Howmet Q3 2026 Earnings: Revenue Rises 29% as Margins Expand

Howmet Aerospace (NYSE: HWM) reported Q3 2026 revenue of $2.703 billion, up 29% from $2.089 billion a year earlier, while GAAP diluted EPS increased 49% to $1.42 from $0.95. Organic revenue grew 25%, adjusted EBITDA margin expanded 310 basis points to 32.5%, and free cash flow rose 33% to $562 million. Engine Products produced the largest segment profit increase, while acquisition mix and aluminum cost pass-through weighed on margins in Fastening Systems and Forged Wheels.

Core Financial Results

Growth extended across Howmet’s major end markets: commercial aerospace revenue rose 32%, defense aerospace increased 10%, gas turbines advanced 45%, and commercial transportation grew 28%. The difference between reported growth of 29% and organic growth of 25% reflects the effects of acquisitions and divestitures.

Profit increased faster than revenue. GAAP operating income rose 43%, and operating margin expanded 280 basis points as growth across aerospace, defense, gas turbines, and commercial transportation supported operating leverage.

Adjusted EPS, adjusted EBITDA, adjusted EBITDA margin, and free cash flow are non-GAAP measures. Q3 adjusted EPS exceeded GAAP EPS by $0.04, primarily reflecting acquisition-related, restructuring, and tax special items.

Business and Segment Performance

Engine Products led the quarter, while the other segments showed how acquisitions, divestitures, and cost pass-through can cause reported revenue and margin trends to diverge. Fastening Systems recorded the fastest reported sales growth, but acquisitions accounted for much of the increase.

Engine Products benefited from commercial aerospace and gas-turbine demand, lifting adjusted EBITDA 57%. The segment added approximately 520 net employees during the quarter to support anticipated revenue growth.

Fastening Systems revenue rose 41%, but growth was 10% excluding the CAM and Brunner acquisitions. The CAM acquisition contributed to the 140-basis-point margin decline, showing that acquired revenue did not carry the segment’s prior margin profile.

Engineered Structures’ reported revenue declined because of the Savannah disk-forging facility divestiture. Excluding that transaction, revenue grew 8%, while the exit from lower-margin business helped adjusted EBITDA rise 9% and margin expand to 23.7%.

Forged Wheels benefited from higher commercial transportation volumes and aluminum cost pass-through. However, adjusted EBITDA grew only 18% against a 32% revenue increase, and margin fell 330 basis points because pass-through revenue increased sales without a proportional profit contribution.

Profitability, Cash Flow, and the Balance Sheet

Q3 operating cash flow increased 34% to $709 million. After $147 million of capital expenditures, free cash flow reached $562 million, even as the company continued investing in additional capacity.

Cash and cash equivalents stood at $507 million on September 30, 2026, down from $742 million at the end of 2025. Over the same period, customer receivables increased from $779 million to $1.116 billion and inventories rose from $1.849 billion to $2.113 billion. For the first nine months of 2026, acquisitions net of acquired cash used $1.929 billion.

Long-term debt was $4.052 billion at quarter-end, compared with $2.859 billion at the end of 2025, while $390 million of the company’s $1 billion commercial paper program was outstanding. Howmet paid down $60 million of commercial paper during Q3.

Cash generation also supported capital returns. Howmet repurchased approximately 1.9 million shares for $500 million during Q3 at an average price of $264.77. Repurchases totaled $1.1 billion through October 28, 2026, and the board added $5 billion to the authorization, bringing total available authorization to $5.397 billion. The quarterly dividend increased 17% from $0.12 to $0.14 per share.

2026 and 2027 Guidance

Howmet raised the baseline for each of its main full-year 2026 guidance measures. The largest revisions were a $250 million increase in revenue, a $100 million increase in adjusted EBITDA, and a $100 million increase in free cash flow.

Howmet also introduced 2027 revenue guidance of approximately $11.5 billion, representing about 12% growth from the increased 2026 outlook. Management tied that projection to the commercial aircraft backlog, expected production increases, continued defense demand, and customers seeking higher gas-turbine volumes.

The company expects capital spending to remain elevated beyond 2027 to support aerospace, defense, and gas-turbine growth. Maintaining free cash flow conversion while funding those capacity additions will therefore be an important measure of execution.

Recent Insider Transactions

The supplied insider data reports 5,407 shares acquired across nine transactions and 41,932 shares sold in one transaction over the past six months, resulting in net sales of 36,525 shares. Total insider holdings were reported at 3.52 million shares; the acquisition entries were primarily stock awards rather than disclosed open-market purchases.

Marchuk’s transaction accounted for the reported six-month sale total. These transactions alone do not establish insiders’ views about Howmet’s outlook.

Risks Investors Should Monitor

• Capacity and production execution: Engine Products added approximately 520 employees, and Howmet plans elevated capital spending beyond 2027. Delays in hiring, training, production ramp-ups, or supplier output could limit the company’s ability to convert demand into revenue and cash flow.
• Acquisition-related margin pressure: CAM contributed to Fastening Systems’ sales growth but reduced the segment’s margin. Integration performance and the profitability of acquired revenue will affect whether headline growth translates into comparable earnings growth.
• Revenue mix and cost pass-through: Forged Wheels demonstrated that aluminum cost pass-through can lift reported sales while reducing the reported margin. Continued pass-through effects could make revenue growth less indicative of underlying profit growth.
• Working capital and debt: Receivables and inventories increased during the first nine months, while long-term debt and short-term borrowings were higher than at year-end. Future cash conversion must balance working-capital needs, capacity investment, debt obligations, and capital returns.

Summary

Howmet’s Q3 2026 results combined broad end-market growth with faster profit expansion, led by Engine Products and gas-turbine demand. The raised 2026 outlook and initial 2027 revenue target point to continued volume growth, but execution now depends on expanding capacity without weakening cash conversion. Investors should watch whether Fastening Systems and Forged Wheels can stabilize margins while the company funds higher capital spending and working-capital requirements.