Revenue Up 11% Year Over Year; Strong Profit
and Cash from Operations
$282 Million Debt Reduction; $100 Million
Deployed for Common Stock Repurchases
2025 Preliminary Revenue Guidance: Up
Approximately 7.5% Year over Year
Howmet Aerospace (NYSE:HWM):
Third Quarter 2024 GAAP Financial Results
- Revenue of $1.84 billion, up 11% year over year, driven by
commercial aerospace, up 17%, partially offset by commercial
transportation, down 12%
- Net income of $332 million versus $188 million in the third
quarter 2023; earnings per share of $0.81 versus $0.45 in the third
quarter 2023
- Operating income margin of 22.9%
- Generated $244 million of cash from operations; $441 million of
cash used for financing activities; and $80 million of cash used
for investing activities
- Share repurchases of $100 million; $0.08 per share dividend on
common stock
Third Quarter 2024 Adjusted Financial Results
- Adjusted EBITDA excluding special items of $487 million, up 27%
year over year
- Adjusted EBITDA margin excluding special items of 26.5%
- Adjusted operating income margin excluding special items of
22.8%
- Adjusted earnings per share excluding special items of $0.71,
up 54% year over year
- Generated $162 million of free cash flow
2024 Guidance
Q4 2024 Guidance
FY 2024 Guidance
Low
Baseline
High
Low
Baseline
High
Revenue
$1.850B
$1.870B
$1.890B
$7.390B
$7.410B
$7.430B
Adj. EBITDA*1
$478M
$488M
$498M
$1.885B
$1.895B
$1.905B
Adj. EBITDA Margin*1
25.8%
26.1%
26.3%
25.5%
25.6%
25.6%
Adj. Earnings per Share*1
$0.70
$0.71
$0.72
$2.65
$2.66
$2.67
Free Cash Flow1
$890M
$920M
$940M
Third Quarter Key Announcements
- Redeemed the remaining outstanding principal amount of $205
million of its 5.125% Notes due October 2024 with cash on hand
- Issued $500 million aggregate principal amount of notes due
2031 (the “2031 Notes”)
- Redeemed the remaining outstanding principal amount of $577
million of its 6.875% Notes due May 2025 with proceeds from the
2031 Notes plus cash on hand
- All combined debt actions year to date through the third
quarter 2024 will reduce annualized interest expense by
approximately $33 million
- Repurchased $100 million of common stock at an average price of
$94.22 per share
- Increased the common stock dividend by 60% to $0.08 per
share
- Raised full year 2024 guidance for Adjusted EBITDA*1 and
Adjusted earnings per share*1 above the third quarter 2024
outperformance despite industry challenges
____________________________________
* 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.
Howmet Aerospace (NYSE:HWM) today reported third quarter 2024
results. The Company reported third quarter 2024 revenue of $1.84
billion, up 11% year over year, primarily driven by growth in the
commercial aerospace market of 17%, partially offset by declines in
the commercial transportation market of 12%.
Howmet Aerospace reported net income of $332 million, or $0.81
per share, in the third quarter 2024 versus $188 million, or $0.45
per share, in the third quarter 2023. Net income included
approximately $42 million in net benefits from special items in the
third quarter 2024. Third quarter 2024 operating income was $421
million, up 37% year over year. Operating income margin was 22.9%,
up approximately 440 basis points year over year.
Howmet Aerospace reported adjusted net income excluding special
items of $290 million, or $0.71 per share, in the third quarter
2024 versus $192 million, or $0.46 per share, in the third quarter
2023. Adjusted EBITDA excluding special items was $487 million, up
27% year over year. The year-over-year increase was driven by
strong growth in the commercial aerospace market. Adjusted EBITDA
margin excluding special items was up approximately 350 basis
points year over year at 26.5%. Third quarter 2024 adjusted
operating income excluding special items was $419 million, up 33%
year over year. Adjusted operating income margin excluding special
items was 22.8%, up approximately 390 basis points year over
year.
Howmet Aerospace Executive Chairman and Chief Executive Officer
John Plant said, “The Howmet team delivered a healthy set of
results in the third quarter 2024. The results exceeded the high
end of guidance for Adjusted EBITDA*, Adjusted EBITDA margin* and
Adjusted earnings per share*. Revenue growth of 11% year over year
took account of actions which restricted volumes shipped to the
Boeing Company and notably weaker Europe market conditions
impacting Forged Wheels. We are pleased that the Boeing strike was
settled on November 4th, and we look forward to Boeing’s gradual
production recovery. Engines spares volumes increased again in the
quarter and are expected to be approximately $1.25 billion for the
full year. Adjusted EBITDA* grew faster than revenue, up 27% year
over year, resulting in margins up approximately 350 basis points
to 26.5%. Adjusted earnings per share* grew 54%, while free cash
flow was a third quarter record at $162 million.”
Mr. Plant continued, “Turning to 2025, the demand outlook for
commercial aerospace remains robust, driven by healthy air traffic
growth. The under-production of aircraft in recent years has
resulted in a very large order backlog which, combined with the
significant needs for additional engine spare parts, is supportive
of future revenue growth. We expect above-trend growth in
commercial aerospace to continue in 2025, while we continue to take
a cautious approach to the assumed pace of new aircraft builds. We
expect growth in 2025 in our defense aerospace and industrial end
markets, while we assume that the commercial transportation end
market will remain soft until the second half 2025. Our 2025
outlook envisions total revenue growth of approximately 7.5% year
over year.”
“Howmet Aerospace’s balance sheet remains a source of strength,
with leverage at a record low and free cash flow generation of
approximately $600 million year to date through the third quarter
2024. Debt actions year to date will reduce annualized interest
expense by approximately $33 million. The Company repurchased $100
million of common stock in the third quarter 2024 and repurchased
an additional $90 million in October 2024, bringing October
year-to-date repurchases to $400 million. Subject to Board
approval, we also expect to increase the common stock dividend by
25% in the first quarter 2025 to $0.10 per share.”
____________________________________
* Excluding special items
Third Quarter 2024 Segment Performance
Engine
Products
(in U.S. dollar
millions)
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Third-party sales
$ 798
$ 852
$ 885
$ 933
$ 945
Inter-segment sales
$ 5
$ 1
$ 2
$ 1
$ 3
Provision for depreciation and
amortization
$ 33
$ 33
$ 33
$ 33
$ 34
Segment Adjusted EBITDA
$ 219
$ 233
$ 249
$ 292
$ 307
Segment Adjusted EBITDA Margin
27.4 %
27.3 %
28.1 %
31.3 %
32.5%
Restructuring and other credits
$ —
$ (1)
$ —
$ (1)
$ 1
Capital expenditures
$ 30
$ 28
$ 55
$ 33
$ 55
Engine Products reported revenue of $945 million, an increase of
18% year over year, due to growth in the commercial aerospace,
defense aerospace, industrial gas turbine and oil & gas
markets. Segment Adjusted EBITDA was a record $307 million, up 40%
year over year, driven by growth in the commercial aerospace,
defense aerospace, industrial gas turbine and oil & gas
markets. The Segment absorbed approximately 235 net headcount in
the quarter and 985 year to date through the third quarter 2024 in
support of expected revenue increases. Segment Adjusted EBITDA
margin increased approximately 510 basis points year over year to a
record 32.5%.
Fastening
Systems
(in U.S. dollar
millions)
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Third-party sales
$ 348
$ 360
$ 389
$394
$392
Provision for depreciation and
amortization
$ 12
$ 11
$ 11
$13
$12
Segment Adjusted EBITDA
$ 76
$ 80
$ 92
$101
$102
Segment Adjusted EBITDA Margin
21.8 %
22.2 %
23.7 %
25.6%
26.0%
Restructuring and other charges
$ 1
$ —
$ —
$2
$1
Capital expenditures
$ 9
$ 8
$ 7
$5
$5
Fastening Systems reported revenue of $392 million, an increase
of 13% year over year due to growth in the commercial aerospace
market, including wide body aircraft recovery. Segment Adjusted
EBITDA was $102 million, up 34% year over year, driven by growth in
the commercial aerospace market. Segment Adjusted EBITDA margin
increased approximately 420 basis points year over year to
26.0%.
Engineered
Structures
(in U.S. dollar
millions)
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Third-party sales
$ 227
$ 244
$ 262
$275
$253
Inter-segment sales
$ —
$ 2
$ 1
$ 3
$ 3
Provision for depreciation and
amortization
$ 12
$ 11
$ 11
$ 11
$ 10
Segment Adjusted EBITDA
$ 30
$ 33
$ 37
$ 40
$ 38
Segment Adjusted EBITDA Margin
13.2 %
13.5 %
14.1 %
14.5%
15.0%
Restructuring and other charges
$ 1
$ 14
$ —
$ 14
$ 1
Capital expenditures
$ 6
$ 5
$ 6
$ 5
$ 5
Engineered Structures reported revenue of $253 million, an
increase of 11% year over year due to growth in the commercial
aerospace and defense aerospace markets. Segment Adjusted EBITDA
was $38 million, up 27% year over year, driven by growth in the
commercial aerospace and defense aerospace markets. Segment
Adjusted EBITDA margin increased approximately 180 basis points
year over year to 15.0%.
Forged
Wheels
(in U.S. dollar
millions)
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Third-party sales
$ 285
$ 275
$288
$ 278
$245
Provision for depreciation and
amortization
$ 10
$ 10
$ 10
$ 10
$10
Segment Adjusted EBITDA
$ 77
$ 72
$ 82
$ 75
$64
Segment Adjusted EBITDA Margin
27.0 %
26.2 %
28.5%
27.0 %
26.1%
Restructuring and other charges
$ —
$ —
$ —
$ —
$ 1
Capital expenditures
$ 9
$ 11
$ 12
$ 9
$ 14
Forged Wheels reported revenue of $245 million, a decrease of
14% year over year due to lower volumes in the commercial
transportation market as well as a decrease in aluminum cost pass
through. Segment Adjusted EBITDA was $64 million, a decrease of
approximately 17% year over year. Segment Adjusted EBITDA margin
decreased approximately 90 basis points year over year to
26.1%.
Redeemed Remaining $205 Million of 5.125% Notes due October
2024 on July 1, 2024
On July 1, 2024, Howmet Aerospace completed the redemption of
the remaining outstanding principal amount of $205 million of its
5.125% Notes due October 2024 (the “2024 Notes”). The 2024 Notes
were redeemed with cash on hand at an aggregate redemption price of
approximately $208 million, including accrued interest of
approximately $3 million.
Issued $500 Million of 2031 Notes at an Effective Rate of
3.72% in August 2024; Redeemed Remaining $577 Million of 6.875%
Notes due May 2025
On August 22, 2024 the Company issued $500 million aggregate
principal amount of 4.850% Notes due October 2031 (the “2031
Notes”). The Company entered into a cross-currency swap to
synthetically convert the 2031 Notes into a Euro liability of
approximately €458 million with a fixed annual interest rate of
3.72%.
On August 23, 2024 the Company redeemed the remaining
outstanding principal amount of $577 million of its 6.875% Notes
due May 2025 (the “2025 Notes”). The 2025 Notes were redeemed with
proceeds from the 2031 Notes plus cash on hand at an aggregate
redemption price of approximately $594 million, including accrued
interest of approximately $12 million.
All combined debt actions year to date through the third quarter
2024 will reduce annualized interest expense by approximately $33
million.
All of the Company’s outstanding debt is unsecured and at fixed
interest rates. The Company’s next debt maturity is in November
2026.
Repurchased $100 Million of Common Stock in Third Quarter
2024, $90 Million in October 2024
In the third quarter 2024, Howmet Aerospace repurchased $100
million of common stock at an average price of $94.22 per share,
retiring approximately 1.1 million shares. Through the third
quarter 2024, the Company has repurchased $310 million of common
stock at an average price of $76.75 per share, retiring
approximately 4 million shares. In October 2024, the Company
repurchased an additional $90 million of common stock at an average
price of $103.15 per share, retiring approximately 0.9 million
shares. As of October 31, 2024, total share repurchase
authorization available was $2,297 million.
Quarterly Common Stock Dividend of $0.08 Per Share
On September 25, 2024, the Board of Directors declared a
dividend of $0.08 per share on the Company’s common stock, an
increase of 60% from the second quarter 2024 dividend of $0.05 per
share.
2024 Guidance
Q4 2024 Guidance
FY 2024 Guidance
Low
Baseline
High
Low
Baseline
High
Revenue
$1.850B
$1.870B
$1.890B
$7.390B
$7.410B
$7.430B
Adj. EBITDA*1
$478M
$488M
$498M
$1.885B
$1.895B
$1.905B
Adj. EBITDA Margin*1
25.8%
26.1%
26.3%
25.5%
25.6%
25.6%
Adj. Earnings per Share*1
$0.70
$0.71
$0.72
$2.65
$2.66
$2.67
Free Cash Flow1
$890M
$920M
$940M
* 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 Wednesday, November 6, 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 November
6, 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, debt issuances, debt reduction and repurchases of
its common stock. 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. Under its share repurchase
program, the Company may repurchase shares from time to time, in
amounts, at prices, and at such times as the Company deems
appropriate, subject to market conditions, legal requirements and
other considerations. The Company is not obligated to repurchase
any specific number of shares or to do so at any particular time.
The declaration of any future dividends is 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. The Company may modify, suspend, or cancel its
share repurchase program or its dividend policy in any manner and
at any time that it may deem necessary or appropriate. 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 millions, except
per-share and share amounts)
Quarter ended
September 30, 2024
June 30, 2024
September 30, 2023
Sales
$
1,835
$
1,880
$
1,658
Cost of goods sold (exclusive of expenses
below)
1,253
1,287
1,183
Selling, general administrative, and other
expenses
85
97
87
Research and development expenses
9
7
9
Provision for depreciation and
amortization
68
69
68
Restructuring and other (credits)
charges
(1
)
22
4
Operating income
421
398
307
Loss on debt redemption
6
—
—
Interest expense, net
44
49
54
Other expense, net
17
15
11
Income before income taxes
354
334
242
Provision for income taxes
22
68
54
Net income
$
332
$
266
$
188
Amounts Attributable to Howmet
Aerospace Common Shareholders:
Earnings per share - basic(1):
Net income per share
$
0.81
$
0.65
$
0.45
Average number of shares(2)(3)
408
408
412
Earnings per share - diluted(1):
Net income per share
$
0.81
$
0.65
$
0.45
Average number of shares(2)(3)
410
411
415
Common stock outstanding at the end of the
period
407
408
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 relates 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
full 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)
September 30, 2024
December 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
475
$
610
Receivables from customers, less
allowances of $— in both 2024 and 2023
757
675
Other receivables
18
17
Inventories
1,902
1,765
Prepaid expenses and other current
assets
239
249
Total current assets
3,391
3,316
Properties, plants, and equipment, net
2,358
2,328
Goodwill
4,047
4,035
Deferred income taxes
39
46
Intangibles, net
484
505
Other noncurrent assets
239
198
Total assets
$
10,558
$
10,428
Liabilities
Current liabilities:
Accounts payable, trade
$
917
$
982
Accrued compensation and retirement
costs
288
263
Taxes, including income taxes
59
68
Accrued interest payable
25
65
Other current liabilities
227
200
Short-term debt
1
206
Total current liabilities
1,517
1,784
Long-term debt, less amount due within one
year
3,393
3,500
Accrued pension benefits
629
664
Accrued other postretirement benefits
84
92
Other noncurrent liabilities and deferred
credits
432
351
Total liabilities
6,055
6,391
Equity
Howmet Aerospace shareholders’ equity:
Preferred stock
55
55
Common stock
407
410
Additional capital
3,386
3,682
Retained earnings
2,453
1,720
Accumulated other comprehensive loss
(1,798
)
(1,830
)
Total equity
4,503
4,037
Total liabilities and equity
$
10,558
$
10,428
Howmet Aerospace and
subsidiaries
Statement of Consolidated Cash Flows
(unaudited)
(in U.S. dollar millions)
Nine months ended September
30,
2024
2023
Operating activities
Net income
$
841
$
529
Adjustments to reconcile net income to
cash provided from operations:
Depreciation and amortization
204
204
Deferred income taxes
39
92
Restructuring and other charges
21
8
Net realized and unrealized losses
18
17
Net periodic pension cost
31
28
Stock-based compensation
54
39
Loss on debt redemption
6
1
Other
4
2
Changes in assets and liabilities,
excluding effects of acquisitions, divestitures, and foreign
currency translation adjustments:
Increase in receivables
(97
)
(211
)
Increase in inventories
(139
)
(148
)
Decrease (increase) in prepaid expenses
and other current assets
9
(12
)
Decrease in accounts payable, trade
(67
)
(57
)
Decrease in accrued expenses
(42
)
(18
)
(Decrease) increase in taxes, including
income taxes
(5
)
17
Pension contributions
(33
)
(19
)
Increase in noncurrent assets
(6
)
(2
)
Decrease in noncurrent liabilities
(20
)
(27
)
Cash provided from operations
818
443
Financing Activities
Additions to debt
500
—
Repurchases and payments on debt
(805
)
(376
)
Debt issuance costs
(5
)
—
Premiums paid on early redemption of
debt
(5
)
(1
)
Repurchases of common stock
(310
)
(150
)
Proceeds from exercise of employee stock
options
7
10
Dividends paid to shareholders
(76
)
(52
)
Taxes paid for net share settlement of
equity awards
(48
)
(77
)
Cash used for financing
activities
(742
)
(646
)
Investing Activities
Capital expenditures
(219
)
(164
)
Proceeds from the sale of assets and
businesses
9
1
Other
1
—
Cash used for investing
activities
(209
)
(163
)
Effect of exchange rate changes on
cash, cash equivalents and restricted cash
(2
)
(1
)
Net change in cash, cash equivalents and
restricted cash
(135
)
(367
)
Cash, cash equivalents and restricted cash
at beginning of period
610
792
Cash, cash equivalents and restricted
cash at end of period
$
475
$
425
Howmet Aerospace Inc. and
subsidiaries
Segment Information (unaudited)
(in U.S. dollar millions)
1Q23
2Q23
3Q23
4Q23
2023
1Q24
2Q24
3Q24
Engine
Products
Third-party sales
$
795
$
821
$
798
$
852
$
3,266
$
885
$
933
$
945
Inter-segment sales
$
2
$
5
$
5
$
1
$
13
$
2
$
1
$
3
Provision for depreciation and
amortization
$
32
$
32
$
33
$
33
$
130
$
33
$
33
$
34
Segment Adjusted EBITDA
$
212
$
223
$
219
$
233
$
887
$
249
$
292
$
307
Segment Adjusted EBITDA Margin
26.7
%
27.2
%
27.4
%
27.3
%
27.2
%
28.1
%
31.3
%
32.5
%
Restructuring and other (credits)
charges
$
—
$
(1
)
$
—
$
(1
)
$
(2
)
$
—
$
(1
)
$
1
Capital expenditures
$
33
$
21
$
30
$
28
$
112
$
55
$
33
$
55
Fastening
Systems
Third-party sales
$
312
$
329
$
348
$
360
$
1,349
$
389
$
394
$
392
Provision for depreciation and
amortization
$
11
$
12
$
12
$
11
$
46
$
11
$
13
$
12
Segment Adjusted EBITDA
$
58
$
64
$
76
$
80
$
278
$
92
$
101
$
102
Segment Adjusted EBITDA Margin
18.6
%
19.5
%
21.8
%
22.2
%
20.6
%
23.7
%
25.6
%
26.0
%
Restructuring and other charges
$
—
$
—
$
1
$
—
$
1
$
—
$
2
$
1
Capital expenditures
$
9
$
5
$
9
$
8
$
31
$
7
$
5
$
5
Engineered
Structures
Third-party sales
$
207
$
200
$
227
$
244
$
878
$
262
$
275
$
253
Inter-segment sales
$
—
$
1
$
—
$
2
$
3
$
1
$
3
$
3
Provision for depreciation and
amortization
$
12
$
12
$
12
$
11
$
47
$
11
$
11
$
10
Segment Adjusted EBITDA
$
30
$
20
$
30
$
33
$
113
$
37
$
40
$
38
Segment Adjusted EBITDA Margin
14.5
%
10.0
%
13.2
%
13.5
%
12.9
%
14.1
%
14.5
%
15.0
%
Restructuring and other charges
$
1
$
5
$
1
$
14
$
21
$
—
$
14
$
1
Capital expenditures
$
10
$
5
$
6
$
5
$
26
$
6
$
5
$
5
Forged
Wheels
Third-party sales
$
289
$
298
$
285
$
275
$
1,147
$
288
$
278
$
245
Provision for depreciation and
amortization
$
9
$
10
$
10
$
10
$
39
$
10
$
10
$
10
Segment Adjusted EBITDA
$
79
$
81
$
77
$
72
$
309
$
82
$
75
$
64
Segment Adjusted EBITDA Margin
27.3
%
27.2
%
27.0
%
26.2
%
26.9
%
28.5
%
27.0
%
26.1
%
Restructuring and other charges
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
1
Capital expenditures
$
9
$
7
$
9
$
11
$
36
$
12
$
9
$
14
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
2Q24
3Q24
Income before income taxes
$
220
$
243
$
242
$
270
$
975
$
303
$
334
$
354
Loss on debt redemption
1
—
—
1
2
—
—
6
Interest expense, net
57
55
54
52
218
49
49
44
Other expense, net
7
(13
)
11
3
8
17
15
17
Operating income
$
285
$
285
$
307
$
326
$
1,203
$
369
$
398
$
421
Segment provision for depreciation and
amortization
64
66
67
65
262
65
67
66
Unallocated amounts:
Restructuring and other charges
(credits)
1
3
4
15
23
—
22
(1
)
Corporate expense(1)
29
34
24
12
99
26
21
25
Total Segment Adjusted EBITDA
$
379
$
388
$
402
$
418
$
1,587
$
460
$
508
$
511
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 (credits), 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
2Q24
3Q24
Plant fire costs (reimbursements), net
$
4
$
(4
)
$
1
$
(13
)
$
(12
)
$
—
$
(6
)
$
—
Collective bargaining agreement
negotiation
—
7
1
—
8
—
—
—
Costs (benefits) associated with closures,
supply chain disruptions, and other items
1
9
1
2
13
1
—
(1
)
Total Pre-tax special items included in
Corporate expense
$
5
$
12
$
3
$
(11
)
$
9
$
1
$
(6
)
$
(1
)
Howmet Aerospace Inc. and
subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in U.S. dollars millions)
Reconciliation of Free cash
flow
Quarter ended
Nine months ended
1Q24
2Q24
3Q24
3Q24
Cash provided from operations
$
177
$
397
$
244
$
818
Capital expenditures
(82
)
(55
)
(82
)
(219
)
Free cash flow
$
95
$
342
$
162
$
599
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 millions, except
per-share and share amounts)
Reconciliation of Net income excluding
Special items
Quarter ended
3Q23
2Q24
3Q24
Net income
$
188
$
266
$
332
Diluted earnings per share ("EPS")
$
0.45
$
0.65
$
0.81
Special items:
Restructuring and other charges
(credits)(1)
4
22
(1
)
Loss on debt redemption and related
costs
—
—
6
Plant fire costs (reimbursements), net
1
(6
)
—
Collective bargaining agreement
negotiations
1
—
—
Costs (benefits) associated with closures,
supply chain disruptions, and other items
1
—
(1
)
Subtotal: Pre-tax special items
7
16
4
Tax impact of Pre-tax special items(2)
(1
)
—
(1
)
Subtotal
6
16
3
Discrete and other tax special
items(3)
(2
)
(6
)
(45
)
Total: After-tax special items
4
10
(42
)
Net income excluding Special items
$
192
$
276
$
290
Diluted EPS excluding Special items
$
0.46
$
0.67
$
0.71
Average number of shares - diluted EPS
excluding Special items
415
411
410
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
(credits), 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 and Diluted EPS determined
under GAAP as well as Net income excluding Special items and
Diluted EPS excluding Special items.
(1)
Q2 2024 includes non-cash Special items of
a loss on sale of a small manufacturing facility in Engineered
Structures $14 and other exit costs, including accelerated
depreciation $1.
(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 September 30, 2023, a net benefit for
other small items ($1);
- for the quarter ended June 30, 2024, an excess tax benefit for
stock compensation ($5);
- for the quarter ended September 30, 2024, a net benefit related
to additional U.S. federal and state research and development
("R&D") credits claimed for prior years upon completion of the
Company's R&D study ($44), and an excess tax benefit for stock
compensation ($2).
Howmet Aerospace Inc. and
subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in U.S. dollar millions)
Reconciliation of Operational tax
rate
3Q24
Nine months ended September
30, 2024
Effective tax rate, as
reported
Special items(1)(2)
Operational tax rate, as
adjusted
Effective tax rate, as
reported
Special items(1)(2)
Operational tax rate, as
adjusted
Income before income taxes
$
354
$
4
$
358
$
991
$
21
$
1,012
Provision for income taxes
$
22
$
46
$
68
$
150
$
58
$
208
Tax rate
6.2
%
19.0
%
15.1
%
20.6
%
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 September 30, 2024 included Loss on debt redemption and
related costs $6 offset by Restructuring and other charges
(credits) ($1) and Costs (benefits) associated with closures,
supply chain disruptions, and other items ($1). Pre-tax special
items for the nine months ended September 30, 2024 included
Restructuring and other charges (credits) $21 and Loss on debt
redemption and related costs $6 offset by Plant fire costs
(reimbursements) ($6).
(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 each period
included the following:
- for the quarter ended September 30, 2024, a net benefit related
to additional U.S. federal and state R&D credits claimed for
prior years upon completion of the Company's R&D study ($44),
and an excess tax benefit for stock compensation ($2); and
- for the nine months ended September 30, 2024, a net benefit
related to additional U.S. federal and state R&D credits
claimed for prior years upon completion of the Company's R&D
study ($44), an excess tax benefit for stock compensation ($9), a
benefit to release a valuation allowance related to U.S. foreign
tax credits ($6), and a net charge 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
3Q23
2Q24
3Q24
Sales
$
1,658
$
1,880
$
1,835
Operating income
$
307
$
398
$
421
Operating income margin
18.5
%
21.2
%
22.9
%
Net income
$
188
$
266
$
332
Add:
Provision for income taxes
$
54
$
68
$
22
Other expense, net
11
15
17
Loss on debt redemption
—
—
6
Interest expense, net
54
49
44
Restructuring and other charges
(credits)
4
22
(1
)
Provision for depreciation and
amortization
68
69
68
Adjusted EBITDA
$
379
$
489
$
488
Add:
Plant fire costs (reimbursements), net
$
1
$
(6
)
$
—
Collective bargaining agreement
negotiations
1
—
—
Costs (benefits) associated with closures,
supply chain
disruptions, and other items
1
—
(1
)
Adjusted EBITDA excluding Special
items
$
382
$
483
$
487
Adjusted EBITDA margin excluding Special
items
23.0
%
25.7
%
26.5
%
Incremental margin
Quarter ended
September 30, 2023
September 30, 2024
Q3 2024 YoY
Third-party sales (b)
$1,658
$1,835
$177
Adjusted EBITDA excluding Special items
(a)
$382
$487
$105
Incremental margin (a)/(b)
59%
Adjusted EBITDA, Adjusted EBITDA excluding
Special items, Adjusted EBITDA margin excluding Special items,
Third-party sales, 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. Special items, including Restructuring and other are
charges (credits), are excluded from Adjusted EBITDA.
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
Quarter ended
3Q23
2Q24
3Q24
Sales
$
1,658
$
1,880
$
1,835
Operating income
$
307
$
398
$
421
Operating income margin
18.5
%
21.2
%
22.9
%
Add:
Restructuring and other charges
(credits)
$
4
$
22
$
(1
)
Plant fire costs (reimbursements), net
1
(6
)
—
Collective bargaining agreement
negotiations
1
—
—
Costs (benefits) associated with closures,
supply chain disruptions, and other items
1
—
(1
)
Adjusted operating income excluding
Special items
$
314
$
414
$
419
Adjusted operating income margin excluding
Special items
18.9
%
22.0
%
22.8
%
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/20241106463205/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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