Howmet Aerospace Q3 Revenue Rises 29% as Margins Expand

Howmet Aerospace Inc. (NYSE: HWM) reported a 29% year-over-year increase in third-quarter 2026 revenue, supported by commercial aerospace and gas-turbine demand, while adjusted earnings and margins grew faster than sales. The aerospace components maker also set full-year guidance around $10.3 billion of revenue and projected approximately 12% revenue growth in 2027.

Revenue reached $2.703 billion, up from $2.089 billion a year earlier and 6% above the second quarter. Organic revenue, which excludes the effects of acquisitions and divestitures, increased 25% year over year. Commercial aerospace revenue rose 32% and represented 54% of total sales, while gas-turbine revenue increased 45%. Defense aerospace, commercial transportation and other revenue grew 10%, 28% and 48%, respectively.

Adjusted EBITDA increased 43% to $879 million, with the adjusted EBITDA margin expanding 310 basis points to 32.5%. Adjusted operating income rose 45% to $786 million, and adjusted earnings per share advanced 54% to $1.46.

On a GAAP basis, operating income was $777 million, compared with $542 million in the prior-year quarter, while operating margin increased to 28.7% from 25.9%. Net income rose to $567 million from $385 million, and diluted EPS increased to $1.42 from $0.95.

Engine Products leads segment growth

Engine Products, Howmet’s largest segment, generated $1.451 billion in third-party revenue, up 33% year over year. Segment adjusted EBITDA climbed 57% to $567 million, and the margin rose to 39.1% from 33.3%. Howmet attributed the performance to growth in commercial aerospace, gas turbines and spare parts. The company also continued to invest in additional Engine Products capacity.

Fastening Systems revenue increased 41% to $630 million, including contributions from the Brunner and Consolidated Aerospace Manufacturing acquisitions. Organic growth was 10%, supported by commercial and defense aerospace. Segment adjusted EBITDA rose 34% to $185 million, although the adjusted EBITDA margin declined to 29.4% from 30.8%.

Engineered Structures revenue decreased 4% to $295 million following the March 2026 divestiture of a disk-forging facility. Excluding acquisition and divestiture effects, organic revenue grew 8%. Adjusted EBITDA increased 9% to $70 million, and the margin improved to 23.7% from 20.8%, reflecting product rationalization and operational improvement initiatives identified by the company.

Forged Wheels revenue rose 32% to $327 million on commercial transportation growth and higher aluminum-cost pass-through. Adjusted EBITDA increased 18% to $86 million, but the segment margin narrowed to 26.3% from 29.6%.

Cash generation supports buybacks and debt reduction

Third-quarter cash provided by operations totaled $709 million, while capital expenditures were $147 million, resulting in non-GAAP free cash flow of $562 million. Free cash flow for the first nine months of 2026 reached $1.4 billion.

Howmet repurchased $500 million of common stock during the quarter at an average price of about $265 per share, bringing year-to-date repurchases to $1.1 billion. It also paid down $60 million of debt and distributed $56 million in dividends. The quarterly dividend was increased 17% sequentially to $0.14 per share.

Net debt to trailing-12-month adjusted EBITDA improved to 1.3 times from 1.4 times at the end of the second quarter. Howmet ended September with $508 million in cash and approximately $4.44 billion in total debt. On October 28, the company increased its share-repurchase authorization by $5 billion to $5.4 billion.

Howmet sets 2026 and 2027 outlook

For full-year 2026, management expects revenue of $10.29 billion to $10.31 billion, adjusted EBITDA of $3.325 billion to $3.335 billion and an adjusted EBITDA margin of 32.3%. Adjusted EPS is projected at $5.49 to $5.51, while free cash flow is expected to range from $1.95 billion to $2.05 billion.

At the midpoint, the outlook implies approximately 25% revenue growth, 38% adjusted EBITDA growth and 46% adjusted EPS growth from 2025. Howmet expects free cash flow of about $2 billion, representing roughly 90% conversion of adjusted net income, and capital spending of approximately $515 million, or about 5% of revenue. The guidance includes the effects of completed acquisitions and divestitures.

For the fourth quarter, the company forecast revenue of $2.74 billion to $2.76 billion, adjusted EBITDA of $895 million to $905 million and adjusted EPS of $1.49 to $1.51. Howmet also projected 2027 revenue of approximately $11.5 billion, which would represent about 12% year-over-year growth.

The outlook remains subject to risks identified by the company, including changes in aerospace and transportation markets, tariffs and trade policies, energy costs, supply-chain disruptions, manufacturing and workforce constraints, and the ability to meet higher production requirements. Howmet also cited integration and performance risks related to acquisitions, cybersecurity threats, geopolitical and regulatory uncertainty, and potential changes in customer financial conditions.