Howmet Aerospace Inc. (HWM) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary indicates a positive outlook with increased revenue projections for 2025 and 2026, strong growth in aerospace sectors, and significant capital investments. The Q&A section reveals management's optimistic view on growth and strategic investments, despite acknowledging challenges in margin improvements. Share buybacks and increased dividends further enhance shareholder value. Overall, these factors suggest a positive sentiment, likely leading to a stock price increase in the short term.
Key Financial Performance
Revenue (Q4 2025) $2.17 billion, up 15% year-over-year. Growth driven by strong performance in commercial aerospace, defense aerospace, and gas turbines.
Full Year Revenue (2025) Up 11% year-over-year. Growth attributed to increased demand in commercial aerospace and gas turbines.
EBITDA (Q4 2025) $653 million, up 29% year-over-year. Growth due to strong revenue performance and operational efficiencies.
Operating Income (Q4 2025) $580 million, up 34% year-over-year. Increase driven by higher revenue and improved margins.
Full Year EBITDA (2025) $2.42 billion, up 26% year-over-year. Growth supported by strong performance across all segments.
Free Cash Flow (2025) $1.43 billion, up more than $100 million above guidance. Achieved 93% conversion of net income, driven by record capital spend and operational efficiencies.
Earnings Per Share (Q4 2025) $1.05, up 42% year-over-year. Increase due to higher net income and share buybacks.
Earnings Per Share (Full Year 2025) $3.77, up 40% year-over-year. Growth driven by strong revenue, EBITDA performance, and share repurchases.
Commercial Aerospace Revenue (Q4 2025) Up 13% year-over-year. Growth driven by demand for engine spares and backlog for fuel-efficient aircraft.
Commercial Aerospace Revenue (Full Year 2025) Up 12% year-over-year. Growth attributed to engine spares and new aircraft builds.
Defense Aerospace Revenue (Q4 2025) Up 20% year-over-year. Growth driven by engine spares and new F-35 aircraft builds.
Defense Aerospace Revenue (Full Year 2025) Up 21% year-over-year. Growth supported by engine spares and F-35 builds.
Gas Turbine Revenue (Q4 2025) Up 32% year-over-year. Growth driven by demand for electricity generation, especially for data centers.
Gas Turbine Revenue (Full Year 2025) Up 25% year-over-year. Growth attributed to increased demand for natural gas electricity generation.
Spares Revenue (2025) Up 33% year-over-year to $1.7 billion. Growth driven by commercial aerospace, defense aerospace, and gas turbines.
EBITDA Margin (Full Year 2025) 29.3%, up 350 basis points year-over-year. Improvement due to operational efficiencies and revenue growth.
Debt Reduction (2025) $265 million. Reduction achieved through repayment of long-term notes and issuance of new notes at lower interest rates.
Capital Expenditures (2025) $453 million, up approximately $130 million year-over-year. Investments focused on Engines business and growth markets.
Share Buybacks (2025) $700 million, retiring approximately 4.4 million shares. Supported EPS growth and reduced share count.
Dividends Paid (2025) $181 million, up 69% year-over-year. Increase supported by strong free cash flow and net income.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Commercial Aerospace Engine Spares: Revenue up 44% for the full year, driven by both legacy and next-generation engines.
Gas Turbines: Revenue up 32% in Q4 and 25% for the full year, driven by increased demand for electricity generation, especially from natural gas for data centers. Expected to double revenue from $1 billion to $2 billion over the next 3-5 years due to strong demand for electricity generation.
Fasteners Business Acquisition: Acquired Brunner Inc. to enhance product offerings and explore new markets in fasteners.
Commercial Aerospace: Revenue up 13% in Q4 and 12% for the full year, driven by demand for new, fuel-efficient aircraft and engine spares.
Defense Aerospace: Revenue up 20% in Q4 and 21% for the full year, driven by engine spares and new F-35 aircraft builds.
EBITDA Margin: Increased 350 basis points to 29.3% for the full year, with a Q4 exit rate of 30.1%.
Free Cash Flow: Record $1.43 billion for the year, with a 93% conversion of net income.
Debt Reduction: Reduced debt by $265 million in 2025, improving net debt to trailing EBITDA to a record low of 1x.
Portfolio Enhancements: Acquired Brunner Inc. and an aerospace fasteners and fittings business for $1.8 billion to strengthen product offerings and market position.
Dividend Policy: Increased dividends by 69% year-over-year, with plans for further increases in 2026.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Commercial Transportation Revenue: Revenue was down 5% for the full year, including the pass-through of higher aluminum costs and tariffs. On a volume basis, Wheels was down 10% in the fourth quarter and down 13% for the full year.
Wide-Body Aircraft Builds: Sluggish recovery of wide-body aircraft builds along with weakness in commercial transportation impacted the Fastening Systems segment.
Commercial Truck Wheels: The market experienced a volume downturn in 2025, especially in the second half. Revenue was down 5% despite material and tariff recovery covering part of the volume downdraft.
Engine Products Segment: The addition of approximately 1,440 net new employees has a near-term margin drag, though it positions the company for future growth.
Debt Management: The company paid off $625 million 2027 notes with newly issued $500 million notes due 2032 and $125 million of cash on hand. While this reduces annualized interest expense, it reflects ongoing financial restructuring.
Gas Turbine Business: The business is entering a growth phase, but its expansion depends on the successful negotiation of contracts with key customers, with three out of seven still under negotiation.
Commercial Aerospace Engine Spares: Durability issues in modern engines due to higher operating pressures and temperatures required for increased fuel efficiency could lead to elevated spares demand.
Regulatory Processes for Acquisitions: The acquisition of a $1.8 billion aerospace fasteners and fittings business is subject to regulatory processes, which could delay its closure and impact on earnings.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Commercial Aerospace Growth: The commercial aerospace market is expected to grow due to increased air travel, particularly in Asia Pacific, North America, and Europe. Passenger demand and a multiyear underbuild of commercial aircraft have led to a record OEM backlog stretching into the next decade. New aircraft builds, including narrow-body, wide-body, and freighters, are planned to grow at all manufacturers. Spares demand is elevated due to the expanding size and aging fleet of aircraft, as well as durability issues in modern engines.
Defense Aerospace Growth: The defense aerospace market is buoyant, with steady F-35 OE builds and a large new build backlog. Spares demand for the F-35 exceeded OE demand in 2025. Other defense platforms, such as the F-15 and F-16, are also seeing new builds. Additional demand is expected from tank turbines, missiles, rocket motors, howitzers, and spare rocket parts.
Gas Turbine Market Growth: The gas turbine business is entering a significant growth phase, driven by high demand for electricity generation, especially from natural gas for data centers. The base business of approximately $1 billion is expected to double to $2 billion in revenue over the next 3 to 5 years, with further growth anticipated beyond that. The build-out of the turbine fleet ensures a growing spares market for years to come.
Commercial Truck Wheels: The commercial truck wheel segment is stabilizing at a low level and is expected to show growth in the latter half of 2026, driven by new 2027 emissions regulations.
2026 Financial Guidance: Revenue is projected at $9.1 billion (±$100 million), EBITDA at $2.76 billion (±$50 million), earnings per share at $4.45 (±$0.01), and free cash flow at $1.6 billion (±$50 million). Q1 2026 revenue is guided at $2.235 billion (±$10 million), EBITDA at $685 million (±$5 million), and EPS at $1.10 (±$0.01).
Portfolio Enhancements: Recent acquisitions, including Brunner Inc. and an aerospace fasteners and fittings business, are expected to enhance product offerings and open new markets. These actions strengthen the portfolio for future growth, particularly in commercial aerospace and gas turbines.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Dividends Paid in 2025: $181 million in dividends were paid, representing an increase of 69% year-over-year. The dividend rate was set at 15% ± 5% of adjusted net income. The dividend per share increased from $0.26 in 2024 to $0.44 in 2025.
Future Dividend Outlook: The company expects the dollar value of dividend distributions in 2026 to be higher than in 2025.
Share Buybacks in 2025: $700 million worth of common stock was repurchased at an average price of $161 per share, retiring approximately 4.4 million shares. Q4 marked the 19th consecutive quarter of share repurchases.
Share Buybacks in Early 2026: An additional $150 million worth of common stock was repurchased at an average price of $215 per share. The remaining authorization for share repurchases is approximately $1.35 billion.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:How has John Plant's thinking evolved regarding the growth of engine products over the next 5 years?
A:John Plant's thinking has evolved to see robust and continuing growth in commercial aerospace, driven by extraordinary backlogs for narrow-body and wide-body aircraft. Defense demand remains solid, with significant new orders for legacy aircraft and emerging segments like missiles and drones. The gas turbine market has shifted from being cyclical to showing consistent demand, driven by renewable energy support and fossil fuel needs. Investments in manufacturing plants and capital expenditures are increasing to meet these demands.
Q:Are the current EBITDA margins for Engine Products near a ceiling, and what factors influence this?
A:John Plant stated that while the 34% EBITDA margin is good, he avoids predicting future margins due to various influencing factors, such as additional costs for new manufacturing plants, recruitment of 1,500 employees in 2026, and the need for yield improvements. He emphasized the challenges of achieving further margin increases.
Q:Why does the 2026 guidance imply minimal improvement in revenue, adjusted EBITDA, and adjusted EPS?
A:John Plant explained that the company is undergoing significant activities, including deploying capital for new equipment, extending five manufacturing plants, acquiring a new plant, and completing two acquisitions. These activities create challenges, and the 30 basis points margin decline reflects caution in managing these complexities. He emphasized the importance of balancing growth investments with operational execution.
Q:What is the expected return on investment for the gas turbine market compared to commercial and defense aerospace?
A:John Plant stated that margins and returns on capital for the gas turbine market are similar to those in commercial and defense aerospace. However, new capital deployment may slightly drag returns. The final capital build and timing are still being determined, but the company is investing significantly in this sector.
Q:How is Howmet balancing capital deployment between M&A, share buybacks, and organic growth?
A:John Plant emphasized that Howmet is managing to do it all: investing in record levels of capital expenditure for organic growth, executing significant M&A deals like CAM and Brunner, increasing dividends, and maintaining share buybacks. The company is leveraging its strong financial position to support these initiatives simultaneously.
Q:Could gas turbine revenue eventually surpass commercial jet engine revenue?
A:John Plant does not foresee gas turbine revenue surpassing commercial jet engine revenue, as both commercial and defense aerospace are also growing rapidly. However, he highlighted the increasing demand for electricity and the evolving product mix in gas turbines, which could drive significant growth in this segment.
Q:What are the strategic benefits of the CAM and Brunner acquisitions?
A:The CAM acquisition expands Howmet's presence in the fittings and couplings segment of the fastener market, providing growth opportunities. The Brunner acquisition enables Howmet to produce larger bolts and serve new markets, including aerospace and industrial applications, enhancing its product offering and market position.
Q:How did spares perform in 2025, and what is the outlook for 2026?
A:Spares grew by approximately 33% in 2025, accounting for 21% of Howmet's total revenue, exceeding the 20% target. Commercial aerospace spares contributed 40% of this growth. The company expects continued growth in spares for 2026.
Q:What is the status of automation in Howmet's operations, and what are the future plans?
A:Howmet has invested significantly in automation, particularly in new manufacturing plants, to improve efficiency and reduce labor needs. However, due to high capital demands and engineering bandwidth constraints, further automation efforts have been deferred to 2027 or later. The company plans to revisit automation opportunities after meeting current market demands.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer regarding future EBITDA margin predictions, citing the difficulty of forecasting due to multiple influencing factors. Additionally, John Plant did not provide a definitive answer on whether gas turbine revenue could surpass commercial jet engine revenue, stating it was too far out to predict.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Aerospace Full
Capital deployment
Cash dividend
Debt dollar
Engine Products
Engine segment
Engines market
Forged decrease
Full Conference
Full Results
Full highlight
Gas turbine
Howmet Full
Howmet Notches
Products segment
aerospace defense
aerospace gas
aluminum tariff
conversion income
currency
defense aerospace
dividend stock
fastener
flow record
flow share
generation
interest
mid
note
pas
pension
plan
point margin
premium product
redemption
reduction
share buyback
transportation
HWM Transcript
Howmet Aerospace Inc. (HWM) Q4 2025 Earnings Call Transcript
Positive2-12
The earnings call summary indicates a positive outlook with increased revenue projections for 2025 and 2026, strong growth in aerospace sectors, and significant capital investments. The Q&A section reveals management's optimistic view on growth and strategic investments, despite acknowledging challenges in margin improvements. Share buybacks and increased dividends further enhance shareholder value. Overall, these factors suggest a positive sentiment, likely leading to a stock price increase in the short term.
Howmet Aerospace Inc. (HWM) Q3 2025 Earnings Call Transcript
Positive10-30
The earnings call reveals strong financial performance with increased margins and positive growth across key segments such as commercial aerospace and defense. Despite some uncertainties in guidance for 2026, the company shows optimism in future growth, particularly in aerospace and IGT. The Q&A section further supports this with management expressing confidence in spares demand and minimal impact from raw material issues. Overall, the positive outlook in strategic markets and robust financial health suggest a positive stock price movement.
Howmet Aerospace Inc. (HWM) Presents At Jefferies Industrials Conference (Transcript)
Neutral9-4
Howmet Aerospace Inc. (HWM) Q2 2025 Earnings Call Transcript
Positive7-31
The earnings call presents a positive outlook with increased dividends, share buybacks, and capacity expansion. Strong guidance for 2025 in revenue, EBITDA, and EPS further supports a positive sentiment. The Q&A section reveals management's optimism about future profitability, solid market conditions, and strategic growth plans. Despite some concerns about emissions requirements and supply chain bottlenecks, the overall sentiment remains positive, especially with the anticipation of improved margins and significant orders related to the Precision Castparts facility accident.
HWM Slides
HWM Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
