8-KOther EventsExhibits & Filings

Howmet Aerospace Inc. 8-K Report, Corporate Update (Feb 19, 2019)

Filed February 19, 2019For Securities:HWM

Summary

Howmet Aerospace Inc. (filing as Arconic Inc. at the time) announced on February 19, 2019, a significant capital allocation decision through an Accelerated Share Repurchase (ASR) agreement valued at $700 million. This move indicates the company's confidence in its stock valuation and its commitment to returning capital to shareholders. The ASR is expected to be completed in the first half of 2019, with an initial delivery of approximately 31.9 million shares. Following this substantial repurchase, approximately $300 million will remain available under the company's previously authorized share repurchase program through the end of 2020. Investors should view this ASR as a signal of management's belief that the company's stock is undervalued and a strategic step to enhance shareholder value by reducing the number of outstanding shares.

Key Highlights

  • 1Arconic Inc. entered into a $700 million Accelerated Share Repurchase (ASR) agreement.
  • 2The ASR agreement targets the repurchase of Arconic's common stock.
  • 3An initial delivery of approximately 31.9 million shares is expected on February 21, 2019.
  • 4The final number of shares repurchased will be based on the volume-weighted average price during the ASR term, less a discount.
  • 5The ASR transaction is anticipated to conclude within the first half of 2019.
  • 6Post-ASR, approximately $300 million remains available under the existing share repurchase authorization through the end of 2020.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce Arconic Inc.'s (now Howmet Aerospace Inc.) entry into a $700 million Accelerated Share Repurchase (ASR) agreement, a significant capital allocation strategy to buy back its own stock.

The company is undertaking the ASR as a means to return capital to shareholders and potentially enhance shareholder value. This action suggests that management believes the company's stock is trading at an attractive valuation, and repurchasing shares can increase earnings per share (EPS) and return on equity.

The ASR will reduce the number of outstanding shares. An initial delivery of approximately 31.9 million shares is expected soon, and the final amount will be determined by the market's volume-weighted average price during the ASR period. This reduction can positively impact per-share metrics.

After the $700 million ASR is completed, approximately $300 million will still be available under the previously authorized share repurchase program, which is set to continue through the end of 2020.