Howmet Aerospace Inc.
HWM · NYSE
Next quarter
Expected to report Feb 11, 2027 — estimated from last year’s reporting date.
Consensus is $1.47 EPS for Dec 2026 across 3 estimates, ranging $1.40 to $1.53.
HWM Sep 2026
- 6.57%
- +5.51%
- $1.37
- $1.46
- —
- $2.70B
Reported results
- $2.70B
- $777.00M
- 28.75%
- $567.00M
- $1.42
Highlights
- Earnings beat: Adjusted EPS was $1.46, 6.6% above the $1.37 consensus estimate and up 54% year over year; GAAP diluted EPS was $1.42, versus $0.95 a year ago and $1.33 in Q2.
- Record organic growth: Revenue rose 29% to $2.703 billion, with organic growth of 25%—Howmet’s strongest quarterly growth rate—and accelerated from 21% in Q2 and 19% in Q1.
- Margin expansion: Adjusted EBITDA increased 43% to $879 million, and its margin expanded 310 basis points year over year to 32.5%, with 43% incremental flow-through.
- Broad end-market demand: Revenue grew 32% in commercial aerospace, 10% in defense aerospace, 45% in gas turbines and 28% in commercial transportation; spares rose 30% to about $570 million.
- Gas turbine opportunity: Management now expects to double 2025 gas turbine sales in three years and sees a path to about $2.5 billion by the end of the decade, while planning elevated capacity investment.
- Outlook raised: Full-year 2026 baseline guidance increased to $10.30 billion revenue, $3.33 billion adjusted EBITDA, $5.50 adjusted EPS and $2.0 billion free cash flow; initial 2027 revenue guidance is about $11.5 billion, up approximately 12%.
- Strong cash returns: Free cash flow was $562 million after $147 million of capital spending; Howmet repurchased $500 million of stock in the quarter and authorized an additional $5 billion of repurchases.
- Uneven segment margins: Engine Products’ EBITDA margin rose 580 basis points to 39.1%, while Fastening Systems’ fell 140 basis points to 29.4% and Forged Wheels’ fell 330 basis points to 26.3%.
Analysis
Howmet delivered a broad-based growth quarter, with revenue of $2.703 billion up 29% year over year and 6% sequentially from $2.547 billion in Q2. Organic growth accelerated to 25%, from 21% in Q2 and 19% in Q1. Adjusted EPS of $1.46 beat the $1.37 consensus by 6.6% and exceeded the company’s guidance range; GAAP diluted EPS was $1.42. Adjusted EBITDA rose 43% to $879 million, with a 32.5% margin, up 310 basis points year over year and 40 basis points sequentially. GAAP operating income increased to $777 million from $711 million in Q2 and $542 million a year ago.
The print was defined by demand across all major markets, especially gas turbines, and by improving earnings conversion as volume and pricing supported margins. Management also sharpened its longer-range growth case: gas turbine revenue grew 45%, and the company now expects sales in that market to double from 2025 levels in three years. Cash generation remained strong, with $562 million of quarterly free cash flow, supporting repurchases and investment. Howmet raised its 2026 outlook and set an initial 2027 revenue target of about $11.5 billion, while signaling that elevated capital spending will be needed to expand capacity for future demand.
Revenue and margins
Growth was both rapid and increasingly organic. Of the $614 million year-over-year revenue increase, acquisitions and divestitures accounted for a net $135 million; revenue excluding those effects was $2.568 billion, up 25%. Commercial aerospace and gas turbine growth, engine spares, favorable pricing and cost pass-through contributed to the increase.
- Earnings conversion: Adjusted EBITDA rose 43% to $879 million, faster than revenue, and adjusted EBITDA margin expanded to 32.5% from 29.4% a year ago. Year-over-year incremental flow-through was 43%.
- Sequential progress: Revenue increased from $2.547 billion in Q2 to $2.703 billion. Adjusted EBITDA margin improved 40 basis points from Q2’s 32.1%; GAAP operating income rose from $711 million to $777 million.
Gas turbine growth
Gas turbines were the standout growth engine: revenue increased 45% year over year, which management attributed not only to higher output but also to market-share gains. Management said customer demand is strengthening beyond prior expectations, with existing capacity sold out and customer order books extending into the early 2030s. It now expects to double 2025 gas turbine sales in three years, earlier than its previous three-to-five-year view, and sees potential for roughly 2.5 times 2025 sales, or about $2.5 billion, by the end of the decade.
- Capacity and investment: Howmet is increasing capital spending to serve aerospace and gas turbine demand, with elevated investment expected beyond 2027. Management said it is assessing additional capacity while maintaining its focus on free cash flow conversion.
- Longer-dated demand: Management cited growing demand for power generation, including data centers, and said some customers’ turbine orders are booked through 2031, with 2032 expected to fill soon. It also noted that future demand and capacity decisions carry uncertainty.
Aerospace and spares
Commercial aerospace revenue grew 32%, including organic growth of 27%, supported by both original-equipment production and spares. Defense aerospace grew 10%, or 3% organically, with demand led by spares for legacy fighter platforms. Total spares revenue increased 30% to about $570 million, roughly 21% of sales.
- Commercial outlook: Management expects aircraft production increases through 2027 and beyond, supported by a substantial aircraft backlog. It expects spares demand to remain robust, citing engine shop-visit backlogs and time-on-wing challenges for newer narrowbody engines.
- Defense outlook: Howmet expects defense sales to increase in 2027, but management said the scale of potential inventory replenishment and missile work remains uncertain pending budget clarity and finalized contracts.
Segment performance
- Engine Products: Revenue increased 33% to $1.451 billion and adjusted EBITDA rose 57% to $567 million. Margin expanded 580 basis points to 39.1%, despite adding about 520 net employees during the quarter to support expected growth.
- Fastening Systems: Revenue rose 41% to $630 million, including CAM and Brunner; organic growth was 10%. Adjusted EBITDA increased 34% to $185 million, while margin declined 140 basis points to 29.4%, reflecting the CAM acquisition’s impact.
- Engineered Structures: Revenue declined 4% to $295 million, mainly due to the Savannah facility divestiture; excluding the divestiture, revenue grew 8%. Adjusted EBITDA increased 9% to $70 million and margin expanded 290 basis points to 23.7%, reflecting productivity and a higher-margin mix.
- Forged Wheels: Revenue increased 32% to $327 million on higher commercial transportation volumes and aluminum cost pass-through. Adjusted EBITDA rose 18% to $86 million, but margin fell 330 basis points to 26.3% as pass-through diluted the margin rate.
Raised outlook
Howmet raised its full-year 2026 baseline guidance by $250 million for revenue, $100 million and 20 basis points for adjusted EBITDA and margin, $0.23 for adjusted EPS, and $100 million for free cash flow. The updated baselines are $10.30 billion revenue, $3.33 billion adjusted EBITDA at a 32.3% margin, $5.50 adjusted EPS and $2.0 billion free cash flow.
- Fourth quarter: Guidance calls for revenue of $2.75 billion, adjusted EBITDA of $900 million and adjusted EPS of $1.50.
- 2027 starting point: Management’s initial revenue outlook is approximately $11.5 billion, about 12% growth from the increased 2026 guidance. Further detail is expected with the February 2027 results.
Cash and capital returns
Free cash flow reached $562 million, up from $423 million a year ago, after $147 million of capital expenditures. For the first nine months, cash from operations was $1.745 billion and free cash flow was $1.400 billion. Management said full-year capital spending is expected to be about 5% of sales as it invests in growth.
- Repurchases and dividend: Howmet bought back $500 million of stock in Q3 at an average $264.77 per share, bringing 2026 repurchases through October 28 to $1.1 billion. The board added $5 billion to the repurchase authorization, bringing total remaining authorization to $5.397 billion; the quarterly dividend increased 17% to $0.14 per share.
- Balance sheet: The company repaid $60 million of commercial paper during the quarter and ended with $390 million outstanding under its $1 billion program. Management reported net debt to trailing EBITDA of 1.3 times.
