Core Insights - Howmet Aerospace Inc. (HWM) has seen significant stock performance, trading near its 52-week high of $140.55, with an 8.9% increase since its fourth-quarter 2024 results release [1][2] - The company reported non-GAAP earnings of 74 cents per share, exceeding estimates by 2.8%, and a revenue of $1.90 billion, which is a 9% year-over-year increase [2] Group 1: Financial Performance - HWM's fourth-quarter 2024 non-GAAP earnings increased by 40% year over year [2] - Revenue from the commercial aerospace market rose by 12.9% year over year, making up 53% of total business [6] - Defense aerospace revenues increased by 22% year over year, accounting for 16% of total revenues [7] Group 2: Market Drivers - The commercial aerospace market is a key growth driver, supported by increased air travel and demand for new, fuel-efficient aircraft [5][6] - The expanding defense budget, with a fiscal year 2025 Defense Appropriations Act providing $852.2 billion, is expected to enhance HWM's growth prospects [8] Group 3: Future Outlook - HWM anticipates revenues between $7.93 billion and $8.13 billion in 2025, reflecting an 8% year-over-year growth at the midpoint [9] - The Zacks Consensus Estimate for 2025 earnings has increased by 1.6% to $3.22 per share, indicating a 19.7% year-over-year growth [12] Group 4: Shareholder Returns - In 2024, HWM paid $109 million in dividends and repurchased $500 million in shares, with a 25% dividend increase announced for January 2025 [10][11] - The company has a total share repurchase authorization of $2.15 billion as of January 31, 2025 [11] Group 5: Valuation Concerns - HWM's stock is trading at a forward P/E ratio of 42.36X, significantly higher than the industry average of 22.27X and its peer RTX Corporation at 20.15X [13]

Company Performance - Howmet (HWM) shares have increased by 10% over the past month and reached a new 52-week high of $140.55 [1] - Year-to-date, Howmet has gained 27.5%, outperforming the Zacks Aerospace sector's 0.9% and the Zacks Aerospace - Defense industry's 0.7% [1] Earnings and Revenue - Howmet has consistently exceeded earnings estimates, reporting EPS of $0.74 against a consensus estimate of $0.72 in its last earnings report [2] - For the current fiscal year, Howmet is projected to achieve earnings of $3.22 per share on revenues of $8.07 billion, reflecting a 19.7% increase in EPS and an 8.65% increase in revenues [3] - The next fiscal year is expected to see earnings of $4.03 per share on $9.07 billion in revenues, indicating year-over-year changes of 25.27% and 12.41%, respectively [3] Valuation Metrics - Howmet's current trading metrics show a P/E ratio of 43.3X for the current fiscal year EPS estimates, significantly higher than the peer industry average of 17X [7] - The stock trades at a trailing cash flow basis of 40.9X compared to the peer group's average of 14X, with a PEG ratio of 1.96 [7] - Howmet has a Value Score of D, while its Growth and Momentum Scores are both A, resulting in a VGM Score of B [6] Zacks Rank - Howmet holds a Zacks Rank of 2 (Buy), supported by rising earnings estimates, indicating potential for further gains [8] Industry Comparison - The Aerospace - Defense industry is performing well, ranking in the top 32% of all industries, providing favorable conditions for both Howmet and its peer, RTX Corporation [11] - RTX Corporation also has a Zacks Rank of 2 (Buy) and shows strong earnings performance, with expected earnings of $6.13 per share on revenues of $84.28 billion for the current fiscal year [10]

Financial Performance - Howmet Aerospace reported sales of $7,430 million for the year ended December 31, 2024, representing a 11.9% increase from $6,640 million in 2023[282]. - The net income for 2024 was $1,155 million, up 51.1% from $765 million in 2023[282]. - Operating income increased to $1,633 million in 2024, a 35.8% rise compared to $1,203 million in 2023[282]. - Basic earnings per share rose to $2.83 in 2024, reflecting a 53.0% increase from $1.85 in 2023[282]. - Comprehensive income for 2024 was $1,107 million, compared to $776 million in 2023, reflecting a 42.5% increase[286]. - Total sales for 2024 reached $7,448 million, an increase from $6,656 million in 2023, representing a growth of approximately 11.9%[340]. - Segment Adjusted EBITDA for 2024 was $2,009 million, up from $1,587 million in 2023, indicating a year-over-year increase of about 26.5%[343]. - The total income before income taxes for 2024 was $1.383 billion, an increase from $975 million in 2023[384]. Assets and Liabilities - Total assets rose to $10,519 million in 2024, up from $10,428 million in 2023, indicating a growth of 0.9%[288]. - Long-term debt decreased to $3,309 million in 2024 from $3,500 million in 2023, a reduction of 5.5%[288]. - The company’s total property, plant, and equipment, net, increased to $2,386 million as of December 31, 2024, from $2,328 million in 2023[423]. - Total inventories as of December 31, 2024, were $1,840 million, an increase from $1,765 million in 2023, representing a 4.25% growth[422]. Cash Flow and Expenditures - Cash provided from operations significantly increased to $1,298 million in 2024, compared to $901 million in 2023, marking a 43.9% rise[291]. - Capital expenditures for 2024 were $321 million, up from $219 million in 2023, representing a 46.5% increase[291]. - The company repurchased $504 million of common stock in 2024, compared to $251 million in 2023, indicating a significant increase in share buybacks[293]. Taxation - Howmet's provision for income taxes was $228 million in 2024, up from $210 million in 2023, reflecting higher income levels[282]. - Howmet's effective tax rate for 2024 was 16.5%, down from 21.5% in 2023[386]. - Howmet recorded a discrete tax benefit of $42 million for prior year federal R&D credits in 2024[386]. Pension and Benefits - The projected benefit obligation for pension plans is $1,496 million, down from $1,592 million in 2023, reflecting a decrease of approximately 6%[365]. - The fair value of plan assets for U.S. pension plans decreased to $886 million in 2024 from $925 million in 2023, a decline of about 4.2%[363]. - Cash contributions to Howmet's pension plans were $79 million in 2024, up from $36 million in 2023[381]. Shareholder Information - Net income attributable to common shareholders for 2024 was $1,155 million, a 51% increase from $765 million in 2023[413]. - As of December 31, 2024, there were 405,431,361 shares of common stock outstanding, down from 409,914,461 shares in 2023[399]. - Howmet's share repurchase total for 2024 was $500 million, with 5,770,512 shares repurchased at an average price of $86.65 per share[402]. Market and Revenue Sources - The company derived approximately 52% of its revenue from the commercial aerospace market in 2024, up from 49% in 2023[297]. - Aerospace markets (commercial and defense) contributed 68% of total revenue in 2024, up from 64% in 2023[346]. Debt Management - Interest expense decreased to $182 million in 2024 from $218 million in 2023, indicating improved financial management[282]. - The Company completed the early redemption of approximately $577 million of 6.875% Notes due May 2025, funded by the issuance of 4.850% Notes due October 2031[430]. Internal Controls and Compliance - Howmet maintained effective internal control over financial reporting as of December 31, 2024, as confirmed by independent auditors[270]. - The company does not have any variable interest entities requiring consolidation[299].

Financial Data and Key Metrics Changes - The company reported record revenues, EBITDA, EBITDA margin, and earnings per share for Q4 2024, with EPS at $0.74, a 40% increase year-over-year, concluding the year at $2.69, a 46% increase year-over-year [6][7] - Operating margin for Q4 was 23%, and free cash flow for the year reached a record $977 million, representing an 88% conversion of net income [7][8] - The balance sheet improved with net debt to EBITDA ratio at 1.4 times, and a 25% increase in the quarterly common stock dividend was announced [9][19] Business Line Data and Key Metrics Changes - Revenue from Engine Products increased 14% year-over-year to $972 million, with EBITDA up 30% to $302 million, resulting in an EBITDA margin of 31.1% [25][26] - Fastening Systems revenue rose 11% year-over-year to $401 million, with EBITDA increasing 39% to $111 million and an EBITDA margin of 27.7% [27][28] - Engineered Structures revenue grew 13% year-over-year to $75 million, with EBITDA up 55% to $51 million and an EBITDA margin of 18.5% [29][30] - Forged Wheels revenue decreased 12% year-over-year to $1.1 billion, but maintained a healthy EBITDA margin of 27.2% [31][32] Market Data and Key Metrics Changes - Commercial aerospace revenue was up 13% in Q4 and 20% for the full year, while defense aerospace grew 22% for the year [12][12] - Commercial transportation faced challenges, with revenues down 12% in Q4 and 7% for the full year [12] - Industrial and other markets saw an 11% increase in Q4, driven by oil and gas up 22% and general industrial up 12% [13] Company Strategy and Development Direction - The company aims to continue investing for growth, with a focus on improving profitability across segments, particularly in structures [10][11] - The outlook for 2025 includes expectations of increased demand in commercial aerospace and industrial gas turbines, with a focus on spares growth [35][44] - The company plans to maintain a strong capital allocation strategy, including share buybacks and dividends, while managing debt levels [50][51] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in outpacing market growth in 2025, with expectations for increased production rates from Boeing and Airbus [35][36] - The company anticipates continued strong performance in spares, with a target of 20% of total revenue in the future [39] - Management acknowledged potential headwinds from supply chain challenges and inventory levels but remains cautiously optimistic about growth [62] Other Important Information - The operational tax rate for 2024 improved to 20.5%, and the pretax return on net assets increased by 800 basis points to 41% [33][34] - The company has a strong liquidity position with a cash balance of $565 million and a $1 billion undrawn revolver [20] Q&A Session Summary Question: On fastening systems, can you talk about margin improvements? - Management noted that operational and productivity improvements have led to better margins, with expectations for continued positive mix and margin growth in the future [56][57] Question: Can you rationalize the implied guidance for margins in 2025? - Management indicated a conservative approach due to uncertainties in narrow body builds and supply chain challenges, while remaining optimistic about wide body growth [62][63] Question: What is the outlook for spares growth, particularly for CFM56? - Management believes peak demand for CFM56 has shifted to 2027, with increasing demand for MRO services and deeper overhauls expected [138]

Howmet Aerospace Inc.’s (HWM) fourth-quarter 2024 adjusted earnings of 74 cents per share beat the Zacks Consensus Estimate of 72 cents. The bottom line surged 40% year over year.Total revenues of $1.90 billion beat the consensus estimate of $1.88 billion. The top line increased 9% from the year-ago quarter. The increase was backed by strength in the company’s commercial aerospace market.In 2024, HWM reported net revenues of $7.4 billion, which increased 12% year over year. The company’s adjusted earnings w ...

February 13, 2025 John Plant: Executive Chairman and Chief Executive Officer Ken Giacobbe: EVP and Chief Financial Officer Fourth Quarter and Full Year 2024 Earnings Call Important Information Forward–Looking Statements Other Information In this presentation: where values are denoted, M=USD millions and B=USD billions; YTD=year to date; YoY=year over year; QoQ=quarter over quarter; FY=full year; Q=quarter; IGT=industrial gas turbine; bps=basis points; FCF=Free Cash Flow; Free Cash Flow Conversion=Free Cash ...

Howmet (HWM) reported $1.89 billion in revenue for the quarter ended December 2024, representing a year-over-year increase of 9.2%. EPS of $0.74 for the same period compares to $0.53 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $1.88 billion, representing a surprise of +0.76%. The company delivered an EPS surprise of +2.78%, with the consensus EPS estimate being $0.72.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street e ...

Howmet (HWM) came out with quarterly earnings of $0.74 per share, beating the Zacks Consensus Estimate of $0.72 per share. This compares to earnings of $0.53 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 2.78%. A quarter ago, it was expected that this maker of engineered products for the aerospace and other industries would post earnings of $0.65 per share when it actually produced earnings of $0.71, delivering a surprise of ...

Revenue and Growth - FY 2024 revenue reached $7.4 billion, up 12% year over year, driven by a 20% increase in the commercial aerospace market[13] - Q4 2024 revenue was $1.9 billion, a 9% increase year over year, primarily due to a 13% growth in the commercial aerospace sector[7] - FY 2025 revenue growth guidance has been raised to approximately 8% year over year[17] - Sales for 2024 increased to $7,430 million, up 11.9% from $6,640 million in 2023[47] - Q4 2023 sales reached $1,731 million, with a projected increase to $1,891 million in Q4 2024, representing a growth of 9.7%[69] - The company anticipates a total sales increase from $6,640 million in 2023 to $7,430 million in 2024, reflecting a growth of 11.9%[69] Net Income and Earnings - Net income for FY 2024 was $1.2 billion, or $2.81 per share, compared to $765 million, or $1.83 per share, in FY 2023[14] - Net income rose to $1,155 million in 2024, a 51.0% increase compared to $765 million in 2023[47] - Basic earnings per share (EPS) increased to $2.83 in 2024, up 53.0% from $1.85 in 2023[47] - Net income for Q4 2024 is expected to reach $314 million, with a total of $1,155 million for the year[56] - Total net income excluding special items for the year ended December 31, 2023, was $766 million, with a diluted EPS of $1.84[60] Cash Flow and Capital Management - Free cash flow for FY 2024 was $977 million, representing an 88% conversion of net income[17] - The company repurchased $190 million of common stock in Q4 2024, totaling $500 million for the full year 2024, retiring approximately 5.8 million shares[28] - The company repurchased $500 million of common stock in 2024, up from $250 million in 2023[51] - Free cash flow for Q4 2024 is projected to be $378 million, contributing to a total of $977 million for the year[56] - Free cash flow conversion as a percentage of net income for 2024 is projected at 85%[56] Segment Performance - Engine Products segment revenue for FY 2024 was $3.7 billion, up 14% year over year, with an adjusted EBITDA margin of 30.8%[20] - Fastening Systems segment revenue for FY 2024 was $1.6 billion, up 17% year over year, with an adjusted EBITDA margin of 25.8%[22] - Forged Wheels reported Q4 2024 revenue of $243 million, a 12% decrease year over year due to lower volumes in the commercial transportation market[25] - Full year 2024 revenue was $1.1 billion, down 8% year over year, attributed to lower volumes and inflationary cost pressures[27] - Total Segment Adjusted EBITDA for 2023 was $1,587 million, with a projected increase to $2,009 million in 2024[54] Expenses and Investments - Adjusted EBITDA for FY 2024 was $1.9 billion, up 27% year over year, with an adjusted EBITDA margin of 25.8%[16] - Capital expenditures for 2024 were $321 million, compared to $219 million in 2023, indicating a 46.5% increase[51] - Research and development expenses slightly decreased to $33 million in 2024 from $36 million in 2023[47] Debt and Financial Obligations - In 2024, the company reduced gross debt by $365 million, resulting in annualized interest expense savings of approximately $37 million[32] - Long-term debt decreased to $3,309 million in 2024 from $3,500 million in 2023, a reduction of 5.5%[50] Dividends and Shareholder Returns - The quarterly dividend was increased by 25% to $0.10 per share starting Q1 2025[12] - The quarterly common stock dividend was increased by 25% to $0.10 per share for Q1 2025, following a dividend of $0.08 per share in Q4 2024[33] Future Outlook and Guidance - Q1 2025 guidance for revenue ranges from $1.925 billion to $1.945 billion, with Adjusted EBITDA guidance between $515 million and $525 million[35] - The company plans to hold its quarterly conference call on February 13, 2025, to discuss financial performance and future outlook[36] - The company anticipates continued growth in sales and operating income, driven by market expansion and new product developments[68] Operational Performance - The operating income margin improved from 18.8% in Q4 2023 to 23.5% in Q4 2024[68] - Adjusted operating income margin excluding special items improved from 19.1% in Q4 2023 to 23.0% in Q4 2024[69] - The overall operating income margin is expected to improve from 18.1% in the year ended December 2023 to 22.0% in the year ended December 2024[69] Special Items and Adjustments - Pre-tax special items for YTD 2023 included restructuring charges of $23 million and costs associated with closures of $13 million[66] - The company reported a net benefit of $44 million related to additional U.S. federal and state R&D credits claimed for prior years in YTD 2024[67] - Future periods may still incur additional special items, but management believes it is appropriate to consider both GAAP and non-GAAP measures[69]

Howmet Aerospace Inc. (HWM) is scheduled to release fourth-quarter 2024 earnings on Feb. 13, before market open. The Zacks Consensus Estimate for revenues is pegged at $1.9 billion, indicating growth of 8.4% from the prior-year quarter’s figure.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.The consensus mark for earnings is pinned at 72 cents per share, which has increased a penny in the past 30 days. The figure indicates a jump of 35.9% from the prior-year figure. HWM surpassed e ...