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ATI's Q1 Earnings Top on Strong Aerospace & Defense Sales

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ATI Inc. (ATI - Free Report) recorded a first-quarter 2023 net income of $70.1 million or 48 cents per share compared with $30.9 million or 23 cents per share in the prior-year quarter.

Barring one-time items, adjusted earnings were 49 cents per share, beating the Zacks Consensus Estimate of 47 cents.

The company generated revenues of $1,038.1 million in the quarter, up around 24.5% year over year. The figure surpassed the Zacks Consensus Estimate of $998.9 million. The upside in the top line is primarily due to a rise in aerospace and defense sales.

ATI Inc. Price, Consensus and EPS Surprise

ATI Inc. Price, Consensus and EPS Surprise

ATI Inc. price-consensus-eps-surprise-chart | ATI Inc. Quote

Segment Highlights

In the first quarter, revenues in the High-Performance Materials & Components (HPMC) segment totaled $471.1 million, up 38% year over year, with total aerospace and defense-related sales increasing more than 50% from the prior-year period. EBITDA in the unit was $80.1 million compared with $68.1 million in the prior-year quarter.

The Advanced Alloys & Solutions (AA&S) segment’s sales rose 15% year over year to $567 million, owing to an increase in sales of commercial aerospace products by more than 70% from the prior-year period. EBITDA in the division totaled $72.7 million compared with $75.3 million in the prior-year quarter. The results were driven by a stronger mix of nickel-alloy and titanium mill products, offset by higher retirement benefit costs.

Financial Position

ATI ended the quarter with cash and cash equivalents of $196.2 million, down 66.4% sequentially. Long-term debt was down 0.2% sequentially to $1,702.1 million.

Cash used in operating activities in the first quarter was $285.2 million.

Outlook

The company is making strategic investments with prudent capital allocation in order to have sufficient resources and the ability to meet the unprecedented demand. Through deliberate measures to transform, it is more resilient to potential challenges and can operate under reduced instability. The company anticipates higher profitable revenues from continued strength in its primary markets. With another strong quarter, ATI noted that it continues to progress toward its long-term goals, delivering for its customers and shareholders.

Zacks Rank & Key Picks

ATI currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the Basic Materials space include Steel Dynamics, Inc. (STLD - Free Report) , Linde plc (LIN - Free Report) and PPG Industries, Inc. (PPG - Free Report)

Steel Dynamics currently carries a Zacks Rank #2 (Buy). Shares of STLD have gained 26.7% in the past year. It topped the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 10.7% on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Linde, currently carrying a Zacks Rank #2, has a projected earnings growth rate of 11.9% for the current year. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 4.8% upward in the past 60 days. It has a trailing four-quarter earnings surprise of 6.9%, on average. The stock has gained 21.7% over the past year.

PPG Industries currently carries a Zacks Rank #2 and has a projected earnings growth rate of 17.7% for the current year. Shares of PPG have gained 9% in the past year. It delivered a trailing four-quarter earnings surprise of 6.8% on average.

 


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