Hello, and welcome to the ATI Third Quarter 2023 Results Conference Call. My name is Alex, and I will be coordinating the call today. I now hand it over to your host, Dave Weston, Vice President of Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to ATI's third quarter 2023 earnings call. Today's discussion is being broadcast on our website. Participating in today's call to share key points from our third 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. It can be found on our website at atimaterials.com. After our prepared remarks, we'll open the lines 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.

Thanks, Dave. Good morning, everyone. Q3 marked another solid quarter of A&D growth and continued margin expansion for ATI. This morning, I'll highlight three major points: first, aerospace and defense market demand for ATI products is strong, and we expect continued growth for years to come; second, our transformational actions are driving meaningfully improved results; better still, we're in the early stages of the journey with many benefits yet to come; third, our strong execution is delivering for our customers and shareholders. First up, the continued strong aerospace and defense market demand for ATI's products. Order lead times for some specialty product lines are out as far as the first quarter of 2025, and we're still years away from peak airframe build rates. Recent world events reinforce that safety, security, and sustained performance remain more important than ever. ATI is well positioned to deliver on this expectation. We have the right products, the right capabilities, and the right team. A&D sales hit 61% in the third quarter, up from 58% in Q2. This is an all-time record for ATI, and we're well on our way to our 65% target. What drove this expansion? Another significant step-up in airframe demand, notably in titanium. Shipments of airframe materials surpassed $200 million in the third quarter, which is up more than 50% from the third quarter last year. It's a new record for us, surpassing our prior Q2 2019 high watermark. We achieved this ramping build rates, realization of well-earned share gains, and hard work commonly referred to as operational execution. Our increased titanium melt capacity in Oregon has been a critical enabler to our top line growth. The modest investment to restart these three furnaces, coupled with additional steps that optimize overall melt throughput, helped expand our titanium melt capacity by 35% over the 2022 baseline. It's now producing at full run rate. Customer commitments for ATI titanium are so strong that we're currently bringing online a fourth and most likely the last furnace at that same Oregon Milk facility. This additional furnace will produce high-value specialty titanium alloys that are in fierce demand by our customers with critical applications. It fills another gap left by the geopolitical disruption to the supply chain. This latest incremental step, coupled with highly efficient execution, by our operating team will enable an additional $50 million in titanium revenue per year. We're on track to ramp capacity in the first half of 2024, reaching that higher full run rate in the second half. This investment falls within our existing CapEx guidance. All in, we've increased titanium capacity by 45% through restarts and optimizations, up from the 35% we previously forecast. How strong is titanium demand today? In just 12 months, total ATI titanium sales are up approximately 75%. It's an incredible ramp, strong demand, customer commitments and these timely and efficient capacity additions mean, in some cases, we're the only game in town. The stronger bottom line results are clearly ahead for us. Pretty exciting time to be part of ATI. Let's move to my second point. Our transformational actions are making a difference. They're delivering increased profitability with more room to expand. ATI's transformation, which began in the depths of COVID, is driving meaningful results in the business today. This was another quarter of sequential EBITDA growth and margin improvement. HPMC's EBITDA margins hit 21.5% in Q3. We're making great and steady progress. By 2025, we target delivering HPMC margins consistently in the low to mid-20% range. We're working every day to accelerate shipments, debottleneck and streamline operations, and optimize flow times throughout the system. As this high-value material works its way through ATI's finishing facilities, downstream operations are being tested and are delivering more than ever before. We're not immune to challenges; new bottlenecks emerge and sometimes electrical transformers fail. That was the case at our Lockport, New York mill operation in Q3. While the operating team got the power back on relatively quickly, the outage created a potential deficit in our Q4 shipments. The team has responded aggressively, taking steps to significantly offset what otherwise would be a Q4 bottom line impact. Strong demand means we've been running hard, so we're increasing our focus on preventive maintenance to ensure consistent operations. In our Advanced Alloys & Solutions segment, aerospace and defense mix continues to improve. It reached 35% in Q3, which is 8 points higher than a year ago. That's good news when you think about long-term growth opportunities for these markets. Industrial demand has softened. We know that's caused by transitory conditions. Operationally, we've taken actions to align our near-term cost structure with this lower demand. Commercially, we're focused on optimizing our product mix. It's another reminder why being an aerospace and defense leader is at the core of our strategy. We're at our best in markets with long-term growth potential, where ATI's differentiated capabilities are critical to our customers' success, and where the returns generated reflect the essential value of those materials. What else are we doing to transform? In October, we announced that we have reduced our qualified pension obligations by 85% through annuitization and made additional contributions, which we expect will fully fund the remaining 15%. Let me take a second to be clear here. This is a huge milestone for us and for the team at ATI. We worked on this a long time. We've talked about it in almost every earnings call for 5, 6, 7, maybe a decade years. But we've been very deliberate in getting here, meeting our commitments to our retirees and shareholders. I'm pleased that we're at this point and appreciate the team's hard work and diligent preparation for what we accomplished. This transaction significantly derisks ATI's balance sheet and enhances our ability to generate substantial cash flow going forward. As we shared, this pension annuitization has the greatest benefit to the AA&S segment, where we should see meaningfully lower pension expense starting this quarter. My third point today, ATI continues to deliver. Our adjusted earnings per share were $0.55. This is above the midpoint of our August guidance. We see this momentum continuing into 2025 and beyond. Now Don will take us through the financials and talk a bit about Q4 and what's ahead. Then I'll be back to close out and take us into the Q&A.

Thank you, Bob. Our third quarter reinforces our strong foundation, rooted in growing A&D content, which is serving us well. Our adjusted EPS of $0.55 per share outperformed the midpoint of our guidance. Keep in mind, the prior guidance did not include $0.03 of interest expense related to debt supporting the pension annuitization and funding. The strength of our A&D business allowed us to increase total adjusted EBITDA margin while delivering our fifth consecutive quarter of revenue above $1 billion. As we look ahead to the fourth quarter and beyond, the resiliency of our performance and growth continues to carry our business and support value creation. In HPMC, our A&D content increased 200 basis points to 85%, supporting an increase of EBITDA margin to 21.5%. The mix, pricing, and performance of this segment are all in line with current market conditions and the optimization of ATI around this building demand. EBITDA margins in our AA&S segment at 10.4% reflect the previously communicated seasonal Q3 outages, which impacted the quarter's margins by approximately 200 basis points. AA&S margins should increase in the fourth quarter driven by our production cycle and continued growth in our A&D and A&D-like markets. We will also see initial benefits from the recent pension actions. I would also note that we are ahead of our SRP transformation timeline, and we remain confident in our ability to deliver AA&S's 2025 EBITDA margins in the mid- to upper teen percentage range. Turning to the balance sheet, we have a lot in motion as we continue to reshape this business for strong future cash generation. Managed working capital remains a focal point. Despite the level remaining near 40% of sales through Q3, we project meaningful improvement to manage working capital levels in Q4. This will be driven by inventory reductions as well as receivable and payable performance. Those initiatives are in process as we speak. Inventory is a key target area for improvement as demand in our front-end melt capacity increases. Our team is optimizing that growth as it flows through to finished product and testing. We anticipate year-end managed working capital will be between 31% and 32% of sales. This is slightly higher than our previous expectations, but we expect to largely offset that impact through CapEx management and performance in other areas. Therefore, we are narrowing our full year free cash flow guidance range to $130 million to $160 million. Q4 cash flow should be very strong. While talking about the balance sheet, I want to further highlight the impact of our recent pension actions, including the annuitization. You'll recall, we've taken many steps to reduce exposure over the past several years. Even so, our pension assets and liabilities still represented an element of forward risk for our shareholders, driven by market forces beyond our direct control. With the pension annuitization, approximately 85% of that risk has been successfully transferred out of ATI to a trusted and qualified third party. As a result of additional planned contributions, we expect our remaining obligations to be fully funded. As such, we no longer expect to make any material cash contributions to the qualified pension plans. I also want to emphasize that the annuitization and other pension actions taken in 2023 are expected to deliver substantial earnings benefits. Specifically, we expect to see annual pension expense drop more than $45 million from pre-annuitization run rates. These glide path steps have delivered the outcome that we were striving for, which largely gets us out of the pension business. Our cash balance exceeds $400 million following this activity. With a strong fourth quarter for cash flow, our outlook for net debt will only improve going forward. We intend to continue to deliver a balanced capital deployment strategy, funding growth while also deleveraging and returning capital to shareholders. To that end, we purchased approximately $45 million in outstanding shares in the third quarter and expect to complete our remaining authorization of $30 million in the fourth quarter. We expect this cycle will continue and strengthen in the future with growth, performance, and reduced volatility on our balance sheet moving forward. Let's take a closer look at our guidance for the remainder of 2023. As we estimated previously and reinforced with these results, we're tracking towards a strong fourth quarter and should carry momentum into 2024. As we approach the end of the year, we're tightening our guidance range for full year EPS to $2.20 to $2.30 per share, holding the previous midpoint of $2.25 per share. At this midpoint, our Q4 EPS was centered at $0.62, representing the highest quarterly result for 2023. Robust A&D demand and increasing capacity, along with optimized cycles and performance, point to this high water mark in EPS as we look ahead. As I noted, our free cash flow estimate remains consistent with prior expectations. We're balancing the working capital pressure driven by our increase in sales with continued prudence and tight discipline of our capital investment. All significant expansions and projects, including our newly announced classified facility for additive manufacturing, remain on schedule. With that, we are still able to lower our current-year capital expenditures to a range of $190 million to $210 million. While we're not yet providing formal guidance for 2024, I will tell you that we see continued growth and expanding performance for next year, directionally in line with the targets we have previously outlined for 2025. At our upcoming investor update on November 29, we intend to offer more clarity and visibility into this growth. We'll also provide new perspective and details on the continued upward trend for ATI through 2025 and beyond, including insights into our 2027 financial targets. We hope you'll join us in person at the New York Stock Exchange for that event. By the way, registration is available on our website. With that, I will hand the call back over to Bob to conclude our opening remarks.

Thanks, Don. These are truly exciting times for ATI, and I'm confident in our sustained momentum and trajectory. Best of all, even 2025 won't be the peak of growth for ATI. We have many more years of growth ahead with clear visibility and long-term agreements extending into the back half of the decade. We continue to shape our business to capitalize on increased demand while also insulating our business against future risk. I hope you'll join us later this month for our investor update in New York. As Don said, we'll talk a lot more about what that growth looks like and what it means for ATI and for our shareholders. With that, let's open the line for questions. Operator, we're ready for the first question.

Our first question for today comes from David Strauss of Barclays. David, your line is open. Please go ahead.

I wanted to clarify the outlook for AA&S in the fourth quarter, Don. So I think you talked about in the release about assuming stable performance in the fourth quarter. But then in your remarks just now, you talked about margin improvement on the back of the pension, lower pension as well as not having outages. So if you could just kind of square the two, what exactly you're assuming maybe top line and margins for AA&S in Q4?

Yes. Great. Fair question. So for clarification, when we talk about stabilization, that was really a reference toward what we see in terms of sales trends. We've seen some headwinds around the industrial, but we also see some tailwinds and good mix change in AA&S related to their A&D exposure. But when we look at that overall business Q3 to Q4, we're really looking at a stabilization from a top line standpoint. But you're right, when you look at the bottom line, you would expect, hey, if you posted 10.4% margins in Q3, are you saying you're going to expect similar margins in Q4? The short answer is no. We would expect that the EBITDA as well as the margin should improve in AA&S in Q4. A couple of reasons to point to. One, Q3, we had some major outage costs, think in terms of $8 million to $10 million of those outage costs. Those won't repeat in Q4. Second good guide that we would expect in Q4 is tied to the pension. And we've talked about the pension, $45 million good guide on a run rate basis. We will see some of that benefit hit us in Q4. When you think about the effect to AA&S, you want to break it down like this. That $45 million annualized breaks down to about $11 million plus per quarter. We're not going to get a full quarter's worth of that benefit. Of that $11-plus million at the corporation, we're going to get somewhere between $7.5 million and $9.5 million just because it's a partial period. I think we're going to get the higher end of that element. When you break it down and say, okay, how much of that is AA&S? Think in terms of probably about 75% is AA&S's share. The rest would be split between corporate and HPMC. Does that help you a bit?

Yes, that's more than I was hoping for. A quick follow-up for Bob. So one of the large engine manufacturers is looking to replace a lot of dips here over the next couple of years. Is there any incremental opportunity for you guys in terms of your Forged disk business to help out there and pick up some share?

Yes, that's a good question, David. The straightforward answer is yes. In the near term, we're collaborating closely with the engine producer to ensure their current flow paths remain efficient. With the increase in shop visits, we're receiving additional spares and other items. In situations like this, there are often chances for second sourcing or backup sourcing for both raw materials and forgings. We have a strong relationship in place that we believe will continue to grow. So, in the near term, we're focused on supporting them with flow improvement. Looking ahead, there are potential opportunities related to raw materials and forgings. Within our capital expenditure guidance, we just completed an upgrade to one of our older isothermal forge presses with new controls systems. We feel optimistic about the potential for isothermal forging in the engine sector. This relationship could play a significant role, and while we won't see the benefits until 2025, 2026, or 2027, we are certainly on the right path.

Our next question comes from Richard Safran of Seaport Research. Your line is now open. Please go ahead.

So to the best you can, could you try to make an apples-to-apples comparison between 2022 EPS and what you're guiding for '23? You strip out last year's favorable aviation credits this year. You had pension increase. Is it correct to say that EPS is close to increase? Now those are my words, but I thought maybe you would bridge 2022 with what you're seeing for 2023 kind of trying to apples-to-apples.

You've done all my math for me, and you're absolutely right. But for the benefit of everyone else on the call, I agree with what you just said. When considering our 2022 performance, we reported a $1.99 EPS, but there were nonrecurring items included, such as COVID credits. We also anticipated the pension expense would increase in 2023. Adjusting for that, the 2022 EPS would be around $1.50. If we compare that to the midpoint of our guidance, which I believe is the point you're making, it sits at $2.25, indicating approximately a 50% year-over-year increase in our earnings per share. The good news is that this reflects strong underlying growth within the business, largely driven by our aerospace and defense strategy. Additionally, we do not expect this growth to cease. We anticipate continued growth, and we'll discuss this further on November 29. The increase in 2023 EPS is a positive sign for future performance as well.

And then lastly is this, I think you talked previously about the transactional piece of the business, you were being more selective with it due to high demand. I want to know if you could give a comment or two on the transactional part of the business, how that's trending and if the work you're getting is margin accretive.

Rich, I can go first. Don can add if he wants to at the end here. But it's definitely accretive. We start there. We've never been known in the industry as the low-price guy. So we tend to see the value in the products and tend to be migrating to more of the challenging, more differentiated titanium and nickel alloys in that transactional business. The lead times are such that if you're a distributor or some of the smaller OEMs, we said earlier, probably in May, if you know anybody who is looking for titanium or nickel, they should get their orders on the books, and that's definitely happened. So it's accretive. We tend to migrate more to OEMs because of the lead times and less to the distribution channel. But I would say still strong and still some opportunity. Our strategy is not to be 100% contractual; our strategy is to be in the 80% contractual, 20% transactional. We're holding that mix pretty well, but we are being selective about what kinds of alloys and what kinds of systems we play. And then it actually factored into our decision to start the fourth furnace in Oregon, which tends to be some of the more challenging alloys but higher-value stuff, such as beta alloys, those kinds of alloys as we move into the more sophisticated critical applications. So hopefully, that helps, but it's definitely accretive.

Our next question comes from Phil Gibbs of KeyBanc Capital Markets. Your line is now open. Please go ahead.

My question is about the overall impact of pricing and mix improvement. Will this be a significant factor in 2024 and 2025? It's difficult for us to quantify this based on the results alone. However, I believe it plays a crucial role in enhancing margins. For instance, a company like Hamad is projecting an $80 million increase next year, which would all contribute to the bottom line if everything else remains the same. I'm trying to understand your perspective on this, especially considering you manage thousands of contracts.

Right. Yes. Fair question. So the short answer is, when you hear about our developments in Defense, we're confident we are not lagging at all in that regard. We are gaining market share. As Bob mentioned, we are not typically viewed as a low-cost option but rather a critical option in the industry. Regarding future outlook, it's clear to us. Our Aerospace and Defense market share percentage is on the rise, currently at 61%. We anticipate continued growth into 2024, 2025, and beyond because of robust aerospace growth. Additionally, we serve other markets that are experiencing similar growth patterns. So to summarize, we expect that in 2024 and beyond, we will continue to see an improving mix, which should positively impact our margins and bottom line profits.

Is it just the mix shift? Or is there a real underlying pricing improvement as well?

To be clear, there is real underlying pricing as well. We see this each period, especially with HPMC and AA&S's exposure to A&D. In that space, there is high demand, and we've been intentional about ensuring we are capturing pricing opportunities. So it's not just about the mix; we are indeed seeing price improvements as well, and we will continue to do so.

And then secondly, you do have some near-term headwinds within energy. That was really strong for you the last couple of years. It seems to be sliding down a little bit. Are there any signs that that's leveling out? And then also regarding the Stall business, and it's sort of been stuck in neutral here for a while. Any thoughts on if and when that turns the corner as well? That's it for me.

Thanks, Phil. I'd say two questions in there. On oil and gas, our day-to-day presence there is in the subsea umbilicals, flow lines kind of space, and the feedback we get from our customers is that we're seeing the bottom of that here in Q3, Q4. I would say Q1 will be kind of an uptick, but not where we want it to be yet. By Q2 of next year, we should be back to pretty good strength in the core part of our oil and gas. There's always projects, the big cloud pipelines. There are some kind of in the queue there that could also hit about the same time. So we believe we're at the bottom with our customers as they destock. That's really the issue; they're destocking here and then start to ramp back up after the first of the year. When it comes to Stall, we have definitely hit the bottom, and we're starting to actually see a few signs. Don and I have talked a lot about not projecting a great uptick until we deliver a quarter of uptick. But I think we got to get through the Chinese New Year, but the signs are starting to be positive. There's not going to be a huge fast ramp back, but I think the signs are there that there are some positive economic signs in the markets electronics, that in particular, and those kinds of things in Asia. So more to come, but I would say by Q2 next year, we should see some meaningful improvement in China, in particular in our Precision Rollstrip business.

Our next question comes from Seth Seifman of JPMorgan. Your line is open. Please go ahead.

I wanted to ask a little bit about the engine end market. So I think the sales were down a touch sequentially. I don't think anybody questions the direction of where this is going over the next few years. But as we think about the next few quarters, I think GE lowered the LEAP delivery guide for this year. Pratt obviously has to make some decisions about allocating resources between new engine builds and the shops. Do you get signals from the OEMs regarding the trajectory of that ramp and how steep it is? And has that changed at all over the past several months?

Good question. There are about three or four points to address. I agree that the strength in engines is very encouraging. When comparing year-to-date 2023 to year-to-date 2022, we see a 30% increase. It's important to note that many of these orders were placed 10, 12, or 14 months ago, so they weren't evenly distributed. The indications we're receiving suggest two main trends. First, historically, demand for spare parts has added about 25% to our OEM demand. We anticipate that it will constitute 40% to 50% of our business for the next two to three years due to the availability of new aircraft and the wear and tear from usage. Secondly, as Don mentioned earlier, the shift towards wide-body aircraft is going to favorably impact us. Engine manufacturers in Europe are making progress in this area, which is a positive development. These engines rely on nickel-based alloys, and while we saw a slight decrease in nickel prices and surcharges in the third quarter, we expect those costs to recover. Overall, the long-term trends look promising. We have expanded our titanium capacity, but we anticipate that nickel alloys may be in short supply heading into 2024 and 2025 based on future demand signals. Therefore, we feel optimistic about our position in the industry.

As a follow-up, regarding the wide-body situation in Engine, are you starting to see significant progress on the airframe side? Boeing mentioned a potential increase in 737 production to about five per month, and we anticipate that 777X production will begin to ramp up in preparation for its entry into service. What trends are you observing in the airframe sector for wide-bodied aircraft?

Yes. I believe our airframe business is very strong. During the COVID period, we actually increased our presence on both sides of the Atlantic, so we are well positioned for widebody aircraft, regardless of where they are manufactured. We are experiencing significant demand. Regarding the 787 issue, the raw material demand matches what has been discussed, showing a strong increase—not just in double digits but even 30%, 40%, or 50%, depending on the product type. I would estimate that we are about 12 months ahead of when they will require this material in many instances. We only produce based on orders, not on build forecasts, as we've stated many times. We are not encountering many cancellations or rescheduling; instead, there is a lot of urgent demand for immediate delivery. Overall, the situation is positive, and we are well connected with the OEMs, indicating a very favorable trend.

Thank you. Our next question comes from Timna Tanners of Wolfe Research. Your line is open. Please go ahead.

Wanted to point out, you're the only company in our coverage that actually used the R word. So just thought we'd probe that a little bit with recessionary risk. It seems like your point was really to say that that's outside of your focal area. I also picked up a little bit of commentary about the ability to kind of maybe pivot away from some of these lower-margin operations. I just wanted a little bit more color on how that could proceed going forward and how that might contribute to your margin expansion you talked about in AA&S?

I'll let Don discuss the margin expansion aspect, but to begin, while we've mentioned the recessionary impact, it only accounts for about 15% of our AA&S segment, which is relatively small. We're focusing much more on the product growth in aerospace. So that seems reasonable. Don, how would you respond to Tim's question regarding the margins?

First, we've been pretty purposeful at changing the mix in the AA&S segment. We've talked about the fact that we want to continue to shift away from the industrial exposures and really shift toward our A&D method. In that regard, just this last quarter, you would have seen that our A&D share within AA&S increased about 800 basis points. Now the share within that segment is 35%. So doing things like that is a key part of us improving our margins. We've also been really purposeful in our transformation, changing our footprint, making sure that we're improving our flow paths, and really rightsizing cost structures to support this value-add strategy we're running, which should be beneficial. We're already seeing the benefits of that transformation, and there's more to come. So that's what I would share, Timna.

That seems like you want to keep some optionality in some of these end markets like energy that should be on the come, but trying to deemphasize maybe some of the other areas, if that's fair.

You are absolutely right. And even within energy, there are specialty energy and oil and gas. Oil and gas, we view as more of that industrial demand, commodity-driven, whereas specialties is where we want to play. So we're being pretty refined and focused in terms of where we want to compete in this business.

And then a follow-up, more of a modeling question. Just we didn't see a big decrease in the share count from the buybacks. In general, with great progress on reducing your pension liability, should we expect to see kind of an acceleration of buybacks going forward and see that share count come down?

Yes, it's a fair assumption. So far, in the last two years, we've had $225 million of buyback programs. We're going to finish the current program. There's $30 million left on it, Timna, that's not the last program. Our focus is to set this business up to generate max cash flow, and then we have a really clear, balanced strategy to grow the business with that capital to deleverage. We very much enjoy returning capital to shareholders. So imagine that, that is going to be a key part of our deployment going forward.

Our next question comes from Gautam Khanna from TD Cowen. Your line is open. Please go ahead.

I wanted to make sure I heard something right. Were there any operational challenges in the third quarter at HPMC?

There was an outage at our Lockport facility due to a transformer failure. Fortunately, our team responded quickly, and the outage is now behind us. This incident occurred in Q3, and while it could have led to a more prolonged issue, we managed to minimize the impact. We wanted to be transparent with our investors about it. Despite the 21-day downtime, we are experiencing strong demand for the products from this facility, which has resulted in us selling out of our backlog. As a consequence of the outage, we expect about $35 million in potential impact on our Q4 sales. However, we remain confident in our Q4 guidance and will address this shortfall by adjusting our priorities in finishing activities and implementing cost-saving measures. Overall, this situation showcases our operational strength and our ability to manage challenges effectively.

I think to add a little color to that, one ATI strategy that Adam's probably heard us talk about for many years is really taking bold action on the melt side. When we have an issue, whether it's titanium or nickel, it has a modest effect on both segments because we leverage that capacity to feed both segments. In this particular case, that's probably where Gautam picked up HPMC a little bit. But we're going to work through it and certainly have worked through it. It's part of realigning the production, the debottlenecking, all that kind of stuff that allows us to cover the deficit in Q4.

Was there a financial impact? Yes, indeed. Could you share if there was a loss absorbed in Q3?

Yes, there was not. We had a particular small bucket of incremental costs that we adjusted for, but when you look at the adjusted EBITDA, the answer is no. There's no consequence there.

And just a quick follow-up. What are your preliminary views on the airframe business next year in terms of rate of growth relative to the jet engine business?

Certainly, where lead times are today, we're booking into Q2, Q3 for some applications, and we even stretch out into some others. From the order activity and the conversation we're having, we see airframe growth that's going to be double-digit for sure. This year, we saw airframe growth year-to-date, up 60%. I don't think we'll see 60%, but we probably see something half of that or a third of that based on the order load. We still have some share gains that have yet to be fully realized on the airframe side that will come into play in 2024. I think we'll see growth a little bit ahead of the rest of the market on the airframe side, especially on the titanium side as we bring on this fourth furnace. I would say still strong growth going into 2024.

Our next question comes from Josh Sullivan of the Benchmark Company. Your line is open. Please go ahead.

Did you say what product or end market was impacted by the Lockport outage, that $35 million? Is that concentrated in one product or another?

It would involve several products, but we haven't specified which products are affected.

And then just given the powder issue with the GTF, ATI has a very extensive history of metallurgy. Has there been any increased effort on engaging ATI's expertise to mitigate technology risk from OEMs, either on this product or generally just looking at the outcome there?

That's a pretty broad question, so I'll answer it with a broad answer, which is yes. We have daily, weekly, quarterly technology exchanges with all the major OEMs, especially on the engine side. I think there's always, in this industry, a commitment to quality, looking for impurities, those kinds of things, and how do we continue to improve. Those dialogues do go on. Qualifications are something the industry takes very seriously, and we're involved in almost all qualifications to give the OEMs a second source on everything that they're looking for. There are opportunities, and it's a constant, a positive continual conversation with them. I think there's upside for sure.

And then just one last one. The reshoring gains in the medical side that you mentioned in the deck, is that BSNPO related or something else?

I would say pretty much the BSNPO related things. It's probably a good way to look at it.

Thanks, Alex. And thanks again to everyone for joining us today. This concludes ATI's third quarter earnings call. A replay will be available on our website along with registration info for our upcoming investor update on the 29th of November. Thanks, and have a great day.

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