ATI (ATI) Bernstein 42nd Annual Strategic Decisions Conference summary

Market environment and demand trends

• Material constraints persist, with strong demand across aerospace, defense, and specialty energy markets, now comprising 80% of the portfolio.

• Jet engine content is growing, especially in next-gen engines, with aftermarket demand running at 2X historical levels.

• Defense growth is robust, driven by missiles, nuclear naval, and aircraft programs, with ongoing global conflicts supporting demand.

• Specialty energy demand is rising, with customers seeking strategic supply chain partnerships.

• No slowdown in aftermarket demand; urgency for materials remains high, with customers eager to secure any available capacity.

Strategic focus and portfolio optimization

• Portfolio has shifted to prioritize aerospace, defense, and specialty energy, reducing focus on industrial, electronics, and medical markets.

• Asset redeployment supports growth in core markets, with investments aligned to customer demand and co-funding.

• Strategic investments target debottlenecking and productivity improvements, including AI-driven maintenance and new high-quality assets.

• Customer partnerships include co-investment in capacity, with market pricing maintained despite customer funding.

• Additive manufacturing and new melt technologies are being advanced to enhance product differentiation.

Financial performance and outlook

• Jet engine sales grew 12% in Q1, with full-year growth expected in the mid to upper teens, biased to the upside.

• Aftermarket represents about half of jet engine revenue, with strong shop visit activity for LEAP and GTF engines.

• Margins are improving, with AA&S segment in the upper teens and further expansion expected through price, mix, and productivity.

• Defense and jet engine growth rates are projected in the mid to upper teens through 2026.

• Specialty energy is about 10% of revenue, split 60/40 between gas turbines and nuclear, both growing.