ATI Inc (ATI) 2023 Q2 法說會逐字稿

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 can be found on our website at atimaterials.com. After our prepared remarks, we'll open the line for questions.

謝謝。早上好，歡迎參加 ATI 2023 年第二季度財報電話會議。今天的討論正在我們的網站上播出。董事會主席兼首席執行官 Bob Wetherbee 和執行副總裁兼首席財務官 Don Newman 參加了今天的電話會議，分享第二季度的要點。在開始我們準備好的發言之前，我想提請您注意本次電話會議附帶的補充演示文稿。這些幻燈片提供了更多關於我們的結果和前景的顏色和詳細信息，可以在我們的網站 atimaterials.com 上找到。在我們準備好的發言之後，我們將開通提問熱線。

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.

提醒一下，所有前瞻性陳述均受到各種假設和警告的影響。這些在收益報告和幻燈片演示中都有提及。現在我將把電話轉給鮑勃。

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 3 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.

謝謝，戴夫。首先，我歡迎您加入 ATI 團隊。我們非常高興您的加入，我們已經看到了您的存在所帶來的影響。感謝您來到這裡。我們報告了又一個強勁的季度，收入連續增長，利潤率擴大。我們已經取得了很多成就，今天早上我將利用我的時間將您的注意力集中在我認為最重要的本季度的 3 個亮點上。首先，我們的核心航空航天和國防市場強勁。無論是絕對金額還是佔總收入和收入的百分比，我們的航空航天與研發業務都在持續增長。

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 ground 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.

為什麼這個這麼重要？第二季度 A&D 銷售額比上一季度增長 5%，比 2022 年第二季度增長 39%。具體而言，在國防市場，第二季度銷售額超過 1 億美元。這比上一季度增長 7%，比去年同期增長 25%。軍用地面車輛、旋翼機和海軍應用對材料的需求持續增長。從長遠來看，我們在高超音速技術的進步中發揮著關鍵作用。對於我們高度差異化的材料來說，這個領域具有巨大的增長機會。

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. Our percentage of ATI overall revenue attributed to aerospace and defense is now 58%.

需求持續加速。我們的訂單積壓比年初增加了20%以上。 6月底達到35億美元。當你把所有這些放在一起時，銷售收入連續強勁增長，生產力提高，積壓非常健康，我們正處於週期的一個非常強勁的部分，最好的仍然在我們前面。目前，航空航天和國防業務佔 ATI 總收入的比例為 58%。

Just a year ago, that number was 46%. We're making rapid progress toward our A&D sales goal of 65%. Highlight number two, our strategic transformation continues to deliver greater and greater benefits. Our High Performance Materials & Components segment is hitting its stride. Sales in this segment grew 12% and quarter-over-quarter and 33% year-over-year, driven by ramping commercial aerospace production and robust defense demand. Equally important, HPMC EBITDA margins increased 350 basis points sequentially to 20.5% of sales.

就在一年前，這個數字還是 46%。我們正在快速實現 65% 的 A&D 銷售目標。第二點，我們的戰略轉型繼續帶來越來越大的效益。我們的高性能材料和零部件業務正在蓬勃發展。在商業航空航天生產不斷增長和國防需求強勁的推動下，該細分市場的銷售額環比增長 12%，同比增長 33%。同樣重要的是，HPMC EBITDA 利潤率比上一季度增長了 350 個基點，達到銷售額的 20.5%。

This increase was driven by improved overall pricing, mix and volume. All 3 are enabled by the continued realization of efficiencies in our operations. Our operating teams are doing great work, continuing to improve efficiencies and debottleneck our critical production flow paths. The team also recognizes that we're not done improving. We still have work to do to improve the velocity of inventory through our system. We're not where we want to be on managed working capital as a percentage of sales and for a variety of reasons that Don will provide color on shortly.

這一增長是由整體定價、產品組合和銷量的改善推動的。所有這三個目標都是通過不斷提高我們的運營效率來實現的。我們的運營團隊正在做出色的工作，不斷提高效率並消除關鍵生產流程的瓶頸。團隊還認識到我們的改進還沒有完成。我們仍有工作要做，以提高系統的庫存速度。我們還沒有達到我們想要的管理營運資金佔銷售額的百分比，出於多種原因，唐很快就會提供說明。

But I'm confident we'll see tangible improvement in this metric in the second half of the year. Highlight number three, ATI adjusted earnings per share was $0.59, landing at the top end of our guidance range. It all starts with doing what we say we will do and delivering on our commitments to our customers and our shareholders. And we did this in the face of challenges, including continued recessionary headwinds and in industrial markets served by our Advanced Alloys & Solutions segment. Our Asian Precision Rolled Strip business is stabilizing, but not yet in recovery and we're experiencing continuing late deliveries of directed by forging billet supplied by third parties.

但我相信我們將在今年下半年看到這一指標的明顯改善。第三個亮點是，ATI 調整後每股收益為 0.59 美元，處於我們指導範圍的上限。這一切都始於我們說到做到，並兌現我們對客戶和股東的承諾。我們在面對挑戰的情況下做到了這一點，包括持續的經濟衰退逆風以及我們的先進合金和解決方案部門服務的工業市場。我們的亞洲精密軋製帶材業務正在穩定，但尚未恢復，並且我們遇到了第三方供應的定向鍛坯持續延遲交付的情況。

Q2 was a strong, very productive quarter for ATI. It's one more chapter and there's more of this story to come. I'm excited to talk about how we see this quarter's results, leading us into a strong second half of 2023 and beyond. I'll provide more on that in a moment. But first, Don will share his take on these results and our guidance for the second half. I'll be back after that to share my perspective on ATI's future and take us into questions.

對於 ATI 來說，第二季度是一個強勁、高效的季度。又是一章，這個故事還有更多內容。我很高興談論我們如何看待本季度的業績，帶領我們進入 2023 年下半年及以後的強勁業績。我稍後會提供更多相關內容。但首先，唐將分享他對這些結果的看法以及我們對下半年的指導。之後我會回來分享我對 ATI 未來的看法並提出問題。

Thanks, Bob. Following those same headlines, I'll add some more color on our results and financial trajectory. First up, we are increasing A&D content. This is directly in line with our strategy to expand our aerospace and defense leadership. Reaching a near-term high, 58% of ATI's Q2 revenue was driven by A&D. This is up 1,200 basis points year-over-year and up 200 basis points sequentially.

謝謝，鮑勃。在這些相同的標題之後，我將為我們的業績和財務軌跡添加更多色彩。首先，我們正在增加 A&D 內容。這直接符合我們擴大航空航天和國防領導地位的戰略。 ATI 第二季度收入的 58% 由 A&D 推動，達到近期高點。同比上漲 1,200 個基點，環比上漲 200 個基點。

With strengthening demand, A&D offers some of our highest margins and projected sustained growth. Our goal for A&D content is 65% or higher of our total business. A&D should continue to drive growth for ATI and we project it will be greater than 60% of total sales by year-end. Within A&D, sequential jet engine sales increased 10% and defense sales rose by 7%. Strong trends we expect to continue. Turning to headline number two, margin performance. ATI's overall adjusted EBITDA margin increased to 14.3%. That's an increase of 150 basis points sequentially, driven by our HPMC segment.

隨著需求的增強，A&D 提供了我們最高的利潤率並預計持續增長。我們的 A&D 內容目標是佔總業務的 65% 或更高。 A&D 將繼續推動 ATI 的增長，我們預計到年底它將佔總銷售額的 60% 以上。在 A&D 領域，噴氣發動機銷售額環比增長 10%，國防銷售額增長 7%。我們預計強勁的趨勢將持續下去。轉向第二個標題，利潤率表現。 ATI 整體調整後 EBITDA 利潤率增至 14.3%。在 HPMC 部門的推動下，環比增長了 150 個基點。

Overall, adjusted EBITDA increased by 13% from last quarter and 5% year-over-year. Let's take a closer look at HPMC's Q2 results. 2023 Q2 sales increased $56 million or 12% compared to the first quarter of 2023. Remember, A&D content makes up 83% of total Q2 HPMC sales. It's a key driver in the 33% year-over-year increase in HPMC revenues. Another positive in our HPMC performance was a reduction of our lingering cost inefficiencies from 2022 and Q1 2023.

總體而言，調整後 EBITDA 較上季度增長 13%，同比增長 5%。讓我們仔細看看 HPMC 第二季度的業績。與 2023 年第一季度相比，2023 年第二季度銷售額增加了 5600 萬美元，即 12%。請記住，A&D 內容佔第二季度 HPMC 總銷售額的 83%。這是 HPMC 收入同比增長 33% 的關鍵驅動力。 HPMC 業績的另一個積極因素是 2022 年和 2023 年第一季度以來持續存在的成本效率低下現像有所減少。

As expected, that roughly $5 million headwind incurred in Q1 declined this quarter. The improved mix and efficiencies are clearly visible in HPMC's adjusted EBITDA margins, which improved 350 basis points sequentially to 20.5%. Our 2025 targeted EBITDA margins for HPMC are in the low to mid-20% range. This puts us in line with those 2025 targets. Strength in HPMC offset flatness in our AA&S segment where we saw a sequential sales decline. That was primarily due to softness in general industrial end markets and lingering economic impacts associated with our Asian Precision Rolled Strip business.

正如預期的那樣，第一季度產生的約 500 萬美元的逆風在本季度有所下降。 HPMC 調整後的 EBITDA 利潤率明顯體現出產品組合和效率的改善，環比提高了 350 個基點，達到 20.5%。我們 2025 年 HPMC 的目標 EBITDA 利潤率在 20% 的中低範圍內。這使我們能夠實現 2025 年的目標。 HPMC 的強勢抵消了我們的 AA&S 細分市場的平淡，我們看到該細分市場的銷售額連續下降。這主要是由於一般工業終端市場的疲軟以及與我們的亞洲精密軋製帶材業務相關的持續的經濟影響。

We're doing a lot of things well and it shows in our results. One area that we know there's opportunity for improvement is managed working capital. It's an area of critical focus for ATI and our leadership team. At the end of the second quarter, managed working capital was $1.6 billion or 39% of sales. This balance drops by 120 basis points when adjusted for a $50 million strategic raw material purchase we made in Q2. That purchase was funded with a draw on our ABL revolver.

我們在很多事情上都做得很好，這也體現在我們的成果中。我們知道有待改進的一個領域是營運資本管理。這是 ATI 和我們的領導團隊重點關注的領域。第二季度末，管理營運資金為 16 億美元，佔銷售額的 39%。根據我們在第二季度購買的 5000 萬美元戰略原材料進行調整後，這一餘額下降了 120 個基點。這次購買的資金來自我們的 ABL 左輪手槍。

We expect that strategic inventory largely to be consumed and the ABL draw to be repaid by the end of the year. What else is driving higher working capital. I would point to 3 things. First, we've put inventory into position for the continuing A&D ramp. As Bob noted, our backlog has grown more than 20% year-to-date, including 9% growth in Q2. Second, our production rates are improving, which can create inventory spikes as we work to solve downstream bottlenecks and constraints.

我們預計戰略庫存將大部分被消耗，ABL 提款將在年底前償還。還有什麼因素推動營運資本增加。我想指出三件事。首先，我們已經為持續的 A&D 升級做好了庫存準備。正如 Bob 指出的那樣，今年迄今我們的積壓訂單增長了 20% 以上，其中第二季度增長了 9%。其次，我們的生產率正在提高，這可能會在我們努力解決下游瓶頸和限制時造成庫存激增。

And third, we have inventory associated with expanding titanium melt capacity ahead of ramping sales. The good news is all of these drivers lead to higher sales, earnings and cash generation. We focus on inventory for our purpose. Ramping ahead of new revenue is the best purpose I could think of for near-term inventory increases. We are focused on hitting our 30% managed working capital target by year-end, and we're confident we will deliver.

第三，我們有與在銷量增加之前擴大鈦熔體產能相關的庫存。好消息是所有這些驅動因素都會帶來更高的銷售額、收入和現金生成。為了我們的目的，我們專注於庫存。提前增加新收入是我能想到的近期庫存增加的最佳目的。我們致力於在年底前實現 30% 的管理營運資金目標，並且我們有信心能夠實現這一目標。

We have equally sharp focus on efficient and strategic capital deployment. Our CapEx for the first half of 2023 was $103 million, which includes $38 million of carryover related to capital expenditures accrued at the end of 2022. Overall, we remain on track in 2023 with our disciplined capital investment plan. We're holding our previous annual CapEx guidance of $200 million to $240 million. It's important to emphasize this guidance includes expenditures associated with our recently announced titanium melt expansion in Richland, Washington.

我們同樣高度關注高效和戰略性的資本部署。我們 2023 年上半年的資本支出為 1.03 億美元，其中包括與 2022 年底應計資本支出相關的 3800 萬美元結轉。總體而言，我們在 2023 年仍按嚴格的資本投資計劃走上正軌。我們維持之前 2 億至 2.4 億美元的年度資本支出指導。需要強調的是，該指導包括與我們最近宣布的華盛頓州里奇蘭鈦熔體擴建相關的支出。

We're managing the challenges of working capital in concert with prudent and focused capital expenditures. Therefore, we are holding our annual range of free cash flow at $125 million to $175 million. Expanding on cash management. We generated $68 million of cash from operations in Q2. We ended the quarter with a total liquidity of approximately $770 million. This reflects $267 million in cash and $500 million available under our ABL facility. We remain committed to our balanced capital deployment strategy, which includes returning capital to shareholders.

我們正在與審慎和集中的資本支出一起應對營運資金的挑戰。因此，我們將年度自由現金流保持在 1.25 億美元至 1.75 億美元之間。擴大現金管理。我們第二季度的運營產生了 6800 萬美元的現金。本季度結束時，我們的流動資金總額約為 7.7 億美元。這反映了我們 ABL 設施下的 2.67 億美元現金和 5 億美元可用資金。我們仍然致力於平衡資本配置戰略，其中包括向股東返還資本。

In last quarter's call, we announced the next tranche of share repurchases with a $75 million buyback program. While we did not repurchase shares in Q2, we expect to complete the $75 million program by the end of the year. And our third area to highlight it was a strong quarter for earnings per share. At $0.59 per share, adjusted EPS was at the high end of our guidance range and $0.03 above the midpoint of the range we provided.

在上季度的電話會議中，我們宣布了下一輪股票回購，回購計劃金額為 7500 萬美元。雖然我們沒有在第二季度回購股票，但我們預計將在年底前完成 7500 萬美元的計劃。我們要強調的第三個領域是每股收益強勁的季度。調整後每股收益為 0.59 美元，處於我們指導範圍的高端，比我們提供的範圍的中點高出 0.03 美元。

The higher performance reflects favorable price and mix tied to A&D growth. This was partially offset by slower industrial demand and moderately lower raw material metal prices. This positive performance builds on our results from the first quarter. This was our fourth consecutive quarter in which revenue exceeded $1 billion. Our revenue of $1.05 billion represents a 9% increase year-over-year and reinforces the sustained strength in demand. We are confident in our position as a premier aerospace and defense supplier.

較高的業績反映了與航空航天與發展業務增長相關的有利價格和組合。這被工業需求放緩和原材料金屬價格適度下降所部分抵消。這一積極的業績建立在我們第一季度的業績基礎上。這是我們連續第四個季度收入超過 10 億美元。我們的收入達到 10.5 億美元，同比增長 9%，增強了需求的持續強勁。我們對自己作為一流航空航天和國防供應商的地位充滿信心。

Now let's look forward to Q3 and full year guidance. For the third quarter, we expect adjusted EPS to be in the range of $0.51 to $0.57. The midpoint of the range, $0.54 is below Q2 driven by planned facility outages in the third quarter. It also reflects our expectation that sales in our Asian Precision Rolled Strip business will continue to be pressured due to China's economic conditions. We are also assuming the slowdown in industrial demand will continue in Q3. We are raising our full year EPS guidance to a range of $2.15 to $2.35 per share. You can use the full year and Q3 EPS guidance to get a sense of how we're thinking about Q4 performance.

現在讓我們期待第三季度和全年指導。我們預計第三季度調整後每股收益將在 0.51 美元至 0.57 美元之間。由於第三季度計劃的設施停運，該範圍的中點 0.54 美元低於第二季度。這也反映出我們預計亞洲精密軋製帶鋼業務的銷售將繼續因中國經濟狀況而受到壓力。我們還假設第三季度工業需求將繼續放緩。我們將全年 EPS 指導上調至每股 2.15 美元至 2.35 美元。您可以使用全年和第三季度每股收益指導來了解我們如何看待第四季度的業績。

Assuming Q3 and full year EPS are at the midpoint of their respective ranges, then Q4 EPS would be in the range of $0.63 per share. That will be a strong finish to a great year and will provide nice momentum as we move into 2024. What would drive an EPS increase in Q4, continued robust A&D demand, contributions from the restart of the 34th Avenue facility in Albany, Oregon and continued operational improvements. With that, I will turn the call back over to Bob.

假設第三季度和全年每股收益處於各自範圍的中點，那麼第四季度每股收益將在每股 0.63 美元的範圍內。這將是偉大的一年的有力收官，並將為我們進入2024 年提供良好的動力。推動第四季度每股收益增長的因素、持續強勁的A&D 需求、俄勒岡州奧爾巴尼第34 大道工廠重啟的貢獻以及持續增長的貢獻運營改進。這樣，我會將電話轉回給鮑勃。

Thanks, Don. We've covered a lot this morning, and I can sum it up in one simple statement. We are confident. You look at markets recovering, demand accelerating, focused and disciplined execution, a stronger backlog than we've had in a long time, if ever. It's a great picture, I think, of where we are and a very positive trajectory going forward. We're converting near-term demand into long-term agreements.

謝謝，唐。今天早上我們討論了很多內容，我可以用一個簡單的陳述來總結。我們有信心。你會看到市場正在復蘇、需求加速、專注和嚴格的執行、積壓的情況比我們很長一段時間以來（如果有的話）還要多。我認為，這是一幅偉大的圖景，展示了我們所處的位置以及非常積極的前進軌跡。我們正在將近期需求轉化為長期協議。

In June, we announced that we've secured over $1.2 billion in new commitments. That's an average of $200 million in new sales per year from 2024 to 2029. Of this, roughly 70% is incremental to our announced 2025 targets, assume a targeted incremental EBITDA margin of 30% to 35% on these sales, and the result is an estimated additional $40 million to $50 million of EBITDA per year above our previously announced targets. The collective commitments encompass nickel and titanium materials for aero engine and airframe applications and ground vehicle armor.

6 月，我們宣布已獲得超過 12 億美元的新承諾。從2024 年到2029 年，每年平均新增銷售額為2 億美元。其中，大約70% 是我們宣布的2025 年目標的增量，假設這些銷售額的目標增量EBITDA 利潤率為30% 到35 %，結果是預計每年 EBITDA 比我們之前宣布的目標額外增加 4000 萬至 5000 萬美元。集體承諾包括用於航空發動機和機身應用以及地面車輛裝甲的鎳和鈦材料。

They represent new share positions and support sustained future growth. To meet this rising demand, we continue to increase critical capacity to ensure we can meet the needs of our customers. It starts with getting more from existing assets. Our restarted Albany, Oregon titanium melt shop is producing at the target levels in the third quarter. That's a key component of delivering the 35% increase in capacity on our 2022 baseline. We're already producing ingots at that location. We'll see the positive financial impact from this capacity as the ingots get shipped as end products starting in Q4.

它們代表了新的股票頭寸並支持未來的持續增長。為了滿足這種不斷增長的需求，我們不斷增加關鍵產能，以確保我們能夠滿足客戶的需求。首先要從現有資產中獲得更多收益。我們重新啟動的俄勒岡州奧爾巴尼鈦熔煉車間正在第三季度達到目標水平。這是我們在 2022 年基線上實現容量增長 35% 的關鍵組成部分。我們已經在那個地方生產錠了。隨著矽錠從第四季度開始作為最終產品發貨，我們將看到這種產能帶來的積極財務影響。

A few quarterly calls ago, we announced even more expansion to deliver incremental titanium melt capacity. Last month, we named our existing operation in Richland, Washington as the site of that build. The expansion is well underway. As we shared previously, it will increase ATI's titanium production by an additional 35% over our 2022 baseline. This additional increase is projected to be online by the end of 2024. Additional product qualifications will occur in 2025 and we expect revenue and profits to reach their full run rate in 2026.

幾個季度電話會議前，我們宣布進一步擴張，以提供增量鈦熔體產能。上個月，我們將位於華盛頓州里奇蘭的現有業務命名為該建設地點。擴建工作正在順利進行中。正如我們之前分享的，這將使 ATI 的鈦產量比 2022 年基準增加 35%。這一額外增長預計將於 2024 年底上線。額外的產品資格將於 2025 年實現，我們預計收入和利潤將在 2026 年達到全面運行率。

Added together, 35% increase from existing assets, including the Albany restart, plus 35% from the expansion in Richland, a 70% more capacity to support $1.2 billion in confirmed commitments. To say the least, we're well positioned for a strong future. It's important to highlight that the expansion in Richland has capabilities in addition to capacity, we'll have the flexibility to produce both standard and premium quality to serve both airframe and aero engine demand.

加起來，現有資產增加了 35%，包括奧爾巴尼的重啟，再加上里奇蘭的擴建增加了 35%，產能增加了 70%，可支持 12 億美元的已確認承諾。至少可以說，我們已經為美好的未來做好了準備。需要強調的是，里奇蘭的擴建除了產能之外還有能力，我們將能夠靈活地生產標準和優質質量的產品，以滿足機身和航空發動機的需求。

We gained speed and flexibility in the form of extraordinary chemistry control and the ability to input both recycled and prime materials. We continuously refine and advance the mix of capability and products we deliver for our customers to drive the most value for our shareholders. Our strategic transformation has reduced volatility in our quarterly results related to raw material pricing. It stabilizes the consistency of our quarter-on-quarter performance and fuel strategic growth and value creation.

我們通過非凡的化學控制以及輸入回收材料和優質材料的能力獲得了速度和靈活性。我們不斷完善和改進為客戶提供的能力和產品組合，為股東創造最大價值。我們的戰略轉型減少了與原材料定價相關的季度業績的波動性。它穩定了我們季度業績的一致性，並推動戰略增長和價值創造。

So wrapping it up, what are we confident about? Well, we're confident in our strategy, laser-focused on the strong A&D market. We're confident in our execution. The team is delivering to our customers to meet this ever-growing demand. And we're getting stronger every day unlocking opportunity and operational efficiencies across all of ATI. We're confident in our growth in a disciplined way, we're adding capacity and capability. That gives me confidence in our performance today and what we'll achieve long term.

總結一下，我們對什麼有信心？嗯，我們對我們的戰略充滿信心，專注於強大的 A&D 市場。我們對我們的執行充滿信心。該團隊正在為我們的客戶提供服務，以滿足這種不斷增長的需求。我們每天都在變得更加強大，在整個 ATI 中釋放機遇並提高運營效率。我們對以有紀律的方式實現增長充滿信心，我們正在增加產能和能力。這讓我對我們今天的表現以及我們將取得的長期成就充滿信心。

We're confident in the shareholder value we provide, doing what we say we will with a clear path to go beyond. And last but not least, I'm confident in our team. We're working together across the enterprise, constantly pushing ourselves to higher levels of performance. Each new production record reset brings more ideas and drives us to strive for more. We've created a system that leverages collaboration and accelerates improvements. I'm honored to lead this team forward.

我們對我們提供的股東價值充滿信心，我們將言出必行，並有明確的超越之路。最後但並非最不重要的一點是，我對我們的團隊充滿信心。我們在整個企業內共同努力，不斷推動自己達到更高的績效水平。每一次新的生產記錄重置都會帶來更多的想法，並激勵我們爭取更多。我們創建了一個利用協作並加速改進的系統。我很榮幸能夠帶領這個團隊前進。

Our success is a large part of why we were delighted to add the role of President to Kim Fields responsibilities as Chief Operating Officer. The team is performing and optimizing our business. Yes, it's great to take a minute to recognize the impact her leadership is having. Our customers feel it. Our shareholders are certainly seeing it, and our team is responding to it. Titles are first earned and not given and often well before they're given they're earned. So thank you, Kim. We're in a great position to grow. It's one of the things that makes us proven to perform. Operator, we're ready for the first question.

我們的成功在很大程度上是我們很高興在 Kim Fields 擔任首席運營官的職責之外增加總裁一職的原因。該團隊正在執行和優化我們的業務。是的，很高興花一點時間認識到她的領導力所產生的影響。我們的客戶感受到了。我們的股東肯定看到了這一點，我們的團隊也在對此做出回應。頭銜首先是贏得的，而不是授予的，而且通常在授予之前就已經獲得了。所以謝謝你，金。我們處於有利的發展位置。這是證明我們表現出色的因素之一。接線員，我們準備好回答第一個問題了。

(Operator Instructions) Our first question comes from Richard Safran from Seaport.

（操作員說明）我們的第一個問題來自 Seaport 的 Richard Safran。

Don, I think this first one maybe for you. And then, Bob, if it's okay, I got a quick follow-up. I'd like -- Don, I'd like to ask if you could expand on those comments you were making at Paris Air Show the $1.2 billion in new contracts. I'm kind of wondering if this work is merchant accretive and how also we should think about what that does to your 30% to 35% incremental margin comments that you've made?

唐，我想這第一個可能適合你。然後，鮑勃，如果可以的話，我會得到快速跟進。我想——唐，我想問一下您是否可以詳細闡述一下您在巴黎航展上就 12 億美元新合同發表的評論。我有點想知道這項工作是否會增加商家的收入，我們還應該如何考慮這對您所做的 30% 到 35% 增量利潤評論有何影響？

Okay. Let me take a run at that. The short answer is yes, they should be accretive. And let me walk you through the math on that. So we've shared is $1.2 billion of sales commitments over a 6-year period. So you spread that out, you expect about $200 million a year and of that, as we think about our 2025 targets, about 70% of that $200 million in annual revenue is incremental.

好的。讓我試一下。簡短的回答是肯定的，它們應該是增值的。讓我帶您了解一下這方面的數學知識。因此，我們共同承諾在 6 年內實現 12 億美元的銷售承諾。因此，如果將其展開，您預計每年約為 2 億美元，其中，當我們考慮 2025 年的目標時，這 2 億美元的年收入中約 70% 是增量收入。

And then as you think about the margins on that, Rich, I think in terms of 30% to 35% for that new business that we're picking up. Of course, the math on that then indicates we're going to have probably between $40 million and $50 million of incremental EBITDA that's going to be generated from that new business. As you think about, well, how does that affect our existing EBITDA margins for targeted 2025 and then those 30% to 35% incremental margins for the overall business. The short answer there, yes, this should be incremental. And the way to think about the incremental effect, and I know you're going to do the math on it, but the math is going to prove out that it's probably 30 to 40 basis points of enhancement to our incrementals, which we typically range at 30% to 35%, and it would have a similar effect you would expect to the 18% to 20% kind of EBITDA margin that we've targeted for 2025.

然後，當你考慮這方面的利潤時，Rich，我認為我們正在開展的新業務的利潤率為 30% 到 35%。當然，計算結果表明我們可能會從這項新業務中產生 4000 萬至 5000 萬美元的增量 EBITDA。正如您所想，這對我們 2025 年目標的現有 EBITDA 利潤率以及整個業務 30% 至 35% 的增量利潤率有何影響。簡短的回答是，是的，這應該是增量的。考慮增量效應的方式，我知道你會對其進行數學計算，但數學將證明，我們的增量可能會增強 30 到 40 個基點，我們通常在範圍內30% 到35%，這與我們2025年目標EBITDA 利潤率18% 到20% 的預期效果類似。

Okay. Bob, something you've done before. I'd like to ask you again about titanium trends. Specifically, could you talk a bit about share gains orders, where lead times are? And if possible, pricing and that's because some of the comments you've made previously, I think, about not taking on dilutive work. So any color you could provide on titanium trends would be helpful.

好的。鮑勃，你以前做過的事。我想再向您詢問一下鈦的趨勢。具體來說，您能談談份額收益訂單以及交貨時間嗎？如果可能的話，定價，我認為這是因為你之前發表的一些關於不承擔稀釋性工作的評論。因此，您可以提供有關鈦金屬流行趨勢的任何顏色都會有所幫助。

All right. Well, thanks, Rich. Certainly, dominating our lives these days as we ramp up and increase our capacity and debottleneck. And so actually, because of the improvements we've been making, we've actually been able to I'll call it, lower the bar in terms of what's accretive, right? We actually have more access to more accretive business going forward because of the improvements that we've made. So some of the historical paradigms have actually moved away from us opening up a bigger access.

好的。好吧，謝謝，里奇。當然，隨著我們提高能力和消除瓶頸，這些天主宰了我們的生活。事實上，由於我們一直在進行的改進，我們實際上能夠我稱之為，降低增值的標準，對吧？由於我們所做的改進，我們實際上有更多機會獲得更多增值業務。因此，一些歷史範式實際上已經遠離我們，開闢了更大的途徑。

But to your point, let's use the $1.2 billion that we announced as kind of a baseline for share gains. I would say the split of that is about 2/3 titanium and 1/3 nickel roughly the $1.2 billion. And the titanium is clearly a result of taking share based on the world's adjustments post Ukrainian invasion by Russia, right? So that's the lion's share of it. The other 1/3 in nickel was actually share we picked up due to quality of performance versus our customers. But you're asking more about the titanium side. So share gain's pretty aggressive. We are seeing benefits to that in 2023, but we're not quantifying it.

但就您的觀點而言，讓我們使用我們宣布的 12 億美元作為股票收益的基準。我想說，其中大約 2/3 鈦和 1/3 鎳，大約 12 億美元。鈦顯然是根據烏克蘭被俄羅斯入侵後世界調整而奪取份額的結果，對嗎？這就是其中的最大部分。另外 1/3 的鎳實際上是我們由於相對於客戶的性能質量而獲得的份額。但你問的更多的是鈦方面的問題。因此，份額增長相當激進。我們在 2023 年看到了這一點的好處，但我們沒有對其進行量化。

But by 2024, we'll see a pretty big start there with the titanium share gains. In terms of lead times, it's kind of reflective of our backlog, the 20% rise we've seen in the backlog. I would say, we said a couple of quarters ago that if you knew anybody who was trying to order titanium in the long term, they should get their contracts in, and that's what we've seen, a heavy contract load. So like titanium bar orders are out Q4 2024. Titanium plates probably depending on the customer and these commitments that we picked up in titanium for Q3 2024, maybe even into 2025 for some products.

但到 2024 年，我們將看到鈦份額增長的一個相當大的開始。就交貨時間而言，這在一定程度上反映了我們的積壓情況，我們看到積壓情況增加了 20%。我想說的是，我們在幾個季度前說過，如果你認識任何想要長期訂購鈦的人，他們應該簽訂合同，這就是我們所看到的，沉重的合同負擔。因此，鈦棒訂單將於 2024 年第四季度結束。鈦板可能取決於客戶以及我們在 2024 年第三季度獲得的鈦合金承諾，某些產品甚至可能持續到 2025 年。

If you wanted to just kind of some transactional business maybe we have some opportunities in Q2 of 2024, but that's kind of where the market is. It's extended. And as we start up with 34th Avenue Albany facility, we've got a few slots kind of left in late 2023, but they're starting to be pretty sparse. So I think from a lead time perspective, that helps on titanium and then on the pricing side, I think it's definitely been a seller's market. I think people are trying to get their supply secure and reliable. I do think we're getting value for the reliability and quality. But in terms of pricing, I would say we're seeing appropriate increases for where we are in the states and the market. I think that was your list but there's always like 6 questions in there, Rich, hopefully, I got them all.

如果您只想開展一些交易業務，也許我們在 2024 年第二季度有一些機會，但這就是市場所在。它被延長了。當我們啟動奧爾巴尼第 34 大道設施時，我們在 2023 年底還剩下一些空位，但它們開始變得相當稀疏。因此，我認為從交貨時間的角度來看，這對鈦有幫助，然後在定價方面，我認為這肯定是賣方市場。我認為人們正在努力確保供應安全可靠。我確實認為我們正在從可靠性和質量中獲得價值。但就定價而言，我想說，我們看到各州和市場的價格都有適當的上漲。我想這就是你的清單，但裡面總是有 6 個問題，Rich，希望我能全部答對。

Our next question comes from Seth Seifman from JPMorgan.

我們的下一個問題來自摩根大通的塞思·塞夫曼。

Okay. For first question, I wanted to ask about HPMC and the strong margin we saw in the quarter and the degree to which mix may have played a role there. I saw the engine sales look like they picked up again sequentially. Are there particular products that you started to sell in the quarter that contributed to the profitability in Q2? And how does that factor in going forward if it did, in fact, have any impact?

好的。對於第一個問題，我想詢問 HPMC 以及我們在本季度看到的強勁利潤率以及混合可能在其中發揮作用的程度。我看到發動機銷量似乎再次回升。您在本季度開始銷售的特定產品是否為第二季度的盈利做出了貢獻？如果這個因素確實產生了影響，那麼它對未來有何影響？

That's a good question, Seth. I think the -- from a mix perspective, I would say our comment about hitting our stride is probably the biggest issue. It probably had a slightly larger mix of ingot, billet and bar which are some of our great products, I think we're also seeing some of the isothermal forgings kind of picking up. I wouldn't say we've seen the start of the widebody recovery per se, but those are the kind of products that end up heading towards the wide-body market.

這是個好問題，賽斯。我認為——從混合的角度來看，我想說我們對取得進展的評論可能是最大的問題。它可能有稍微大一些的鋼錠、鋼坯和棒材的組合，這是我們一些很棒的產品，我認為我們也看到了一些等溫鍛件的增長。我不會說我們已經看到寬體機本身復甦的開始，但這些產品最終會走向寬體機市場。

So I would say modest mix, I would say a lot of it is volume revenue and efficiencies that come with that. And certainly, the price with these contract upgrades have been positive. So yes, I think those are probably the big ones. Don, did you have any color you want to add on that one?

所以我想說的是適度的組合，我想說很多都是隨之而來的銷量收入和效率。當然，這些合同升級的價格是積極的。所以是的，我認為這些可能是最重要的。唐，你想在上面添加什麼顏色嗎？

Yes. I think for context, Seth, as you think about the $28 million increase in our sequential EBITDA and that nice expansion on the margin. As you look at it, Bob is absolutely right. It was really all about volume and it was price/mix. But if you want to get a sense as to which of those 2 really drove is kind of probably 2/3 price/mix-driven and about 1/3 related to volume. So really nice overall contribution to that growth from demand really.

是的。我想從背景來看，Seth，當你想到我們的 EBITDA 連續增加 2800 萬美元以及利潤率的良好擴張時。正如你所看到的，鮑勃是絕對正確的。這實際上完全取決於數量和價格/組合。但如果你想知道這兩個因素中哪一個真正驅動力可能是 2/3 價格/混合驅動，大約 1/3 與銷量相關。需求對增長的總體貢獻確實非常好。

Okay. Great. And then maybe as a follow-up, just looking at A&S and thinking about some of the non-A&D demand headwinds that, that segment faces in the end markets. I guess, how do we think about where that is? Is it -- did you kind of end the quarter where things -- where the demand signals were still kind of on the way down? And how did you account for that in terms of the EBITDA that you expect from A&S for the rest of the year? Or are we looking at something that's a little bit more stable?

好的。偉大的。然後也許作為後續行動，只關注 A&S 並思考該細分市場在終端市場中面臨的一些非 A&D 需求阻力。我想，我們如何看待那是哪裡？在本季度結束時，需求信號是否仍然在下降？您是如何解釋 A&S 今年剩餘時間的 EBITDA 的？或者我們正在尋找更穩定的東西？

Yes, good question, something we are looking at all the time. So we go back to -- it's really about 15% of the segment, give or take, mostly the industrial markets you're talking about. I would say we'll see a little bit more decline in Q3, stabilizing into Q4 before recovering in Q1. It's a transitory issue, I think, driven by 2 things, 3 things perhaps. One is obviously the industrial markets, appliances, some of the food and beverage type stuff that we supply into and then some of the remnant automotive businesses we have. So those kinds of things, it's really the industrial markets being down.

是的，好問題，我們一直在關注的問題。所以我們回到——無論給予還是接受，它實際上佔該細分市場的 15% 左右，主要是您所談論的工業市場。我想說，我們將在第三季度看到更多的下降，在第一季度恢復之前穩定到第四季度。我認為這是一個暫時的問題，由兩件事，也許三件事驅動。其中之一顯然是工業市場、電器、我們供應的一些食品和飲料類型的東西，然後是我們擁有的一些剩餘的汽車業務。因此，諸如此類的事情，實際上是工業市場的下滑。

We also tend to see a lot of these products or some of these products going through the distribution channel. And if you're familiar with the distribution channel when OEM's take a breath just to make sure the economy is going in the right place, the distribution channel tends to take two breaths and kind of exacerbate some of that decline. But we do see a solid through or stabilizing in the back half and then moving up in Q1 of next year.

我們還傾向於看到許多此類產品或其中一些產品通過分銷渠道。如果你熟悉分銷渠道，當原始設備製造商喘口氣只是為了確保經濟向正確的方向發展時，分銷渠道往往會喘口氣，並在一定程度上加劇了這種下滑。但我們確實看到後半段將實現穩固或穩定，然後在明年第一季度有所上升。

And it's also -- we're seeing a little on the energy side. if you go back to May when oil prices dropped quickly, nickel prices followed, they've now recovered. When that happens, the EPCs or OEMs take a breath as well and say, well, let's just wait and see. We expect those -- those are kind of chunky program or project orders. They'll come back later in the year for probably H1 of 2024 shipments. So it's kind of the general industrial markets the chunkiness of energy with a little volatility there. But the bottom line is the solid business that we have there, heavy and increasing aerospace and defense.

我們還看到了一些能源方面的情況。如果你回到五月份，當時油價迅速下跌，鎳價也緊隨其後，現在已經回升。當這種情況發生時，EPC 或 OEM 也會喘口氣說，好吧，讓我們拭目以待。我們預計這些都是大塊的計劃或項目訂單。他們將在今年晚些時候回來，可能在 2024 年上半年發貨。因此，這是一般工業市場的能源塊，有一點波動。但最重要的是我們在那裡擁有穩固的業務，即重型且不斷增長的航空航天和國防業務。

Certainly, mid- to high teens EBITDA by 2025 is definitely our target, and we see the runway to be there. But I think we're just going through what everybody else is seeing. Even the reports you guys put out, we actually read them. And it looks like this is kind of different spots and different channels where the economics are kind of floating around and giving people pause. But it is stabilizing in Q4 and then come back in Q1.

當然，到 2025 年，EBITDA 達到中高水平絕對是我們的目標，而且我們看到了這一點。但我認為我們只是經歷了其他人所看到的事情。即使是你們發布的報告，我們也確實閱讀過。看起來這是不同的地點和不同的渠道，經濟在其中浮動，讓人們停下來。但它在第四季度趨於穩定，然後在第一季度恢復。

Our next question comes from David Straus from Barclays.

我們的下一個問題來自巴克萊銀行的大衛·斯特勞斯。

This is actually Josh Korn on for David. I wanted to ask how you're thinking about nickel pass-through and pension relative to the longer-term 2025 target?

這實際上是喬什·科恩（Josh Korn）為大衛代言。我想問一下，相對於 2025 年的長期目標，您如何看待鎳傳遞和養老金？

Sure. Sure. What I would say is, as you think about those 2025 targets, we shape those targets, assuming flat metal prices. So that answers kind of the pass-through assumption that you're talking about. Right now, and we saw this in 2022 as well, we've seen some elevated metal prices, which have elevated pass-through and surcharges.

當然。當然。我想說的是，當你考慮 2025 年的目標時，我們在假設金屬價格持平的情況下制定了這些目標。所以這回答了你所說的傳遞假設。目前，我們在 2022 年也看到了這種情況，金屬價格有所上漲，從而提高了轉嫁費和附加費。

But when it comes to those 2025 targets, we're not assuming that those higher metal prices and that higher pass-through revenue are going to continue to be with us. So that's -- it's, at the moment, a bit of a headwind to our margins. But we don't expect that, that headwind is going to continue to be with us out to 2025. In terms of pension, the simplest way to think about it is that we saw overall about a $36 million increase in pension expense. This is noncash, but a $36 million increase in pension expense in 2024. I've shared with you guys in the past, I do not expect that, that additional expense is going to be with us in the long term.

但當談到 2025 年的目標時，我們並不認為金屬價格上漲和轉嫁收入將繼續伴隨我們。所以，目前，這對我們的利潤率來說有點不利。但我們預計這種逆風不會持續到 2025 年。就養老金而言，最簡單的思考方式是我們看到養老金支出總體增加了約 3600 萬美元。這不是現金，但到 2024 年養老金支出將增加 3600 萬美元。我過去曾與你們分享過，我不認為我們會長期承受這筆額外支出。

It is not assumed to be in those 2025 targets. So that would indicate, I don't expect it to be with us and out to 2025. So that will help you as you're thinking about bridging from current performance to 2025 with the increased profitability as well as expanding margins. Does that answer your question?

假設它不包含在 2025 年的目標中。因此，這表明，我預計這種情況不會一直持續到 2025 年。因此，當您考慮從當前業績過渡到 2025 年，提高盈利能力並擴大利潤率時，這將對您有所幫助。這是否回答你的問題？

Okay. Yes. And then did the recent drop in nickel prices over the last couple of months negatively impacted the results in AA&S at all in the quarter?

好的。是的。那麼過去幾個月鎳價的下跌是否對本季度 AA&S 的業績產生了負面影響？

Yes. The short answer is yes. So there was a modest pullback on metal prices and the way our business is constructed and contracted. When metal prices go up, generally, that's a good guy for us when metal prices go the other direction, it's generally a headwind for us. So as you think about the A&S business, in terms of those headwinds it was probably $2.5 million to EBITDA, something like that, $2 million to $3 million, sorry to get super precise on that.

是的。簡短的回答是肯定的。因此，金屬價格以及我們業務的建設和承包方式出現了小幅回調。一般來說，當金屬價格上漲時，這對我們來說是件好事；當金屬價格下跌時，這對我們來說通常是不利因素。因此，當您考慮 A&S 業務時，就這些不利因素而言，EBITDA 可能為 250 萬美元，類似的金額為 200 萬至 300 萬美元，抱歉無法準確地說明這一點。

But it's probably $2 million to $3 million of headwind in Q2 that we would expect would turn around. We've already seen metal prices actually recovering in early Q3. And so that should be a good guide for us as we look out to the rest of the year.

但我們預計第二季度可能會扭轉 200 萬至 300 萬美元的逆風。我們已經看到金屬價格實際上在第三季度初開始復蘇。因此，當我們展望今年剩餘時間時，這對我們來說應該是一個很好的指南。

Our next question comes from Gautam Khanna from TD Karen.

我們的下一個問題來自 TD Karen 的 Gautam Khanna。

Bob, based on your comments on the new business, the $140-ish million annually, 2/3 of which is titanium. So you got about $100 million of new titanium business. I was curious, does that pretty much exhaust all the opportunity of folks switching away from VSMPO. Or do you think there's still a lot of headroom left to get additional share. I'm just curious how your discussions are, largely concluded or they still going on?

鮑勃，根據您對新業務的評論，每年價值 1.4 億美元左右，其中 2/3 是鈦。這樣你就獲得了大約 1 億美元的新鈦業務。我很好奇，這是否幾乎耗盡了人們放棄 VSMPO 的所有機會。或者你認為還有很大的空間來獲得額外的份額。我只是好奇你們的討論進展如何，基本結束了還是仍在繼續？

Well, it's a never-ending process for sure. But I got to get you to put a new number on your pad. You got to think about $200 million of new business, of which $140 million is incremental to what we said before, right? So just to make sure we got the same numbers. Yes. So I think -- the other part of your question, I think that those are -- we're seeing orders against those commitments is what I would say, which is what's driving our lead times out I think the -- are all the contract commitments done? I would say no.

嗯，這肯定是一個永無止境的過程。但我得讓你在你的平板電腦上輸入一個新號碼。你必須考慮 2 億美元的新業務，其中 1.4 億美元是我們之前所說的增量，對嗎？所以只是為了確保我們得到相同的數字。是的。所以我認為 - 你問題的另一部分，我認為那些 - 我們看到了違背這些承諾的訂單，這就是我想說的，這就是導致我們交貨期超時的原因，我認為 - 都是合同承諾做到了嗎？我會說不。

There's still a couple of big ones that are out there. They don't all expire at the same time. So probably the next renewal point is probably 2026 orders and beyond. So as the wide-body comes back, people are reassessing or assessing where they need to be for the long term. So there's a couple of those. In terms of -- so it doesn't exhaust the opportunities. I think when we see opportunities to pick up or I would call it lack of performance by other industry participants. I think that will be a real concern of the OEMs on the airframe side and definitely on the engine side. So I don't think it exhausts the opportunity.

那裡仍然有幾個大的。它們不會同時過期。因此，下一個更新點可能是 2026 年訂單及以後。因此，隨著寬體機的回歸，人們正在重新評估或評估他們的長期發展方向。所以有幾個。就——所以它並沒有耗盡機會。我認為，當我們看到機會時，或者我會稱之為其他行業參與者缺乏表現。我認為這將是機身方面、尤其是發動機方面的原始設備製造商真正關心的問題。所以我不認為這會耗盡這個機會。

I think we're going to have probably the best titanium capacity situation for the emerging opportunities that come, not overcapacitized by any stretch, but we still see quite a bit of upside as the widebody market continues to recover. And I think there's probably some new product opportunities there as well. And then lastly, we're always using the 80-20 kind of market optimization. So where we have opportunities, we clearly continue to prioritize. So I think that's another upside for us in terms of how the mix can still be adjusted. And see, did that answer your question, Gautam, do I get them all?

我認為，對於即將到來的新興機遇，我們可能會擁有最好的鈦合金產能狀況，不會因任何延伸而產能過剩，但隨著寬體機市場的持續復甦，我們仍然看到相當大的上行空間。我認為那裡也可能存在一些新產品機會。最後，我們總是使用 80-20 類型的市場優化。因此，只要有機會，我們顯然會繼續優先考慮。所以我認為這對我們來說是另一個好處，因為我們仍然可以調整組合。瞧，這回答了你的問題嗎，高塔姆，我都明白了嗎？

Yes, I think you did. Just to be clear, so I understand it better. In terms of contract share opportunities, those are -- the emergent ones will be against supplier -- competitors that aren't doing as well. But in terms of like big opportunities to kind of reset share. Is that 2026 for the next big ones? Or is that -- I just want to make sure I understood that.

是的，我想你做到了。只是為了說清楚，以便我更好地理解它。就合同份額機會而言，這些新興機會將針對供應商，而競爭對手的表現則不佳。但就重置份額的大機會而言。 2026 年是下一個大事件的發生嗎？或者是——我只是想確保我理解這一點。

Yes. So we get the $1.2 billion, we'll start to see the benefit of that in 2024, right? And then the next ones you were asking if it was exhausted. And I would say, no, it's not exhausted. But the next real opportunity for upscaling would be shipments in 2026.

是的。所以我們得到了 12 億美元，我們將在 2024 年開始看到它的好處，對嗎？然後接下來你會問它是否已經用盡了。我想說，不，它還沒有耗盡。但下一個真正的升級機會將是 2026 年的出貨量。

And that's just a matter of the timing of some of the customer schedules and where they sit in their renewal process. But I do think there's opportunity.

這只是一些客戶計劃的時間安排以及他們在續訂流程中所處位置的問題。但我確實認為有機會。

That's very helpful. And then you guys talked about seasonality Q3 seasonal maintenance. Could you articulate what the sequential EBIT impact is to HPMC from that? And just if you could reflect on Q1's HPMC performance relative to Q2 because it looked like in Q1, the throughput wasn't as strong as it could have been. It was back-end loaded in the quarter. Did all of those issues kind of resolve and therefore, we had a very clean Q2? Or is there still opportunity that was on the table in Q2?

這非常有幫助。然後你們談到了季節性第三季度季節性維護。您能否闡明這對 HPMC 的連續息稅前利潤影響是什麼？如果您可以反思一下第一季度相對於第二季度的 HPMC 性能，因為它看起來就像第一季度一樣，吞吐量並沒有想像中那麼強大。該季度已進行後端加載。所有這些問題是否都得到了解決，因此我們的第二季度非常乾淨？或者第二季度仍然存在機會嗎？

Sure this is Don. Let me take a run. Yes. So let me take a run at that. So first of all, in terms of the -- let me answer the second question first. In terms of the Q1 to Q2 performance for HPMC, it was really about volume and price/mix, right? So some of the bottlenecks that we were seeing in the business were resolved in Q2 that released what had been some constraint in HPMC when we got through Q2. Are there more opportunities for that? Yes, we believe so quite strongly actually. And part of that has to do with the work that's being done around our work management and capital flows the inventory flows in the business, really improving that throughput, which will have a positive effect on sales and profitability, et cetera.

當然這是唐。讓我跑一跑。是的。那麼讓我來嘗試一下。首先，讓我先回答第二個問題。就 HPMC 第一季度到第二季度的表現而言，這實際上與數量和價格/組合有關，對嗎？因此，我們在業務中看到的一些瓶頸在第二季度得到了解決，當我們度過第二季度時，HPMC 中的一些限制得到了釋放。還有更多這樣的機會嗎？是的，我們實際上非常堅信這一點。其中一部分與圍繞我們的工作管理和資本流動以及業務中的庫存流動所做的工作有關，真正提高了吞吐量，這將對銷售和盈利能力等產生積極影響。

In addition to that, Kim and the operating teams are doing a phenomenal job identifying operational efficiencies and those are opportunities existing, not just for HPMC but also for the A&S business units. And so we can see over time that those would be additive to the performance in our business. To answer the question in terms of how to think about the seasonal outages that we talked about for Q3? Not much of that is really related to HPMC. So I wouldn't expect to see any significant pullback in terms of performance in HPMC in Q3. So that outage -- the outages are scheduled in Q3 in A&S. The way to think about dimensionalizing those think in terms of probably $8 million to $10 million of effect to the performance.

除此之外，Kim 和運營團隊在確定運營效率方面做得非常出色，這些都是現有的機會，不僅對於 HPMC，而且對於 A&S 業務部門也是如此。因此，隨著時間的推移，我們可以看到，這些將有助於提高我們業務的績效。回答如何看待我們在第三季度討論的季節性停電的問題？其中與 HPMC 真正相關的並不多。因此，我預計第三季度 HPMC 的性能不會出現任何重大回落。因此，停電 - A&S 的停電計劃在第三季度進行。考慮維度化的方法是考慮對性能的影響可能為 800 萬至 1000 萬美元。

And if you do the math on the EPS drop from Q2 to Q3, you'll see that kind of the general direction of that increased spend being reflected in Q3 performance. Now there's some offset. You'll see it in the math when you run the numbers. Obviously, we're expecting the A&D performance to -- especially in that HPMC side of the business to continue to perform well. And so that helps to offset some of that outage cost. And then, of course, as you saw in our Q4 indications, we're expecting a nice breakout quarter in Q4 based upon getting out of those outages, continued A&D strength, et cetera, et cetera.

如果您對從第二季度到第三季度的每股收益下降進行計算，您會發現支出增加的總體方向反映在第三季度的業績中。現在有一些抵消。當你計算數字時，你會在數學中看到它。顯然，我們預計 A&D 業績將繼續表現良好，尤其是 HPMC 業務方面。這有助於抵消部分停電成本。當然，正如您在我們的第四季度指標中看到的那樣，我們預計第四季度將在擺脫這些中斷、持續的 A&D 實力等基礎上實現良好的突破。

(Operator Instructions) Our next question comes from Timna Tanners from Wolfe Research.

（操作員說明）我們的下一個問題來自 Wolfe Research 的 Timna Tanners。

I just had two questions remaining. I was looking at my past notes and you had said that you expected that China hit, the disappointment in China to be a first half story with stabilizing or improving in second half. So is this a change to that? And what's embedded in your guidance now? Is it just assuming kind of soft conditions continue in China? Or anything you can clarify there would be great.

我只剩下兩個問題了。我正在看我過去的筆記，你曾說過你預計中國會受到打擊，中國的失望將成為上半場的故事，下半年將穩定或改善。那麼這是對此的改變嗎？您現在的指導中包含哪些內容？難道只是假設中國的軟環境持續下去嗎？或者你能澄清的任何事情都會很棒。

Yes. So if this is -- if this lacks clarity then please let me know, Timna. So you're absolutely right. When we were entered into 2023, we saw slowness carried over related to that Precision Rolled Strip business. And our expectations were that, that slowness would recover in the second half. We have not seen recovery in this Precision Rolled Strip business.

是的。所以，如果這是——如果這不夠清晰，那麼請告訴我，Timna。所以你是完全正確的。當我們進入 2023 年時，我們看到與精密軋製帶材業務相關的緩慢發展。我們的預期是，這種緩慢的勢頭將在下半年恢復。我們尚未看到精密軋製帶材業務的複蘇。

And so what we've assumed in the guidance is that the performance in Q2 off of that PRS business will continue through the second half of the year. If there is a recovery, obviously, that's an upside to our guidance.

因此，我們在指引中假設 PRS 業務第二季度的業績將持續到今年下半年。如果出現復甦，顯然這對我們的指導是有利的。

Okay. Helpful. And then a random question perhaps, but I know you used to be a big player in the electrical steel market, and that's been really, really strong. I would just -- wondered if it would even be possible to return to producing much electrical steel, whether it be nongrain or grain-oriented, my understanding is those margins have exploded over the last couple of years and demand is expected to be strong. So just wondering if it's possible and if you would think about it.

好的。有幫助。然後可能是一個隨機問題，但我知道您曾經是電工鋼市場的重要參與者，而且非常非常強大。我只是想知道是否有可能恢復生產大量電工鋼，無論是非穀物鋼還是穀物導向鋼，我的理解是，這些利潤率在過去幾年中呈爆炸式增長，預計需求將強勁。所以只是想知道這是否可能以及您是否會考慮一下。

Yes, fair question. I always like clear concise answers like you do, Timna, which is no, we're not getting back into that business. We made a decision back in 2015, 2016 based on the assets we had at the time to devote our capital allocation strategy towards aerospace and defense, and that's what we're still doing. We do see opportunities, I would say, in the magnetic alloys.

是的，公平的問題。我總是喜歡像你一樣清晰簡潔的答案，蒂姆納，這是不，我們不會再回到這個話題了。早在2015年、2016年，我們就根據當時擁有的資產做出了決定，將資本配置策略投入到航空航天和國防領域，這就是我們仍在做的事情。我想說，我們確實在磁性合金中看到了機遇。

So alloy differentiation where there's -- we see very good product opportunities and we see technology differentiating but in terms of the historical electrical steels or grain-oriented electrical steels, it's a big fat no, we're done.

因此，合金差異化——我們看到了非常好的產品機會，我們看到了技術差異化，但就歷史電工鋼或晶粒取向電工鋼而言，這是一個很大的問題，不，我們已經完成了。

There are no further questions on the line. I'll now hand back to David Weston for any closing remarks.

線路上沒有其他問題。現在我將請大衛·韋斯頓發表結束語。

Thanks again for joining us today. This concludes today's ATI Second Quarter 2020 Earnings Call. A replay will be available on our website. Thank you. Have a good day.

再次感謝您今天加入我們。今天的 ATI 2020 年第二季度財報電話會議到此結束。我們的網站上將提供重播。謝謝。祝你有美好的一天。

This concludes today's conference call, everybody. Thank you very much for joining. You may now disconnect your lines. Thank you. Have a good day.

各位，今天的電話會議到此結束。非常感謝您的加入。您現在可以斷開線路。謝謝。祝你有美好的一天。