospace margins. supplier an I'm time it of achieve exciting more With a to results growth financial significant a I'll this We've detail in to to QX We're Don? growth defense our premier opportunities we cover turn with lead you over accelerate that, goal expand put becoming position and materials. to outlook. provide

Donald Newman

the Thanks, went a Bob. moment, months shifted in and We'll ahead reality, returned generating our rightsizing hard on further my momentum, our quarter, of us opening this but already into in lot already third A we've shareholder for Bob on and to line. celebrate expanding this value. putting path growth. our profitability the gave to three ATI of you expectations. business work focus for business capitalizing

gains $X.XX an QX-adjusted to Overall, grew million, We approaching On and special nearly $XX quarter the $XXX understand quarter. suggests XX% bargaining rate Strike-related ATI some details. our $XX EBITDA earned benefits, Flowform XX% were a quarter. adjusted the provide Starting and I'll new adjusting items. EBITDA and sequentially for medical $XXX and million, results, around increased per XX% grew Now reported costs $X.XX year-over-year. per billion XX% for to from excluded. of rate a and million share a sales by better sequentially SRP performance. year-over-year. for in up These share the post-retirement basis, run collective in million. up third with by To prior the QX up revenue XX% earned the also agreement segment's revenue after performance $X run QX EBITDA AA&S, included XXX% from each resulting versus color sequentially products net divestiture. of

back efforts the levels. first September, of production a of as us backdrop demand strong the SRP had against XXXX to Their rates tangible quarter did This pricing results, opportunities. production an we post-strike job by customer was elevated and Within bringing end the predicted. accelerating segment, team produced outstanding

jet were the of second jet business This a engine volumes, improvements. growth business in energy strong $XX major a cost-cutting market conversion of improvements. our from impressive once and Earnings sales continued QX This increased structures led Specialty margins XXXX. earnings performance the increased same demand, again in higher sales toll in EBITDA was contractual actions, and Precision QX. sales Materials by also weaker engine favorably quarter impact QX third had with result Sequential higher AA&S military and metal a and segment China HPMC and were and versus QX aerospace. increased market, with growth compared and driven streamlined earnings sales sales to We improved due quarter margins of in quarter-over-quarter decline million, selling and QX our product powered sequentially. variety Our year-over-year record HRPF Earnings market HPMC share in earnings XXXX by in cost million. offset expanded $XX forgings margin of to tailwinds. by by every demand XXXX. a markets. gains cost across Flowform Rolled Strip XXXX. price consistent the quarter decisive Revenue and much line was revenues and in significantly the from engine increased commercial end were commercial offset jet is mix, operational

notes balance bear debt X.XXX% and in Let's in million used move of cash are million rate. annual interest of a lower largely in in the from several pension interest X.XXX%. a were savings, interest at support we interest the due glide to benefits, After million proceeds voluntary improved approximately a $XXX in to to the due cash were the million back $XXX due issued $XXX XXXX, the we sheet. notes third in debt maturity interest brings pension million million. used redeeming $XXX million contribution Proceeds at of come in notes quarter, $X quarter. tranches notes financing totaling of in the are will Late $XXX mid-October, X XXXX including The schedule. the than and million liquidity, hand. largely redeem X.XXX%. XXXX rates path and a bear significantly $XX notes bearing of these I Excess to much from moment. XXXX had more including on financing $XXX our

target. to sequentially, levels increasing This SRP Third above recovery was accounts quarter QX efforts. quarter-end due our sales improved strike but were loaded, SRP largely capital receivable. back-end remained working managed

eliminate production quarter, ramped before in unable but we're also the inventory end. We to backlogs quarter fully

significant working to Returning of in managed expect We pensions. XX% across well capital in below QX. reductions levels, company the revenue

Our In $XX This million pension our completed million fifth pension the in plan participation voluntary we contribution time. action lowers overall to is our expenses and and party. annuitization funding reduce liabilities a third approximately latest people nearly X,XXX the over levels and shifts quarter, effort. contributions related to third $XX by assets and of improve

pension-funded of XXXX. XXXX. year, at so seen the rate we have discount asset favorable meaningful in close the a our returns the end that far in movements of see We through and may planned status If holds improvement

to expect product quarter decline. minutes recovery broaden across aerospace accelerate strong several After continued We engine-driven portfolio. fourth few specialty anticipate to likely jet to energy markets growth. discuss a HPMC, take the let's outlook. our commercial sales quarters, we will In and Now forgings

in We mix also defense additional sequentially. commercial sales and should These result a improved large benefit space discrete from to project. changes expect

after AA&S, in SA&C will In in defense to in extended support decreasing SRP results transformation. of due we business. is equipment our several take For of and increasing business, and the medical outage. This improved pieces strategic quarter maintenance financial fourth volumes our seasonal our our outages QX anticipate expenses

to and fourth we'll process capabilities; to asset anticipate The the First, idle expense high-value negatively outages absorption we'll return-to-normal cost XXXX. operations allow to cash line impact QX in and its We backlogs. to idle finishing increase finishing expected levels specialty a post-strike melt in a upgrade second, are a materials quarter. capacity

Precision we due Lastly, Strip quarter our experience demand. to business to post-holiday normal electronics lower Rolled the China its in fourth seasonal anticipate slowdown

improved XXXX $X credit bottom the results and a quarter China. recognize benefit in line. to tax aggregate, building our expect QX the we retroactive we on in anticipate both from In fourth Additionally, million a on top

the more year-end quarters, X high should than XXXX's expect words, to adjusted This This expansion earnings in sales Xx per propel than a will reflect point the between rate strategic earnings costs. in our report segment. share structure In to greater leverage outage growth lead other XXXX. SRP HPMC expand, despite our cost our as quarter, We largely and $X.XX $X.XX Incremental margins fully fourth quarter further earnings our to and year-end into range guidance than profit translates in tripled XXXX. EBITDA more exit in trajectory. that's fourth we've

it's earlier, time at exciting said Bob an As to be ATI.

the earnings in climb back are We of XXXX see and a the out steady black trough.

Before Bob, free want in guidance the to provided the call back affirm XXXX. early flow I I hand to cash

and to free expect to a full the turn to year has for the out fully call year, will are they the a year third quarter pension we Excluding be the Work but high that to note. contributions, I progress close and significant We over The hard to in be mark. expect on worked hit the remains flow confident position cash team in that, XXXX. the With I'm back us demonstrated successful, to put Bob. committed. we'll positive exit

Robert Wetherbee

little long to term. Don. points. together. is possible that with responding will largely GDP we're No. growth transformation convince and Thanks, Has markets Number of they've success. urgency, With accomplished the I'll describe come. it? hear it been extended the we shareholders advantage. close Have in tad product with and had what the and and with a mind. The enthusiasm we've importantly, one, safely focused do I'll the understated. challenge Together, very to needed the to done higher be done and much well what do done, when Number it the we've headwinds. what laugh is track our done. we're of That's change. the line a deliver to market financial in of team what be to significant velocity period I Most cost than needed as for that, we with thank yet over and clear, first always during need weathered for interest experts persevered Yes. four four, two, I of was consistent occasionally are our bit ask competitive our benefits. working key accelerating ATI open for and on growth a for of achieve team we number long-term But operator ourselves pundits have ATI collectively core ATI mix Number our an our accomplished And our questions. the could to all important to proud easy? people, positioned three, be we've on uncertainty, has With structure the we've I is company successful I'm everything and team future. clear a strategy they execution, focused that to to


we pause Research Safran our will At Instructions]. the [Operator from assemble time, momentarily come roster. Seaport And question Partners. first this with Richard to will

Richard Safran

I questions. two So have

bit strategic I for First driven -- is sales by with was ask of a interesting, just the down. second more bit nature, but to defense clarification at one energy, a HP. select first, wanted a in aerospace It

Bob, about, You Materials. offset offsetting you Specialty forgings noted and higher spoke by --

me be thing it's from your I'm would are is, And item. other more aerospace you the materials And would issues I long-lead of materials resolved destocking. wrong, think said why if I a due to it production if remarks, but take be Now strictly is correct declining? that soon. increasing, just the

interpret but mean XQ a XXXX? impact have probably I do you to not likely So that

Robert Wetherbee

I'll All question. right. things. A couple take of that Rich,

I'll there. LEAP-XB. you the of great give The factoid right. a little was You're forgings business, example that a

XXXX, the what seeing think accordion than LEAP-XB supply the shipped So right? chain. So about we effect you're when in in is forgings of you QX, all of more that,

to first forgings is the thing the So to we the customer. had get do

that supply. is by that in I see time pulling that which then of supply forgings definitely out of we're other some gets to as booking. it longer alloy-specific, of be trapped end But demand the end There's that synchronization and the we're where on the Now depleted of assumption through item. And think year, the there, pull at the we the order the kind we billet some was pockets balance still year, inventory gone fair we're or a year XXXX, billet we a customer-specific, and here will there, and better seeing depending the the should side and book, it lead that time so rates. get batches the engine of towards

If you for probably just wanted for the it'd of to be QX, forgings of longer some order and some today, the early billets.

starting adjusting we're that capacity We're obviously to and see crewing our it. So accommodate demand build. to

of So I to it's demand kind inventory your levels and sync demand XXXX. quarter chain of effect into as in supply out. I which enter of be to kind that we the back answered question, we're think we of is part yes, that accordion expect pulling with And

Richard Safran


Second big not D&A, cetera, of And but just wanted examples, and I'm remarks, example, trends of cash be know you about you you're looking take major you'd these in trends, cetera. in flow, improvements just the -- not that could if drive using kind et pension, it. us your CapEx, to for brief thinking to cash working but that made to net pieces really but et you your just on view you if also outlook. And I'm about tell like a your pieces capital flow mentioned cash discuss how maybe, long-term cash a the if flow long-term I Could as 'XX, willing mention moving for expand one, Don, income, contribute some here. you would,

Donald Newman

do to that. happy I'm

markets trajectory right? you the course, end the to generate to, to lever in first to but said generation So is course, ability going earnings, We've the profitability. our recover. past, Of increased I include of major around cash our movement as drive profitability Rich, flow be talked that's to about going not the have really

mix, This So is to a the XXXX that first key of $XXX is managed really think cash you EBITDA. the we've should after math generate that capital. When mind other working before. important. a excess you everybody is that through business drivers of through walked earnings thing around comes in million key. that walked about flow, And That's and volumes the math,

and on couple where levels probably a QX to that there about is down mean? certainly focused XX%, What myopically year, about from way means XX% before. next we're about are will to maybe revenue. couple we this get What to think we to then And It this years working out rate our be going is that should and We achieving then over well how directionally right ended think years, our capital down XX%. last at That our continuing north XX% our draw should a target. to now been as think mid-XXs. we're QX that you achieving We've of managed there sub-XX% achieving one work We target quarter it, We below you take take of of now. working investment. work that be X of the of does exit of end think us capital sub-XX% probably line, years from Rich, below right?

important. that's So

is from on to total is about I'm carve guys Well, interesting But guidance, little think growth think you CapEx? early one It's maintenance a number CapEx think way placeholder, point. a XXXX to million maintenance view you your CapEx, we probably gave It course, in a Another The $XX about off in about a do moving One to is What's a Then is it. is data should to want okay? you've to a of growth $XX of about CapEx total think terms add is million once CapEx, bifurcated of way maintenance CapEx got think in bit give How our $XX just key the year CapEx. has quarter-to-quarter. not to view. CapEx steady going million the the CapEx. an you'd year, driver, pre-COVID thing I CapEx? to million that what you guidance number. of kind is to but that as of ATI $XX a models,

you remember, CapEx. on that said XXXX, spend to to going about we before If hit, million $XXX we $XXX million COVID in were

obviously, something that of $XXX We range CapEx. that. of million, spending And lot like growth only so ended the a was up in

capital an had of amount we our that deferred. we So

So as you in think finish the hit. the and coming before about trough of will projects we the we started out recovery, into -- that had COVID getting

sense a then but whatever spending growth will that, start. -- on you of maintenance we're as in from think you the give about, and support CapEx? LTAs demand might look past ATI as CapEx good what how customers. okay, two, market seeing the I to in think, So of you is spend number should our that all-in CapEx we where about that Number from think remember an we're on target one,

number. so that be of it maintenance And will be a target. But north sensible certainly, we'll

about we we think are kind the when we generation. about targets levers rather we when helpful? that or -- think So major the that Is flow about think major what of those cash free

Richard Safran



And with David the be from Strauss question next Barclays. will

David Strauss

adjusted out and metal year? next here about exit think of given all the we pieces let's And as is year, think good Bob, from the good way place take of build QX we how off kind at to just we that next guidance, with that -- should is stainless prices? model EPS building that $X.XX. a as of a kind to The moving the midpoint about of off

Donald Newman

our take to going up data a But it's and standpoint, a that needed. at Don. $X.XX of is XXXX consider helpful to things. of if out run mop from guidance about want I to the I'm interesting Bob earnings yes, exit couple an is you think and But $X.XX point. think, to This a question, can of

a we part we've to all, a the of SRP outage First in of did got in parcel and It's specialty products note our transformation business. that to strategic business. QX that planned business

about and to the think And million impacts, absorption so under And we're we've tax also then $X QX. guessing associated it's the $XX out-of-pockets to good a those a the in with in just right out-of-pocket on range, noted I'm line. going costs million that something way some guy got as have that we Probably placeholder.

looking takeouts in XXXX you you're extrapolate EPS, guy million once if and a pick line, a trajectory, in in and QX. $XXX dramatic transformation. making the about in $X would to our up throughout from wouldn't is accident. billion earnings, star us. it's consider but of our rate, EBITDA. expecting of all tax by end end this the about to Aerospace, a want recovery about that of XXXX that, not meaningful you those continuing course, markets. and run this a to as our item capture. and in in not because of that changes course, we our think we And in I we're profitability adjusted you executed So that kind to -- the revenue encourage what for the addition million you because markets almost it's by think we It's that cost key business, in that at efficiencies portion as good are because to quarters a QX projecting we is future $X turnaround accident are year of in the But EPS It's of of It also standpoint think in is our

hopefully, helps So that you.

David Strauss

finer put question. And guess a on trying the does. it I cash to point Yes, flow

mean, it -- Would do a of right projecting, rate EBITDA. I it XX% including this $XXX EBITDA Is EBITDA what a into you as Is convert the XX% you pension, conversion? into million of is What rate cash? You're conversion cash? kind a conversion? you -- it Don, free can about at think

Donald Newman

I'd giving percentage, of what little -- you're prefer to want that, I'd So to is again, that of there's that. if with just, to point, kind EBITDA, bit you right? give I'd Well, that consider you for on just blunt cash -- want of you a a like remember do to data interest starting instead you'd

runs range Our right million of now annually. the about $XXX interest in expense

want to that. you So consider

tax-shielded. are We

then the And get to it We big it heroic other want that. believe is when wholly shouldn't and you it, capital, as taxes target. our can on like working sound you've That right? impact projecting. already have we say We where consider important been. modeling completely back you're you you're XX% So part doesn't of before. at a to very So were what

And some much to believe to an so in we on to you're that we we've that growth there. big want is got how strike structurally work the can assumption CapEx but going question is do consistently, and period. And get a then given

shared CapEx just because know I You maintenance already that. our

thinking you're XXXX, you we gave that to total point the back about I its of CapEx. do if raised beginning head, the that -- what million before XXXX is data you and COVID at for of what $XXX was can go So example, I would

So about points, think you how view all terms those to a probably think take I of conversion. in can with data

David Strauss


And sorry, last one.

pension, Next year, would including perspective, free cash positive? whatever you a pension? pension from flow you excluding including expect not to So do be

Donald Newman

positive Well, creation our That cash with value that that target. target, generation. is right? understand certainly comes our positive cash is flow We free always the

how and asked helpful -- the I thing data to by to you, and that pension be you missed one had another about it, point contributions. So think might way, is,

pension in out expect you contributed glide tell can't of how are pension $XX we pension to business. -- So our And we're we this see be on plan million XXXX. we to to the path. potential excited the And I that

by the probably should you or we'll and like thinking that million. is is free Our generation in $XX to level de the all And million you next and a What this contributions to that our ultimate expect, more pension ourselves. we're obligations cash conversion going to to of X, X glide million make as it's on for minimum minimis But years. irrelevant range you're driven to making required continue and driving $XX them guys about flow net be to objective path. million $XX $XX

So very, very positive.


question from And KeyBanc from next will come Phil the Markets. Gibbs Capital

Philip Gibbs

we're and I with it? of up way to pieces got the too that want plus moving and out on with far way that the think is expectations looking to about you have be you the don't the at fourth should So XQ, to because quarter down you all that AA&S balance here, similar largely David, EBITDA, think Is get and on the moving outage. minus, moving the hit essentially I or HPMC reasonably

Donald Newman

math. good think that's I

Philip Gibbs

And year, that pension $XX year? positive the then breakeven contribution cash contributions, that... Is on pension modestly flow free modestly is being number this or for million -- excluding your positive

Donald Newman

part of The it? Can first you the broke your up. can first question, repeat Phil, -- you repeat

Philip Gibbs

saying free your cash in for breakeven modestly positive? of or was the I year flow guide Yes.

Donald Newman

sir. Yes,

Philip Gibbs

million? Excluding the contribution number, Is the Is pension that $XX number... pension contributions.

Donald Newman

XXXX. We're we're yes, additional that's it. in not Yes, making -- any contributions pension not anticipating

Philip Gibbs

be right the million? that's $XX using, number But to

Donald Newman

That's it, Yes. got Yes, right. Phil. you've

Philip Gibbs

end backlog this Okay. we in you've the the for filings your And versus thinking of business. recently, the providing backlog terms at in then been be quarter about the last of What should quarter?

Donald Newman

we for -- the business, working working think would expect through SRP for we capital were I strike-related our SRP. you built I mentioned what managed backlog. that our still We

that You would we by this the year. of that end expect through will be backlog

end at the that, at the the in of generally is backlog range end QX, say would What I same saw add as generally. of we would Bob? QX to you just that, Beyond

Robert Wetherbee

that's Yes, I think right.

looking at our on is are of where and way it in going the we're Phil, what's kind lead times industry. the think, I going

we Specialty times XX the see is what Materials through pandemic lead business less for days. So were than that our

to QX. they're Now out closer to moving

So XXX, XXX, days. XXX

align point getting ramp. starting we're orders to demand So the the with actually we're this to where see

increase I a book. is perspective, So are lead times the backlog order HPMC best from the that the in really seeing indication think the

Philip Gibbs

refinancing reduction, on debt then perspective, actual gel just last terms in And fully one, sheet. the of Okay. in a didn't housekeeping balance XQ from the

accrued debt, be we things, and how interest bonds expect those out to of are So QX should coming including retired? as much other

Donald Newman

be, outstanding QX that out. par took we at of $XXX that headline of had the would the million end on we numbers So

a We then premium redemption. paying And $XX also of redemption. about happened about there's events obviously those paid up million that And both standpoint, to that interest related that mid-October. $X we million an execute of interest from in then ended to


will Seth question with JPMorgan. come next The from Seifman

Seth Seifman

the you feel of QX? about the first that's in places been work challenge do have guess in some forging how prepared ramping. ramp ask XXXX? do forgings. of I lot to And HPMC It's a wanted for historically what in about there you a heard what's challenges ahead. we've and for to kind Just of aerospace in Obviously, different

Robert Wetherbee


goes in shape in for good forgings. forging our We the a that we're I of into So our billet QX. lot think business supply actually

we That's pretty the capacity slowed heat-treating forging We pandemic. here. we're So have in down there. and shape feel we getting qualified do good during isothermal that coming and

our So hardest moment have really the labor are in got capacity a we place. have we're employees we getting workforce that in. And that feel going XXXX of laid and as force on And or the good at our working prior went to people going we we're back. off into the XXXX, things pool with

process QX. of in so And them we're back the calling in

from HR spot. Our where on and followed right in get And the headcount staffing into we end direct fully on requisite we of getting the would increasing by probably COVID-related sure the But our say headcount today, X%, we're great most in the our our And it's I obviously to our time. as our side, of get labor issues, we're of the importance has go next up back. But keep a by training where that's mostly we we are to them team we X% year hiring making disruptions. lot a going place. and then spending team engaged our people avoid the eye that, is in too. job done recognize to

place we is think making issue is crewing I our in the as #X us into sure So go XXXX. for

Seth Seifman

Great. pension today's made? if today that you I that And ended year the will think the what liability tell would year returns discount Don, mentioned and us Can today, you if you have the be from the with rates then, that contributions shrunk Okay. Great. year-end. and ended

Donald Newman

the XX the context, lot around fair actually on lot a a can question, we And there's fully has and just I impact that rates, discount going for the direction it, movers is because to around volatility $XXX for it I'm of largely liability. every the what discount going. done of rate say rates, science, look some discount love that It's key at answer not when you But has are be that. a but work basis point million to that in move

rates of this just sheet, we're continue in favor, And were we good then kind discount our good think, XX But million have level certainly right? And far year much see there because how I in in want balance to don't $XXX our we'll to a guys, of, we would move they very prepared the have you that into so expectation are managing to and point basis on our takes with share good I with of that detail talk see about. if guy moved to not us investments. I'm indicators then, a so returns

on I not cross advisers rates, do team a hope in there's think or done and discount about can they we our lot that. but and direction. whole job fingers our good more a maybe even then our can at we have our least go And even hold


the next from Khanna from And will Gautam question come Cowen.

Gautam Khanna

Good results.

Robert Wetherbee


Gautam Khanna

couple of So questions. a

titanium and overhang around guys up just then how XXX be that inventory 'XX? they First, down year? demand the XXXX, just respect the Boeing what you you from curious, or to titanium out. on relative the like shipments And do and what next Boeing guys are -- be given chain seeing noise plays at visibility supply are I'm ramp your good to to have going you XXX in will the all are with year-over-year pretty

Robert Wetherbee

like what's have more on times titanium. with visibility we'd And we question. good at going probably Yes, as to than

airframe So to go to I'm limit you up, further. we'll the if then want question follow to And specifically. going titanium

on big So I'll say the be the call B pretty that the side will product titanium. XXXX would into I XXXX airframe from probably is it low but much goes flat mill to that the point, that perspective.

that our agreement offset the growing share we there. have new some benefits position One of OEM with European long-term with of a is that the

So be will you is the level have XXXX And to XXX mill And titanium to we up in see of XXXX. XXX industry have as the I flat products. to needs back should think certainly, take, XX. through our some going to But confidence. the come to flat for shipments actually to to it's suggested, see going really get

waiting all that Although titanium decision standpoint, we're a I think from really the for. it's XXX

of Now pipeline. the we've inventory a there's Did but lot lot that our taken still in in-process down, help? a

Gautam Khanna

Okay. -- then That's that also you guys of do view very the on on 'XX side, and on a both to expand And absolutely. titanium maybe end those tiling, have industrial respect engine just helpful. just to markets? And with

Robert Wetherbee

airframe us. get should going see nickel are much be that as on see about the that's that of good and will for it are I industrial related. should growth because enough. reasons. we business, which problem. titanium the the Obviously, actually we there, titanium say, for we titanium forgings rates planes of a and the I big seeing aerospace most of obviously the not is for sure. because strong we're similar in the on questions engines, But We see very it In don't couple kind we think think see stellar billet I up And But engine be are side, than up. global up, industrial going has been and that, would engines, other a next-generation demand the we of the part positive. One flying talk area,

Gautam Khanna

Corp might of over, due how if be demand But turn if the the to And Metals before seeing obviously have it markets? end if Yes. of kind more you don't in a has strikes unrelated kind long -- contract to share of that -- there's expectation And because -- that your conferred are one that last? you just What's last competitor know any share. whatever, Specialty GE seeing you, just or emergent or signed gains improvement of any challenges chain so, whether of an supply there? could what you are kind it I you any just strike. in obviously I not there's

Robert Wetherbee

my I'll make answer The Gautam, answer when but yes. happy this, speak question. Yes. sure attorneys All right. always your are on call like to have I I a is

LTAs, But I We it's and competitors' opportunities it's will next it, or converted goal. to a of the what get certainly first supply other half from the disruptions these are and in is long transactional about to we supply business of And are emergent good then are would seeing how opportunities quantify emerging disruptions say last. labor any those And us. we seeing disruptions. hard these converting So right? get for LTAs, our are calls, gets you calls to which then

I little glad opportunities, opportunities a is across Products to is have Rolled significantly titanium a of be We're the But company? nickel resolved on. Specialty positive bit for in to board. lot it we the move just Materials. So seeing combination us. been our business in But the it's think our where a for going and Specialty we're and issues moved of needle probably it's going It's


be from The Benchmark will The Josh Sullivan Company. with next question

Joshua Sullivan

follow-up on theme. a the titanium Just

agreements, just magnesium you our just supply shortages? any Your right raw seen now anyways? a pull 'XX, titanium not impact the noted, huge from Or demand have as in inventories for current you and that

Robert Wetherbee


answer simple I think no. is mag the to on the question

not but chain We issues that haven't We indicative major issues any seen kind all issue it of it's yet. right? are an supply other watch out of because there, yet,

Joshua Sullivan

on space is one an customer? then new it. a the discrete Or mentioned, material? Got project, commercial this switching is that's And this the existing customer you that

Robert Wetherbee

prudent business. long-term been that's ahead. commercial they the probably kind space supplying, a I as say aerospace will activity. want bulk buy, that's obviously, the it's sucked in up customer commercial of think recovery. space of right? would They're get increasing kind by And the a good it's They're the a See, question. capacity I It's buying

buy exaggerated is say. buy -- from it's it's So multiyear probably would a an what I

And and we're have technologies science leverages so our and glad pretty to well. -- it process it material we're advanced

to answering that that close question? think I answered So Josh, -- enough, your is your

Joshua Sullivan

Yes. Yes.


from next Berenberg. Misra be The question from will Paretosh

Paretosh Misra

had production? guess, lower program QX. X-per-month just, your Scott, you with that shipments given QX? for a I during and Don running issues than in think on Or line they XXX were you Do question the were in Bob, that

Robert Wetherbee

Good question.

in they X. were with I a from line being think away still ways

on lower things the other mean various of I probably of that. I and than think situation, COVID with out I we're whack. kind think, titanium got

ever it's don't through. terms the industry working the it's that in that worst significant seen, think if but pretty I has I know of -- it's probably

was and running into. XXX I So between were difference the think double-digit -- X we the what biggest gap

by I it's going extend quarter, and the of think third it issue. destocking year, would balance probably to the the probably extend it's the going really destocking. thought What probably be it's through to we

smooth your as so of I hadn't particular possible. a that, it's can degree. people think And seeing we to question that were solution, the the to the issue. justified. working it economically there's kind still answer out a no, to do desire is OEM but think by But as destocking we're I gotten We

just an up. extended to midyear to the it's of catch end year of so And -- titanium the extension the from probably recovery

Paretosh Misra

Got Or Rolled what, be of million your captured QX the you how it. down, $XXX in idled, And two capacity? we commodity it. Got then next business? should sales in million, some Product that as Should exit Specialty your million was QX of results? because about already it quarters $XXX think in you some about say, sequentially $XXX

Robert Wetherbee

it Yes, think don't would going down. I see -- it's say, I I

probably see with that Don that dealing I line. maintenance the signaling we was in the for is Is the XX% growth issue $XX And top general, if in we're fair, think, why this issue I million issue get with finish we're we're going compression the to some we're But end margin ongoing transformation, outages have that is or of prepared think outages up is doing work with because I now. off that to our actually dealing which with the issue. the Don?

Donald Newman

Right. outage, of was related And to then SRP. the course,

Robert Wetherbee


Donald Newman

relative headwind be But it otherwise to will our performance. a

Robert Wetherbee

business. Right, the overall

Paretosh Misra

see. I

last one. Okay. a And maybe then

terms XXXneo? bigger MAX Just that? or MAX bigger is much of your your to to than ramp-up, Or exposure similar exposure to that is XXX in platform

Robert Wetherbee

Let's see.

it things. do on like ever depends -- built, it a think of period. we airplane couple every I flies We today, So

every So people have. would series, them love We when at engine the on AXXX program. preferences look clearly all. say that I you there's we're

the with pick LEAP, And but go they some of them might don't the turbofans. always geared -- we're

differential on plus and between XXX. XXX% biggest X is probably So turbofan gear I LEAP the on think LEAP the XX% them program that's

when gets world. happy to getting we're anywhere any -- in -- it's we're but -- the built the point every where So airplane

all. airplanes geared airplanes, turbofan-powered love a but So them. love maybe slight is material there, our we advantage them but to We versus LEAP-powered


Merrill question from Bank The next Lynch. will Matthew America of from Fields be

Matthew Fields

receivables the in working want to dramatically here, just else? get particular deposits of but that's beat of engines you a up going the something I door? kind receivable cash quarter? Is reverse capital why that LEAP Is initial to kind kind the about so in Can your third accounts this talk you when was the horse lot don't quarter. jumped on death the to that of higher

Donald Newman


for in of out we the course, had But coming the the recovery SRP, QX. that the revenue. SRP, strike of in also and I Of was growth course, mentioned

were the we will, that, up And see so their lot were quarter course, in because throughout should of And balance A sales the so back-end of in end. ramping at of they quarter. that That QX. that loaded release. and QX, drove collected be AR

Matthew Fields

part that's of the And capital you at working least the flip in to Okay. get cash guidance? will fourth quarter the that flow

Donald Newman

of Yes, And similar -- that's the That a good for yes. SRP, interpretation. direction, not we'll magnitude. is great similar mechanic or in inventory see in a similar guy in release

Matthew Fields

what from contributions of it sheet then of helpful. next you the sheet? on at kind towards side? down for paying is credit know of near-term equity years. about That's of -- deleveraging the your to the kind call, getting can the the the Great. steps there's balance steps maturity. couple talk a plan? bit hopefully that of of the the kind other in I million you are -- with little hopefully, of next converts that, kind up, You lot balance chopped deleveraging pension 'XX What the million or And few next maturity mentioned wood mind After next from on kind but parties rid a $XX Okay. $XX of of

Donald Newman

first maximize basis we So is with that's continue last the going From going ratio but debt happening know in Well, in to past to drive points That just conversion, metric. one, net foremost, of in standpoint, a the the earnings right? we took terms step we're to delever that and to normal Well, are down you -- debt-to-EBITDA think quarter. when going we course to the that, of, net ramp and get what cash do already Sure. in our our drop-through because we the profitability, our right? down XXX ratio cash?

again, pushing out the schedule. are maturities So near nearest a we of our very, it we If didn't $XX that, more refinancing, believe right? convert, convert. in expecting going that you're position deal expect you reason, got financial beyond we've team have high. the the from we love It's take, is term convertible work it But not pay it's debt, actions pretty $X.X I'm And what those converting maturities really will that phenomenal both The about this debt want a job to -- when just very profile, off. we're maturity But And right, likelihood our Treasury that for do debt. convert. X with to to benefit. because are in So and solidifying is us a The we're we maturities hits some strong profitable. billion nearest other maturity is me, to that to net would million, did healthy X to of with term on term more talk in it Then We rely of and ratio. just on great XXXX. it the down it. about have

time, pay cash we'll, over times. and appropriate down maturities the attack these with at So those

make your your to debt opportunities by sure position. over-allocating you're need growth also you not launching that to course, reduce Of

happening levered ask in too pension, another question like happen a what's business question already So shared, net didn't our to you -- distant I balance that as our think we're our just the as a going on as yet. contributions. our below on as delevering, other you far we'll on Xx answering with natural at I in be to debt. to a Maybe just normal we're But necessarily down that And levels, path I'd we're on we've path. around future, there efforts work do Then that not we over balanced about in glide far the what definitely said to delevering extraordinary leverage mean, part. that. a glide are very -- course. had we any see without see sheet think plan mentioned, We


turn our Thank you, would I for closing to And gentlemen, Scott concludes over sir. ladies to the question-and-answer Minder conference back remarks. like any this session. and

Scott Minder

interest in our appreciate Thanks earnings We third quarter call. your who's to everyone joined concludes us continued This ATI. today. XXXX


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