Howmet Aerospace Reports Fourth Quarter and Full Year 2024 Results

FY 2024: Revenue Up 12% Year Over Year; Record Revenue, Profit and Cash Generation

FY 2024: Approx. $975 Million Deployed for Common Stock Repurchases, Debt Reduction, and Dividends

Q1 2025: Increased Common Stock Dividend 25% from Fourth Quarter 2024

FY 2025: Raising Revenue Growth Guidance to ~8% YoY; Expect Improved Profit and Cash Generation

Howmet Aerospace (NYSE:HWM):

Fourth Quarter 2024 GAAP Financial Results

• Revenue of $1.9 billion, up 9% year over year, driven by Commercial Aerospace, up 13%
• Net Income of $314 million versus $236 million in the fourth quarter 2023; Earnings Per Share of $0.77 versus $0.57 in the fourth quarter 2023
• Operating Income Margin of 23.5%
• Generated $480 million of cash from operations; $284 million of cash used for financing activities; and $107 million of cash used for investing activities

Full Year 2024 GAAP Financial Results

• Revenue of $7.4 billion, up 12% year over year, driven by Commercial Aerospace, up 20%
• Net Income of $1.2 billion versus $765 million in the full year 2023; Earnings per Share of $2.81 versus $1.83 in the full year 2023
• Operating Income Margin of 22.0%
• $1.3 billion cash from operations; $1.0 billion of cash used for financing activities; and $316 million of cash used for investing activities; Free Cash Flow¹ 85% of Net Income

Fourth Quarter 2024 Adjusted Financial Results

• Adj. EBITDA excluding special items of $507 million, up 27% year over year
• Adj. EBITDA Margin excluding special items of 26.8%
• Adj. Operating Income Margin excluding special items of 23.0%
• Adj. Earnings Per Share excluding special items of $0.74, up 40% year over year
• $378 million of Free Cash Flow

Full Year 2024 Adjusted Financial Results

• Adj. EBITDA excluding special items of $1.9 billion, up 27% year over year
• Adj. EBITDA Margin excluding special items of 25.8%
• Adj. Operating Income Margin excluding special items of 22.0%
• Adj. Earnings Per Share excluding special items of $2.69, up 46% year over year
• $977 million of Free Cash Flow; 88% conversion of Net Income excluding special items

2025 Guidance

Key Announcements

• In the fourth quarter 2024, the Company repurchased $190 million of common stock at an average price of $109.75 per share, retiring approximately 1.7 million shares.
• In January 2025, the Company repurchased an additional $50 million of common stock. As of January 31, 2025, total share repurchase authorization available was approximately $2.15 billion.
• In the fourth quarter 2024, the Company paid down $60 million of its US dollar-denominated Term Loan, resulting in annualized interest expense savings of approximately $3 million.
• On November 25, 2024, the Company paid a quarterly dividend of $0.08 per share on its common stock.
• The Company increased the quarterly dividend of its common stock by 25% to $0.10 per share in the first quarter 2025.

Howmet Aerospace (NYSE:HWM) today reported fourth quarter and full year 2024 results. The Company reported fourth quarter 2024 revenues of $1.9 billion, up 9% year over year, primarily driven by growth in the commercial aerospace market of 13%.

Howmet Aerospace reported Net Income of $314 million, or $0.77 per share, in the fourth quarter 2024 versus $236 million, or $0.57 per share, in the fourth quarter 2023, and included approximately $11 million in net benefit from special items. Net Income excluding special items was $303 million, or $0.74 per share, in the fourth quarter 2024, versus $218 million, or $0.53 per share, in the fourth quarter 2023.

Fourth quarter 2024 Operating Income was $445 million, up 37% year over year. Fourth quarter Adjusted Operating Income excluding special items was $434 million, up 32% year over year. Operating Income Margin was up approximately 470 basis points year over year at 23.5% in the fourth quarter 2024. Fourth quarter Adjusted Operating Income Margin excluding special items was 23.0%, up approximately 390 basis points year over year.

Fourth quarter 2024 Adjusted EBITDA excluding special items was $507 million, up 27% year over year. The year-over-year increase was driven by growth in the commercial aerospace and defense aerospace markets. Adjusted EBITDA Margin excluding special items was up approximately 380 basis points year over year at 26.8%.

Howmet Aerospace reported full year 2024 revenues of $7.4 billion, up 12% year over year, primarily driven by growth in the commercial aerospace market of 20%.

The Company reported Net Income of $1.2 billion, or $2.81 per share, in the full year 2024 versus $765 million, or $1.83 per share, in the full year 2023, and included approximately $48 million in net benefit from special items. Net Income excluding special items was $1.1 billion, or $2.69 per share, in the full year 2024, versus $766 million, or $1.84 per share, in the full year 2023.

Full year 2024 Operating Income was $1.6 billion, up 36% year over year. Full year Adjusted Operating Income excluding special items was $1.6 billion, up 32% year over year. Operating Income Margin was up approximately 390 basis points year over year at 22.0% in the full year 2024. Full year Adjusted Operating Income Margin excluding special items was 22.0%, up approximately 340 basis points year over year.

Full year 2024 Adjusted EBITDA excluding special items was $1.9 billion, up 27% year over year. The year-over-year increase was driven by growth in the commercial aerospace and defense aerospace markets. Adjusted EBITDA Margin excluding special items was up approximately 310 basis points year over year at 25.8%.

Howmet Aerospace Executive Chairman and Chief Executive Officer John Plant said, "Howmet drove a healthy set of results to close out the year, exceeding the high end of guidance. Revenue in the fourth quarter 2024 grew 9% year over year to a record $1.9 billion, with commercial aerospace growth of 13% supported by engine spares volumes. Adjusted EBITDA^* grew 27% to $507 million and Adjusted EBITDA Margin* increased approximately 380 basis points to 26.8%, also records. Adjusted Earnings per Share* grew 40% to a record $0.74."

Mr. Plant continued, "Robust cash generation continues to support Howmet's strong balance sheet as well as an attractive shareholder return profile. In full year 2024, the Company generated $977 million of Free Cash Flow for an 88% conversion of Net Income*, and deployed approximately $975 million of cash in the form of common stock repurchases, debt reduction, and dividends. On January 27, the Board of Directors approved a 25% increase in the common stock dividend to $0.10 per share."

"The outlook for commercial aerospace remains solid with rising OEM production rates supported by strong demand as well as continued healthy growth in engine spares demand. We expect continued growth in the defense aerospace and industrial end markets, with the commercial transportation market anticipated to be soft until the second half of 2025. The mid-point of our 2025 revenue growth guidance is increased to approximately 8% year over year compared to the 7.5% outlook provided at third quarter 2024 earnings, and this extra growth is on top of a strong finish to 2024. We continue to employ a cautious view on underlying build rates in our guidance, assuming The Boeing Company produces approximately 25 737-MAX aircraft per month and 6 787 aircraft per month on average across 2025 and Airbus averages mid-50s per month on the A320 and approximately 6 per month on the A350. Free Cash Flow in 2025 is expected to exceed $1 billion with approximately 85% conversion of Net Income*, while investing in additional capital expenditures for growth."

Fourth Quarter and Full Year 2024 Segment Performance

Engine Products reported fourth quarter 2024 revenue of $972 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 $302 million, up 30% year over year, driven by growth in the commercial aerospace, defense aerospace, oil & gas, and industrial gas turbine markets. The segment absorbed approximately 220 net headcount in the quarter and approximately 1,205 in full year 2024 in support of expected revenue increases. Segment Adjusted EBITDA margin increased approximately 380 basis points year over year to 31.1%.

Engine Products reported full year 2024 revenue of $3.7 billion, up 14% year over year, due to growth in the commercial aerospace, defense aerospace, oil and gas, and industrial gas turbine markets. Segment Adjusted EBITDA was a record $1.2 billion, up 30% year over year, driven primarily by growth in the commercial aerospace, defense aerospace, oil and gas, and industrial gas turbine markets. Segment Adjusted EBITDA margin increased approximately 360 basis points year over year to 30.8%.

Fastening Systems reported fourth quarter 2024 revenue of $401 million, an increase of 11% year over year due to growth in the commercial aerospace market, including wide body aircraft recovery. Segment Adjusted EBITDA was $111 million, up 39% year over year, driven by growth in the commercial aerospace market as well as productivity gains. Segment Adjusted EBITDA margin increased approximately 550 basis points year over year to 27.7%.

Fastening Systems reported full year 2024 revenue of $1.6 billion, up 17% year over year, due to growth in the commercial aerospace market, including wide body recovery. Segment Adjusted EBITDA was $406 million, up 46% year over year, driven primarily by growth in the commercial aerospace market as well as productivity gains. Segment Adjusted EBITDA margin increased approximately 520 basis points year over year to 25.8%.

Engineered Structures reported fourth quarter 2024 revenue of $275 million, an increase of 13% year over year due to growth in the commercial aerospace and defense aerospace markets. Segment Adjusted EBITDA was $51 million, up 55% year over year, driven by growth in the commercial aerospace and defense aerospace markets. Segment Adjusted EBITDA margin increased approximately 500 basis points year over year to 18.5%.

Engineered Structures reported full year 2024 revenue of $1.1 billion, up 21% year over year, due to growth in the commercial aerospace and defense aerospace markets. Segment Adjusted EBITDA was $166 million, up 47% year over year, driven primarily by growth in the commercial aerospace and defense aerospace markets. Segment Adjusted EBITDA margin increased approximately 270 basis points year over year to 15.6%.

Forged Wheels reported fourth quarter 2024 revenue of $243 million, a decrease of 12% year over year due to lower volumes in the commercial transportation market. Segment Adjusted EBITDA was $66 million, a decrease of approximately 8% year over year, driven by lower volumes in the commercial transportation market. Segment Adjusted EBITDA margin increased approximately 100 basis points year over year to 27.2%.

Forged Wheels reported full year 2024 revenue of $1.1 billion, down 8% year over year, due to lower volumes in the commercial transportation market as well as a decrease in aluminum and other inflationary cost pass through. Segment Adjusted EBITDA was $287 million, down 7% year over year, driven primarily by lower volumes in the commercial transportation market. Segment Adjusted EBITDA margin increased approximately 30 basis points year over year to 27.2%.

Key Announcements

Repurchased $190 Million of Common Stock in Fourth Quarter 2024, $500 Million in Full Year 2024; $50 Million in January 2025

In the fourth quarter 2024, Howmet Aerospace repurchased $190 million of common stock at an average price of $109.75 per share, retiring approximately 1.7 million shares.

In the full year 2024, the Company repurchased $500 million of common stock at an average price of $86.65 per share, retiring approximately 5.8 million shares.

In January 2025, the Company repurchased an additional $50 million of common stock at an average price of $116.39 per share, retiring approximately 0.4 million shares.

As of January 31, 2025, total share repurchase authorization available was approximately $2.15 billion.

Paid Down $60 Million of US Dollar-Denominated Term Loan; Reduced Debt $365 Million in Full Year 2024

In the fourth quarter 2024, the Company paid down $60 million of its US dollar-denominated Term Loan, resulting in annualized interest expense savings of approximately $3 million. The Company has $140 million remaining outstanding on the USD Term Loan due November 2026.

In the full year 2024, the Company reduced gross debt by $365 million, resulting in annualized interest expense savings of approximately $37 million.

Quarterly Common Stock Dividend of $0.08 Per Share in Fourth Quarter 2024; $0.10 Per Share in First Quarter 2025

On November 25, 2024, the Company paid a quarterly dividend of $0.08 per share on its common stock to holders of record at the close of business November 8, 2024.

On January 27, 2025, the Board of Directors declared a dividend of $0.10 per share on the Company's common stock to be paid on February 25, 2025 to holders of record as of the close of business on February 7, 2025. The quarterly dividend represents a 25% increase from the prior dividend of $0.08 per share.

2025 Guidance

Howmet Aerospace will hold its quarterly conference call at 10:00 AM Eastern Time on Thursday, February 13, 2025. 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 February 13, 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 1,170 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"; "Q" means "quarter"; "YoY" means year over year; "Adj." means adjusted; and references to performance by Howmet Aerospace or its segments as "record" mean its best result since April 1, 2020 when Howmet Aerospace Inc. (previously named Arconic Inc.) separated from Arconic Corporation.

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.

The Accounts Receivable Securitization program remains unchanged at $250 outstanding.

Free cash flow and Free cash flow conversion as a percentage of Net income excluding Special items are non-GAAP financial measures. Management believes that these measures are 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.