Howmet Aerospace Reports Third Quarter 2024 Results
Revenue Up 11% Year Over Year; Strong Profit and Cash from Operations
2025 Preliminary Revenue Guidance: Up Approximately 7.5% Year over Year
Third Quarter 2024 GAAP Financial Results
-
Revenue of
$1.84 billion , up 11% year over year, driven by commercial aerospace, up 17%, partially offset by commercial transportation, down 12% -
Net income of
$332 million versus$188 million in the third quarter 2023; earnings per share of$0.81 versus$0.45 in the third quarter 2023 - Operating income margin of 22.9%
-
Generated
$244 million of cash from operations;$441 million of cash used for financing activities; and$80 million of cash used for investing activities -
Share repurchases of
$100 million;$0.08 per share dividend on common stock
Third Quarter 2024 Adjusted Financial Results
-
Adjusted EBITDA excluding special items of
$487 million , up 27% year over year - Adjusted EBITDA margin excluding special items of 26.5%
- Adjusted operating income margin excluding special items of 22.8%
-
Adjusted earnings per share excluding special items of
$0.71 , up 54% year over year -
Generated
$162 million of free cash flow
2024 Guidance
Q4 2024 Guidance |
FY 2024 Guidance |
||||||
Low |
Baseline |
High |
Low |
Baseline |
High |
||
Revenue |
|
|
|
|
|
|
|
Adj. EBITDA*1 |
|
|
|
|
|
|
|
Adj. EBITDA Margin*1 |
25.8% |
26.1% |
26.3% |
|
25.5% |
25.6% |
25.6% |
Adj. Earnings per Share*1 |
|
|
|
|
|
|
|
Free Cash Flow1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Key Announcements
-
Redeemed the remaining outstanding principal amount of
$205 million of its 5.125% Notes dueOctober 2024 with cash on hand -
Issued
$500 million aggregate principal amount of notes due 2031 (the “2031 Notes”) -
Redeemed the remaining outstanding principal amount of
$577 million of its 6.875% Notes dueMay 2025 with proceeds from the 2031 Notes plus cash on hand -
All combined debt actions year to date through the third quarter 2024 will reduce annualized interest expense by approximately
$33 million -
Repurchased
$100 million of common stock at an average price of$94.22 per share -
Increased the common stock dividend by 60% to
$0.08 per share - Raised full year 2024 guidance for Adjusted EBITDA*1 and Adjusted earnings per share*1 above the third quarter 2024 outperformance despite industry challenges
____________________________________ |
* Excluding special items |
1 Reconciliations of the forward-looking non-GAAP measures to the most directly comparable GAAP measures, as well as the directly comparable GAAP measures, are not available without unreasonable efforts due to the variability and complexity of the charges and other components excluded from the non-GAAP measures – for further detail, see “2024 Guidance” below. |
“Howmet Aerospace’s balance sheet remains a source of strength, with leverage at a record low and free cash flow generation of approximately
____________________________________ |
* Excluding special items |
Third Quarter 2024 Segment Performance
Engine Products
(in |
Q3 2023 |
Q4 2023 |
Q1 2024 |
Q2 2024 |
Q3 2024 |
Third-party sales |
|
|
|
|
|
Inter-segment sales |
|
|
|
|
|
Provision for depreciation and amortization |
|
|
|
|
|
Segment Adjusted EBITDA |
|
|
|
|
|
Segment Adjusted EBITDA Margin |
27.4 % |
27.3 % |
28.1 % |
31.3 % |
32.5% |
Restructuring and other credits |
$ — |
|
$ — |
|
|
Capital expenditures |
|
|
|
|
|
Engine Products reported revenue of
Fastening Systems
(in |
Q3 2023 |
Q4 2023 |
Q1 2024 |
Q2 2024 |
Q3 2024 |
Third-party sales |
|
|
|
|
|
Provision for depreciation and amortization |
|
|
|
|
|
Segment Adjusted EBITDA |
|
|
|
|
|
Segment Adjusted EBITDA Margin |
21.8 % |
22.2 % |
23.7 % |
25.6% |
26.0% |
Restructuring and other charges |
|
$ — |
$ — |
|
|
Capital expenditures |
|
|
|
|
|
Fastening Systems reported revenue of
Engineered Structures
(in |
Q3 2023 |
Q4 2023 |
Q1 2024 |
Q2 2024 |
Q3 2024 |
Third-party sales |
|
|
|
|
|
Inter-segment sales |
$ — |
|
|
|
|
Provision for depreciation and amortization |
|
|
|
|
|
Segment Adjusted EBITDA |
|
|
|
|
|
Segment Adjusted EBITDA Margin |
13.2 % |
13.5 % |
14.1 % |
14.5% |
15.0% |
Restructuring and other charges |
|
|
$ — |
|
|
Capital expenditures |
|
|
|
|
|
Engineered Structures reported revenue of
Forged Wheels
(in |
Q3 2023 |
Q4 2023 |
Q1 2024 |
Q2 2024 |
Q3 2024 |
Third-party sales |
|
|
|
|
|
Provision for depreciation and amortization |
|
|
|
|
|
Segment Adjusted EBITDA |
|
|
|
|
|
Segment Adjusted EBITDA Margin |
27.0 % |
26.2 % |
28.5% |
27.0 % |
26.1% |
Restructuring and other charges |
$ — |
$ — |
$ — |
$ — |
|
Capital expenditures |
|
|
|
|
|
Forged Wheels reported revenue of
Redeemed Remaining
On
Issued
On
On
All combined debt actions year to date through the third quarter 2024 will reduce annualized interest expense by approximately
All of the Company’s outstanding debt is unsecured and at fixed interest rates. The Company’s next debt maturity is in
Repurchased
In the third quarter 2024,
Quarterly Common Stock Dividend of
On
2024 Guidance
Q4 2024 Guidance |
FY 2024 Guidance |
||||||
Low |
Baseline |
High |
|
Low |
Baseline |
High |
|
Revenue |
|
|
|
|
|
|
|
Adj. EBITDA*1 |
|
|
|
|
|
|
|
Adj. EBITDA Margin*1 |
25.8% |
26.1% |
26.3% |
|
25.5% |
25.6% |
25.6% |
Adj. Earnings per Share*1 |
|
|
|
|
|
|
|
Free Cash Flow1 |
|
|
|
|
|
|
|
* Excluding Special Items
1 Reconciliations of the forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures, as well as the directly comparable GAAP measures, are not available without unreasonable efforts due to the variability and complexity of the charges and other components excluded from the non-GAAP measures, such as the effects of foreign currency movements, gains or losses on sales of assets, taxes, and any future restructuring or impairment charges. In addition, there is inherent variability already included in the GAAP measures, including, but not limited to, price/mix and volume. |
About
Dissemination of Company Information
Forward-Looking Statements
This release contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as "anticipates", "believes", "could", “envisions”, "estimates", "expects", "forecasts", "goal", "guidance", "intends", "may", "outlook", "plans", "projects", "seeks", "sees", "should", "targets", "will", "would", or other words of similar meaning. All statements that reflect Howmet Aerospace’s expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, statements, forecasts and outlook relating to the condition of end markets; future financial results or operating performance; future strategic actions;
Non-GAAP Financial Measures
Some of the information included in this release is derived from Howmet Aerospace’s consolidated financial information but is not presented in Howmet Aerospace’s financial statements prepared in accordance with accounting principles generally accepted in
Other Information
In this press release, the acronym “FY” means “full year” and “Q” means “quarter”; and references to
Statement of Consolidated Operations (unaudited)
(in |
|||||||||
|
Quarter ended |
||||||||
|
|
|
|
|
|
||||
Sales |
$ |
1,835 |
|
|
$ |
1,880 |
|
$ |
1,658 |
|
|
|
|
|
|
||||
Cost of goods sold (exclusive of expenses below) |
|
1,253 |
|
|
|
1,287 |
|
|
1,183 |
Selling, general administrative, and other expenses |
|
85 |
|
|
|
97 |
|
|
87 |
Research and development expenses |
|
9 |
|
|
|
7 |
|
|
9 |
Provision for depreciation and amortization |
|
68 |
|
|
|
69 |
|
|
68 |
Restructuring and other (credits) charges |
|
(1 |
) |
|
|
22 |
|
|
4 |
Operating income |
|
421 |
|
|
|
398 |
|
|
307 |
|
|
|
|
|
|
||||
Loss on debt redemption |
|
6 |
|
|
|
— |
|
|
— |
Interest expense, net |
|
44 |
|
|
|
49 |
|
|
54 |
Other expense, net |
|
17 |
|
|
|
15 |
|
|
11 |
|
|
|
|
|
|
||||
Income before income taxes |
|
354 |
|
|
|
334 |
|
|
242 |
Provision for income taxes |
|
22 |
|
|
|
68 |
|
|
54 |
Net income |
$ |
332 |
|
|
$ |
266 |
|
$ |
188 |
|
|
|
|
|
|
||||
Amounts Attributable to Howmet Aerospace Common Shareholders: |
|
|
|
|
|
||||
Earnings per share - basic(1): |
|
|
|
|
|
||||
Net income per share |
$ |
0.81 |
|
|
$ |
0.65 |
|
$ |
0.45 |
Average number of shares(2)(3) |
|
408 |
|
|
|
408 |
|
|
412 |
|
|
|
|
|
|
||||
Earnings per share - diluted(1): |
|
|
|
|
|
||||
Net income per share |
$ |
0.81 |
|
|
$ |
0.65 |
|
$ |
0.45 |
Average number of shares(2)(3) |
|
410 |
|
|
|
411 |
|
|
415 |
|
|
|
|
|
|
||||
Common stock outstanding at the end of the period |
|
407 |
|
|
|
408 |
|
|
412 |
(1) |
In order to calculate both basic and diluted earnings per share, preferred stock dividends declared of less than |
|
(2) |
For the quarters presented, the difference between the diluted average number of shares and the basic average number of shares relates to share equivalents associated with outstanding restricted stock unit awards and employee stock options. |
|
(3) |
As average shares outstanding are used in the calculation of both basic and diluted earnings per share, the full impact of share repurchases is not fully realized in earnings per share ("EPS") in the period of repurchase since share repurchases may occur at varying points during a period. |
Consolidated Balance Sheet (unaudited)
(in |
|||||||
|
|
|
|
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
475 |
|
|
$ |
610 |
|
Receivables from customers, less allowances of $— in both 2024 and 2023 |
|
757 |
|
|
|
675 |
|
Other receivables |
|
18 |
|
|
|
17 |
|
Inventories |
|
1,902 |
|
|
|
1,765 |
|
Prepaid expenses and other current assets |
|
239 |
|
|
|
249 |
|
Total current assets |
|
3,391 |
|
|
|
3,316 |
|
Properties, plants, and equipment, net |
|
2,358 |
|
|
|
2,328 |
|
|
|
4,047 |
|
|
|
4,035 |
|
Deferred income taxes |
|
39 |
|
|
|
46 |
|
Intangibles, net |
|
484 |
|
|
|
505 |
|
Other noncurrent assets |
|
239 |
|
|
|
198 |
|
Total assets |
$ |
10,558 |
|
|
$ |
10,428 |
|
|
|
|
|
||||
Liabilities |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable, trade |
$ |
917 |
|
|
$ |
982 |
|
Accrued compensation and retirement costs |
|
288 |
|
|
|
263 |
|
Taxes, including income taxes |
|
59 |
|
|
|
68 |
|
Accrued interest payable |
|
25 |
|
|
|
65 |
|
Other current liabilities |
|
227 |
|
|
|
200 |
|
Short-term debt |
|
1 |
|
|
|
206 |
|
Total current liabilities |
|
1,517 |
|
|
|
1,784 |
|
Long-term debt, less amount due within one year |
|
3,393 |
|
|
|
3,500 |
|
Accrued pension benefits |
|
629 |
|
|
|
664 |
|
Accrued other postretirement benefits |
|
84 |
|
|
|
92 |
|
Other noncurrent liabilities and deferred credits |
|
432 |
|
|
|
351 |
|
Total liabilities |
|
6,055 |
|
|
|
6,391 |
|
|
|
|
|
||||
Equity |
|
|
|
||||
|
|
|
|
||||
Preferred stock |
|
55 |
|
|
|
55 |
|
Common stock |
|
407 |
|
|
|
410 |
|
Additional capital |
|
3,386 |
|
|
|
3,682 |
|
Retained earnings |
|
2,453 |
|
|
|
1,720 |
|
Accumulated other comprehensive loss |
|
(1,798 |
) |
|
|
(1,830 |
) |
Total equity |
|
4,503 |
|
|
|
4,037 |
|
Total liabilities and equity |
$ |
10,558 |
|
|
$ |
10,428 |
|
Statement of Consolidated Cash Flows (unaudited)
(in |
|||||||
|
Nine months ended |
||||||
|
|
2024 |
|
|
|
2023 |
|
Operating activities |
|
|
|
||||
Net income |
$ |
841 |
|
|
$ |
529 |
|
Adjustments to reconcile net income to cash provided from operations: |
|
|
|
||||
Depreciation and amortization |
|
204 |
|
|
|
204 |
|
Deferred income taxes |
|
39 |
|
|
|
92 |
|
Restructuring and other charges |
|
21 |
|
|
|
8 |
|
Net realized and unrealized losses |
|
18 |
|
|
|
17 |
|
Net periodic pension cost |
|
31 |
|
|
|
28 |
|
Stock-based compensation |
|
54 |
|
|
|
39 |
|
Loss on debt redemption |
|
6 |
|
|
|
1 |
|
Other |
|
4 |
|
|
|
2 |
|
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments: |
|
|
|
||||
Increase in receivables |
|
(97 |
) |
|
|
(211 |
) |
Increase in inventories |
|
(139 |
) |
|
|
(148 |
) |
Decrease (increase) in prepaid expenses and other current assets |
|
9 |
|
|
|
(12 |
) |
Decrease in accounts payable, trade |
|
(67 |
) |
|
|
(57 |
) |
Decrease in accrued expenses |
|
(42 |
) |
|
|
(18 |
) |
(Decrease) increase in taxes, including income taxes |
|
(5 |
) |
|
|
17 |
|
Pension contributions |
|
(33 |
) |
|
|
(19 |
) |
Increase in noncurrent assets |
|
(6 |
) |
|
|
(2 |
) |
Decrease in noncurrent liabilities |
|
(20 |
) |
|
|
(27 |
) |
Cash provided from operations |
|
818 |
|
|
|
443 |
|
Financing Activities |
|
|
|
||||
Additions to debt |
|
500 |
|
|
|
— |
|
Repurchases and payments on debt |
|
(805 |
) |
|
|
(376 |
) |
Debt issuance costs |
|
(5 |
) |
|
|
— |
|
Premiums paid on early redemption of debt |
|
(5 |
) |
|
|
(1 |
) |
Repurchases of common stock |
|
(310 |
) |
|
|
(150 |
) |
Proceeds from exercise of employee stock options |
|
7 |
|
|
|
10 |
|
Dividends paid to shareholders |
|
(76 |
) |
|
|
(52 |
) |
Taxes paid for net share settlement of equity awards |
|
(48 |
) |
|
|
(77 |
) |
Cash used for financing activities |
|
(742 |
) |
|
|
(646 |
) |
Investing Activities |
|
|
|
||||
Capital expenditures |
|
(219 |
) |
|
|
(164 |
) |
Proceeds from the sale of assets and businesses |
|
9 |
|
|
|
1 |
|
Other |
|
1 |
|
|
|
— |
|
Cash used for investing activities |
|
(209 |
) |
|
|
(163 |
) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
(2 |
) |
|
|
(1 |
) |
Net change in cash, cash equivalents and restricted cash |
|
(135 |
) |
|
|
(367 |
) |
Cash, cash equivalents and restricted cash at beginning of period |
|
610 |
|
|
|
792 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
475 |
|
|
$ |
425 |
|
Segment Information (unaudited)
(in |
||||||||||||||||||||||||
|
|
1Q23 |
|
|
2Q23 |
|
|
3Q23 |
|
|
4Q23 |
|
|
2023 |
|
|
1Q24 |
|
|
2Q24 |
|
|
3Q24 |
|
Engine Products |
|
|
|
|
|
|
|
|
||||||||||||||||
Third-party sales |
$ |
795 |
|
$ |
821 |
|
$ |
798 |
|
$ |
852 |
|
$ |
3,266 |
|
$ |
885 |
|
$ |
933 |
|
$ |
945 |
|
Inter-segment sales |
$ |
2 |
|
$ |
5 |
|
$ |
5 |
|
$ |
1 |
|
$ |
13 |
|
$ |
2 |
|
$ |
1 |
|
$ |
3 |
|
Provision for depreciation and amortization |
$ |
32 |
|
$ |
32 |
|
$ |
33 |
|
$ |
33 |
|
$ |
130 |
|
$ |
33 |
|
$ |
33 |
|
$ |
34 |
|
Segment Adjusted EBITDA |
$ |
212 |
|
$ |
223 |
|
$ |
219 |
|
$ |
233 |
|
$ |
887 |
|
$ |
249 |
|
$ |
292 |
|
$ |
307 |
|
Segment Adjusted EBITDA Margin |
|
26.7 |
% |
|
27.2 |
% |
|
27.4 |
% |
|
27.3 |
% |
|
27.2 |
% |
|
28.1 |
% |
|
31.3 |
% |
|
32.5 |
% |
Restructuring and other (credits) charges |
$ |
— |
|
$ |
(1 |
) |
$ |
— |
|
$ |
(1 |
) |
$ |
(2 |
) |
$ |
— |
|
$ |
(1 |
) |
$ |
1 |
|
Capital expenditures |
$ |
33 |
|
$ |
21 |
|
$ |
30 |
|
$ |
28 |
|
$ |
112 |
|
$ |
55 |
|
$ |
33 |
|
$ |
55 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fastening Systems |
|
|
|
|
|
|
|
|
||||||||||||||||
Third-party sales |
$ |
312 |
|
$ |
329 |
|
$ |
348 |
|
$ |
360 |
|
$ |
1,349 |
|
$ |
389 |
|
$ |
394 |
|
$ |
392 |
|
Provision for depreciation and amortization |
$ |
11 |
|
$ |
12 |
|
$ |
12 |
|
$ |
11 |
|
$ |
46 |
|
$ |
11 |
|
$ |
13 |
|
$ |
12 |
|
Segment Adjusted EBITDA |
$ |
58 |
|
$ |
64 |
|
$ |
76 |
|
$ |
80 |
|
$ |
278 |
|
$ |
92 |
|
$ |
101 |
|
$ |
102 |
|
Segment Adjusted EBITDA Margin |
|
18.6 |
% |
|
19.5 |
% |
|
21.8 |
% |
|
22.2 |
% |
|
20.6 |
% |
|
23.7 |
% |
|
25.6 |
% |
|
26.0 |
% |
Restructuring and other charges |
$ |
— |
|
$ |
— |
|
$ |
1 |
|
$ |
— |
|
$ |
1 |
|
$ |
— |
|
$ |
2 |
|
$ |
1 |
|
Capital expenditures |
$ |
9 |
|
$ |
5 |
|
$ |
9 |
|
$ |
8 |
|
$ |
31 |
|
$ |
7 |
|
$ |
5 |
|
$ |
5 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Engineered Structures |
|
|
|
|
|
|
|
|
||||||||||||||||
Third-party sales |
$ |
207 |
|
$ |
200 |
|
$ |
227 |
|
$ |
244 |
|
$ |
878 |
|
$ |
262 |
|
$ |
275 |
|
$ |
253 |
|
Inter-segment sales |
$ |
— |
|
$ |
1 |
|
$ |
— |
|
$ |
2 |
|
$ |
3 |
|
$ |
1 |
|
$ |
3 |
|
$ |
3 |
|
Provision for depreciation and amortization |
$ |
12 |
|
$ |
12 |
|
$ |
12 |
|
$ |
11 |
|
$ |
47 |
|
$ |
11 |
|
$ |
11 |
|
$ |
10 |
|
Segment Adjusted EBITDA |
$ |
30 |
|
$ |
20 |
|
$ |
30 |
|
$ |
33 |
|
$ |
113 |
|
$ |
37 |
|
$ |
40 |
|
$ |
38 |
|
Segment Adjusted EBITDA Margin |
|
14.5 |
% |
|
10.0 |
% |
|
13.2 |
% |
|
13.5 |
% |
|
12.9 |
% |
|
14.1 |
% |
|
14.5 |
% |
|
15.0 |
% |
Restructuring and other charges |
$ |
1 |
|
$ |
5 |
|
$ |
1 |
|
$ |
14 |
|
$ |
21 |
|
$ |
— |
|
$ |
14 |
|
$ |
1 |
|
Capital expenditures |
$ |
10 |
|
$ |
5 |
|
$ |
6 |
|
$ |
5 |
|
$ |
26 |
|
$ |
6 |
|
$ |
5 |
|
$ |
5 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Forged Wheels |
|
|
|
|
|
|
|
|
||||||||||||||||
Third-party sales |
$ |
289 |
|
$ |
298 |
|
$ |
285 |
|
$ |
275 |
|
$ |
1,147 |
|
$ |
288 |
|
$ |
278 |
|
$ |
245 |
|
Provision for depreciation and amortization |
$ |
9 |
|
$ |
10 |
|
$ |
10 |
|
$ |
10 |
|
$ |
39 |
|
$ |
10 |
|
$ |
10 |
|
$ |
10 |
|
Segment Adjusted EBITDA |
$ |
79 |
|
$ |
81 |
|
$ |
77 |
|
$ |
72 |
|
$ |
309 |
|
$ |
82 |
|
$ |
75 |
|
$ |
64 |
|
Segment Adjusted EBITDA Margin |
|
27.3 |
% |
|
27.2 |
% |
|
27.0 |
% |
|
26.2 |
% |
|
26.9 |
% |
|
28.5 |
% |
|
27.0 |
% |
|
26.1 |
% |
Restructuring and other charges |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
1 |
|
Capital expenditures |
$ |
9 |
|
$ |
7 |
|
$ |
9 |
|
$ |
11 |
|
$ |
36 |
|
$ |
12 |
|
$ |
9 |
|
$ |
14 |
|
Differences between the total segment and consolidated totals are in Corporate. |
Calculation of Financial Measures (unaudited)
(in |
||||||||||||||||||||||||
Reconciliation of Total Segment Adjusted EBITDA to Consolidated Income Before Income Taxes |
||||||||||||||||||||||||
|
|
1Q23 |
|
|
2Q23 |
|
|
3Q23 |
|
|
4Q23 |
|
|
2023 |
|
|
1Q24 |
|
|
2Q24 |
|
|
3Q24 |
|
Income before income taxes |
$ |
220 |
$ |
243 |
|
$ |
242 |
$ |
270 |
$ |
975 |
$ |
303 |
$ |
334 |
$ |
354 |
|
||||||
Loss on debt redemption |
|
1 |
|
— |
|
|
— |
|
1 |
|
2 |
|
— |
|
— |
|
6 |
|
||||||
Interest expense, net |
|
57 |
|
55 |
|
|
54 |
|
52 |
|
218 |
|
49 |
|
49 |
|
44 |
|
||||||
Other expense, net |
|
7 |
|
(13 |
) |
|
11 |
|
3 |
|
8 |
|
17 |
|
15 |
|
17 |
|
||||||
Operating income |
$ |
285 |
$ |
285 |
|
$ |
307 |
$ |
326 |
$ |
1,203 |
$ |
369 |
$ |
398 |
$ |
421 |
|
||||||
Segment provision for depreciation and amortization |
|
64 |
|
66 |
|
|
67 |
|
65 |
|
262 |
|
65 |
|
67 |
|
66 |
|
||||||
Unallocated amounts: |
|
|
|
|
|
|
|
|
||||||||||||||||
Restructuring and other charges (credits) |
|
1 |
|
3 |
|
|
4 |
|
15 |
|
23 |
|
— |
|
22 |
|
(1 |
) |
||||||
Corporate expense(1) |
|
29 |
|
34 |
|
|
24 |
|
12 |
|
99 |
|
26 |
|
21 |
|
25 |
|
||||||
Total Segment Adjusted EBITDA |
$ |
379 |
$ |
388 |
|
$ |
402 |
$ |
418 |
$ |
1,587 |
$ |
460 |
$ |
508 |
$ |
511 |
|
||||||
Total Segment Adjusted EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because Total Segment Adjusted EBITDA provides additional information with respect to the Company's operating performance and the Company’s ability to meet its financial obligations. The Total Segment Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies. Howmet’s definition of Total Segment Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation and amortization. Net margin is equivalent to Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation and amortization. Special items, including Restructuring and other charges (credits), are excluded from net margin and Segment Adjusted EBITDA. Differences between the total segment and consolidated totals are in Corporate. |
(1) Pre-tax special items included in Corporate expense |
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
1Q23 |
|
|
2Q23 |
|
|
3Q23 |
|
|
4Q23 |
|
|
2023 |
|
|
1Q24 |
|
|
2Q24 |
|
|
3Q24 |
|
Plant fire costs (reimbursements), net |
$ |
4 |
$ |
(4 |
) |
$ |
1 |
$ |
(13 |
) |
$ |
(12 |
) |
$ |
— |
$ |
(6 |
) |
$ |
— |
|
|||
Collective bargaining agreement negotiation |
|
— |
|
7 |
|
|
1 |
|
— |
|
|
8 |
|
|
— |
|
— |
|
|
— |
|
|||
Costs (benefits) associated with closures, supply chain disruptions, and other items |
|
1 |
|
9 |
|
|
1 |
|
2 |
|
|
13 |
|
|
1 |
|
— |
|
|
(1 |
) |
|||
Total Pre-tax special items included in Corporate expense |
$ |
5 |
$ |
12 |
|
$ |
3 |
$ |
(11 |
) |
$ |
9 |
|
$ |
1 |
$ |
(6 |
) |
$ |
(1 |
) |
Calculation of Financial Measures (unaudited), continued
(in |
||||||||||||||||
Reconciliation of Free cash flow |
Quarter ended |
|
Nine months ended |
|||||||||||||
|
1Q24 |
|
|
|
2Q24 |
|
|
|
3Q24 |
|
|
|
|
3Q24 |
|
|
Cash provided from operations |
$ |
177 |
|
|
$ |
397 |
|
|
$ |
244 |
|
|
|
$ |
818 |
|
Capital expenditures |
|
(82 |
) |
|
|
(55 |
) |
|
|
(82 |
) |
|
|
|
(219 |
) |
Free cash flow |
$ |
95 |
|
|
$ |
342 |
|
|
$ |
162 |
|
|
|
$ |
599 |
|
The Accounts Receivable Securitization program remains unchanged at
Free cash flow is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management reviews cash flows generated from operations after taking into consideration capital expenditures (due to the fact that these expenditures are considered necessary to maintain and expand the Company's asset base and are expected to generate future cash flows from operations). It is important to note that Free cash flow does not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure. |
Calculation of Financial Measures (unaudited), continued
(in |
|||||||||||
Reconciliation of Net income excluding Special items |
Quarter ended |
||||||||||
|
3Q23 |
|
|
|
2Q24 |
|
|
|
3Q24 |
|
|
Net income |
$ |
188 |
|
|
$ |
266 |
|
|
$ |
332 |
|
|
|
|
|
|
|
||||||
Diluted earnings per share ("EPS") |
$ |
0.45 |
|
|
$ |
0.65 |
|
|
$ |
0.81 |
|
|
|
|
|
|
|
||||||
Special items: |
|
|
|
|
|
||||||
Restructuring and other charges (credits)(1) |
|
4 |
|
|
|
22 |
|
|
|
(1 |
) |
Loss on debt redemption and related costs |
|
— |
|
|
|
— |
|
|
|
6 |
|
Plant fire costs (reimbursements), net |
|
1 |
|
|
|
(6 |
) |
|
|
— |
|
Collective bargaining agreement negotiations |
|
1 |
|
|
|
— |
|
|
|
— |
|
Costs (benefits) associated with closures, supply chain disruptions, and other items |
|
1 |
|
|
|
— |
|
|
|
(1 |
) |
Subtotal: Pre-tax special items |
|
7 |
|
|
|
16 |
|
|
|
4 |
|
Tax impact of Pre-tax special items(2) |
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
Subtotal |
|
6 |
|
|
|
16 |
|
|
|
3 |
|
|
|
|
|
|
|
||||||
Discrete and other tax special items(3) |
|
(2 |
) |
|
|
(6 |
) |
|
|
(45 |
) |
Total: After-tax special items |
|
4 |
|
|
|
10 |
|
|
|
(42 |
) |
|
|
|
|
|
|
||||||
Net income excluding Special items |
$ |
192 |
|
|
$ |
276 |
|
|
$ |
290 |
|
|
|
|
|
|
|
||||||
Diluted EPS excluding Special items |
$ |
0.46 |
|
|
$ |
0.67 |
|
|
$ |
0.71 |
|
|
|
|
|
|
|
||||||
Average number of shares - diluted EPS excluding Special items |
|
415 |
|
|
|
411 |
|
|
|
410 |
|
Net income excluding Special items and Diluted EPS excluding Special items are non-GAAP financial measures. Management believes that these measures are meaningful to investors because management reviews the operating results of the Company excluding the impacts of Restructuring and other charges (credits), Discrete tax items, and Other special items (collectively, “Special items”). There can be no assurances that additional Special items will not occur in future periods. To compensate for this limitation, management believes that it is appropriate to consider both Net income and Diluted EPS determined under GAAP as well as Net income excluding Special items and Diluted EPS excluding Special items. |
(1) |
Q2 2024 includes non-cash Special items of a loss on sale of a small manufacturing facility in Engineered Structures |
|
(2) |
The Tax impact of Pre-tax special items is based on the applicable statutory rates whereby the difference between such rates and the Company’s consolidated estimated annual effective tax rate is itself a Special item. |
|
(3) |
Discrete tax items for each period included the following: |
|
|
||
Calculation of Financial Measures (unaudited), continued
(in |
|||||||||||||||||||||
Reconciliation of Operational tax rate |
3Q24 |
|
Nine months ended |
||||||||||||||||||
Effective tax
|
|
Special
|
|
Operational
|
|
Effective tax
|
|
Special
|
|
Operational
|
|||||||||||
Income before income taxes |
$ |
354 |
|
|
$ |
4 |
|
$ |
358 |
|
|
$ |
991 |
|
|
$ |
21 |
|
$ |
1,012 |
|
Provision for income taxes |
$ |
22 |
|
|
$ |
46 |
|
$ |
68 |
|
|
$ |
150 |
|
|
$ |
58 |
|
$ |
208 |
|
Tax rate |
|
6.2 |
% |
|
|
|
|
19.0 |
% |
|
|
15.1 |
% |
|
|
|
|
20.6 |
% |
||
Operational tax rate is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management reviews the operating results of the Company excluding the impacts of Special items. There can be no assurances that additional Special items will not occur in future periods. To compensate for this limitation, management believes that it is appropriate to consider both the Effective tax rate determined under GAAP as well as the Operational tax rate. |
(1) |
Pre-tax special items for the quarter ended |
|
(2) |
Tax Special items includes discrete tax items, the tax impact on Special items based on the applicable statutory rates, the difference between such rates and the Company’s consolidated estimated annual effective tax rate and other tax related items. Discrete tax items for each period included the following: |
|
|
Calculation of Financial Measures (unaudited), continued
(in |
|||||||||||
Reconciliation of Adjusted EBITDA and Adjusted EBITDA margin excluding Special items |
|
||||||||||
|
3Q23 |
|
|
|
2Q24 |
|
|
|
3Q24 |
|
|
Sales |
$ |
1,658 |
|
|
$ |
1,880 |
|
|
$ |
1,835 |
|
Operating income |
$ |
307 |
|
|
$ |
398 |
|
|
$ |
421 |
|
Operating income margin |
|
18.5 |
% |
|
|
21.2 |
% |
|
|
22.9 |
% |
|
|
|
|
|
|
||||||
Net income |
$ |
188 |
|
|
$ |
266 |
|
|
$ |
332 |
|
Add: |
|
|
|
|
|
||||||
Provision for income taxes |
$ |
54 |
|
|
$ |
68 |
|
|
$ |
22 |
|
Other expense, net |
|
11 |
|
|
|
15 |
|
|
|
17 |
|
Loss on debt redemption |
|
— |
|
|
|
— |
|
|
|
6 |
|
Interest expense, net |
|
54 |
|
|
|
49 |
|
|
|
44 |
|
Restructuring and other charges (credits) |
|
4 |
|
|
|
22 |
|
|
|
(1 |
) |
Provision for depreciation and amortization |
|
68 |
|
|
|
69 |
|
|
|
68 |
|
Adjusted EBITDA |
$ |
379 |
|
|
$ |
489 |
|
|
$ |
488 |
|
|
|
|
|
|
|
||||||
Add: |
|
|
|
|
|
||||||
Plant fire costs (reimbursements), net |
$ |
1 |
|
|
$ |
(6 |
) |
|
$ |
— |
|
Collective bargaining agreement negotiations |
|
1 |
|
|
|
— |
|
|
|
— |
|
Costs (benefits) associated with closures, supply chain disruptions, and other items |
|
1 |
|
|
|
— |
|
|
|
(1 |
) |
Adjusted EBITDA excluding Special items |
$ |
382 |
|
|
$ |
483 |
|
|
$ |
487 |
|
|
|
|
|
|
|
||||||
Adjusted EBITDA margin excluding Special items |
|
23.0 |
% |
|
|
25.7 |
% |
|
|
26.5 |
% |
Incremental margin |
Quarter ended |
|
|
||
|
|
|
|
Q3 2024 YoY |
|
Third-party sales (b) |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA excluding Special items (a) |
|
|
|
|
|
|
|
|
|
|
|
Incremental margin (a)/(b) |
|
|
|
|
59% |
Adjusted EBITDA, Adjusted EBITDA excluding Special items, Adjusted EBITDA margin excluding Special items, Third-party sales, and Incremental margin are non-GAAP financial measures. Management believes that these measures are meaningful to investors because they provide additional information with respect to the Company's operating performance and the Company’s ability to meet its financial obligations. The Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies. The Company's definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation and amortization. Net margin is equivalent to Sales minus the following items: Cost of goods sold, Selling, general administrative, and other expenses, Research and development expenses, and Provision for depreciation and amortization. Special items, including Restructuring and other are charges (credits), are excluded from Adjusted EBITDA. |
Calculation of Financial Measures (unaudited), continued
(in |
|||||||||||
Reconciliation of Adjusted Operating Income Excluding Special Items and Adjusted Operating Income Margin Excluding Special Items |
Quarter ended |
||||||||||
|
3Q23 |
|
|
|
2Q24 |
|
|
|
3Q24 |
|
|
Sales |
$ |
1,658 |
|
|
$ |
1,880 |
|
|
$ |
1,835 |
|
Operating income |
$ |
307 |
|
|
$ |
398 |
|
|
$ |
421 |
|
Operating income margin |
|
18.5 |
% |
|
|
21.2 |
% |
|
|
22.9 |
% |
|
|
|
|
|
|
||||||
Add: |
|
|
|
|
|
||||||
Restructuring and other charges (credits) |
$ |
4 |
|
|
$ |
22 |
|
|
$ |
(1 |
) |
Plant fire costs (reimbursements), net |
|
1 |
|
|
|
(6 |
) |
|
|
— |
|
Collective bargaining agreement negotiations |
|
1 |
|
|
|
— |
|
|
|
— |
|
Costs (benefits) associated with closures, supply chain disruptions, and other items |
|
1 |
|
|
|
— |
|
|
|
(1 |
) |
Adjusted operating income excluding Special items |
$ |
314 |
|
|
$ |
414 |
|
|
$ |
419 |
|
|
|
|
|
|
|
||||||
Adjusted operating income margin excluding Special items |
|
18.9 |
% |
|
|
22.0 |
% |
|
|
22.8 |
% |
Adjusted operating income excluding Special items and Adjusted operating income margin excluding Special items are non-GAAP financial measures. Management believes that these measures are meaningful to investors because management reviews the operating results of the Company excluding the impacts of Special items. There can be no assurances that additional Special items will not occur in future periods. To compensate for this limitation, management believes that it is appropriate to consider both Operating income determined under GAAP as well as Operating income excluding Special items. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20241106463205/en/
Investor Contact
(412) 553-1950
Paul.Luther@howmet.com
Media Contact
(412) 553-2666
Rob.Morrison@howmet.com
Source: