Core Viewpoint - Howmet (HWM) is positioned as a strong investment opportunity due to significant upward revisions in earnings estimates, indicating a positive earnings outlook and potential for continued stock price growth [1][2]. Earnings Estimate Revisions - Analysts have shown increasing optimism regarding Howmet's earnings prospects, leading to a notable rise in earnings estimate revisions, which historically correlate with stock price movements [2]. - For the current quarter, Howmet is expected to earn $0.85 per share, reflecting a year-over-year increase of +26.87%. Over the past 30 days, three estimates have been revised upward, resulting in an 8.12% increase in the Zacks Consensus Estimate [5]. - For the full year, the earnings estimate is projected at $3.39 per share, representing a +26.02% change from the previous year. In the last month, four estimates have been raised, pushing the consensus estimate up by 7.48% [6][7]. Zacks Rank and Performance - Howmet currently holds a Zacks Rank 2 (Buy), indicating favorable conditions for investment based on the positive estimate revisions. Stocks with Zacks Rank 1 (Strong Buy) and 2 (Buy) have historically outperformed the S&P 500 [8]. - The stock has experienced a significant gain of 35.9% over the past four weeks, driven by strong earnings growth prospects [9].

Company Overview - Howmet (HWM) currently holds a Momentum Style Score of B, indicating a positive momentum outlook [3] - The company has a Zacks Rank of 2 (Buy), suggesting strong potential for outperformance in the market [4] Price Performance - HWM shares have increased by 13.49% over the past week, significantly outperforming the Zacks Aerospace - Defense industry, which rose by 4.22% during the same period [6] - Over the last month, HWM's price change is 35.93%, compared to the industry's 18.92% [6] - In the past quarter, HWM shares have risen by 20.48%, and over the last year, they have gained 95.17%, while the S&P 500 has moved -7.56% and 9.65%, respectively [7] Trading Volume - HWM's average 20-day trading volume is 2,676,586 shares, which serves as a baseline for price-to-volume analysis [8] Earnings Outlook - In the last two months, 5 earnings estimates for HWM have been revised upwards, while none have been revised downwards, increasing the consensus estimate from $3.23 to $3.39 [10] - For the next fiscal year, 4 estimates have moved higher, with 1 downward revision [10] Conclusion - Given the positive price momentum and favorable earnings outlook, HWM is positioned as a strong candidate for investors seeking momentum stocks [12]

Company Performance - Howmet (HWM) has gained approximately 42.5% year-to-date, significantly outperforming the average gain of 7.6% in the Aerospace sector [4] - The Zacks Consensus Estimate for HWM's full-year earnings has increased by 10.4% over the past quarter, indicating improved analyst sentiment and a stronger earnings outlook [4] - Leonardo DRS, Inc. (DRS) has also shown strong performance with a year-to-date return of 28.3% and a 0.9% increase in its consensus EPS estimate over the past three months [5] Industry Ranking - Howmet is part of the Aerospace - Defense industry, which includes 25 companies and currently ranks 91 in the Zacks Industry Rank, with an average gain of 8.9% this year [6] - Leonardo DRS, Inc. belongs to the Aerospace - Defense Equipment industry, which consists of 27 companies and is ranked 33, with a year-to-date gain of 3.5% [6] Sector Overview - The Aerospace sector, which includes 53 individual stocks, is currently ranked 2 in the Zacks Sector Rank, reflecting the strength of the group [2] - The Zacks Rank system identifies stocks with characteristics likely to outperform the market, with Howmet currently holding a Zacks Rank of 2 (Buy) [3]

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Core Insights - Howmet (HWM) reported revenue of $1.94 billion for Q1 2025, a year-over-year increase of 6.5% and an EPS of $0.86 compared to $0.57 a year ago, exceeding Zacks Consensus Estimates for both revenue and EPS [1] Financial Performance - Total Sales for Engine Products reached $998 million, surpassing the average estimate of $991.56 million, with a year-over-year change of +12.5% [4] - Total Sales for Forged Wheels was $252 million, slightly above the average estimate of $248.22 million, but represented a year-over-year decline of -12.5% [4] - Total Sales for Engineered Structures amounted to $285 million, exceeding the average estimate of $276.53 million, with a year-over-year increase of +8.4% [4] - Total Sales for Fastening Systems was $412 million, close to the average estimate of $413.81 million, reflecting a year-over-year increase of +5.9% [4] Adjusted EBITDA - Adjusted EBITDA for Engine Products was $325 million, above the average estimate of $313.17 million [4] - Adjusted EBITDA for Forged Wheels reached $68 million, exceeding the average estimate of $64.67 million [4] - Adjusted EBITDA for Engineered Structures was $60 million, surpassing the average estimate of $49.75 million [4] - Adjusted EBITDA for Fastening Systems was $127 million, above the average estimate of $113.05 million [4] Stock Performance - Howmet's shares returned +3.5% over the past month, while the Zacks S&P 500 composite experienced a -0.7% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Financial Performance - Sales for the first quarter of 2025 were $1,942 million, an increase of $118 million or 6% compared to $1,824 million in the first quarter of 2024, driven by growth in commercial aerospace and defense markets [96]. - Net income for the first quarter of 2025 was $344 million, or $0.84 per diluted share, compared to $243 million, or $0.59 per diluted share in the first quarter of 2024, reflecting a $101 million increase [106]. - In the first quarter of 2025, income before income taxes increased to $446 million, up from $303 million in the first quarter of 2024, representing a growth of 47% [126]. - Total Segment Adjusted EBITDA for the first quarter of 2025 was $580 million, compared to $460 million in the same period of 2024, reflecting a 26% increase [126]. - Cash provided from operations rose to $253 million in the first quarter of 2025, a 43% increase from $177 million in the first quarter of 2024 [131]. Segment Performance - Engine Products segment third-party sales increased by $111 million or 13% in the first quarter of 2025, reaching $996 million, primarily due to growth in commercial and defense aerospace markets [110]. - Fastening Systems segment third-party sales rose by $23 million or 6% in the first quarter of 2025, totaling $412 million, driven by growth in the commercial aerospace market [114]. - Engineered Structures segment third-party sales increased by $20 million or 8% in the first quarter of 2025, reaching $282 million, mainly due to growth in the defense aerospace market [118]. - Forged Wheels segment third-party sales decreased by $36 million or 13% in the first quarter of 2025, totaling $252 million, primarily due to lower volumes in the commercial transportation market [122]. - Segment Adjusted EBITDA for the Engine Products segment increased by $76 million or 31% in the first quarter of 2025, reaching $325 million [111]. - Segment Adjusted EBITDA Margin for the Fastening Systems segment increased by approximately 710 basis points in the first quarter of 2025, reaching 30.8% [116]. Cost and Expenses - Cost of goods sold (COGS) as a percentage of sales decreased to 66.4% in the first quarter of 2025 from 70.7% in the first quarter of 2024, attributed to higher volumes and favorable product pricing [97]. - Interest expense, net decreased by $10 million or 20% in the first quarter of 2025, totaling $39 million, due to early redemptions of debt [100]. - Corporate expenses decreased by $4 million, or 15%, in the first quarter of 2025 compared to the first quarter of 2024, mainly due to lower legal costs [128]. Cash Flow and Investments - Cash used for investing activities increased to $115 million in the first quarter of 2025, up 53% from $75 million in the first quarter of 2024, primarily due to higher capital expenditures [143]. - Cash used for financing activities decreased to $167 million in the first quarter of 2025, down 6% from $178 million in the first quarter of 2024 [133]. Dividends and Ratings - The Board of Directors declared a quarterly dividend of $0.10 per share on January 27, 2025, reflecting a $0.05 increase from the previous quarter [134]. - Fitch Ratings upgraded Howmet's short-term debt rating from F2 to F1 and long-term debt rating from BBB to BBB+, citing strong free cash flow generation [140]. Future Outlook - The company expects pension contributions and other postretirement benefit payments in 2025 to be approximately $65 million [132]. - The company anticipates demand in the commercial transportation markets will not recover before mid-2025 due to economic uncertainties [125].

Core Insights - Howmet Aerospace Inc. reported adjusted earnings of 86 cents per share for Q1 2025, exceeding the Zacks Consensus Estimate of 77 cents, marking a 51% year-over-year increase [1] - Total revenues reached $1.94 billion, surpassing the consensus estimate of $1.93 billion, with a 6% increase from the previous year, driven by strength in the commercial aerospace market [1] Segment Performance - The Engine Products segment generated revenues of $996 million, accounting for 51.3% of total revenues, with a 13% year-over-year increase, supported by growth in commercial aerospace, defense aerospace, industrial gas turbine, and oil and gas markets [2] - The Fastening Systems segment reported revenues of $412 million, representing 21.3% of total revenues, with a 6% year-over-year increase, primarily due to growth in the commercial aerospace market, though partially offset by weakness in commercial transportation [3] - The Engineered Structures segment's revenues increased 8% year-over-year to $282 million, representing 14.5% of total revenues, benefiting from growth in the defense aerospace market [4] - The Forged Wheels segment's revenues totaled $252 million, accounting for 12.9% of total revenues, down 12.5% year-over-year due to lower volumes in the commercial transportation market [5] Financial Metrics - Cost of goods sold remained flat year-over-year at $1.29 billion, while selling, general, and administrative expenses decreased by 3.4% to $85 million [6] - Adjusted EBITDA rose 28% year-over-year to $560 million, with an adjusted EBITDA margin increasing by 480 basis points to 28.8% [6] - Adjusted operating income increased 33% year-over-year to $491 million, with an adjusted operating income margin of 25.3%, up 500 basis points [7] Balance Sheet and Cash Flow - As of the end of Q1 2025, Howmet had cash and cash equivalents of $536 million, down from $564 million at the end of Q4 2024, with long-term debt stable at $3.31 billion [8] - Net cash generated from operating activities was $253 million, compared to $177 million in the same period last year, with capital spending totaling $119 million [9] - Free cash flow for the quarter was $134 million, with dividends paid out amounting to $42 million, up from $21 million a year ago, and share repurchases totaling $125 million [9] Future Outlook - For Q2 2025, Howmet expects revenues between $1.98 billion and $2.0 billion, with adjusted EBITDA projected between $555 million and $565 million, and adjusted earnings per share estimated at 85-87 cents [11] - For the full year 2025, revenues are anticipated to be in the range of $7.88 billion to $8.18 billion, with adjusted EBITDA expected between $2.225 billion and $2.275 billion, and adjusted earnings per share forecasted at $3.36-$3.44 [12]

Financial Data and Key Metrics Changes - Q1 2025 revenue reached a record high, increasing by 6% year over year, with an EBITDA margin of 28.8% and an operating margin of 25.3%, up 500 basis points year over year [4][10] - Free cash flow was positive at $134 million, marking a record for the first quarter, with a 25% increase in dividends and $125 million in share buybacks [5][12] - EBITDA increased by 28% year over year, with earnings per share rising by 51% to $0.86 [10][11] Business Line Data and Key Metrics Changes - Engines segment revenue increased by 13% year over year to $996 million, with EBITDA up 31% to $325 million and an EBITDA margin of 32.6% [15] - Fastening Systems revenue grew by 6% year over year to $412 million, with EBITDA increasing by 38% to $127 million and an EBITDA margin of 30.8% [16] - Engineered Structures revenue rose by 8% year over year to $282 million, with EBITDA up 62% to $60 million and an EBITDA margin of 21.3% [17] - Forged Wheels revenue decreased by 13% year over year but increased by 4% sequentially, with an EBITDA margin of 27% [18] Market Data and Key Metrics Changes - Commercial aerospace revenue was up 9% year over year, driven by demand for engine spares, while defense aerospace grew by 19% [8] - Commercial transportation faced challenges with a 14% revenue decline in Q1, although it was up 2% sequentially [8][9] - Industrial and other markets saw a 10% increase, with oil and gas up 21% and IGT up 12% [9] Company Strategy and Development Direction - The company is focused on continued investments for growth, particularly in engine markets and capacity expansions in major regions [7][26] - The strategy includes enhancing operational efficiencies and improving process controls to sustain margin improvements [49] - The company aims to strengthen its balance sheet further, targeting a net debt to EBITDA ratio of 1.1 by year-end [32][81] Management's Comments on Operating Environment and Future Outlook - Management noted uncertainty in air travel growth due to tariffs and economic conditions, but highlighted resilience in customer demand and strong backlogs [22][24] - The outlook for commercial aerospace remains positive, with expectations for increased build rates and strong spares demand [29][30] - The company anticipates a potential step down in commercial truck builds due to economic uncertainties, impacting overall revenue guidance [27][30] Other Important Information - The company achieved a 21.7% reduction in greenhouse gas emissions compared to the 2019 baseline, meeting its three-year target [20] - Fitch upgraded the company's credit rating from BBB to BBB+, reflecting improved financial leverage and strong cash generation [12] Q&A Session Summary Question: Impact of air traffic growth on structures and fasteners - Management emphasized that overall demand for travel is important for future investment and volume assumptions, but noted strong backlogs in aircraft manufacturing [35] Question: Progress on upgraded turbine airfoils and certification timing - Production is on track, with certification for LEAP-1B expected by the end of the calendar year [42] Question: Margin improvements in fastening systems and engineered structures - Improvements are attributed to enhanced process control and operational efficiencies, with expectations for sustainability [46][49] Question: Update on production rates for Boeing 737 and widebody aircraft - Production rates for narrow-body aircraft have increased, while widebody production has faced delays [56][58] Question: Tariff impacts and mitigation strategies - The gross impact of tariffs is estimated at $80 million, with a net impact of less than $15 million after mitigation efforts [88][90]

Howmet Aerospace (HWM) Q1 2025 Earnings Call May 01, 2025 10:00 AM ET Company Participants Paul Luther - VP, IRJohn Plant - Executive Chairman, CEOKen Giacobbe - EVP and CFOSeth Seifman - Executive DirectorDavid Strauss - Managing Director - Aerospace & Defense Equity ResearchRobert Stallard - PartnerMyles Walton - Managing DirectorRonald Epstein - MD - Aerospace & DefenseSheila Kahyaoglu - Aerospace & Defense and Airlines Equity ResearchScott Deuschle - Director - Aerospace & Defense Equity Research Confer ...

First Quarter 2025 Earnings Call John Plant: Executive Chairman and Chief Executive Officer Ken Giacobbe: EVP and Chief Financial Officer May 1, 2025 Important Information Forward–Looking Statements This presentation contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as "anticipates", "believes", "could", " ...