Howmet Aerospace Inc. Q3 FY2025 earnings call

• Q3 was a strong quarter with revenue growth accelerating, up 14% (8% in first half). Commercial Aerospace increased 15%, with commercial aero part sales up 38% and spares up 31%. EBITDA up 26%, operating income up 29%. Cash flow was $423 million after $108 million capital expenditure. Year-to-date capital expenditure ~$330 million.
• $200 million of cash deployed to buybacks in Q3 with an additional $100 million in October, totaling $600 million year-to-date. Paid off $63 million U.S. term loan early, net leverage at 1.1x net debt-to-EBITDA. Dividend payments increased 20% in August. Earnings per share increased by over 34%. Working capital days improved. Headcount increased by 265 people, mainly in engines business.
• End markets strong: Commercial Aerospace up 15% (> $1.1 billion), Defense Aerospace up 24%, Commercial Transportation down 3%, Industrial and other up 18%. Spares for Commercial Aero, Defense Aero, IGT and oil and gas up 31% in Q3.

Engines Products Team

• Revenue: Increased 17% to $1.1 billion in Q3. EBITDA increased 20% to $368 million. EBITDA margin increased 80 basis points year-over-year to 33.3%.

Fastening Systems Team

• Revenue: Increased 14% to $448 million in Q3. EBITDA increased 35% to $138 million. EBITDA margin increased 480 basis points year-over-year to 30.8%.

Engineered Structures

• Revenue: Increased 14% to $289 million in Q3. EBITDA increased 53% to $58 million. EBITDA margin increased 510 basis points to 20.1%.

Forged Wheels

• Revenue: Essentially flat. EBITDA was strong at $73 million, an increase of 14% despite a challenging market. EBITDA margin increased 350 basis points to 29.6%.

• 2025 full-year: Revenue $8.15 billion ± $10 million, EBITDA $2.375 billion ± $5 million, EPS $3.67 ± $0.01, free cash flow $1.3 billion ± $25 million.
• Q4 2025: Revenue ~$2.1 billion ± $10 million, EBITDA ~$610 million ± $5 million, EPS $0.95 ± $0.01.
• 2026: Revenue ~$9 billion ±, +10% year-on-year. Further refined in February 2026 earnings call.

• Commercial transportation market challenging with revenue down 3% in Q3, including pass-through of higher aluminum costs and tariffs. Wheels volume down 16% on volume basis.
• Tariff changes continue to produce uncertainty for Howmet, with net tariff drag small at around $5 million plus or minus.

Q: Kristine Liwag asked about the competitive landscape for turbines and IGT, including expected returns and comparison with aerospace.

A: John Plant responded discussing data center build-out demand, shift in emphasis on fossil fuels, investment profile, technology evolution similar to aerospace, and expansion in manufacturing plants.

Q: Myles Walton asked about 2026 growth and incrementals.

A: John Plant stated he reserves profit guidance for February call, mentioned Q3 incrementals were healthy at 50%, and was optimistic about Commercial Aerospace build rates in 2026.

Q: Mariana Perez Mora asked about destocking trends, aftermarket trends, and IGT capacity.

A: John Plant said destocking essentially finished, spares demand strong for Commercial Aero, and IGT demand expected to increase in 2026.

Q: Sheila Kahyaoglu asked about Howmet's end state over the next few years.

A: John Plant talked about growth trajectory, automation, artificial intelligence and machine learning in manufacturing, and digital thread for improved yields and economics.

Q: Noah Poponak asked about incremental margins and drivers.

A: John Plant said incrementals are a combination of factors including volume, automation, yield, content, and price, and reserved comments for February call.

Q: Scott Deuschle asked about CapEx levels and mix.

A: John Plant said majority CapEx still focused on aerospace, but mix of IGT and midsized turbines investment may be higher relative percentage, and CapEx to remain at high levels into 2026 and 2027.