Howmet Aerospace Q2 Earnings Call Highlights

Howmet exceeded Q2 guidance, with revenue up 24% year over year, adjusted EBITDA up 39%, adjusted EPS up 46% to $1.33, and $479 million in free cash flow. Growth was led by commercial aerospace, defense and gas turbines. The company raised its full-year outlook to approximately $10.05 billion in revenue, $3.23 billion in EBITDA, $5.27 in EPS and $1.9 billion in free cash flow, while expecting continued demand growth through 2026 and beyond. Howmet is investing heavily to expand aerospace and gas-turbine capacity, with 2026 capital expenditures expected to exceed $500 million. It also repurchased $800 million of stock year to date, raised its quarterly dividend 17%, and expects the CAM Fastener acquisition to become earnings-accretive in 2027.

Howmet reported second-quarter results that exceeded the high end of its guidance, driven by continued growth in commercial aerospace, gas turbines and defense markets. The company also raised its full-year outlook for revenue, EBITDA, earnings per share and free cash flow. Revenue rose 24% year over year in the second quarter, including the effects of acquisitions, while organic revenue increased 21%. Adjusted EBITDA increased 39% and EBITDA margin expanded 340 basis points to 32.1%. Adjusted earnings per share rose 46% to $1.33, while free cash flow totaled $479 million during the quarter and approximately $840 million during the first half.

“Second quarter revenue, EBITDA margin, and earnings per share all exceeded the high end of guidance,” Chief Financial Officer Patrick Winterlich said. The company generated 46% incremental flow-through from revenue to EBITDA, despite what management described as a modest headwind from the CAM Fastener acquisition.

Commercial aerospace revenue increased 28%, or 26% organically, as demand grew for both original-equipment production and spare parts. Howmet said it continued to experience higher demand for spares on legacy and next-generation aircraft engines. Defense aerospace revenue increased 11%, or 7% organically, supported by spare-parts activity and higher legacy fighter demand. Gas turbine revenue climbed 38%, with management attributing the increase to rising electricity-generation demand, particularly for natural-gas-powered data centers. Total spare-parts revenue across commercial aerospace, defense aerospace and gas turbines rose 37% to approximately $560 million. Spares represented about 22% of total revenue through the first half of 2026, a greater share than historically. Commercial transportation revenue rose 12%, largely reflecting higher aluminum-cost pass-through. Wheel volumes declined 8% from a year earlier but increased 7% sequentially as the North American market began to recover.

Executive Chairman and CEO John Plant said Howmet had not experienced any changes in customer demand amid Middle East conflict-related volatility in fuel prices and air traffic. He said aircraft orders and backlogs continued to grow, supporting expectations for higher build rates through 2026, 2027 and beyond.

Engine Products revenue increased 32% to $1.37 billion. Commercial aerospace revenue in the segment rose 37%, defense aerospace increased 17%, and gas turbine revenue grew 38%. EBITDA increased 51% to $517 million, while EBITDA margin rose 470 basis points to 37.7%. The segment added approximately 485 net new employees during the quarter as it increased capacity for future grow.