Hello everyone, and welcome to ATI's fourth quarter 2023 earnings call. My name is Nadia, and I'll be coordinating the call today. If you would like to ask a question, please press Star followed by 1 on your telephone keypad. I will now hand over to your host, Dave Weston, Vice President, Investor Relations, to begin. Dave, please go ahead. Thank you. Good morning, and welcome to ATI's fourth quarter 2023 earnings call. Today's discussion is being webcast online at atimaterials.com. Participating in today's call to share key points from our fourth quarter results are Bob Wetherbee, Board Chair and CEO, and Don Newman, Executive Vice President and CFO. Before starting our prepared remarks, I would like to draw your attention to the supplemental presentation that accompanies this call. Those slides provide additional color and details on our results and outlook, and they can also be found on our website at atimaterials.com. It is important to note that all of our financial data, both results and outlook, as well as our sequential and year-over-year comparisons, reflect a change in pension accounting policy we announced on January 19. After our prepared remarks, we'll open the line for questions. As a reminder, all forward-looking statements are subject to various assumptions and caveats. These are noted in the earnings release and in the accompanying presentation. Now, I'll turn the call over to Bob. Thanks, Dave. Good morning, everyone. Q4 marked a strong end to another year of significant growth for ATI. This morning, I'll focus on 3 takeaways I believe best summarize the results we're announcing today. 1, we're doing what we said we would do, executing our strategy of aerospace and defense leadership, delivering on our customer and shareholder commitments. The benefits show in our bottom line. 2, we're sharpening our operational advantage, shifting our culture around inventory management. We're overcoming challenges, uncovering opportunities, and positioning the business for long-term cash generation success and sustainable growth. 3, we're well-positioned in strong markets with years of continued growth ahead. Let's dive deeper into each of these, starting with my first point. What does it take to do what we said we'd do? It starts with execution across the enterprise. Meeting our commitments is important to our team, and it shows in our results. In the fourth quarter, we delivered ATI Adjusted EBITDA of $161 million, which is 15% of sales. That's driven by continued strength in aerospace and defense. It was our highest revenue quarter of 2023 and our sixth quarter in a row, exceeding $1 billion. Our quarterly Adjusted Earnings per Share of $0.64 was above the midpoint of our November guidance. For the full year, 2023, ATI Adjusted EBITDA was $635 million, including the benefits of our pension actions during the year. Full year free cash flow was $165 million. That's above the high end of our guidance range. What drove this cash flow? Purposeful and targeted inventory management initiatives and significant operational efficiency improvements. We're building strong momentum at the operating level. It gives us velocity, speed in our defined direction. Let me share a few proof points of what made 2023 a great year. Isothermal forging output is up 20%, delivering record revenues as we support jet engine demand. We increased process yield by 40% for a key jet engine powder alloy. Process flow time for a major titanium product line is down 53%. Production of high-value niobium and hafnium, those alloys critical to commercial space launches, is up 37%, and aerospace and defense revenue is up 32% overall. All of these examples are compared to 2022, and they illustrate the strong foundation 2024 is built upon. This momentum that we're harnessing comes from our people. We have a great team. Drive my guys crazy to step for a moment and go off script for just a second. I mean, this is a team effort. Our team has accomplished a lot. Their efforts are incredibly meaningful and very comprehensive. Thanks to every member of the team and the leaders who encourage them. The results speak to those efforts and are much appreciated. My second takeaway today is this: We're shifting the fundamentals of how we operate. Inventory management is at the heart. We faced a lot of growth-related challenges in 2023. We ramped every operation from melting to shipping, asking more from our people and our assets. Uncertainty of incoming materials and upstream operational reliability made that exciting at times. Our drive for operational efficiency means we're consciously reducing the inventory cushion. That requires our team to operate and lead differently. Sufficient titanium supply to meet ramping demand remains a critical issue across the A&D industry. You'll recall that we restarted a significant amount of titanium melt capacity in 2023. By the end of this year, 2024, we'll have expanded 45% over 2022 levels. Keep in mind, to date, only a portion of this additional titanium has been converted to revenue. We're targeting the second half of 2024 to achieve full run rate of that 45% expanded capacity. When the Richland, Washington expansion is at full production in late 2025, our total titanium melt capacity will be up by 80% over our 2022 baseline. We're on track for Richland's first melt in Q4 of this year. Our philosophy is to be melt long at the start of a growth cycle. Melting tends to be a long lead time investment and defines the potential for the rest of our operations. Forward-looking and decisive, that's our competitive advantage. We and our customers are seeing the benefits of that now. Clearly, we aren't going to melt if we can't flow it through to finished parts, which is why our work to address bottlenecks is so crucial. Let me give you a great example of how we're addressing one of the biggest. A new billet forging press in North Carolina is coming online in Q1. As we speak, this added capacity is converting round ingots to dimensionalized billets. This opens up more downstream capacity to take advantage of the increased melt. Don would be disappointed in me if I didn't emphasize that this investment was within our previously announced capital spend. Equipment reliability is another opportunity to improve our performance. In an effort to support the ramp, we pushed maintenance cycles longer. This led to both planned and unplanned outages late in Q4 that will affect shipments in Q1. We don't expect year-end outages to be an issue going forward as we reevaluate how to space them more evenly across the year. This all stems from our significant growth in titanium and nickel. We're focused on resolving each bottleneck we encounter. These and a few additional capital-efficient projects already in the works, give us clear line of sight to a significant step-up in results in the second half of 2024. We made significant progress in the fourth quarter toward our managed working capital target of 30% of sales or lower. We ended 2023 at 31% of sales. ATI President and COO, Kim Fields, is a champion in this space. Under her leadership, the team is accelerating flow, removing idle inventory, while finding and driving operational efficiencies. As our free cash flow performance indicates, that work is yielding tangible results. We're not yet where we want to be, and that's not lost on our team. We've learned a lot, we're taking action, and we're committed to doing even better in 2024. Our extended growth trajectory means inventory management will remain a key priority for quite some time. The process improvements locked in thus far set the stage for what we can achieve. Looking forward, the first quarter brings unique challenges. We're working through weather-related outages from January's Pacific Northwest Arctic storm, continuing headwinds in our industrial end markets, and lower metal prices for key inputs. Don will add more clarity with our Q1 guidance. What you should keep top of mind is the fundamentals that influenced the fourth quarter, mainly enduring demand and proven performance, support our profitable growth in 2024. This brings me to my third and final takeaway today. ATI is well-positioned within strong markets with years of continued growth ahead. In Q4, ATI achieved 63% in sales from aerospace and defense, up from 61% in the third quarter and 10 points above last year. It speaks to the magnitude of growth we're capturing. We expect that to continue over the next several years. It also highlights how critical our melt capacity expansions are to ATI's ability to capture and meet that demand. Fourth quarter jet engine shipments increased by 7% sequentially and 15% year-over-year. We expect growth to continue in 2024 and beyond, driven by continued acceleration of OEM jet engine builds and ongoing elevated spares demand. Demand for ATI airframe materials, predominantly titanium, remains at historic highs. Airframe shipments surpassed $200 million for the second quarter in a row. We saw significant airframe growth in the first and third quarters of 2023. This market doesn't grow in a linear fashion. It rises, then stabilizes as build rates ramp. We're generally synced to airframe build rates over the medium to long term, but sometimes in the process of getting there, it's a little choppy. You got to think about stairsteps, not necessarily a nice, gentle hill. Before I leave the topic of commercial aerospace, let me address how we're thinking about narrow body disruptions that have been in recent headlines. Uncertainty has been the norm of recent years for a lot of reasons. It's the market reality we deal with. We don't expect it to impact our long-term growth potential, and our market position has broadened materially to help diminish any significant near-term implications. Three points to keep in mind: One, our long-term directional targets are based on monthly build rates, reaching 120 narrow bodies and 24 wide bodies in 2027. Even if the industry adjusts its expectations, the actual build rate is likely still above our projections. Second, we saw narrow body disruptions in 2023 and still achieved record titanium sales. And third, remember, we're still in the early innings of the wide body ramp and several years away from overall peak airframe build rates. Moving beyond commercial aerospace, ATI's defense business continues to grow at a significant pace. Sales expanded 21% sequentially and 16% year-over-year. At ATI, we fly, float, and roll in this segment. The increase was broadly driven by growth in shipments of military rotorcraft, naval propulsion materials serving U.S. and allied navies, and titanium ground vehicle armor. Overall, 2023, ATI Aerospace and Defense sales grew by 32% versus the prior year. So let's add it up here for a minute. Increasing build rates for frames and engines are a positive trend. The defense market's strong in almost every product we serve, and we're well-positioned with the right customers for the long term. A recipe for success that's delivering results. Now, great demand isn't just limited to aerospace and defense. You've heard me talk about our work in aerolite markets, where barriers to entry are high and so are the returns. Late last month, our customer, Confluent, announced their $50 million investment in ATI's Nitinol melt and materials conversion infrastructure. That expansion will more than triple our capacity for this life-saving material used in heart stents and related devices. It's really unique to have customers so excited about a product that ATI makes. Investment support is great. It's their money that they're investing, and the confidence in what we can achieve together. They're a great partner, and we look forward to tremendous success together. In industrial markets, demand remains soft. The good news is that these conditions remain transitory, and they affect an even smaller portion of the ATI portfolio than in years past. As I said last quarter, we're taking actions operationally to align our near-term cost structure with this lower demand. We remain focused on adjusting the portfolio as needed, using our 80/20 toolkit to optimize the product mix. Now I'll turn it over to Don to share details of our financial performance. Thanks, Bob. Q4 capped off a great year for ATI. We delivered the highest quarterly revenue since Q2 2019. We also ended the year with a consolidated Adjusted EBITDA margin of over 15%, an important threshold as we progress toward our longer-term targets of delivering Adjusted EBITDA margins in the 20% range. We also delivered free cash flow above the high end of our guidance range. The actions taken related to our pensions de-risk the business, strengthen the balance sheet, and will improve profitability for years to come. With that established, let's jump into our performance. Our consolidated sales were 5% higher than Q4 2022 and up 9% for the full year. Those growth figures do not entirely reflect the underlying strength of customer demand. In recent years, we have increased risk sharing with our customers and lowered our volatility by adding pass-through mechanisms to our contracts. As those pass-throughs reduce risk, they create fluctuation in revenues and margins from period to period. As a result of the decline in metal prices in 2023, most notably nickel, Q4 and full year 2023 had lower pass-through revenues than the same periods in 2022. Those year-over-year declines in pass-through revenue created growth headwinds of 3% and 1% for Q4 and full year 2023, respectively. Our HPMC segment continues its sustained performance. Fourth quarter margins were 21.5%, built on our expanding A&D foundation. The fourth quarter in 2023 in total affirmed the consistency and strength in this segment. Revenue and segment EBITDA increased sequentially and year over year, driven by the segment's focus on aerospace and defense end markets, representing 86% of HPMC's Q4 sales. In the fourth quarter, AA&S delivered a segment margin of nearly 12%. For two quarters in a row, A&D sales in this segment were 35%, reflecting the transformation that's underway. That's up from 30% in Q4 2022. We worked through the challenges of slower near-term industrial demand, with sales stabilizing in Q4 after declines in Q2 and Q3. What do we expect from this segment in 2024? Richer sales mix, recovering industrial demand, and improving operating performance. This will lead to margin expansion, a trend that we expect to continue beyond 2024. In Q4, we took decisive action to put our pension obligations behind us. We annuitized roughly 85% of our qualified defined benefit obligations, transferring $1.4 billion in gross pension liabilities to a third party. We fully funded the remaining qualified defined benefit pension obligations, and we changed the pension accounting policy to better match current financial performance. What are the benefits of those actions? Higher earnings, a stronger balance sheet, reduced volatility, and increased future cash flow. We accomplished this while ensuring our retired employees receive the benefits to which they are entitled. Our pension glide path is substantially complete. Let me boil down the financial impacts of the pension changes. First, our annual pension expense decreased roughly $50 million from 2023 annual run rates prior to these actions. Second, no meaningful cash contributions to the qualified pension plans will be required in the future. The pension actions are another element of our transformation. In 2019, before the majority of our transformational efforts, we posted Adjusted EBITDA margins of just above 10% on roughly $4.2 billion in revenue. Now, we are back to that revenue level, and our mid-teen margins far exceed that 2019 performance. Best of all, we are still in the early stages of our ramping performance. Strong demand in our core markets, increasing capacity, expanding capabilities, and focus on operational excellence will continue to drive growth and margin expansion. We closed out 2023 with strong cash generation. The result was roughly $165 million in free cash flow for the full year. We made significant progress in the fourth quarter in reducing managed working capital, ending the year at just above 31% of sales. As promised, capital expenditures were approximately $200 million for the full year 2023. We repurchased $30 million in shares in the fourth quarter, completing our 2023 authorization of $75 million. At our November investor update, we announced authorization for another $150 million of share buybacks. We ended 2023 with $744 million in cash and $1.3 billion in total liquidity. Our net debt to Adjusted EBITDA ratio improved to 2.3 times. With that, let's talk about our 2024 outlook. At our investor update in November, I shared color regarding the 2024 outlook. What I'm sharing today is consistent with those thoughts. We see a very strong second half of 2024 forming. Aerospace and defense and aero-like demand remains robust. Adding capacity from restarted titanium melt assets will reach earnings run rate in the second half. We'll also benefit from debottlenecking efforts in both nickel and titanium. As we've shared today, industrial demand stabilized in Q4, and we expect recovery in the second half of 2024. Cash generation is expected to take another step upward in 2024 as our capital discipline builds momentum. Let's discuss these drivers and what to expect for earnings and cash flows in 2024. We expect earnings per share in the first quarter to be in the range of $0.36-$0.44. I want to bridge you from the $0.64 of EPS in Q4 2023 to the midpoint of this outlook. First, $0.09 of the sequential change in EPS is attributed to income tax expense. As a result of our improved performance, we released our tax asset valuation reserves at the end of 2023. That means we will provision taxes at a more normalized rate starting in 2024. As a result, we expect to provision income taxes at an effective rate of between 22.5% and 23.5% in 2024. By contrast, we provisioned income tax expense at a rate of approximately 5% in 2023. Second, January's extreme winter weather in the Pacific Northwest had a temporary impact on our Millersburg, Oregon, facility. We're back in full operation now and expect the outage will negatively impact Q1 EPS by $0.03. We expect a similar financial impact in Q2. Third, HPMC experienced melt and processing outages late in the fourth quarter. Those outages were behind us by mid-January. The impact on materials for sale in Q1 will result in negative $0.08 to Q1 earnings. Fourth, the balance of the sequential decrease in EPS is largely tied to seasonality at our Asian precision rolled strip business and negative metal impacts on the broader business. Full-year outlook is brighter, given meaningful improvement in our key operations and financial measures. Demand in our core end markets remains very strong. As we closed out 2023, backlog and customer agreements continued to build. That puts us in a great position to grow in aerospace and defense as we continue to deliver through long-term agreements and market opportunities. As our capacity increases and our capabilities expand, we are confident this growth will translate into profitable earnings and sustained cash generation in 2024. Our current range for full-year earnings per share is $2.12-2.52 per share. There are a few items of note related to our 2024 guidance. We expect incremental revenue and earnings to increase, especially in the second half of 2024, as restarted titanium melt assets hit full earnings run rate. As Bob noted, our focus on removing bottlenecks, such as adding the new billet press, are expected to contribute production volumes and efficiencies as 2024 progresses. Impacts from Q1's Arctic conditions at our Oregon operations will be behind us for the second half of the year. We don't typically provide revenue guidance. However, we do expect continued strong growth in 2024. Excluding metal impacts, we anticipate sales will grow in the upper single-digit% range year-over-year. Let me point out a few other items that will allow you to bridge adjusted EPS to Adjusted EBITDA in 2024. Depreciation expense is expected to be in the range of $146 million, and book interest expense in the range of $113 million for full year 2024. Average shares outstanding are assumed to be 149.4 million in Q1 and 146.9 million for the full year. The drop in shares reflects the anticipated buybacks under our current $150 million program. Annual free cash flow is expected to be in the range of $245 million-$325 million. At the midpoint of guidance, that's a year-over-year increase of 73%. This puts us on a strong foundation to deliver our cash conversion targets of greater than 90% in 2025. Our free cash flow range assumes CapEx of between $190 million and $230 million. I would also note that we don't expect significant cash taxes to be paid in 2024 due to our net operating loss carryforward shields. Looking beyond 2024, we are very confident in our ability to deliver the 2025 and 2027 financial targets we provided at our investor update in November. We project more than $1 billion in top-line organic growth and a 60% increase in adjusted earnings from 2023 to 2027. We target revenues exceeding $5 billion with Adjusted EBITDA of more than $1 billion by 2027. With that, I will turn the call back over to Bob. Thanks, Don. Today marks a strong end to yet another great year. You know, I don't think I'll ever get tired of saying that. This performance doesn't just happen. Our hardworking people across the enterprise are driving these results every day. Thank you to the entire ATI team. Aerospace and defense is a complex industry, and we're living in complicated times. There's incredible demand. The signals aren't always clear, but at the end of the day, two things give me tremendous confidence. The first, the fundamentals of the aerospace and defense markets. Our customers are turning their projections and growing demand into orders and commitments. We're honored to be their partner, supporting their extraordinary performance, earning their first call. Q1 has some challenges, but we have our arms around it. 2023 was a great year, and 2024 is shaping up to be even better. The second thing that gives me confidence, our ability to deliver. Our capabilities in material science and our advanced process technologies are the best in the business. We're sharpening our operational advantage, executing with disciplined efficiency, and resolving bottlenecks to accelerate our results. Our team is committed, competitive, and here to win. This puts us on a strong trajectory to achieve our 2025 and 2027 goals. We're focused on exceeding $5 billion in sales and $1 billion of EBITDA within the next 4 years. We are proven to perform. With that, let's open the line for questions. Operator, we're ready for the first question. Thank you. If you would like to ask a question, please press star, followed by one on your telephone keypad. If you would like to retract your question, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. Our first question goes to Seth Seifman of JP Morgan. Seth, please go ahead. Your line is open. Hey, thanks very much, and, good morning, everyone. Hey, Seth. Wanted to make sure I understood some of the dynamics around you know some of the bottlenecks that are there now and you know the way things might improve going forward. It looked to me like the airframe sales in A and S were down a decent amount sequentially in Q4. I guess you know is that correct? And is this some of the you know debottlenecking that's gonna happen through the year? And you know how do you see that kind of recovery playing out and getting back to the levels we saw in sort of the first three quarters of the year? Sure, Seth. I think the question you're asking about aerospace, I think you also have to throw in the defense bucket. Probably what you saw in Q4 is incredibly strong defense sales picking up. So they're all running through that same flow path, predominantly plate is where we're seeing some of the debottlenecking being required. Whether that's process control equipment or twists to make sure that we're covering it. Titanium and nickel, and some of the PH grades we make require some slightly different process times. So we're working through that. But I think when you look forward, you know, the order's very strong for aerospace. The airframes are back. I mean, we're gonna see continued growth through the year. I think, you know, overall, I think Q1 was just kind of mixed up with the defense activity that was pretty heavy in Q4. Okay, so we should think about that as more of a shift, rather than a sort of a decline in the airframe, a shift in where you're directing the capacity? In the fourth quarter- In the fourth quarter. I think that's true. I think you'll see... Yeah, you'll see it return to, you know, strength. Yet, you know the, you know these airframe guys, they kind of go up. We talked about the stairstep and the lead times. You remember when we were booking Q4 of 2023, that was like 12 months before. So, obviously, the defense demand is somewhat emergent, and they've got some big programs they're trying to deal with. So it's just a matter of how the orders fell into the quarter. But long term, we don't see anything disrupting the strength of the airframe side of the business. In fact, that's where we're spending a lot of time debottlenecking at the moment. Right. Okay. Okay, great. Thanks. And then, I guess, just in terms of the cash flow, you know, do we think about sort of a typical profile with, you know, a pretty significant outflow in the first quarter of the year? And you know, does that impact the way you think about returning cash this year? Hey, Seth, I'll take that one. Generally, the pattern is going to be similar, but the magnitudes from quarter to quarter, I think you're gonna see an improvement. So what do I mean by that? Our seasonality typically has a heavy use of cash at the beginning of the year, as we're positioning for inventory builds and the ramp that we expect throughout the year. We've spent a significant amount of energy improving how we're managing inventory. Saw some of the effect of that with our 31% ending inventory or managed working capital level. So when you think about our cash generation by quarter for 2024, you're still gonna see a use in Q1 rather, but it's not gonna be as heavy a use as you saw last year. I would expect, last year was a use of, you know, something in the range of $300 million. I could see definitely less than $200 million. Then, as you, as you progress through the year, you're gonna see in Q2, marginal improvement from what we saw last year, you know, be in the range of probably $50 million, 50, of cash generation. You're gonna see that increased in Q3, where it's, you know, probably two to three times that Q2 level. And then when you get out to Q4, it'll still be a heavy cash generation quarter for us, but it's not gonna be as strong as we saw, for example, in 2023, because we've levelized that cash generation a little bit better in, in the business. And then, as you look past that, 'cause I know you do your long-term models, I, I think what you should expect is we're gonna continue to get better and better at levelizing the, the use of cash in the business. Right. Okay. Okay. And then last one here, just to follow up on the deployment piece of that. I guess there were about $750 on the balance sheet at the end of the year and, you know- Yeah L ooking to generate about $285 million. If you use the $150 million buyback, you know, you still have about, you know, $875 million on the balance sheet at the end of the year. Is that, you know, is it necessary to have the cash balance increase over the course of this year, or, you know, might there be some other opportunities for deployment? Yeah. So let's talk about that. You know, our goal is not to become a bank, okay? We don't- we don't see a lot of value in building cash balances and holding them on the balance sheet. We want that cash to go to work. We've been really, really clear on our three destinations for capital. We shared with you guys today, we intend to spend about $200 million on organic growth through CapEx, again, in 2024. In terms of delevering, we took a huge step forward in delevering when we executed the pension annuitization, transferred $1.4 billion over to third parties. We don't have any debt maturities that are scheduled really before 2025. Doesn't mean we might not take some actions to reduce our gross debt, but, you know, I think the way to think about it is, I would not assume significant cash use for delevering in 2024, as you're modeling it. Well, to your point, that leaves a chunk of money at the end of the year, even after we execute our $150 million share repurchase program. Now, there are some other uses of cash that you'll see in our cash statement down in the financing section. They're about $50 million, just to refine your number, pay some operating leases and things like that. But the core of your question is really about, "Don, are you guys gonna do some more share repurchases," right? Isn't that what you're kind of wondering? Yeah. After we're done with the $150 million current program, what I would say, Seth, is, listen, returning capital to our shareholders is a high priority for our board. It's a high priority for the management team. Clearly, it's a high priority for our shareholders. When we're done with the current program, we will talk to our board. We're going to be in a healthy liquidity position. We've never anticipated that the current $150 million program will be the last program. So, you know, you can interpret that as you think appropriate. Great. Thank you very much. Thank you. And the next question goes to Gautam Khanna of TD Cowen. Gautam, please go ahead. Line is open. Hi, good morning, guys. Hey, Gautam. I was wondering if you could put a finer point on the Q1 guidance with respect to segment EBITDA at AA&S and HPMC? S ure. Sequentially down- Why don't I take magnitude of each then? Yeah, so, so certainly the bridge that I, I shared with you in my in my prepared remarks gives you a sense of how to think about that relative to the Q4 levels of performance. So you think about that bridge from $0.64 to the $0.40 range. We're seeing some impacts in both of the segments that are causing that re-decrease in EPS. So let's get to specifics. When you look at the the impact of the severe Arctic weather pattern in our AA&S business, and that hit in that Oregon facility, we're seeing about $0.03 of impact in Q1, another roughly $0.03 of impact in Q2. So again, that's on the AA&S side, and the translation back to EBITDA means, you, you should expect about $2 million, for every two million dollars of EBITDA for every penny of earnings. So that'll allow you to, to do the math on that. And then as far as the other drivers, we do note that sales is one of the elements of that bridge. It's not a huge element, to be honest. There's Lunar New Year that, that happens, literally every year. And so that's a penny, sequentially. So you can bake that into how you think about sales. That'll just refine your numbers. Then on the HPMC side of the house, that's where those melt outages really come into play. So I noted that there's about an 8-cent divot that's created on the HPMC side of the house, because with those outages, it meant that we don't have material that we would otherwise be selling in Q1. That 8 cents equates to about $16 million, roughly—you know, plus or minus—of EBITDA. So does that help you, Gautam? Does that kind of give you an idea of how to think about that? It does. It does. Great. I just wanted to make sure at AA&S that the $6 million or what, you know, what have you, of EBITDA being sequentially plus the stall impact is the only impact. Or are you actually seeing markets weaken sequentially, beyond, you know, the Arctic weather and the stall issue? I mean, are you seeing just, you know, prices rolling over because nickel prices and surcharges have come in, et cetera. Is there anything beyond what you've specifically highlighted on the sequential base? You know, there's... Yeah, I think from a color standpoint, you know, we were pleased to see where the industrial demand had stabilized for the AA&S part of the business. That has a couple of benefits. One, I think the indicator is a good guy in terms of volumes. At a minimum, it's kind of flattish and potentially up from Q4 to Q1. Another thing is that would benefit us potentially is, you know, when you see that demand increase and orders coming in, what that would typically mean is a firming up of prices. We did see some negative impact of price from Q3 to Q4 due to that industrial softening, but not dramatic. So I don't see that as a headline kind of number going into Q1. There's some other odds and sods that I won't drag you through. You know, metal prices, for example, have softened globally. And we do see that certainly in our pass-through revenues. I'm not going to drag that answer into your question, but there would be probably a marginal effect, truly marginal, to AA&S related to those metal price movements in Q1, but they're not headline kind of figures. Okay. Just, if I could have the liberty of asking two quick ones beyond that. Sure. First, I was curious, the 2027 targets did not change, correct? I think there was some language- Yeah ..A round $1 billion, but the range is still $1 billion-$1.2 billion on EBITDA. Is that correct? True story. Yeah. Neither the 25 nor the 27 targets have changed, period. Okay, good. And then on the HPMC melt outages, were these unplanned? And just if you could elaborate on what specifically happened. Was this planned maintenance outages, or were these unplanned? And, if they were planned, why weren't they conveyed around the Investor Day? Thank you. Yeah, I think, yes, fair question. I think, about 50/50 is how I would put it, 50% unplanned. Y ou know, and that was pretty much on the melt side, where you just get a, a failure, or you get some kind of, electrical problem or, you know, different, different pieces. But it was equipment related and, or, you know, we're still going through some operator training issues and, and, crewing issues. So those—the, about 50% was melt, and it was pretty much unplanned and happened pretty quick. And, but any melt is important melt today. The other issue, you know, that we certainly dealt with was, a planned outage for a particular press. Usually, we do those in about a week. I think this one, you know, took about two and a half weeks to kind of get where we want it to be. The challenge specifically was the outage occurred at the bottleneck, right? So you can have outages a lot of different places, but this one, we just—we pushed it as far as we could. We recognized we needed to do it, we recognized that we need to do it quickly, so we did it. Yeah, why wasn't it conveyed? Fair question. We probably thought it was gonna be less of an impact at the end of the year, but that's the reality of where we are. But again, we did it to ensure that we had what we needed for 2024 and beyond. Some of these maintenance cycles, they can be two, three, four years, you know, and we see that in the industry where, you know, you take something down for a week and other people are down for 6 weeks, right? So I think that's part of the, the planned maintenance that we need to make sure we're on top of. Thank you. Thank you. The next question goes to Richard Safran of Seaport Research Partners. Richard, please go. Your line is open. Bob, Don, David, good morning. I have a question on titanium. I want to know if you could expand a little bit on your opening remarks about the titanium capacity increases here. I'm trying to get a sense of how accretive titanium is to margins. And also, I'm assuming some part of this is relatively new contracts due to the VSMPO or market share pickup. Is that correct? And I'm also assuming that most of the margin contribution comes in 25 and not 2024. Is that the way to look at it? You see, there's like eight questions in there, Richard. I'm gonna have to peel them out for you. So I think if you go back to June of 2023, we announced $1.2 billion in long-term contracts that would carry us from 2024 to 2029, or the balance of the decade. That is true, and that's what we're seeing, right? We're seeing the customers respond. To go back to June of 2023, however, our lead times were already out into the middle part of 2024. So that's why we're seeing this very strong second half, is these orders are kicking in. Our capacity from what we're doing in Oregon is flowing through to those orders. You know, we don't cast or melt anything that doesn't have a specific order, so we see that material flowing, everything's working. So I think one of your questions was, are we seeing the benefit of everyone else leaving the Russian supply source? Yeah, we're seeing it, and in some cases, we feel we're getting more than our fair share of that. So that's part of the answer to your question. I think, you know, we're debottlenecking everywhere we can. You know, we've historically been kind of heavy nickel, less titanium airframe. I think we're gonna be much more balanced in the future, so some of our processes require some debottlenecking. The processes are slightly different, and we have to address that. I think, you know, in terms of demand, I would say, you know, a bellwether for us is clearly wide-body demand. You know, it came, kind of came into the point where we were doing 12 wide-bodies a month. You know, now it's, you know, 15, probably gonna go to 19, probably gonna go to 24, you know, over the next couple of years. So the real strength of the market for titanium is yet to come. We're seeing a lot of defense activity, and, you know, that's, that's, kind of coming through at the same time. So I would just say, when you think about titanium and you think of ATI, you know, about half of it's probably the big B related, you know, 20%, 30% is probably the big A, and the rest is defense. So all that growth is hitting home, kind of as we hit the mid part of the year into, you know, the next couple of years. So, yeah, Don, did you want... There were some questions I think Richard had that you could help him with. Sure. Why don't I add just a couple of things. One, I think you asked, Rich, is titanium accretive? The short answer is yes. It is an accretive product space for us. The second question I think that you also asked was in regard to the capacity, and maybe I can add to what Bob shared around capacity. So we have talked repeatedly about we're adding 45% of our titanium melt capacity on existing assets. And so to give you an idea of kind of how we're seeing that staged in 2024, so you guys have a sense of, you know, what that build looks like relative to a run rate. The way you want to think about it is go back to the original targets that we gave, and what we said is related to this 45% increase in our melt capacity, we expected that capacity to add in excess of $150 million of revenue. Might even share, you know, something closer to $160 million of revenue at run rate and assume 30% margin. So those numbers still hold. I think that there may be some upside to them, but we will share that at the right time. B ut then the question is, when do we hit the run rate? What does that look like? We've talked about the second half of 2024 being a really strong second half relative to the first half. This is part of the reason, and so what you want to think about is, you know, for these assets, we expect that they're going to be at their run rate capacity from an income statement standpoint. And, you know, we see them as kind of building from maybe a, you know, it'd be split 40/60, if you will. 40% of that contribution, it would, we'd be seeing in the first half and 60% in the second half. I know I'm mixing math here, but it gives you an idea of the step change that we're expecting from half to half. So hopefully that's helpful. Yeah, I appreciate it. Now, just real quickly, I get the impression from your slides that the supply chain issues are pretty much over for you. I think you said manageable. I just wanted to set expectations from your standpoint, are sales and margins no longer going to be impacted by the supply chain constraints we've seen? In ATI? No. Correct. Yeah, we think they're behind us. The bottleneck issue was around the first step in the process from ingot casting to using the billet. That's why the billet press was important. It was originally designed to be a nickel press, and when you shift over to titanium, you have to add a couple pieces to the puzzle to make sure you're making a quality titanium part, different temperature, different issues. So that's behind us. You know, I think we eat and breathe the issues around all kinds of melting. That's why we talk about being melt long. We're not investing huge amounts of money in melting other than what we talked about with titanium, which is within our guidance. I do think there are two issues that are out there in the marketplace that we are working. You know, one is what I'd call contracted services with significant training or certification requirements, which makes it hard for contracted services to ramp quickly. Some people see that as like ultrasonic inspection and some of that in aerospace that's kind of under duress with some of the other activities that are going on in the market. The other issue is, you know, there are some single points of failure out there. We get we're part of directed buy contracts with our major OEMs, where they ship billet to us, and there are a couple of other parts of the supply chain where they've had a failure. I think extrusion facility in Texas has had a problem that affects some of the supply chain. But those that are within our control and those things we can manage, you know, we feel very confident that we have what we need and to execute in 2024. Thanks very much. Thank you. The next question goes to Timna Tanners of Wolfe Research. Timna, please go ahead. Your line is open. Yeah. Hey, good morning, everyone. Two questions from us- Good morning, Timna. Just to clarify and understand the outlook. Good morning. So just wanted to see if you could elaborate on the comment about taking actions operationally to align with lower demand. Is that, you know, short term, long term, if you could just explain that? Yep. I think that was me that made that comment, and it was really about our activities in the AAMS segment related to the industrial markets. You know, one of the industrial markets that's in there is some of the, I'd call it the nickel-clad pipe projects for oil and gas, you know, basically in Brazil, those kind of places. You know, we want to make sure we got the right amount of capacity there. We're also seeing, like everybody, a little bit of softness in the residential construction space, so we have some engineered products that go into that space. And then we obviously watch the distribution channel, although the vast majority of what we sell today is the OEM direct. You know, we still see some inventory destocking going on in those places, but it's mostly in the AA&S segment, and it's stabilized, I think, is the key. So the headwinds are still there, but they're, they're not getting any worse. And, you know, we are seeing some signs of life and, green shoots for Q2, but, I hopefully that helps. Is that, is that what you're looking for, Timna? Yeah, I'm just trying to think about how material they could be, so some tweaks or if we're talking about big changes there. Oh, no. Yeah, they're tweaks. They're in the tweak category. You know, it's whenever you're doing- Okay. Dealing with your cost structure, you wouldn't call them necessarily tweaks because it, it can involve people and crewing and shifts and that, that kind of thing, but I would say they're modest at best. I think most of them have already been taken. It's just a matter for them to show up in the, in the results, which should be by Q2. Got it. Thank you. Okay, so the next question was just about the metal price impacts. I just wanted to understand that better because if you look at nickel, the big shift in prices, I mean, it was a terrible year for nickel last year, but the bulk of that commodity price change was in the first half of the year. So just thinking about that for going forward, should we think about just the annualized impact rather, since you said it was more Q4 weighted, or how should we think about the impact of metal price changes for the future? So just to make sure that we're, we're in sync, at back of my mind, I saw—I'm recalling that nickel prices in the latter half of 2023 really saw their slide. And, you know, first half, relatively stable, not massive changes to, to, 2022 levels. But then when you get to Q4 2023, we really saw a, you know, a continued meaningfully, meaningful step down to, like, the $7 per pound range. So the way to think about that is, in our business, there's a little bit of a lag in terms of the effect of metal. And one area where I'd really focus the listeners is around our pass-through. So our team has done a really good job adding pass-through mechanisms to our various contracts. And so, as a result, as the metal prices and those material prices move around, then we can see our pass-through revenues increase or decrease. Case in point, go back to 2022. I'd shared at the end of last year's call that we saw our pass-through revenues increase in 2022 in the range of $300 million because metal prices went up, and that inflated our revenues, okay? Now, metal prices have kind of retraced to where they were before the, and I'm talking nickel in this case, retraced to where they were before the Ukraine invasion. And so a lot of that lift that we saw going into our pass-through revenues has begun to go the other direction. We saw about $50 million of negative impact on our revenues in Q4. And here's what we're thinking: if the metal prices remain at about the same level they are now, plus or minus, then as you think about that reversal of our pass-through revenues, Timna, I would expect our pass-through revenues in 2024 will probably be, I don't know, $175-200 million lower than we saw in 2023. You know, as you know, there's not a significant impact to our bottom line because of changes in pass-through, but as you're trying to get a feel for our underlying growth rates for revenue, it's an important thing to make sure that you have built in. Does that answer your question and help you? Yeah, I think so. We can definitely follow up, but that's a helpful reminder. Thank you. Thank you. The next question goes to Michael Leshock of KeyBanc Capital Markets. Michael, please go ahead. Line is open. Hey, good morning. I wanted to ask more broadly on the aftermarket side within commercial aerospace. Obviously, seeing some strong demand there right now, but could you talk to some of the pockets or platforms within MRO that are maybe elevated right now? And then if there's any way that you could frame the duration of that aftermarket strength, that would be helpful. All right, I'll give it a try. So our aftermarket is predominantly jet engine spares, right? And so we are seeing elevated spares demand. Historically, it's about 25% of our mix. I think today we've said it's probably closer to 40. And there's a couple different reasons for it, and you kind of have to go almost, I don't wanna say too much about each individual engine platform, but you have to look at it from each individual engine platform. I think there's some widely discussed issues with the GTF, right? And there are other issues in terms of just different versions and different kits that are being put in different engines. There's also the extended use of narrow bodies. Anytime you're at a major airport, and you see an MD-80, it's like, huh, you know, they're all out of the desert. Everybody's looking for narrow bodies. And, I think that's the extended cycle from people are reaching the point where they have to make the commitment to major maintenance and engines, and overhauls, because it's gonna be a while before they get their next narrow body plane. The wide body side, you know, more and more planes are in the desert where there's more sandy conditions, you know, that kind of thing. So I think all the trends for us, we, we, we do see that some engine programs will kind of revert back to the mean here in terms of spares. For the foreseeable future, I think there's enough drivers outside of the norm that's gonna keep that spares level elevated for, I would say, a couple of years, I think, till it all gets sorted out. Hopefully that's that helps. We don't really have much MRO- And then my- Yeah. I'm sorry. Go ahead. No, that's very helpful. I just wanted to ask lastly on inventory management, you had touched on that. How do you see your inventory progressing throughout 2024, just given some of the moving pieces with the outages and the underlying commercial aerospace ramp? Is there a level that you're targeting or inventory turns? What way do you frame that? Thanks. So let me frame it not just specifically for inventory, but you know, how we're thinking about managed working capital in general, understanding that inventory is the primary piece of managed working capital. So we made some really good progress here at the end of the year, getting our overall managed working capital down to much, much closer to our 30% target. As you think about 2024, the way you wanna think about it is, we are working very hard to not to not build inventory as we have done historically during the year. Keep it wrap- really tapped down so that it's not a drain on our cash. So that is a clear effort, and you should expect to see improvement year over year in that area. In terms of the overall year and what are we expecting from Managed Working Capital, we expect that we're going to, by the end of 2024, end at the 30% target, a nd very possibly marginally below it. And so, that's how I would describe. Does that help you? Yeah, it does. Thank you. Thank you. The next question goes to Josh Sullivan of the Benchmark Company. Josh, please go ahead. Your line is open. Hey, good morning. Good morning. Just as a kind of follow-up to that, that inventory question. You know, on the narrow-body customer developments you mentioned in the prepared remarks, you know, what do you think your customers' willingness to hold and build inventory looks like as these narrow-body developments are digested? You know, one of the OEMs talked about, you know, the issue is actually an opportunity for the supply chain to catch up, but, you know, curious what your thoughts are about your customers' inventory levels. Yeah, fair question. You know, I think that there's a lot of noise in the system at the moment, you know, whether that's in the US system or the European system, you know, engine programs, airframes, a lot of noise, right? But we're not seeing any change in behavior in terms of buying patterns or on the airframe side, and certainly not on the engine side. You know, I think the disruption in the spares, or the need for more spares around the GTF is having a positive effect for those of us who supply materials. Certainly engine guys don't wanna be the, you know, the lagger. They don't wanna be the bottleneck either, and I think they are working to get ahead. There's also a tremendous influx of defense applications, you know, whether it's rotorcraft, engines, or, you know, frames. There's a lot of activity there, helicopters in particular. But we're not seeing any letup from the engine producers. And for us, you know, we've materially broadened our market position. So we've always said we love every airliner that flies and every engine that powers it, and that's more true today than ever before. So today, I think, you know, these companies are big companies. They have great capabilities. They're gonna sort themselves out, and I think when they do sort themselves out, nobody wants to be the ultimate bottleneck in the supply chain. Maybe just one on the nickel powder market. You know, I think you mentioned isothermal forging was a highlight. You know, I know titanium gets a lot of focus here, but how does the nickel powder market look like? Yeah, I mean, we feel good about it. Yeah, normally, we'd be talking all about nickel powder, but titanium has kind of been the topic of conversation in 2023. You know, it's strong. You know, we're on some really great programs that are really ramping up. You know, I think we've been focusing on yield. You know, and obviously, in the short term, if you can get your yields up 40%, that pretty much covers some of the capacity issues that we have in the short to medium term. But it continues to be strong. You know, I think when you look at some of these single points of failure that are occurring in the market, especially on the nickel alloy side, if there's a single point of failure and we're not the supplier, that just opens the door for us and gives us an opportunity to do more. So we actually see not only volume growth, but share growth potential there, you know, in the next couple of years. So is it gonna be tight? It's always gonna be tight, 'cause we don't wanna have a lot of excess capacity in the system. But I think we're taking steps both in our process improvement and with our customer relationships to move and see the growth there. Hey, Nadia, this is David Weston. Oh, yeah. Thank you. Yeah, this is Dave Weston. I think we've reached the window of our time. I'd like to thank you for coordinating the call, and thanks everyone for joining us today. This does conclude our ATI fourth quarter earnings call. A replay will be available on our website, and our investor relations team is here to assist with any follow-up questions that you may have. So thank you, and have a great day. Thank you. This now concludes today's call. Thank you all for joining. You may now disconnect your line.