Financial Data and Key Metrics Changes - Q4 revenue was $1.2 billion, with adjusted EBITDA of $232 million, exceeding guidance [5][13] - Full year 2025 revenue totaled $4.6 billion, up 5% year-over-year, driven by 14% growth in aerospace and defense [5][13] - Adjusted EBITDA for 2025 exceeded $859 million, up 18% year-over-year, with adjusted EPS at $3.24, a 32% increase from 2024 [5][14] - Adjusted free cash flow totaled $380 million, up 53% from 2024, representing 124% of free cash flow returned to shareholders [5][14] Business Line Data and Key Metrics Changes - Aerospace and defense revenue represented 68% of total revenue in 2025, up from 62% in 2024, with jet engine sales growing 21% year-over-year [8][13] - Specialty energy business delivered 9% year-over-year growth in Q4, supported by multi-year customer commitments [8][9] - Adjusted EBITDA margins for the full year 2025 were 18.7%, a 200 basis point increase from 2024, with HPMC margins at 23.6% and AA&S margins at 16.3% [15] Market Data and Key Metrics Changes - Strong demand in aerospace and defense markets, with commercial aerospace demand accelerating and next-generation engines gaining market share [6][8] - Defense revenue grew 14% year-over-year, with missile sales up 127% due to sustained demand for specific alloys [8][39] - The company anticipates continued growth in defense spending, with a projected mid-teen growth rate for 2026 [22][39] Company Strategy and Development Direction - The company is focused on proprietary products and long-term agreements to secure pricing and expand market share [9][10] - Capital discipline and operational execution are central to the strategy, with a targeted capital investment of $220 million-$240 million for 2026 [10][19] - The company aims to prioritize aerospace and defense while strategically reducing capacity in industrial, medical, and electronics sectors [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in customer demand and operational execution, guiding for $1 billion of adjusted EBITDA in 2026, a 16% increase year-over-year [6][17] - The company expects continued margin expansion, with full-year consolidated margins projected to be around 20% in 2026 [23] - Management highlighted the importance of differentiated capabilities and strong customer partnerships in driving future growth [25] Other Important Information - The company has no significant debt repayments planned for 2026 and has repurchased about $1 billion of shares since 2022 [20] - The backlog remains just under one year of revenue, with expectations for it to increase as lead times for materials extend [70] Q&A Session Summary Question: Capacity expansion with customer support - Management explained that customer agreements ensure access to differentiated materials, allowing flexibility in capacity allocation [29][30] Question: Airframe growth visibility - Management noted that airframe inventories are normalizing, with modest improvements in order rates expected in the second half of 2026 [32] Question: Breakdown of defense revenue - Management provided insights into defense revenue, indicating naval and missile segments are key growth drivers, with missile spending expected to increase significantly [38][39] Question: 2027 guidance update - Management expressed confidence in the 2027 guidance, indicating a bias towards the top end of the EBITDA margin percentage [44] Question: Share gains opportunities - Management highlighted opportunities for share gains in defense, jet engines, and specialty energy, driven by customer demand and operational capabilities [48] Question: Pricing outlook for exotic alloys - Management indicated that pricing assumptions for 2026 are based on current market conditions, with significant movements in specialty alloys considered [56] Question: Headcount plans for 2026 - Management stated that headcount will remain stable, with some open positions to support new capacity, leveraging the existing experienced workforce [90] Question: Isothermal forging growth - Management confirmed that isothermal forging is in high demand, with lead times extending and continued growth expected from all major engine OEMs [94]

ATI (NYSE:ATI) Q4 2025 Earnings call February 03, 2026 08:30 AM ET Speaker5Hello and welcome everyone to the ATI fourth quarter and full year 2025 results conference call. My name is Becky, and I will be your operator today. All lines will be muted throughout the presentation portion of the call with a chance for Q&A at the end. If you wish to ask a question at this time, please press star followed by 1 on your telephone keypads. I will now hand over to your host, David Weston, to begin. Please go ahead.Spe ...