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?
Don Newman: 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.
Gautam Khanna: 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?
Don Newman: Yes. Neither the 2025 nor the 2027 targets have changed period.
Gautam Khanna: 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.
Bob Wetherbee: 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.
Gautam Khanna: Thank you.
Operator: The next question goes to Richard Safran of Seaport Research Partners. Richard, please go ahead. Your line is open.
Richard Safran: 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?
Bob Wetherbee: 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.
