Howmet Aerospace Inc.

What they do

Howmet produces engineered components from nickel, titanium, aluminum, and cobalt for aerospace, commercial transportation, gas turbines, and other markets. It operates in 19 countries, with North America and Europe generating 72% and 22% of 2025 sales by shipment location. The company traces to Alcoa Inc. (1888), was renamed Arconic Inc., and became Howmet Aerospace after the April 1, 2020 separation that spun off Arconic Corporation's rolled products, extrusions, and building systems businesses.

Revenue drivers

• Commercial and defense aerospace — About 70% of 2025 revenue came from commercial and defense aerospace products; 2025 sales growth was driven by commercial aerospace, defense aerospace, and gas turbines, including engine spares.
• Engine products and spares — Jet engine components and engine spares are core to the aerospace business and were cited among the growth drivers of the 11% sales increase in 2025.
• Gas turbines — Gas turbine demand is a named growth market and was a contributor to 2025 sales and segment EBITDA growth.
• Commercial transportation (forged aluminum wheels) — Forged aluminum wheels serve commercial transportation; this market had lower volumes in 2025 and was the only named market offset to growth, but management said in mid-2026 it had begun to recover.

Recent performance

Second quarter 2026 sales were $2,547 million, up 24% from $2,053 million a year earlier, with 21% organic growth excluding the year's three asset transactions. Q2 2026 operating income was $711 million (27.9% margin), net income $534 million, and diluted EPS $1.33, versus $1.00 in Q2 2025. Adjusted EBITDA was $817 million (32.1% margin, up 340 basis points) and free cash flow was $479 million after $104 million of capital expenditures. For the six months ended June 30, 2026, sales were $4,860 million, operating income $1,464 million, and diluted EPS $2.77. The company repurchased $300 million of common stock in Q2 2026 and $800 million year to date through July.

Strategy

Howmet closed the acquisition of Consolidated Aerospace Manufacturing, LLC (CAM) from Stanley Black & Decker on April 6, 2026, for approximately $1.8 billion, expanding its fastener position. It also acquired Brunner Manufacturing Co. Inc., a small U.S. fastener maker, on February 6, 2026 for cash, and repaid a $186 million Japanese Yen-denominated term loan while entering a $300 million cross-currency swap expected to cut annualized interest expense by $12 million. In 2025 it redeemed $625 million of 5.900% notes due 2027, prepaid $140 million of its USD term loan, and issued $500 million of 4.550% notes due 2032. Management is returning cash through buybacks and a dividend raised 17% in Q3 2026 to $0.14 per share, while signaling rising capital expenditure needs for 2027 to support aerospace and gas turbine growth.

Risks

• Aerospace cyclicality and OEM build rates — About 70% of revenue is tied to commercial and defense aerospace, which the 10-K describes as cyclical and sensitive to aircraft production timing and mix.
• CAM and Brunner integration — Howmet closed the roughly $1.8 billion CAM acquisition in April 2026 and the Brunner acquisition in February 2026; management says CAM integration is on track, but the acquired revenue and cost savings are not yet proven.
• Commercial transportation weakness — Lower volumes in the commercial transportation market partially offset 2025 growth, and the forged aluminum wheels business depends on truck demand.
• Commodity, tariff, and currency exposure — The 10-K cites inflation, tariffs, and foreign currency and interest rate fluctuations as factors affecting results in the countries where Howmet operates.

Outlook

For 2026, management projects sales growth on continued strength in commercial aerospace, defense aerospace, and gas turbines, including engine spares, and expects EPS to grow. On the Q2 2026 call, management said all major markets are in growth mode, with record commercial aircraft backlogs, increasing engine spares needs, healthy defense markets, and extraordinary gas turbine demand already prompting customers to raise their outlooks. Management also said capital expenditure requirements are rising and will need to increase further in 2027 to support organic growth in aerospace and gas turbines.