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 ...

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]

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", " ...

Howmet (HWM) came out with quarterly earnings of $0.86 per share, beating the Zacks Consensus Estimate of $0.77 per share. This compares to earnings of $0.57 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 11.69%. A quarter ago, it was expected that this maker of engineered products for the aerospace and other industries would post earnings of $0.72 per share when it actually produced earnings of $0.74, delivering a surprise o ...

Exhibit 99.1 FOR IMMEDIATE RELEASE Paul.Luther@howmet.com Rob.Morrison@howmet.com First Quarter 2025 Adjusted Financial Results 2025 Guidance: Includes current assumptions of tariff impacts | | | Q2 2025 Guidance | | | FY 2025 Guidance | | | --- | --- | --- | --- | --- | --- | --- | | | Low | Baseline | High | Low | Baseline | High | | Revenue | $1.980B | $1.990B | $2.000B | $7.880B | $8.030B | $8.180B | | Adj. EBITDA | $555M | $560M | $565M | $2.225B | $2.250B | $2.275B | | Adj. EBITDA Margin | 28.0% | 28. ...

Analysts on Wall Street project that Howmet (HWM) will announce quarterly earnings of $0.77 per share in its forthcoming report, representing an increase of 35.1% year over year. Revenues are projected to reach $1.93 billion, increasing 6% from the same quarter last year. Over the past 30 days, the consensus EPS estimate for the quarter has been adjusted downward by 0.5% to its current level. This demonstrates the covering analysts' collective reassessment of their initial projections during this period. Ah ...

Core Viewpoint - Howmet Aerospace Inc. is set to release its first-quarter 2025 results, with earnings expected to show a significant year-over-year increase, despite facing challenges in the commercial transportation market and supply chain disruptions [1][4][5]. Financial Performance - The Zacks Consensus Estimate for earnings is 77 cents per share, reflecting a 35.1% increase from the previous year, while revenues are projected at $1.93 billion, indicating a 6% year-over-year growth [1]. - Earnings estimates have remained stable over the past 60 days, with the current quarter's estimate unchanged at 77 cents per share [2]. Earnings Surprise History - Howmet has a strong earnings surprise history, exceeding the Zacks Consensus Estimate in the last four quarters with an average surprise of 8.3% [2]. Market Conditions - The company is experiencing weakness in the commercial transportation market, particularly in the Forged Wheels segment, due to lower OEM builds [4]. - Production issues at Boeing are expected to negatively impact Howmet's sales, particularly in narrow-body and wide-body aircraft [4]. Supply Chain and Cost Challenges - Howmet has faced supply chain disruptions in the aerospace sector, leading to delays and increased costs, which are likely to affect its performance [5]. - High operating costs, labor shortages, and increased raw material costs are anticipated to hurt the company's bottom line in the upcoming quarter [6]. Positive Market Trends - Despite challenges, Howmet is witnessing strong demand in the commercial aerospace market, driven by increased air travel and OEM spending [7]. - The recovery of the Boeing 737 MAX production is expected to positively influence demand for Howmet's products [8]. - The defense business is also performing well, with robust orders for engine spares for the F-35 program contributing to top-line growth [8]. Stock Performance - Howmet's shares have increased by 9.4% over the past three months, outperforming the Zacks Aerospace - Defense industry, which declined by 4.3% [9]. Valuation Concerns - The company is trading at a forward P/E ratio of 38.62X, significantly higher than the industry average of 23.42X, which may pose risks if market sentiment declines [11]. Long-term Outlook - Howmet's diversified portfolio and strength in the commercial aerospace market suggest promising long-term growth potential [14].

Core Viewpoint - The article highlights the strong performance of Howmet Aerospace Inc. (NYSE: HWM.PR) with a reported return of 11.2% and a total return of 12.6% since the last analysis, indicating a positive investment opportunity in the aerospace sector [1]. Group 1: Company Performance - Howmet Aerospace Inc. has shown a strong buy rating, which has resulted in significant returns for investors [1]. - The company is part of a broader analysis focused on the aerospace, defense, and airline industries, which are expected to have substantial growth prospects [1]. Group 2: Analyst Insights - The analysis is conducted by an experienced analyst with a background in aerospace engineering, providing informed insights into the complexities of the industry [1]. - The investing group offers access to data analytics monitors, enhancing the investment decision-making process [1].

Company Performance - Howmet Aerospace Inc. (HWM) shares have surged 96.1% in the past year, significantly outperforming the industry and the S&P 500, which returned 4.9% and 8.1%, respectively [1] - The stock closed at $124.47, trading below its 52-week high of $140.55 but above its 52-week low of $62.80, indicating solid upward momentum and price stability [3] Market Drivers - The commercial aerospace market is the strongest driver of Howmet's business, with air travel demand continuing to rise through 2024, particularly for wide-body aircraft [5][8] - Revenues from the commercial aerospace market increased 12.9% year over year in Q4 2024, constituting 53% of Howmet's business, driven by demand for new, fuel-efficient aircraft [9] - The defense business is also experiencing positive momentum, with revenues increasing 22% year over year in Q4, making up 16% of the company's business [10] Financial Outlook - Howmet expects to generate revenues in the range of $7.93-$8.13 billion in 2025, indicating year-over-year growth of 8% at the midpoint [12] - The Zacks Consensus Estimate for Howmet's 2025 earnings has increased 1.6% to $3.25 per share, reflecting a year-over-year growth of 20.8% [16] Shareholder Returns - Howmet is committed to rewarding shareholders, having paid dividends worth $109 million and repurchased shares for $500 million in 2024 [13] - In January 2025, the company increased its dividend by 25% to 10 cents per share, and in July 2024, it approved an increase in the share repurchase program by $2 billion [13] Competitive Landscape - Howmet operates in a highly competitive aerospace and defense market, with peers like GE Aerospace and Textron also being significant players [15] - The company faces near-term concerns due to weakness in the commercial transportation market and production issues at Boeing [14]

For those looking to find strong Aerospace stocks, it is prudent to search for companies in the group that are outperforming their peers. Has Howmet (HWM) been one of those stocks this year? Let's take a closer look at the stock's year-to-date performance to find out.Howmet is a member of our Aerospace group, which includes 53 different companies and currently sits at #3 in the Zacks Sector Rank. The Zacks Sector Rank considers 16 different sector groups. The average Zacks Rank of the individual stocks with ...