What ATI (ATI) Said on Its Q3 Earnings Call

Key Points

• ATI exceeded Q3 expectations, with revenue up 26% year over year to $1.4 billion and adjusted EBITDA up 46% to a record $328 million. Backlog reached nearly $4.3 billion, while adjusted EPS rose 72% to $1.46.
• The company raised its full-year adjusted EBITDA guidance for the third time to $1.19 billion–$1.20 billion, implying 39% growth, while maintaining its $550 million–$600 million free-cash-flow outlook.
• Demand remains broad-based: jet-engine revenue grew 39%, defense revenue reached a record, and specialty-energy revenue rose 49%. AA&S margins expanded sharply, while HPMC’s results were temporarily pressured by costs to ramp a new nickel-based superalloy.

ATI NYSE: ATI reported third-quarter 2026 results that exceeded its adjusted EBITDA outlook and raised its full-year guidance for the third time this year, citing broad demand across aerospace, defense and specialty-energy markets.

Revenue increased 26% year over year and 13% sequentially to $1.4 billion. Adjusted EBITDA rose 46% from a year earlier to $328 million, exceeding the high end of the company’s guidance by $13 million and marking ATI’s highest quarterly adjusted EBITDA since 2007, according to Board Chair, President and CEO Kim Fields. Adjusted EBITDA margin expanded 300 basis points year over year to 23%.

Adjusted earnings per share increased 72% to $1.46, while backlog stood near a record at $4.3 billion, up 20% from the prior-year period. Third-quarter adjusted free cash flow was $80 million, bringing year-to-date adjusted free cash flow to $223 million, a 49% increase from the comparable period in 2025.

Outlook Raised Again

ATI now expects full-year adjusted EBITDA of $1.19 billion to $1.20 billion, compared with its prior outlook midpoint that was $35 million lower. The updated range implies 39% adjusted EBITDA growth from 2025. The company also projected adjusted EPS of $5.17 to $5.23 for the full year.

For the fourth quarter, ATI expects adjusted EBITDA of $345 million to $355 million and adjusted EPS of $1.51 to $1.57. Chief Financial Officer Rob Foster said the company expects the fourth quarter to be its strongest period of 2026 for both sales and profit, supported by committed customer schedules, contracted pricing and planned shipment timing.

The company maintained its adjusted free-cash-flow outlook of $550 million to $600 million, with a midpoint of $575 million. ATI expects gross capital expenditures of $280 million to $300 million for the year, partially offset by $55 million to $65 million in customer-funded capital. Through the third quarter, ATI had spent $70 million on share repurchases and had $425 million remaining under its authorization.

AA&S Margin Expansion Leads Performance

ATI’s Advanced Alloys & Solutions, or AA&S, segment reported sales of $702 million, up 34% year over year. Segment EBITDA margin rose 850 basis points to a record 25.8%, aided by pricing, volume and a more favorable mix of aerospace and defense business.

Fields said the segment has changed substantially after ATI exited lower-value commodity stainless-steel products and shifted resources toward aerospace, defense and specialty-energy products. Aerospace and defense accounted for about 45% of AA&S sales at the end of the third quarter, compared with 18% in 2021.

Foster said ATI expects AA&S margins to remain in the mid-20% range in the fourth quarter and described the segment’s improved earnings profile as sustainable, pointing to long-term contracts, stronger commercial terms, higher aerospace and defense mix, and productivity initiatives under the company’s elevATIon operating model.

The segment’s results also benefited from the first full quarter of shipments under a Naval Nuclear contract, as well as stronger commercial nuclear and industrial gas-turbine demand. ATI said pricing for hafnium and zirconium products remained favorable.

HPMC Absorbs New-Alloy Ramp Costs

High Performance Materials & Components, or HPMC, generated $721 million in sales, an increase of 20% year over year, as demand for nickel and titanium products used in jet engines remained strong. Segment margin was 23.2%.

HPMC’s margin was reduced by approximately 200 basis points relative to ATI’s plan because of costs associated with ramping commercial production of a new nickel-based superalloy. Fields said ATI qualified the alloy and moved it into production within nine months following a contract win. The company is one of only two producers worldwide making the alloy, which is the sixth of seven advanced alloys used in the hot section of a jet engine.

Fields said the costs represented roughly $15 million to $20 million of EBITDA impact during the quarter. Foster said the effect should be modest in the fourth quarter and fully behind the company by the end of 2026. ATI expects HPMC margins to improve sequentially into the mid-20% range during the fourth quarter.

Jet-Engine Demand Drives Growth

Jet-engine revenue increased 39% year over year and 19% sequentially, supported by original-equipment production, aftermarket demand and growing content on next-generation engines. ATI raised its expectation for full-year jet-engine revenue growth to the low-to-mid-20% range, from a prior forecast in the high teens.

Fields said next-generation engines use more than twice ATI’s content relative to legacy engine platforms. She added that ATI’s jet-engine materials and forgings serve both new engine production and maintenance, repair and overhaul demand, with the company estimating its exposure is currently about evenly split between the two demand streams.

Airframe revenue grew 11% year over year and 14% sequentially, with ATI maintaining its expectation for mid-to-high-single-digit full-year growth. Fields said airframe inventory normalization is “largely behind us” and customer orders are closely aligned with production schedules. She said ATI has not seen changes in its order book or demand outlook extending into 2027.

Defense revenue reached a company record, rising 6% both year over year and sequentially. ATI cited strengthening missile-related inquiries for titanium, nickel and niobium products used in platforms including Tomahawk, THAAD and PAC-3. The company continues to forecast high-teens defense revenue growth for the full year.

Specialty-energy revenue rose 49% year over year and 36% sequentially, driven primarily by commercial nuclear demand and supported by industrial gas turbines. ATI retained its expectation for mid-teens specialty-energy revenue growth for the year.

Fields said the company’s flexible manufacturing assets allow it to shift production between defense and specialty-energy products as customer requirements change, which can create quarter-to-quarter shipment variability. She said ATI had not seen a decline in jet-engine demand related to higher fuel prices and continues to see strong customer demand across both new-production and aftermarket channels.

About ATI (NYSE:ATI)

ATI Inc NYSE: ATI is a specialty materials and components manufacturer serving demanding applications in the aerospace and defense, medical, energy, and industrial markets. The company develops and produces materials designed to perform in high-temperature, high-strength, and corrosion-resistant environments.

Its products include nickel-based superalloys, titanium and titanium-based materials, specialty steels, precision-rolled materials, forgings, and other engineered components. These products are used in aircraft engines and airframes, defense systems, medical implants and devices, power-generation equipment, and other industrial applications.

ATI was formed in 1996 through the combination of Allegheny Ludlum Corporation and Teledyne, Inc The company serves customers in the United States and international markets through manufacturing and processing operations across North America and Europe.

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