Record Quarterly Revenue, Up 14% Year Over
Year; Strong Profit and Cash from Operations
$150 Million Deployed for Common Stock
Repurchases
Full Year 2024 Guidance Increased
Howmet Aerospace (NYSE:HWM):
First Quarter 2024 GAAP Financial Results
- Revenue of $1.82 billion, up 14% year over year, driven by
commercial aerospace, up 23%
- Net income of $243 million versus $148 million in the first
quarter 2023; earnings per share of $0.59 versus $0.35 in the first
quarter 2023
- Operating income margin of 20.2%
- Generated $177 million of cash from operations; $178 million of
cash used for financing activities; and $75 million of cash used
for investing activities
- Share repurchases of $150 million; $0.05 per share dividend on
common stock
First Quarter 2024 Adjusted Financial Results
- Adjusted EBITDA excluding special items of $437 million, up 21%
year over year
- Adjusted EBITDA margin excluding special items of 24.0%
- Adjusted earnings per share excluding special items of $0.57,
up 36% year over year
- Generated $95 million of free cash flow
2024 Guidance
Q2 2024 Guidance
FY 2024 Guidance
Low
Baseline
High
Low
Baseline
High
Revenue
$1.825B
$1.835B
$1.845B
$7.225B
$7.300B
$7.375B
Adj. EBITDA*1
$435M
$440M
$445M
$1.720B
$1.750B
$1.780B
Adj. EBITDA Margin*1
23.8%
24.0%
24.1%
23.8%
24.0%
24.1%
Adj. Earnings per Share*1
$0.57
$0.58
$0.59
$2.31
$2.35
$2.39
Free Cash Flow1
$750M
$800M
$850M
_____________________________* Excluding special items
1 Reconciliations of the forward-looking
non-GAAP measures to the most directly comparable GAAP measures, as
well as the directly comparable GAAP measures, are not available
without unreasonable efforts due to the variability and complexity
of the charges and other components excluded from the non-GAAP
measures – for further detail, see “2024 Guidance” below.
Key Announcements
- On February 29, 2024, Moody’s Investors Service, Inc. upgraded
Howmet Aerospace’s senior unsecured rating from Ba1 to Baa3. With
this upgrade, Howmet Aerospace is now rated as investment grade by
all three credit rating agencies.
- On April 4, 2024, the Company established a commercial paper
program, under which the Company may issue unsecured commercial
paper notes up to a maximum aggregate face value amount of $1
billion outstanding at any time.
- In the first quarter 2024, Howmet Aerospace repurchased $150
million of common stock at an average price of $66.87 per share,
retiring approximately 2.2 million shares. As of May 1, 2024, total
share repurchase authorization available was $547 million.
- On February 26, 2024, the Company paid a quarterly dividend of
$0.05 per share on its common stock.
- The Company expects to increase the quarterly common stock
dividend to $0.07 per share beginning in the third quarter 2024,
subject to the discretion and approval of the Board of
Directors.
Howmet Aerospace (NYSE:HWM) today reported first quarter 2024
results. The Company reported record first quarter 2024 revenue of
$1.82 billion, up 14% year over year, primarily driven by growth in
the commercial aerospace market of 23%.
Howmet Aerospace reported net income of $243 million, or $0.59
per share, in the first quarter 2024 versus $148 million, or $0.35
per share, in the first quarter 2023. Net income included
approximately $5 million in net benefits from special items in the
first quarter 2024. First quarter 2024 operating income was $369
million, up 29% year over year. Operating income margin was 20.2%,
up approximately 240 basis points year over year.
Howmet Aerospace reported adjusted net income excluding special
items of $238 million, or $0.57 per share, in the first quarter
2024 versus $175 million, or $0.42 per share, in the first quarter
2023. Adjusted EBITDA excluding special items was $437 million, up
21% year over year. The year-over-year increase was driven by
strong volume growth in the commercial aerospace market. Adjusted
EBITDA margin excluding special items was up approximately 150
basis points year over year at 24.0%. First quarter 2024 adjusted
operating income excluding special items was $370 million, up 27%
year over year. Adjusted operating income margin excluding special
items was 20.3%, up approximately 210 basis points year over
year.
Howmet Aerospace Executive Chairman and Chief Executive Officer
John Plant said, “Howmet Aerospace delivered an outstanding start
to 2024, with results exceeding the high end of guidance on all
metrics. The team achieved record quarterly results in revenue,
Adjusted EBITDA*, Adjusted EBITDA margin* and Adjusted earnings per
share*. First quarter 2024 revenue grew 14% year over year with all
end markets up, led by 23% growth in commercial aerospace. Adjusted
EBITDA* grew 21% with a 24.0% margin*, and Adjusted earnings per
share* of $0.57 grew 36%. Free cash flow was $95 million and marks
the first time the Company has generated positive cash flow in the
first quarter of a year.”
Mr. Plant continued, “Demand for air travel continues to be
robust, exceeding pre-pandemic levels, and supports record aircraft
OEM backlogs. Against this healthy backcloth, quality issues at
Boeing have resulted in much slower 737 MAX production than
expected. We now assume sharply lower 737 MAX volumes in our
guidance with an average build rate of 20 per month for full year
2024. However, a more favorable demand outlook in other aspects of
our business have driven an overall $200 million increase in Howmet
Aerospace’s full year 2024 revenue guidance.”
“Howmet Aerospace’s balance sheet remains strong with leverage
at a record low. Continued solid cash generation supported $150
million in common stock repurchases in the first quarter. Subject
to Board approval, we also expect to increase the common stock
dividend by 40% in the third quarter 2024 to $0.07 per share,
demonstrating the Company’s confidence in sustained healthy cash
generation.”
_____________________________ * Excluding special items
First Quarter 2024 Segment Performance
Engine Products
(in U.S. dollar millions)
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Engine
Products
Third-party sales
$
795
$
821
$
798
$
852
$
885
Inter-segment sales
$
2
$
5
$
5
$
1
$
2
Provision for depreciation and
amortization
$
32
$
32
$
33
$
33
$
33
Segment Adjusted EBITDA
$
212
$
223
$
219
$
233
$
249
Segment Adjusted EBITDA Margin
26.7
%
27.2
%
27.4
%
27.3
%
28.1
%
Restructuring and other charges
(credits)
$
—
$
(1
)
$
—
$
(1
)
$
—
Capital expenditures
$
33
$
21
$
30
$
28
$
55
Engine Products reported revenue of $885 million, an increase of
11% year over year, due to growth in the commercial aerospace,
defense aerospace, and oil & gas markets. Segment Adjusted
EBITDA was a record $249 million, up 17% year over year, driven by
favorable volume in the commercial aerospace, defense aerospace,
and oil & gas markets. The Segment absorbed approximately 435
net headcount in the quarter in support of expected revenue
increases. Segment Adjusted EBITDA margin increased approximately
140 basis points year over year to a record 28.1%.
Fastening Systems
(in U.S. dollar millions)
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Fastening
Systems
Third-party sales
$
312
$
329
$
348
$
360
$
389
Provision for depreciation and
amortization
$
11
$
12
$
12
$
11
$
11
Segment Adjusted EBITDA
$
58
$
64
$
76
$
80
$
92
Segment Adjusted EBITDA Margin
18.6
%
19.5
%
21.8
%
22.2
%
23.7
%
Restructuring and other charges
$
—
$
—
$
1
$
—
$
—
Capital expenditures
$
9
$
5
$
9
$
8
$
7
Fastening Systems reported revenue of $389 million, an increase
of 25% year over year due to growth in the commercial aerospace
market, including wide body aircraft recovery. Segment Adjusted
EBITDA was $92 million, up 59% year over year, driven by favorable
volume in the commercial aerospace market as well as productivity
gains. Segment Adjusted EBITDA margin increased approximately 510
basis points year over year to 23.7%.
Engineered Structures
(in U.S. dollar millions)
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Engineered
Structures
Third-party sales
$
207
$
200
$
227
$
244
$
262
Inter-segment sales
$
—
$
1
$
—
$
2
$
1
Provision for depreciation and
amortization
$
12
$
12
$
12
$
11
$
11
Segment Adjusted EBITDA
$
30
$
20
$
30
$
33
$
37
Segment Adjusted EBITDA Margin
14.5
%
10.0
%
13.2
%
13.5
%
14.1
%
Restructuring and other charges
$
1
$
5
$
1
$
14
$
—
Capital expenditures
$
10
$
5
$
6
$
5
$
6
Engineered Structures reported revenue of $262 million, an
increase of 27% year over year due to growth in the commercial
aerospace market, including wide body aircraft recovery, and the
defense aerospace market. Segment Adjusted EBITDA was $37 million,
up 23% year over year, driven by higher volumes in the commercial
aerospace and defense aerospace markets. Segment Adjusted EBITDA
margin decreased approximately 40 basis points year over year to
14.1%.
Forged Wheels
(in U.S. dollar millions)
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Forged
Wheels
Third-party sales
$
289
$
298
$
285
$
275
$
288
Provision for depreciation and
amortization
$
9
$
10
$
10
$
10
$
10
Segment Adjusted EBITDA
$
79
$
81
$
77
$
72
$
82
Segment Adjusted EBITDA Margin
27.3
%
27.2
%
27.0
%
26.2
%
28.5
%
Capital expenditures
$
9
$
7
$
9
$
11
$
12
Forged Wheels reported revenue of $288 million, approximately
flat year over year as a decrease in aluminum price and other
inflationary cost pass through was offset by 2% higher volumes in
the commercial transportation market. Segment Adjusted EBITDA was
$82 million, an increase of approximately 4% year over year.
Segment Adjusted EBITDA margin increased approximately 120 basis
points year over year to 28.5%.
Moody’s Upgraded Howmet Aerospace Rating to Investment
Grade
On February 29, 2024, Moody’s Investors Service, Inc. upgraded
Howmet Aerospace’s senior unsecured rating from Ba1 to Baa3. With
this upgrade, Howmet Aerospace is now rated as investment grade by
all three credit rating agencies.
Established a $1 Billion Commercial Paper Program
On April 4, 2024, the Company established a commercial paper
program under which the Company may issue unsecured commercial
paper notes from time to time up to a maximum aggregate face amount
of $1 billion outstanding at any time. The maturity of the notes
may vary but will not exceed 397 days from the date of issue.
Repurchased $150 Million of Common Stock in First Quarter
2024
In the first quarter 2024, Howmet Aerospace repurchased $150
million of common stock at an average price of $66.87 per share,
retiring approximately 2.2 million shares, which represents the
12th consecutive quarter of share repurchase activity. As of May 1,
2024, total share repurchase authorization available was $547
million.
Quarterly Common Stock Dividend of $0.05 Per Share Paid in
First Quarter 2024
On February 26, 2024, the Company paid a quarterly dividend of
$0.05 per share on its common stock.
Company Expects to Increase Quarterly Common Stock Dividend
to $0.07 Per Share in Third Quarter 2024, Subject to Board
Approval
The Company expects to increase the quarterly common stock
dividend to $0.07 per share beginning in the third quarter 2024,
subject to the discretion and approval of the Board of Directors
after the Board’s consideration of all factors it deems relevant
and subject to applicable law.
2024 Guidance
Q2 2024 Guidance
FY 2024 Guidance
Low
Baseline
High
Low
Baseline
High
Revenue
$1.825B
$1.835B
$1.845B
$7.225B
$7.300B
$7.375B
Adj. EBITDA*1
$435M
$440M
$445M
$1.720B
$1.750B
$1.780B
Adj. EBITDA Margin*1
23.8%
24.0%
24.1%
23.8%
24.0%
24.1%
Adj. Earnings per Share*1
$0.57
$0.58
$0.59
$2.31
$2.35
$2.39
Free Cash Flow1
$750M
$800M
$850M
* Excluding Special Items
1 Reconciliations of the forward-looking
non-GAAP financial measures to the most directly comparable GAAP
financial measures, as well as the directly comparable GAAP
measures, are not available without unreasonable efforts due to the
variability and complexity of the charges and other components
excluded from the non-GAAP measures, such as the effects of foreign
currency movements, gains or losses on sales of assets, taxes, and
any future restructuring or impairment charges. In addition, there
is inherent variability already included in the GAAP measures,
including, but not limited to, price/mix and volume. Howmet
Aerospace believes such reconciliations would imply a degree of
precision that would be confusing or misleading to investors.
Howmet Aerospace will hold its quarterly conference call at
10:00 AM Eastern Time on Thursday, May 2, 2024. The call will be
webcast via www.howmet.com. The press release and presentation
materials will be available at approximately 7:00 AM ET on May 2,
via the “Investors” section of the Howmet Aerospace
website.
About Howmet Aerospace
Howmet Aerospace Inc., headquartered in Pittsburgh,
Pennsylvania, is a leading global provider of advanced engineered
solutions for the aerospace and transportation industries. The
Company’s primary businesses focus on jet engine components,
aerospace fastening systems, and airframe structural components
necessary for mission-critical performance and efficiency in
aerospace and defense applications, as well as forged aluminum
wheels for commercial transportation. With approximately 1,150
granted and pending patents, the Company’s differentiated
technologies enable lighter, more fuel-efficient aircraft and
commercial trucks to operate with a lower carbon footprint. For
more information, visit www.howmet.com.
Dissemination of Company Information
Howmet Aerospace intends to make future announcements regarding
Company developments and financial performance through its website
at www.howmet.com.
Forward-Looking Statements
This release 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", “envisions”,
"estimates", "expects", "forecasts", "goal", "guidance", "intends",
"may", "outlook", "plans", "projects", "seeks", "sees", "should",
"targets", "will", "would", or other words of similar meaning. All
statements that reflect Howmet Aerospace’s expectations,
assumptions or projections about the future, other than statements
of historical fact, are forward-looking statements, including,
without limitation, statements, forecasts and outlook relating to
the condition of end markets; future financial results or operating
performance; future strategic actions; Howmet Aerospace's
strategies, outlook, and business and financial prospects; and any
future dividends and repurchases of its debt or equity securities.
These statements reflect beliefs and assumptions that are based on
Howmet Aerospace’s perception of historical trends, current
conditions and expected future developments, as well as other
factors Howmet Aerospace believes are appropriate in the
circumstances. Forward-looking statements are not guarantees of
future performance and are subject to risks, uncertainties and
changes in circumstances that are difficult to predict, which could
cause actual results to differ materially from those indicated by
these statements. Such risks and uncertainties include, but are not
limited to: (a) deterioration in global economic and financial
market conditions generally; (b) unfavorable changes in the markets
served by Howmet Aerospace; (c) the impact of potential cyber
attacks and information technology or data security breaches; (d)
the loss of significant customers or adverse changes in customers’
business or financial conditions; (e) manufacturing difficulties or
other issues that impact product performance, quality or safety;
(f) inability of suppliers to meet obligations due to supply chain
disruptions or otherwise; (g) failure to attract and retain a
qualified workforce and key personnel, labor disputes or other
employee relations issues; (h) the inability to achieve revenue
growth, cash generation, restructuring plans, cost reductions,
improvement in profitability, or strengthening of competitiveness
and operations anticipated or targeted; (I) inability to meet
increased demand, production targets or commitments; (j)
competition from new product offerings, disruptive technologies or
other developments; (k) geopolitical, economic, and regulatory
risks relating to Howmet Aerospace’s global operations, including
geopolitical and diplomatic tensions, instabilities, conflicts and
wars, as well as compliance with U.S. and foreign trade and tax
laws, sanctions, embargoes and other regulations; (l) the outcome
of contingencies, including legal proceedings, government or
regulatory investigations, and environmental remediation, which can
expose Howmet Aerospace to substantial costs and liabilities; (m)
failure to comply with government contracting regulations; (n)
adverse changes in discount rates or investment returns on pension
assets; and (o) the other risk factors summarized in Howmet
Aerospace’s Form 10-K for the year ended December 31, 2023 and
other reports filed with the U.S. Securities and Exchange
Commission. Market projections are subject to the risks discussed
above and other risks in the market. Credit ratings are not a
recommendation to buy or hold any Howmet Aerospace securities, and
they may be revised or revoked at any time at the sole discretion
of the credit rating organizations. The statements in this release
are made as of the date of this release, even if subsequently made
available by Howmet Aerospace on its website or otherwise. Howmet
Aerospace disclaims any intention or obligation to update publicly
any forward-looking statements, whether in response to new
information, future events, or otherwise, except as required by
applicable law.
Non-GAAP Financial Measures
Some of the information included in this release is derived from
Howmet Aerospace’s consolidated financial information but is not
presented in Howmet Aerospace’s financial statements prepared in
accordance with accounting principles generally accepted in the
United States of America (GAAP). Certain of these data are
considered “non-GAAP financial measures” under SEC rules. These
non-GAAP financial measures supplement our GAAP disclosures and
should not be considered an alternative to the GAAP measure.
Reconciliations to the most directly comparable GAAP financial
measures and management’s rationale for the use of the non-GAAP
financial measures can be found in the schedules to this
release.
Other Information
In this press release, the acronym “FY” means “full year” and
“Q” means “quarter”; and references to Howmet Aerospace performance
that is “record” means its best result since April 1, 2020 when
Howmet Aerospace Inc. (previously named Arconic Inc.) separated
from Arconic Corporation.
Howmet Aerospace Inc. and subsidiaries Statement of
Consolidated Operations (unaudited) (in U.S. dollar and
millions, except per-share amounts)
Quarter ended
March 31, 2024
December 31, 2023
March 31, 2023
Sales
$
1,824
$
1,731
$
1,603
Cost of goods sold (exclusive of expenses
below)
1,290
1,230
1,164
Selling, general administrative, and other
expenses
88
83
75
Research and development expenses
10
9
9
Provision for depreciation and
amortization
67
68
69
Restructuring and other charges
—
15
1
Operating income
369
326
285
Loss on debt redemption
—
1
1
Interest expense, net
49
52
57
Other expense, net
17
3
7
Income before income taxes
303
270
220
Provision for income taxes
60
34
72
Net income
$
243
$
236
$
148
Amounts Attributable to Howmet
Aerospace Common Shareholders:
Earnings per share - basic(1):
Net income per share
$
0.59
$
0.57
$
0.36
Average number of shares(2)(3)
410
411
412
Earnings per share - diluted(1):
Net income per share
$
0.59
$
0.57
$
0.35
Average number of shares(2)(3)
412
414
418
Common stock outstanding at the end of the
period
408
410
412
(1)
In order to calculate both basic and
diluted earnings per share, preferred stock dividends declared of
less than $1 for the quarters presented need to be subtracted from
Net income.
(2)
For the quarters presented, the difference
between the diluted average number of shares and the basic average
number of shares related to share equivalents associated with
outstanding restricted stock unit awards and employee stock
options.
(3)
As average shares outstanding are used in
the calculation of both basic and diluted earnings per share, the
impact of share repurchases is not fully realized in earnings per
share ("EPS") in the period of repurchase since share repurchases
may occur at varying points during a period.
Howmet Aerospace Inc. and subsidiaries Consolidated
Balance Sheet (unaudited) (in U.S. dollar millions)
March 31, 2024
December 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
533
$
610
Receivables from customers, less
allowances of $— in both 2024 and 2023
785
675
Other receivables
18
17
Inventories
1,783
1,765
Prepaid expenses and other current
assets
221
249
Total current assets
3,340
3,316
Properties, plants, and equipment, net
2,294
2,328
Goodwill
4,020
4,035
Deferred income taxes
38
46
Intangibles, net
498
505
Other noncurrent assets
220
198
Total assets
$
10,410
$
10,428
Liabilities
Current liabilities:
Accounts payable, trade
$
964
$
982
Accrued compensation and retirement
costs
201
263
Taxes, including income taxes
84
68
Accrued interest payable
45
65
Other current liabilities
198
200
Short-term debt
206
206
Total current liabilities
1,698
1,784
Long-term debt, less amount due within one
year
3,486
3,500
Accrued pension benefits
662
664
Accrued other postretirement benefits
91
92
Other noncurrent liabilities and deferred
credits
387
351
Total liabilities
6,324
6,391
Equity
Howmet Aerospace shareholders’ equity:
Preferred stock
55
55
Common stock
408
410
Additional capital
3,542
3,682
Retained earnings
1,942
1,720
Accumulated other comprehensive loss
(1,861
)
(1,830
)
Total equity
4,086
4,037
Total liabilities and equity
$
10,410
$
10,428
Howmet Aerospace and subsidiaries Statement of
Consolidated Cash Flows (unaudited) (in U.S. dollar
millions)
Three months ended March
31,
2024
2023
Operating activities
Net income
$
243
$
148
Adjustments to reconcile net income to
cash provided from operations:
Depreciation and amortization
67
69
Deferred income taxes
32
31
Restructuring and other charges
—
1
Net realized and unrealized losses
7
4
Net periodic pension cost
10
9
Stock-based compensation
15
14
Loss on debt redemption
—
1
Other
1
5
Changes in assets and liabilities,
excluding effects of acquisitions, divestitures, and foreign
currency translation adjustments:
Increase in receivables
(127
)
(137
)
Increase in inventories
(31
)
(45
)
Decrease in prepaid expenses and other
current assets
23
12
Increase (decrease) in accounts payable,
trade
22
(67
)
Decrease in accrued expenses
(87
)
(19
)
Increase in taxes, including income
taxes
15
16
Pension contributions
(2
)
(9
)
(Increase) decrease in noncurrent
assets
(2
)
2
Decrease in noncurrent liabilities
(9
)
(12
)
Cash provided from operations
177
23
Financing Activities
Repurchases and payments on debt
—
(176
)
Premiums paid on early redemption of
debt
—
(1
)
Repurchases of common stock
(150
)
(25
)
Proceeds from exercise of employee stock
options
5
6
Dividends paid to shareholders
(21
)
(17
)
Taxes paid for net share settlement of
equity awards
(12
)
(1
)
Cash used for financing
activities
(178
)
(214
)
Investing Activities
Capital expenditures
(82
)
(64
)
Proceeds from the sale of assets and
businesses
7
—
Cash used for investing
activities
(75
)
(64
)
Effect of exchange rate changes on
cash, cash equivalents and restricted cash
—
1
Net change in cash, cash equivalents and
restricted cash
(76
)
(254
)
Cash, cash equivalents and restricted cash
at beginning of period
610
792
Cash, cash equivalents and restricted
cash at end of period
$
534
$
538
Howmet Aerospace Inc. and subsidiaries Segment
Information (unaudited) (in U.S. dollar millions)
1Q23
2Q23
3Q23
4Q23
2023
1Q24
Engine
Products
Third-party sales
$
795
$
821
$
798
$
852
$
3,266
$
885
Inter-segment sales
$
2
$
5
$
5
$
1
$
13
$
2
Provision for depreciation and
amortization
$
32
$
32
$
33
$
33
$
130
$
33
Segment Adjusted EBITDA
$
212
$
223
$
219
$
233
$
887
$
249
Segment Adjusted EBITDA Margin
26.7
%
27.2
%
27.4
%
27.3
%
27.2
%
28.1
%
Restructuring and other credits
$
—
$
(1
)
$
—
$
(1
)
$
(2
)
$
—
Capital expenditures
$
33
$
21
$
30
$
28
$
112
$
55
Fastening
Systems
Third-party sales
$
312
$
329
$
348
$
360
$
1,349
$
389
Provision for depreciation and
amortization
$
11
$
12
$
12
$
11
$
46
$
11
Segment Adjusted EBITDA
$
58
$
64
$
76
$
80
$
278
$
92
Segment Adjusted EBITDA Margin
18.6
%
19.5
%
21.8
%
22.2
%
20.6
%
23.7
%
Restructuring and other charges
$
—
$
—
$
1
$
—
$
1
$
—
Capital expenditures
$
9
$
5
$
9
$
8
$
31
$
7
Engineered
Structures
Third-party sales
$
207
$
200
$
227
$
244
$
878
$
262
Inter-segment sales
$
—
$
1
$
—
$
2
$
3
$
1
Provision for depreciation and
amortization
$
12
$
12
$
12
$
11
$
47
$
11
Segment Adjusted EBITDA
$
30
$
20
$
30
$
33
$
113
$
37
Segment Adjusted EBITDA Margin
14.5
%
10.0
%
13.2
%
13.5
%
12.9
%
14.1
%
Restructuring and other charges
$
1
$
5
$
1
$
14
$
21
$
—
Capital expenditures
$
10
$
5
$
6
$
5
$
26
$
6
Forged
Wheels
Third-party sales
$
289
$
298
$
285
$
275
$
1,147
$
288
Provision for depreciation and
amortization
$
9
$
10
$
10
$
10
$
39
$
10
Segment Adjusted EBITDA
$
79
$
81
$
77
$
72
$
309
$
82
Segment Adjusted EBITDA Margin
27.3
%
27.2
%
27.0
%
26.2
%
26.9
%
28.5
%
Capital expenditures
$
9
$
7
$
9
$
11
$
36
$
12
Differences between the total segment and
consolidated totals are in Corporate.
Howmet Aerospace Inc. and subsidiaries Calculation of
Financial Measures (unaudited) (in U.S. dollar
millions)
Reconciliation of Total Segment
Adjusted EBITDA to Consolidated Income Before Income Taxes
1Q23
2Q23
3Q23
4Q23
2023
1Q24
Income before income taxes
$
220
$
243
$
242
$
270
$
975
$
303
Loss on debt redemption
1
—
—
1
2
—
Interest expense, net
57
55
54
52
218
49
Other expense (income), net
7
(13
)
11
3
8
17
Operating income
$
285
$
285
$
307
$
326
$
1,203
$
369
Segment provision for depreciation and
amortization
64
66
67
65
262
65
Unallocated amounts:
Restructuring and other charges
1
3
4
15
23
—
Corporate expense(1)
29
34
24
12
99
26
Total Segment Adjusted EBITDA
$
379
$
388
$
402
$
418
$
1,587
$
460
Total Segment Adjusted EBITDA is a
non-GAAP financial measure. Management believes that this measure
is meaningful to investors because Total Segment Adjusted EBITDA
provides additional information with respect to the Company's
operating performance and the Company’s ability to meet its
financial obligations. The Total Segment Adjusted EBITDA presented
may not be comparable to similarly titled measures of other
companies. Howmet’s definition of Total Segment Adjusted EBITDA
(Earnings before interest, taxes, depreciation, and amortization)
is net margin plus an add-back for depreciation and amortization.
Net margin is equivalent to Sales minus the following items: Cost
of goods sold; Selling, general administrative, and other expenses;
Research and development expenses; and Provision for depreciation
and amortization. Special items, including Restructuring and other
charges, are excluded from net margin and Segment Adjusted EBITDA.
Differences between the total segment and consolidated totals are
in Corporate.
(1) Pre-tax special items included in
Corporate expense
1Q23
2Q23
3Q23
4Q23
2023
1Q24
Plant fire costs (reimbursements), net
$
4
$
(4
)
$
1
$
(13
)
$
(12
)
$
—
Collective bargaining agreement
negotiation
—
7
1
—
8
—
Costs associated with closures, supply
chain disruptions, and other items
1
9
1
2
13
1
Total Pre-tax special items included in
Corporate expense
$
5
$
12
$
3
$
(11
)
$
9
$
1
Howmet Aerospace Inc. and subsidiaries Calculation of
Financial Measures (unaudited), continued (in U.S. dollars
millions)
Reconciliation of Free cash
flow
1Q23
1Q24
Cash provided from operations
$
23
$
177
Capital expenditures
(64
)
(82
)
Free cash flow
$
(41
)
$
95
The Accounts Receivable Securitization
program remains unchanged at $250 outstanding.
Free cash flow is a non-GAAP financial
measure. Management believes that this measure is meaningful to
investors because management reviews cash flows generated from
operations after taking into consideration capital expenditures
(due to the fact that these expenditures are considered necessary
to maintain and expand the Company's asset base and are expected to
generate future cash flows from operations). It is important to
note that Free cash flow does not represent the residual cash flow
available for discretionary expenditures since other
non-discretionary expenditures, such as mandatory debt service
requirements, are not deducted from the measure.
Howmet Aerospace Inc. and subsidiaries Calculation of
Financial Measures (unaudited), continued (in U.S. dollar
and millions, except per-share amounts)
Reconciliation of Net income excluding
Special items and Diluted EPS excluding Special items
1Q23
4Q23
1Q24
Net income
$
148
$
236
$
243
Diluted earnings per share (EPS)
$
0.35
$
0.57
$
0.59
Special items:
Restructuring and other charges(1)
1
15
—
Loss on debt redemption and related
costs
1
1
—
Plant fire costs (reimbursements), net
4
(13
)
—
Costs associated with closures, supply
chain disruptions, and other items
1
2
1
Subtotal: Pre-tax special items
7
5
1
Tax impact of Pre-tax special items(2)
(1
)
—
—
Subtotal
6
5
1
Discrete and other tax special
items(3)
21
(23
)
(6
)
Total: After-tax special items
27
(18
)
(5
)
Net income excluding Special items
$
175
$
218
$
238
Diluted EPS excluding Special items
$
0.42
$
0.53
$
0.57
Average number of shares - diluted EPS
excluding Special items
418
414
412
Net income excluding Special items and Diluted EPS excluding
Special items are non-GAAP financial measures. Management believes
that these measures are meaningful to investors because management
reviews the operating results of the Company excluding the impacts
of Restructuring and other charges, Discrete tax items, and Other
special items (collectively, “Special items”). There can be no
assurances that additional Special items will not occur in future
periods. To compensate for this limitation, management believes
that it is appropriate to consider both Net income determined under
GAAP as well as Net income excluding Special items and Diluted EPS
excluding Special items.
(1)
4Q23 includes a non-cash Special item of
asset impairments and accelerated depreciation $13.
(2)
The Tax impact of Pre-tax special items is
based on the applicable statutory rates whereby the difference
between such rates and the Company’s consolidated estimated annual
effective tax rate is itself a Special item.
(3)
Discrete tax items for each period
included the following:
- for the quarter ended March 31, 2023, a charge for a tax
reserve established in France $20 and a net charge for other small
items $1;
- for the quarter ended December 31, 2023, a benefit to release a
valuation allowance related to U.S. foreign tax credits ($14), a
net benefit for other small items ($4), a benefit to release a
valuation allowance related to U.S. state tax losses and tax
credits ($2), and a benefit to revalue deferred taxes for changes
to apportioned U.S. state tax rates ($2); and
- for the quarter ended March 31, 2024, a benefit to release a
valuation allowance related to U.S. foreign tax credits ($6), and a
net benefit for other small items ($1).
Howmet Aerospace Inc. and subsidiaries Calculation of
Financial Measures (unaudited), continued (in U.S. dollar
millions)
Reconciliation of Operational tax
rate
1Q24
Effective tax rate, as
reported
Special items(1)(2)
Operational tax rate, as
adjusted
Income before income taxes
$
303
$
1
$
304
Provision for income taxes
$
60
$
6
$
66
Tax rate
19.8
%
21.7
%
Operational tax rate is a non-GAAP financial measure. Management
believes that this measure is meaningful to investors because
management reviews the operating results of the Company excluding
the impacts of Special items. There can be no assurances that
additional Special items will not occur in future periods. To
compensate for this limitation, management believes that it is
appropriate to consider both the Effective tax rate determined
under GAAP as well as the Operational tax rate. (1)
Pre-tax special items for the quarter
ended March 31, 2024 included Costs associated with closures,
supply chain disruptions, and other items $1.
(2)
Tax Special items includes discrete tax
items, the tax impact on Special items based on the applicable
statutory rates, the difference between such rates and the
Company’s consolidated estimated annual effective tax rate and
other tax related items. Discrete tax items for the quarter ended
March 31, 2024 included a benefit to release a valuation allowance
related to U.S. foreign tax credits ($6), and a net benefit for
other small items ($1).
Howmet Aerospace Inc. and subsidiaries Calculation of
Financial Measures (unaudited), continued (in U.S. dollars
millions)
Reconciliation of Adjusted EBITDA and
Adjusted EBITDA margin excluding Special items and Incremental
margin
1Q23
4Q23
1Q24
Sales
$
1,603
$
1,731
$
1,824
Operating income
$
285
$
326
$
369
Operating income margin
17.8
%
18.8
%
20.2
%
Net income
$
148
$
236
$
243
Add:
Provision for income taxes
$
72
$
34
$
60
Other expense, net
7
3
17
Loss on debt redemption
1
1
—
Interest expense, net
57
52
49
Restructuring and other charges
1
15
—
Provision for depreciation and
amortization
69
68
67
Adjusted EBITDA
$
355
$
409
$
436
Add:
Plant fire costs (reimbursements), net
$
4
$
(13
)
$
—
Costs associated with closures, supply
chain disruptions, and other items
1
2
1
Adjusted EBITDA excluding Special
items
$
360
$
398
$
437
Adjusted EBITDA margin excluding Special
items
22.5
%
23.0
%
24.0
%
Incremental margin
Quarter ended
March 31, 2023
March 31, 2024
Q1 2024 YoY
Third-party sales (b)
$1,603
$1,824
$221
Adjusted EBITDA excluding Special items
(a)
$360
$437
$77
Incremental margin (a)/(b)
35%
Adjusted EBITDA, Adjusted EBITDA excluding
Special items, Adjusted EBITDA margin excluding Special items, and
Incremental margin are non-GAAP financial measures. Management
believes that these measures are meaningful to investors because
they provide additional information with respect to the Company's
operating performance and the Company’s ability to meet its
financial obligations. The Adjusted EBITDA presented may not be
comparable to similarly titled measures of other companies. The
Company's definition of Adjusted EBITDA (Earnings before interest,
taxes, depreciation, and amortization) is net margin plus an
add-back for depreciation and amortization. Net margin is
equivalent to Sales minus the following items: Cost of goods sold,
Selling, general administrative, and other expenses, Research and
development expenses, and Provision for depreciation and
amortization.
Howmet Aerospace Inc. and subsidiaries Calculation of
Financial Measures (unaudited), continued (in U.S. dollar
millions)
Reconciliation of Adjusted Operating
Income Excluding Special Items and Adjusted Operating Income Margin
Excluding Special Items
1Q23
4Q23
1Q24
Sales
$
1,603
$
1,731
$
1,824
Operating income
$
285
$
326
$
369
Operating income margin
17.8
%
18.8
%
20.2
%
Add:
Restructuring and other charges
$
1
$
15
$
—
Plant fire costs (reimbursements), net
4
(13
)
—
Costs associated with closures, supply
chain disruptions, and other items
1
2
1
Adjusted operating income excluding
Special items
$
291
$
330
$
370
Adjusted operating income margin excluding
Special items
18.2
%
19.1
%
20.3
%
Adjusted operating income excluding
Special items and Adjusted operating income margin excluding
Special items are non-GAAP financial measures. Management believes
that these measures are meaningful to investors because management
reviews the operating results of the Company excluding the impacts
of Special items. There can be no assurances that additional
Special items will not occur in future periods. To compensate for
this limitation, management believes that it is appropriate to
consider both Operating income determined under GAAP as well as
Operating income excluding Special items.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240502745191/en/
Investor Contact Paul T. Luther (412) 553-1950
Paul.Luther@howmet.com
Media Contact Rob Morrison (412) 553-2666
Rob.Morrison@howmet.com
Howmet Aerospace (NYSE:HWM)
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Howmet Aerospace (NYSE:HWM)
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From Nov 2023 to Nov 2024
