ATI Inc. Reports Strongest Quarterly EBITDA Since 2007, Raises Full-Year Guidance
The specialty materials manufacturer posted 37% year-over-year EBITDA growth as its transformed aerospace alloys segment emerged as a second earnings engine alongside high-performance materials.
Record Performance Driven by Portfolio Transformation
ATI Inc. delivered adjusted EBITDA of $284 million in the second quarter, marking its strongest quarterly performance since 2007 and exceeding the high end of guidance by $29 million (earnings call, 2026-08-06). Revenue increased 11% year-over-year to $1.3 billion, supported by a record backlog of $4.4 billion, up 18% from the prior year.
The company's adjusted EBITDA margin expanded 440 basis points year-over-year to 22.6%, reflecting what CEO Kimberly Fields described as "stronger commercial terms, favorable mix, disciplined execution and operational improvements" (earnings call, 2026-08-06).
AA&S Emerges as Second Earnings Engine
The quarter's standout performance came from ATI's Advanced Alloys & Solutions (AA&S) segment, which Fields characterized as having transformed from "a more cyclical lower-margin business" into "a second durable earnings engine" (earnings call, 2026-08-06). Excluding a $10 million asset sale gain, AA&S generated underlying EBITDA margins of approximately 22%, compared to 14% a year ago.
The transformation stems from three strategic shifts: optimizing the portfolio toward aerospace, defense, and specialty energy applications; leveraging ATI's position as one of three qualified Western producers of high-purity hafnium and zirconium; and capturing improved pricing as China limits exports of these materials. Aerospace and defense now represent approximately 44% of AA&S revenue, more than double the share from five years ago (earnings call, 2026-08-06).
Defense and Jet Engine Revenue Accelerate
Defense revenue reached an all-time high, growing 36% year-over-year, driven by naval nuclear, missile, and missile defense applications. ATI recently secured a naval nuclear contract renewal extending through 2030 that "more than doubles annual revenue compared to the prior contract" with improved pricing and product mix (earnings call, 2026-08-06).
Jet engine revenue increased 13% year-over-year and 8% sequentially, reflecting strength in high-temperature nickel alloys. ATI holds sole-source positions on five of the seven most advanced nickel-based superalloys and expects content on next-generation engines to be "more than double that of legacy platforms" (earnings call, 2026-08-06). The company maintained guidance for high-teens jet engine revenue growth for the full year.
Raised Full-Year Outlook
Based on first-half performance, ATI raised its full-year guidance across all key metrics. The company now projects adjusted EBITDA of $1.16 billion at the midpoint, representing 35% year-over-year growth; adjusted EPS of $5.04, up 56% year-over-year; and adjusted free cash flow of $575 million, an increase of 51% year-over-year (earnings call, 2026-08-06).
First-half free cash flow improved to $143 million compared to a use of $50 million in the prior-year period. CFO Rob Foster noted the company is implementing customer consignment strategies for forging input materials to further improve working capital efficiency.
ATI continues investing in capacity expansion, including a new nickel remelt furnace scheduled to come online by end-2027 that will increase nickel capacity by approximately 15% to 20% by early 2028. These investments are expected to deliver approximately $350 million of incremental annual revenue by 2028 (earnings call, 2026-08-06).
According to MarginX data, CEO Kimberly Fields recently executed stock sales totaling approximately 34,157 shares. ATI is expected to report third-quarter 2026 results on November 4, 2026.
This article was generated by MarginX from the earnings call on 2026-08-06. It is not investment advice.