10-KPeriod: FY2019

Howmet Aerospace Inc. Annual Report, Year Ended Dec 31, 2019

Filed February 27, 2020For Securities:HWM

Summary

This 10-K filing for Arconic Inc. (now Howmet Aerospace Inc.) for the fiscal year ending December 31, 2019, details significant corporate restructuring, including the planned separation of the company into two independent entities: Howmet Aerospace Inc. (focused on Engineered Products and Forgings) and Arconic Corporation (focused on Global Rolled Products). This separation was targeted for April 1, 2020. The company reported a 1% increase in sales to $14.2 billion, driven by growth in aerospace, packaging, commercial transportation, and industrial sectors. Segment operating profit saw a significant increase of 27% due to favorable pricing, cost savings, and higher volumes. Key financial highlights include cash from operations of $406 million and a reduction in total debt by $390 million to $5.94 billion. The company also engaged in substantial share repurchases totaling $1.15 billion during the year. Significant restructuring and other charges of $620 million were incurred, primarily related to asset impairments and layoff costs, impacting profitability for the period. The company faces ongoing litigation related to the Grenfell Tower fire, with an uncertain financial outcome.

Financial Highlights

53 data points
Beta

Revenue

$7.10B

Net Income

$470.00M

6.6% Net Margin

EPS (Diluted)

$1.03

Total Assets

$17.56B

Cash & Equivalents

$1.58B

Free Cash Flow

-$180.00M

Financial Statements
Beta
Revenue$7.10B
R&D Expenses$28.00M
SG&A Expenses$400.00M
Operating Income$579.00M
Interest Expense$338.00M
Net Income$470.00M
EPS (Basic)$1.05
EPS (Diluted)$1.03
Shares Outstanding (Basic)446.00M
Shares Outstanding (Diluted)463.00M

Key Highlights

  • 1Planned separation into two independent companies: Howmet Aerospace Inc. (EP&F) and Arconic Corporation (GRP), targeting completion April 1, 2020.
  • 2Reported sales of $14.2 billion, a 1% increase year-over-year, driven by growth in aerospace, packaging, commercial transportation, and industrial markets.
  • 3Segment operating profit increased by 27% to $2.015 billion, benefiting from improved pricing, cost savings, and higher volumes.
  • 4Generated $406 million in cash from operations.
  • 5Reduced total debt by $390 million to $5.94 billion.
  • 6Executed significant share repurchases totaling $1.15 billion during 2019.
  • 7Incurred $620 million in restructuring and other charges, primarily for asset impairments and layoffs.

Frequently Asked Questions

The most significant event discussed is the planned separation of Arconic Inc. into two independent publicly-traded companies: Howmet Aerospace Inc. (comprising Engineered Products and Forgings businesses) and Arconic Corporation (comprising Global Rolled Products businesses). This separation was targeted for completion on April 1, 2020.

In 2019, Arconic reported sales of $14.2 billion, a 1% increase from 2018. Net income was $470 million, or $1.03 per diluted share. Segment operating profit significantly improved by 27% to $2.015 billion due to favorable pricing, cost savings, and higher volumes. The company also managed its debt effectively, reducing it by $390 million to $5.94 billion.

The company faces several risks, including cyclicality in its end markets (aerospace, automotive, etc.), significant competition, potential manufacturing difficulties, product liability claims (notably related to the Grenfell Tower fire), global economic and geopolitical uncertainties, cybersecurity threats, and the successful execution of the planned separation. The company also notes potential impacts from raw material cost fluctuations and environmental matters.