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Financial Data and Key Metrics Changes - Revenue growth accelerated to 14% in Q3 2025, up from 8% in the first half of the year [6] - EBITDA increased by 26%, while operating income rose by 29% [6] - Earnings per share (EPS) grew by over 34% to $0.95 [7] - Free cash flow was strong at $423 million, with capital expenditures of $108 million in the quarter [11] - Net leverage improved to 1.1x net debt to EBITDA, with total debt reduced by $140 million [12] Business Line Data and Key Metrics Changes - Commercial aerospace revenue increased by 15%, with parts sales up 38% and total spares up 31% [6][9] - Defense aerospace revenue grew by 24%, driven by a 33% increase in engine spares [9] - Commercial transportation revenue declined by 3%, with wheels volume down 16% [9] - Industrial and other markets saw an 18% increase, with oil and gas up 33% and IGT up 23% [9] Market Data and Key Metrics Changes - Total revenue from end markets was up 14%, with commercial aerospace exceeding $1.1 billion [9] - The combination of spares for commercial aerospace, defense aerospace, IGT, and oil and gas was up 31% in Q3 [10] - The balance sheet strengthened with a cash balance of $660 million and a $1 billion undrawn revolver [12] Company Strategy and Development Direction - The company is focused on expanding its manufacturing footprint with five new plants, particularly a new Michigan Aero engine core and casting plant [19][20] - Investments in technology and automation are expected to enhance productivity and yield, with a strong emphasis on artificial intelligence and machine learning [67][68] - The outlook for 2026 anticipates revenues of approximately $9 billion, reflecting a 10% year-over-year increase [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth in air travel and a strong backlog for commercial aircraft [17] - The demand for aftermarket parts, especially for engine components, is expected to remain robust [17] - The company is optimistic about defense sales, particularly for the F-35 and legacy fighter jets [17] - Concerns about commercial truck volumes due to low freight rates and high prices were noted, but the overall outlook remains positive [19] Other Important Information - The company repurchased $200 million of common stock in Q3, with a total of $600 million year-to-date [12] - A 20% increase in quarterly dividends was announced, raising the dividend to $0.12 per share [13] Q&A Session Summary Question: Insights on technology investments and competitive landscape in turbines - Management highlighted the growing demand for electricity due to data center buildouts and the need for reliable power sources, leading to increased investments in gas turbines [28][31] - The company is focusing on developing advanced turbine technologies similar to those in aerospace, with a strong emphasis on cooling capabilities [36][38] Question: End market growth expectations for 2026 - Management anticipates stronger commercial aerospace growth in 2026, with increased build rates for narrow-body aircraft [46] - Defense sales are expected to see mid-single-digit growth, while industrial segments are projected to grow in double digits [48] Question: Impact of tariffs and raw material pricing - Management reported that the net effect of tariffs remains minimal, around $5 million, and they are confident in their pass-through capabilities [61][62] Question: Future outlook for Howmet - Management expressed optimism about the company's growth trajectory, emphasizing the importance of automation and AI in improving operational efficiency [66][67] Question: Incremental margins and pricing dynamics - Management noted that current incrementals are healthy, driven by volume leverage, automation benefits, and pricing, while acknowledging the challenges posed by labor costs [73][74]

Financial Data and Key Metrics Changes - Revenue growth accelerated to 14% in Q3 2025, up from 8% in the first half of the year [6] - EBITDA increased by 26%, and operating income rose by 29% [6] - Cash flow was reported at $423 million after capital expenditures of $108 million [6] - Earnings per share increased by over 34% to $0.95 [7] - Net leverage improved to 1.1 times net debt to EBITDA [7][12] - Free cash flow guidance for 2025 was raised to $1.3 billion [22] Business Line Data and Key Metrics Changes - Commercial Aerospace revenue increased by 15%, with parts sales up 38% and total spares up 31% [6][9] - Defense Aerospace revenue grew by 24%, driven by a 33% increase in engine spares [9] - Commercial Transportation revenue decreased by 3%, with wheels volume down 16% [9] - Industrial and other markets saw an 18% increase, with oil and gas up 33% and IGT up 23% [9] Market Data and Key Metrics Changes - Total revenue from end markets was up 14%, with commercial aerospace exceeding $1.1 billion [9] - The combination of spares for commercial aero, defense aero, IGT, and oil and gas was up 31% in Q3 [10] - The balance sheet strengthened with a cash balance of $660 million and a $1 billion undrawn revolver [12] Company Strategy and Development Direction - The company is focused on expanding its manufacturing footprint with five new plants, particularly the Michigan Aero engine core and casting plant [20][21] - Investments in technology and automation are expected to enhance productivity and yield [72] - The company aims to convert 90% of net income into free cash flow while maintaining high capital expenditures [36][91] Management's Comments on Operating Environment and Future Outlook - The outlook for air travel and commercial aerospace remains strong, with a backlog of aircraft extending for many years [18] - Demand for defense sales is steady, with growth in both F-35 and legacy fighter jets [18] - The company anticipates revenue of approximately $9 billion for 2026, reflecting a 10% year-on-year increase [21] Other Important Information - The company repurchased $200 million of common stock in Q3, with a total of $600 million year-to-date [12] - A 20% increase in quarterly dividends was announced, bringing the total to $0.12 per share [13] Q&A Session Summary Question: Insights on competitive landscape for turbines and industrial gas turbines - Management highlighted the growing demand for electricity due to data center buildouts and the need for reliable power sources, indicating a solid investment outlook in this sector [30][34] Question: End market growth expectations for 2026 - Management expects stronger growth in commercial aerospace, with increased build rates for narrow-body aircraft and a mid-single-digit increase in defense sales [48][49] Question: Impact of tariffs and raw material pricing - Management reported that the net effect of tariffs remains minimal, around $5 million, and they are confident in their pass-through capabilities [64][65] Question: Future of Howmet and its growth trajectory - Management expressed optimism about the company's growth trajectory, emphasizing the importance of technology investments and operational improvements [71][72] Question: Incremental margins and pricing dynamics - Management noted that various factors, including volume leverage and automation, contribute to healthy incrementals, with expectations to maintain above historical ranges [78][82]

Financial Data and Key Metrics Changes - Q3 2025 revenue growth accelerated to 14%, up from 8% in the first half of the year [6] - EBITDA increased by 26%, and operating income rose by 29% [6] - Cash flow was strong at $423 million after capital expenditures of $108 million [6] - Earnings per share increased by over 34% to $0.95 [7] - Net leverage improved to 1.1 times net debt to EBITDA [7] - Free cash flow guidance for 2025 was raised to $1.3 billion [22] Business Line Data and Key Metrics Changes - Commercial Aerospace revenue grew by 15%, with parts sales up 38% and total spares increasing by 31% [6][9] - Defense Aerospace revenue rose by 24%, driven by a 33% increase in engine spares [9] - Commercial Transportation faced challenges, with revenue down 3% and wheels volume down 16% [10] - Industrial and other markets saw an 18% increase, with oil and gas up 33% and IGT up 23% [10] Market Data and Key Metrics Changes - Total revenue from end markets was up 14% [9] - The backlog for new, more fuel-efficient aircraft remains strong, contributing to commercial aerospace growth [9] - Demand for defense sales is steady, particularly for F-35 aircraft and legacy fighter jets [18] - The industrial gas turbine market is experiencing strong growth, particularly in the context of data center buildouts [19] Company Strategy and Development Direction - The company is focused on expanding its manufacturing footprint with new plants and extensions, particularly in the engines business [20] - Investments in technology and automation are expected to enhance productivity and margins [68] - The company aims to convert 90% of net income into free cash flow while maintaining high capital expenditures for growth [34] Management's Comments on Operating Environment and Future Outlook - The outlook for air travel and aircraft demand remains positive, with expectations for continued growth in aftermarket parts [18] - The company anticipates revenue of approximately $9 billion for 2026, reflecting a 10% year-on-year increase [21] - Management expressed confidence in the company's ability to navigate challenges related to tariffs and raw material costs [60] Other Important Information - The company repurchased $200 million of common stock in Q3, with a total of $600 million year-to-date [6][14] - A 20% increase in quarterly dividends was announced, reflecting strong cash generation [14] Q&A Session Summary Question: Insights on technology investments and competitive landscape in turbines and industrial gas turbines - Management highlighted the extraordinary demand for electricity due to data center buildouts and the need for reliable power supply [29][31] - The company is investing in advanced turbine technologies to meet growing demand and improve efficiency [36][38] Question: Expectations for end market growth and margin incrementals - Management indicated that commercial aerospace is expected to see stronger growth in 2026, with a mid-single-digit increase in defense sales [45][46] - Incremental margins were reported to be healthy, with expectations for continued strong performance [78] Question: Impact of tariffs and raw material pricing on guidance - Management noted that the net effect of tariffs remains minimal, around $5 million, and is not expected to significantly impact operations [60] Question: Future outlook for Howmet and its growth trajectory - Management expressed optimism about the company's growth potential, driven by technology investments and operational improvements [67][70]

Third Quarter 2025 Earnings Call John Plant: Executive Chairman and Chief Executive Officer Ken Giacobbe: EVP and Chief Financial Officer October 30, 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", "coul ...

Core Insights - Howmet (HWM) reported quarterly earnings of $0.95 per share, exceeding the Zacks Consensus Estimate of $0.91 per share, and up from $0.71 per share a year ago [1][2] - The company achieved revenues of $2.09 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 2.14% and increasing from $1.84 billion year-over-year [3] - Howmet's stock has increased approximately 86.1% since the beginning of the year, significantly outperforming the S&P 500's gain of 17.2% [4] Earnings Performance - The earnings surprise for the quarter was +4.40%, following a previous surprise of +4.6% when earnings were $0.91 against an expectation of $0.87 [2] - Over the last four quarters, Howmet has consistently surpassed consensus EPS estimates [2] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.97, with expected revenues of $2.14 billion, and for the current fiscal year, the estimate is $3.59 on revenues of $8.18 billion [8] - The estimate revisions trend for Howmet was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [7] Industry Context - Howmet operates within the Zacks Aerospace - Defense industry, which is currently ranked in the bottom 33% of over 250 Zacks industries, suggesting potential challenges ahead [9] - Another company in the same industry, StandardAero, Inc. (SARO), is expected to report earnings of $0.20 per share, reflecting a year-over-year increase of +233.3% [10]

Core Insights - Howmet Aerospace Inc. (HWM) reported its financial results for Q3 and provided guidance for Q4 and full-year 2025 [1][2] Q4 Guidance - The company expects adjusted earnings between $0.94 and $0.96 per share, with revenues projected between $2.09 billion and $2.11 billion for Q4 [1] - Analysts' average expectations for Q4 are earnings of $0.94 per share and revenues of $2.12 billion [2] Full-Year 2025 Outlook - For fiscal 2025, Howmet Aerospace projects adjusted earnings in the range of $3.66 to $3.68 per share, with revenues between approximately $8.175 billion and $8.195 billion [2] - This is an increase from previous projections of adjusted earnings between $3.56 and $3.64 per share and revenues between about $8.08 billion and $8.18 billion [2] - The Street anticipates earnings of $3.63 per share and revenues of $8.15 billion for the year [3]

Financial Performance - Record revenue of $2.09 billion in Q3 2025, up 14% year over year, driven by a 15% increase in commercial aerospace[8] - Net income of $385 million, or $0.95 per share, compared to $332 million, or $0.81 per share, in Q3 2024[9] - Adjusted EBITDA of $614 million, up 26% year over year, with an adjusted EBITDA margin of 29.4%, an increase of 290 basis points[11] - Net income for Q3 2025 was $385 million, compared to $407 million in Q2 2025 and $332 million in Q3 2024[32] - Sales for Q3 2025 reached $2,089 million, an increase from $2,053 million in Q2 2025 and $1,835 million in Q3 2024[32] - Total Segment Adjusted EBITDA for 3Q24 was $488 million, increasing to $614 million by 3Q25, reflecting a growth in Adjusted EBITDA margin from 26.5% to 29.4%[49] - Net income for 3Q24 was $332 million, which rose to $385 million in 3Q25, with diluted earnings per share increasing from $0.81 to $0.95 during the same period[45] Guidance and Projections - Full Year 2026 revenue guidance raised to approximately $9 billion, representing a ~10% increase year over year[13] - Q4 2025 revenue guidance ranges from $2.090 billion to $2.110 billion, with FY 2025 guidance between ~$8.175 billion and ~$8.195 billion[24] - Adjusted EBITDA for Q4 2025 is guided between $605 million and $615 million, with an adjusted EBITDA margin of approximately 29.0%[24] - Adjusted earnings per share for Q4 2025 is projected to be between $0.94 and $0.96, with FY 2025 adjusted EPS guidance between $3.66 and $3.68[24] Cash Flow and Capital Management - Cash from operations generated $531 million, with free cash flow of $423 million after $108 million in capital expenditures[12] - The company paid down the remaining $63 million of its USD Term Loan in Q3 2025, resulting in annualized interest expense savings of approximately $4 million[22] - Cash provided from operations for the nine months ended September 30, 2025, was $1,230 million, up from $818 million in 2024, representing a 50.5% increase[36] - Free cash flow for the nine months ended September 30, 2025, was $901 million, compared to $423 million in the same period of 2024, indicating a 112% increase[37] - The company repurchased $500 million of common stock during the nine months ended September 30, 2025, compared to $310 million in the same period of 2024[36] Segment Performance - Engine Products segment revenue of $1.1 billion, up 17% year over year, with adjusted EBITDA of $368 million, up 20%[15] - Fastening Systems segment revenue of $448 million, up 14% year over year, with adjusted EBITDA of $138 million, up 35%[17] - Engineered Structures segment revenue of $289 million, up 14% year over year, with adjusted EBITDA of $58 million, up 53%[18] - Total third-party sales in Engine Products segment for Q3 2025 reached $1,105 million, a 16% increase from $945 million in Q3 2024[40] - Segment Adjusted EBITDA margin for Engine Products in Q3 2025 was 33.3%, up from 32.5% in Q3 2024[40] Balance Sheet and Equity - Total assets as of September 30, 2025, were $11,177 million, up from $10,519 million at the end of 2024[35] - Total equity increased to $5,143 million as of September 30, 2025, compared to $4,554 million at the end of 2024[35] - Cash, cash equivalents, and restricted cash at the end of the period were $660 million, up from $475 million at the end of the same period in 2024[36] Stockholder Returns - $200 million of common stock repurchased in Q3 2025 at an average price of $182.20 per share, with an additional $100 million repurchased in October 2025[20] - The quarterly common stock dividend increased by 20% to $0.12 per share in Q3 2025, up from $0.10 per share in Q2 2025[21] Credit Rating and Tax Efficiency - S&P upgraded Howmet Aerospace's long-term issuer credit rating from BBB to BBB+ on September 8, 2025[23] - The operational tax rate for 3Q25 was reported at 21.3%, compared to 22.2% in the previous quarter, reflecting improved tax efficiency[47]

Core Insights - Howmet Aerospace reported record revenue of $2.09 billion for Q3 2025, reflecting a 14% year-over-year growth, driven by strong performance in the commercial aerospace, defense aerospace, and industrial markets [3][4][7] - The company achieved a net income of $385 million, or $0.95 per share, compared to $332 million, or $0.81 per share, in Q3 2024, marking a significant increase in profitability [4][8] - Full year 2026 revenue guidance has been raised to approximately $9 billion, representing a ~10% increase year-over-year [9][16] Financial Performance - Q3 2025 Adjusted EBITDA was $614 million, up 26% year-over-year, with an Adjusted EBITDA margin of 29.4%, an increase of approximately 290 basis points [6][8] - Operating income for Q3 2025 was $542 million, a 29% increase from the previous year, with an operating income margin of 25.9%, up about 300 basis points [5][8] - Free cash flow generated in Q3 2025 was $423 million after $108 million in capital expenditures [7][8] Shareholder Returns - The company repurchased $200 million of common stock in Q3 2025 and an additional $100 million in October 2025, totaling $600 million year-to-date [9][13] - A 20% increase in the quarterly dividend to $0.12 per share was declared in Q3 2025 [14][9] - The company paid down $63 million of debt in Q3 2025, reducing annualized interest expenses by approximately $4 million [15][9] Market Outlook - The commercial aerospace market is expected to continue growing, supported by increasing air traffic and a backlog of commercial aircraft orders extending through the decade [7][9] - The defense aerospace market remains robust, particularly due to demand for F-35 and legacy fighter aircraft [7][9] - However, the commercial transportation market is experiencing weakness, which may impact overall performance [7][9]

Core Viewpoint - Howmet Aerospace Inc. is expected to report strong third-quarter results driven by robust demand in the commercial and defense aerospace markets, with earnings estimated at 91 cents per share and revenues of $2.05 billion, reflecting a year-over-year growth of 28.2% and 11.5% respectively [1][4][5]. Earnings Estimates - The Zacks Consensus Estimate for current quarter earnings is 91 cents per share, unchanged over the past week, with a slight increase from 90 cents 30 days ago [2]. - The earnings surprise history shows that Howmet has consistently outperformed estimates, with an average surprise of 7.1% over the last four quarters [2]. Market Demand Factors - Strong momentum in the commercial aerospace market is expected to benefit Howmet, driven by increased demand for wide-body aircraft and a rise in air travel [4]. - The commercial aerospace revenue estimate stands at $1.09 billion, indicating a 13.6% increase year-over-year [5]. - The defense aerospace market is also contributing significantly, with revenues estimated at $351 million, reflecting a 21.5% growth from the previous year [6][7]. Challenges - The commercial transportation market is facing challenges, with revenues expected to decline by 10% year-over-year to $279 million due to lower OEM builds and tariff impacts [7]. - Supply chain disruptions in the aerospace sector have led to delays and increased costs, which may affect overall performance [8]. Valuation and Performance - Howmet's shares have increased by 5.5% over the past three months, underperforming compared to the Zacks Aerospace - Defense industry and the S&P 500 [9]. - The company is trading at a forward P/E ratio of 48.07X, significantly higher than the industry average of 29.61X, which may pose risks if market sentiment declines [12]. Investment Outlook - The robust demand in both commercial and defense aerospace markets is expected to drive future performance, supported by significant government defense spending [15]. - However, near-term challenges such as weakness in the commercial transportation market and high valuation may limit growth prospects [16][17].