Hello, everyone, and welcome to ATI's Fourth Quarter 2023 Earnings Call. My name is Nadia, and I'll be coordinating the call today. [Operator Instructions] I will now hand over to your host, Dave Weston, Vice President Investor Relations to begin. Dave please go ahead.

Thank you. Good morning, and welcome to ATI's Fourth Quarter 2023 Earnings Call. Today's discussion is being webcast online at atimaterials.com. Participating in today's call to share key points from our fourth quarter results 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, and they can also be found on our website at atimaterials.com. It is important to note that all of our financial data, both results and outlook, as well as our sequential and year-over-year comparisons reflect a change in pension accounting policy we announced on January 19. 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 accompanying presentation. Now, I'll turn the call over to Bob.

Thanks, Dave. Good morning, everyone. Q4 marked a strong end to another year of significant growth for ATI. This morning, I'll focus on three takeaways I believe best summarize the results we're announcing today. Number one, we're doing what we said we would do, executing our strategy of aerospace and defense leadership, delivering on our customer and shareholder commitments. The benefits show in our bottom line. Number two, we're sharpening our operational advantage, shifting our culture around inventory management. We're overcoming challenges uncovering new opportunities and positioning the business for long-term cash generation success and sustainable growth. Number three, we're well positioned in strong markets with years of continued growth ahead. Let's dive deeper into each of these, starting with my first point. What does it take to do what we said we'd do? It starts with execution across the enterprise, meeting our commitments is important to our team and it shows in our results. In the fourth quarter, we delivered ATI adjusted EBITDA of $161 million, which is 15% of sales. That's driven by continued strength in Aerospace and Defense. It was our highest revenue quarter of 2023 and our sixth quarter in a row exceeding $1 billion. Our quarterly adjusted earnings per share of $0.64 was above the midpoint of our November guidance. For the full year 2023, ATI adjusted EBITDA was $635 million including the benefits of our pension actions during the year. Full year free cash flow was $165 million. That's above the high end of our guidance range. What drove this cash flow? Purposeful and targeted inventory management initiatives and significant operational efficiency improvements. We're building strong momentum at the operating level. It gives us philosophy, speed and power defined direction. Let me share a few proof points of what made 2023, a great year.…

Thanks, Bob. Q4 capped off a great year for ATI. We delivered the highest quarterly revenue since Q2 2019. We also ended the year with a consolidated adjusted EBITDA margin of over 15%, an important threshold as we progress toward our longer-term targets of delivering adjusted EBITDA margins in the 20% range. We also delivered free cash flow above the high end of our guidance range. The actions taken related to our pensions, derisk the business, strengthen the balance sheet and will improve profitability for years to come. With that established let's jump into our performance. Our consolidated sales were 5% higher than Q4 2022 and up 9% for the full year. Those growth figures do not entirely reflect the underlying strength of customer demand. In recent years, we have increased risk sharing with our customers and lowered our volatility by adding pass-through mechanisms to our contracts. As those pass-throughs reduce risk they create fluctuation in revenues and margins from period to period. As a result of the decline in metal prices in 2023 most notably nickel, Q4 and full year 2023 had lower pass-through revenues than the same periods in 2022. Those year-over-year declines in pass-through revenue created growth headwinds of 3% and 1% for Q4 and full year 2023, respectively. Our HPMC segment continues its sustained performance. Fourth quarter margins were 21.5% built on our expanding A&D Foundation. The Fourth quarter in 2023 in total affirm the consistency and strength in this segment. Revenue and segment EBITDA increased sequentially and year-over-year, driven by the segment's focus on aerospace and defense end markets representing 86% of HPMC's Q4 sales. In the Fourth Quarter AA&S delivered a segment margin of nearly 12%. For two quarters in a row A&D sales in this segment were 35% reflecting the transformation that's underway,…

Thanks Don. Today marks a strong end to yet another great year. I don't think I'll ever get tired of saying that. This performance doesn't just happen. Our hard-working people across the enterprise are driving these results every day. Thank you to the entire ATI team. Aerospace and defense is a complex industry and we're living it complicated times. There's incredible demand. The signals aren't always clear, but at the end of the day two things give me tremendous confidence. The first, the fundamentals of the aerospace and defense markets. Our customers are turning their projections and growing demand into orders and commitments. We're honored to be their partner supporting their extraordinary performance earning their first call. Q1 has some challenges but we have our arms around it. 2023 was a great year and 2024 is shaping up to be even better. The second thing that gives me confidence, our ability to deliver. Our capabilities in material science and our advanced process technologies are the best in the business. We're sharpening our operational advantage, executing with disciplined efficiency and resolving bottlenecks to accelerate our results. Our team is committed, competitive and here to win. This puts us on a strong trajectory to achieve our 2025 and 2027 goals. We're focused on exceeding $5 billion in sales and $1 billion of EBITDA within the next four years. We are proven to perform. With that let's open the line for questions. Operator, we're ready for the first question.

Thank you. [Operator Instructions] And our first question is to Seth Seifman of JPMorgan. Seth, please go ahead. Your line is open.

Hey thanks very much and good morning everyone. Wanted to make sure I understood some of the dynamics around some of the bottlenecks that are there now and the way things might improve going forward. It looked to me like the airframe sales in A&S were down a decent amount sequentially in Q4. I guess, is that correct? And is this some of the debottlenecking that's going to happen through the year? And how do you see that kind of recovery playing out getting back to the levels we saw in sort of the first three quarters of the year?

Sure, Seth. I think the question you're asking about aerospace, I think you also have to throw in the defense bucket probably what you saw in Q4 is incredibly strong defense sales picking up. So they're all running through that same low path predominantly plate is where we're seeing some of the debottlenecking being required, whether that's process control equipment or twist to make sure that we're covering it titanium, titanium and nickel and some of the PH grades we make require some slightly different process times. So we're working through that. But I think, when you look forward, the order is very strong for aerospace. The airframes are back. I mean we're going to see continued growth through the year. I think, overall I think Q1 was just kind of mixed up with the defense activity that was pretty heavy in Q4.

Okay. So we should think about that as more of a shift, rather than sort of a decline in the airframe? A shift in where you're directing the capacity.

In the fourth quarter. I think that's true. Yes, you'll see it return to strength yet. These airframe guys they kind of go up. We talked about the stairstep and the lead times remember when we were booking Q4 of 2023 that was like 12 months before. So, obviously the defense demand is somewhat emergent and they've got some big programs they're trying to deal with. So it's just a matter of how the orders fell into the quarter. But long term, we don't see anything disrupting the strength of the airframe side of the business. In fact, that's where we're spending a lot of time debottlenecking at the moment.

All right. Okay. great. Thanks. And then I guess just in terms of the cash flow, do we think about sort of a typical profile with a pretty significant outflow in the first quarter of the year? And does that impact the way you think about returning cash this year?

Hey, Seth, I'll take that one. Generally the pattern is going to be similar, but the magnitude from quarter-to-quarter, I think, you're going to see an improvement. So what do I mean by that? Our seasonality typically has a heavy use of cash at the beginning of the year, as we're positioning for inventory builds and the ramp that we expect throughout the year. We've spent a significant amount of energy improving how we're managing inventory. We saw some of the effect of that with our 31% ending inventory, or measuring capital level. So when you think about our cash generation by quarter for 2024, you're still going to see a use in Q1 rather, but it's not going to be as heavy a use as you saw last year. I would expect last year was a use of something in the range of $300 million. I could see definitely less than $200 million. Then as you progress through the year, you're going to see in Q2 a marginal improvement from what we saw last year, I'll be in the range of probably $50 million of cash generation. You're going to see that increase in Q3 where it's probably two times to three times that level. And then when you get out to Q4 it will still be a heavy cash generation quarter for us. But it's not going to be as strong, as we saw for example in 2023 because we've levelized that cash generation a little bit better in the business. And then as you look past that because I know you do your long-term models, I think what you should expect is we're going to continue to get better and better at levelizing the use of cash in the business.

Okay. Okay. And then last one here. Just a follow-up on the deployment piece of that. I guess about $750 million on the balance sheet at the end of the year and looking to generate about 2.85. If you use the $150 million buyback you still have about $875 million on the balance sheet at the end of the year. Is that is it necessary to have the cash balance increase over the course of this year? Or might there be some other opportunities for deployment?

Yes. So let's talk about that. Our goal is not to become a bank, okay? We don't see a lot of value in building cash balances and holding them on the balance sheet. We want that cash to go to work. We've been really, really clear on our three destinations for capital. We shared with you guys today we intend to spend about $200 million on organic growth through CapEx and again in 2024. In terms of delivering, we took a huge step forward in delevering when we executed the pension annuitization transferred $1.4 billion over to third parties. We don't have any debt maturities that are scheduled really before 2025. It doesn't mean we might not take some actions to reduce our gross debt. But I think the way to think about it is, I would not assume significant cash use for delevering in 2024 as you're modeling it. Well, to your point that leaves a chunk of money at the end of the year even after we execute our $150 million share repurchase program. Now there are some other uses of cash that you'll see in our cash from our cash statement down to the financing section. They're about $50 million just to refine your number, pay some operating leases and things like that. But the core of your question is really about, Don are you guys going to do some more share repurchases, right? Is that what you're kind of wondering? And after we're done with $150 million current program, what I would say Seth is, listen, returning capital to our shareholders is a high priority for our Board. It's a high priority for the management team. Clearly, it's a high priority for our shareholders. When we're done with the current program, we will talk to our Board. We're going to be in a healthy liquidity position. We have never anticipated that the current $150 million program will be the last program. So, you can interpret that as you think appropriate.

Great. Thank you very much.

Thank you. And the next question goes to Gautam Khanna of TD Cowen. Gautam, please go ahead. Your line is open Q – Gautam Khanna: Hi. Good morning, guys.

Hi, Gautam. Q – Gautam Khanna: I was wondering, if you could put a finer point on the Q1 guidance, with respect to segment EBITDA at AA&S and HPMC.

Sure Q – Gautam Khanna: Why don’t I tick mark..

Yes. So certainly the bridge that I shared with you in my prepared remarks, gives you a sense of how to think about that relative to the Q4 levels of performance. So you think about that bridge from $0.64 to the $0.40 range, we're seeing some impacts in both of the segments that are causing that decrease in EPS. So, let's get to specifics. When you look at the impact of the severe Arctic weather pattern in our AA&S business and that hit in that Oregon facility, we're seeing about $0.03 of impact in Q1 another roughly $0.03 of impact in Q2. So, again, that's on the AA&S side and the translation back to EBITDA means you should expect about $2 million for every $2 million of EBITDA for every penny of earnings. So, that allow you to do the math on that. And then, as far as the other drivers, we do note that STAL is one of the elements of that bridge. It's not a huge element to be honest there's Lunar New Year [ph]that happens literally every year. And so that's a penny sequentially. So you can bake that into how you think about STAL. That will just refine your numbers. Then on the HPMC side of the house, that's where those melt outages really into play. So I noted that there's about, an $0.08 debit that's created on the HPMC side of the house because, with those outages it meant that we don't have material that we would otherwise be selling in Q1. That $0.08 equates to about $16 million plus or minus of EBITDA. So does that help you, Gautam? Does that kind of give you an idea of, how to think about that? Q – Gautam Khanna: It does. It does. I just wanted to make sure that as that the $6 million or what have you of EBITDA being sequentially plus the STAL impact is the only impact? Are you actually seeing markets weaken sequentially, beyond the Arctic weather and the STAL issue? I mean, are you seeing just prices rolling over because nickel prices and surcharges have come in, et cetera. Is there anything beyond what you specifically highlighted?

Yes. I think from a color standpoint, we were pleased to see where the industrial demand has stabilized for the AA&S part of the business. That has a couple of benefits. One, I think the indicator is a good guide in terms of volumes at a minimum it's kind of flattish and potentially up from Q4 to Q1. Another thing that would benefit us potentially is when you see that demand increase in orders coming in, what that would typically mean is a firming up of prices. We did see some negative impact of price from Q3 to Q4, due to industrial softening but not dramatic. And so I don't see that as a headline kind of number going into Q1. There are some other odds and sides that I won't drag you through metal prices for example have softened globally. And we do see that certainly in our pass-through revenues. I'm not going to drag that answer into your question. But there would be probably a marginal effect truly marginal to AA&S related to those metal price movements in Q1 but they're not headline kind of figures.

And just if I could have the liberty of asking two trick ones beyond that. First, I was curious, the 2027 targets did not change, correct? I think there was some language around $1 billion but the range is still $1 billion to $1.2 billion in EBITDA. Is that correct?

Yes. Neither the 2025 nor the 2027 targets have changed period.

Okay. Good. And then on the HPMC melt outages were these on plans? And just if you could elaborate on what specifically happened? Was this planned maintenance outages or these unplanned? And if they were planned, why weren't they conveyed around the Investor Day? Thank you.

Yes. I think – yes third question. I think about 50-50 is how I would put it 50% unplanned and that was pretty much on the melt side, where you just get a failure? Or do you get some kind of an electrical problem or different pieces but it was equipment related and/or we're still going through some operator training issues and crewing issues. So those – about 50% was melt and it was pretty much unplanned and happened pretty quick. And – but any melt is important met today. The other issue that we certainly dealt with was planned outage for a particular press. Usually we do those in about a week. I think this one took about 2.5 weeks to kind of get where we want it to be. And the challenge specifically, was the outage occurred at the bottleneck, right? And so you got to have outages a lot of different places but this one we pushed it as far as we could. We recognize we needed to do it. We recognize that we need to do it quickly. So we did it. And yes, why wasn't it conveyed? Fair question. We probably thought it was going to be less of an impact at the end of the year but that's the reality of where we are. But again, we did it to ensure that we had what we needed for 2024 and beyond.\ Some of these maintenance cycles – they can be two, three, four years. And we see that in the industry, where you take something down for a week and other people are down for six weeks, right? So I think that's part of the planned maintenance that we need to make sure we're on top of.

Thank you.

The next question goes to Richard Safran of Seaport Research Partners. Richard, please go ahead. Your line is open.

Bob, Don, David, good morning. I have a question on titanium. And I wonder if you could expand a little bit on your opening remarks about the titanium capacity increases here. I'm trying to get a sense of how accretive titanium is to margins. And also, I'm assuming some part of this is relatively new contracts, due to the VSMPO market share pickup. Is that correct? And I'm also assuming that most of the margin contribution comes in 2025 and not 2024. Is that the way to look at it?

See there's like eight questions in there Richard, I have to peel them out for you. So I think if you go back to June of 2023, we announced $1.2 billion in long-term contracts that would carry us from 2024 to 2029 or the balance of the decade. That is true and that's what we're seeing, right? We're seeing the customers respond. If you go back to June of 2023, however, our lead times were already out into the middle part of 2024. So that's why we're seeing this very strong second half as these orders are kicking in. Our capacity from what we're doing in Oregon is flowing through to those orders. We don't cast or melt anything that doesn't have a specific order. So we see that material flowing everything is working. So I think one of your questions was we've seen the benefit of everyone else leaving the Russian supply source. We're seeing it. In some cases, we feel we're getting more than our fair share of that. So that's part of the answer to your question. I think -- we're debottlenecking everywhere we can. We've historically been kind of heavy nickel less titanium airframe, I think we're going to be much more balanced in the future. So some of our processes require some debottlenecking. The processes are slightly different and we have to address that. I think in terms of demand, I would say about weather for us is clearly wide-body demand kind of came in to the point where we were doing 12 wide-bodies a month, now it's 15 probably going to go to 19 probably going to go to 24 over the next couple of years. So the real strength of the market for titanium is yet to come. We're seeing a lot of defense activity and that's kind of coming through at the same time. So I would just say when you think about titanium and you think of ATI, about half of it is probably the big B related 20%, 30% is probably the big A and the rest is defense. So all that growth is hitting home kind of as we hit the mid part of the year into the next couple of years. Don, did you want to -- here some questions I think Richard had that you could help him with.

Sure. Why don't I add just a couple of things. One, I think you asked Rich is titanium accretive. The short answer is, yes. It is an accretive product space for us. The second question, I think that you also asked was in regard to the capacity. And maybe I can add to what Bob shared around capacity. So we have talked repeatedly about we're adding 45% of our titanium melt capacity on existing assets. And so to give you an idea of kind of how we're seeing that staged in 2024. So you guys have a sense of what that build looks like relative to a run rate. The way you want to think about it is go back to the original targets that we gave, and what we said is, related to this 45% increase in our melt capacity, we expected that capacity to add in excess of $150 million of revenue might even share something closer to $160 million of revenue at run rate, and assume 30% margin. So, those numbers still hold. I think that there may be some upside to them, but we will share that at the right time. But then the question is when do we hit the run rate? What does that look like? We've talked about the second half of 2024 being a really strong second half relative to first half. This is part of the reason. And so, what you want to think about is for these assets, we expect that they're going to be at the run rate capacity from an income statement standpoint and we see them as kind of building from maybe -- it would be split 40%-60%, if you will 40% of that contribution we'd be seeing in the first half and 60% in the second half. I know, I'm mixing math here, but it gives you an idea of the step change that we're expecting from half to half. So hopefully that's helpful.

Yeah, I appreciate it. Now just real quickly, I get the impression from your slides that the supply chain issues are pretty much over for you. I think you said manageable. I just wanted to set expectations. From your standpoint, are sales and margins no longer going to be impacted by the supply chain constraints we've seen?

In ATI? No.

Correct.

Yeah. We think they're behind us. The bottleneck issue was around the first step in the process from -- testing to using the billet. That's why the billet press was important. It was originally designed to be a nickel press. And when you shift over to titanium, you have to add a couple of pieces to the puzzle to make sure you're making a quality titanium part, different temperature, different issues. So that's behind us. I think we eat and breathe the issues around all kinds of melting. That's why we talk about being melt long. We're not investing huge amounts of money in melting other than what we talked about with titanium, which within our guidance. I do think there are two issues that are out there in the marketplace that we are working. One is what I'd call contracted services with significant training or certification requirements, which makes it hard for contracted services to ramp quickly. Some people see that as like ultrasonic inspection and some of that in aerospace is kind of under the rest with some of the other activities that are going on in the market. The other issue is there are some single points of failure out there. We get -- we're part of directed buy contracts with our major OEMs where they ship and bill it to us. And there are a couple of other parts of the supply chain where they've had a failure, I think extrusion facility in Texas has had a problem that affects some of the supply chain. But those that are within our control and those things we can manage we feel very confident that we have what we need to execute in 2024.

Thanks very much.

The next question goes to Timna Tanners of Wolfe Research. Timna, please go ahead. Your line is open.

Hey, good morning, everyone. Two questions from us.

Good morning, Timna.

Just to clarify and understand outlet. Good morning. So, just wanted to see, if you could elaborate on the comment about taking actions operationally to align with lower demand. Is that short term, long term, if you could just explain that?

Yes. I think that was me to make that comment. And it was really about our activities in the AA&S segment related to the industrial markets. You know, one of the industrial markets that's in there is some of the I call it the nickel clad pipe projects for oil and gas basically in Brazil those kind of places. We want to make sure we got the right amount of capacity there. We're also seeing like everybody a little bit of softness in the residential construction space. So we have some engineered products that go into that space. And then we obviously watch the distribution channel although the vast majority of what we sell today is the OEM direct we still see some inventory destocking going on in those places, but it's mostly in the AA&S segment and it's stabilized I think is the key. So the headwinds are still there, but they're not getting any worse. And we are seeing some signs of life and green shoots for Q2. But hopefully that helps. Is that what you're looking for Timna?

Yes. I'm just trying to think about how material they could be so some tweaks or if we're talking about big changes there.

Yes, that's weak. They're in the tweak category.

Okay.

So whenever you're doing dealing with your cost structure you wouldn't call them necessarily tweaks because it can involve people and crewing and shifts and that kind of thing. But I would say they're modest at best. I think most of them have already been taken. It's just a matter for them to show up in the results which should be by Q2.

Got it. Thank you. Okay. So the next question was just about the metal price impact. So I just want to understand that better because if you look at nickel. The big shift in prices I mean it was a terrible year for nickel last year, but the bulk of that commodity price change was in the first half of the year. So just thinking about that for -- going forward should we think about just annualized impact rather since you said it was more Q4 weighted? Or how should we think about the impact of metal price changes for the future?

So just to make sure that we're in sync back in my mind I saw -- I'm recalling that nickel prices in the latter half of 2023 really saw their slide and first half relatively stable not massive changes to 2022 levels. But then when you get to Q4 2023, we really saw continued meaningful step down to like the $7 per pound range. So the way to think about that is in our business there's a little bit of a lag in terms of the effective metal. And one area where I really focus the listeners is around our pass-through. So our team has done a really good job adding pass-through mechanisms to our various contracts. And so as a result as the metal prices and those material prices move around then we could see our pass-through revenues increase or decrease. Case in point go back to 2022. I shared at the end of last year's call that we saw our pass-through revenues increase in 2022 in the range of $300 million because metal prices went up and that inflated our revenues, okay? Now metal prices have kind of retraced to where they were before the -- I'm talking nickel in this case retraced to where they were before the Ukraine invasion. And so a lot of that lift that we saw going into our pass-through revenues has begun to go the other direction. We saw about $15 million of negative impact on our revenues in Q4 and here's what we're thinking. If the metal prices remain at about the same level they are now plus or minus then as you think about that reversal of our pass-through revenues Timna, I would expect our pass-through revenues in 2024 will probably be, I don't know $175 million, $200 million lower than we saw in 2023. As you know there's not a significant impact to our bottom line because of changes in pass-through. But as you're trying to get a feel for our underlying growth rates for revenue, it's an important thing to make sure that you have built in. Does that answer your question and help you?

Yeah, I think so. We can definitely follow-up, but that's a helpful reminder. Thank you.

Thank you. The next question goes to Michael Leshock of KeyBanc Capital Markets. Michael, please go ahead. Your line is open.

Hey, good morning. I wanted to ask more broadly on the aftermarket side within commercial aerospace, obviously, seeing some strong demand there right now. But could you talk to some of the pockets or platforms within MRO that are maybe elevated right now? And then if there's any way that you could frame the duration of that aftermarket strength that would be helpful.

All right. I'll give it a try. And so our aftermarket is predominantly jet engine spares. And so we are seeing elevated spares demand. Historically it's about 25% of our mix. I think today we've said it's by closer to 40% and there's a couple of different reasons for it. And you kind of have to go almost, I don't want to say too much about each individual engine platform but you have to look at it from each individual engine platform. I think there's some widely discussed issues with the GTF. And there are other issues in terms of just different versions and different kits that are being put in different engines. There's also the extended use of narrow-bodies anytime you're in a major airport and you see an MD-80, say, they're all out of the desert. Everybody is looking for narrow-bodies. And I think that's the extended cycle from people are reaching the point where they have to make the commitment to major maintenance and engines and overhauls because it's going to be a while before they get their next narrow-body plane. The wide-body side more and more planes are in the desert where there's more sandy conditions that kind of thing. So I think all the trends for us, we do see that some engine programs will kind of revert back to the mean here in terms of spares, but for the foreseeable future. I think there's enough drivers outside of the norm that's going to keep that spares level elevated for, I would say, a couple of years I think it all gets sorted out. Hopefully that helps.

We don't really have much in MRO. Yes. I'm sorry. Go ahead.

No, that's very helpful. I just wanted to ask lastly on inventory management. You had touched on that. How do you see your inventory progressing throughout 2024 just given some of the moving pieces with the outages and the underlying commercial aerospace ramp? Is there a level that you're targeting or inventory turns? What way do you frame that? Thanks.

So let me frame it not just specifically for inventory but how we're thinking about managed working capital in general. Understanding that inventory is the primary piece of management capital. So, we made some really good progress here at the end of the year getting our overall managed working capital down to much, much closer to our 30% target. As you think about 2024, the way you want to think about it is, we are working very hard to not build inventory as we have done historically during the year. Keep it really tapped down so that it's not a drain on our cash. So that is a clear effort and you should expect to see improvement year-over-year in that area. In terms of the overall year and what are we expecting from managed working capital, we expect that we're going to by the end of 2024 and at the 30% target and very possibly marginally below it. And so that's how I would describe it. Does that help you?

Yes, it does. Thank you.

Thank you. The next question goes to Josh Sullivan of the Benchmark Company. Josh, please go ahead. Your line is open.

Hey. Good morning.

Good morning.

Just as a kind of follow-up to that inventory question. On the narrow-body customer developments you mentioned in the prepared remarks, what do you think your customers' willingness to hold and build inventory looks like is these narrow-body developments are digested? One of the OEMs talked about the issue is actually an opportunity for the supply chain to catch up. But I'm curious what your thoughts are about customers and inventory levels.

Yes, fair question. I think there's a lot of noise in the system at the moment, whether that's in the US system or the European system, engine programs, airframes a lot of noise, right? But we're not seeing any change in behavior in terms of buying patterns or on the airframe side, and certainly not on the engine side. I think the disruption in the spares or the need for more spares around the GTF is having a positive effect for those of us who supply materials. Certainly, engine guys don't want to be the laggard, they don't want to be the bottleneck either. I think they are working to get ahead. There's also a tremendous influx of defense applications whether it's rotorcraft engines or airframes, there's a lot of activity there, helicopters in particular. But we're not seeing any let up from the engine producers. And for us, we've materially broadened our market position. So we've always said, we love every airliner that flies in every engine that powers it. And that's more true today than ever before. So today I think -- these companies are big companies. They have great capabilities. They're going to sort themselves out. And I think when they do sort themselves out nobody wants to be the ultimate bottleneck in the supply chain.

And then maybe just one on the nickel powder market. I think you mentioned isothermal forging was a highlight. I know titanium gives a lot of focus here, but how does the nickel powder market look like?

Yes. I mean, we feel good about it. Yes, normally, we've been talking all about nickel powder, but titanium has kind of been the topic of conversation in 2023, it's strong. We're on some really great programs that are really ramping up. I think, we've been focusing on yield, and obviously, in the short-term, we can get your yields up 40% that pretty much covers some of the capacity issues that we have in the short to medium-term. But it continues to be strong. I think when you look at some of these single points of failure that are occurring in the market, especially on the nickel alloy side, if there's a single point of failure, and we're not the supplier, it just opens the door for us, and gives us an opportunity to do more. So we actually see not only volume growth, but share growth potential there in the next couple of years. So is it going to be tight, it's always going to be tight, because we don't want to have a lot of excess capacity in the system. But I think we're taking steps both in our process improvement and with our customer relationships to move and see the growth there.

Hey, Nadia, this is Dave Weston.

Okay. Thank you.

This is Dave Weston. I think, we've reached the window of our time. I'd like to thank you for coordinating the call, and thanks everyone for joining us today. This does conclude our ATI Fourth Quarter earnings call. A replay will be available on our website. And our Investor Relations team is here to assist with any follow-up questions that you may have. So thank you and have a great day.

Thank you. This now concludes today's call. Thank you all for joining. You may now disconnect your lines.