Why Did Howmet Aerospace Shares Fall Today?

Howmet Aerospace Inc HWM reported a second-quarter sales decline of 4.6% year-over-year to $1.19 billion, missing the estimate of $1.21 billion.

• The decline was attributed to the commercial aerospace market (down 31% Y/Y), driven by COVID-19 and Boeing 787 production declines.
• Sales by segments: Engine Products $544 million (-7% Y/Y), Fastening Systems $262 million (-20% Y/Y), Engineered Structures $160 million (-30% Y/Y) and Forged Wheels $229 million (+103% Y/Y).
• Adjusted EPS improved to $0.22 from $0.12 in 2Q20, in line with the consensus of $0.22.
• The operating income increased by 180% Y/Y to $207 million, and the margin expanded by 1,142 bps to 17.3%. Operating income excluding special items was $205 million, up 14% Y/Y.
• The company generated cash from operating activities year-to-date of $79 million, compared to cash used of $177 million a year ago, and adjusted Free cash flow of $160 million.      
• Adjusted EBITDA was $272 million, compared to $275 million in 1Q21, and margin expanded by 10 bps to 22.8% vs. 19.7 in 2Q20.
• Howmet repurchased ~6 million shares in Q2 2021 for $200 million. It ended the quarter with a cash balance of $716 million.
• Howmet Aerospace reinstated a quarterly dividend, declaring a dividend of $0.02 per share, to be paid on August 25, 2021, to the holders of record of the common stock at the close of business on August 6, 2021.
• Q3 Outlook: Howmet Aerospace expects revenue of $1.28 billion -$1.32 billion, Adjusted EBITDA of $285 million - $305 million, and a margin of 22.3%-23.1%. It expects an adjusted EPS of $0.23-$0.27.
• It expects FY21 revenue of $5.05 billion - $5.15 billion, Adjusted EBITDA of 1.145 billion - $1.17 billion, and a margin of 22.7%-23.0%.
• It sees an adjusted EPS of $0.95-$1.02 and an adjusted free cash flow of $415 million -$485 million.
• Price Action: HWM shares trading lower by 6.03% at $31.01 on the last check Wednesday.