• Revenue: $1.14 billion, a 10% increase year-over-year.
• Adjusted EBITDA: $195 million, surpassing guidance by $15 million.
• Adjusted Earnings Per Share (EPS): $0.72, exceeding guidance range of $0.55 to $0.61.
• Commercial Jet Engine Revenue: 37% of total Q1 revenue, with a 35% year-over-year growth.
• Defense Sales Growth: 11% year-over-year in Q1.
• Free Cash Flow Usage: $143 million in Q1.
• Share Repurchase: $70 million in Q1, with plans to repurchase up to $250 million in Q2.
• Full Year 2025 Adjusted EBITDA Guidance: $800 million to $840 million.
• Full Year 2025 EPS Guidance: Increased to $2.87 to $3.09 per share.
• Full Year Free Cash Flow Guidance: $240 million to $360 million.
• Full Year CapEx Guidance: $260 million to $280 million.

• Warning! GuruFocus has detected 2 Warning Sign with AME.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• ATI Inc (NYSE:ATI) reported a 10% year-over-year revenue growth, reaching approximately $1.14 billion for Q1 2025.
• Adjusted EBITDA for the quarter was $195 million, surpassing the top end of their guidance range by $15 million.
• The company achieved an adjusted earnings per share of $0.72, exceeding their guidance range of $0.55 to $0.61.
• ATI Inc (NYSE:ATI) successfully ratified a six-year labor agreement with 1,000 USW represented employees, ensuring long-term labor stability.
• The company plans to repurchase up to $250 million in shares in Q2, accelerating their full-year buyback program.

Negative Points

• Trade-related uncertainties are affecting industrial markets, leading to a cautious outlook despite strong aerospace and defense demand.
• The industrial segment, which represents about 20% of ATI's business, is experiencing a 'wait and see' posture from customers due to trade uncertainties.
• There is potential exposure to $50 million in annual costs due to tariffs, although mitigation strategies are in place.
• The company anticipates a modest sequential decline in sales and earnings for Q2 due to inventory drawdowns and trade uncertainties.
• Despite strong performance, the company remains cautious about non-A&D markets such as industrials, which are impacted by lower US demand and China's slowed economy.

Q & A Highlights

Q: Can you provide more color on aftermarket or MRO contribution to A&D growth this quarter? A: Kimberly Fields, President of ATI Inc, explained that MRO demand is strong, running at 40% to 50%, and continues to rise. The company doubled its revenue from the GTF program with Pratt in 2024 and anticipates doubling it again in 2025. Donald Newman, CFO, added that MRO is a significant contributor to jet engine sales growth, although specific revenue splits between MRO and new builds are not discerned.

Q: Do you think the US and Ukraine mineral deal could impact ATI's sourcing of feedstock? A: Kimberly Fields noted that while the deal may not have an immediate impact, it could positively affect the aerospace ramp in demand and diversify the titanium sponge supply in the US. The development and qualification process will take time, but historically, Ukraine has been a supplier, which could expand the supply chain.

Q: Can you elaborate on the $50 million tariff impact and the offsets that allow you to maintain your outlook? A: Kimberly Fields stated that ATI's diversified supply chain and cost management strategies help mitigate tariff impacts. The company uses duty drawbacks, defense exemptions, and contract mechanisms like surcharges to manage volatility. While industrial markets may feel a recession's impact, aerospace and defense demand remains strong.

Q: Does the reiterated guidance include contingency for softer sales in industrial end markets for the second half of the year? A: Donald Newman confirmed that the 2025 guidance includes risks related to industrial ordering patterns, indicating that potential softness in these markets has been accounted for in their projections.

Q: How is ATI balancing the need for capacity discipline with growing demand for nickel alloys? A: Donald Newman explained that ATI is investing in debottlenecking and adding incremental capacity within their $200 million annual CapEx guide. The focus is on maintaining competitive advantages in jet engine materials, with investments in melt capacity and other production elements to meet demand.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.