Material sciences specialist ATI (NYSE: ATI) reported a strong first quarter, and its guidance implies that issues at Boeing are not softening demand for its products. Investors are relieved, sending ATI shares up 17% as of 2 p.m. ET.
Steady results in a tough environment
ATI makes high-performance materials for the aerospace, defense, healthcare, and energy markets. It is best known for the composite fibers used to replace heavier metals on aircraft to improve fuel economy.
ATI earned $0.48 per share in the quarter on sales of $1.04 billion, topping Wall Street expectations for $0.41 per share in earnings on sales of $1.03 billion. Sales to the aerospace and defense sector were up 7% year over year, fueling the beat.
The company said it has moved past outages and weather impacts that have weighed on results. As a result, the company is raising its full-year earning guidance to $2.30 to $2.60 per share, up from $2.12 to $2.52, and raised its free-cash-flow guidance by $15 million to $260 million to $340 million.
"ATI's outlook continues to be strong and is supported by a robust backlog of commercial aircraft orders," CEO Robert S. Wetherbee said in a statement. He added that
Continued demand in our core markets and increasing production capacity provide a clear path for achieving our robust 2024 and 2025 financial targets, as well as exceeding both $5 billion in revenue and $1 billion in adjusted EBITDA by 2027.
Is ATI a buy after its strong quarterly results?
The entire aerospace sector is grappling with Boeing's manufacturing slowdown. These results should go a long way toward calming some of the fears around ATI.
Sales of commercial airframe and engine components have been wobbly quarter to quarter, but defense revenue grew 20% year over year in the quarter, and electronics sales were up more than 50%.
ATI is unlikely to soar until Boeing's issues are resolved, but the quarter is a reminder that the company has a lot more going on than just supplying new Boeing jets. Investors are understandably excited about the results.
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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
