Third Quarter 2024 Earnings Call John Plant: Executive Chairman and Chief Executive Officer Ken Giacobbe: EVP and Chief Financial Officer November 6, 2024 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," "coul ...

Howmet (HWM) came out with quarterly earnings of $0.71 per share, beating the Zacks Consensus Estimate of $0.65 per share. This compares to earnings of $0.46 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 9.23%. A quarter ago, it was expected that this maker of engineered products for the aerospace and other industries would post earnings of $0.60 per share when it actually produced earnings of $0.67, delivering a surprise of ...

Core Viewpoint - Howmet Aerospace Inc. is expected to report strong third-quarter 2024 earnings, with a consensus estimate indicating significant revenue and earnings growth compared to the previous year [1][7]. Revenue Performance - The Engine products segment is projected to generate revenues of $945 million, reflecting a 17.9% increase from the third quarter of 2023, driven by strong demand in commercial aerospace and defense markets [3]. - The Fastening Systems segment is estimated to achieve revenues of $386 million, marking a 10.9% rise year-over-year, supported by growth in the commercial aerospace market [4]. - The Engineered Structures segment is expected to report revenues of $270 million, indicating an 18.9% increase from the previous year, bolstered by recovery in the commercial and defense aerospace markets [5]. - Conversely, the Forged Wheels segment is anticipated to see revenues of $258 million, representing a decline of 9.5% year-over-year, attributed to softness in the commercial transportation market [6]. Overall Financial Outlook - The overall revenue estimate for Howmet Aerospace is pegged at $1.85 billion, which indicates an 11.8% increase from the same quarter last year [7]. - The consensus estimate for adjusted earnings is set at 65 cents per share, reflecting a growth of 41.3% compared to the previous year [7]. Earnings Prediction - The company has a positive Earnings ESP of +1.86%, with the Most Accurate Estimate at $1.24 per share, higher than the Zacks Consensus Estimate of $1.22, suggesting a strong likelihood of an earnings beat [9].

Core Insights - Howmet (HWM) is expected to report quarterly earnings of $0.65 per share, a 41.3% increase year-over-year, with revenues projected at $1.85 billion, reflecting an 11.8% year-over-year growth [1] - The consensus EPS estimate has been revised upward by 0.2% in the last 30 days, indicating analysts' reassessment of their initial estimates [2] - Analysts emphasize the importance of earnings estimate revisions as indicators for predicting investor actions and stock price performance [3] Revenue Estimates - Total Sales for Engine Products are forecasted to reach $944.77 million, representing a 17.7% year-over-year increase [4] - Total Sales for Fastening Systems are expected to be $385.76 million, indicating a 10.9% year-over-year growth [5] - Total Sales for Engineered Structures are projected at $270.33 million, reflecting a 19.1% year-over-year increase [5] - Total Sales for Forged Wheels are estimated at $257.60 million, suggesting a 9.6% year-over-year decline [5] End Market Revenue Estimates - End Market Revenue for Aerospace-Commercial is expected to be $997.87 million, indicating a 21.7% year-over-year increase [6] - End Market Revenue for Aerospace-Defense is projected at $291.67 million, reflecting a 16.2% year-over-year growth [6] - End Market Revenue for Commercial Transportation is estimated at $319.48 million, suggesting a 9.2% year-over-year decline [7] - End Market Revenue for Industrial and Other is expected to reach $255.43 million, indicating an 8.7% year-over-year increase [7] Adjusted EBITDA Estimates - Adjusted EBITDA for Engine Products is projected at $291.12 million, up from $219 million in the same quarter last year [8] - Adjusted EBITDA for Forged Wheels is expected to be $66.07 million, down from $77 million year-over-year [8] - Adjusted EBITDA for Engineered Structures is forecasted at $39.00 million, compared to $30 million in the prior year [9] - Adjusted EBITDA for Fastening Systems is estimated at $98.18 million, up from $76 million year-over-year [9] Stock Performance - Shares of Howmet have experienced a -1% change in the past month, mirroring the -1% movement of the S&P 500 composite [9][10] - Howmet holds a Zacks Rank 3 (Hold), indicating expected performance in line with the overall market [10]

In the latest market close, Howmet (HWM) reached $101.14, with a +1.05% movement compared to the previous day. The stock outpaced the S&P 500's daily loss of 0.33%. Elsewhere, the Dow lost 0.22%, while the tech-heavy Nasdaq lost 0.56%. Shares of the maker of engineered products for the aerospace and other industries witnessed a loss of 0.82% over the previous month, beating the performance of the Aerospace sector with its loss of 6.93% and underperforming the S&P 500's gain of 1.83%. Investors will be eager ...

Group 1: Investment Activity - Michael McCaul, a congressional representative, invested between $100,001 and $250,000 in Howmet Aerospace (NYSE: HWM) on September 16, when shares were priced at $94.59 [1] - Since McCaul's purchase, HWM shares have increased by 10.12%, and the Congressman could potentially gain between $10,120 and $25,300 from this trade [1][2] Group 2: Company Overview - Howmet Aerospace is a significant supplier for major contractors, including Lockheed Martin (NYSE: LMT), providing titanium and involved in a legal dispute over supply prices settled on May 3 [2] - The company is not a direct defense contractor but benefits from increased defense spending amid geopolitical instability and upcoming elections [2] Group 3: Market Sentiment and Analyst Ratings - Wall Street analysts are cautiously optimistic about HWM, with a consensus rating of 'Strong Buy' from 17 equity researchers [4] - Deutsche Bank analyst Scott Deuschle raised the price target for HWM from $106 to $125, anticipating an earnings beat and increased guidance in the upcoming earnings call on November 6 [4] - The average price target for HWM is $109.36, indicating a potential increase of 5.24% from the current share price [4]

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Core Insights - Howmet Aerospace Inc. (HWM) is experiencing strong momentum in the commercial aerospace market, driven by increased air travel and demand for wide-body aircraft, which supports Original Equipment Manufacturer (OEM) spending [1] - The defense sector is also showing positive trends, with robust orders for engine spares related to the F-35 program and legacy fighters, contributing to a 14% year-over-year revenue increase to $1.88 billion in Q2 2024 [2] Financial Performance - HWM's liquidity position is strong, with cash equivalents and receivables totaling $1.52 billion against short-term maturities of $782 million, and a free cash flow of $437 million generated in the first half of the year [3] - In the first six months of 2024, the company paid out $42 million in dividends and repurchased shares worth $210 million, with a 60% dividend increase to 8 cents per share announced in July 2024 [4] Market Trends - Despite the positive performance in commercial aerospace, HWM is facing challenges in the commercial transportation market, with a 4% year-over-year revenue decline in Q2 2024 and expectations of continued demand decline in the second half of 2024 [6] - The company is also dealing with rising costs, with the cost of goods sold increasing by 9.2% to $2.6 billion in the first half of 2024, and selling, general, and administrative expenses rising by 13.5% to $185 million [7]

Stock Performance - Howmet's stock ended at $102 99, marking a +0 16% increase from the previous day's close [1] - The stock underperformed compared to the S&P 500 (+0 97%), Dow (+0 3%), and Nasdaq (+1 45%) [1] - Over the past month, Howmet's shares gained 9 76%, outperforming the Construction sector (+8 21%) and the S&P 500 (+5 41%) [2] Earnings and Revenue Projections - The company's upcoming earnings report is expected to show an EPS of $0 66, a 43 48% increase from the same quarter last year [3] - Revenue is projected to be $1 85 billion, up 11 83% year-over-year [3] - For the annual period, EPS is estimated at $2 59 (+40 76% YoY) and revenue at $7 47 billion (+12 54% YoY) [4] Analyst Revisions and Zacks Rank - Recent upward revisions in analyst estimates reflect positivity towards the company's business operations and profitability [5] - The Zacks Rank system, which integrates estimate changes, has a strong track record, with 1-ranked stocks averaging +25% annual returns since 1988 [7] - Howmet currently holds a Zacks Rank of 2 (Buy), with the consensus EPS estimate increasing by 0 18% over the last 30 days [7] Valuation Metrics - Howmet is trading at a Forward P/E ratio of 39 63, higher than the industry average of 21 16 [8] - The company's PEG ratio is 1 49, slightly below the industry average of 1 54 [8] Industry Overview - The Engineering - R and D Services industry, part of the Construction sector, has a Zacks Industry Rank of 64, placing it in the top 26% of all industries [9] - Industries in the top 50% of the Zacks Industry Rank outperform the bottom half by a factor of 2 to 1 [9]

Core Viewpoint - Howmet (HWM) is well-positioned to continue its earnings-beat streak, having consistently surpassed earnings estimates in recent quarters [1][3]. Earnings Performance - In the most recent quarter, Howmet reported earnings of $0.67 per share, exceeding the expected $0.60 per share by 11.67%. In the previous quarter, it reported $0.57 per share against an expectation of $0.52 per share, resulting in a surprise of 9.62% [2]. Earnings Estimates and Predictions - There has been a favorable change in earnings estimates for Howmet, with a positive Earnings ESP (Expected Surprise Prediction) indicating a strong likelihood of an earnings beat. The current Earnings ESP stands at +3.54% [3][6]. - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have historically produced a positive surprise nearly 70% of the time, suggesting a high probability of beating consensus estimates [4]. Zacks Rank and Earnings ESP - Howmet currently holds a Zacks Rank of 2 (Buy), which, when combined with its positive Earnings ESP, indicates a strong potential for another earnings beat [6]. - The Earnings ESP metric is based on the Most Accurate Estimate compared to the Zacks Consensus Estimate, reflecting the latest analyst revisions and information [5].