Howmet Aerospace Q2 2026 earnings: Organic growth reaches 21% as guidance rises

Howmet Aerospace (NYSE: HWM) reported second-quarter 2026 revenue of $2.547 billion, up 24% year over year, while diluted GAAP EPS rose 33% to $1.33 from $1.00. Organic revenue grew 21%, adjusted EBITDA margin expanded 340 basis points to 32.1%, and quarterly free cash flow reached $479 million. The company also raised its full-year 2026 guidance across revenue, adjusted EBITDA, adjusted EPS, and free cash flow.

Core earnings data

For the quarter ended June 30, 2026, reported on August 6, growth in commercial aerospace, defense aerospace, and gas turbines supported higher revenue. Commercial aerospace revenue increased 28%, defense aerospace grew 11%, and gas turbine revenue rose 38%.

Profit increased faster than revenue. GAAP operating margin expanded 250 basis points, while adjusted EBITDA margin rose 340 basis points despite the April addition of CAM and $22 million of acquisition-related costs during the quarter.

Organic revenue, adjusted operating income, adjusted EBITDA, adjusted EPS, and free cash flow are non-GAAP measures. Howmet defines free cash flow as operating cash flow less capital expenditures.

Business and segment performance

Engine Products remained the largest contributor and recorded the fastest EBITDA growth. All four segments expanded their adjusted EBITDA margins, although portfolio transactions and inflation-related pass-through affected reported revenue comparisons.

Engine Products benefited from demand across commercial aerospace, defense aerospace, and gas turbines. The segment added approximately 485 net employees during the quarter to prepare for expected revenue growth, while adjusted EBITDA increased 51%.

Fastening Systems’ 37% sales growth included contributions from the CAM and Brunner acquisitions. The segment’s adjusted EBITDA rose 40%, slightly faster than revenue, even as CAM was integrated beginning in April.

Engineered Structures was the only segment with lower revenue. The Savannah disk-forging facility divestiture and product rationalization reduced sales by 13%, but exiting lower-margin business helped lift the segment margin by 170 basis points.

Forged Wheels’ revenue increased despite an 8% year-over-year decline in commercial transportation volumes, as aluminum and other inflation-related cost pass-through more than offset the volume reduction. Volumes improved 7% sequentially, and cost reductions supported a 16% increase in adjusted EBITDA.

Profitability, cash flow, and the balance sheet

Cash generation and acquisition funding

Operating cash flow increased to $583 million. After $104 million of capital expenditures, free cash flow was $479 million, compared with $344 million one year earlier.

Howmet completed its approximately $1.8 billion acquisition of Consolidated Aerospace Manufacturing on April 6. Acquisition payments totaled $1.929 billion during the first six months of 2026, while cash and cash equivalents stood at $563 million on June 30, down from $742 million at the end of 2025.

Reported debt and short-term borrowings totaled approximately $4.501 billion at quarter-end, compared with $3.050 billion at December 31, 2025. Howmet repaid a $186 million yen-denominated term loan and entered into a $300 million cross-currency swap that reduced the effective fixed rate on the related liability to approximately 3.88%. The company expects the combined debt actions to lower annualized interest expense by $12 million.

Receivables increased to $1.040 billion from $779 million at year-end, while inventories rose to $2.183 billion from $1.849 billion. These working-capital balances are important to monitor as Howmet increases production capacity and capital spending.

Capital returns

Howmet repurchased $300 million of common stock during the quarter and another $200 million in July. Repurchases totaled $800 million through July 2026, and $697 million of authorization remained as of August 6.

The board also increased the third-quarter dividend by 17% to $0.14 per share from $0.12 in the second quarter. The dividend was scheduled for payment on August 25 to shareholders of record on August 7.

2026 guidance

Howmet raised the baseline of every full-year measure disclosed in its guidance. The largest changes were a $400 million increase in the revenue baseline and a $170 million increase in adjusted EBITDA, with the baseline adjusted EBITDA margin lifted by 40 basis points.

The respective Q3 baseline figures are $2.575 billion of revenue, $830 million of adjusted EBITDA, a 32.2% adjusted EBITDA margin, and adjusted EPS of $1.35. Full-year baseline figures are $10.050 billion, $3.230 billion, 32.1%, $5.27, and $1.900 billion of free cash flow.

Management’s view

Management said all of Howmet’s major end markets were expanding. Commercial aircraft production is supported by customer backlogs, while engine spare-parts demand continues to increase. Defense demand remains healthy, with missiles, drones, and collaborative combat aircraft identified as medium-term growth areas.

Gas turbine customers were described as adding to their demand outlooks, while North American commercial transportation had begun to recover. Management also said CAM integration was on track and expected cash generation to restore leverage to pre-acquisition levels in a relatively short period.

At the same time, capital requirements are increasing. Howmet expects to raise spending further in 2027 to support organic growth in aerospace and gas turbines.

Recent insider transactions

The supplied Yahoo Finance summary lists 112,603 shares across 18 insider purchase transactions and 88,082 shares across three sales during the preceding six months, resulting in net purchases of 24,521 shares. The latest transaction list is dominated by stock awards, which are compensation-related transactions rather than open-market purchases.

The transaction data alone do not establish insiders’ views about Howmet’s future performance.

Risks investors should monitor

• Capacity and execution: Engine Products added approximately 485 net employees, and capital requirements are expected to rise further in 2027. Converting demand into revenue depends on hiring, production expansion, and supplier execution.
• CAM integration and leverage: The approximately $1.8 billion acquisition expanded Fastening Systems but was accompanied by higher debt and acquisition-related costs. Integration performance and the pace of leverage reduction remain important.
• Commercial transportation recovery: Forged Wheels volumes were still 8% below the prior year. Reported revenue benefited from aluminum and inflation-related pass-through, so sustained volume recovery is important for underlying growth.
• Working capital and capital intensity: Inventories and receivables increased from year-end, while management expects higher capital expenditures. Continued increases could absorb part of the company’s operating cash generation.

Summary

Howmet’s second-quarter results reflected broad aerospace and gas turbine demand, with 21% organic revenue growth and faster profit growth producing substantial margin expansion. Engine Products led the improvement, while portfolio actions reduced Engineered Structures revenue but improved its margin. Higher full-year guidance signals continued operating momentum, although investors should track capacity expansion, CAM integration, leverage reduction, working capital, and the durability of the commercial transportation recovery.