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Item 2. Management’s Discussion and Analysis

2025-07-31 compared with 2025-05-01 · 257 added, 120 removed, 181 unchanged (68% of the section changed)

1 unchanged sentence

ATI is a global manufacturer of technically advanced specialty materials and complex components.

Our largest market is aerospace & defense, representing 66% of sale s for the quarter ended March 30, 2025, led by products for jet engines and airframes.

Our largest market is aerospace & defense, representing 66% of sale s for the year-to-date period ended June 29, 2025, led by products for jet engines and airframes.

Additionally, we have a strong presence in the specialty energy, medical and electronics markets.

In aggregate, these markets represented 77 % of our sales for the quarter ended March 30, 2025.

In aggregate, these markets represented 79% of our sales for the year-to-date period ended June 29, 2025.

ATI is a market leader in manufacturing differentiated products that require our materials science capabilities and unique process technologies, including our new product development competence.

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Unless otherwise stated, references to years and quarters in this Quarterly Report on Form 10-Q relate to fiscal years and quarters, rather than calendar years and quarters.

First quarter 2025 sales increased 9.7% to $1.14 billion, compared to $1.04 billion of sales for the first quarter 2024, as increases in sales to the aerospace & defense and industrial markets were offset by softness in the specialty energy, medical and electronics markets.

The increase in the aerospace & defense market was primarily a result of increases in commercial jet engines sales.

Total aerospace & defense sales were $754.4 million, or 66% of total sales for the first quarter 2025, compared to $615.7 million, or 59% of total sales for the first quarter 2024.

Gross profit for the first quarter of 2025 was $235.8 million, or 20.6% of sales, compared to $197.4 million, or 18.9% of sales for the first quarter 2024.

First quarter 2025 gross profit includes restructuring and other charges consisting of $4.0 million of start-up and transaction related costs, and $1.6 million of losses on the sale of accounts receivables .

First quarter 2024 gross profit includes $2.9 million of start-up costs.

These restructuring and other charges were excluded from segment EBITDA.

Restructuring charges for the first quarter of 2024 were $0.2 million, primarily for the involuntary termination of several employees in ATI’s domestic operations.

In addition, interest expense decreased to $23.0 million in the first quarter of 2025 compared to $26.6 million in the first quarter of 2024, primarily as a result of the redemption of the 2025 Convertible Notes in the third quarter of 2024.

Our pre-tax income was $121.5 million in the first quarter 2025, compared to $85.3 million in the prior year period.

Our effective tax rate was 17.3%, resulting in an income tax provision of $21.0 million for the first quarter of 2025.

Our effective tax rate was 19.8%, resulting in an income tax provision of $16.9 million for the first quarter of 2024.

Net income attributable to ATI was $97.0 million, or $0.67 per share, in the first quarter of 2025, compared to $66.1 million, or $0.46 per share, for the first quarter of 2024.

Adjusted EBITDA was $194.6 million, or 17.0% of sales, for the first quarter 2025, and $151.0 million, or 14.5% of sales, for the prior year first quarter.

ATI utilizes Adjusted EBITDA and Segment EBITDA, which are non-GAAP financial measures, to assist in assessing operating performance on a consistent basis across multiple reporting periods by removing the impact of special items, which can vary from period to period, that management does not believe are directly reflective of the Company’s core operations.

The Company defines special items as significant non-recurring or non-operational charges or credits, including restructuring charges or credits, gains or losses on the sale of accounts receivables, strike related costs, goodwill and long-lived asset impairments, debt extinguishment charges, pension remeasurement gains and losses, other postretirement/pension curtailment and settlement gains and losses, and gains or losses on sales of businesses.

We define Adjusted EBITDA as net income, excluding net interest expense, income taxes, depreciation and amortization, and special items.

Our measure of Segment EBITDA, which we use to analyze the performance and results of our business segments, excludes net interest expense, income taxes, depreciation and amortization, special charges, corporate expenses, closed operations and other income (expense).

Management believes presenting these non-GAAP financial measures is useful to investors because it (1) provides investors with meaningful supplemental information regarding financial and operating performance by excluding certain items management believes do not directly impact the Company’s core operations, (2) permits investors to view performance using the same metrics that management uses to forecast, evaluate performance, and make operating and strategic decisions, and (3) provides additional information useful to investors on a period-to-period consistent basis that are commonly used to analyze companies’ operating performance.

Management believes that consideration of these non-GAAP financial measures, together with our GAAP financial measures and the corresponding reconciliations, provides investors with additional understanding of the Company’s performance and trends that would be absent such disclosures.

Non-GAAP financial measures should be viewed in addition to, and not superior to or as an alternative for, the Company’s reported results prepared in accordance with GAAP.

The following table provides the reconciliation of net income attributable to ATI to the Adjusted EBITDA and Total segment EBITDA non-GAAP financial measures:

Quarter Ended

March 30, 2025 March 31, 2024

Net income attributable to ATI $ 97.0 $ 66.1

Net income attributable to noncontrolling interests 3.5 2.3

Net income 100.5 68.4

(+) Depreciation and amortization 40.8 36.0

(+) Interest expense 23.0 26.6

(+) Income tax provision 21.0 16.9

EBITDA $ 185.3 $ 147.9

Adjustments for special items, pre-tax:

(+) Restructuring and other charges 5.6 3.1

(+/-) Loss on sales of businesses, net 3.7 —

Adjusted EBITDA $ 194.6 $ 151.0

Corporate expenses 17.4 17.1

Closed operations and other (income) expense 2.4 1.3

Total segment EBITDA $ 214.4 $ 169.4

Comparative information regarding our overall revenues (in millions) by end market and their respective percentages of total revenues for the quarters ended March 30, 2025 and March 31, 2024 is shown below.

Results of Operations

Second quarter 2025 sales increased 4% to $1.14 billion, compared to $1.10 billion of sales for the second quarter 2024, primarily due to increased demand for commercial jet engines, partially offset by a decline in sales for commercial airframes.

In aggregate, ATI’s aerospace & defense market sales increased 11% to $762 million, or 67% of total sales in the second quarter 2025, compared to $684 million, or 62% of total sales in the second quarter 2024.

The increase in aerospace & defense market sales was partially offset by sales declines of 37% to the medical market and 17% to the specialty energy market.

Sales for the year-to-date period ended June 29, 2025 increased 7% to $2.28 billion, compared to sales of $2.14 billion for the comparable 2024 period.

The increase in sales was primarily due to a 17% increase in the aerospace & defense markets, driven by higher demand for commercial jet engines.

The increase was partially offset by a 20% decline in sales to our other core markets, including declines of 33% and 14% in sales to the medical and specialty energy markets, respectively.

Comparative information regarding our overall revenues (in millions) by end market and their respective percentages of total revenues for the quarters and year-to-date periods ended June 29, 2025 and June 30, 2024 is shown below.

Quarter ended Quarter ended

Markets March 30, 2025 March 31, 2024

Markets June 29, 2025 June 30, 2024

Aerospace & Defense:

4 unchanged sentences

Specialty Energy 63.5 6 % 76.6 7 %

Electronics 43.7 4 % 40.8 4 %

Medical 38.9 3 % 61.7 6 %

Other Core Markets 146.1 13 % 179.1 17 %

Core End Markets 907.9 80 % 863.0 79 %

Conventional Energy 92.9 8 % 66.1 6 %

Automotive 64.8 6 % 70.8 7 %

Construction/Mining 33.3 3 % 44.2 4 %

Other 41.5 3 % 51.2 4 %

Industrial Markets 232.5 20 % 232.3 21 %

Total $ 1,140.4 100 % $ 1,095.3 100 %

Year-to-date period ended Year-to-date period ended

Markets June 29, 2025 June 30, 2024

Aerospace & Defense:

Jet Engines- Commercial $ 869.2 38 % $ 664.0 31 %

Airframes- Commercial 401.0 17 % 400.9 19 %

Defense 246.0 11 % 234.7 11 %

Total Aerospace & Defense 1,516.2 66 % 1,299.6 61 %

Specialty Energy 114.0 5 % 132.7 6 %

Electronics 83.3 4 % 93.7 4 %

Medical 81.3 4 % 120.8 6 %

Other Core Markets 278.6 13 % 347.2 16 %

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Total $ 2,284.8 100 % $ 2,138.2 100 %

Sales increased 10% in the first quarter of 2025, compared to the first quarter of 2024, primarily due to increased demand in the aerospace & defense market.

In aggregate, ATI’s aerospace & defense market sales increased 23% to $754 million in the first quarter 2025, compared to $616 million the first quarter 2024, reflecting a 25% increase in commercial aerospace and an 11%

increase in defense products.

These increases were partially offset by declines in other core markets of 28% in medical, 25% in electronics, and 10% in specialty energy.

For the first quarter 2025, international sales increased to $501 million, or 44% of total sales, from $471 million, or 45% of total sales, in the first quarter 2024.

For the second quarter 2025, international sales increased to $490 million, or 43% of total sales, from $457 million, or 42% of total sales, in the second quarter 2024.

ATI’s international sales are mostly to our core end markets.

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HRPF conversion service sales in the AA&S segment are excluded from this presentation.

Quarter ended

March 30, 2025 March 31, 2024

Quarter ended Year-to-date period ended

June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024

Nickel-based alloys and specialty alloys 48 % 44 % 48 % 44 %

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Total 100 % 100 % 100 % 100 %

Gross profit for the second quarter of 2025 was $242.5 million, or 21.3% of sales, compared to $227.4 million, or 20.8% of sales for the second quarter 2024.

Second quarter 2025 gross profit includes a benefit of $7.0 million related to the recognition of previously deferred employee retention tax credits, of which $4.4 million related to the HPMC segment and $2.6 million related to the AA&S segment.

Second quarter 2025 gross profit also includes $7.1 million of start-up and transaction related costs, which are excluded from Adjusted EBITDA.

Second quarter 2024 gross profit includes a benefit of $8.6 million related to the recognition of previously deferred employee retention tax credits, of which $3.5 million related to the HPMC segment and $5.1 million related to the AA&S segment.

Second quarter 2024 gross profit also includes $5.5 million of charges for inventory write-downs related to our European restructuring and $1.8 million of start-up related costs, which are excluded from Adjusted EBITDA.

Our gross profit was $478.3 million, or 20.9% of sales, for the year-to-date period ended June 29, 2025, compared to $424.8 million, or 19.9% of sales for the year-to-date period ended June 30, 2024.

Year-to-date 2025 gross profit includes a benefit of $7.2 million related to the recognition of previously deferred employee retention tax credits, of which $4.4 million of related to the HPMC segment and $2.8 million related to the AA&S segment.

Year-to-date 2025 gross profit also includes start-up and transaction related costs of $11.1 million, which are excluded from Adjusted EBITDA.

Year-to-date 2024 gross profit includes a benefit of $8.6 million related to the recognition of previously deferred employee retention tax credits, of which $3.5 million related to the HPMC segment and $5.1 million related to the AA&S segment.

Year-to-date 2024 gross profit also includes $5.5 million of charges for inventory write-downs related to our European restructuring and $4.7 million of start-up related costs, which are excluded from Adjusted EBITDA.

Selling and Administrative Expenses

Selling and administrative expenses for the second quarter 2025 were $82.8 million, a decline of 7% compared to $88.9 million for the second quarter 2024.

The decrease was primarily due to lower incentive compensation costs and foreign exchange gains, partially offset by higher research and development expenses.

Second quarter 2025 includes $1.6 million of losses on the sale of customer accounts receivable, which are excluded from Adjusted EBITDA.

Selling and administrative expenses for the year-to-date 2025 period were $167.8 million, a decline of 2% compared to $170.9 million for the second quarter 2024.

The decrease was primarily due to lower incentive compensation costs and foreign exchange gains, partially offset by higher research and development expenses.

Year-to-date 2025 includes $3.2 million of losses on the sale of customer accounts receivable, which are excluded from Adjusted EBITDA.

Restructuring Charges

Restructuring charges were a credit for the second quarters of 2025 and 2024 of $1.3 million and $1.9 million, respectively, due to a reduction in severance-related reserves based on revised workforce reduction estimates.

Restructuring charges were a credit for the year-to-date periods ended June 29, 2025 and June 30, 2024 of $1.3 million and $1.7 million, respectively, due to a reduction in severance-related reserves based on revised workforce reduction estimates.

Loss (Gain) on Asset Sales and Sales of Businesses, net

The year-to-date 2025 loss on asset sales and sales of businesses of $3.9 million was mostly comprised of a $3.7 million loss for the sale of certain immaterial, non-core operations in Birmingham, UK and Dusseldorf, Germany, which were part of our European business in the HPMC Segment.

Gains on asset sales and sales of businesses of $2.2 million for both the second quarter and year-to-date 2024 were mostly comprised of a $2.3 million gain on the sale of our idled Houston, PA facility.

Interest Expense, Net

Interest expense, net decreased to $25.4 million in the second quarter of 2025 compared to $28.4 million in the second quarter of 2024.

Capitalized interest reduced interest expense by $2.1 million in the second quarter 2025 and $1.9 million in the second quarter 2024.

In addition, interest expense, net in the year-to-date period ended June 29, 2025 decreased to $48.4 million compared to $55.0 million in the year-to-date period ended June 30, 2024.

For the year-to-date periods ended June 29, 2025 and June 30, 2024, capitalized interest was $5.2 million and $5.9 million, respectively.

The decrease in interest expense, net in both the quarter and year-to-date periods was primarily due to the redemption of the 2025 Convertible Notes in the third quarter of 2024.

Our effective tax rate for the second quarter of 2025 was 22.0%, resulting in an income tax provision of $29.3 million, and our effective tax rate for the second quarter of 2024 was 22.8%, resulting in an income tax provision of $25.3 million.

The effective tax rate for the second quarter of 2025 includes discrete tax expense of $0.6 million.

The effective tax rate for the second quarter of 2024 includes discrete tax benefits of $1.6 million, which includes the recognition of a stranded deferred tax valuation allowance in accumulated other comprehensive loss due to the maturity of our interest rate swap.

Excluding the discrete tax items, the Company’s effective tax rate for the second quarter of 2025 and 2024 was 21.5% and 24.2%, respectively.

The decline in the effective tax rate was primarily due to deductions previously limited by net operating losses.

Our effective tax rate for the year-to-date period ended June 29, 2025 was 19.7%, resulting in an income tax provision of $50.3 million.

Our effective tax rate for the year-to-date period ended June 30, 2024 was 21.5%, resulting in an income tax provision of $42.2 million.

The effective tax rate for the year-to-date period ended June 29, 2025 includes discrete tax benefits of $4.5 million, inclusive of $4.1 million for share-based compensation.

The effective tax rate for the year-to-date period ended June 30, 2024 includes discrete tax benefits of $4.7 million, inclusive of $3.2 million for share-based compensation as well as the impact from the recognition of a stranded deferred tax valuation allowance in accumulated other comprehensive loss due to the maturity of our interest rate swap.

Excluding the discrete tax items, the Company’s effective tax rate for the sear-to-date periods ended June 29, 2025 and June 30, 2024 was 21.5% and 23.9%, respectively.

The decline in the effective tax rate was primarily due to deductions previously limited by net operating losses.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which includes permanent extensions of most expiring Tax Cuts and Jobs Act provisions and international tax changes.

Pursuant to ASC 740, Income Taxes, the effects of changes in tax law are recognized in the period of enactment.

The Company is still evaluating the potential impacts of the OBBBA;

however, the Company does not anticipate it will have a material impact on the Company’s financial statements.

Net income attributable to ATI was $100.7 million, or $0.70 per share, in the second quarter of 2025, compared to $81.9 million, or $0.58 per share, for the second quarter of 2024.

Net income attributable to ATI was $197.7 million, or $1.38 per share, in the year-to-date period ended June 29, 2025, compared to a net income attributable to ATI of $148.0 million, or $1.04 per share, for the prior year period.

Business Segment Results

Quarter Ended

March 30, 2025 March 31, 2024

Comparative financial information (in millions) for our segments and corporate operations for the quarters and year-to-date periods ended June 29, 2025 and June 30, 2024 is shown below.

Quarter Ended Year-to-date period ended

June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024

High Performance Materials & Components $ 608.8 $ 562.0 $ 1,192.9 $ 1,091.9

1 unchanged sentence

Total external sales $ 1,140.4 $ 1,095.3 $ 2,284.8 $ 2,138.2

Segment EBITDA:

Segment EBITDA (a) :

High Performance Materials & Components $ 144.0 $ 113.8 $ 275.0 $ 211.4

2 unchanged sentences

% of Sales 14.4 % 16.4 % 14.7 % 15.2 %

Total segment EBITDA $ 214.4 $ 169.4

Corporate, Closed Operations and Other (income) expense (b) :

Corporate expense $ 15.4 $ 19.4 $ 32.8 $ 36.5

Closed operations and other (income) expense (2.4) (0.7) — 0.6

Total Corporate, Closed Operations and Other expense $ 13.0 $ 18.7 $ 32.8 $ 37.1

Depreciation & Amortization:

3 unchanged sentences

Total depreciation & amortization $ 41.6 $ 37.9 $ 82.4 $ 73.9

(a) The Company’s Chief Operating Decision Maker (“CODM”) utilizes the Segment EBITDA as a key metric to evaluate segment performance.

Our measure of Segment EBITDA, which we use to analyze the performance and results of our business segments, excludes net interest expense, income taxes, depreciation and amortization, special charges, unallocated corporate expenses, closed operations and other income (expense).

See Note 11 for the reconciliation of Segment EBITDA to Income before taxes.

(b) Amounts exclude depreciation and amortization.

High Performance Materials & Components Segment

First quarter 2025 sales were $584.1 million, an increase of 10% compared to the first quarter 2024, primarily due to a 21% increase in sales to the aerospace & defense market.

The increase in aerospace & defense sales was primarily due to increases in commercial jet engine sales of 34%, partially offset by declines in commercial airframe and defense sales of 5% and 3%, respectively.

Overall aerospace & defense market sales were 92% of total HPMC sales in the first quarter of 2025.

Comparative information for our HPMC segment revenues (in millions) by market and their respective percentages of the segment’s overall revenues for the quarters ended March 30, 2025 and March 31, 2024 is as follows:

Second quarter 2025 sales were $608.8 million, an increase of $46.8 million, or 8%, compared to the second quarter 2024, which included a negative impact of $30 million due to the first quarter 2025 disposition of certain non-core operations in Europe.

Overall, the sales increase in second quarter 2025 compared to second quarter 2024 was primarily due to an $81.2 million, or 17%, increase in sales to the aerospace & defense market.

The increase in aerospace & defense sales was primarily driven by an $87.8 million, or 26%, increase in commercial jet engine sales, partially offset by a $16.4 million, or 18%, decrease in sales of commercial airframes, which included the impact of inventory destocking by current customers.

Sales were also lower to the medical and specialty energy markets.

Comparative information for our HPMC segment revenues (in millions) by market and their respective percentages of the segment’s overall revenues for the quarters ended June 29, 2025 and June 30, 2024 is as follows:

Quarter ended Quarter ended

Markets March 30, 2025 March 31, 2024

Markets June 29, 2025 June 30, 2024

Aerospace & Defense:

9 unchanged sentences

Construction/Mining 8.1 1 % 8.3 2 %

Convention Energy 1.7 1 % 3.5 1 %

Automotive 2.8 1 % 3.8 1 %

Convention Energy 1.4 — % 2.4 — %

Other 7.7 1 % 12.5 2 %

1 unchanged sentence

Total $ 608.8 100 % $ 562.0 100 %

International sales represented 46% of total segment sales for the first quarter 2025, compared to 55% in the prior year period.

Comparative information for the HPMC segment’s major product categories, based on their percentages of revenue for the quarters ended March 30, 2025 and March 31, 2024, is as follows:

International sales represented 43% of total segment sales for the second quarter 2025, compared to 52% in the prior year period.

Comparative information for the HPMC segment’s major product categories, based on their percentages of revenue for the quarters ended June 29, 2025 and June 30, 2024, is as follows:

Quarter ended

March 30, 2025 March 31, 2024

June 29, 2025 June 30, 2024

Nickel-based alloys and specialty alloys 44 % 39 %

1 unchanged sentence

Titanium and titanium-based alloys 17 % 24 %

Total 100 % 100 %

Segment EBITDA in the second quarter 2025 was $144.0 million, or 23.7% of total sales, compared to $113.8 million, or 20.2% of total sales, for the second quarter 2024.

The increase in segment EBITDA, as a percentage of sales, was primarily due to higher sales and favorable pricing of nickel-based and specialty alloys.

Results in the second quarter of 2025 and 2024 included benefits of $4.4 million and $3.5 million, respectively, from the recognition of previously deferred employee retention tax credits.

Sales for the year-to-date period ended June 29, 2025 were $1,192.9 million , an increase of $101.0 million, or 9%, compared to the year-to-date period ended June 30, 2024 , which included a negative impact of $67 million due to the first quarter 2025 disposition of certain non-core operations in Europe .

Sales to the aerospace & defense market increased $176.1 million, or 19% , primarily due to higher commercial jet engine sales of $188.2 million, or 30%, partially offset by a decline in sales of commercial airframes of $20.3 million, or 11%, which included the impact of inventory destocking by current customers .

Sales were also lower to the medical, industrial, and specialty energy markets.

Comparative information for our HPMC segment revenues (in millions) by market and their respective percentages of the segment’s overall revenues for the year-to-date periods ended June 29, 2025 and June 30, 2024 is as follows:

Year-to-date period ended Year-to-date period ended

Markets June 29, 2025 June 30, 2024

Aerospace & Defense:

Jet Engines- Commercial $ 816.9 69 % $ 628.7 58 %

Airframes- Commercial 159.1 13 % 179.4 16 %

Defense 120.2 10 % 112.0 10 %

Total Aerospace & Defense 1,096.2 92 % 920.1 84 %

Medical 31.2 3 % 68.9 6 %

Specialty Energy 27.1 2 % 40.7 4 %

Electronics — — % 3.0 — %

Other Core Markets 58.3 5 % 112.6 10 %

Core End Markets 1,154.5 97 % 1,032.7 94 %

Construction/Mining 15.2 1 % 15.0 1 %

Automotive 4.2 1 % 8.8 1 %

Convention Energy 3.1 — % 5.9 1 %

Other 15.9 1 % 29.5 3 %

Industrial Markets 38.4 3 % 59.2 6 %

Total $ 1,192.9 100 % $ 1,091.9 100 %

International sales represented 44% of total segment sales for the first half of 2025.

Comparative information for the HPMC segment’s major product categories, based on their percentages of revenue for the year-to-date periods ended June 29, 2025 and June 30, 2024, is as follows:

Year-to-date period ended

June 29, 2025 June 30, 2024

Nickel-based alloys and specialty alloys 43 % 39 %

Precision forgings, castings and components 39 % 36 %

Titanium and titanium-based alloys 18 % 24 %

Precision rolled strip products — % 1 %

Total 100 % 100 %

Segment EBITDA in the first quarter 2025 was $131.0 million, or 22.4% of total sales, compared to $97.6 million, or 18.4% of total sales, for the first quarter 2024.

The increase in segment EBITDA, as a percentage of sales, was primarily due to higher sales and improved sales mix as well as favorable pricing.

Segment EBITDA in the first half of 2025 increased to $275.0 million, or 23.1% of total sales, compared to $211.4 million, or 19.4% of total sales, for the first half of 2024.

The increase in segment EBITDA, as a percentage of sales, was primarily due to higher sales and favorable pricing of nickel-based and specialty alloys.

Results in the first half of 2025 and 2024 included benefits of $4.4 million and $3.5 million, respectively, from the recognition of previously deferred employee retention tax credits.

The Company’s investments to increase capacity and focus on continuous improvement are driving improvements to our work-flow processes and operations.

HPMC results for first quarter 2025 reflected year-over-year improved operating leverage and pricing as we continued to experience increasing demand from the aerospace & defense market.

Although macro risks and uncertainty increased during the latter part of the first quarter, we believe our capabilities, strong backlog and long-term agreements ( “ LTAs ” ) with aerospace market OEMs for our specialty materials, including powders, parts and components, position the HPMC segment for profitable growth for the next several years.

HPMC results for 2025 reflected year-over-year improved operating leverage and pricing as we continued to experience increasing demand from the aerospace & defense market, especially for commercial jet engines.

Although macro risks and uncertainty continue, we believe our capabilities, strong backlog and long-term agreements (“LTAs”) with aerospace market OEMs for our specialty materials, including powders, parts and components, position the HPMC segment for profitable growth for the next several years.

ATI has prepared for the potential risks of tariffs for many years, and we have taken actions to minimize the impact of these tariffs in our contracts and supply chains.

1 unchanged sentence

Advanced Alloys & Solutions Segment

First quarter 2025 sales were $560.3 million, an increase of 9% compared to the first quarter 2024, primarily due a 25% increase in sales of aerospace & defense products and a 21% increase in sales to the conventional energy market.

These increases were partially offset by a 24% decrease in sales to the electronics market.

Comparative information regarding our AA&S segment revenues (in millions) by market and their respective percentages of the segment’s overall revenues for the quarters ended March 30, 2025 and March 31, 2024 is shown below.

Second quarter 2025 sales of $531.6 million were relatively flat compared to the second quarter 2024, decreasing $1.7 million.

Sales to the aerospace & defense market declined by $3.3 million, or 2%, as stronger demand for commercial jet engines was offset by a decline in sales of defense related applications.

Sales to our other core markets also declined by $5.6 million, or 5%, primarily due to lower demand in the specialty energy and medical markets.

These decreases were partially offset by an increase of $7.2 million, or 4%, in the industrial markets, primarily due to higher sales to the conventional energy market.

Quarter ended Quarter ended

Markets March 30, 2025 March 31, 2024

Markets June 29, 2025 June 30, 2024

Aerospace & Defense:

14 unchanged sentences

Total $ 531.6 100 % $ 533.3 100 %

International sales represented 42% of total segment sales for the first quarter of 2025, compared to 36% in the prior year’s first quarter.

Comparative information regarding the AA&S segment’s major product categories, based on their percentages of revenue for the quarters ended March 30, 2025 and March 31, 2024, is presented in the following table.

International sales represented 44% of total segment sales for the second quarter of 2025, compared to 31% in the prior year’s second quarter.

Comparative information regarding the AA&S segment’s major product categories, based on their percentages of revenue for the quarters ended June 29, 2025 and June 30, 2024, is presented in the following table.

HRPF conversion service sales are excluded from this presentation.

Quarter ended

March 30, 2025 March 31, 2024

June 29, 2025 June 30, 2024

Nickel-based alloys and specialty alloys 53 % 49 %

3 unchanged sentences

Total 100 % 100 %

Segment EBITDA was $83.4 million, or 14.9% of sales, for the first quarter 2025, compared to segment EBITDA of $71.8 million, or 14.0% of sales, for the first quarter 2024.

The margin increase compared to the prior year was primarily due to higher sales and a favorable sales mix on higher demand for nickel-based alloys.

First quarter 2025 also included a benefit of $2.6 million due to a customer recovery for previously reserved accounts receivable.

While our margin declined sequentially from the fourth quarter 2024, that quarter included a net benefit of $4.9 million due to the Advanced Manufacturing Production Credit and a customer commercial negotiation.

We continue to expect to see margin expansion through improved sales mix and improved operating performance, which was demonstrated by our year-over-year margin expansion.

Segment EBITDA was $76.7 million, or 14.4% of sales, for the second quarter 2025, compared to segment EBITDA of $87.5 million, or 16.4% of sales, for the second quarter 2024.

The margin decrease compared to the prior year was primarily due to sales mix changes and unfavorable manufacturing cost absorption.

Further, s econd quarter 2025 included a $2.6 million benefit from the recognition of previously deferred employee retention tax credits compared to $5.1 million of such benefits in the second quarter 2024.

Sales for the first half of 2025 were $1,091.9 million, an increase of $45.6 million or 4% compared to the first half of 2024.

Sales to the aerospace & defense market increased by $40.5 million, or 11%, while sales to industrial markets increased $19.4

million, or 5%, driven by demand in the conventional energy market.

These increases were partially offset by a decline in sales to our other core markets of $14.3 million, or 6%, primarily due to the electronics and specialty energy market.

Comparative information regarding our AA&S segment revenues (in millions) by market and their respective percentages of the segment’s overall revenues for the year-to-date periods ended June 29, 2025 and June 30, 2024 is shown below.

Year-to-date period ended Year-to-date period ended

Markets June 29, 2025 June 30, 2024

Aerospace & Defense:

Jet Engines- Commercial $ 52.3 5 % $ 35.3 3 %

Airframes- Commercial 241.9 22 % 221.5 21 %

Defense 125.8 12 % 122.7 12 %

Total Aerospace & Defense 420.0 39 % 379.5 36 %

Specialty Energy 86.9 8 % 92.0 9 %

Electronics 83.3 8 % 90.7 9 %

Medical 50.1 5 % 51.9 5 %

Other Core Markets 220.3 20 % 234.6 23 %

Core End Markets 640.3 59 % 614.1 59 %

Convention Energy 211.6 19 % 162.7 16 %

Automotive 121.2 11 % 118.0 11 %

Construction/Mining 51.0 5 % 56.4 5 %

Other 67.8 6 % 95.1 9 %

Industrial Markets 451.6 41 % 432.2 41 %

Total $ 1,091.9 100 % $ 1,046.3 100 %

International sales represented 43% of total segment sales for the first half of 2025, compared to 33% the prior year.

HRPF conversion service sales are excluded from this presentation.

Year-to-date period ended

June 29, 2025 June 30, 2024

Nickel-based alloys and specialty alloys 54 % 50 %

Zirconium and related alloys 18 % 19 %

Titanium and titanium-based alloys 17 % 13 %

Precision rolled strip products 11 % 18 %

Total 100 % 100 %

Segment EBITDA was $160.1 million, or 14.7% of sales, in the first half of 2025, compared to segment EBITDA of $159.3 million, or 15.2% of sales, for the second quarter 2024.

The margin decrease compared to the prior year was primarily due to sales mix changes, unfavorable manufacturing cost absorption and higher operating costs, which offset the benefit of higher sales volumes.

In addition, r esults in the first half of 2025 include a benefit of $2.8 million from the recognition of previously deferred employee retention tax credits and a benefit of $2.6 million due to a customer recovery for previously reserved accounts receivable.

The first half of 2024 includes a benefit of $5.1 million from the recognition of previously deferred employee retention tax credits.

While our margins for the AA&S segment declined on a year-over-year basis, we expect to see margin expansion in the second half of 2025 through improved sales mix and improved operating performance.

We are also closely monitoring macro risks and uncertainty, and have taken actions to minimize the impact of tariffs in our contracts and supply chains.

Corporate Items

Corporate expenses for the first quarter of 2025 were $17.4 million, compared to $17.1 million for the first quarter 2024.

Closed operations and other expense for the first quarter 2025 was $2.4 million, compared to $1.3 million for the first quarter 2024.

Interest expense, net of interest income, in the first quarter 2025 decreased to $23.0 million, compared to $26.6 million for the first quarter 2024, due to the conversion of the 2025 Convertible Notes during the third quarter 2024.

Capitalized interest reduced interest expense by $3.1 million in the first quarter 2025 and $4.0 million in the first quarter 2024.

Restructuring and other charges of $5.6 million for the first quarter of 2025 include $4.0 million of start-up and transaction related costs, and $1.6 million for losses on sale of accounts receivables .

Restructuring and other charges of $3.1 million for the first quarter of 2024 include $2.9 million of start-up costs and $0.2 million of restructuring costs.

Start up and transaction related costs are included within cost of sales in the consolidated statements of operations.

These restructuring and other charges were excluded from segment EBITDA.

Cash payments associated with prior restructuring programs were $1.7 million in the first quarter of 2025.

Of the $6.8 million of remaining reserves associated with these restructuring actions as of March 30, 2025, all are expected to be paid within the next year.

Corporate expenses for the second quarter of 2025 were $15.4 million, compared to $19.4 million for the second quarter 2024.

For the year-to-date period ended June 29, 2025, corporate expenses were $32.8 million, compared to $36.5 million for the year-to-date period ended June 30, 2024.

The decrease in corporate expenses for the quarter and year-to-date periods ended June 29, 2025 was primarily due to lower incentive compensation costs.

Closed operations and other income/expense for the second quarter 2025 was income of $2.4 million, compared to income of $0.7 million for the second quarter 2024.

For the year-to-date period ended June 29, 2025, closed operations and other income/expense offset, compared to expense of $0.6 million for the year-to-date period ended June 30, 2024.

Closed operations and other income/expense for the quarter and year-to-date periods ended June 29, 2025 benefited from foreign exchange gains and a favorable bankruptcy settlement related to an insurance claim.

Managed Working Capital

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Our strategies include, but are not limited to, taking advantage of favorable customer and supplier payment terms, participating in supplier financing programs, accounts receivable factoring arrangements and other customer financing programs, managing the timing of purchases of raw materials, and leveling manufacturing process throughput and shipping to limit periodic increases in Managed working capital.

At March 30, 2025, Managed working capital increased as a percentage of annualized sales to 35.9% compared to 30.9% at December 29, 2024.

The increase in Managed working capital as a percentage of annualized sales was primarily due to seasonal inventory builds and the timing of shipments and vendor payments in the quarter.

Days sales outstanding, which measures actual collection timing for accounts receivable, worsened by 21% as of March 30, 2025 compared to year end 2024.

Gross inventory turns, which measures how many times we turn over our inventory relative to cost of sales in a year, worsened by 4% as of March 30, 2025 compared to year end 2024.

The computations of Managed working capital at March 30, 2025 and December 29, 2024, reconciled to the financial statement line items as computed under U.S.

At June 29, 2025, Managed working capital increased as a percentage of annualized sales to 36.5% compared to 30.9% at December 29, 2024.

The increase in Managed working capital as a percentage of annualized sales was primarily due to seasonal inventory builds and the timing of shipments, which impacts days sales outstanding, and vendor payments in the quarter.

Days sales outstanding, which measures actual collection timing for accounts receivable, worsened by 14% as of June 29, 2025 compared to year end 2024.

Gross inventory turns, which measures how many times we turn over our inventory relative to cost of sales in a year, worsened by 8% as of June 29, 2025 compared to year end 2024.

The computations of Managed working capital at June 29, 2025 and December 29, 2024, reconciled to the financial statement line items as computed under U.S.

GAAP, were as follows.

The December 29, 2024 amounts include management working capital balances that are classified as held for sale.

March 30, December 29,

June 29, December 29,

(In millions) 2025 2024

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Managed working capital as a % of annualized sales 36.5 % 30.9 %

Our effective tax rate was 17.3%, resulting in an income tax provision of $21.0 million for the quarter ended March 30, 2025.

Our effective tax rate was 19.8%, resulting in an income tax provision of $16.9 million for the quarter ended March 31, 2024.

The effective tax rate for the quarterly periods ended March 30, 2025 and March 31, 2024 included discrete tax benefits of $5.1 million and $3.0 million, respectively, primarily for share-based compensation in.

Excluding discrete tax benefits, the Company’s operating tax rates for the quarters ended March 30, 2025 and March 31, 2024 were 21.5% and 23.3%, respectively.

Liquidity and Financial Condition

We have an Asset Based Lending (ABL) Credit Facility, which is collateralized by the accounts receivable and inventory of our operations.

The ABL facility also provides us with the option of including certain machinery and equipment as additional collateral for purposes of determining availability under the facility.

The ABL facility, which matures in September 2027, includes a $600 million revolving credit facility, a letter of credit sub-facility of up to $200 million, a $200 million term loan (Term Loan), and a swing loan facility of up to $60 million.

As of March 30, 2025, there were no outstanding borrowings under the revolving portion of the ABL facility, and $30.5 million was utilized to support the issuance of letters of credit.

At March 30, 2025, we had $476 million of cash and cash equivalents, and available additional liquidity under the ABL facility of approximately $537 million.

Our next significant debt maturity are the 6.95% Debentures due 2025 issued by our wholly owned subsidiary, Allegheny Ludlum LLC.s in the fourth quarter of this year.

On June 13, 2025, we amended our Asset Based Lending (ABL) Credit Facility, which is collateralized by the accounts receivable and inventory of our operations.

As amended, the ABL facility also provides us with the option of including certain machinery and equipment as additional collateral for purposes of determining availability under the facility.

This amendment extended the ABL facility through June 2030.

The amended ABL includes a $600 million revolving credit facility, a letter of credit sub-facility of up to $200 million, a $200 million term loan (Term Loan), and a swing loan facility of up to $60 million.

Additionally, the amendment gives the Company the ability, through June 13, 2026 and as long as no default or event of default has occurred and is continuing, to borrow an additional term loan of up to $100 million in total, using one or two draws (the Delayed-Draw Term Loan).

As of June 29, 2025, there were no outstanding borrowings under the revolving portion of the ABL facility, and $29.4 million was utilized to support the issuance of letters of credit.

At June 29, 2025, we had $319.6 million of cash and cash equivalents, available additional liquidity under the ABL facility of approximately $570 million, and up to $100 million of availability under the Delayed-Draw Term Loan.

Our next significant debt maturity is in the fourth quarter of this year and relates to the 6.95% Debentures due 2025 issued by our wholly owned subsidiary, Allegheny Ludlum LLC.

Periodically, our Board of Directors authorizes the repurchase of ATI common stock (the “Share Repurchase Program”), the most recent of which was $700 million that was announced in September 2024.

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Open market repurchases are structured to occur within the pricing and volume requirements of SEC Rule 10b-18.

In the quarter ended March 30, 2025, ATI used $70.0 million to repurchase 1.2 million of its common stock under the Share Repurchase Program.

In the quarter ended March 31, 2024, ATI used $150.0 million to repurchase 3.4 million shares of its common stock under the Share Repurchase Program.

At March 30, 2025, ATI has utilized $180 million of the $700 million currently authorized under the Share Repurchase Program.

In the quarter and year-to-date period ended June 29, 2025, ATI used $250 million and $320 million, respectively, to repurchase 3.2 million and 4.4 million, respectively, of its common stock under the Share Repurchase Program.

At June 29, 2025, the Company has utilized $430 million of the $700 million currently authorized under the Share Repurchase Program.

In the year-to-date period ended June 30, 2024, ATI used $150.0 million to repurchase 3.4 million shares of its common stock under the Share Repurchase Program.

We believe that internally generated funds, current cash on hand and available borrowings under the ABL facility will be adequate to meet our liquidity needs.

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We define net debt as the total principal balance of our outstanding indebtedness excluding deferred financing costs, net of cash, at the balance sheet date.

See above for our definition of Adjusted EBITDA, which is a non-GAAP measures and is not intended to represent, and should not be considered more meaningful than, or as an alternative to, a measure of operating performance as determined in accordance with U.S.

See above for our definition of Adjusted EBITDA, which is a non-GAAP measure and is not intended to represent, and should not be considered more meaningful than, or as an

alternative to, a measure of operating performance as determined in accordance with U.S.

Our ratio of net debt to Adjusted EBITDA (Adjusted EBITDA Leverage Ratio) measures net debt at the balance sheet date to Adjusted EBITDA as calculated on the trailing twelve-month period from this balance sheet date.

Our Total Debt to Adjusted EBITDA Leverage ratio improved in the first quarter of 2025 compared to year end 2024, while our Net Debt to Adjusted EBITDA Leverage ratio worsened in the first quarter of 2025 compared to year end 2024, largely due to a decreased cash balance.

Our Total Debt to Adjusted EBITDA Leverage ratio improved in the second quarter of 2025 compared to year end 2024, while our Net Debt to Adjusted EBITDA Leverage ratio worsened in the second quarter of 2025 compared to year end 2024, largely due to a lower cash balance.

The reconciliations of our Adjusted EBITDA Leverage Ratios to the balance sheet and income statement amounts as reported under U.S.

GAAP are as follows:

Trailing 12-month period ended Year ended

March 30, 2025 December 29, 2024

Quarter ended Trailing 12-month period ended Year ended

June 29, 2025 June 30, 2024 June 29, 2025 December 29, 2024

Net income attributable to ATI $ 100.7 $ 81.9 $ 417.5 $ 367.8

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Net Debt to Adjusted EBITDA 1.98 1.63

Cash used in operations was $92.5 million in the first quarter of 2025, compared to cash used in operations of $98.8 million in the first quarter of 2024.

Cash provided by operations was $69.0 million in the year-to-date period ended June 29, 2025, compared to $2.3 million in the year-to-date period ended June 30, 2024.

Both periods reflect higher accounts receivable and higher inventory balances due to increased operating levels as well as seasonal inventory builds.

Working capital balances, and consequently cash from operations, can fluctuate throughout any operating period based upon the timing of receipts from customers and payments to vendors.

Other significant first quarter 2025 and 2024 operating cash flow items included payment of the annual cash incentive compensation.

Cash used in investing activities was $50.6 million in the first quarter of 2025, which included $53.3 million for capital expenditures.

Cash used in investing activities was $63.8 million in the first quarter of 2024, which included $65.8 million for capital expenditures.

Other significant first half 2025 and 2024 operating cash flow items included payment of the annual cash incentive compensation.

Cash used in investing activities was $119.2 million in the in the year-to-date period ended June 29, 2025, which included $125.4 million for capital expenditures.

Cash used in investing activities was $117.1 million in the year-to-date period ended June 30, 2024, reflecting $126.0 million in capital expenditures primarily to support various growth projects in our aerospace & defense and other core markets.

We expect to fund our capital expenditures with cash on hand and cash flow generated from our operations and, if needed, borrowings under the ABL facility.

Cash used in financing activities was $107.5 million in the first quarter of 2025, which included $70.0 million to repurchase 1.2 million shares of ATI stock.

Cash used in financing activities was $186.9 million in the first quarter of 2024, which included $150.0 million to repurchase 3.4 million shares of ATI stock.

All share repurchases were made pursuant to the Share Repurchase Program authorized by our Board of Directors.

At March 30, 2025, cash and cash equivalents on hand totaled $475.8 million, a decrease of $245.4 million from year end 2024.

Cash and cash equivalents held by our foreign subsidiaries was $198.8 million at March 30, 2025, of which $71.3 million was held by the STAL joint venture.

Cash used in financing activities was $365.8 million in the year-to-date period ended June 29, 2025, which included $320.0 million to repurchase 4.4 million shares of ATI stock under our Share Repurchase Program.

For the year-to-date period ended June 30, 2024, cash used in financing activities was $193.9 million, which included $150.0 million to repurchase 3.4 million shares of ATI stock under our Share Repurchase Program.

At June 29, 2025, cash and cash equivalents on hand totaled $319.6 million, a decrease of $401.6 million from year end 2024.

Cash and cash equivalents held by our foreign subsidiaries was $146.0 million at June 29, 2025, of which $86.7 million was held by the STAL joint venture.

Reconciliation of Adjusted EBITDA to Net Income

ATI utilizes Adjusted EBITDA, which is a non-GAAP financial measure, to assist in assessing operating performance on a consistent basis across multiple reporting periods by removing the impact of special items, which can vary from period to period, that management does not believe are directly reflective of the Company’s core operations.

The Company defines special items as significant non-recurring or non-operational charges or credits, including restructuring charges or credits, gains or losses on the sale of accounts receivable, strike related costs, goodwill and long-lived asset impairments, debt extinguishment charges, pension remeasurement gains and losses, other postretirement/pension curtailment and settlement gains and losses, and gains or losses on sales of businesses.

We define Adjusted EBITDA as net income, excluding net interest expense, income taxes, depreciation and amortization, and special items.

Management believes presenting this non-GAAP financial measure is useful to investors because it (1) provides investors with meaningful supplemental information regarding financial and operating performance by excluding certain items management believes do not directly impact the Company’s core operations, (2) permits investors to view performance using the same metrics that management uses to forecast, evaluate performance, and make operating and strategic decisions, and (3) provides additional information useful to investors on a period-to-period consistent basis that are commonly used to analyze companies’ operating performance.

Management believes that consideration of Adjusted EBITDA, together with Net Income, and the corresponding reconciliation, provides investors with additional understanding of the Company’s performance and trends that would be absent such disclosures.

Non-GAAP financial measures should be viewed in addition to, and not superior to or as an alternative for, the Company’s reported results prepared in accordance with GAAP.

The following table provides the reconciliation of net income attributable to ATI to the Adjusted EBITDA non-GAAP financial measures:

Quarter Ended Year-to-date period ended

June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024

Net income attributable to ATI $ 100.7 $ 81.9 $ 197.7 $ 148.0

Net income attributable to noncontrolling interests 3.3 3.7 6.8 6.0

Net income 104.0 85.6 204.5 154.0

(+) Depreciation and amortization 41.6 37.9 82.4 73.9

(+) Interest expense 25.4 28.4 48.4 55.0

(+) Income tax provision 29.3 25.3 50.3 42.2

EBITDA $ 200.3 $ 177.2 $ 385.6 $ 325.1

Adjustments for special items, pre-tax:

(+) Restructuring and other charges (a)

7.4 5.4 13.0 8.5

(+) Loss on sales of businesses (b)

Adjusted EBITDA $ 207.7 $ 182.6 $ 402.3 $ 333.6

Adjusted EBITDA as a % of sales 18.2 % 16.7 % 17.6 % 15.6 %

(a) Restructuring and other charges of $ 7.4 million for the second quarter of 2025 include $ 7.1 million of start-up and transaction related costs, which are included within cost of sales on the consolidated statements of operations, and $ 1.6 million for losses on sale of accounts receivable, which are included in selling and administrative expenses on the consolidated statement of operations .

These charges were partially offset by credits of $ 1.3 million due to a reduction in severance-related reserves for a previous restructuring in the AA&S segment.

Restructuring and other charges of $ 5.4 million for the second quarter of 2024 include $ 5.5 million of inventory write-downs related to our European restructuring and $ 1.8 million of start-up costs, both of which are included within cost of sales on the consolidated statements of operations.

These charges were partially offset by credits of $ 1.9 million primarily due to a reduction in severance-related reserves.

Restructuring and other charges of $ 13.0 million for the year-to-date period ended June 29, 2025 include $ 11.1 million of start-up and transaction related costs , which are included within cost of sales on the consolidated statements of operations, and $ 3.2 million for losses on sale of accounts receivable, which are included in selling and administrative expenses on the consolidated statement of operations .

These charges were partially offset by credits of $ 1.3 million due to a reduction in severance-related reserves for a previous restructuring in the AA&S segment.

Restructuring and other charges of $ 8.5 million for the year-to-date period ended June 30, 2024 include $ 5.5

million of inventory write-downs related to our European restructuring and $ 4.7 million of start-up costs, both of which are included within cost of sales on the consolidated statements of operations.

These charges were partially offset by credits of 1.7 million primarily due to a reduction in severance-related reserves.

(b) Loss on sales of businesses of $3.7 million for the year-to-date period ended June 29, 2025 includes the sale of certain non-core European operations from the HPMC segment.

Critical Accounting Policies

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis