Executive Summary

Q3 2025 was ATI’s strongest quarter of the year: revenue of $1.13B (+7% y/y), adjusted EPS $0.85, and adjusted EBITDA $225M (20.0% margin). Adjusted EPS and revenue both beat S&P Global consensus; EPS by ~$0.11 and revenue by ~$2M, and management raised full‑year adjusted EBITDA, EPS, and free cash flow guidance . Q3 revenue: $1,125.5M; adj. EPS: $0.85; adj. EBITDA: $225.1M. Consensus EPS: $0.738; revenue: $1,123.6M (S&P Global)*.
Mix shift to aerospace & defense accelerated: A&D reached a record 70% of sales; jet engines were 38–39% and MRO ~50% of engine sales. Defense grew 51% y/y and 36% q/q, driving outperformance vs. guidance alongside operational gains; Q4 mix expected to tilt back toward jet engines as certain defense shipments normalize .
Guidance raised: FY25 adjusted EBITDA to $848–858M (from $810–840M), adjusted EPS to $3.15–3.21 (from $2.90–3.07), and adjusted FCF to $330–370M (from $270–350M); Q4 adjusted EBITDA guided to $221–231M with consolidated margins >19% and HPMC margin expansion >Q3’s 24.2% .
Cash and capital deployment: YTD operating cash flow of $299M (+$273M y/y); Q3 operating cash flow ~$230M and adjusted FCF ~$200M. Share repurchases totaled $150M in Q3 ($470M YTD; $120M authorization remaining). Managed working capital improved slightly to 36.4% of annualized sales. AR securitization/factoring aided working capital in Q3 .

What Went Well and What Went Wrong

What Went Well
- Record A&D mix with strong profitability: HPMC margin expanded to 24.2% and AA&S to 17.3% on price/mix and execution; consolidated adj. EBITDA margin reached 20.0%, highest since the pandemic. “We exceeded our guidance…delivering strong adjusted earnings and operating cash flow,” CEO Kim Fields noted .
- Defense momentum: revenue up 51% y/y and 36% q/q across naval, nuclear, missiles, and armored vehicles; multi‑year visibility and qualification wins support sustained growth into 2026 and beyond .
- Cash generation and capital returns: YTD operating cash flow $299M (+$273M y/y), Q3 adjusted FCF ~$199.7M, and $150M in Q3 buybacks with $120M remaining authorization; confidence underpinned FY guidance raise .
What Went Wrong
- Non‑A&D weakness persisted: medical, specialty energy, and industrial/other core markets remained softer y/y; AA&S cited lower industrial and specialty energy sales sequentially in Q3. Management continues to see tariff/macro caution in industrials .
- Reported special items and non‑core gains: Q3 included $12.9M pre‑tax restructuring/other charges and a $10.5M oil & gas rights gain in other income; while operational results were strong, these items added noise to comparability (adj. EPS excludes special items; adjusted EBITDA included oil & gas gain per management) .
- Airframe destocking lingered: airframe revenue improved y/y but OEM inventory balancing tempered the near‑term cadence; management expects more visible pickup into 2026 as build rates rise and new LTAs (Airbus/Boeing) ramp .

Financial Results

Headline metrics vs prior periods and estimates

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($USD Millions)	$1,051.2	$1,140.4	$1,125.5
Diluted EPS (GAAP)	$0.57	$0.70	$0.78
Adjusted EPS (Non‑GAAP)	$0.60	$0.74	$0.85
Adjusted EBITDA ($M)	$185.7	$207.7	$225.1
Adjusted EBITDA Margin %	17.7%	18.2%	20.0%

Q3 actuals vs S&P Global consensus (quarterly)

Metric	Q3 2025 Estimate	Q3 2025 Actual	Beat/(Miss)
Revenue ($USD Millions)	$1,123.6*	$1,125.5	+$1.9
Primary EPS ($)	$0.738*	$0.85	+$0.11

Q3 performance exceeded guidance/consensus, with operational upside and defense strength; management noted adjusted EBITDA included ~$10M oil & gas rights gain; excluding it, EBITDA would be ~$215M, still above guidance .

Segment performance

Segment	Q3 2024	Q2 2025	Q3 2025
HPMC Sales ($M)	$552.4	$608.8	$602.9
HPMC EBITDA ($M)	$123.2	$144.0	$145.8
HPMC EBITDA Margin %	22.3%	23.7%	24.2%
AA&S Sales ($M)	$498.8	$531.6	$522.6
AA&S EBITDA ($M)	$73.6	$76.7	$90.4
AA&S EBITDA Margin %	14.8%	14.4%	17.3%

End‑market KPIs (A&D detail)

Market ($M, % of sales)	Q3 2024	Q2 2025	Q3 2025
Jet Engines – Commercial	$365.9 (35%)	$447.8 (39%)	$433.6 (38%)
Airframes – Commercial	$180.8 (17%)	$195.2 (17%)	$197.7 (18%)
Defense	$107.1 (10%)	$118.8 (11%)	$161.4 (14%)
Total A&D	$653.8 (62%)	$761.8 (67%)	$792.7 (70%)

Cash, working capital, and capital deployment (select)

KPI	Q4 2024	Q2 2025	Q3 2025
Managed Working Capital % of Annualized Sales	30.9%	36.5%	36.4%
Operating Cash Flow (Quarter) $M	—	—	~$230
Adjusted Free Cash Flow (Quarter) $M	($37.1) (Q3’24)	—	$199.7
Share Repurchases ($M)	—	$250 (Q2 commentary)	$150

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA ($M)	Q4 2025	—	$221–231	New quarterly guide
Adjusted EBITDA ($M)	FY 2025	$810–840	$848–858	Raised
Adjusted EPS ($)	FY 2025	$2.90–3.07	$3.15–3.21	Raised
Adjusted Free Cash Flow ($M)	FY 2025	$270–350	$330–370	Raised
Capital Expenditures ($M)	FY 2025	$260–280	$260–280	Maintained

Management also expects Q4 consolidated margins >19% and HPMC margins to exceed Q3’s 24.2%; AA&S margins seen at 16–16.5% in Q4 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1–Q2 2025)	Current Period (Q3 2025)	Trend
Jet engines/MRO	Full‑year jet engine +20–25%; growing MRO, next‑gen content; capacity projects add 8–10% nickel melt; order visibility into decade	Jet engines ~39% of sales; MRO ~50% of engine sales; expect Q4 jet engines up high‑single to low‑double digits	Accelerating mix/profitability
Airframe destock	Airframe flattish in 2025 amid inventory rebalancing; Airbus/Boeing LTAs expand share/content; widebody ramp supports 2026	Modest sequential improvement; expect steadier growth into 2026; ATI now majority flat‑rolled supplier to Airbus portfolio	Stabilizing toward improvement
Defense	Third straight year of double‑digit growth expected; timing of naval nuclear/missile/rotary deliveries	Q3 defense +51% y/y, +36% q/q; strength continues into 2026 though Q4 moderates from Q3’s surge	Strong, sustained
Tariffs/macro	Contracts enable pass‑throughs; industrial softness tied to tariffs/macro; keeping margin discipline	Industrial/other non‑A&D still cautious; maintaining price/mix, shifting capacity to higher‑value A&D/energy	Mixed, cautious
Capacity investments (Ni/Ti/forgings)	Debottlenecking and discrete nickel melt additions; titanium melt +80% across projects; customer co‑funding; forged products scaling	Operational “triple threat” driving ~10% effective capacity gains; selective additional nickel melt; isothermal forging output/qualifications improving	Increasing leverage
Working capital/cash	Tightening AR/inventory cycles; target <30% managed WC; positive FCF in H2	AR securitization/factoring aided Q3; managed WC 36.4%; strong Q4 cash generation expected	Improving execution

Management Commentary

“Q3 was another strong quarter… Adjusted EBITDA totaled $225 million… Adjusted EBITDA margin exceeded 20%, our highest since the pandemic… Both segments delivered excellent profitability.” — CEO Kimberly Fields .
“Total A&D revenue rose 21% year over year… A&D reached an all‑time high of 70% of total revenue… Our order book extends into mid‑2027.” — CEO .
“Adjusted EBITDA was $225 million, including a $10 million gain from oil and gas right sales. Excluding that, EBITDA of $215 million… nearly $10 million of operational upside versus our prior guidance midpoint.” — CFO Don Newman .
“We are raising full year guidance… Adjusted EBITDA $848–$858M… Adjusted EPS $3.15–$3.21… Free cash flow $330–$370M.” — CFO .
“We are optimizing the mix… prioritizing differentiated hot‑section proprietary alloys with very long qualification times and long‑term agreements.” — CEO .

Q&A Highlights

Drivers of guidance raise: stronger‑than‑expected A&D (especially defense) and operational productivity; Q4 to benefit from jet engine shipments as defense shipments normalize .
Nickel/titanium strategy: manage near‑term to highest‑margin products; selective, purpose‑built nickel melt expansion co‑funded by customers to defend proprietary hot‑section alloy moat; Airbus flat‑rolled titanium share now majority supplier in ATI’s sold portfolio .
Working capital: AR securitization/factoring executed in Q3 improved working capital (alongside inventory/AR initiatives) .
Specialty energy/nuclear: sequential recovery expected to build into 2026; commercial nuclear and land‑based gas turbines cited as growth vectors; zirconium supply chain stable with stockpiles ~2 years finished goods/~1 year raw .
Contract structure: isolated conversion‑only shift on a forging contract reduced revenue by ~$10M sequentially with neutral/positive margin impact; not seen as broader trend .

Estimates Context

Q3 2025 actual vs S&P Global consensus: revenue $1,125.5M vs $1,123.6M estimate; adjusted/primary EPS $0.85 vs $0.738 estimate — both beats. The magnitude of operational outperformance and raised FY guide suggest upward estimate revisions for Q4/FY, with company guiding Q4 adjusted EBITDA $221–231M and indicating consolidated margins >19% .
Forward consensus (S&P Global)*: Q4 2025 EPS ~$0.863 and revenue ~$1,180.7M; Q1 2026 EPS ~$0.860 and revenue ~$1,204.1M — management commentary (jet engines up in Q4, HPMC margin >24.2%) is directionally supportive .

Note: Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

Mix and margin story intact and improving: record 70% A&D mix, HPMC margin 24.2%, AA&S 17.3%, consolidated adj. EBITDA margin 20.0%; management targets >19% in Q4 with further HPMC expansion — positive for earnings quality and multiple .
Guidance raise is meaningful: FY25 adjusted EBITDA midpoint +$28M, EPS +$0.20, FCF +$40M — a clear positive catalyst, aided by defense strength and execution .
Near‑term narrative: Q4 to pivot back to jet engines after Q3 defense surge; watch for sustained >19% margins and delivery cadence in jet engines/MRO .
Medium‑term thesis: customer‑co‑funded, purpose‑built nickel melt and forging investments reinforce proprietary alloy moat and visibility into 2026–2027; Airbus/Boeing LTAs expand share/content, supporting airframe recovery in 2026 .
Cash discipline: AR securitization improved working capital; strong H2 cash generation and rising FCF guidance support buybacks (Q3 $150M; $470M YTD) .
Watch risks: industrial/medical softness and tariff‑related demand behavior persist; however, contractual pass‑throughs and mix optimization mitigate margin risk .

Appendix: Additional context from prior quarters

Q1 2025: Revenue $1,144.4M; adj. EBITDA $194.6M (17.0% margin); adj. EPS $0.72; A&D 66% of sales .
Q2 2025: Revenue $1,140.4M; adj. EBITDA $207.7M; adj. EPS $0.74; consolidated margin 18.2% .

Footnote: * S&P Global consensus data. Values retrieved from S&P Global.

ATI INC (ATI)·Q3 2025 Earnings Summary