Howmet Aerospace (HWM) Q4 2023 earnings summary

Executive summary

• FY 2023 revenue was $6.640B, up 17% YoY; Adjusted EBITDA was $1.508B, up 18%, and Adjusted EPS was $1.84, up 31%.

• Q4 revenue rose 14% YoY to $1.731B; Adjusted EBITDA increased 18% to $398M and Adjusted EPS rose 39% to $0.53.

• Revenue, Adjusted EBITDA and Adjusted EPS grew for ten consecutive quarters.

• Commercial aerospace led growth, with revenue up 24% for FY 2023 and 22% in Q4.

Financial highlights

• FY GAAP net income was $765M versus $469M in FY 2022; GAAP diluted EPS was $1.83 versus $1.11. Excluding special items, FY net income was $766M and diluted EPS was $1.84.

• Q4 GAAP net income was $236M versus $111M, and diluted EPS was $0.57 versus $0.26; excluding special items, net income was $218M and diluted EPS was $0.53.

• FY GAAP operating income was $1.203B, with an 18.1% margin; Q4 GAAP operating income was $326M, with an 18.8% margin. Adjusted operating income rose 22% for FY and 23% in Q4.

• FY operating cash flow was $901M and record free cash flow was $682M; Q4 generated $458M and $403M, respectively. Cash ended the year at $610M.

Outlook and guidance

• FY 2024 revenue guidance is $7.00B–$7.20B, with a $7.10B baseline, up ~7% YoY; Adjusted EBITDA guidance is $1.600B–$1.670B, with a $1.635B baseline, up ~8%.

• FY 2024 Adjusted EBITDA margin guidance is 22.9%–23.2%, with a 23.0% baseline; Adjusted EPS guidance is $2.10–$2.20, with a $2.15 baseline, up ~17% YoY.

• FY 2024 free cash flow guidance is $700M–$770M, with a $735M baseline and ~85% conversion, +/- 5%; year-end net debt / LTM Adjusted EBITDA is expected below ~2x.

• Q1 2024 revenue guidance is $1.73B–$1.75B, with a $1.74B baseline; Adjusted EBITDA baseline is $400M, margin 23.0%, and Adjusted EPS $0.51.

• FY 2024 capex is expected at $275M–$305M versus ~ $270M of depreciation and amortization; guidance assumes monthly builds of ~34 Boeing 737 MAX and ~56 Airbus A320-family aircraft.