On August 6, 2024, ATI Inc (ATI, Financial) released its 8-K filing for the second quarter of 2024. ATI Inc supplies specialty metals to various end markets, including aerospace and defense, oil and gas, automotive, and electrical energy. The company's operating segments include High-Performance Materials and Components (HPMC) and Advanced Alloys and Solutions (AA&S), with the majority of revenue coming from the HPMC segment.
Performance Overview
ATI Inc reported Q2 2024 sales of $1.10 billion, a 5% increase from Q1 2024. Net income attributable to ATI was $81.9 million, or $0.58 per share, up 26% from Q1 2024. However, these results fell short of analyst estimates, which projected earnings per share (EPS) of $0.66 and revenue of $1.13 billion.
The aerospace and defense sector was a significant driver of growth, representing 62% of Q2 2024 sales, up from 59% in Q1 2024. Adjusted net income attributable to ATI was $86.0 million, or $0.60 per share, and adjusted EBITDA was $182.6 million, or 16.7% of sales.
Segment Performance
High-Performance Materials and Components (HPMC):
| Q2 2024 | Q1 2024 | Q2 2023 | |
|---|---|---|---|
| Sales | $562.0 million | $529.9 million | $527.1 million |
| Segment EBITDA | $113.8 million | $97.6 million | $109.7 million |
| % of Sales | 20.2% | 18.4% | 20.8% |
HPMC's sales increased by 6% compared to Q1 2024, primarily due to an 8% rise in aerospace and defense sales. Segment EBITDA was $113.8 million, or 20.2% of sales, driven by higher-margin commercial aerospace platforms.
Advanced Alloys and Solutions (AA&S):
| Q2 2024 | Q1 2024 | Q2 2023 | |
|---|---|---|---|
| Sales | $533.3 million | $513.0 million | $518.9 million |
| Segment EBITDA | $87.5 million | $71.8 million | $74.1 million |
| % of Sales | 16.4% | 14.0% | 14.3% |
AA&S sales increased by 4% compared to Q1 2024, driven by higher aerospace and defense and specialty energy sales. Segment EBITDA was $87.5 million, or 16.4% of sales, benefiting from improved sales mix and increased titanium deliveries.
Financial Metrics and Analysis
ATI Inc's gross profit for Q2 2024 was $227.4 million, up from $197.4 million in Q1 2024. Operating income stood at $142.6 million, compared to $115.2 million in the previous quarter. The company reported a cash flow from operating activities of $101 million for Q2 2024.
Key financial metrics include:
- Adjusted EBITDA: $182.6 million, or 16.7% of sales
- Net income attributable to ATI: $81.9 million, or $0.58 per share
- Cash on hand: $426 million
- Available liquidity: $556 million
ATI's strong 2024 performance continued in the second quarter," said Kimberly A. Fields, President and CEO. "Growth in aerospace & defense accelerated in the second quarter, with sales increasing sequentially by 11%. This is due in part to the diversification in our jet engine and airframe customer bases. ATI is on every major commercial platform flying today," she said.
Conclusion
ATI Inc's Q2 2024 results highlight robust performance in the aerospace and defense sectors, driving sequential growth. However, the company missed analyst EPS estimates, which may raise concerns among investors. The company's strong cash position and liquidity provide a solid foundation for future growth, particularly in high-margin segments like aerospace and defense.
For more detailed insights and analysis, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from ATI Inc for further details.
