ATI Inc. (ATI) Earnings Call Transcript

Good afternoon, everybody. and welcome to ATI's 2026 Investor Day. I'm Rob Rengel, Vice President of Investor Relations. Our goal for today is simple, show you who ATI is, how we've transformed the company and most importantly, how we expect to accelerate profitable growth going forward. A couple of quick reminders before we get started, we completed our safety briefing in the room. For any of those of you online, please be aware of your local safety protocols. I can get to the supplemental presentation that accompanies our event today provides additional color and details on our results, capabilities and outlook. They are also on our website. As a reminder, all forward-looking statements are subject to certain risks and caveats. These are noted in our most recent 10-Q and filed with the SEC. ATI does not authorize recording transcription, reproduction, alteration or generative AI analysis or manipulation of our content or materials without our prior express written consent. Now on to our agenda. Our CEO, Kim Fields, will start off. So kick goes off with who we are today, and he'll talk about the transformation that we've undergone and completed. That will be followed by acceleration, our next phase of profitable growth. She will also include comments on our new targets that we're announcing today. Marty Pike, our Chief Commercial Officer, will then tell you about our growth drivers, our core markets and our commercial strategy. And then our CFO, Rob Foster, will translate those opportunities into our financial framework. He'll close with detail on our new targets. At the end of the day, we'll have a live Q&A session. We'll take questions from the audience in the room. And we also allow you to submit questions online, just click on the link in your browser. Now let's set the stage for our Board Chair, President and CEO, Kim Fields.

[Presentation] Welcome to ATI's Investor Day. As you saw in the video, our customers are pushing beyond the boundaries of what's possible. And ATI is proud to be their partner at providing the materials and solutions that help their products perform in the most demanding conditions. As many of you here today saw firsthand during the tours of the Bakers campus, our specialized processes and advanced technologies come together to form materials that operate in these challenging environments. Today, I'm going to share with you how we've transformed our operating model and transformed our company to create a strong foundation for growth. And now using our differentiated capabilities, we are accelerating our growth. I'm Kim Fields, ATI's Board Chair, President and CEO. I'm an engineer by training. I've spent my career in operations. Since joining ATI, I've had the pleasure of leading both business segments, serving as the CEO and now leading the company -- I'm sorry, serving as a COO and now leading the company as the CEO. And that's given me a first-hand look behind the scenes at the people and capabilities behind ATI's financial results. I know there's a lot of new folks that are joining us here today. And so let's talk about -- let me share with you some examples of ATI at work. Heat, pressure, speed, thrust and corrosion. These are the demanding conditions that our customers are designing for. And this is where ATI's materials and processes make a difference. We developed advanced alloys and transform them through processes such as isothermal forging, heat treating and machining into critical components. Like you see in this picture, the CH 53k hub or the Black Hawk hub, we are taking those materials and putting them into the most demanding situations. Every time each one of you fly you are experiencing ATI's products at work. When you're on that plane, many of you flew here to join us today, you're on that plane, you hear the engines spool up. You feel the thrust of those engines as you're going down the runway, pushing you back into your seats. That's ATI's disks in the hot section of the engine, rotating at 10,000 RPM and operating in temperatures at 1,200 degrees Fahrenheit and higher. Those engines lift that plane up off the ground, flight after flight, thousands of times between shop visits, performing every time exactly as it was designed to do. And when that plane comes back to the airport and lands and the landing gear hits the ground, it's taking the force of that impact carrying the weight of that plane, time after time, all the while keeping the structure as light as possible to make the fuel efficiency improve. That's ATI's premium quality titanium that makes that landing possible. Turning to another market that requires performance in demanding environments is our defense business. In defense, naval propulsion is our largest market, but we support all aspects of the defense market, in the air on land and at sea. We've got applications in military aircraft, naval propulsion, missile systems and ground vehicles. And across all of these -- all these markets ATI's materials are used when strength at high temperatures is critical. And we cover a full range of temperatures. I think many of you, I heard on the tour that my team shared with you -- you start with titanium in these ranges. And up to 1,000 degrees, you'll see those titanium materials performing extraordinary feeds. And as you move above 1,000 degrees, you get into those advanced nickel super alloys. Then you get above 1,800 degrees Fahrenheit and those are the most extreme environments. That's where our niobium alloys that contain hafnium, operate and perform. These are used in things like missiles, exhaust nozzle applications are great examples -- our materials help our customers go higher, go faster and hotter with strength and performance when their missions demanded. I just mentioned hafnium. It's also used in a multitude of applications. It's used as an alloy addition, but it's also an important material in our specialty energy markets. Zirconium and hafnium occurred together in nature naturally, which makes separating and purifying them very complex. ATI's specialized process expertise to turn them into high purity materials and very different applications. Nuclear power is a great example of this expertise. Zirconium is used in fuel systems, such as cladding because it absorbs very few new trends, allowing more of those new trends to sustain that nuclear reaction. Hafnium on the other hand, is almost the opposite. Because it absorbs neutron so it's used in control applications. One helps sustain reactions, the other helps control it. ATI makes both of those. Gas turbines is another great example of looking at the interconnectedness of our businesses and the broad portfolio of products that we provide. In the hot section, the disks operate very similarly to a jet engine hot section disc and uses our nickel super alloys. Our forging business produces components for the fan that draws in air and use to power the generator. Our nickel sheet products are used in the turbine housing and hafnium is used in the alloy used to cast the blades. Now I just mentioned castings. So there's one important distinction that I'd like to make. ATI does not make castings. We make the material that goes into them. Across all of these markets, very few companies can produce these demanding materials consistently, reliably and at scale. That's where ATI excels. But to understand how ATI built this portfolio. Let's go back to 2021. At the height of the pandemic, ATI was a $2.8 billion company 1% of our revenues came from Aerospace and Defense. And our portfolio was broad. It included a lot of products in commodity products and other markets. We are trying to be all things to all people. By using 80/20, we set a clear goal to focus ATI on the differentiated products and markets where we create the most value for our customers and attractive returns for our shareholders. We first applied this discipline to the portfolio and exited commoditized products like our standard steel, sheet products. Those -- that freed up resources that we were then able to redeploy and focus on growing products that have the highest value in the aerospace and defense markets. And that's where our technical capabilities and reliable supply are valued the highest. Today, aerospace and defense is 70% of our revenue, up 1.5x from 2021. And -- we deliberately shifted where we compete and how we use our assets. We also made structural improvements to the business. We took costs out -- we streamlined our manufacturing footprint. We reduced layers in our organization and improved our operating model. We applied a 30% internal hurdle rate and invested in finishing capabilities to allow us to continue to grow in those specialized advanced materials for aerospace and defense. We also invested in relationships with customers. improving service, deepening our relationships, winning long-term agreements and growing our position on key programs. Today, ATI participates across every major airframe and engine program. I'll say that again. We participate on every airframe and engine program. And as air travel recovered, ATI was better positioned to benefit from that growth. And the results are clear. Over the past 5 years, our EBITDA has grown over 300% and margins have expanded by more than 1,000 basis points. Total shareholder return has exceeded 1,000% since 2021, more than twice our A&D peer benchmarks, and we delivered ATI is leaner, more focused, a more differentiated company, a leading aerospace and defense supplier. We have built a strong foundation for growth and attractive returns and now it's time for Act II, acceleration. Today, we're announcing 2 new investments in differentiated core products. Combined with our previous announcements, this creates a path to nearly $1 billion of incremental annual revenue by the end of this decade. Rob is going to share more details when he presents the financial frameworks. But let's talk about the projects first. The first investment will double our nickel powder production capacity at the Bakers facility. All of you saw those tremendous capabilities that's where these investments are going. You probably saw some of the work going on while you were there. We expect this expansion to be ramping in late 2028. This is an important process for those sole-source jet engine materials that I've been talking about. Those alloys don't want to stay together in conventional melt processes. So the powder process allows us to combine them to form materials that have extraordinary strength and structural integrity at extreme temperatures. These materials are one of the reasons that next-gen engines can operate hotter and more efficiently. The second investment is an increase in our zirconium sponge production by 20% and additional ramping additional capacity will begin to ramp in early 2028. And ATI's ability to separate and pure Pfizerconium gives us a distinctive position in a growing nuclear supply chain, positioning us for growth in demand in both defense as well as specialty energy. Both of these projects build on our facilities and our experience that we already have today and both are supported by strong customer demand and significant commitments. These investments expand capacity and products customers need, building on capabilities where ATI has a strong position as the capacity ramps, it supports our growth and strong earnings going forward. These investments are important examples of how we are accelerating growth and how we are focusing on those core differentiated capabilities and markets. Our strategy to accelerate is really built on 3 pillars: first, extend our differentiated lead and then invest in those attractive growing markets and third, turn that growth into stronger financial performance. This strategy guides what we prioritize where we invest and how we create value. These pillars reinforce one another. That capability is what customers -- why customers choose ATI. And the markets we choose need those differentiated capabilities to be able to perform in those demanding conditions. With elevation, along with our disciplined investment, this helps turn that demand into earnings. I'll focus first on the capabilities behind our first pillar, and then I'll show you how they guide our growth and the investment choices. So why differentiated capabilities. You've heard me talk about that a lot. In demanding environments, the cost of failure is high. So delivering defect-free products every time is critical and required. The more demanding the application, the more our capabilities matter and the higher value to our customers that our expertise brings. There are 4 capabilities that are central to that advantage. The first, advanced nickel super alloys. The second, premium quality titanium. The third hafnium in zirconium and the fourth isothermal forgings. These are more than just product categories or processes. They bring together specialized assets, technical knowledge and customer qualifications. A few suppliers can match that combination and even fewer can deliver it consistently at scale based on customers' needs. The strength of that foundation gives us an advantage today and growth for decades. You can think of it as compounding returns on the investment that's been made over many, many years. So let's look at what those capabilities mean in practice. Our hot section nickel alloy position is a powerful example of what ATI can do. There are 7 alloys that are used in the hot section by all of the engine OEMs, just 7. Of those 7, ATI is a sole-source supplier of 5 of them. And we just recently moved the sixth alloy from qualification and are ramping production. This new alloy expands our competitive moat, providing decades of growth as that engine platform continues to perform and continues to go into aftermarket. Producing takes more than following a recipe. I hope all of you saw that during your tours today and your time with my team. It requires decades of metallurgical expertise, specialized equipment like you saw and precision at every step. Our focus is on controlling the chemistry, the cleanliness and the internal grain structure. To provide the high-quality material that performs in these demanding applications. Our advantage is not simply knowing how to make it, but it's producing it consistently at scale to those exacting specifications every single time. And we're expanding our capabilities of this key differentiator based on the announcement I just shared today. Let's hear a little bit and learn more about this from our team about that nickel powder project at Bakers. [Presentation] And as you saw during your tour today, we are in production. They are actually melting their first production orders this week. I was very excited to hear that. Hopefully, the team had an opportunity to share that with you while you were there. This expansion allows us to meet our customers' unprecedented growth in these markets. As next-generation engines operate at higher pressures and temperatures this material becomes even more valuable. Our process knowledge and our customer qualification support the share positions we have, and this took decades to build. So let's talk about another important engine material, our premium quality titanium. You also had an opportunity to see this at our Bakers campus on your tour, and hopefully, you appreciated the tight control that we have on the process to make sure that there are no impurities or defects and that, that material is consistent every single time. We accomplished this with our advanced titanium melting and remelting processes that help us achieve the quality that customers require. And we are one of only 2 qualified domestic producers of this material. In each of these material systems, qualification and process consistency go hand in hand. Customers need confidence that material will meet their requirements every time at production scale. That kind of record is built up over time, and it is not easy to replicate. This investment that we announced earlier will be supporting this increasing demand. Today, we are in standard quality production and making product and as I've shared on some of the earnings calls, we are in the process of qualifying our premium quality product, which will continue into next year. So let's talk about zirconium for a minute. This was the second investment that I mentioned earlier. Half human zirconium is our third differentiated capability. Because the 2 metals occur together in nature, they have very similar chemistries, which makes separating and purifying them complex. ATI specialized process expertise allows us to produce high purity materials for nuclear, defense and advanced aerospace applications. ATI is 1 of 3 qualified Western producers and the only producer that's independent. This is the second announcement I announced -- this is the second investment I announced earlier today to support the growing demand in these spaces. So let's take a minute now to hear more about what this means for ATI and for our customers. [Presentation] As the team highlighted demand for high-purity zirconium at scale continues to grow rapidly in both our defense and our energy applications. And our last capability pulls it all together, all of these advanced materials transforming them into critical components using our isothermal forging process. By controlling temperature of both the material and the die, we are able to form process sensitive materials into complex shapes such as a hot section disk in an engine with the properties that customers require. Specialized heating and cooling tailor those properties in different areas of that disc putting strength and mechanical properties exactly where they're needed. ATI supplies these isothermal forge discs across every major engine manufacturer. And we bring together our material expertise with this component manufacturing. We are one of only 2 integrated U.S. suppliers with these specialized forging capabilities. And this rounds out our 4 incredible differentiated capabilities that set ATI apart. These aren't just 4 product categories or processes, as I mentioned earlier. These are specialized capabilities built through years of technical learning and investment. They help our customers perform in the most demanding applications in the world. And they give our customers confidence today and help keep ATI accelerating. Our second pillar is to grow in the markets where customers need us. Using 80/20, as I mentioned earlier, we focus on those markets and customers that value our differentiated capabilities. These markets are where we have very deep moats and generate higher returns because of high barriers to entry, few qualified suppliers and very strong long-term durable demand. These are applications where ATI where the work is difficult and ATI's capabilities are what customers value, along with our reliable supply. And we don't just supply a product, we partner with our customers to solve their challenges, both today and in the future. As a result, we are rewarded with strong returns and long-term commitments. But first, let's talk about what defines these markets and sets them apart. There's 4 factors that guide where ATI competes and invests. The intersection of these factors, expanding markets, limited supply, complex customer applications and customer partnerships are where ATI excels and leads to our attractive returns. Taking each one. First, qualification along with our technical capabilities, forms a real barrier to entry. Customers must qualify both the material and the process and in some cases, all the way down to the asset level to prove that they can perform consistently at scale a painstakingly precise process that can take years and a large investment. But once the material is qualified on, say, an engine platform, it can support that platform for the decades that it continues to be sold and put into plans. Second, we look for durable demand. Air travel continued to grow, fleet replacement defense readiness, rising electricity demands. All of these create the backdrop for our advanced materials and forged parts. These are the markets where performance matters. And that's what ATI provides. Third, we focus on those capabilities that I just got on sharing with you that are difficult to replicate. As I mentioned earlier, ATI now produces of those advanced alloys used on next-generation engines. And we're proud of the positions that we've earned, but we're not standing still. We continue to invest in our people, in our processes and our capabilities to maintain our performance and raise the bar even higher. And fourth, we grow through customer partnerships, -- we get the first call. Customers bring us challenges that others can't solve with a standard material or a standard process, and our teams asked what would have to be true -- we're known throughout the industry for teams that dig in. And if you bring us a problem, we will look at all the different avenues around material science, process expertise and manufacturing capability to work with our customers to find a solution. And once we've developed that solution, we then align that demand with elevation and investment. These 4 factors qualification, durable demand, differentiated capability and partnership shape where we compete and how we grow. Marty is going to share with you how these connect to our market opportunities and commercial model behind our strategy. But let me show you what this looks like in practice. How capability and qualifications go hand in hand and how consistent performance can create a differentiated position over time. This slide shows how we earned a sole source position on 1 of those 5 jet engine alloys. We started as 1 of 2 suppliers. And as this program ramped -- the other supplier was not able to meet their quality requirements or keep up with their production demands. ATI did. Thanks in part to our vertically integrated half nem capabilities as well as our downstream capabilities in isothermal forgings. In 2021, as you can see, the customer moved to a sole source relationship with -- and years later, we remain the only supplier producing this material with an agreement that extends for decades. We've seen this progression on other programs. This is not unique. We earn the opportunity to come in and qualify our product. And once we have that position, we prove to the customers that our consistent quality, our reliable supply earn us the right to continue to grow with them and earn share. That position you see here was earned through performance, and it shows why this combination of both capabilities as well as reliable supply are so difficult to replicate. It also gives us a very strong foundation to grow for decades. The last pillar bringing it all together we convert that demand in these markets with high barriers to entry, invest in those differentiated capabilities and optimize our operating footprint to generate strong earnings. Elevation is our operating system that we use to drive these improvements. Through elevation, we are improving commercial discipline, productivity, throughput and equipment reliability, across all of our manufacturing footprints. I hope you were all able to see some evidence of that. And I heard maybe some of the tours got some examples of that from the team. This helps us reduce our inventory reduce our cost to serve customers and more effectively and improve the performance of our assets. Elevation has changed the way we operate. Our focus is to optimize our existing footprints, unlock that hidden factory within our 4 walls and then invest in that maximized footprint. These capabilities, markets and investments underpin ATI's strategy and our accelerated growth plans and support our growth for the next 3 years. So let's pull it all together and review our new 2029 financial targets. We are positioned for decades of profitable growth. Our 2029 targets reflect combined effect of these properties, stronger revenue growth, higher margins and more free cash flow. From 2026 through 2029, we are targeting annual revenue growth of 10% to 12%, including the doubling of our specialty energy business. We're targeting adjusted EBITDA margins in the upper 20% to low 30% range, implying at least a 700 basis point improvement over the 3 years. And we expect to convert more than 90% of that profit into free cash flow that would deliver adjusted free cash flow of $1.25 billion, more than double our expected 2026 levels. We plan to continue to return cash to our shareholders by returning more than 70% of adjusted free cash flow with the bias towards consistent share repurchases. So let me be clear, these are guideposts. These are not the full limit of ATI's opportunity. We have a strong foundation in our capabilities, our customer relationships and our people. Now our focus is on accelerating execution, delivering profitable growth and strong financial performance that we've outlined. Rob is going to walk through more of the assumptions behind these targets and the financial frameworks in detail. But first, our Chief Commercial Officer, Marty Pike, will share how our customer positions and market opportunities supports ATI strategy and our pathway to be a $7 billion company by the end of this decade. Marty brings more than 20 years' experience at ATI and most recently was the President of Specialty Materials. The campus that you saw today was one of the many sites that he ran and he oversaw unprecedented demand as we came out of COVID, and as you saw, started these investments that are ongoing today. As he takes the stage, though, let's hear from one of our key customers about why ATI is vital to them. [Presentation]

Good afternoon. What we just heard from one of our strategic customers, Airbus, it is a clear example of the opportunity in front of ATI. My name is Marty Pike. I'm Chief Commercial Officer. I look forward to the next few minutes -- as we get to talk about our commercial strategy, not just how we're supplying more materials into growing markets where we're partnering with these strategic customers. We're working with them as they develop the next generation of products as they continue to increase their capabilities and capacities as they solve some of the world's most challenging and critical problems on the supply chain and technology. ATI's commercial strategy is to take our strategic customers, work with them, pull our differentiated capabilities together and provide long-term profitable growth. Let me share with you how we're going to do that. ATI looks at markets that are strategic, meaning they have durable demand, long-term forecast visibility and our customers, our customers look for our technology. They look for our strategic capital, and they also look for us to secure their supply chain. When you look at these markets, aerospace, defense, specialty energy, each one of those fits in the frame of our strategic commercial objectives. We'll start with the aerospace industry, particularly in the jet engine market. When you look at the jet engine, our materials go across the entire jet engine. We make materials and components, and we like to focus on what we like to call the hot section, some people call it the core, we prefer to call it the heart of the engine. The materials and components that we produce in the heart provide the thrust. They rotate at speed as errors pushed through the engine in the combustion section. It gives that engine a heartbeat. ATI is the heart of the jet engine. When you think about what you saw today, you saw us -- for those of you who are on the tour, saw us producing proprietary alloys, the powder that you saw 100% uniform consistency that creates these components that withstand heat, force and speed. We know that this makes extraordinary products, the type of products like discs, -- these disks go into the hot section, they're connected with these blades and they rotate together at speed in these temperatures, consider this. One of these turbine blades way about 2 pounds -- as it's spending on this disk is pulling on the disk with the thrust of a fully loaded tractor trailer. Now imagine dozens of them all through the ring. Tremendous speed, 1,000 times per minute, in these extraordinary conditions, that's where our material has to handle. And then think about the next generation of engines. The engines are getting hotter, that heartbeat is getting stronger, and that's where we have an advantage -- we're positioned to grow there as the next-generation engines grow, we're there, too. These engines require more demanding performance. They have tighter specs and the products and components they need are in a constrained environment. This next-generation engines, they run hotter. They run hotter because they have to hit the fuel efficiencies -- they have to hit the mission requirements. The heat is just getting greater. Our engineers like to think about it like this. The heat has intensified and it's intensified the specs are becoming more challenging. And that's where ATI is differentiated. Remember what Kim said, we make 5 of the 7 super alloys where we're sole sourced. The sixth one, we're 1 of Titanium PQ, 1 of 2 half zirconium, 1 of 3, isothermal forging 1 of 2 -- and that's why we're decades ahead of the competition. We're just going to extend our lead. Let me give a focus on to the jet engine market. As the next-generation engine grows the market, build rates our share will ramp as well. If you look at the chart, 26 through 29 production rates are growing at about 11% new builds and MRO is relatively limited at this point and it's partially offsetting the growth. ATI will grow with the market through 2019. But as you move past 2019 and into the next decade, you start to see the service lives of these engines need to come in for MRs. And that -- you can see the significant growth there. And that's where ATI will grow with the market in current through 29 and to grow with the MROs as we move out. And remember, these engines, the next-generation engines, the materials we put in those have a better margin perspective and also we're twice the content of the value as compared to the legacy engines. These next-generation engines are a great story for us, but it's not the whole story. The whole story is really when you take these engines, and you connect them to the airplane, ATI produces materials and components that not only go into the jet engine, but we also go into the airframe, the airframe market is critical to us. Imagine this, a 275-ton aircraft descending on to the runway in a fraction of a second landing gear must absorb the impact of a freight train, withstand breaking in lateral forces all while remaining in the air moving at 600 miles per hour, that's what our material is designed to handle. Let me tell you why this market is important. The aerospace titanium market is going to continue to grow. That's because composites. If you think about composites, they're getting more and more popular on these airplanes, particularly the next generation. And as the air framers are looking at their future generation -- they're also looking at composites in a big way. And for a materials company, you may think that may not be so good, but for a company who produces aerospace-grade titanium ATI titanium -- it's a good thing. ATI's titanium provides a noncorrosive environment with the composites, so compatibility, lightweight and high strength -- we make the full suite of products and alloys when you think about from sheet and plate, billet and bar, all of these products, we also make premium quality titanium for the airframe. It's not just rotating parts like in the engine. These are critical applications, as Kim talked about, the landing gear. The landing gear, we melt the material, we make the components and they have to survive day after day, hundreds of thousands of pounds of force on every landing every day. This is what our material is designed to do. We do know that this is going to also be a very long-term value for us. Again, I mentioned the widebody. And as the widebodies continue to recover, those airframes require 3 to 5x the amount of titanium than the narrow body. So as these start to get back into the market, it makes a very compelling story for the airframe. So I'm going to take you beyond the atmosphere and take you up into the stratosphere. Let's talk about space. Space is another part of our aerospace market. Kim mentioned some of the applications we have. But when you talk about space, refractory heat-resistant material. This material starts to perform when conventional materials reach their limit. Think about the environment we're in, propulsion, rocket nozzles, heat shields, thrusters, extreme temperatures in amazing environments. When you see that red glow from the second stage rocket -- most times, when you see that red glow, you believe material is deforming, losing its strength or failing. What ATI has designed -- is designed in the withstand these extraordinary conditions, keeping its strength, keeping its structure and to finish the mission. Think about it like this. When you see the red glow -- that's usually a warning sign for metals, but this is what ATI has designed it to do. The C103 metal that you see, Kim touched on it briefly, -- this has been produced for 60 years, has been on every man flight. It's the only 1 certified for man flight. It's on the Apollo space mission if you want to go all the way back there. and is a sole-source position. Space is an interesting growing market visibility is becoming better. There's about a launch a day, it seems like, and it just seems to be getting more and more critical. And so space is interesting. So I'm going to take you now back out of the Stratosphere, let's come back down to earth, and we're going to talk about the defense and specialty energy markets. We know the world is not becoming a safer and defense market is critical. Geopolitical conflicts or having governments reconsider their defense budgets and the defense budgets are increasing. The missions are also becoming more critical -- and that's where ATI is here to support the war fighter. We think about fighter aircraft, submarines and carriers of the naval nuclear propulsion for those massive ships tanks and vehicles and missiles, naval nuclear applications are clear areas of growth for ATI, long-term agreements, good visibility, durable demand defense business is expected to bring a better price/volume mix as we roll through 2029. And then as we continue to see these defense budgets grow, -- it also affects what they do on the fixed-wing fighter craft and the missile programs. Missiles are completely important. As you think about what the Department of war has issued for multiyear contracts on some very technically complicated missiles, PAC-3, FAD, Tomahawk, those complex missile programs need complex solutions and our materials are there to do it. we're going to see 3 to 4x the production rate increase again in the market visibility, durable demand. And defense is critical. But when we move to specialty energy, this will provide an extraordinary opportunity. We will expand our share with double-digit growth and double the revenue in specialty energy as a percent of sales. Our materials are built around this, very similar to the rest of the market. heat, pressure, long service life. And we think about specialty energy, we're highly focused on the commercial nuclear market. Countries are looking to increase their nuclear output because of the electrification, grid refurbishments. And you heard him talk about half nimanzurconium. These are in the most critical areas of the reactors, and we're expected to grow with that 30-plus countries around the world have pledged to increase their nuclear output threefold by 2050 with refurbishments in the marketplace and that type of growth -- that's significant. And then we look at the industrial gas turbine market, this will play a significant role. The materials that go into the industrial gas turbines, very similar to the jet engine market, nickel, titanium, sircodium, hafnium, critical forgings. And when you put these 2 markets together, there's a great opportunity on both commercial nuclear and industrial gas turbines as people are expanding their capacities and putting power generation closer to the market. This market is really interesting. We have a video from 1 of our strategic customers, GE Renova. They're going to talk about what's going on in the market and how ATI is looking to partner. [Presentation] That's what a great inning to that. So -- it's exciting to see what Give Dova is up to, but it's another good example, a perfect example of our commercial strategy. Strategic customers, working with them on their opportunities pulling our differentiated capabilities together and turning those into long-term value for both of us. You may be thinking about, okay, Marty, I heard you talk about all the markets and the demand now. Let's see what that is actually in practice? How does this actually work? And what does it mean? So our commercial strategy is of value to our customer. We build relations, we innovate with new tech and we create value. Let me give you an example of how this works. Let's think about a jet engine supplier producer. They're creating a brand-new jet engine. They're going to increase the temperatures of the core. The testing requirements are getting tighter, and they're going to be flying up in some extreme environments, 30,000 feet in the air that come to I hey, we're building this. Here are the specifications, Here's the complicated nature of what we have to accomplish. We need you to take your materials, those differentiated materials capabilities create a dish for us, by the way, 0 defects. All right. We say, you bring the spec ATI will bring the tech and then it's on us. unmatched processes, unmatched capabilities, manufacturing and setting up, and we work with the customer. development isn't cheap, but it's a value to the customer. So we partner with them. They help fit the cost of the qualification. They help develop strategic capital. We both have skin in the game. And at that point in time, we build the disc, we test it, and it's qualified -- and that's when we create an LTA, our customers get a surety of supply. They get to front-of-the-line view, they put in money to get into the strategic capital so they have a spot at the front of the line. And this is key and critical for us. When we think about the LTA, it's surety of demand for us, so long-term durable demand visibility, but we also have pricing optionality in it. When you think about raw material indexes, pass-throughs, think about inflation pass-throughs. These are risk reducers. But as our customers continue to innovate as they think about pushing the limits of this this next-generation engine. We work with them. We help them improve. So it gets to be a better product. The testings get more tight. We go with them there where they need more material. We work with them and meet their challenge, but it's also where we get valuation. We monetize the value at that point in time. LTAs are really key to how we think about the business and altogether, this is ATI's competitive advantage. Customers depend on ATI for 4 reasons: performance in mission-critical materials, assured supply of difficult-to-make products -- this is important, consistent quality at scale and then the technical partnership from development, qualification, production, together -- that's -- those are the advantages that set ATI apart. Okay. Now it's my pleasure to introduce Rob Foster, who will take us into the third strategic pillar, talk about how we're going to take all this demand and turn it into results. Rob Foster.

Hello. I'm Rob Foster, and thank you for joining our Investor Day today. I became the CFO of ATI in the beginning of 2026. And it took about 3 to 4 days, I think, before the first investor started asking me Rob, when are you going to update your long-term 2027 targets? And I was thinking, man, it would be nice if I could get a few months or at least a few weeks before we needed to provide an updated long-term guidance. But I understand why the investors were asking. It was potentially visible then, and it became obvious after 3 consecutive beat and raises here in 2026. And that ATI was on a trajectory to achieve the previous long-term 2027 targets in 2026, a full year early. For those of you who waited patiently with me for the last few months, today is the day that you're looking forward to, we're going to provide an update to the outlook. But before we provide that updated outlook, we're going to jump into the previous 2027 long-term guidance. and talk about how we are on track to achieve that here in 2026, a full year early. As you can see, based upon the recent guidance from our Q3 earnings call, we are in a position to meet or exceed our consolidated revenue, our adjusted EBITDA margin, adjusted EBITDA. And if you look at the segments, we're on track to achieve our segment targets as well for revenue and margin percent. These financial results reflect the transformational work that has positioned ATI as a stronger company with a solid foundation for growth. Revenue supported by an attractive mix of growing markets, reflecting the success of our transformation into an A&D company. As volumes grow with our differentiated products, we expand our margins. Higher margins drive stronger earnings and cash flow, which support the maintenance of a strong balance sheet, continued organic growth opportunities and consistent returns of cash to shareholders. So now let's review the evolution of ATI over the last 4 years. We have made meaningful improvements in our financial performance over the last 4 years since our last investor update. Our revenue has grown at a 7% compounded annual growth rate, and our EBITDA has grown at approximately 23%, nearly 3x our revenue growth as we focused on price and mix and utilizing 80/20 tools to manage our portfolios. Adjusted EBITDA margins expanded by 700 basis points through the third quarter of this year. And our cash generation is accelerating. In 2025, we generated $380 million of free cash flow. And this year, we're on track to generate approximately $575 million or 50% higher than last year. and it's about 3.5x the amount of free cash flow that we generated in 2023. So what has this improved financial performance meant to you as investors, more capital to return to shareholders. Over the last 4 years, we have returned meaningful cash to shareholders each and every year. We have returned about $1 billion and retired of almost 15 million shares at an average price of about $68 a share. And we've reduced our outstanding share count by nearly 8% since 2023. These share repurchases have been the most efficient and effective way to return capital to shareholders. And returning capital to shareholders has been and will be a priority going forward. And so now that we've level set on the historical financial performance, let's turn to the updated targets and let me put a finer point on the 2029 outlook. Just because we've had a lot of success with our first act transformation. It doesn't mean we're content. Today, we're introducing new long-term 2029 financial targets that underpin our next act, acceleration. If you look at the revenue growth, you can see low double-digit compound annual growth rate over the next 3 years. say, 10% to 12%. This revenue growth is driven by aerospace and defense demand as well as strong demand in our specialty energy markets. This continued focus on A&D and specialty energy will lead to a richer mix of products, driving strong incremental margins and overall margin improvements in both segments. We plan to drive free cash flow version efficiency to greater than 90% and and return most of that cash back to shareholders. We currently see our 2029 free cash flow target at $1.25 billion. Now let's double-click on the segment level. We see our HPMC segment going from a margin profile in the mid-20s to the low to mid-30s by 2029. We see our AA&S segment moving from the low to mid-20s to the mid- to high 20s by 2029. And while we expect upside in both of our segments, we see HKMC as having the most opportunity to expand margins over this 3-year period. And let me remind you, 2029 is a way point by no means the endpoint of our evolution. We see growth continuing well beyond our 2029 guidance period. So now let's spend a minute talking about how we plan to achieve these targets. Approximately 2/3 of the growth is going to come from higher volumes, both from the newly added organic growth CapEx investments as well as capacity unlocks enabled by elevation. In addition, we're going to be recognizing additional earnings from favorable pricing and mix initiatives as well as cost savings that will more than offset inflation, both of which are enabled by elevation. And so we're going to spend the next few slides talking about the details behind our growth CapEx and the capacity unlocked by elevation. But before we dive deeper, let's watch a video describing our elevation operating model. [Presentation] As you saw in the video, elevation is changing the way we operate across the business. It gives our teams a consistent way to find opportunities, tackle constraints in turn ideas into measurable improvements. From improving yield and increasing throughput to optimizing costs, our teams are focused on projects that strengthen our value streams and improve our profitability. And that work is happening across ATI every day. That's why elevation isn't just a program. Elevation is ATI. So as we have discussed, we expect significant volume unlocks as well as price and mix opportunities to be enabled by elevation. And you can see that in their first kind of chart there with the gray with the base growth. However, most of our growth is going to come from increased volumes from our new growth CapEx projects. We expect almost $1 billion of incremental revenue to come from the 4 growth projects that are in process. The first project here is the newly announced zirconium project. Kim mentioned it earlier in her presentation. but the zirconium project is expected to add approximately $100 million of incremental revenue at 50-ish percent incremental margins, and we expect that to be at full run rate in early 2028 and let me remind you, zirconium is used primarily in our nuclear businesses. So think nuclear defense, nuclear specialty energy, but our zirconium is also used as an alloying addition to some of our premium quality titanium that's used in rotating jet engine discs. The next 2 projects are the previously announced titanium project and the nickel remelt and primary melt projects. And some of you had an opportunity to see those projects today or at least the nickel free melts and primary melt project. But I'm happy to say that both of the projects are on scope, on schedule and on budget. And speaking of the Bakers Campus Tour, some of you also got to see the new project, the newly announced nickel powder project. We expect that project to contribute approximately $200 million of incremental revenue with incremental margins of approximately 50%, and we expect that to be at full run rate by the end of 2028. And again, the nickel powder is going to be used primarily as a jet engine for the jet engine applications. And I want to clarify that all of these growth projects are focused on 1 of our 4 differentiated key areas, where we have a competitive and durable competitive advantage. We are staying focused on our core. We're staying disciplined and enforcing our 30% return threshold. And we're being careful not to add capacity that could lead the pricing instability or erosion. And with so much of our growth being enabled by organic growth CapEx, we wanted to share our perspectives on how we think about the stages of organic growth CapEx. We think of it in 4 phases. The first phase, capital deployment. When we talk about capital deployment stage, think about moving earth building buildings, installing equipment. And for those of you who got to see the Baker's campus, you saw a lot of that. You saw bulldozers, cranes, you saw buildings being built, equipment being installed, so that's really the first stage. The second stage is once we get the equipment installed, we start to test out that equipment and manufacture limited quantities of material. So we learn how to dial in that equipment so that we can meet our very demanding customer specifications. Once we're confident that we can meet these customer requirements, we then move into the qualification phase. And this phase can be quite voluminous. In some cases, we're required to melt over 1 million pounds for a customer qualification. In other cases, we're required to multiple product forms. So think about melting ingot, billet, bar sometimes taking it clear through a forged part to get qualified. In other cases, each individual piece of equipment along the flow path has to be qualified for a fixed frozen path. And once we work our way through the qualification process, which generally takes, I'll say, between 6 and 24 months depending on the type of asset, we then move into the ramping for production volumes. This is where we work out all the efficiencies that come along with manufacturing at production volumes. I also want to call out on this slide that you can see that several of our newly announced projects are fairly early. However, we do expect our titanium assets to start contributing incremental revenue as well as our nickel remelt assets to start contributing incremental revenue beginning in 2027, though they won't be at full production run rate until 2028. So now that you've seen the stages of the CapEx and what stages they're in, let's take a look at how I think about CapEx and the profile overall for the next couple of years. While we've announced a few new significant new organic growth CapEx projects today, and over the last few quarters, our outlook doesn't include a major increase to our overall CapEx spend profiles. We see modest increases in our CapEx spend for 2027 and 2028 and as we work to ramp to meet our customers' growing demand for differentiated products, and this will not exceed 7% of sales. Then in 2029, we expect it to drop back to a more normalized range of between 5% and 6%. And let me be clear, we are not investing in any monolithic growth CapEx projects. Again, we're limiting our investments to the key differentiated areas where we have unique capabilities and positions with our customers, where we're aligned with customer contracts or even in some cases, customer funding. We've done several customer-funded projects over the last couple of years. So I just wanted to give you a flavor for how I think about customer-funded CapEx. And before I do, I guess, I'll step back and explain how I see the markets -- the customers, generally speaking, in our key differentiated markets like aerospace, defense, specialty energy, a lot of them have really significant growth profiles in front of them and they can achieve their growth profiles without ATI's materials. So security of supply is really important. And from our perspective, we have precious capacity that we have to determine how to allocate. And so when I think about customer-funded capital, it's really about alignment. It's a way for us to get aligned with our customers so that we know exactly what capability they need, at what capacity and over what time frame. And from our perspective, we get to better understand that alignment. And in addition, we get the efficiencies that come along with that alignment when you move your -- through the process is like the qualification. So our customers, if they have skin in the game, they're more likely to be responsive. They're going to be ready to help us qualify as soon as we get the equipment installed and commissioned. And so it's really a win-win. And I also want to be clear with what customer funding is not when we talk about customer-funded capital. We do not give our customers title to the equipment. We don't give the customers the ability to do the production planning on these assets. We don't give the customers exclusivity for these assets. And finally, we don't have a pricing conversation when we do the customer-funded. Pricing is a separate conversation that we have where we talk about the value that we're helping bring to the table and helping them create. So customer-funded capital is really about that alignment with our customers. So now let's move on from CapEx and talk about another priority area for our outlook, manager. We still have work to do with regards to our managed working capital efficiency, and we're going to be focused on managed working capital using elevation as our tool for driving improvements. We'll be laser-focused on the supply chain initiatives as well as operational improvements, including yield, scrap and throughput gains. And the target is to drive our managed working capital as a percent of sales below 30% by 2029. And these improved manage working capital efficiencies will help drive improved cash flow. So as I look at the free cash flow in 2029, I see us more than doubling our currently projected 2026 free cash flow to $1.25 billion. which equates to a 90%-plus free cash flow conversion rate. As we execute and generate this significant free cash flow, capital allocation is going to be an important consideration. So I wanted to talk a little bit about how I think about my capital allocation priorities. Number one, we're going to continue to maintain a strong balance sheet. Our leverage is currently within our target range of between 1 and 2x and I see that improving as we grow our earnings over the next couple of years. The second priority is we're going to continue to fund organic growth investments that meet our investment criteria. In addition, we're going to be disciplined and responsible about the maintenance CapEx required to reliably run our business. Once these first 2 priorities are met, we will then be positioned to return significant amounts of cash back to shareholders. We plan to return at least 75% of our adjusted free cash flow back to shareholders. And this will be over time within a disciplined capital allocation framework. My expectations are that share repurchases will be the way we return capital to shareholders over the next 3-year period. And so as you pull it all together, and as Kim and Marty shared with you, we have a tremendous differentiated capabilities, and we're extending our lead. We are growing in high-value markets where the barriers to entry are high and our partnerships with our customers run deep. We're converting that demand into stronger earnings and cash flow and then returning that cash flow to shareholders. And so when you put these 3 pieces together, it becomes clear that we've built the platform and now we accelerate. And now Kim, Marty and Rob Rengel will join me on stage, and we'll jump into your questions. Thank you.

Okay. Thank you, everybody. We're going to move to the Q&A portion of the program. A couple of things. We've got some excited members here. Raise your hand. We've got some mics here we can hand those out, make sure to identify yourself both your name and your affiliation, that will help us for the record. And we've got a couple of questions coming in on line. To start off, why don't we start in the front, our brand-new analyst, John from Citi.

John Godyn at Citi. Kim, when you were talking about the guidance framework, described it as guideposts, not the full limit of ATI's potential. I was hoping that you could elaborate on that. We could explore that for a minute. And then separately, obviously, the last guidance was hit early. So kind of what would have to happen to hit the new guidance a year early.

I like that, looking ahead already. So I appreciate it. Yes. So we did hit our guidance a year early. As Rob said, I think it was the first earnings call. The first question, hey, what are you going to do about that? He's like yes, I just got here. Give me a minute. But yes, I wanted to be clear because this growth that we talked about in these markets does not stop at the end of 2029. And as we just shared, we're making some very important investments. We expect that to continue to expand and grow. I shared the 1 example. We're still winning share. That 6x alloy is a great proof point of there's still more growth for us to do in this space, not just with the markets, which are phenomenal, and Marty talked about that, but additional share additional products. And we're seeing that across not just the powdered billets and hot sections, but also in premium quality materials, some of our advanced nickel materials. And so as OE continues to ramp and then MRO really starts to kick in at the end of this, we do see that growth continuing past 2029. Now to your point, what would pull that in. There's a couple of things that I think, as I look at our markets that could really drive that. One, with airframe, we've got build rates that, I would say, are fairly conservative. They're right around the consensus spot, maybe a little bit below that number. So if that were to accelerate, that would help on the narrow-body. But let's be honest, widebody hasn't really come back yet since before the pandemic. If that were to start to increase, I think Marty's slide had up there, anywhere from 3 to 5 more titanium goes into those airframes, but the engines take a significant of our material as well. So that would be a really strong tailwind to allow us to be at the top end of that range or to do that sooner. Defense, right now, our Guide has not built in a lot of the increased defense spending that have been talked about. Most of the programs that we're on are funded programs. So in the event of a CR, we're still very, very confident in numbers put out. But there are things like missiles that are continuing to grow. I shared on some of our earlier calls. We've already taken some orders for some missile work. We've got significant kind of 7 fold above that of inquiries that have come in as the industrial base starts to ramp up. And so that, with the replenishment and restocking could really create some tailwinds, sorry. And then specialty energy, I think we've got some significant positions, especially around nuclear energy, and we're expanding that as turbine stage, so I think each of these -- those guide points again, I think, are based on pretty reasonable assumptions, but if we see some acceleration in any one of those markets or continued share wins, I think that would help us get there a lot quicker.

Interested in your reported up on share gains. And I was kind inofirstifyou could tell me on is the further opportunity for share gains out there with Pilgrim? And second is what really drives that I mean example, is it pricing? What's driving the ATR to gain share? And how do you think about this going forward?

Yes. Thanks, Rich. So as I think I just mentioned and Marty talked about as well, there are still significant share gains. I will share -- I will share with you and the whole group. We don't typically win those on price. -- we're going to win on our performance, our quality, our service, our technical capabilities in those differentiated areas. The sixth allay is a very open example of that, but we've won share gains across multiple areas of differentiated growth. I think one that I talked a little bit about in the past is around our quality titanium used for jet engines. We're 1 of 2 in the world that are qualified. There's been some recent issues and challenges with that other supplier, and it's really accelerated the demand for our products. And so in that case, I know we've talked about this, where we may have a share and a contract, most of our contracts contain caps. Mainly for us to maintain that surety of supply for our customers. But as you start to exceed those caps, then that opens up another opportunity for us to talk about what does that agreement look like going forward. So there is still significant share gains I -- as I go into every air show, I think this is going to be the year when things start to settle and people are pretty well aligned and yet there's always opportunities where people are coming and looking those expertise or capabilities to help them to make sure that they're continuing to keep up with the build rates. Defense, space, all of those, again, are growing in using these fungible assets. And so we do have increasing demand across the whole portfolio, which is really underpinning the investments we talked about as well as those commitments. So -- that's what it looks like for us. I can talk in more detail, but generally, we're getting the market growth and then on top of that, these share gains and new market opportunities and new product you talk -- you heard Airbus 7x growth with them since 2021. And that -- a lot of that came from some of you know. We didn't have a contract with them before the pandemic. We came out of the pandemic. We had not been qualified yet. Russia and Ukraine and all of a sudden, we were in acceleration mode. And today, and many of those products were 50% share. And that is just another example on top of the one I shared here that we've got these opportunities to come in and provide very, very high-quality precision material to meet those very demanding performance.

Seth Seifman from JPMorgan. I guess to start out, could you tell us how much of the jet engine revenue now comes from the 5, soon to be 6 alloys and then how we think about that contribution to the overall growth in the coming years?

Yes. So -- and I'll let Rob jump in here so that he can answer a couple of questions. Yes, it's a portion of that, but it's not all of that jet engine revenue. So as I mentioned, premium quality titanium, we do hot die forgings as well. So it's not just in the very hot section. We're also doing -- if you look at an engine, it's got titanium, it's got more conventional nickel alloys and then it has these very high temperature powder alleys. We're participating in all of those applications. That picture Marty showed of the jet engine could have lit up blew all over the place because we are participating in lots of other areas as well. But Rob, I don't know if you want to add any color to that?

Yes. If you look at the -- when we do the disclosure with the revenue by segment, kind of in that nickel space, it's a majority of nickel within the HPMC side, so kind of just over that 50% kind of range right now.

That's super helpful. And then maybe as a quick follow-up, and I don't mean this to be a downer question at all because the tour was awesome today, and thank you. I don't doubt that the customers want to work with you, and they're obviously a signing new share, which is great. But when you think when the customers talk theoretically about how they want to run a business and avoid single points of failure, -- how do you make sure that you work with them to make sure that you maintain your position as the only supplier of these products?

Yes. I mean I think it's a really important part because to your point, everybody wants diversity of supply. The problem is the -- these differentiated capabilities that we provide are very, very difficult to replicate. -- and they're going into applications that, as I mentioned, the cost of failure is very high. And so when you just think about the technical capability, the qualifications and the decades of consistent apply at scale. It's very difficult for them or anyone else to come into the space and supply materials. I was sharing, we were talking last night with some folks. And in this space, as we're doing this, we're also partnering with them, and I talked about that on the technical development. And -- many times the equipment we're putting in, I shared some of them saying, hey, somebody else could buy a VM, for example. Those wins we put in just to share, we don't buy the off-the-shelf control systems. We put in design and program our own control systems, our own sensing equipment. There are pieces of that equipment. We design all in-house and build and nobody else gets to see it. And so just the equipment alone is a very significant barrier I think the reason customers continue to want to work with us, and I do hear this, Marty, you can jump in. Our technology and our expertise, you got to meet some of them today. their heads and shoulders above what they see in other companies. And so when they have a really hard problem that whole we earn that first call, that's very true. They're calling us and they're bringing to us either. We want to go design this next engine platform. We want to do this next missile design. They're coming to us. In some cases, I shared, we had even the regulatory agency coming to us and saying, we want to help characterize these types of defects, -- can you partner with us to do that. And that's the technical reputation and quality reputation that we have throughout the industry that we bring every day that customers want to partner with us to tap into. I don't know, Marty, do you want to add anything to that?

No, no, that's exactly right. When we talk to our customers, even with this 6 alloy, the amount of time it took for us to get into production, qualify and get ramping. It's impressive. I don't know if there's any other business in the world could have gone as quick as that to secure the supply chain. And I think that was around your question is how do we ensure that we don't have this single port of failure? And I believe we look at the the capital installment, just like the powder facility, there's -- we have a couple of different powder facilities in different locations. So some of that is derisking it from a location standpoint, and we have presses that can do similar things. So you've got some capability requirements that when you're sole source, you do have some operations that can pick up if something happens.

Point Okay. Thank you. We actually have a number of questions online. I'm going to grab 1 on the technical side. This might be good for you, Marty. The question is, is the new engine technology making engines cooler potentially reducing the benefit of your differentiation.

Yes. engines aren't getting cooler. I can tell you that these next-generation engines, they have to become hotter and that's how they become more fuel efficient, how they have to heat these emission requirements. So if you get these engines have specific requirements, not only from world standards of a mission. But if you think about all the volatility in gas that we've seen just over the last little bit, the aerospace industry demands these requirements because is really helping them reduce that risk. The engine guys are always going to innovate and where they innovate, they get better performance. And so driving things like casting technologies, and we don't do castings, but that helps the performance of the overall engine. But the heat and temperatures that these engines are running out or required for the emission and the fuel efficiency.

Thanks, Marty. Let's go back to you in room Sam?

Sam McKinney from KeyBanc. Referencing the , the line on Slide 24, once you're in that customers prefer you in the dual source that you are on the sixth alloy. It stands at a reason you'd eventually like to take more share and may come still source on that one. First, is that true? And second, assuming it is, talk us through how you might plan to get there and what the typical time frame for winning more alloy share on a platform has been like in the past?

Sure. I mean, certainly, our goal is always to continue to grow and take share. So I appreciate that opening. For that alloy in particular, One of our other strategies are to continue to integrate both at upstream advanced alloy melting and producing with our downstream is forgings. And so as I look at it, our target would be to continue to grow that share so that we're completely supplying that material internally for those parts, those isothermal forge parts. If I look at what that could mean, that could be doubling our current position on this alloy. And to Marty's point, just to remind everyone, we started this at the beginning of this year, and we've already increased some of our share position there. And it is because of that surety of supply to make sure we're supporting the overall supply chain. So what would that timing look like? Sometimes -- and I shared a little bit on that other example, something unusual happens, there's a quality issue or maybe the other supplier can't step in when there's a need or an airframe or ramps or MRO demands continue to raise or I hear a lot about upgrade packages, right? All of a sudden, those are opportunities for us to come in and that what has to be true is really pervasive through a company of saying, what do we have to do to be able to meet and rise to the challenge that's been laid out in front of us. And many times when we're able to do that, those doors open and we're able to move that share position. I do think we talked about isothermal forging. Just to remind everybody, it's more than 2 years of lead time right now on those products. It's been like that pretty infor over a year, 1.5 years. Premium quality titanium has just shot out as well because of some of these challenges that are going on. And so I do look not just in the hot section but across our whole portfolio for those opportunities -- and our team -- I'd tell you the key is our team. They are the ones that come together and they don't let -- it isn't the standard answer, which from what I hear, maybe what other customers hear from other suppliers. But we do say, how do we pull up the stops, how do we do the qualification is an example of this alloy, -- how do we get the testing done? How do we accelerate that because we know we got to hit a mark to meet that need. And customers know that and they have the confidence in us as well. So those keep opening doors. We've got great opportunity to keep growing. There's some other fund spaces like space continues to expand, and we're increasing our content across the company in the different applications we're doing there as well as some of the other emerging technologies that are coming out.

Myles Walton, Wolf Research. Kim, you talked about the 4 differentiators at the company, 3 of those, you've laid out some of the investment strategies. You just talked about Isil Thermal having the longest lead time, but I didn't see the investment strategy there. So maybe just talk about why that is. And Rob, I think the implied cash flow for '29, you have to hold net working capital constant for the next 3 years. For the last 3 years, you grew by $200 million. How are you going to do that?

Yes. All right. Great. So I'll touch on your first question, I'm glad you gave him the hard one. So isothermal forging. So yes, I mean, when we look at the overall industry balance, there's probably the need for water, maybe even new forges by the end of the decade. We are in a position where we are 1 of only 2 qualified suppliers. And so we are continuing to look at that and talk through that and making sure that we're thinking about what is the right timing One of the things to elevation, which I believe I mentioned that hurdle rate is important, but also the timing. We want to make sure these investments are aligned to exactly when hits because putting in an early means you have underutilized assets. And so that is the balance as we're thinking through and talking with our customers. And it's very important that before we start a project that we've got those firm customer commitments that are going to support that once it's in place, both for the revenue stream, but also for the qualification, which, in many cases, can be lengthy.

Yes. And in regards to the inventory, I think if you heard my opening, I said we have some room to go with our managed working capital. If you look at where we're at, inventory specifically, I talked about that SIOP process, getting more efficiency with our production planning and just a lot of the work doing -- going into that. When you look at where we're at at $1.7-ish billion of inventory that's not the efficiency that we're targeting. So when you think about how we grow that kind of cash flow, putting the focus and we talked about using elevation is going to be the focus area that we put on driving that managed working capital efficiency. So is it going to be easy? No. But is it our focus area, absolutely.