Howmet Aerospace Inc.’s (HWM - Free Report) fourth-quarter 2023 adjusted earnings of 53 cents per share beat the Zacks Consensus Estimate of 46 cents. The bottom line improved 39.5% year over year.
Total revenues of $1.73 billion surpassed the consensus estimate of $1.65 billion. The top line increased 14.4% from the year-ago quarter. The rise was backed by an improved commercial aerospace market.
Segmental Details
The Engine Products segment’s revenues totaled $852 million, representing 49.2% of net revenues in the quarter under review. On a year-over-year basis, the segment’s revenues increased 16%, driven by growth in the commercial aerospace, defense aerospace, industrial gas turbine, and oil and gas markets. The Zacks Consensus Estimate for Engine Products revenues was pegged at $811 million.
The Fastening Systems segment generated revenues of $360 million, accounting for 20.8% of net revenues in the reported quarter. Revenues increased 26% year over year, driven by growth in the commercial aerospace market, including emerging wide-body aircraft recovery and the commercial transportation market. The consensus estimate for Fastening Systems’ revenues was pegged at $345 million.
The Engineered Structures segment’s revenues, representing 14.1% of net revenues, increased 6% year over year to $244 million. The results benefited from growth in the commercial aerospace market, including emerging wide-body aircraft recovery. The Zacks Consensus Estimate for Engineered Structures’ revenues was pegged at $227 million.
The Forged Wheels segment’s revenues totaled $275 million, representing 15.9% of net revenues in the quarter under review. On a year-over-year basis, the segment’s revenues increased 3%, driven by growth in the commercial transportation market. The consensus estimate for Forged Wheels’ revenues was pegged at $273 million.
Margin Profile
In the reported quarter, Howmet’s cost of goods sold increased 14.4% year over year to $1.2 billion. Selling, general, administrative and other expenses increased 31.8% year over year to $83 million. Research and development expenses were $9 million.
Adjusted EBITDA, excluding special items, in the reported quarter was $409 million, up 23.6% year over year. Adjusted EBITDA margin increased 170 basis points year over year to 23.6%. Operating income increased 48.2% year over year to $326 million. The operating income margin in the quarter was 18.8%, up 430 basis points year over year. Net interest expenses totaled $52 million, down 8.8% from the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the fourth quarter of 2023, Howmet had cash and cash equivalents of $610 million compared with $791 million at the end of December 2022. Long-term debt (less amount due within one year) was $3.5 billion compared with $4.2 billion at the end of fourth-quarter 2022.
In 2023, Howmet generated net cash of $901 million from operating activities compared with $733 million generated in the year-ago period. Capital spending totaled $219 million compared with $193 million spent a year ago. Free cash flow was $682 million in the period.
Howmet, currently carrying a Zacks Rank #2 (Buy), paid out dividends of $73 million in 2023 compared with $44 million in the year-ago period. Also, it repurchased shares worth $250 million in the year compared with the $400-million buyback made a year ago. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Q1 Outlook
For the first quarter of 2024, Howmet expects revenues of $1.73-$1.75 billion. The Zacks Consensus Estimate for the same is pegged at $1.72 billion. Adjusted EBITDA is expected between $395 million and $405 million, whereas the margin is anticipated to be 22.8-23.1%. Adjusted earnings per share are estimated to be 50-52 cents. The mid-point of the guided range — 51 cents — lies above the consensus estimate of adjusted earnings per share of 50 cents.
2024 Outlook
Howmet predicts revenues of $7.0-$7.2 billion. The Zacks Consensus Estimate for the same is $7.05 billion. Adjusted EBITDA is estimated to be $1.60-$1.67 billion. The margin is projected to be 22.9-23.2%.
Adjusted earnings per share are forecast to be $2.1-$2.2 per share. The consensus estimate of adjusted earnings per share is $2.17. The free cash flow is expected to be $700-$770 million for 2024.
Performance of Other Companies
Tetra Tech, Inc. (TTEK - Free Report) reported first-quarter fiscal 2024 (ended Dec 31, 2023) adjusted earnings of $1.40 per share, which surpassed the Zacks Consensus Estimate of $1.35. The bottom line surged 4.5% year over year driven by strong momentum in each of its segments.
In the fiscal first quarter, Tetra Tech generated adjusted revenues of $1.2 billion, reflecting a year-over-year increase of 37.3%. Adjusted net revenues (adjusted revenues minus subcontractor costs) were $1.0 billion, up 37.8% year over year. Tetra Tech’s revenues exceeded the consensus estimate of $974 million.
A. O. Smith Corporation’s (AOS - Free Report) fourth-quarter 2023 adjusted earnings of 97 cents per share surpassed the Zacks Consensus Estimate of 96 cents. The bottom line jumped 13% year over year, driven by the continued strong demand for residential water heaters in North America.
Net sales of $988.1 million narrowly missed the consensus estimate of $989 million. However, the top line increased 5.6% year over year.
Illinois Tool Works Inc. (ITW - Free Report) reported fourth-quarter 2023 adjusted earnings of $2.42 per share, which surpassed the Zacks Consensus Estimate of $2.40. Earnings increased 3.4% year over year.
The company’s revenues of $3.98 billion missed the consensus estimate of $4.01 billion. The top line inched up 0.3% year over year due to a favorable foreign currency translation of 1.2%. However, organic sales decreased 0.5% and divestitures reduced revenues by 0.4%.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>
Howmet Aerospace Inc.’s (HWM - Free Report) fourth-quarter 2023 adjusted earnings of 53 cents per share beat the Zacks Consensus Estimate of 46 cents. The bottom line improved 39.5% year over year.
Total revenues of $1.73 billion surpassed the consensus estimate of $1.65 billion. The top line increased 14.4% from the year-ago quarter. The rise was backed by an improved commercial aerospace market.
Segmental Details
The Engine Products segment’s revenues totaled $852 million, representing 49.2% of net revenues in the quarter under review. On a year-over-year basis, the segment’s revenues increased 16%, driven by growth in the commercial aerospace, defense aerospace, industrial gas turbine, and oil and gas markets. The Zacks Consensus Estimate for Engine Products revenues was pegged at $811 million.
The Fastening Systems segment generated revenues of $360 million, accounting for 20.8% of net revenues in the reported quarter. Revenues increased 26% year over year, driven by growth in the commercial aerospace market, including emerging wide-body aircraft recovery and the commercial transportation market. The consensus estimate for Fastening Systems’ revenues was pegged at $345 million.
The Engineered Structures segment’s revenues, representing 14.1% of net revenues, increased 6% year over year to $244 million. The results benefited from growth in the commercial aerospace market, including emerging wide-body aircraft recovery. The Zacks Consensus Estimate for Engineered Structures’ revenues was pegged at $227 million.
The Forged Wheels segment’s revenues totaled $275 million, representing 15.9% of net revenues in the quarter under review. On a year-over-year basis, the segment’s revenues increased 3%, driven by growth in the commercial transportation market. The consensus estimate for Forged Wheels’ revenues was pegged at $273 million.
Margin Profile
In the reported quarter, Howmet’s cost of goods sold increased 14.4% year over year to $1.2 billion. Selling, general, administrative and other expenses increased 31.8% year over year to $83 million. Research and development expenses were $9 million.
Adjusted EBITDA, excluding special items, in the reported quarter was $409 million, up 23.6% year over year. Adjusted EBITDA margin increased 170 basis points year over year to 23.6%. Operating income increased 48.2% year over year to $326 million. The operating income margin in the quarter was 18.8%, up 430 basis points year over year. Net interest expenses totaled $52 million, down 8.8% from the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the fourth quarter of 2023, Howmet had cash and cash equivalents of $610 million compared with $791 million at the end of December 2022. Long-term debt (less amount due within one year) was $3.5 billion compared with $4.2 billion at the end of fourth-quarter 2022.
In 2023, Howmet generated net cash of $901 million from operating activities compared with $733 million generated in the year-ago period. Capital spending totaled $219 million compared with $193 million spent a year ago. Free cash flow was $682 million in the period.
Howmet, currently carrying a Zacks Rank #2 (Buy), paid out dividends of $73 million in 2023 compared with $44 million in the year-ago period. Also, it repurchased shares worth $250 million in the year compared with the $400-million buyback made a year ago. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Q1 Outlook
For the first quarter of 2024, Howmet expects revenues of $1.73-$1.75 billion. The Zacks Consensus Estimate for the same is pegged at $1.72 billion. Adjusted EBITDA is expected between $395 million and $405 million, whereas the margin is anticipated to be 22.8-23.1%. Adjusted earnings per share are estimated to be 50-52 cents. The mid-point of the guided range — 51 cents — lies above the consensus estimate of adjusted earnings per share of 50 cents.
2024 Outlook
Howmet predicts revenues of $7.0-$7.2 billion. The Zacks Consensus Estimate for the same is $7.05 billion. Adjusted EBITDA is estimated to be $1.60-$1.67 billion. The margin is projected to be 22.9-23.2%.
Adjusted earnings per share are forecast to be $2.1-$2.2 per share. The consensus estimate of adjusted earnings per share is $2.17. The free cash flow is expected to be $700-$770 million for 2024.
Performance of Other Companies
Tetra Tech, Inc. (TTEK - Free Report) reported first-quarter fiscal 2024 (ended Dec 31, 2023) adjusted earnings of $1.40 per share, which surpassed the Zacks Consensus Estimate of $1.35. The bottom line surged 4.5% year over year driven by strong momentum in each of its segments.
In the fiscal first quarter, Tetra Tech generated adjusted revenues of $1.2 billion, reflecting a year-over-year increase of 37.3%. Adjusted net revenues (adjusted revenues minus subcontractor costs) were $1.0 billion, up 37.8% year over year. Tetra Tech’s revenues exceeded the consensus estimate of $974 million.
A. O. Smith Corporation’s (AOS - Free Report) fourth-quarter 2023 adjusted earnings of 97 cents per share surpassed the Zacks Consensus Estimate of 96 cents. The bottom line jumped 13% year over year, driven by the continued strong demand for residential water heaters in North America.
Net sales of $988.1 million narrowly missed the consensus estimate of $989 million. However, the top line increased 5.6% year over year.
Illinois Tool Works Inc. (ITW - Free Report) reported fourth-quarter 2023 adjusted earnings of $2.42 per share, which surpassed the Zacks Consensus Estimate of $2.40. Earnings increased 3.4% year over year.
The company’s revenues of $3.98 billion missed the consensus estimate of $4.01 billion. The top line inched up 0.3% year over year due to a favorable foreign currency translation of 1.2%. However, organic sales decreased 0.5% and divestitures reduced revenues by 0.4%.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>
Get the latest research report on ITW - FREE
Get the latest research report on TTEK - FREE
Get the latest research report on AOS - FREE
Get the latest research report on HWM - FREE