Howmet Aerospace's second quarter 2024 results

Howmet Aerospace Inc., headquartered in Pittsburgh, Pennsylvania, a leading global provider of advanced engineered solutions for the aerospace and transportation industries.  Its primary business focus is on jet engine components, aerospace fastening systems, and airframe structural components necessary for mission-critical performance has released its latest results for the second quarter of 2024. 

Howmet scored revenue of $1.88 billion, up 14% from the same period in 2023, which was driven by commercial aerospace, up 27%.  Net income of $266 million versus $193 million in the second quarter 2023.  The firm generated $397 million of cash from operations; $123 million of cash used for financing activities; and $54 million of cash used for investing activities.

Howmet Aerospace Executive Chairman and Chief Executive Officer John Plant said, “In the second quarter 2024, the Howmet Aerospace team drove another very strong set of results, again exceeding the high end of guidance on all fronts. Revenue grew a healthy 14% year over year, with commercial aerospace revenue up 27%, continuing a strong trend. For the second consecutive quarter, Howmet achieved record quarterly results in revenue, adjusted EBITDA*, adjusted EBITDA margin* and adjusted earnings per share*. Adjusted EBITDA margin* of 25.7% was up approximately 340 basis points year over year, and adjusted earnings per share* grew 52%.”

Mr. Plant continued, “The outlook for commercial aerospace continues to be robust, with strong travel demand and an aging aircraft fleet, leading to an extremely high backlog at the aircraft OEMs. The issue faced by Howmet Aerospace continues to be the aircraft manufacturers’ ability to build and deliver aircraft on a consistent basis. We continue to take these factors into account in our guidance. Despite these challenges, we are again raising full year 2024 guidance above the second quarter 2024 beat, reflecting strong continued performance at Howmet Aerospace.”

“Howmet Aerospace generated very healthy free cash flow of $342 million in the second quarter 2024 and $437 million in the first half 2024, which enabled the Company to redeem the remaining $205 million of our notes due in October 2024 and $23 million of our notes due in May 2025, and repurchase $210 million of common stock year to date. We are pleased that the Board of Directors approved a 60% increase in the common stock dividend to $0.08 per share for the third quarter 2024. Moreover, the Board of Directors approved the establishment of a 2025 dividend policy on common stock of 15% plus or minus 5% of net income excluding special items. Finally, the Board of Directors authorized an increase in the share repurchase program by $2 billion to $2.487 billion, reflecting the Company’s strong free cash flow outlook.”

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Second Quarter 2024 Segment Performance

Engine Products
(in U.S. dollar millions)	Q2 2023	Q3 2023	Q4 2023	Q1 2024	Q2 2024
Third-party sales	$ 821	$ 798	$ 852	$ 885	$ 933
Inter-segment sales	$ 5	$ 5	$ 1	$ 2	$ 1
Provision for depreciation and amortization	$ 32	$ 33	$ 33	$ 33	$ 33
Segment Adjusted EBITDA	$ 223	$ 219	$ 233	$ 249	$ 292
Segment Adjusted EBITDA Margin	27.2 %	27.4 %	27.3 %	28.1 %	31.3 %
Restructuring and other credits	$ (1)	$ —	$ (1)	$ —	$ (1)
Capital expenditures	$ 21	$ 30	$ 28	$ 55	$ 33

Engine Products reported revenue of $933 million, an increase of 14% year over year, due to growth in the commercial aerospace, defense aerospace, oil & gas, and industrial gas turbine markets. Segment Adjusted EBITDA was a record $292 million, up 31% year over year, driven by growth in the commercial aerospace, defense aerospace, oil & gas, and industrial gas turbine markets. The Segment absorbed approximately 315 net headcount in the quarter and 750 in the first half 2024 in support of expected revenue increases. Segment Adjusted EBITDA margin increased approximately 410 basis points year over year to a record 31.3%.

Fastening Systems
(in U.S. dollar millions)	Q2 2023	Q3 2023	Q4 2023	Q1 2024	Q2 2024
Third-party sales	$ 329	$ 348	$ 360	$ 389	$ 394
Provision for depreciation and amortization	$ 12	$ 12	$ 11	$ 11	$ 13
Segment Adjusted EBITDA	$ 64	$ 76	$ 80	$ 92	$ 101
Segment Adjusted EBITDA Margin	19.5 %	21.8 %	22.2 %	23.7 %	25.6 %
Restructuring and other charges	$ —	$ 1	$ —	$ —	$ 2
Capital expenditures	$ 5	$ 9	$ 8	$ 7	$ 5

Fastening Systems reported revenue of $394 million, an increase of 20% year over year due to growth in the commercial aerospace market, including wide body aircraft recovery. Segment Adjusted EBITDA was $101 million, up 58% year over year, driven by growth in the commercial aerospace market as well as labor productivity gains. Segment Adjusted EBITDA margin increased approximately 610 basis points year over year to 25.6%.

Engineered Structures
(in U.S. dollar millions)	Q2 2023	Q3 2023	Q4 2023	Q1 2024	Q2 2024
Third-party sales	$ 200	$ 227	$ 244	$ 262	$ 275
Inter-segment sales	$ 1	$ —	$ 2	$ 1	$ 3
Provision for depreciation and amortization	$ 12	$ 12	$ 11	$ 11	$ 11
Segment Adjusted EBITDA	$ 20	$ 30	$ 33	$ 37	$ 40
Segment Adjusted EBITDA Margin	10.0 %	13.2 %	13.5 %	14.1 %	14.5 %
Restructuring and other charges	$ 5	$ 1	$ 14	$ —	$ 14
Capital expenditures	$ 5	$ 6	$ 5	$ 6	$ 5

Engineered Structures reported revenue of $275 million, an increase of 38% 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 $40 million, up 100% year over year, driven by growth in the commercial aerospace and defense aerospace markets. Segment Adjusted EBITDA margin increased approximately 450 basis points year over year to 14.5%.

Forged Wheels
(in U.S. dollar millions)	Q2 2023	Q3 2023	Q4 2023	Q1 2024	Q2 2024
Third-party sales	$ 298	$ 285	$ 275	$ 288	$ 278
Provision for depreciation and amortization	$ 10	$ 10	$ 10	$ 10	$ 10
Segment Adjusted EBITDA	$ 81	$ 77	$ 72	$ 82	$ 75
Segment Adjusted EBITDA Margin	27.2 %	27.0 %	26.2 %	28.5 %	27.0 %
Capital expenditures	$ 7	$ 9	$ 11	$ 12	$ 9

Forged Wheels reported revenue of $278 million, a decrease of 7% year over year due to 4% lower volumes in the commercial transportation market as well as a decrease in aluminum and other inflationary cost pass through. Segment Adjusted EBITDA was $75 million, a decrease of approximately 7% year over year. Segment Adjusted EBITDA margin decreased approximately 20 basis points year over year to 27.0%.

Howmet Aerospace Inc. and subsidiaries
Statement of Consolidated Operations (unaudited)
(in U.S. dollar millions, except per-share and share amounts)
	Quarter ended
	June 30, 2024			March 31, 2024			June 30, 2023
Sales	$	1,880		$	1,824		$	1,648
Cost of goods sold (exclusive of expenses below)		1,287			1,290			1,196
Selling, general administrative, and other expenses		97			88			88
Research and development expenses		7			10			9
Provision for depreciation and amortization		69			67			67
Restructuring and other charges		22			—			3
Operating income		398			369			285
Interest expense, net		49			49			55
Other expense (income), net		15			17			(13	)
Income before income taxes		334			303			243
Provision for income taxes		68			60			50
Net income	$	266		$	243		$	193
Amounts Attributable to Howmet Aerospace Common Shareholders:
Earnings per share – basic(1):
Net income per share	$	0.65		$	0.59		$	0.47
Average number of shares(2)(3)		408			410			413
Earnings per share – diluted(1):
Net income per share	$	0.65		$	0.59		$	0.46
Average number of shares(2)(3)		411			412			417
Common stock outstanding at the end of the period		408			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 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 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)
	June 30, 2024				December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	752			$	610
Receivables from customers, less allowances of $— in both 2024 and 2023		749				675
Other receivables		19				17
Inventories		1,848				1,765
Prepaid expenses and other current assets		235				249
Total current assets		3,603				3,316
Properties, plants, and equipment, net		2,307				2,328
Goodwill		4,016				4,035
Deferred income taxes		32				46
Intangibles, net		489				505
Other noncurrent assets		232				198
Total assets	$	10,679			$	10,428
Liabilities
Current liabilities:
Accounts payable, trade	$	971			$	982
Accrued compensation and retirement costs		235				263
Taxes, including income taxes		81				68
Accrued interest payable		64				65
Other current liabilities		225				200
Short-term debt		782				206
Total current liabilities		2,358				1,784
Long-term debt, less amount due within one year		2,877				3,500
Accrued pension benefits		645				664
Accrued other postretirement benefits		90				92
Other noncurrent liabilities and deferred credits		432				351
Total liabilities		6,402				6,391
Equity
Howmet Aerospace shareholders’ equity:
Preferred stock		55				55
Common stock		408				410
Additional capital		3,486				3,682
Retained earnings		2,186				1,720
Accumulated other comprehensive loss		(1,858	)			(1,830	)
Total equity		4,277				4,037
Total liabilities and equity	$	10,679			$	10,428

Howmet Aerospace and subsidiaries
Statement of Consolidated Cash Flows (unaudited)
(in U.S. dollar millions)
	Six months ended June 30,
		2024				2023
Operating activities
Net income	$	509			$	341
Adjustments to reconcile net income to cash provided from operations:
Depreciation and amortization		136				136
Deferred income taxes		67				57
Restructuring and other charges		22				4
Net realized and unrealized losses		13				11
Net periodic pension cost		20				19
Stock-based compensation		38				26
Loss on debt redemption		—				1
Other		7				—
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:
Increase in receivables		(100	)			(141	)
Increase in inventories		(109	)			(99	)
Decrease (increase) in prepaid expenses and other current assets		5				(9	)
Increase (decrease) in accounts payable, trade		6				(80	)
Decrease in accrued expenses		(17	)			(15	)
Increase in taxes, including income taxes		13				31
Pension contributions		(17	)			(12	)
(Increase) decrease in noncurrent assets		(7	)			1
Decrease in noncurrent liabilities		(12	)			(19	)
Cash provided from operations		574				252
Financing Activities
Repurchases and payments on debt		(23	)			(176	)
Premiums paid on early redemption of debt		—				(1	)
Repurchases of common stock		(210	)			(125	)
Proceeds from exercise of employee stock options		6				9
Dividends paid to shareholders		(42	)			(35	)
Taxes paid for net share settlement of equity awards		(32	)			(75	)
Cash used for financing activities		(301	)			(403	)
Investing Activities
Capital expenditures		(137	)			(105	)
Proceeds from the sale of assets and businesses		8				—
Cash used for investing activities		(129	)			(105	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(2	)			—
Net change in cash, cash equivalents and restricted cash		142				(256	)
Cash, cash equivalents and restricted cash at beginning of period		610				792
Cash, cash equivalents and restricted cash at end of period	$	752			$	536

Howmet Aerospace Inc. and subsidiaries
Segment Information (unaudited)
(in U.S. dollar millions)
	1Q23	2Q23	3Q23	4Q23	2023	1Q24	2Q24
Engine Products
Third-party sales	$ 795	$ 821	$ 798	$ 852	$ 3,266	$ 885	$ 933
Inter-segment sales	$ 2	$ 5	$ 5	$ 1	$ 13	$ 2	$ 1
Provision for depreciation and amortization	$ 32	$ 32	$ 33	$ 33	$ 130	$ 33	$ 33
Segment Adjusted EBITDA	$ 212	$ 223	$ 219	$ 233	$ 887	$ 249	$ 292
Segment Adjusted EBITDA Margin	26.7 %	27.2 %	27.4 %	27.3 %	27.2 %	28.1 %	31.3 %
Restructuring and other credits	$ —	$ (1)	$ —	$ (1)	$ (2)	$ —	$ (1)
Capital expenditures	$ 33	$ 21	$ 30	$ 28	$ 112	$ 55	$ 33
Fastening Systems
Third-party sales	$ 312	$ 329	$ 348	$ 360	$ 1,349	$ 389	$ 394
Provision for depreciation and amortization	$ 11	$ 12	$ 12	$ 11	$ 46	$ 11	$ 13
Segment Adjusted EBITDA	$ 58	$ 64	$ 76	$ 80	$ 278	$ 92	$ 101
Segment Adjusted EBITDA Margin	18.6 %	19.5 %	21.8 %	22.2 %	20.6 %	23.7 %	25.6 %
Restructuring and other charges	$ —	$ —	$ 1	$ —	$ 1	$ —	$ 2
Capital expenditures	$ 9	$ 5	$ 9	$ 8	$ 31	$ 7	$ 5
Engineered Structures
Third-party sales	$ 207	$ 200	$ 227	$ 244	$ 878	$ 262	$ 275
Inter-segment sales	$ —	$ 1	$ —	$ 2	$ 3	$ 1	$ 3
Provision for depreciation and amortization	$ 12	$ 12	$ 12	$ 11	$ 47	$ 11	$ 11
Segment Adjusted EBITDA	$ 30	$ 20	$ 30	$ 33	$ 113	$ 37	$ 40
Segment Adjusted EBITDA Margin	14.5 %	10.0 %	13.2 %	13.5 %	12.9 %	14.1 %	14.5 %
Restructuring and other charges	$ 1	$ 5	$ 1	$ 14	$ 21	$ —	$ 14
Capital expenditures	$ 10	$ 5	$ 6	$ 5	$ 26	$ 6	$ 5
Forged Wheels
Third-party sales	$ 289	$ 298	$ 285	$ 275	$ 1,147	$ 288	$ 278
Provision for depreciation and amortization	$ 9	$ 10	$ 10	$ 10	$ 39	$ 10	$ 10
Segment Adjusted EBITDA	$ 79	$ 81	$ 77	$ 72	$ 309	$ 82	$ 75
Segment Adjusted EBITDA Margin	27.3 %	27.2 %	27.0 %	26.2 %	26.9 %	28.5 %	27.0 %
Capital expenditures	$ 9	$ 7	$ 9	$ 11	$ 36	$ 12	$ 9

Differences between the total segment and consolidated totals are in Corporate.