Executive Summary

Q4 2024 sales were $1.173B, up 12% sequentially and 10% YoY; GAAP EPS was $0.94 and adjusted EPS $0.79. Aerospace & Defense mix rose to 65% of sales, from 62% in Q3 2024 and 63% in Q4 2023 .
Adjusted EBITDA was $209.8M (17.9% margin), above management’s prior Q4 guidance range ($181–$191M); CFO noted ~$18M of non-operational favorability (oil & gas rights gains and IRS credit) with underlying adjusted EBITDA ~$192M still above the guide high-end .
FY25 guidance introduced: Adjusted EBITDA $800–$840M (narrowed from prior $800–$900M), adjusted EPS $2.80–$3.00, FCF $240–$360M, capex $260–$280M; Q1 2025 adjusted EBITDA $170–$180M and EPS $0.55–$0.61 .
Potential stock reaction catalysts: a strong sequential revenue rebound (some revenue pull-forward from Q1 to Q4), robust A&D demand (defense +38% seq), and explicit non-recurring benefits (IRS credit, asset gains) that investors will adjust for in run-rate valuation .

What Went Well and What Went Wrong

What Went Well

Strong A&D demand: A&D mix reached 65% in Q4; full-year A&D mix >62%. “Q4 was a great quarter… Our products are on every commercial platform flying today” (CEO) .
Engine and defense momentum: Jet engines grew YoY; defense revenue reached $490M in 2024 and Q4 defense sales spiked sequentially. “Full year revenues were up 22% to $490 million… we did have a very good quarter for defense” (CEO) .
Free cash flow strength and working capital improvement: Q4 FCF was $399.5M; FY FCF $247.6M (+50% YoY); managed working capital fell to 30.9% of annualized sales from 40.0% in Q3 .
Operational records: “Record levels of premium quality heat melted… best flow times… newly qualified operations” (CEO). Isothermal forging pushes increased 32% in 2024; highest quarterly output ever in Q4 .

What Went Wrong

HPMC margin pressure: HPMC EBITDA margin fell sequentially to 20.0%, impacted by unfavorable mix, incentive comp, carry-over costs from Q3 outages, and a ~$6.3M customer negotiation charge .
Non-operational items that won’t repeat: Q4 included ~$10.4M IRS Advanced Manufacturing Production Credit (AA&S) and ~$8M oil & gas rights gains; CFO emphasized these are not embedded in ongoing guidance .
Supply chain/timing dynamics: Q4 benefited from $25–$30M of revenue pulled-forward from Q1; Q3 operational disruptions and hurricane-related shipping constraints created mix/timing noise .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($USD Millions)	$1,064.0	$1,051.2	$1,172.7
GAAP Diluted EPS ($)	$0.99	$0.57	$0.94
Adjusted EPS ($)	$0.64	$0.60	$0.79
Adjusted EBITDA ($USD Millions)	$160.7	$185.7	$209.8
Adjusted EBITDA Margin (%)	N/A	17.7%	17.9%
A&D Mix (%)	63%	62%	65%

Segment performance:

Segment	Metric	Q4 2023	Q3 2024	Q4 2024
HPMC	Sales ($MM)	$582.5	$552.4	$634.2
HPMC	Segment EBITDA ($MM)	$125.1	$123.2	$126.8
HPMC	Segment EBITDA Margin (%)	21.5%	22.3%	20.0%
AA&S	Sales ($MM)	$481.5	$498.8	$538.5
AA&S	Segment EBITDA ($MM)	$57.3	$73.6	$88.0
AA&S	Segment EBITDA Margin (%)	11.9%	14.8%	16.3%

Key KPIs and cash:

KPI	Q4 2023	Q3 2024	Q4 2024
Operating Cash Flow ($MM)	$417.2	$24.0	$380.9
Free Cash Flow ($MM)	$367.2	$(37.1)	$399.5
Managed Working Capital (% of annualized sales)	31.1%	40.0%	30.9%
Capital Expenditures ($MM)	$200.7 FY	$66 Q3	$47 Q4; $239 FY
Cash & Equivalents ($MM)	$743.9 YE23	$406.6 Q3	$721.2 YE24
Share Repurchases ($MM)	$85.2 FY23	$40 Q3	$70 Q4; $260 FY24

Non-GAAP adjustments (Q4 2024): $52.9M gain on sale of precision rolled strip ops; $14.1M pension remeasurement loss; $9.3M restructuring/other charges; after-tax net benefit $22.5M ($0.15/share) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA ($MM)	Q1 2025	N/A	$170–$180	New
Adjusted EPS ($)	Q1 2025	N/A	$0.55–$0.61	New
Adjusted EBITDA ($MM)	FY 2025	$800–$900 (Nov-2023 target reiterated Oct-2024)	$800–$840	Narrowed lower-end maintained, upper-end reduced
Adjusted EPS ($)	FY 2025	N/A	$2.80–$3.00	New
Free Cash Flow ($MM)	FY 2025	N/A	$240–$360	New
Capital Expenditures ($MM)	FY 2025	N/A	$260–$280	New

Management also outlined expected quarter-by-quarter EBITDA progression for 2025: Q2 “low 200s,” Q3/Q4 “$200M to 20-plus kind of range,” implying second-half lift vs first half (contextual, not formal guidance) .

Earnings Call Themes & Trends

Topic	Q2 2024 (Prev-2)	Q3 2024 (Prev-1)	Q4 2024 (Current)	Trend
Jet engine demand/MRO	A&D mix reached 62%; jet engines +13% seq; $4B+ nickel commitments; strong MRO tailwinds	Jet engine demand resilient; MRO heavy; airframe pushouts; testing bottlenecks addressed	Continued robust engine demand; MRO driving “very high” shop visits; forged backlog >1 year	Strengthening, with MRO outsized
Airframe titanium	Titanium up 11% seq; expanded melt capacity ramping	Noted airframe pushouts/cancellations (distribution) tied to Boeing strike and smoothing	Airframe flat-to slightly up in 1H25, wide-body ramp expected back-half 2025	Near-term muted; medium-term positive
Defense	Sequentially up 5%; armor plate demand strong	Headwinds in Q3; Aberdeen ballistic testing bottleneck noted	Defense +38% seq in Q4; expecting ~7% growth in 2025; geopolitical tailwinds	Acceleration
Supply chain & operations	Debottlenecking, staffing adds (500 heads), reliability focus	Q3 outages (nickel melt, Oregon furnace); hurricane shipping delays	Stability restored; AI-driven predictive maintenance; Oregon furnace repair on track into Q2	Improving
Tariffs/raw materials	Pass-through mechanisms de-risk metals; pricing discipline	Boeing strike impacts; smoothing orders	Canada nickel tariff risk manageable (multi-source; ~25% from Canada); zirconium supply diversified with physical hedges	Managed with contract pass-throughs
Tax/credits	No IRS credit commentary [Q2]	Outlook includes divestiture proceeds; 2024 FCF guide lowered	$10.4M IRS Advanced Manufacturing Production Credit clarified in Q4; above-the-line in AA&S	One-time uplift in Q4
Capital deployment	Liquidity near $1B; net debt ratio 2.7x; buybacks anticipated	$700M buyback authorized; converts redeemed; Q3 buyback $40M	Q4 buyback $70M; plan to repay $150M debentures in Q4 2025; authorization remaining $590M	Ongoing buybacks, deleveraging

Management Commentary

“Q4 was a great quarter… revenue up 12% sequentially to $1.2 billion… Adjusted EBITDA was $210 million… our highest since 2012, up 5%… Free cash flow for 2024 was $248 million, up more than 50%” (CEO) .
“Three key areas drive our confidence… 2025 demand remains robust… our products are on every commercial platform… operationally, ATI is where we need to be… investments in equipment reliability and AI technology [to] proactively correct [issues]” (CEO) .
“Adjusted results include approximately $18 million of nonoperational favorability… excluding those, underlying adjusted EBITDA would have been ~$192 million, still above the high end of guidance” (CFO) .
“We are setting FY25 adjusted EBITDA at $800–$840M… Q1 at $170–$180M… EPS $2.80–$3.00… FCF $240–$360M… capex $260–$280M” (CFO) .

Q&A Highlights

2025 quarterly cadence: CFO suggested progression from Q1 mid-$170s to Q2 low $200s, then Q3/Q4 “$200M to 20-plus kind of range” as recovery and seasonality play through .
Tariffs: Nickel supply diversified (Canada ~25% of ATI nickel), multi-sourcing and pass-through mechanisms in contracts mitigate potential tariff impact; zirconium supply also diversified with physical hedges .
Non-recurring benefits: ~$8M oil & gas gains at corporate; $10.4M IRS credit (AA&S) recorded above the line as expense reduction; CFO clarified treatment and non-repeatability .
Labor: Union discussions constructive; guidance assumes no work stoppage .
Pull-forward/timing: ~$20M catch-up from Q3 issues plus $25–$30M pulled from Q1 into Q4 at customers’ request to position for ramp; mix less favorable muted drop-through .

Estimates Context

Wall Street consensus from S&P Global for Q4 2024 was unavailable due to access limits at the time of this analysis; therefore, we cannot provide a results vs consensus comparison. S&P Global estimates not retrieved (SPGI daily limit exceeded).
Management’s Q4 adjusted EBITDA exceeded its own guidance, and 2025 guidance cadence implies Street estimates may need to reflect a stronger second-half recovery and non-recurring Q4 benefits excluded from run-rate .

Key Takeaways for Investors

Robust A&D demand and MRO dynamics continue to drive topline strength; AA&S margin uplift (to 16.3%) signals transformation progress beyond HPMC .
Normalize for Q4 non-recurring benefits (IRS credit, asset gains) and revenue pull-forward to assess run-rate margins; underlying adjusted EBITDA still exceeded guidance .
FY25 guidance narrowed (EBITDA $800–$840M) reflects supply chain smoothing and realistic ramp timing; watch for wide-body acceleration in back-half 2025 (787, 777X) .
Working capital discipline showed tangible progress (30.9% vs 40.0%); sustaining this should support FCF targets despite elevated capex in 2025 .
HPMC margins expected to expand through 2025 (to >23% later in year) as mix, absorption and operational improvements matter; track quarterly progression .
Capital deployment remains shareholder-friendly: ongoing buybacks ($590M authorization remaining) and planned debt repayment ($150M due Q4 2025) underpin deleveraging .
Tariff/macro risks are actively managed via multi-sourcing and contract pass-throughs; monitor potential changes affecting nickel and zirconium inputs and associated surcharge mechanics .

Appendix: Additional Data Points and Sources

Consolidated income statement, segment tables, market revenue breakdown, working capital and FCF computations included in Q4 press release/8-K exhibits .
Precision rolled strip divestiture (Ulbrich) completed in Nov 2024; Q4 recorded $52.9M gain .
Prior quarter baselines: Q3 2024 sales $1.051B, adjusted EBITDA $185.7M (17.7% margin), updated FY24 guidance and cash flow context .
Q2 2024 execution framework and Farnborough commitments: A&D mix 62%, jet engine growth, titanium ramp, staffing and debottlenecking .

ATI INC (ATI)·Q4 2024 Earnings Summary