Howmet Aerospace (HWM) Barclays 42nd Annual Industrial Select Conference summary

Revenue and market outlook

• Revenue guidance was raised to 8%, driven by optimism in commercial aerospace and expectations of recovery in commercial transportation by the second half of the year.

• Commercial aerospace is projected to grow at 12% or slightly higher, with defense and industrial markets expected to see mid to single-digit growth.

• Spares revenue is anticipated to grow 20%-25% in 2025, moving closer to 20% of total revenue, with further progress possible by 2026 depending on growth rates.

• Aero aftermarket and IGT/defense spares are expected to contribute significantly to overall growth.

Pricing and contracts

• Pricing initiatives began in 2019, challenging the notion of a deflationary industry, and have continued to deliver gains independent of inflation recovery.

• 2024 pricing matched or exceeded 2023, and 2025 is expected to be similar, with over 90% of pricing already determined.

• Focus is shifting to 2026 contract renegotiations, with most contracts spanning three to five years and careful consideration of contract duration and competitive dynamics.

• Tariff impacts are managed through commodity escalators, with ongoing vigilance due to frequent changes in global trade policies.

Production and capacity

• Production rates vary by product line, with some above and some below OEM rates; inventory adjustments by major customers like Boeing influence output.

• Optimism remains for increased production rates, especially if Boeing achieves its targeted rates, which would benefit the entire industry.

• Significant investments have been made in IGT capacity, including new facilities in Japan and Europe, to meet rising demand from data center buildouts and increased electricity needs.

• Additional capacity is expected to come online in 2026, supporting global turbine manufacturers.