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Howmet's Q3 Earnings Surpass Estimates, Revenues Increase Y/Y

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Howmet Aerospace Inc.’s (HWM - Free Report) third-quarter 2024 adjusted earnings of 71 cents per share beat the Zacks Consensus Estimate of 65 cents. The bottom line surged 9.2% year over year.

Total revenues of $1.84 billion missed the consensus estimate of $1.85 billion. The top line increased 10.7% from the year-ago quarter. The increase was backed by strength in the company’s commercial aerospace market.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Howmet’s Segmental Details

The Engine Products segment’s revenues totaled $945 million, representing 51.5% of net revenues. On a year-over-year basis, the segment’s revenues increased 18%, driven by growth in the commercial aerospace, defense aerospace, industrial gas turbine and oil & gas markets. The Zacks Consensus Estimate for Engine Products’ revenues was pegged at $945 million.

The Fastening Systems segment generated revenues of $392 million, accounting for 21.4% of net revenues. Revenues increased 13% year over year, driven by growth in the commercial aerospace market, including wide body aircraft recovery. The consensus estimate for Fastening Systems’ revenues was pegged at $386 million.

The Engineered Structures segment’s revenues, representing 13.8% of net revenues, increased 11% year over year to $253 million. The results benefited from growth in the commercial aerospace and defense aerospace markets. The Zacks Consensus Estimate for Engineered Structures’ revenues was pegged at $270 million.

The Forged Wheels segment’s revenues totaled $245 million, representing 13.3% of net revenues. On a year-over-year basis, the segment’s revenues were down 14%. The consensus estimate for Forged Wheels’ revenues was pegged at $258 million.

Howmet Aerospace Inc. Price, Consensus and EPS Surprise

Howmet Aerospace Inc. Price, Consensus and EPS Surprise

Howmet Aerospace Inc. price-consensus-eps-surprise-chart | Howmet Aerospace Inc. Quote

HWM’s Margin Profile

Howmet’s cost of goods sold increased 5.9% year over year to $1.25 billion. Selling, general, administrative and other expenses decreased 2.3% year over year to $85 million. Research and development expenses were $9 million.

Adjusted EBITDA, excluding special items, was $487 million, up 27.5% year over year. Adjusted EBITDA margin increased 350 basis points year over year to 26.5%. Operating income increased 37.1% year over year to $421 million.

The operating income margin was 22.9%, up 400 basis points year over year. Net interest expenses totaled $44 million, down 18.5% from the year-ago quarter.

Howmet’s Balance Sheet and Cash Flow

Exiting the third quarter, Howmet had cash and cash equivalents of $475 million compared with $610 million at the end of December 2023. Long-term debt (less amount due within one year) was $3.4 billion compared with $3.50 billion at the end of fourth-quarter 2023.

In the first nine months of 2024, Howmet generated net cash of $818 million from operating activities compared with $443 million in the year-ago period. Capital spending totaled $219 million compared with $164 million a year ago. Free cash flow in the first nine months of the year was $599 million.

Howmet paid out dividends of $76 million in the first nine months of 2024 compared with $52 million in the year-ago period. Also, it repurchased shares worth $310 million compared with $150 million in the year-ago period.

HWM’s Q4 Outlook

For the fourth quarter, Howmet expects revenues to be in the range of $1.850 -$1.890 billion. Adjusted EBITDA is expected to be between $478 million and $498 million, while the adjusted EBITDA margin is anticipated in the range of 25.8-26.3%. Adjusted earnings per share are estimated to be in the range of 70-72 cents.

Howmet’s 2024 Outlook

Howmet predicts revenues to be $7.390-$7.430 billion compared with the earlier anticipated range of $7.400-$7.480 billion. Adjusted EBITDA is expected to be between $1.885 billion and $1.905 billion, while the adjusted EBITDA margin is projected to be 25.5-25.6%.

Adjusted earnings per share are forecasted to be in the band of $2.65-$2.67. Free cash flow is expected to be in the range of $890-$940 million.

HWM’s Zacks Rank

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies

Avery Dennison Corporation (AVY - Free Report) delivered third-quarter adjusted earnings of $2.33 per share, which beat the Zacks Consensus Estimate of $2.32. The bottom line increased 9% year over year, driven by higher volume and productivity gains.

Total revenues grew 4.1% year over year to $2.18 billion and missed the Zacks Consensus Estimate of $2.2 billion.

John Bean Technologies Corporation reported adjusted earnings of $1.50 per share in third-quarter 2024, 35.1% higher than the prior-year quarter. The figure beat the consensus estimate of $1.41.

Revenues of $454 million increased 12.4% from the year-ago quarter. The top line surpassed the consensus estimate of $445 million.

A. O. Smith Corporation’s (AOS - Free Report) third-quarter adjusted earnings of 82 cents per share matched the Zacks Consensus Estimate. The bottom line decreased 8.9% on a year-over-year basis.

Net sales of $902.6 million missed the consensus estimate of $913 million. The top line decreased 4% year over year due to lower sales in China and decreased volumes of water heaters in North America.


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