Why is GAAP EPS ($1.44) so much higher than adjusted EPS ($1.22)?

The GAAP figure includes a $93 million pre-tax gain from selling the Savannah, GA disk forging facility, which is recorded as a negative restructuring and other charge. Management excludes this special item, along with $7 million of acquisition-related costs and an offsetting tax adjustment, to arrive at adjusted EPS of $1.22. Investors should treat the adjusted figure as the better gauge of recurring operating performance, since the gain is non-recurring.

How much did the CAM acquisition add to Howmet's debt, and how does it affect leverage?

Howmet issued $1.2 billion of senior notes in March 2026 (3.75% due 2028, 3.90% due 2029, and 4.75% due 2036) and drew $450 million on commercial paper to fund the roughly $1.8 billion CAM purchase, with the balance sourced from cash, including proceeds from the Savannah sale. Long-term debt rose to $4.05 billion from $2.86 billion at year-end 2025. The release does not provide a net leverage ratio, but the increase is material relative to adjusted EBITDA, so investors should look for leverage commentary on the earnings call and in the 10-Q.

What is driving the guidance increase, and how much is from acquisitions?

Management attributes about $275 million of the $550 million revenue raise to portfolio changes, including CAM and Brunner, net of the Savannah divestiture. The remainder reflects stronger demand, particularly in commercial aerospace, gas turbines, and defense. Management says the EPS effect of the portfolio changes is insignificant in 2026, with accretion expected in 2027. The adjusted EPS guidance raise of $0.49 therefore reflects mostly organic improvement.

Is the share buyback sustainable alongside the higher debt load?

Howmet repurchased $300 million of stock in Q1 and another $150 million in April, and it had $1.05 billion of authorization remaining as of May 4, 2026. Free cash flow of $359 million in Q1 covered the buybacks and dividends, and full-year 2026 free cash flow guidance of $1.75 billion provides additional capacity. However, Q1 buybacks were partly funded by the debt-financed acquisition period, and the company's ability to sustain this pace will depend on continued cash generation and how it balances deleveraging against repurchases.

HWM 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed May 7, 2026. Cited figures are marked; the original filing is the authoritative source.

Howmet Aerospace (HWM) reported first quarter 2026 results that were strong on nearly every measure.

Revenue rose 19% year over year to $2.31 billion^a, GAAP diluted EPS was $1.44 (up 71%), and adjusted EPS was $1.22 (up 42%). Operating margin expanded to 32.6% from 25.4%, but GAAP results were flattered by a $93 million pre-tax gain on the sale of the Savannah, GA disk forging facility, which was excluded from adjusted metrics. Adjusted EBITDA reached $740 million (up 32%), with the adjusted EBITDA margin up about 320 basis points to 32.0%.

Growth was broad-based, led by gas turbines (+39%), commercial aerospace (+20%), and defense (+10%), while Forged Wheels revenue rose 17% despite an 11% volume decline in commercial transportation. The quarter was also marked by significant portfolio and capital activity. Howmet completed the roughly $1.8 billion^b acquisition of Consolidated Aerospace Manufacturing (CAM) on April 6, 2026, funded by $1.2 billion of notes and $450 million of commercial paper.

Cash rose to $2.4 billion^c at quarter-end, but total debt increased substantially, with long-term debt reaching $4.05 billion and short-term borrowings at $450 million. Free cash flow was $359 million, and the company repurchased $300 million of stock in the quarter and another $150 million in April. Management raised full-year 2026 guidance: revenue to a $9.65 billion baseline (up $550 million), adjusted EBITDA to $3.06 billion (up $300 million), adjusted EPS to $4.94 (up $0.49), and free cash flow to $1.75 billion (up $150 million).

Management said the portfolio changes add about $275 million^d of revenue in 2026, with EPS impact insignificant in 2026 and accretive in 2027. For investors, the key takeaways are the strong operating momentum, the guidance raise, and the leverage increase from the CAM financing. Investors should note that the GAAP beat was partly driven by a one-time gain, and that the company's balance sheet now carries materially more debt, which it offset in part with a Fitch upgrade to A- in February 2026.

02—Key points

Key Highlights

Revenue up 19% YoY to $2.31B; gas turbines +39%, commercial aerospace +20%, defense aerospace +10%.
Adjusted EBITDA of $740M (up 32%), with margin expanding ~320 bps to 32.0%; Engine Products segment margin reached 36.6%.
GAAP diluted EPS of $1.44 includes a $93M pre-tax gain from the Savannah disk forging sale; adjusted EPS of $1.22 (up 42%) excludes special items.
Full-year 2026 guidance raised: revenue baseline $9.65B (+$550M), adjusted EBITDA $3.06B (+$300M), adjusted EPS $4.94 (+$0.49), free cash flow $1.75B (+$150M).
Completed the ~$1.8B CAM acquisition on April 6, 2026, financed largely with $1.2B of new notes and $450M in commercial paper; long-term debt rose to $4.05B from $2.86B.
Free cash flow of $359M (up 168%) supported $300M of Q1 share repurchases plus $150M in April; $1.05B remaining authorization as of May 4, 2026.
Fitch upgraded Howmet to A- in February 2026; all three major agencies rate the company at least three notches into investment grade.

03—Questions

Frequently Asked Questions

Why is GAAP EPS ($1.44) so much higher than adjusted EPS ($1.22)?
The GAAP figure includes a $93 million pre-tax gain from selling the Savannah, GA disk forging facility, which is recorded as a negative restructuring and other charge. Management excludes this special item, along with $7 million of acquisition-related costs and an offsetting tax adjustment, to arrive at adjusted EPS of $1.22. Investors should treat the adjusted figure as the better gauge of recurring operating performance, since the gain is non-recurring.
How much did the CAM acquisition add to Howmet's debt, and how does it affect leverage?
Howmet issued $1.2 billion of senior notes in March 2026 (3.75% due 2028, 3.90% due 2029, and 4.75% due 2036) and drew $450 million on commercial paper to fund the roughly $1.8 billion CAM purchase, with the balance sourced from cash, including proceeds from the Savannah sale. Long-term debt rose to $4.05 billion from $2.86 billion at year-end 2025. The release does not provide a net leverage ratio, but the increase is material relative to adjusted EBITDA, so investors should look for leverage commentary on the earnings call and in the 10-Q.
What is driving the guidance increase, and how much is from acquisitions?
Management attributes about $275 million of the $550 million revenue raise to portfolio changes, including CAM and Brunner, net of the Savannah divestiture. The remainder reflects stronger demand, particularly in commercial aerospace, gas turbines, and defense. Management says the EPS effect of the portfolio changes is insignificant in 2026, with accretion expected in 2027. The adjusted EPS guidance raise of $0.49 therefore reflects mostly organic improvement.
Is the share buyback sustainable alongside the higher debt load?
Howmet repurchased $300 million of stock in Q1 and another $150 million in April, and it had $1.05 billion of authorization remaining as of May 4, 2026. Free cash flow of $359 million in Q1 covered the buybacks and dividends, and full-year 2026 free cash flow guidance of $1.75 billion provides additional capacity. However, Q1 buybacks were partly funded by the debt-financed acquisition period, and the company's ability to sustain this pace will depend on continued cash generation and how it balances deleveraging against repurchases.

04—Continue

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