ATI Raises 2026 EBITDA Outlook as Q3 Sales Rise 26%

ATI raised its full-year 2026 adjusted EBITDA and adjusted EPS guidance after third-quarter sales increased across all key end markets, led by a sharp expansion in jet-engine revenue. Stronger demand, pricing and product mix helped lift adjusted EBITDA above the high end of the company’s quarterly guidance.

Third-quarter sales rose 26% year over year and 13% sequentially to $1.42 billion. Adjusted EBITDA increased 46% from a year earlier and 15% from the second quarter to $328 million, exceeding the top of ATI’s guidance by $13 million. Adjusted EBITDA margin expanded 300 basis points year over year and 40 basis points sequentially to 23.0%.

Aerospace and defense accounted for about 70% of revenue. ATI’s order backlog remained near a record level at $4.3 billion, up 20% year over year, providing visibility into committed demand.

Jet-engine demand leads market growth

Jet-engine revenue climbed 39% year over year and 19% sequentially, supported by demand from both original equipment manufacturers and the maintenance, repair and overhaul market, as well as increased production of next-generation engines. ATI now expects full-year jet-engine revenue growth in the low-to-mid-20% range, compared with its previous high-teens forecast.

The company said it produces six of the seven advanced nickel-based superalloys used in jet engines and is the sole source for five of them. Production is ramping for a sixth superalloy, for which ATI is one of two qualified global suppliers.

Airframe revenue rose 11% year over year and 14% from the prior quarter. ATI expects mid-to-high-single-digit growth for the full year, citing committed backlog and strong orders.

Defense revenue increased 6% on both a year-over-year and sequential basis. Management said missile demand is strengthening and maintained its full-year defense growth outlook in the high teens.

Specialty energy recorded the strongest percentage increase among ATI’s key markets, with revenue up 49% year over year and 36% sequentially. The company attributed most of the growth to commercial nuclear demand and said industrial gas turbine demand remained strong. ATI expects mid-teens growth in specialty energy for 2026.

Segment results diverge

The AA&S segment generated $702 million in third-quarter sales, up 34% year over year, while its EBITDA margin increased 850 basis points to 25.8%. ATI said the performance reflected the segment’s improved earnings profile and a more integrated business structure.

HPMC sales rose 20% to $721 million, driven by jet-engine growth. Its EBITDA margin declined 100 basis points to 23.2%, as the benefit from higher jet-engine activity was offset by the commercial production ramp for the sixth superalloy.

Adjusted free cash flow was $80 million in the quarter, including about $10 million from an asset sale, compared with $69 million in the second quarter. Year-to-date adjusted free cash flow rose 49%, or $73 million, to $223 million.

Full-year outlook moves higher

ATI now expects full-year adjusted EBITDA of $1.19 billion to $1.20 billion, with a midpoint of $1.195 billion. That is $35 million above the midpoint of its prior range and follows a $125 million increase announced in the second quarter. The updated midpoint represents 39% growth from 2025.

Adjusted EPS is projected at $5.17 to $5.23, compared with the prior range of $4.90 to $5.18. The new midpoint of $5.20 implies 60% year-over-year growth. ATI maintained its adjusted free cash flow forecast of $550 million to $600 million and continues to expect a consolidated adjusted EBITDA margin in the low-20% range.

For the fourth quarter, the company expects adjusted EBITDA of $345 million to $355 million and adjusted EPS of $1.51 to $1.57. At the midpoint, adjusted EBITDA would increase 7% sequentially and 51% year over year, with profit improvement expected across both operating segments.

ATI reported about $1 billion of liquidity at quarter-end, including $442 million in cash, while net debt was 1.3 times last-12-month adjusted EBITDA. The company repurchased $70 million of shares during the quarter, equivalent to about 88% of quarterly adjusted free cash flow, and had $425 million remaining under its authorization.

Third-quarter capital spending was $93 million, supplemented by about $4 million of customer-funded capital. ATI expects 2026 capital expenditures of $280 million to $300 million before approximately $60 million of estimated customer funding. The company also redeemed $350 million of notes due in 2027 after issuing $450 million of notes due in 2033 during the second quarter, leaving it with no scheduled debt maturities until 2029.

The outlook remains subject to execution on production ramps, working-capital requirements and the broader risks described in ATI’s regulatory filings. The company expects managed working capital to use about $235 million of cash in 2026, while the ramp of its sixth superalloy continues to weigh on HPMC profitability.