ATI Inc. (NYSE:ATI) Q2 2023 Earnings Conference Call August 2, 2023 10:30 AM ET

Company Participants

Bob Wetherbee - Board Chairman & Chief Executive Officer

Don Newman - Executive Vice President & Chief Financial Officer

Conference Call Participants

Richard Safran - Seaport

Seth Seifman - JPMorgan

Joshua Korn - Barclays

Gautam Khanna - TD Cowen

Timna Tanners - Wolfe Research

Operator

Thank you. Good morning and welcome to ATI's Second Quarter 2023 Earnings Call. Today's discussion is being broadcast on our website. Participating in today's call to share key points from our second quarter are; Bob Wetherbee, Board Chair, and CEO and Don Newman, Executive Vice President and CFO.

Before starting our prepared remarks, I would like to draw your attention to the supplemental presentation that accompanies this call. Those slides provide additional color and details on our results and outlook that can be found on our website at atimaterials.com. After our prepared remarks, we'll open the line for questions. As a reminder, all forward-looking statements are subject to various assumptions and caveats. These are noted in the earnings release and in the slide presentation.

Now, I'll turn the call over to Bob.

Bob Wetherbee

Thanks, Dave. Let me begin by welcoming you to the ATI team. We're really happy to have you with us and we're seeing the impact of your presence already. So thanks for being here. We reported another strong quarter with sequential top line growth and margin expansion. We've accomplished a lot, and I'll use my time this morning to focus your attention on the three highlights about the quarter that I think are most important.

First, our core aerospace and defense markets are strong. We continue to grow in A&D, both in absolute dollars and as a percentage of our total revenue and income. Why is this so important? Q2 A&D sales increased 5% over the prior quarter and 39% over Q2 of 2022. Specifically in defense markets, sales surpassed $100 million in the second quarter. This is up 7% from the prior quarter and 25% year-over-year. There's sustained demand in materials for military brown vehicles, rotorcraft and naval applications.

Looking longer-term, we're playing a key role in the advancement of hypersonic technologies, an area with significant growth opportunity for our highly differentiated materials. Demand continues to accelerate. Our order backlog is up more than 20% from the beginning of the year, reaching $3.5 billion at the end of June. When you put it all together, strong sequential top line growth in sales, increasing productivity, a very healthy backlog, we're in a very robust part of the cycle with the best still ahead of us.