ATI (ATI) Q2 2024 earnings summary

Executive summary

• Q2 2024 sales reached $1.1 billion, up 5% sequentially and year-over-year, driven by strong aerospace & defense demand and significant growth in titanium and forgings revenue.

• Adjusted EBITDA was $183 million (16.7% margin), up 21% sequentially and 11% year-over-year; adjusted EPS was $0.60, at the high end of guidance.

• Aerospace & defense accounted for 62% of Q2 sales, with HPMC segment A&D sales at 85% and AA&S A&D sales up 19% sequentially.

• Over $4 billion in new sales commitments, mainly for high-value nickel and titanium products, support long-term growth and are not yet reflected in long-term targets.

• Strategic investments in titanium capacity expansion and new facilities are underway to support ongoing growth.

Financial highlights

• Q2 2024 revenue was $1,095M–$1.1B, up 5% year-over-year and sequentially; adjusted EBITDA of $183M, up 11% YoY and 21% sequentially.

• Jet engine revenue grew 13% sequentially to over $350 million; titanium revenue for airframe increased 11% sequentially to more than $210 million, up 28% YoY.

• Free cash flow for Q2 was $47.8M–$48M, with liquidity of ~$980M and $426M cash on hand.

• Net debt/Adjusted EBITDA ratio at 2.7x; total debt $2.17B–$2.19B.

• Cash from operations improved by $219M year-over-year for the first six months.

Outlook and guidance

• Raised full-year 2024 guidance: adjusted EPS $2.40–$2.60, Adjusted EBITDA $720M–$750M, free cash flow $260M–$340M.

• Q3 2024 guidance: adjusted EPS $0.63–$0.69, Adjusted EBITDA $189M–$199M.

• Expect sequential Adjusted EBITDA margin increases, reaching 17%–18% by year-end.

• Backlog reached $4.1 billion, with ~70% expected to be fulfilled within 12 months and a 14% increase in forgings.

• Management reaffirmed long-term targets, supported by new $4B sales commitments from the Farnborough Airshow.