Great. Okay, cool. Thank you. Appreciate you guys joining, those also on the webcast. It's our 45th annual Aerospace and Defense Conference, which is shocking. But let me introduce him. I'm Gautam Khanna, analyst who covers ATI. We're very pleased to have with us Don Newman, who's the Chief Financial Officer. We also have David Weston here, who runs IR. This is an interview format, so we're just Q&A, and then I'll open it up to questions with, maybe 10 minutes remaining or so. Don, welcome. Thank you for coming. Thanks. Thanks for having us. I wondered first just if we could just rehash the quarter a little bit because there were some kind of outages and what have you. If you could just walk us through, like, what happened, and are those now confined in time and behind the company? So if you could just walk us through, like. Yeah. I'd be happy to do that. We're getting the question a fair amount. So first of all, for the overall performance in the quarter, it was a really good quarter. We performed quite well from a cash generation standpoint, exceeded the high end of our guidance. From an EBITDA standpoint, EPS standpoint, everything went quite well. But one of the events that we did see in the quarter had an impact largely on our Q1. There were some planned outages that we had late in the quarter. Those planned outages, you know, in some cases took a bit longer than we expected. You know, we are running these assets, you know, at a pretty strong pace. And for good reason. We have fantastic demand for our products, and we wanna help our customers and get them the materials that they need. So, you know, we realize that that means that sometimes you're gonna spend more time and money around maintenance. It's a ticket to the game. So we found that in December. We had some outages in some of our Melt assets, as well as some of our finishing assets. We're managing a number of bottlenecks that we are creating in the business. Why do I say creating? Well, we're increasing the production capacity in our assets, which means as you flow those assets, that material downstream to finishing, for example, you're gonna hit bottlenecks that didn't exist before you increased your production. So good news is we're increasing production. Bad news is there's a bottleneck downstream. New good news is you get to fix the bottleneck, and then you get the benefit of that flow. So that was also one of the elements of, you know, why did December, the outages in December create some headwind for Q1? Well, as we had these bottlenecks and we had planned and as well as unplanned outages, we ran down our WIP balances because, of course, at the same time, we're increasing the efficiency of our managed working capital, which means we're taking some risk in doing that because you don't have as much cushion. And so there's a lot of good news, though, in all of this. One piece of good news is the demand for our products is still absolutely wicked strong. And that's not slowing down at all. Another piece of good news is our production off of our assets from period to period is actually really good, you know, despite the fact that we had some outages that were longer than we expected. As you look past Q1, we expect that we're largely making up the, you know, the Q1 impact of that outage. We guided at a very, what I think is a pretty good growth rate from 2023 to 2024. It sets us up really, really well for the targets that we put out for 2025, which is, you know, that's we wanna make sure we're maintaining the momentum in the business as we progress through 2024. If I can just ask you to elaborate, there was an exotic alloy outage at AA&S that was related to the weather in the Pacific Northwest. Yes. That's the pipes froze or something of that nature, right? Yeah. Yeah. Yeah. It was Arctic weather conditions in the Portland and Albany area. We had some pipes that broke. Think of that facility, guys, as like a refinery. There's a lot of exposed pipe. I think we had 20, 21 days of below-freezing weather in that area of the country. That, believe me, is not typical. So we had some pipe breakage that caused. That was a January event. It's all behind us now from a weather standpoint. We're just, you know, finishing fixing the pipes and, again, getting the production ramped. Gotcha. That was a $0.03 impact to Q1 and to Q2, if I recall? That's true. That's correct. Okay. The melt assets that had a challenge in Q4, what specifically happened? I'm just curious, like, was it titanium melt? Was it nickel alloy melt? It was, as I recall, it was primarily titanium, as I recall. What ended up happening is we had a combination of assets that we were taking down. One was, well, not one, but we had some melt assets as well as some downstream finishing assets. In combination with that, we also had a press that we were working on to get ready for really the run of 2024. As you guys can imagine, when you get into an outage, in some cases, these outages are things that you do every two, three, or four years, right? So you don't always know what you're gonna find when you open it up. That was the case here. Once you find that an outage is going longer than you expect, you wanna take advantage. If you've got the system shut down, you're gonna want to take advantage of the time and do some maintenance that would otherwise be done later. And so we had some of that going on. Good news is that that means there's lower maintenance on those HPMC assets later in the year than we would have planned, right? Because we've kind of pulled that forward. So production should be better as you look further out in the year. Gotcha. I just wanted to ask, is this related to any of the new titanium furnaces that you guys have added, or was this a legacy? No. Okay. To your point, though, normally Q3 tends to have planned outages. Should we expect that this year we're gonna have fewer such outages? Is it gonna be meaningful in the P&L to see, like, normally the sequential decline happens and HPMC is looking out to Q3? Right. So the Q3 outages that we typically have are in the AAMS segment. So these outages were on the high-performance side of our business, so probably won't affect that Q3 outage. But when you look at Q4, it's not unusual for us on the HPMC to take some seasonal outages in December when the teams are going home for the holidays and whatnot. You know, it could be that we'll see some marginal benefit by having some lower outage, you know, for those planned events. Fair enough. So one of the questions we get time and again is because the Q1 starting point's like near $0.40 of earnings per share, and then we have to get to an average of whatever it is, $0.60-some-odd cents thereafter, your conviction level around, like, the visibility of Q2, if you will. Could you just tell us, like, what gives you that confidence? Yeah. So why am I confident about the annual and the trend that we? So we didn't guide Q2, but I do wanna give you guys a sense, right, of how to think about it. So as, you know, we tried to be really transparent with investors around how to think about Q1, the whys, and what was, you know, what really drove that. Because you think about Q4, our EPS was $0.64. And then you think about the guide I gave, midpoint was $0.40 in Q1. But then you look at the full year guide, and we're guiding it to midpoint at $2.32. And so where does that confidence come from? Well, part of the confidence is what were the reasons for the Q1 dividend? The Q1 dividend was driven by those Q4 outages behind us, right? So the dryness, the low WIP condition that was created because of those Q4 outages, those should be fully behind us by the time we get to Q2. So that's a good guide. Another thing is, as you look at how 2024 should unfold, 2024 will see an increase in EPS from Q1 to Q2. And then in the second half, we have some inflection points that we hit. And I'll explain those in a second. But before we do that, one way to free you guys to think about, say, first half versus second half, okay? Think of it as first half 40%, second half 60%. Okay? So that'll give you a sense as to what this growth looks like because you already know Q1, right? And so you can do the math on that. And I do expect Q4 is gonna be higher than Q3. So that'll give you, you know, some indication. But the why? Now is the why. Well, we have a few things that are happening in, you know, certainly from Q1 to Q2, but especially from Q2 to the second half. Some of those things are in Q2. We have the billet press that Bob Wetherbee, our CEO, talked about in our earnings call. We have a billet press that we're bringing into service. This was an investment that was started a number of years ago. We paused during COVID. We restarted that and finished that project. It's a really cool asset. It's a press, a billet press that can be used with both titanium and nickel. So that's pretty powerful. It's also a really critical asset to debottleneck part of our production process. When you think about, you know, we've added melt assets. Part of it’s been restarting idled assets. We also, you know, in 2025, largely, we’re gonna see another titanium melt asset come online, and we’re picking up efficiencies in our nickel stream. So having that press capacity is really critical. Well, that should be online starting in Q2. And then it should really be present to help debottleneck the stream in the second half of the year. So that’s a good guide. Another good guide for us is think about the titanium demand. Really high, guys. Super high. Well, what about our capacity? Well, one of the things that we shared with the market was in 2022, we said, “Hey, we have an idle asset that is in Albany, Oregon.” Great facility, but it had some issues." Well, as we looked at that, as we saw the titanium demand ramping, we saw an opportunity to address the deficiencies and eliminate them and restart an asset that we knew that could be restarted very quickly, especially relative to a new asset, and economically was just like a slam dunk. So imagine this. So we have a facility out there that I think it was constructed originally in 2008, which is pretty relatively new in this industry, right? And it had a number of bars. And so that facility was shut down very responsibly and wisely. And we figured out we could restart that within a matter of months. And sure enough, when we decided to do that, we were getting initial melts out of that asset within, I'll say, 90 days. Now, my colleagues in operations would say that's probably wrong by days, but, you know, trust me, it's kind of in that direction. By the end of 2023, we were at run rate for that plant from a production standpoint. The way to think about it, as you guys are modeling it, first of all, that asset is ultimately gonna be responsible for increasing our titanium melt capacity by about 45% from our base period. Base period in this case is 2022. So by 45%, as you do the math on run rate revenue out of that facility, think in terms of $150-$170 million of revenue off that facility at an incremental EBITDA margin of between 30%-35%. Okay? You guys have already done the math in your head. Now understand that the restart cost on that asset was about $10 million. $10 million. So clearly, it was an easy economic decision, especially when our operations colleagues figured out how to eliminate the ongoing cost penalty that historically existed. Yeah. And so as that facility ramped up, we originally thought, "Hey, it would make economic sense to restart 3 machines, 3 bars." But then as we really started unwrapping that business and seeing where the demand was, we identified a fourth bar. And so that fourth bar, we are going through the process of restarting. That should be producing certainly in the first half of 2024. But, you know, the basic question, the fair question is, "Okay, Don, when is this whole thing gonna hit run rate on my income statement?" And the answer on that one is really second half of 2024. So that's another reason why, hey, why are you comfortable with this step-up? Well, I've got that ramping production and revenue stream coming from those assets. Do you think all four will be contributing to the P&L by Q3, or is it really Q4? So, it's Q4, but, you know, certainly the three. Let me give you a little bit more granularity here. So when you think about the 150-170, okay, is every one of those units contributing pro rata amount? The answer, of course, is no, right? So the first three units would generate roughly $110 million-$120 million of incremental revenue, about the same amount of incremental margin. Okay? And then the fourth unit, think of that as bridging the gap to the 150-170, right? Got it. So I have to do the math in my head quickly, but, you know, if you're like 150, 30% margins, 23% tax rate, 150-ish million shares, it's like it's about, and you get half of it, say, for the year. So it's about, you cut it in half. It's, what, $0.12 in the second half, something like that, right? Rough amount. It's $0.06 a quarter if it's Q3, Q4, at $40 million a quarter, thereabouts. Okay. So that does support that lift. And then you guys have other assets coming online beyond that. There was another. We do. That takes a while to qualify, correct? It does. But let's talk about that. Yeah. So I just described a 45% increase in our titanium melt capacity. There's another 35% of increased melt capacity off that 2022 level. That is a brownfield investment that we have. It's already under construction. We expect that we're gonna get first melts off those assets by the end of this year. And then it takes about a year to qualify. And so these are, you know, these are assets that are gonna produce very high quality, very, very high quality material. And so there can be a longer qualification period because of that. And so the way to think about the earnings contribution from those assets is, you know, from a revenue standpoint, it's probably gonna be more revenue relative to the other 45% I described. And there's reasons for it. And I won't, it'll take the rest of your time. I don't wanna do that. I think it'll be more incremental revenue. You know, we'll probably see something less than $50 million in incremental revenue in the second half of 2025. Then you'll hit run rate on those assets in 2026. So one of the questions we get a lot is Boeing has had some challenges on the 737 MAX, as you know, raising the rate. Are you guys, do you know what rate you're at on the 737 MAX in terms of the engine channel and the airframe channel? Are you at their stated rate? So does this impact, if there's a delay that's extended in terms of taking up the rate, when would it impact ATI, if at all? Yeah. So of course, like everything else, there's not a straightforward answer. So what we can, what I can tell you definitively is we do not reduce to build rates. Build rates are interesting, and it helps everybody with their modeling. But the reality is we manufacture the material or we produce the forging when we get the order, long short. And so what I can tell you is that despite the recent announcements around capped production levels, et cetera, we have not seen a pullback in any order activities, period. Engine or airframes demand is quite strong. And so then the next natural question is, well, how long would that be true? You know, if how long does this cap need to be in place before we start to feel it? Yeah, it would have to be a pretty long time. You know, keeping in mind that our business, you know, there's two main airframers. The other guy, I think, is seeing some pretty strong ramp. Our relationship with that company continues to grow. So we're not worried about a slowdown. Another thing to keep in mind, Gautam, is when we put out our targets for 2025 and 2027, we were well within the assumptions that the OEMs had out for build rates. You know, we do see demand hit sooner. Our typical lead times are, you know, 12-15 months for airframe, kind of probably closer to 12 is typical. For engine, it's like six to nine months. That's our typical lead time. Right now, our lead times are, yeah, for those airframe, it's probably, you know, better than a year. Certainly for like engine forgings, I mean, we're out 12-15 months. Okay, yeah. So yeah, we've got a, and our backlog, by the way, is growing. Gotcha. So you're not seeing a slowdown in order entry? You're not getting fewer orders in January versus what happened? No. No. Our book is building, and strength is still there. Signals in the conversations with our customers are also very positive around A&D. Yeah. Okay. I actually wanted to ask a little bit more about AAMS because one of the questions that used to, well, one of the factors that used to dog the stock, if you will, and sentiment on stock was the sensitivity to nickel prices because of the commodity stainless business, which you largely have, ATI has largely exited that business. But I am curious, what are you seeing in some of the shorter cycle AAMS stuff right now? And what's your visibility, if at all, to it getting better in the second half? Maybe talk about STAL as well. Happy to. So when you think about the AAMS segment, so AAMS was previously referred to as our flat-rolled products business, right? We started a transformation in that business back in 2020, we announced, but it really hit in 2021. The goal in that business was to materially change the profitability of that business. So you're talking about a business that would generate, wouldn't be unusual to have low single-digit EBITDA numbers. Well, that's not acceptable. And so we got pretty aggressive in a transformation that's designed to raise the AAMS EBITDA, so now I'm back, I call it at the segment level, AAMS EBITDA margins, which were about 8% in 2019. We see those getting to the middle to upper teens as a result of the transformation that's happening. Transformation is not about just taking costs out. We walked away from over $400 million of standard stainless sheet sales, right? That contributed, you know, $400 million of sales contributed $1 million of EBITDA. Not a good use of our assets, right? Well, we walked away from that business in 2021. Our team was able to replace that with value-added sales by the end of 2022. Pretty remarkable. We've seen the A&D exposure on that segment rise to about 35%. Before the transformation, I think it was in the range of 15%. So a lot of great things that are happening there. We have, as a result of moving away from that standard portfolio, we've seen our exposure to volatility tied to commodities like nickel drop by roughly two-thirds. Okay? That's enormous. Reduces the risk in our financials significantly. So we got all those great things going on. We are in transition. We have not fully gotten away from the market, the end markets, and the distributors that we sell to for about 25% of the business. And what did we see from Q2 to Q3? We saw a meaningful pullback on those end market sales to what we call general industrials. It includes auto. It includes appliances. It includes oil and gas. Okay? For example. So we saw a meaningful pullback. We in Q4 saw that leveling off. So when you think about 2024, how should you guys think about that part of our business? Well, we've seen stabilization. We believe that we will see recovery in that part of our business in the second half of the year. And that's based upon when we've experienced pullbacks in these markets before. It doesn't instantaneously drop, and it doesn't instantaneously come back. But we've seen this pattern. It's great when it comes back. That's another reason why you think, why is Don assuming second half's gonna be better? We are assuming some recovery in those markets, which is great for absorption and, you know, just other profits, right? Maybe could you talk about the STAL JV, the China JV? Happy to. Yeah. So what's happening over there? 'Cause that started to soften early last year, if I recall. So for the benefit of folks that aren't familiar with STAL, so STAL is what we refer to as our Asian Precision Rolled Strip business. It's a joint venture. We own 60% of it. It really serves the electronics and automotive end markets in Asia and specifically China. And what Gautam's referring to is if you go back to 2022, we started to see slowing in that business tied to slowing economy, a slowing economy in China. And we expected in the first half of 2023, we'd start to see recovery. Well, guess what? The Chinese economy didn't really come back strong, right? So right now what we see is a real stabilized business. So we saw the revenues in that business drop. You know, it's about a, it was about a $300 million revenue business drop to, you know, $250 million plus or minus range. It is a good business. It's a really good business. It has accretive margins to us. So what I would expect and what's assumed in our guidance is that the Asian Precision Rolled Strip business, it's gonna remain at about the current level for the full year. And until we start seeing signs of recovery, we're not gonna, we're not gonna assume that, you know, anything different. Okay? Hopefully that helps. No, that definitely helps. At AAMS, historically, there was always some sort of large project, high-value project coming through, you know, whether it be a pipeline repair, whether it be a desalination plant, Yanbu. I remember, you know, over the years there've been a number of things. Are there any such kind of high-value projects that you're pursuing right now that could maybe benefit us or the upside? Yeah. For sure there are. And I'm not sure that I can name them specifically and publicly. So I wanna be cautious on that. But the short answer is yes. Okay? And And you know, that is something we have seen some of them hit. And that is part of the reason why we've seen some stabilization in our numbers. And so the expectation is, yeah, we'll see more of that. But the recovery, the full recovery in the end markets that we're anticipating in the second half aren't tied to just, you know, a specific or a couple major projects. It's more of a general recovery in those end markets. Okay. You know, I hate to ask, but given the 2025 guidance is $800 million-$900 million of EBITDA, do you have any way of handicapping where you would be in that range? Like based on what you see today, obviously it changes. Yeah, next month may be different. Yeah. So first. High end, low end. Yeah, yeah, yeah. No, I'm happy to. First, you know, so this is true of the 2027s too. So we guided on some revenue, give you guys an idea of what's revenue and EBITDA margin. Okay? So if you look at the ranges that we gave, if you take the low end of the revenue and the low end of the margin and you do the math, it gives you the low end of the EBITDA range. And same thing on the high end. And so by its nature, that meant that at the midpoint, it's $850 'cause the low end is $800, high end is $900 for 2025, $850. Do I believe we're gonna be at $850? No, I believe, I certainly don't believe we're gonna be at the low end of that range. I would expect we'll be somewhere in the mid to, you know, if everything goes in a great straight line, we could be at the top end, but it's probably in the 850- 875 range. It's, I'm not guiding, I'm just giving you my guide as to where we're at. Same thing, by the way, as you think about 2027. You know, I don't think we're gonna be at the low end. I don't think we're gonna be at the high end someplace in the midpoint, but you know, maybe probably better than, a little bit better is a fair assumption. Yeah. No, I just wanted to get your impression. And I recognize that's not formal guidance. Yeah. Of course, I'm still hoping that you don't push your expectations too high. Yeah, no, I get it. I don't think you need to, but. But we'll do our best. Okay. Fair enough. You know, I was also gonna ask, when you guys, you know, talk about cash deployment, there's been an increasing focus on buybacks, it sounds like. A, kind of the pace of buybacks, you know, this year and beyond. And then appetite for M&A, if at all. And where are the gaps in the portfolio, if you have any? Yeah. Fair questions. So first, when you talk about how we think about returning capital to shareholders, it's important to understand our philosophy around capital deployment because wherever you deploy the capital, you're doing it at the expense of some other potential. And so the strategy that we're executing around capital deployment is what I call a balanced deployment strategy. There's three legs to the stool. We're investing a modest amount for growth and modest in our business. And we've guided to this multiple years. Think in terms of, you know, between now and 2027, averaging around $200 million of all-in CapEx. It's an average. And of that all-in CapEx, about 60% of that would be growth. So the math says $80 million of it is maintenance. Okay? I don't expect one year to be $100 million and the next year to be $300 million. Okay? It's gonna be in that range. So that's one leg of the stool. The second leg of the stool that is important to not ignore is the leverage on the balance sheet. Right now we have $2.2 billion of gross debt, which on a net debt basis, we're at about 2-3, and you know, if everything goes as I'm currently expecting, you know, we would be certainly sub-2x by the end of 2024. And you know, but we have to start, you know, you wanna start paying off some of your debt and not just rolling it over and over and over again. 'Cause at some point you can find where things cycle down and we don't wanna be in a position where we have too much debt at the wrong time because it'll be too expensive for all of us if that's the case. Let's just be rational. Let's work it down in the normal course so we don't have to do anything crazy or exaggerated. That's the second leg to the stool. Let's work down gross debt. We don't have any current maturities, but we do have some options as to how we could do that. Third leg to the stool is a really important leg to the stool in our capital deployment strategy. That's returning capital to our shareholders. Right now our preferred vehicle for doing that is share repurchases. Okay? That's the intro to the answer. Right. Okay? So here, so right now we've got a $150 million program that we're executing. When we're done with that program, it will mean that between early 2022 and the completion of that program, we will have repurchased almost $400 million of shares in, you know, in that modest period of time. I don't expect that that will be the last share repurchase program that will be approved by our board of directors. And so we will keep that going. We'll also keep, you know, balance. Often I'm asked about, well, how should we think about, you know, how big is that ultimate basket of share repurchases? Which of course, you know, I can't give a specific number, but I can give you, again, a philosophy. So one thing that is an easy target for us when it comes to share repurchases and the magnitudes is we have a convertible note that's gonna convert 18.8 million shares. It's deep in the money, right? The shares have performed really well. So my goal, and I think it's a goal that my board would say it's their goal too, is let's attack that and buy shares back with the intention of us setting that dilution. It's a good target. There's no magic to it. It's just a known target and pulling in 18.8 million shares and we have 126 million shares outstanding today. That seems like a good move, a good objective. So that's the goal. I can't get all those shares in in all likelihood between now and the maturity of the note, which is 2025, mid-2025. But I think we can, you know, do that, you know, not too far after the maturity of the note. Gotcha. Okay. That helps. And then M&A, is there any desire, and you guys have what you need basically? I would say that there are some capabilities that would be nice to have, but you know, we've looked at most every deal that's been in the market. And it's not, guys, it is not because we're just desperate to do M&A. It is not the case at all. But when you look at a business, you learn. And when you look at the business, you could identify, yeah, there are capabilities here that are really value add to us and would make sense. We haven't seen that yet. The combination of really differentiated capabilities that are critical for us to have and economics that makes sense for us. So I'm not gonna say never, but I will say we're just gonna continue to be disciplined. We have a lot of organic opportunities and none of the senior management team or the board of directors feels in, you know, a drive to go out and do M&A. Okay. That's good to hear. I just wanted to open up to the audience. Does anyone have a question for Don? Okay. With that, I think we're done. But thank you so much. I will do one clarification. I'm second guessing myself on, you asked if whether the outages were titanium or nickel, and I said mostly titanium. And so assume that it's a mix because I'm hedging it 'cause I have this feeling that there's a piece I'm missing. So Dave, I don't know if you have that answer off the top of your head. Yeah. Okay. So I'm gonna hedge it a little bit.