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]

Financial Data and Key Metrics Changes - The company reported a free cash flow guidance of $1.15 billion for the year, with factors affecting this including final cash tax bills, capital expenditures, and working capital efficiency [82][84] - The company has improved margins significantly, with engine products margins increasing due to a combination of pricing, operating leverage, and improved processes [47][48] Business Line Data and Key Metrics Changes - The aftermarket for engine products has grown from 11% of total revenues in 2019 to approximately 20% in Q1 2025, indicating strong growth in this segment [42][44] - The fastener business has seen margins increase by 400 basis points, despite the anticipated ramp-up in wide-body aircraft production not yet occurring [56][58] Market Data and Key Metrics Changes - The company is optimistic about the narrow-body production market, particularly with Boeing's production rates improving, which is expected to drive demand for parts [4][12] - The company is experiencing a shift in production requirements, with expectations of increased production rates for LEAP engines and geared turbofans as market demand grows [21][22] Company Strategy and Development Direction - The company is focusing on organic growth as the best deployment of capital, emphasizing the importance of high conversion ratios for net income [84][86] - There is a strong emphasis on automation and process improvements across facilities to enhance productivity and reduce labor costs [48][49] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the impact of tariffs, noting that the net effect has trended better than previously expected [5][6] - The company is preparing for increased production in response to anticipated growth in the aerospace market, particularly in narrow-body and wide-body segments [22][23] Other Important Information - The company is expanding its capacity in IGT (Industrial Gas Turbines) and has made technology acquisitions to enhance production capabilities [69][70] - There is ongoing investment in new facilities and equipment to support increased production demands, particularly in the engine products segment [51][52] Q&A Session Summary Question: Can you provide an update on tariffs and their impact? - Management indicated that the net effect of tariffs has trended better than expected, with a potential impact of around €15 million for the year [5][6] Question: How is the production related to Boeing's recovery? - Management noted that production is currently ahead of industry averages and is optimistic about increasing production rates in line with Boeing's recovery [12][20] Question: What is the outlook for the aftermarket in engine products? - The aftermarket has grown significantly, with expectations for continued growth as new engine designs come into service [42][44] Question: Can you comment on margin improvements in the fastener business? - Margins have improved significantly, and management expects further improvements as production ramps up in the wide-body aircraft segment [56][58] Question: What is the company's strategy regarding capital expenditures? - The company prioritizes organic growth and high conversion ratios for net income, with a focus on investing in fixed capital to support growth [84][86]