ATI Inc.
ATI · NYSE
Sep 2026
Next quarter
Reports Oct 27, 2026.
Consensus is $1.35 EPS for Sep 2026 across 4 estimates, ranging $1.34 to $1.36.
ATI Jun 2026
- 19.42%
- +1.97%
- $1.03
- $1.23
- —
- $1.26B
Reported results
- $1.26B
- 24.57%
- $220.00M
- 17.45%
- $151.00M
- $1.09
Highlights
- Earnings beat: Adjusted EPS was $1.23 versus consensus of $1.03, a 19.42% surprise; GAAP diluted EPS was $1.09 versus $0.70 a year ago and $0.85 in Q1 2026.
- Margin expansion: Adjusted EBITDA rose 37% year over year to $284.4 million, while margin expanded 440 basis points to 22.6% on 11% sales growth.
- Aerospace-led growth: Sales increased 11% year over year to $1.26 billion, with aerospace and defense revenue up 13% to $862.0 million, or 68% of total sales.
- AA&S acceleration: Advanced Alloys & Solutions sales rose 17% year over year to $624.0 million, while segment EBITDA increased 92% to $147.6 million and margin reached 23.7%, including a $9.9 million facility-sale gain.
- HPMC execution: High Performance Materials & Components sales grew 5% to $637.1 million, led by commercial jet engine demand, and segment EBITDA increased 7% to $153.5 million.
- Record backlog: Confirmed backlog reached $4.4 billion, up from $3.7 billion a year earlier, with approximately 70% scheduled for fulfillment within the next 12 months.
- Guidance raised: Full-year adjusted EPS guidance increased to $4.90-$5.18 from $4.20-$4.48, adjusted EBITDA guidance to $1.135-$1.185 billion from $1.010-$1.060 billion, and adjusted free cash flow guidance to $550-$600 million from $465-$525 million.
- Cash and capital: First-half operating cash flow was $260.0 million and capital expenditures were $123.8 million; ATI ended the quarter with $783.0 million of cash and repurchased $50.0 million of stock in Q2.
Analysis
ATI's second quarter was a broad operating beat, led by aerospace demand, pricing and a sharply better AA&S mix. Adjusted EPS of $1.23 exceeded the $1.03 consensus estimate by 19.42%, while GAAP EPS of $1.09 increased 56% from $0.70 in Q2 2025 and 28% from $0.85 in Q1 2026. Revenue of $1.26 billion rose 11% year over year and 10% sequentially; operating income increased to $220.0 million from $161.0 million a year ago and $163.8 million in the prior quarter.
The defining feature was earnings conversion: adjusted EBITDA grew 37% to $284.4 million and margin reached 22.6%, up from 18.2% a year ago. AA&S provided most of the incremental improvement, with revenue up 17% and EBITDA margin rising to 23.7% from 14.4%, helped by pricing, mix and a $9.9 million facility-sale gain. HPMC remained solid, with 24.1% EBITDA margin despite qualification and manufacturing costs at new capacity. Record $4.4 billion backlog and continued aerospace and defense demand supported another full-year guidance increase. Cash generation improved materially, although inventory builds lifted managed working capital to 34.3% of annualized sales.
Operating leverage
- Revenue: Sales were $1.261 billion, up 11% year over year and 10% sequentially, reflecting higher pricing and demand in aerospace and defense, particularly commercial jet engines and naval nuclear defense products.
- Profitability: Gross profit increased to $309.8 million, or 24.6% of sales, from $242.5 million, or 21.3%, a year earlier. Operating income rose to $220.0 million from $161.0 million in Q2 2025 and $163.8 million in Q1 2026.
- Adjusted results: Adjusted net income reached $169.7 million versus $106.4 million a year ago and $139.2 million sequentially. The quarter included $23.6 million of pre-tax special items, partly offset by the $9.9 million gain on a closed-facility sale.
AA&S momentum
- Growth: AA&S revenue rose 17% year over year to $624.0 million and 16% sequentially from $537.2 million. Aerospace and defense sales increased 34% year over year to $272.0 million, including 90% growth in defense sales.
- Mix and pricing: Aerospace and defense represented 44% of AA&S sales versus 38% a year earlier. Management attributed the margin improvement primarily to higher pricing and favorable mix, with conventional energy also benefiting from shipment timing.
- Segment EBITDA: EBITDA increased to $147.6 million from $76.7 million, and margin reached 23.7% versus 14.4%. The $9.9 million facility-sale gain contributed to the reported result; excluding it, margin still improved materially year over year.
HPMC demand
- Commercial engines: HPMC revenue increased 5% year over year to $637.1 million, with commercial jet engine sales up more than 10% to $462.0 million. Aerospace and defense represented 93% of segment sales.
- Profitability: Segment EBITDA rose to $153.5 million from $144.0 million, while margin increased to 24.1% from 23.7%. Higher volume and favorable pricing outweighed higher manufacturing and period costs.
- Capacity costs: Revised qualification requirements for the new Mexico facility and the titanium electron-beam furnace pressured the sequential margin, which declined from 24.9% in Q1 2026.
Backlog and outlook
- Demand visibility: Confirmed backlog reached a record $4.4 billion at June 28, up 18% from $3.7 billion a year earlier. Approximately 70% represents performance obligations expected to be satisfied within 12 months.
- Third quarter: ATI expects adjusted EBITDA of $305-$315 million and adjusted EPS of $1.31-$1.37 for Q3 2026.
- Full year: Adjusted EBITDA guidance increased to $1.135-$1.185 billion, adjusted EPS to $4.90-$5.18 and adjusted free cash flow to $550-$600 million. The company cited contracted pricing, richer mix and higher volumes as capacity investments come online.
Cash and capital
- Cash flow: Second-quarter operating cash flow was $131.8 million against $68.6 million of capital expenditures, producing $68.6 million of adjusted free cash flow. First-half operating cash flow was $260.0 million versus $69.0 million a year earlier.
- Working capital: Managed working capital increased to $1.731 billion, or 34.3% of annualized sales, from 32.5% at year-end 2025, primarily because of seasonal inventory builds and shipment timing. Net inventory rose to $1.668 billion from $1.403 billion at year-end.
- Balance sheet and returns: ATI ended the quarter with $783.0 million of cash and $2.192 billion of debt, for net debt of $1.426 billion. It issued $450 million of 5.875% notes due 2033 and redeemed the $350 million notes due 2027 on July 8; Q2 share repurchases totaled $50.0 million, leaving $495 million of authorization.
