Howmet Raises Outlook as Aerospace Demand Accelerates
Second-quarter revenue reached $2.547 billion, topping the high end of Howmet’s prior guidance by $137 million.
Howmet Aerospace (HWM), the aerospace-components maker, raised its full-year outlook after commercial-aerospace growth accelerated to 28% from 20% in the preceding quarter.
The results extended a three-quarter acceleration in companywide revenue growth, to 24% year over year from 19% in the first quarter and 15% in the fourth quarter of 2024. Organic revenue grew 21%, with acquisitions and divestitures accounting for the balance.
Second-quarter revenue rose 24% year over year and 10% sequentially. Adjusted earnings increased 46% to $1.33 a share, exceeding the prior guidance ceiling of $1.24 and accelerating from 42% growth in each of the previous two quarters.
Engine Products led the advance as revenue rose 32% to $1.373 billion. Adjusted EBITDA increased 51% to $517 million, lifting the segment’s margin to 37.7% from 33.0% a year earlier. Fastening Systems revenue grew 37% to $589 million, supported by the CAM and Brunner acquisitions, while its margin widened 90 basis points to 30.1% as Howmet integrated the acquired businesses.
Engineered Structures revenue declined 13% after the Savannah disk-forging divestiture and product rationalization. Its margin rose 170 basis points to 23.8% following the exit from lower-margin business. Forged Wheels revenue increased 14% as inflation pass-through offset an 8% decline in volumes, though its margin fell sequentially to 27.8% from 30.5%.
Adjusted EBITDA rose 39% to $817 million, and the margin expanded 340 basis points to 32.1%. GAAP operating income fell sequentially to $711 million because the prior quarter included a $93 million restructuring credit and the latest period included $22 million of acquisition-related costs. Free cash flow increased 39% to $479 million even as capital spending rose.
Howmet now expects full-year revenue of about $10.05 billion, up $400 million at the midpoint from its May outlook. It projects adjusted earnings of about $5.27 a share, a $0.33 increase, and free cash flow of roughly $1.90 billion.
The company repurchased $300 million of stock during the quarter and another $200 million in July, bringing purchases through July to $800 million, above the total for all of 2024. It also raised its quarterly dividend 17% to $0.14 a share. Capital spending will need to increase further in 2027 to support organic growth in aerospace and gas turbines.