Revenue and Mix
Q1 revenue of $1.15 billion with 69% attributed to aerospace & defense; company expects A&D to represent >70% of full year sales as mix shifts toward higher-value markets.
April 30th, 2026
Summary
- Earnings Call Date:
- 2026-04-30
- Change Since:
- +27.10%
- Next Earnings Date:
- 2026-07-30
Earnings Call Sentiment
PositiveThe call presents a clearly positive operational and financial trajectory: strong Q1 revenue and margin expansion, record $4.1B backlog, a substantial free-cash-flow turnaround, raised full-year guidance, notable defense and specialty energy contract wins, and tangible productivity gains. The principal risks are isolated: a Q1 airframe revenue decline, softer industrial/medical/electronics end markets, remaining debottlenecking capacity that only fully comes online later in 2026–2027, tariff uncertainty and some lumpy revenue timing. Overall, the positives (material margin expansion, backlog growth, cash-flow improvement, raised guidance and strategic contracts) materially outweigh the limited and manageable challenges cited.
Company Guidance
ATI raised full‑year guidance, increasing adjusted EBITDA by $35M to a range of $1.01B–$1.06B (midpoint $1.035B, +20% YoY), with adjusted EPS of $4.20–$4.48 and adjusted free cash flow of $465M–$525M (midpoint $495M, +$115M or +30% YoY). Q2 guidance is $245M–$255M adjusted EBITDA (EPS $0.98–$1.04; midpoint +20% y/y and ~+8% sequential), and full‑year consolidated margins are expected to be 20%+, with HPMC mid‑20s and AA&S upper‑teens; consolidated incremental margins ~40%. Q1 performance exceeded guidance: revenue $1.15B, adjusted EBITDA $232M (+19% YoY, 20.1% margin, $11M above midpoint/$6M above high end), adjusted free cash flow $75M (vs a $143M use prior year, +$218M YoY), managed working capital 34.8% of sales (‑110 bps), Q1 CapEx $55M (incl. $21M customer‑funded), share repurchases $75M and $545M remaining buyback authorization. Other notable metrics underpinning the outlook: backlog $4.1B (up 10% seq), jet engine growth mid‑teens (Q1 +12%), aerospace & defense ~70%+ of sales (Q1 A&D +6%), specialty energy mid‑teens (Q1 +22%), and segment Q1 margins HPMC 24.9% (+250 bps) and AA&S 18.1% (+320 bps).
Adjusted EBITDA and Margin Expansion
Q1 adjusted EBITDA of $232 million, up 19% year-over-year; consolidated adjusted EBITDA margin ~20.1%, expanded by more than 300 basis points year-over-year.
Record Backlog and Lead Time Visibility
Order backlog grew 10% sequentially to an all-time high of $4.1 billion; lead times extended for differentiated products (super-alloy nickels, premium titanium, isothermal forgings), providing multi-quarter to multi-year visibility.
Free Cash Flow Turnaround
Adjusted free cash flow of $75 million in Q1 versus a use of $143 million in Q1 last year — a $218 million year-over-year improvement; full year adjusted FCF guidance raised to $465M–$525M (midpoint $495M), ~30% above 2025.
Guidance Raise and 2026 Outlook
Raised full year adjusted EBITDA guidance by $35 million to a range of $1.01B–$1.06B (midpoint $1.035B, +20% YoY); adjusted EPS guidance set at $4.20–$4.48; Q2 EBITDA guide $245M–$255M (midpoint ~8% sequential increase).
Segment-Level Margin Gains
HPMC reported 24.9% margin (up ~250 bps YoY); AA&S reported 18.1% margin (up ~320 bps YoY). Management expects consolidated incremental margins of ~40%.
Aerospace (Jet Engines) Strength
Jet engine sales up 12% YoY and represent ~40% of sales in the quarter; management sees mid-teens growth for jet engine revenue full-year driven by OEM production, aftermarket MRO and higher content on next‑gen engines.
Defense Momentum and Major Contracts
Defense revenue up 9% YoY in Q1 with missile-related revenue more than doubling YoY; renewed a 5-year naval nuclear agreement projected to generate $1 billion over the term (more than doubling prior annual revenue from that contract).
Specialty Energy Growth and Strategic Partnership
Specialty energy revenue grew 22% YoY in Q1; extended a 5-year agreement with Cameco (~$250 million) improving product mix and pricing and positioning AA&S for more aero-like margins over time.
Operational Productivity Improvements
Weekly output at primary melt facilities increased >15% YoY; record shipments across multiple product lines; debottlenecking and quality initiatives improving throughput and yields ahead of capital expansions.
Capital Allocation to Shareholders
Repurchased $75 million of shares in Q1 and increased share repurchase authorization by $500 million (remaining authorization $545 million), signaling emphasis on returning capital as FCF improves.
Planned Capacity Investments
Nickel remelt capacity scheduled to come online late 2026 and primary VIM melting next year; titanium investments in qualification phase to support premium engine demand — projects on schedule and on budget according to management.
Operator
Hello, everyone. Thank you for joining us, and welcome to ATI's First Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to David Weston. Please go ahead.
David Weston
Good morning, and welcome to ATI's First Quarter 2026 Earnings Call. Today's discussion is being webcast at atimaterials.com. Joining me today are Kim Fields, President and CEO; and Rob Foster, Senior Vice President and CFO. Before starting our prepared remarks, I would like to draw your attention to the supplemental presentation that accompanies this call. Those slides provide additional color and details on our results, capabilities and outlook and can also be found on our website at atimaterials.com. After our prepared remarks, we'll open the line for questions. As a reminder, all forward-looking statements are subject to various assumptions and caveats. These are noted in the earnings release and in the accompanying presentation.
Now I'll turn the call over to Kim.
Kimberly Fields
Good morning, and thank you for joining us. We're off to a great start in 2026. We delivered strong first quarter performance by driving higher quality revenue, expanded margins and improved cash flow. This quarter demonstrates that the ATI model is working. We're prioritizing the right volume, expanding margins and converting demand into earnings and cash flows. First quarter results exceeded the high end of our guidance, supported by disciplined operational execution and richer mix. Demand across our core markets remains robust, and we continue to grow alongside our customers. I'll highlight the quarter's results.
Reven...
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