Executive Summary

Q2 2025 delivered solid A&D-led growth and margin expansion: adjusted EBITDA rose 14% YoY to $207.7M (18.2% of sales) and adjusted EPS was $0.74, both above Q1 levels; revenue was $1.14B, up 4% YoY but flat sequentially .
Mixed vs Street: EPS beat consensus ($0.74 vs $0.713*), EBITDA was modestly above ($207.7M vs $204.9M*), while revenue modestly missed ($1.140B vs $1.156B*). Guidance raised midpoints for FY adjusted EBITDA and FCF; Q3 guide set at EBITDA $200–210M and EPS $0.69–$0.75 .
A&D strength was anchored by commercial jet engines (+27% YoY; A&D 67% of total), while airframes remained flattish due to customer destocking; industrial markets were pressured by tariff-driven order pauses and macro softness .
Strategic catalysts: newly expanded Airbus and Boeing LTAs (share and pricing gains), titanium sheet capacity online, $250M buybacks executed with $270M authorization remaining—key supports for the equity narrative into H2 and 2026 .

What Went Well and What Went Wrong

What Went Well

Strong A&D momentum: commercial jet engines sales +27% YoY; A&D mix reached 67% of total sales ($762M), supporting margin expansion (adj. EBITDA margin 18.2%) .
HPMC margin strength: HPMC segment EBITDA margin rose to 23.7% (from 22.4% in Q1), aided by favorable nickel/specialty alloy pricing, mix, and productivity; management highlighted incrementals north of 40% normalized .
Contract wins and capacity: expanded Airbus titanium LTA (more than doubles prior support) and Boeing airframe agreement; titanium sheet operation (Pageland, SC) and titanium melt brownfield up and qualifying, adding 35% titanium melt capacity and unlocking $125–$135M run-rate revenue potential next year .

What Went Wrong

Airframe destocking: commercial airframe sales down sequentially (Q2 $195.2M vs Q1 $205.8M) and YoY decline reflects inventory rebalancing; FY airframes outlook held flat vs 2024 .
Industrial softness and tariffs: order activity subdued in certain industrials (construction/mining, food equipment) due to tariff uncertainty and macro; management cited customers delaying orders and preferring non-U.S. suppliers to avoid tariffs .
AA&S margin step-down: AA&S segment EBITDA margin fell to 14.4% (from 14.9% in Q1; 16.4% in Q2 2024) on volume/timing, partly offset by $2.6M deferred retention credits; AA&S recovery expected H2 with margins 15–16% .

Financial Results

Consolidated Performance vs Prior Year, Prior Quarter, and Estimates

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$1,095.3	$1,144.4	$1,140.4
GAAP EPS ($USD)	$0.58	$0.67	$0.70
Adjusted EPS ($USD)	$0.60	$0.72	$0.74
Adjusted EBITDA ($USD Millions)	$182.6	$194.6	$207.7
Adjusted EBITDA Margin %	16.7%	17.0%	18.2%

Estimates vs Actuals (Q2 2025):

Metric	Consensus	Actual
Revenue ($USD Millions)	$1,156.2*	$1,140.4
Adjusted EBITDA ($USD Millions)	$204.9*	$207.7
Adjusted EPS ($USD)	$0.713*	$0.74

Values with asterisk (*) retrieved from S&P Global.

Segment Breakdown

Segment Metric	Q2 2024	Q1 2025	Q2 2025
HPMC Sales ($USD Millions)	$562.0	$584.1	$608.8
HPMC Segment EBITDA ($USD Millions)	$113.8	$131.0	$144.0
HPMC % of Sales (%)	20.2%	22.4%	23.7%
AA&S Sales ($USD Millions)	$533.3	$560.3	$531.6
AA&S Segment EBITDA ($USD Millions)	$87.5	$83.4	$76.7
AA&S % of Sales (%)	16.4%	14.9%	14.4%

KPIs (Q2 2025)

KPI	Q2 2025
A&D Sales ($USD Millions; % of total)	$761.8; 67%
Jet Engines – Commercial ($USD Millions; % of total)	$447.8; 39%
Airframes – Commercial ($USD Millions; % of total)	$195.2; 17%
Defense ($USD Millions; % of total)	$118.8; 11%
Industrial Markets ($USD Millions; % of total)	$232.5; 20%
Adjusted Free Cash Flow ($USD Millions)	$92.9
Managed Working Capital (% of annualized sales)	36.5%
Share Repurchases (Q2)	$250M at $76.79/sh, ~3.2M shares; $270M authorization remaining

Non-GAAP adjustments: Q2 adjusted results exclude pre-tax special items of $7.4M (after-tax $5.7M; $0.04/sh) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA	FY 2025	$800M–$840M	$810M–$840M	Raised midpoint (+$5M)
Adjusted EPS	FY 2025	$2.87–$3.09	$2.90–$3.07	Narrowed range; effectively maintained midpoint
Adjusted Free Cash Flow	FY 2025	$240M–$360M	$270M–$350M	Raised midpoint (+$10M)
Capital Expenditures	FY 2025	$260M–$280M	$260M–$280M	Maintained; CFO bias to low end
Adjusted EBITDA	Q3 2025	N/A	$200M–$210M	New
Adjusted EPS	Q3 2025	N/A	$0.69–$0.75	New

Management’s end-market assumptions: >20% jet engine growth for 2025, double-digit defense growth, flat airframes vs 2024 on destocking, non-A&D down 5–7% .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 & Q1 2025)	Current Period (Q2 2025)	Trend
Commercial Jet Engines growth/mix	Q1: Jet engines 37% of revenue; +35% YoY; sole-source alloys into 2030s/2040s	Q2: +27% YoY; year-to-date +31%; expect >20% FY growth; margin tailwinds from mix and pricing	Strengthening; durable through decade
Airframe destocking	Q1: Anticipated slow recovery; destocking expected in H1	Q2: Airframe sales down seq.; FY airframe held flat; expect Q4 orders as inventories normalize	Bottoming; potential inflection late-2025
Tariffs/macro impact on industrials	Q1: ~$50M annual tariff cost exposure mitigated; industrial wait-and-see posture	Q2: Order pauses; customers avoiding U.S. suppliers; expect quick rebound once uncertainties fade	Near-term headwind; policy-dependent
Long-term contracts (Airbus/Boeing)	Q1: 5-year Airbus LTA ~approaches $1B; expands titanium flat role	Q2: Airbus LTA “more than doubles” prior support; Boeing guaranteed volume expansion incl. titanium sheet	Positive; share/pricing gains
Capacity investments (nickel/titanium)	Q1: Titanium melt +80%; brownfield online; heat treat/inspection added	Q2: New nickel melt debottleneck (+8–10% capacity in 2026; ~$50M capex); titanium EB2 online/qualifying	Executing; enabling ramp
Cash flow and working capital	Q4: FCF $399.5M; managed WC 30.9%	Q2: Adj. FCF $92.9M; WC 36.5%; H2 margins ≥18% expected	Improving; further H2 gains targeted

Management Commentary

“Q2 was another strong quarter… Adjusted EBITDA reached $208 million… Adjusted EPS came in at $0.74… Our adjusted EBITDA margin reached 18.2%.” — Kim Fields, CEO .
“We signed a new long-term guaranteed volume agreement with Boeing… and a significantly expanded agreement with Airbus… positioning ATI as Airbus’s top supplier of titanium flat-rolled and long products.” — Kim Fields .
“For the third quarter, guidance for adjusted EBITDA is $200 to $210 million… Full year narrowed to $810 to $840 million… adjusted EPS $2.90 to $3.07… Free cash flow $270 to $350 million.” — Don Neumann, CFO .
“Industrial end markets are flattish… tariff impacts on order activities… non-U.S. customers preferring non-U.S. suppliers.” — Don Neumann .
“HPMC incrementals were very favorable… expecting HPMC incrementals ~40% going forward; margins north of 24%.” — Don Neumann .

Q&A Highlights

Airframe destocking and widebody ramp timing: inventories normalizing; expect signs of demand in Q4; Boeing 787 ramp supportive; new LTAs de-risk pricing and margins .
Capacity outlook: discrete nickel melt debottleneck investment (~$50M) adds 8–10% capacity in 2026; titanium EB2 up and qualifying; incremental revenue potential $125–$135M from brownfield melt capacity .
Industrial/tariff dynamics: distribution customers delaying orders; U.S. customers preferring U.S. producers; ATI contracts/surcharges mitigate cost impacts; defensive on margins .
Aftermarket (MRO) demand: sustained high shop visits (e.g., LEAP) through decade; ATI has >2x content on next-gen engines; aftermarket remains a major value driver .
Forgings share gains with GTF and long lead times: shipments to Pratt nearly match full-year 2024 in H1; further 50% growth next 1–2 years; lead times into 2027 .

Estimates Context

Q2 2025 vs consensus: EPS beat ($0.74 vs $0.713*), EBITDA above ($207.7M vs $204.9M*), revenue modest miss ($1.140B vs $1.156B*). Expect Street to modestly lift margin/EBITDA assumptions and narrow FY ranges to management’s updated guide. Values with asterisk (*) retrieved from S&P Global.
Q3 snapshot: Street sees revenue ~$1.124B*, EPS ~$0.74*, EBITDA ~$206.0M*, broadly aligned with guidance ($200–$210M EBITDA; $0.69–$0.75 EPS). Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

Margin story intact and strengthening: adj. EBITDA margin at 18.2% with segment mix and pricing tailwinds; H2 margins expected ≥18% with HPMC ≥24% .
A&D engine cycle drives visibility: >20% 2025 jet engine growth, MRO tailwinds, sole-source alloy positions underpin multi-year profitable growth .
Airframe headwinds are timing-related: destocking pressuring titanium volumes; LTAs and new sheet capacity position ATI for the widebody ramp and share gains into 2026 .
Industrial softness likely transient: tariff uncertainty and macro weigh on orders now; recovery can accelerate quickly once policy signals stabilize; contracts mitigate cost impacts .
Capital allocation supportive: $250M Q2 buyback executed; $270M authorization remains; FCF midpoint raised; capex maintained with customer co-funding opportunities .
Model implications: raise FY adj. EBITDA midpoint to $825M (mgmt $810–$840M) and FCF midpoint to ~$310M; temper near-term airframe volumes while keeping HPMC margins elevated .
Watch catalysts: Q3 print vs guide, airframe order normalization signs in Q4, Airbus/Boeing LTA implementation, nickel/titanium capacity qualification milestones .

Notes:
- All document-based figures and quotes are cited to ATI’s Q2 2025 8-K press release and earnings call transcript.
- Values marked with * are retrieved from S&P Global (consensus estimates).

ATI INC (ATI)·Q2 2025 Earnings Summary