Polen Capital Management, LLC - Focus Growth Composite on ATI Inc.
Thesis
ATI produces specialty materials including nickel-based alloys used in high-temperature jet-engine components. Polen believes the aerospace supply chain is structurally constrained and that ATI is one of very few companies capable of producing these materials at the required scale and quality. Limited capacity additions and strong expected demand from commercial aerospace and gas turbines have improved the industry structure, scarcity value, and long-term economics of a business that historically appeared more cyclical or commodity-like.
“The aerospace supply chain is structurally constrained, and ATI is one of only a very small number of companies capable of producing these materials at the required scale and quality.”
Key risks
- Historically cyclical and commodity-like business characteristics
- Dependence on sustained commercial aerospace and gas-turbine demand