Howmet Aerospace Inc.

Q2 revenue was up 24% year over year, or 21% organically. EBITDA rose 39% to a margin of 32.1%, operating margin was 28.8%, and EPS was $1.33, up 46% year over year. Free cash flow was $479 million in the quarter and approximately $840 million in the first half; quarter-end cash was $564 million and net debt to trailing EBITDA was 1.4x. For guidance, Howmet guided Q3 revenue to $2.575 billion plus or minus $10 million, EBITDA to $830 million plus or minus $5 million, and EPS to $1.35 plus or minus $0.01. Full-year guidance was raised to revenue of $10.05 billion plus or minus $50 million, EBITDA of $3.23 billion plus or minus $20 million, EPS of $5.27 plus or minus $0.04, and free cash flow of $1.9 billion plus or minus $50 million.

John Plant struck an upbeat tone and framed the quarter as proof that Howmet is benefiting from strong end-market demand and sustained investment in capacity. He emphasized that aircraft backlog, spares demand, gas turbine demand for data centers, and defense-related demand are all supportive, and he said the company expects further growth into 2027 and beyond. He also said capex will likely exceed $500 million in 2026 and may need to step up again in 2027 to support organic growth.

Patrick Winterlich highlighted that all end markets grew, with commercial aerospace up 28%, defense aerospace up 11%, commercial transportation up 12%, and gas turbines up 38%. He noted EBITDA margin of 32.1% despite a modest CAM headwind, strong incremental flow-through of 46%, and solid segment execution, including Engine Products revenue of $1.37 billion with 37.7% EBITDA margin and Fastening Systems revenue of $589 million with 30.1% EBITDA margin. On the balance sheet, he cited $564 million of cash, $479 million of quarterly free cash flow, $186 million of yen term loan repayment, and roughly $12 million of annualized interest savings from debt actions and a cross-currency swap. He also said the company repurchased $300 million of stock in Q2, $200 million more in July, and ended with about $700 million of remaining buyback authorization.

Analysts focused on how quickly Howmet can add capacity for IGT, commercial aerospace, and defense spares, and whether demand growth can continue to be met without bottlenecks. Management said its IGT blade market share is above 50% globally, that it is investing aggressively in new plants and equipment, and that some new demand will be met in 2027-2030 as additional capacity comes online. On aerospace, John Plant said wide-body and narrow-body rates are likely to rise over the next few years, but the real constraint is the overall market and the supply chain, not a single aircraft platform; he also said LEAP-1A/1B cutover is likely in the first quarter of 2027 and GTFA output is still ramping for a larger 2027 retrofit opportunity. On defense, he said there is not yet a confirmed near-term spike from recent conflict-related activity, but management expects a possible 2027 increase in spares and missile demand, though formal orders are not yet in hand.