$HWM earnings report

Howmet reported a strong third quarter, with revenue of $ 2,703 million, up 29% year over year, and organic revenue growth of 25%. GAAP operating income increased 43% to $ 777 million, while GAAP operating income margin expanded 280 basis points to 28.7%. GAAP diluted EPS rose 49% to $ 1.42, and adjusted EPS rose 54% to $ 1.46. The Company stated that the quarter exceeded the high end of guidance.

Growth was broad across end markets. The Company cited 32% commercial aerospace growth, 10% defense aerospace growth, 45% gas turbines growth, and 28% commercial transportation growth. Engine Products delivered $ 1,451 million of third-party sales and a 39.1% Segment Adjusted EBITDA margin. Fastening Systems grew 41%, including acquisition contributions, while its 29.4% margin reflected the CAM acquisition. Engineered Structures declined 4% because of the Savannah divestiture but grew 8% excluding that divestiture. Forged Wheels revenue grew 32%, though aluminum cost pass through reduced its margin to 26.3%.

Profitability and cash generation improved substantially. Adjusted EBITDA increased 43% to $ 879 million and adjusted EBITDA margin expanded 310 basis points to 32.5%. Third-quarter cash from operations was $ 709 million, and free cash flow was $ 562 million after $ 147 million in capital expenditures. For the first nine months, free cash flow was $ 1,400 million, up 55%, while capital expenditures were $ 345 million. The Company said it expects elevated capital expenditure beyond 2027 while maintaining focus on free cash flow conversion.

Capital allocation included $500 million of third-quarter common-stock repurchases and $1.1 billion repurchased year to date through October 28, 2026. The Board increased the repurchase authorization by $5 billion to $5.397 billion total authorization, and the quarterly dividend increased 17% to $0.14 per share. The Company also paid down $60 million of commercial paper borrowings during the quarter, though short-term borrowings were $ 390 million and long-term debt was $ 4,052 million at September 30, 2026.

Management increased FY 2026 guidance, including a revenue baseline of $ 10,300, adjusted EBITDA baseline of $ 3,330, adjusted EPS baseline of $ 5.50, and free-cash-flow baseline of $ 2,000. Q4 revenue guidance is $ 2,740 to $ 2,760, and Q4 adjusted EBITDA margin guidance is 32.7% to 32.8%. The Company also provided full-year 2027 revenue guidance of approximately $11.5 billion, representing approximately 12% growth from increased 2026 guidance. The filing attributes the outlook to commercial aerospace backlog, solid defense markets, strengthening gas-turbine demand, and North American commercial transportation recovery.

Howmet reported a strong second quarter. Revenue was $2,547 million, up 24% year over year, with 21% organic growth excluding the net impact of three asset transactions. GAAP operating income increased 36% to $711 million and GAAP operating income margin rose 250 basis points to 27.9%. Adjusted EBITDA grew 39% to $817 million, while adjusted EBITDA margin expanded 340 basis points to 32.1%. GAAP EPS was $1.33 and adjusted EPS was also $1.33.

Demand was broad-based across the aerospace and gas-turbines end markets. Commercial aerospace grew 28%, defense aerospace grew 11%, and gas turbines grew 38%. Engine Products was the largest segment and delivered $1,373 million of third-party sales, up 32%, alongside a 470-basis-point expansion in segment adjusted EBITDA margin to 37.7%. Fastening Systems revenue increased 37% to $589 million, with CAM and Brunner acquisition impacts included. The acquisition mix was therefore a contributor to reported growth, while organic growth remained substantial.

Profitability improved despite incremental investment and acquisition absorption. Management cited the absorption of the CAM fastener acquisition in the 32.1% adjusted EBITDA margin. Engine Products added approximately 485 net headcount to support expected revenue increases. Engineered Structures was the exception on sales, with revenue declining 13% to $269 million following the Savannah disk forging facility divestiture and product rationalization, although segment adjusted EBITDA margin increased 170 basis points to 23.8%. Forged Wheels reported 14% revenue growth, but commercial transportation volumes were 8% lower year over year; aluminum and other inflationary cost pass through more than offset the volume decline.

Cash generation was also strong. Cash from operations was $583 million and free cash flow was $479 million after $104 million in capital expenditures. The Company deployed $300 million to second-quarter common-stock repurchases and another $200 million in July. It completed the CAM acquisition for approximately $1.8 billion, repaid approximately $186 million of Japanese Yen-denominated term-loan principal, and entered a cross-currency swap involving $300 million of 6.75% Bonds due 2028. Management said the combined debt actions reduce annualized interest expense by $12 million.

The guidance increase reinforces the reported momentum. Full-year 2026 revenue guidance is $10,000 million to $10,100 million, with the baseline increased by $400 million. Full-year adjusted EBITDA guidance is $3,210 million to $3,250 million, adjusted EPS guidance is $5.23 to $5.31, and free-cash-flow guidance is $1,850 million to $1,950 million. The primary execution items are the planned increase in capital expenditures, CAM integration, the expected return to pre-CAM leverage levels, and the developing recovery in commercial transportation volumes.