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Allegheny Tech (ATI +9%) is putting the pedal to the metal today after the company bounced back from an EPS miss in Q3 to report huge upside in Q4. ATI is a supplier of high performance metals for aerospace & defense (particularly jet engines, airframes) at 62% of FY24 revs. It also has exposure to energy (14%), automotive (6%), medical (5%) etc. We like to monitor ATI so we can gauge the health of the aerospace industry as ATI provides content to all major engine and airframe OEMs.

• Revenue rose 10.2% yr/yr in Q4 to $1.17 bln, which was nicely ahead of analyst expectations and its first double-digit growth quarter since 1Q23. Revenue in Q4 was higher than ATI had expected as customer demand improved from Q3. However, mix was a bit weaker than anticipated due to short term shifts in customer requirements.
• EPS guidance was solid as well with its Q1 mid-point coming in ahead of expectations. 2025 EPS guidance was in-line at $2.80-3.00. ATI says it ended the year on a high note that gives it momentum heading into 2025. Importantly, ATI is forecasting that 2025 adjusted EBITDA will build each successive quarter during the year. ATI expects 1H25 to reflect modest recovery as the commercial aero supply chain rebounds and subsequently grows following delays in the aero ramp in 2H24.
• ATI says that 2025 demand remains robust and that Boeing (BA) is bouncing back as it is ramping 737 MAX production. Airbus remains steady with opportunities for upside as they push their ramp rates. ATI is seeing stability as anxiety comes out of the supply chain. ATI said that demand for its materials comes from every segment of the aerospace industry as its products are on every commercial platform flying today.
• The company noted that its 2025 guidance is in-line with Boeing's projections and as an early member in the value stream, ATI expects to be one of the first to see increased pull as Boeing strives to meet ramping build rates. For 2026, Boeing publicly stated that the 787 build will increase from 5 to 7, which ATI sees as a another sign of increasing stability. Also, the 777X is entering back into service, a milestone many have been looking forward to.

Overall, this was an impressive finish in 2024 for ATI, which was a tough year for ATI. The company had to endure delays in the aero ramp in 2H24 following Boeing's labor strike. The good news is that ATI is notably more bullish on 2025, especially in the back half of the year. That comports with what we heard on Boeing's call last week, namely that demand for air travel remains strong and it is ramping back up its production schedule. Specifically, Boeing said it delivered only 36 airplanes in all of Q4, but had delivered 33 in January alone. That is good news for ATI and other aerospace suppliers.