HWM Howmet Aerospace Inc. 10-Q 2026-09-30 section summaries

Howmet Aerospace — Q3 and nine months ended September 30, 2026

Dollars in millions, except per-share data and share counts.

Consolidated results

Revenue growth was supported by aerospace demand, particularly commercial aerospace, and by acquisitions. Operating income and net income rose substantially year over year. The nine-month effective tax rate, including discrete items, was 19.1%, versus 19.4% in 2025; 2026 included a $35 discrete tax benefit, partly offset by a $17 international withholding-tax reserve charge and a $5 pension-termination charge.

Segment results — Q3

End-market revenue — Q3

Commercial and defense aerospace represented 68% of nine-month revenue, down from 69% in the prior-year period. GE Aerospace and RTX accounted for approximately 14% and 11% of nine-month third-party sales, respectively (10% and 11% in 2025), creating notable customer concentration, primarily in Engine Products.

Cash flow and capital spending — nine months

Balance sheet and debt

Goodwill and other intangible assets increased substantially, largely from acquisitions. Total equity less goodwill and other intangible assets implies negative tangible equity of $191. Debt carrying value includes $4,052 of long-term debt, net of current maturities; $391 due within one year; and $390 of commercial paper, versus none at year-end. Long-term debt fair value was $3,894, compared with its $4,052 carrying value.

Howmet issued $1,200 of notes in March 2026, with net proceeds of $1,193 used to help finance CAM, and repaid its remaining JPY term loan in May for approximately $186. Commercial paper carried a weighted-average interest rate of 4.223%. The $1,000 five-year and $600 364-day revolving facilities were undrawn. The net-debt-to-EBITDA covenant is 3.75x, temporarily increasing to 4.25x for four quarters after a material acquisition; Howmet was in compliance.

Business developments, capital allocation and risks

Howmet completed the CAM acquisition on April 6 for approximately $1,812 net of cash acquired and acquired Brunner in February for approximately $120 net of cash acquired. The acquisitions expand aerospace fasteners and exposure to aircraft and defense programs. Preliminary purchase accounting included $1,096 of goodwill and $425 of acquired intangible assets. From their acquisition dates through September 30, the businesses contributed about 3% of consolidated sales and 1% of consolidated net income.

The company sold its Savannah disk-forging facility for $230 and recognized a $93 gain in the first quarter; the divested business had generated about $130 of 2025 sales. Nine-month share repurchases totaled $1,100 for 4.387 million shares, compared with $500 for 3.333 million shares in 2025. A further $5,000 was added to the repurchase authorization on October 28; approximately $5,397 remained available after repurchases through that date.

Nine-month inventory increased to $2,113, notably in work-in-process ($1,047 versus $885) and raw materials ($527 versus $424). The receivables-sale facility was fully drawn at its $250 limit and extended to October 2027; it can be increased to $325. Deferred revenue rose to $397 from $253 at year-end. Supplier-finance invoices awaiting payment were $285, up from $266; they remain in trade accounts payable and are paid on their original maturity dates.

Approximately 68% of nine-month revenue came from commercial and defense aerospace. Results remain exposed to aircraft OEM build timing, geopolitical developments, and energy and raw-material volatility. Tariff costs are expected to be passed through to customers, but delays in recovery could pressure margins. Management also notes uncertainty in asset and deferred-tax-asset estimates. Other contingencies include environmental remediation reserves of $18 and a French tax dispute with reduced penalties of $4; management does not currently expect litigation to have a material adverse effect overall.

Howmet Aerospace (HWM) — Q3 and 9M 2026

Dollar amounts in millions unless otherwise noted.

Consolidated results

Sales rose on stronger commercial and defense aerospace, gas-turbine, commercial transportation and engine-spares demand, favorable pricing, cost pass-through, and contributions from CAM and Brunner. The March 31, 2026 divestiture of the disk-forging facility partly offset growth. Pricing increases exceeded material and inflationary cost pass-through. Lower cost of goods sold as a share of sales reflected favorable market and product mix and pricing, partly offset by pass-through costs and added headcount, particularly in Engine Products. Higher SG&A reflected employment, acquisition-related and administrative costs; D&A increased with capacity investment and acquired assets.

Aerospace markets represented approximately 68% of 9M revenue, making results sensitive to aircraft build schedules and geopolitical and raw-material and energy-market volatility. Net income growth primarily reflected higher sales, pricing, market growth and acquisitions. The 9M restructuring and other credits included a $93 gain on the Savannah disk-forging facility sale and a $1 post-closing gain on a prior U.K. facility sale; Q3 included $2 of charges. The estimated annual effective tax rate before discrete items was 20.8% in Q3 2026 versus 21.4%; including discrete items, it was 21.4% versus 22.2%. Q3 included a $6 discrete tax charge versus a $1 benefit. For 9M, the rate including discrete items was 19.1% versus 19.4%, with discrete tax benefits of $35 versus $27. A larger U.S. FDDEI deduction lowered the 2026 estimated annual rate.

Segment results — Q3

Engine Products benefited from aerospace, gas-turbine and spares demand and added approximately 520 net employees in Q3; capacity investment is expected to remain elevated. Fastening Systems’ growth reflected aerospace demand and CAM and Brunner acquisitions; excluding acquisitions, revenue grew 10%, while acquired businesses diluted margin. Engineered Structures sales fell 4% due to the disk-forging divestiture and product rationalization, but grew 8% excluding the divestiture; productivity improvements supported higher margins. Continued footprint and product-mix rationalization is expected to reduce aerospace sales. Forged Wheels grew with higher commercial transportation volumes, while aluminum and inflationary pass-through costs pressured Q3 margin. Management cited cost reductions, favorable foreign exchange and volume gains as supporting its 9M EBITDA growth; 9M margin increased approximately 10 basis points, while Q3 margin declined approximately 330 basis points. Commercial transportation demand is expected to remain moderate, with a modest recovery underway but continued North American energy, economic and regulatory uncertainty.

Segment Adjusted EBITDA reconciliation — Q3

Segment Adjusted EBITDA is a non-GAAP measure; Corporate accounts for differences from consolidated amounts. Corporate expense increased primarily due to acquisition-related costs, employment costs and administration. For 9M 2026 versus 9M 2025, operating income was $2,241 versus $1,557 and Segment Adjusted EBITDA was $2,518 versus $1,830; restructuring and other credits were $(91) versus $(4).

Cash flow, investment and financing

Higher operating results drove most of the $515 increase in operating cash flow. Working-capital pressures included receivables ($104 unfavorable), prepaid expenses and other current assets ($29 unfavorable), inventories ($22 unfavorable) and taxes ($20 unfavorable), partly offset by other accrued expenses ($81 favorable, including deferred revenue and compensation accruals) and accounts payable ($51 favorable). Estimated 2026 pension and other postretirement benefit payments are approximately $65.

Investing outflow primarily reflected $1,929 of net cash used for the CAM and Brunner acquisitions and a $16 increase in capital expenditures, partly offset by $217 more proceeds from asset and business sales, primarily the disk-forging facility sale. Management expects 2026 capital expenditures to be approximately 5% of sales, including continued Engine Products growth investment. Financing cash flow improved by $885, including $1,200 of debt additions and a $390 net increase in commercial paper, partly offset by increased share repurchases, $46 of additional debt payments, $23 of additional taxes paid on net share settlement of equity awards and $12 of debt issuance costs. Dividends paid increased by $22; the 9M dividend per common share rose to $0.38 from $0.32.

Debt, liquidity and risks

At September 30, 2026, commercial paper outstanding was $390, versus none at December 31, 2025, against a $1,000 program limit. No borrowings were outstanding under the $1,000 five-year and $600 364-day revolving facilities at either date. Howmet expects recent debt actions to add approximately $38 to annual net interest expense. The March 2026 issuance comprised $1,200 aggregate principal of notes bearing 3.750%–4.750%; the November 2025 issuance was $500 of 4.550% notes due 2032. Commercial paper borrowings carried a 3.979% weighted-average rate. Debt prepayments, the JPY facility prepayment and a cross-currency swap partly offset higher interest expense. Howmet is evaluating refinancing $300 million aggregate principal of 6.750% bonds due January 2028, and believes cash and/or revolver availability would permit repayment if refinancing is not completed. Management considers cash, revolver, commercial-paper and receivables-securitization capacity sufficient for operating and capital-allocation needs.

Common shares outstanding declined to 397,656,778 at September 30, 2026 from 401,620,565 at December 31, 2025; diluted shares declined to 399,450,237 from 403,759,503. Moody’s moved its outlook to positive in May 2026; Fitch upgraded Howmet to A- in February 2026, and S&P had upgraded it to BBB+ in September 2025. All three maintained investment-grade ratings. Key risks include tariffs and their timing, scope and recoverability; inflation, currency and interest-rate movements; OEM build schedules; moderate commercial transportation demand; geopolitical and regulatory developments; and supply-chain, manufacturing, workforce, customer, cyber and acquisition-integration risks.

Disclosure Controls and Internal Control

As of the end of Q3 2026, the CEO and CFO concluded that disclosure controls and procedures were effective. No changes in internal control over financial reporting during the quarter materially affected, or were reasonably likely to materially affect, the company’s internal control over financial reporting.

HWM reported no material changes to the risk factors previously disclosed in Part I, Item 1A of its Form 10-K for the year ended December 31, 2025. The section identifies no new or materially changed risks.