ATI Inc.
Materials · Steel
Structural: pure-play on commercial aerospace build-rate recovery ($BA 737 MAX ramp to 38/mo then 47, $AIR A320neo to 75/mo, 787 to 7/mo, A350 to 12/mo) plus $LMT F-35 titanium content and Columbia-class submarine nickel alloys. Two-segment model - HPMC (engine forgings, ~55% rev) and AA&S (mill products, strip) - both volume-leveraged with multi-year LTAs locking in price.
(1) jet engine OEM destocking ending; GE Aerospace + $RTX Pratt LEAP/GTF build rates inflecting through 2027; (2) defense titanium share gain post-Russia sanctions (VSMPO displaced); (3) HPMC EBITDA margin expansion 18%→22%+ on richer mix and Sherbrooke titanium ramp; (4) AA&S nickel/specialty strip pricing firm on energy + medical demand; (5) free cash flow inflection funds buybacks after 2026 capex peak.
(1) commercial aero is the entire thesis - any 737 MAX certification delay, $BA strike redux, or airline cancellations compress multi-year LTA volumes; (2) titanium sponge input pricing volatile; (3) capex-heavy through 2026 (Sherbrooke + isothermal forge) keeps FCF lumpy; (4) defense budget continuing resolutions can push F-35 lot timing; (5) any specialty-steel cycle rollover hits AA&S mix.
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