Engine Market Share Gain and New OEM Deal
Q: What's the outlook for the second engine OEM deal and its impact?
A: Howmet is investing in additional capacity to meet demand from a second engine manufacturer, with volumes starting in 2026. " This investment will enable Howmet to capture significant market share, similar to prior gains. " The returns are expected to be satisfactory, delivering an adequate return on capital despite higher depreciation from new investments. "

Incremental Margins and Long-term Margin Outlook
Q: How should we think about incremental margins and long-term targets?
A: Incremental margins are expected to be over 40% in Q3, driven by productivity gains and stable input costs. " Howmet has achieved significant revenue increases with minimal headcount additions, particularly in the Fasteners business. " The company refrained from providing specific long-term margin targets. "

Risks to Outlook and Excess Inventory
Q: Are there any excess inventory concerns or risks to the outlook?
A: While Howmet has seen some unexpected reductions in low-pressure turbine parts due to lower LEAP engine assemblies, leading to excess inventory, overall demand remains strong. " The company adjusts production and employment levels as needed and believes the current guide reflects the best knowledge of market conditions. "

Casting Shortages and Opportunities
Q: How is Howmet positioned amid industry casting shortages?
A: Howmet acknowledges high demand for high-pressure turbine castings and is operating above engine build rates. " The company is investing in new capital expenditure to increase capacity, but substantial increases in production will take time due to the need for new tools and equipment. "

Pricing Trends
Q: Is pricing accelerating, and what is the impact on revenue?
A: Howmet maintains its previous guidance on pricing, expecting it to be similar to or slightly above the $100 million increase achieved last year. " No further comments were provided on pricing acceleration. "

Fasteners Business Margin Potential
Q: Can Fasteners margins improve as revenue recovers?
A: Howmet has achieved sequential improvement in Fasteners margins without adding incremental headcount, despite revenue increases of over 20%. " Future margin rates were not specified, but the company is focused on continuous improvement. "

Impact of Engine Issues on Business
Q: How are engine build issues affecting Howmet?
A: Engine build reductions have some adverse consequences on Howmet, affecting structural castings and low-pressure turbine parts. " However, opportunities exist to supply more high-pressure turbine blades, especially for the aftermarket. "

787 Production and Fasteners Demand
Q: What's the outlook for 787 production and its impact on Fasteners?
A: Howmet's Fasteners business is seeing deliveries in line with previous guidance. " Boeing's production rates have been lower than expected, and Howmet adjusts inventory levels accordingly. "

RTX Facility Impact
Q: Will RTX's new casting facility affect Howmet's outlook?
A: Howmet has not observed any material impact from RTX's new facility and continues to supply as per previous expectations. " The company believes significant further investment would be required for RTX's facility to become cost-effective at scale. "

Hiring Needs and Productivity
Q: When will hiring increase to match revenue growth?
A: Net headcount additions have been modest, with increases mainly in the Engine business. " The company focuses on productivity gains and automation to meet demand without significant increases in labor. "

Yield Improvements in Castings
Q: How much can casting yields improve?
A: Further yield improvements are marginal due to already high performance. " Any improvements would come from minor changes that do not affect product quality. "