Howmet Aerospace Inc. (HWM) Earnings & Analysis

Latest quarter

Howmet reported Q2 FY2026 revenue of $2.5 billion, above the $2.4 billion consensus, and adjusted earnings of $1.33 per share, above the $1.23 consensus. Revenue rose from $2.1 billion a year earlier, while diluted earnings per share increased from $1.00 to $1.33.

CFO Patrick Winterlich said Engine Products revenue rose 32% to $1.37 billion, with growth in commercial aerospace, defense aerospace and gas turbines. Fastening Systems revenue increased 37% to $589 million, including the CAM and Brunner acquisitions. Engineered Structures revenue fell 13% to $269 million following the sale of the Savannah disk forging facility, he said.

Howmet reported gross margin of 37.3%, compared with 33.5% a year earlier, and operating margin of 27.9%, compared with 25.4%. Free cash flow rose to $479.0 million from $347.0 million.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

On the Q2 call, CFO Patrick Winterlich said commercial aerospace growth came from demand for both new builds and spares, including parts for legacy and next-generation engines. He said gas turbine revenue rose 38%, driven by electricity-generation demand, especially natural gas for data centers. Across commercial aerospace, defense aerospace and gas turbines, he said first-half spares revenue reached approximately $560 million.

Winterlich said commercial transportation revenue rose as higher aluminum costs were passed through, although wheel volumes fell year over year. He said the pass-through diluted the Forged Wheels margin percentage without materially affecting EBITDA dollars, adding that the effect would likely continue for at least the next couple of quarters.

CEO John Plant said the CAM optimization plan was focused on 2027 for noticeable synergies. Winterlich said the fastener acquisition’s integration was on track and that Howmet’s capital investments were backed by customer contracts. Plant said capital spending was likely to exceed $500 million in 2026 and would need to rise further in 2027.

Asked about gas turbine capacity, Plant described expansion in Japan, Europe and Virginia and said customers currently want “whatever we can make.” He said Howmet was also committing to a commercial aerospace plant and would need further investment to meet customer production rates.

On aircraft demand, Plant said the company was monitoring backlogs, potential cancellations and the broader supply base rather than planning around a single year’s peak. He said the amount Howmet would ultimately need to produce remained uncertain.

Asked about defense spares, Plant said increased demand from recent aircraft activity was more likely in 2027 but was “anticipated but not assured because we don’t have specific orders in hand.” He said customers were also discussing missile production increases, with no formal increased orders agreed at the time.

Guidance

Howmet subsequently raised its FY2026 revenue outlook to $10.29 billion to $10.31 billion, from the $10.05 billion plus or minus $50 million announced on the Q2 call. It also expects earnings of $5.49 to $5.51 per share, compared with its earlier $5.27 plus or minus $0.04.

The company expects FY2026 free cash flow of $1.95 billion to $2.05 billion, compared with previous guidance of approximately $1.9 billion. CEO John Plant also introduced an expectation for 2027 revenue of approximately $11.5 billion.