10-QPeriod: Q2 FY2025

Howmet Aerospace Inc. Quarterly Report for Q2 Ended Jun 30, 2025

Filed July 31, 2025For Securities:HWM

Summary

Howmet Aerospace Inc. (HWM) reported a strong second quarter and first half of 2025, demonstrating significant year-over-year growth in both sales and net income. Total sales increased by 9% to $2.05 billion for the quarter and 8% to $3.99 billion for the first half, driven by robust demand in the commercial and defense aerospace sectors, supported by favorable pricing and cost pass-through mechanisms. Net income surged by 53% to $407 million ($1.00 diluted EPS) for the quarter and by 47% to $751 million ($1.84 diluted EPS) for the six months, reflecting improved operational efficiencies and reduced interest expenses. The company's core Engine Products segment continues to be a primary growth driver, with strong performance and margin expansion, bolstered by increasing aircraft production rates and demand for engine spares. Financially, Howmet exhibits a healthy balance sheet with total assets growing to $11.05 billion. The company generated substantial cash from operations, amounting to $699 million for the first half of 2025, an increase of 22% year-over-year. This strong cash flow generation enabled aggressive capital allocation, including significant share repurchases totaling $300 million in the first half and $506 million used in financing activities. Management reiterated its positive outlook for the aerospace market, anticipating continued growth, and is actively managing potential impacts from tariffs and supply chain dynamics through cost pass-through strategies. The company also saw positive credit rating actions, with multiple agencies upgrading their ratings, reflecting strong financial performance and deleveraging efforts.

Financial Highlights

47 data points
Beta

Revenue

$2.05B

Net Income

$407.00M

19.8% Net Margin

EPS (Diluted)

$1.00

Total Assets

$11.05B

Cash & Equivalents

$545.00M

Free Cash Flow

$344.00M

Financial Statements
Beta
Revenue$2.05B
R&D Expenses$9.00M
SG&A Expenses$89.00M
Operating Income$521.00M
Net Income$407.00M
EPS (Basic)$1.01
EPS (Diluted)$1.00
Shares Outstanding (Basic)404.00M
Shares Outstanding (Diluted)406.00M

Key Highlights

  • 1Sales grew 9% year-over-year to $2.05 billion in Q2 2025 and 8% to $3.99 billion in the first half, driven by strong aerospace demand and favorable pricing.
  • 2Net income increased significantly by 53% to $407 million ($1.00 diluted EPS) in Q2 2025 and by 47% to $751 million ($1.84 diluted EPS) in the first half.
  • 3The Engine Products segment showed robust growth, with third-party sales up 13% in Q2 and 13% in the first half, and Segment Adjusted EBITDA margin improving by 170 and 300 basis points, respectively.
  • 4Cash from operations improved by 22% to $699 million for the first six months of 2025, supporting increased investing and financing activities.
  • 5The company executed substantial share repurchases totaling $300 million in the first half of 2025 and used $506 million in total financing activities.
  • 6Cost of Goods Sold (COGS) as a percentage of sales decreased to 66.5% in Q2 2025 from 68.5% in Q2 2024, indicating improved efficiency.
  • 7Multiple credit rating agencies (Fitch, S&P, Moody's) upgraded Howmet's debt ratings, citing deleveraging actions, strong free cash flow, and debt reduction.

Frequently Asked Questions

The substantial increase in net income was driven by a combination of factors, including strong top-line growth from higher sales in the commercial and defense aerospace markets, favorable product pricing and cost pass-throughs, improved operational efficiencies leading to a lower COGS as a percentage of sales, and a reduction in interest expense due to lower debt levels. Additionally, discrete tax benefits in the second quarter of 2025 significantly boosted net income.

Howmet Aerospace expects to pass along the costs associated with tariffs to its customers through a cost pass-through mechanism. While this may cause a delay between increased costs and recovery, the company is actively managing these dynamics. The report also mentions that the timing and extent of tariffs are subject to changes and uncertainties across all segments.

The demand in the commercial transportation markets served by the Forged Wheels segment is expected to continue to decrease throughout the remainder of 2025. This is reflected in the segment's sales, which decreased slightly in Q2 2025 and more notably in the first half of 2025 compared to the prior year. The segment is implementing cost reductions to mitigate the impact of lower volumes.

Capital expenditures increased significantly in the first six months of 2025 ($221 million) compared to the same period in 2024 ($132 million), primarily driven by an increase in capital expenditures related to capacity expansion projects in the Engine Products segment. These investments are in support of expected revenue increases backed by aerospace and industrial gas turbine customer contracts.