Ati (ATI -0.27%), a specialty materials producer focused on advanced alloys and components for aerospace and defense, reported its earnings for the fiscal second quarter ended June 30, 2025, on July 31, 2025. The company posted non-GAAP earnings per share of $0.74 for the quarter, beating the consensus non-GAAP estimate of $0.71. Revenue was $1,140.4 million, coming in below the expected $1,157.3 million, but still up 4% from the same period last year. Net income under generally accepted accounting principles (GAAP) climbed 23% year over year, supported by margin expansion and continued strength in core aerospace markets. The quarter showed strong profit momentum but also highlighted missed revenue targets and ongoing softness in some industrial segments.
| Metric | Fiscal Q2 2025 | Q2 2025 Estimate | Fiscal Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.74 | $0.71 | $0.60 | 23% |
| Revenue | $1,140.4 million | $1,157.3 million | $1,095.3 million | 4% |
| Net Income Attributable to ATI | $100.7 million | $81.9 million | 23% | |
| Adjusted EBITDA | $207.7 million | $182.6 million | 14% | |
| Adjusted Free Cash Flow | $92.9 million | $47.8 million | 94.3% |
Source: Analyst estimates provided by FactSet. Management expectations based on guidance as provided in the first quarter 2025 earnings report.
Understanding Ati’s business and focus
Ati is a major supplier of advanced specialty materials, including nickel-based alloys, titanium products, and precision-forged components. Its main customers are in the commercial aerospace, defense, energy, electronics, and medical device markets. The company produces materials designed to withstand extreme conditions, such as the high temperatures inside jet engines and critical defense systems.
In recent years, Ati has concentrated on expanding its presence in the aerospace and defense sectors. It is investing in additional titanium melt capacity and advanced manufacturing technology to support future demand from major original equipment manufacturers. Total titanium melt capacity is expected to be 80% higher by late fiscal 2025 compared to 2022. Long-term contracts with major aircraft manufacturers and engine suppliers are now a central feature of the business, providing stability. Key success factors include managing raw material costs, keeping pace with aerospace demand through capacity investment, and sustaining margins with contracts that allow for cost pass-through.
Quarterly highlights: Growth, risks, and shifts
During the quarter, aerospace and defense sales rose to $761.8 million, making up 67% of total revenue, compared to 62% in the same period last year. Sales to commercial jet engine makers increased 27% year over year, reaching $447.8 million, driven by strong demand and contract renewals. While commercial airframe sales fell 18% as customers continued to reduce inventory, overall revenue from key aerospace applications grew compared to the prior year. A recently signed five-year contract with Airbus, expected to generate close to $1 billion in sales over the next five years and focused on flat-rolled titanium products, secured Ati’s role as a prime supplier for the airframe producer.
The High Performance Materials & Components segment, which mainly serves the aerospace and defense markets, saw sales climb 8% to $608.8 million, posting an EBITDA margin of 23.7% for the quarter (non-GAAP segment EBITDA), up from 20.2% of sales in the same period last year. The growth was driven by higher commercial jet engine sales, favorable pricing in nickel and specialty alloys, and extended contract positions. Ati reported that order lead times for forged products now reach into 2027, reflecting strong demand for isothermal forgings -- a specialized type of forged component essential for jet engines and supplied to manufacturers worldwide. In contrast, the Advanced Alloys & Solutions segment held steady on sales but experienced declining segment EBITDA margins, as weaker industrial and conventional energy markets weighed on results. That segment’s EBITDA margin declined to 14.4%, down two percentage points from the previous year, mainly due to lower sales volume.
Ati’s long-term efforts to expand its titanium production took a major step forward, with a newly qualified brownfield facility in Oregon coming online. Management expects this and other related projects to increase titanium melt capacity by 80% over 2022 levels by the end of fiscal 2025. This is important because titanium is a key material for next-generation widebody aircraft, which use significantly more titanium than narrowbody models. This move supports contracts like the new agreement with Airbus and ensures the company can fulfill future aerospace demand as airframers schedule higher build rates for 2026 and beyond.
On the innovation front, Ati continued to invest in advanced metallic powders, used in additive manufacturing (also known as 3D printing), and in state-of-the-art inspection and finishing equipment. For example, its Florida additive manufacturing facility supports rapid prototyping and production for aerospace customers. Its ongoing research and development focus, especially for defense-related applications and proprietary alloys, underpins its long-term competitive edge. Supply chain management remains a core priority given volatility in nickel and titanium prices. The company uses a mix of diversified sourcing, hedging, and cost pass-throughs within contracts to protect margins. In fiscal 2025, about $50 million in annual tariff exposure remains, though most of this is offset by surcharges, productivity, and contract terms.
Financially, adjusted free cash flow (non-GAAP) nearly doubled to $92.9 million in the quarter compared to the same period last year. However, working capital increased compared to last year, now representing 36.5% of annualized sales. Capital expenditures were $72 million for the quarter. Full-year capital expenditures are expected to be between $260 million and $280 million for fiscal 2025. Share buybacks were a significant feature in the quarter, with the company repurchasing $250 million of its own shares, reducing cash balances but aligning with its capital return strategy. Cash on the balance sheet stood at $319.6 million at the end of the quarter, down from $721.2 million in cash and cash equivalents at the end of fiscal 2024, affected by buybacks and expansion investments.
Looking forward: Guidance and watchpoints
Management provided clear guidance for the coming quarters. For the third quarter, the company expects adjusted EBITDA of $200–$210 million and adjusted earnings per share between $0.69 and $0.75. For fiscal 2025, full-year guidance was raised, with adjusted EBITDA (non-GAAP) now projected at $810–$840 million and adjusted earnings per share forecast at $2.90–$3.07. Adjusted free cash flow for the full year is guided in the range of $270 million to $350 million. These forecasts factor in potential continued softness in industrial end markets, especially for the Advanced Alloys & Solutions segment, which faces pressure from customers pausing orders amid economic uncertainties. No guidance was offered for dividend payments.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted. The company does not currently pay a dividend.
