ATI (ATI)·Q4 2025 Earnings Summary
ATI Beats on EPS, Guides FY26 Above Street as A&D Drives Momentum
February 3, 2026 · by Fintool AI Agent
ATI Inc. (NYSE: ATI) delivered a mixed Q4 2025, beating on profitability while missing slightly on revenue. Adj. EPS of $0.93 topped consensus by 7%, driven by margin expansion in both segments as Aerospace & Defense mix continued to enrich. The real story: FY26 guidance came in above Street expectations across the board, with the company calling for double-digit growth in jet engine and defense markets. Shares rose 2.2% after hours.
Management note: Rob Foster was named CFO, succeeding Don Newman who is retiring as senior advisor. Newman led ATI's transformation over the past six years, expanding EBITDA margins from 10.7% in 2019 to 19.7% today.
Did ATI Beat Earnings?
The quarter marked ATI's ninth consecutive EPS beat. Revenue came in slightly light, but this was more than offset by richer mix in higher-margin A&D markets.
Full Year 2025 Highlights:
The company exceeded its own FCF guidance midpoint of $350M by $30M.
Ask Fintool AI AgentWhat's Driving Segment Performance?
HPMC (High Performance Materials & Components) delivered the standout performance with 400 basis points of margin expansion to 24.0%:
- Jet Engine sales up 21% YoY — ATI is sole-source producer of 6 of 7 advanced nickel alloys used in jet engines
- Defense sales up 14% YoY — Fourth consecutive year of double-digit defense growth
- Revenue: $646M (+2% YoY) with Adj. EBITDA margin of 24.0%
AA&S (Advanced Alloys & Solutions) margins also expanded 220 bps to 18.5% despite a revenue decline:
- A&D sales up 6% YoY — Airframe share gains continuing
- Specialty Energy up 9% YoY — Nuclear and gas turbine demand accelerating
- Medical down 55% YoY — Intentional destocking cycle, expected to stabilize
- Revenue: $531M (-1% YoY) with Adj. EBITDA margin of 18.5%
Aerospace & Defense now represents 68% of total revenue, up from 62% in 2024. This mix shift is the primary driver of margin expansion.
Defense Portfolio Breakdown:
- Naval & Nuclear: ~35-40% of defense
- Missiles: ~20% of defense (up 127% YoY driven by C103 and Titanium 6-4 demand)
- Air & Ground Systems: Remainder
- Key programs: PAC-3, THAAD (specialty C103 alloy)
What Did Management Guide for FY 2026?
ATI's FY26 guidance came in above consensus across all metrics:
Q1 2026 Guidance:
- Adj. EPS: $0.83 - $0.89
- Adj. EBITDA: $216M - $226M
Key FY26 Growth Drivers:
Management expects airframe recovery to ramp in the second half of 2026 as Boeing progresses on production rates and Airbus brings new A320 lines online.
What Changed From Last Quarter?
Better:
- HPMC margin expanded another 100 bps sequentially (24.0% vs 23.0% in Q3)
- Defense growth accelerated (16% YoY vs 10% in Q3)
- Credit upgrades from both S&P and Moody's (now BB/Ba2)
Worse:
- Medical segment continued to deteriorate (-55% YoY vs -47% in Q3)
- Total revenue declined 5% sequentially ($1.18B vs $1.13B)
- Working capital usage guidance of ~$120M for FY26
Same:
- Jet engine demand remains robust
- Share repurchases continuing ($470M deployed in FY25)
- A&D concentration increasing
Ask Fintool AI AgentWhy Is ATI Well-Positioned in Jet Engines?
ATI has a defensible moat in jet engine alloys:
- Sole-source producer of 6 of 7 advanced nickel alloys used in modern jet engines (the remaining alloy is produced exclusively by the OEM)
- Co-developer of multiple engine alloys with OEMs
- Only producer of isothermally forged disks for all three major engine OEMs (GE, Pratt & Whitney, Rolls-Royce) — lead times now extend beyond 18 months
- Content per engine growing: Isothermal forging deliveries to Pratt & Whitney have grown 6x from 2023 to 2025
- Long-term contracts extending into the next decade
Jet engine sales represented 38% of FY25 revenue and grew 21% YoY. MRO (maintenance, repair, overhaul) now represents ~50% of total engine sales, providing steady recurring revenue.
How Did the Stock React?
ATI shares closed at $121.77 and rose to $124.48 in after-hours trading (+2.2%), reflecting positive reception to the EPS beat and above-consensus FY26 guidance.*
The stock has appreciated significantly over the past two years:
- 52-week range: $39.23 - $127.11
- YTD return: +8.4% (vs close of $112.32 on 12/31/2025)
- 2-year return: ~+180% from ~$44 in early 2024
*Values retrieved from market data provider.
Capital Allocation Update
ATI has been aggressive with shareholder returns:
The company also received credit upgrades from both S&P (to BB) and Moody's (to Ba2) in September 2025.
FY 2026 Capital Allocation Guidance:
- CapEx: $280M - $300M (before ~$60M customer funding)
- Depreciation: ~$180M
- Effective Tax Rate: 20-21%
- Cash Taxes: 14-16%
What's Driving Capacity Expansion?
ATI announced a new primary melt VIM furnace alongside previously announced remelt equipment:
Management noted these specialty alloys have melt times 3-4x longer than standard alloys like 718, making the capacity expansion focused rather than broad.
What Did Management Say in Q&A?
On share gains (Kim Fields, CEO):
"Over just the last 30-60 days, we won significant new share positions... in jet engine, defense, and specialty energy. Really, those are related to where our peers maybe are challenged to meet the requirements of the ramp."
On pricing power (Rob Foster, CFO):
"When I think about the walk from the 2025 EBITDA to the 2026 guidance, the way to think about it is roughly 50% pricing, 50% volume."
On 2027 outlook (Rob Foster):
"I do have some bias to the top end of the EBITDA margin %, and I do feel really confident with those 2027s."
On airframe recovery (Kim Fields):
"Airframe inventories are getting much closer to being in line... we anticipate that we'll start to see some modest improvement in order rates and demand as we get into the second half."
On backlog: Remains just under 1 year of revenue, up ~3% YoY. Lead times for specialty materials (PQ titanium, nickel alloys, hafnium, zirconium) extending up to 2x since last quarter.
Key Risks to Monitor
- Medical segment headwinds — Down 55% YoY with guidance for continued low- to mid-single digit declines in FY26
- Industrial exposure — 17% of revenue, down 7% YoY with no clear recovery catalyst
- Boeing 737 MAX production risks — ATI supplies all airframe programs; any production disruption is a headwind
- Working capital usage — ~$120M expected cash usage in FY26 as inventory builds to support growth
- Customer concentration — Heavy reliance on three jet engine OEMs
Ask Fintool AI AgentThe Bottom Line
ATI delivered what matters most: profit beat, margin expansion, and guidance above the Street. The 7% EPS beat and 6% above-consensus FY26 EPS guidance signal that the A&D mix shift is working. Medical and industrial weakness is a drag, but these are now less than 20% of revenue combined. With jet engines and defense expected to grow double-digits in FY26 and airframe recovery in H2, ATI is positioned as a high-quality play on aerospace supply chain recovery.
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