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ATI's Q2 Earnings Surpass Estimates, Revenues Fall Short

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ATI Inc. (ATI - Free Report) recorded second-quarter 2023 profit of $76 million or 52 cents per share against the year-ago quarter's loss of $38 million or 31 cents per share.

ATI posted adjusted earnings of 59 cents per share, up 9% from the year-ago quarter figure of 54 cents. Adjusted earnings exceeded the Zacks Consensus Estimate of 55 cents.

The company’s net sales in the second quarter were $1,046 million, which marginally lagged the Zacks Consensus Estimate of $1,046.3 million. Net sales increased around 9% from $959.5 million in the prior-year quarter.

ATI's second-quarter results faced challenges with lower deliveries of nickel-based alloys and precision rolled strip products. Despite this, the company found support in increased margins from its High-Performance Materials & Components segment, which helped offset some of the impact.

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

High Performance Materials & Components (HPMC) recorded sales of $527.1 million in the second quarter, representing a 33% increase compared to sales of $396.1 million in the year-ago quarter. It also surpassed our estimate of $480.7 million. During the reported quarter, HPMC's EBITDA for the segment reached $108.1 million. The company's ability to deliver  incremental margins is attributed to the surge in volumes, particularly on higher-margin next-generation commercial aerospace platforms.

In the reported quarter, Advanced Alloys & Solutions (AA&S) reported sales of $518.9 million, around 8% lower than the previous year's quarter figure of $563.4 million. The figure beat our estimate of $517.5 million. The performance was impacted by recessionary softness observed in general industrial end markets, as well as the lingering effects of COVID-related disruptions, particularly affecting ATI’s Asian precision rolled strip business. AA&S segment's EBITDA for the quarter reached $63.2 million. The reduced deliveries of nickel-based alloys and precision rolled strip products in the second quarter of 2023 were the primary factors affecting the segment's performance. However, these challenges were partly mitigated by increased deliveries of titanium plate products.

Financials

For the second quarter of 2023, cash provided by operating activities was $68.1 million, up from cash used in operating activities of $5.2 million in the previous year’s quarter. The company’s long-term debt was $1,699.9 million, flat year over year.

Outlook

The successful restart of ATI’s Albany, OR titanium melt shop and ongoing brownfield expansion in Richland, WA position it favorably to seize market opportunities. Confident about delivering for 2023 and beyond, ATI remains focused on executing its long-term strategy.

Zacks Rank & Other Key Picks

ATI currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the Basic Materials space are Livent Corporation , Carpenter Technology Corporation (CRS - Free Report) and PPG Industries, Inc. (PPG - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for LTHM’s current-year earnings has been revised 14% upward in the past 90 days. LTHM beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 22%.

The earnings estimate for CRS’s current year is pegged at $1.04, indicating year-over-year growth of 198%. CRS beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 30.9%. The company’s shares have rallied 73.3% in the past year.

The Zacks Consensus Estimate for PPG’s current-year earnings has been revised 6.8% upward in the past 60 days. PPG beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 7.3% on average. The company’s shares have risen roughly 9.6% in the past year.


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