Howmet Aerospace (HWM) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached a record $1.88B, up 14% year-over-year, led by 27% growth in commercial aerospace and strong operational improvements across all segments.

• Net income increased to $266M ($0.65 per diluted share), up from $193M ($0.46) in Q2 2023, with adjusted EPS up 52% to $0.67.

• Adjusted EBITDA rose 31% to $483M, with margin expanding to 25.7%, and free cash flow reached a Q2 record of $342M.

• Capital expenditures increased to support new engine business capacity and market share gains.

• Share repurchase authorization was increased by $2B to $2.487B, and the quarterly dividend was raised 60% to $0.08 per share for Q3 2024.

Financial highlights

• Q2 2024 revenue: $1.88B (+14% YoY); net income: $266M; adjusted EBITDA: $483M (25.7% margin, +340 bps YoY); adjusted EPS: $0.67 (+52% YoY); free cash flow: $342M.

• GAAP operating income was $398M (21.2% margin), up from $285M (17.3%) a year ago; adjusted operating income was $414M (22% margin), up 38% year-over-year.

• Net debt-to-EBITDA improved to a record low 1.7x; all long-term debt is unsecured and at fixed rates.

• Q2 2024 gross margin improved to 31.5% from 27.4% in Q2 2023.

• Q2 2024 effective tax rate was 20.4%.

Outlook and guidance

• FY 2024 guidance raised: revenue $7.44B ± $40M, adjusted EBITDA $1.84B–$1.88B (margin ~25.1%), adjusted EPS $2.53–$2.57, free cash flow $840M–$900M.

• Q3 2024 guidance: revenue $1.845B–$1.865B, adjusted EBITDA $465M ± $5M, adjusted EPS $0.63–$0.65.

• Capital expenditures for 2024 expected at $310M–$330M, reflecting new contracts and capacity expansion.

• Dividend increased 60% to $0.08 per share starting August; 2025 dividend policy set at 15% ±5% of net income excluding special items.

• Free cash flow conversion expected at ~85% for FY 2024.