It doesn’t mean that we’re not interested in M&A, but I can tell you their hurdles that we have internally hurdles in terms of very close adjacencies overlap to our current business, return profiles, those kinds of things. They’re very robust. So if we were to do any sort of acquisition, it would certainly be — it would be challenged to hit our internal targets. It isn’t something that we are putting great emphasis on our priority. We have a great business to run that’s growing with CapEx and is going to provide the returns and the targets that we’ve shared with the market. And so we’re happy with where we’re at. But it is — I will tell you, it’s nice to have choices. And it goes back to your original question, capital deployment. Our starting objective with our capital deployment strategy and focus on cash generation, Rich, was to put us in a position where we can make healthy choices for our shareholders and that’s something that I think you’re starting to see.
Richard Safran: Thanks a lot.
Operator: Our next question comes from David Strauss of Barclays. Please go ahead.
David Strauss: Thanks, good morning. Bob, want to offer my congratulations as well, and best wishes going forward.
Robert Wetherbee: Thanks, David.
David Strauss: Appreciate it. Of course, I guess the first question for you, Don. The EPS guidance increase, obviously, some of that is a lower share count. But beyond that, what actually changed since I don’t — we didn’t have an EBITDA expectation before this or guidance before this. I guess, what got better in terms of end markets or maybe break it out by business AA&S, HPM? What has improved versus when you gave initial guidance?
Don Newman: Yes. It starts with our Q1 performance being better than expected. And so that was helpful and getting comfortable with raising the guidance. But really, it’s starting with two pretty key items. One is continued strength of demand in our core end markets, aerospace and defense and aero like. And that strength is reinforcing growth, especially in the second half of the year in our business and growth that we expect is going to carry to 2025 and beyond. So seeing that continued strength of demand was helpful. Another thing that I would point to that has increased our expectations of the business are tied to our debottlenecking activity. And of course, that’s related to production and as we saw successes in the first quarter around our debottlenecking efforts and seeing improved flow around products that are melted and then seeing those progress through our production cycles through finishing and getting out the door, very positive trends that we see there.
And — so that’s what I would point to. We’ve got some additional debottlenecking focus that our efforts rather in the second half that will continue to add incremental EBITDA to the business. And so that — those are the primary drivers.
David Strauss: Okay. Great. And you’ve talked about the second half of the year recovery and in your industrial end markets, I think mainly pointing to oil and gas. If that doesn’t materialize, how much risk is there to your guidance? Are we at the low end of the EPS range if the — if industrial just kind of holds where we are today? Does that put us at the low end or are we outside the range? Thanks.
Don Newman: Yes. The magnitude of — if that were to happen, it wouldn’t have a significant effect on the guidance or us performing against the guidance that we shared today. It would be marginal, I would say, to the EBITDA guidance of $725 million. And so I would still expect was stable industrial, stable being defined as kind of where we were in Q1. I would expect pretty high confidence in our ability to deliver on the guidance that’s on the table today.
David Strauss: Thanks very much.
Operator: The next question comes from Scott Deuschle of Deutsche Bank. Your line is open.
Scott Deuschle: Hey, good morning.
Don Newman: Good morning.
Scott Deuschle: Hey Kim, reading between the lines on the prepared remarks, it sounded like ATI maybe recently expanded its role with Pratt and its work scope on the GTF. I guess did I read that right? And is there any additional context you can add if so?
Kimberly Fields: Thanks, Scott. Yes, you did. You did read that right. I’d say ATI is part of the solution there. We’ve got a great relationship that’s only grown through the pandemic, and it started with us partnering that with them on the angle scan testing protocols and practice and helping them work through both what was necessary and then how to streamline that, so that it didn’t create more bottlenecks in the supply chain from an industry standpoint. And second, as I mentioned, we are partnering with them, and we are part of the solution with helping them address the GTF issue and the accelerated overhauls that they’re driving. I think was mentioned during the earnings call, material flow is really going to be the key, and we’re partnering with them to accelerate that flow-through parts.
I talked a little bit about our investment in ultrasonic inspection and testing. And again, that’s in conjunction with helping to help support them really to accelerate bringing those AOGs back down. Just — you didn’t ask, but as we look at our guidance, that is something that we did anticipate some of that incremental work in there in terms of scope. But as we look forward, I’d say my bias and you’ve probably — you’re hearing Don’s bias as well as to the upside of the range because clearly, if we’re able to move quicker and as we work with them, they’ll want — they want to do that as well and get those planes back up in the air and back in service.
Scott Deuschle: Okay. Can you say what specific parts you’re selling into them now? Is it powder metal or more forged products? Just trying to understand more specifically…
Kimberly Fields: Yes. No. So they’re powdered metal. I think they’ve shared this publicly that they, through their joint venture, provide that material to our forged products group. So we’re making the forged products and just — as an overview, we are typically participating with all of our engine OEMs in the hot section of those parts. So the HPT and HPC disks and so forth. So again, as you look at overhaul both from the powdered metal situation they’ve got but also just from the expanded overhauls that they’re bringing these planes in that they may want to do some additional work so that they don’t have to come back in again as soon. Both of those opportunities are hitting us.
Scott Deuschle: Okay. Great. And Kim, are you able to say if ATI was one of the new sources of supply for titanium that Collins Aerospace recently signed on?
