ATI Targets $1.35B EBITDA Run Rate as Aerospace, Defense Near 70% of Sales

ATI has shifted heavily toward aerospace and defense, which now account for roughly 68%–70% of revenue, up from about 50% in 2019 after the company exited its Standard Stainless Sheet business. Operational improvements helped lift second-quarter AA&S margins to approximately 22% from 14% a year earlier, while companywide margins reached 23% and EBITDA rose 57% year over year. CEO Kim Fields sees an implied $1.35 billion EBITDA run rate entering 2027, supported by pricing resets, new production assets, defense demand—including a fourfold increase in missile activity—and continued investment in specialized capacity.

ATI has transformed its portfolio toward aerospace and defense markets, with those end markets now representing about 70% of total revenue, President and CEO Kim Fields said during a Morgan Stanley aerospace and defense conference panel. Fields said the company’s shift began in 2019, when ATI focused its AA&S segment on aerospace and defense applications and exited its Standard Stainless Sheet business, which had generated about $400 million in revenue at the time. ATI has since directed resources and investment toward differentiated products, including hafnium and zirconium materials used in commercial and naval nuclear programs, hypersonics, space launch applications and jet-engine alloys.

“Overall, from a company standpoint, we’ve increased our aerospace and defense percent of revenue up to 68%, 70% of our total revenue,” Fields said, compared with about 50% in 2019. Within AA&S, aerospace and defense revenue represented 44% of the segment’s sales over the past five years, more than double its prior proportion, she said.

Fields said ATI’s AA&S segment posted a roughly 22% margin in the second quarter, up from 14% a year earlier, while companywide margin reached 23%. She attributed the improvement to the company’s portfolio changes, commercial discipline and operating model, known as Elevation. Elevation includes procurement savings, operational improvements, commercial discipline and portfolio optimization, according to Fields. The company is using the program to improve yields, productivity and flow through capacity-constrained operations before adding new capacity.

ATI reported that EBITDA rose 57% year over year in the second quarter, Fields said. She added that the company was generating approximately 50% incremental margins and expected that level to continue through the rest of the year. Looking ahead, Fields cited an implied EBITDA run rate of $1.35 billion entering 2027. She said the company expects momentum from a full year of pricing and contractual resets, new production assets and continuing operational improvements.

Fields identified four areas where ATI believes it is differentiated: Proprietary jet-engine alloys, where ATI produces five of seven alloys used in the hot section of a jet engine as a full-source supplier, while sharing supply of a sixth alloy with another producer. Isothermal forging, a process used to manufacture jet-engine discs. Fields said ATI is one of two companies globally with that capability. Premium-quality titanium used in jet engines, missiles, defense applications and specialty energy markets. ATI is qualifying a new asset in Richland, Washington. Hafnium and zirconium materials, for which Fields said ATI is one of three qualified Western suppliers and the only independent supplier not ser...