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Howmet Aerospace Inc. (HWM)·Q4 2024 Earnings Summary

Executive Summary

  • Record Q4 revenue of $1.891B and GAAP EPS of $0.77; adjusted EPS of $0.74. Adjusted EBITDA margin expanded to 26.8% (+380 bps YoY). Management said results “exceeded the high end of guidance,” driven by commercial aerospace and engine spares volumes .
  • FY24 spares revenue reached ~$1.28B (17% of total), accelerating in 2H; management expects spares to continue rising toward ~20% of company revenue, structurally reducing volatility in the model .
  • FY25 outlook raised: revenue growth midpoint increased to ~8% (from ~7.5% previously), with Q1 FY25 guide of ~$1.935B revenue, ~$520M adjusted EBITDA, and $0.76 adjusted EPS; FY25 baseline ~$8.03B revenue, $2.13B adj. EBITDA, $3.17 EPS, and ~$1.075B FCF .
  • Capital returns remain a catalyst: $190M buybacks in Q4, $500M in FY24, plus $50M in Jan-2025; dividend increased 25% to $0.10 per share starting Q1 FY25 .

What Went Well and What Went Wrong

What Went Well

  • Commercial aerospace strength: Q4 commercial aerospace revenue up 13% YoY; Engines +14% YoY revenue to $972M and 31.1% EBITDA margin; Fasteners +11% YoY revenue to $401M and 27.7% EBITDA margin .
  • Margin expansion and records: Adjusted EBITDA $507M (+27% YoY); adjusted EBITDA margin 26.8% (+380 bps YoY). “Adjusted EBITDA* grew 27%… also records,” CEO John Plant noted .
  • Cash generation and balance sheet: Q4 cash from operations $480M; Q4 FCF $378M; FY24 FCF $977M (88% of net income excluding special items); net debt/EBITDA improved to 1.4x and S&P upgraded to BBB in Q4 .

What Went Wrong

  • Commercial transportation softness: Forged Wheels revenue down 12% YoY to $243M; EBITDA down ~8% YoY; management still held margins at 27.2% but flagged continued weakness until 2H25 .
  • Narrow-body production uncertainty: Cautious FY25 incrementals and back-end loaded profitability given Boeing 737 MAX rate assumptions (~25/month on average 2025) and supply chain bottlenecks at OEMs; margin ramp conservatively guided after Q1 .
  • Engine changeover and Q4 noise: Engines margin stepped down ~150 bps sequentially; management cited transition costs around LEAP 1A changeover as non-repeat and “quarterly noise” .

Financial Results

P&L vs prior year and prior quarters

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$1.731 $1.880 $1.835 $1.891
GAAP Diluted EPS ($)$0.57 $0.65 $0.81 $0.77
Operating Income ($USD Millions)$326 $398 $421 $445
Operating Margin (%)18.8% 21.2% 22.9% 23.5%
Adjusted EBITDA excl. SI ($USD Millions)$398 $483 $487 $507
Adjusted EBITDA Margin excl. SI (%)23.0% 25.7% 26.5% 26.8%
Adjusted EPS excl. SI ($)$0.53 $0.67 $0.71 $0.74

Cash flow and conversion

MetricQ2 2024Q3 2024Q4 2024
Cash from Operations ($USD Millions)$397 $244 $480
Free Cash Flow ($USD Millions)$342 $162 $378
FCF Conversion of Net Income excl. SI (FY basis)——88% (FY24)

Segment breakdown (sales)

Segment Third-Party Sales ($USD Millions)Q4 2023Q3 2024Q4 2024
Engine Products$852 $945 $972
Fastening Systems$360 $392 $401
Engineered Structures$244 $253 $275
Forged Wheels$275 $245 $243

Segment profitability

Segment Adjusted EBITDA ($USD Millions)Q4 2023Q3 2024Q4 2024
Engine Products$233 $307 $302
Fastening Systems$80 $102 $111
Engineered Structures$33 $38 $51
Forged Wheels$72 $64 $66
Segment Adjusted EBITDA Margin (%)Q4 2023Q3 2024Q4 2024
Engine Products27.3% 32.5% 31.1%
Fastening Systems22.2% 26.0% 27.7%
Engineered Structures13.5% 15.0% 18.5%
Forged Wheels26.2% 26.1% 27.2%

KPIs

KPIPeriodValue
Spares revenue ($USD Billions)FY 2024~$1.28
Spares share of total revenue (%)FY 202417%
Net debt / EBITDA (x)Q4 20241.4x
Operational tax rate (%)FY 202420.5%
Share repurchases ($USD Millions)Q4 2024$190
Share repurchases ($USD Millions)FY 2024$500
Share repurchases ($USD Millions)Jan 2025$50

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company revenue growth YoY (%)FY 2025~7.5% (prelim.) ~8% midpoint Raised
Revenue ($USD Billions)Q1 2025—$1.935B baseline; $1.925B–$1.945B range New
Adjusted EBITDA ($USD Millions)Q1 2025—$520M baseline; $515M–$525M range New
Adjusted EPS ($)Q1 2025—$0.76 baseline; $0.75–$0.77 range New
Revenue ($USD Billions)FY 2025—$8.03B baseline; $7.93B–$8.13B range New
Adjusted EBITDA ($USD Billions)FY 2025—$2.13B baseline; $2.105B–$2.155B range New
Adjusted EPS ($)FY 2025—$3.17 baseline; $3.13–$3.21 range New
Free Cash Flow ($USD Billions)FY 2025—~$1.075B baseline; $1.025B–$1.125B range New
Dividend per share ($)Q1 2025$0.08 (Q4 2024) $0.10 (Q1 2025) Raised 25%
OEM build assumptions (units/month)FY 2025—Boeing 737 MAX ~25; 787 ~6; Airbus A320 mid-50s; A350 ~6 New explicit assumptions

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
AI/data centers → IGT demandIntroduced AI/IGT electricity thesis; adding IGT capacity in 2025 Expanded thesis; multi-year global capacity build; #1 turbine blades supplier More bullish: incoming U.S. policy favors natural gas; building out two sites; margins similar to aero turbines Strengthening
Supply chain and OEM ratesCautious on Airbus/Boeing rates; derisked guide; Boeing 737 ~22/mo in 2024 Restricted supply to Boeing during strike; Europe seasonality impacted Wheels Conservative FY25 incrementals; back-end loaded; Boeing 737 ~25/mo assumption; A320 mid-50s Persisting constraints
Tariffs/macro pass-through——Will pass-through costs; proven ability post-2022 inflation Prepared
Product performance: LEAP/GTF upgradesAddressed LEAP airfoils supply; capacity up ~40% Built inventory of upgraded blades pending certification LEAP-1A changeover done; LEAP-1B likely 2026; GTF Advantage mid-2025; Q4 engine margin “noise” Transition in-flight
Regional trends: Europe WheelsWheels resilient despite declines Europe down 18% QoQ; NA down 10% Wheels still soft; margins held at 27.2%; 2H25 improvement expected Weak near-term
Regulatory/legal/tax—$44M R&D tax credit (special item) Operational tax rate improved to 20.5%; discrete tax items detailed Tax rate improving
Capital allocationBuybacks/dividend increase discussed; leverage 1.7x ~ $416M deployed in Q3; authorization ~$2.3B $190M Q4 buybacks; $500M FY24; $50M Jan-25; dividend to $0.10; buybacks in 2025 to exceed 2024 Accretive returns

Management Commentary

  • “Revenue in the fourth quarter 2024 grew 9% year over year to a record $1.9 billion… Adjusted EBITDA* grew 27% to $507 million… Adjusted Earnings per Share* grew 40% to a record $0.74.” — John Plant .
  • “The mid-point of our 2025 revenue growth guidance is increased to approximately 8% year over year compared to the 7.5% outlook provided at third quarter 2024 earnings… Free Cash Flow in 2025 is expected to exceed $1 billion.” — John Plant .
  • “We continue to employ a cautious view on underlying build rates… assuming Boeing produces ~25 737-MAX per month and 6 787 per month on average across 2025 and Airbus averages mid-50s per month on the A320 and ~6 per month on the A350.” — John Plant .
  • “Free cash flow for the year was a record $977 million… Net debt to trailing EBITDA continues to improve and was at a record low of 1.4x.” — Ken Giacobbe .

Q&A Highlights

  • Fasteners margin sustainability: Management cited operational productivity and commercial discipline; expects continued improvement with widebody recovery (e.g., 787 and A350 rate increases), though future margin gains will be less aggressive .
  • Conservative full-year profile: After strong Q1 incrementals (>70%), management guided more muted for FY25 due to narrow-body visibility, supply chain issues, and new plant ramp timing; profitability back-end loaded .
  • Boeing inventory and 737 forecast: Q4 Boeing demand weakness was incorporated into Q1 guide; potential for instability later in the year; LEAP-1B airfoils changeover not expected until 2026 .
  • Engineered Structures rationalization: Prior closures and a small divestiture combined with productivity/commercial focus drove step up to 18.5% margin; management sees sustaining high-teens margins and earned right to invest .
  • Spares trajectory: Management reiterated CFM56/V2500 peak likely pushed to ~2027; spares expected to increase again in 2025; prioritization of spares could impact OE structural/LPT volumes mix .

Estimates Context

  • S&P Global consensus EPS and revenue estimates for Q4 2024 were unavailable due to data access limits at the time of this analysis. As a proxy for performance context, management said Q4 exceeded the high end of company guidance on adjusted EBITDA margin and adjusted EPS . Values retrieved from S&P Global were unavailable.

Key Takeaways for Investors

  • Commercial aerospace momentum with structurally higher spares mix (17% of FY24 revenue) and management targeting ~20% over time reduces earnings cyclicality and supports margin durability .
  • Engines and Fasteners demonstrated operating leverage; Engines held >31% segment EBITDA margin and Fasteners reached 27.7% in Q4; Structures’ improvement to 18.5% is a positive inflection .
  • FY25 raised growth outlook (~8% revenue midpoint) and >$1B FCF guide, with back-end loaded earnings tied to narrow-body rate acceleration and 2H Wheels recovery; near-term prints may be conservative .
  • Tangible capital returns and stronger credit: dividend increased to $0.10; robust buybacks with ~$2.15B authorization; S&P upgrade to BBB underscores balance sheet strength (1.4x net debt/EBITDA) .
  • Watch engine program transitions: LEAP-1A changeover complete; GTF Advantage likely mid-2025; LEAP-1B in 2026—transient costs can create quarterly noise, but upgrades should be margin-accretive longer-term .
  • IGT demand from AI/data centers is emerging as a multi-year growth vector; Howmet’s blade leadership and planned capacity adds suggest incremental growth beyond aero in 2026+ .
  • Risk checks: Boeing rate/inventory dynamics, supply chain constraints, and regional Wheels weakness remain key sensitivities; management plans to pass tariffs/costs through to customers .