- Howmet Aerospace Inc HWM reported first-quarter FY23 revenue growth of 21% year-over-year to $1.60 billion, beating the consensus of $1.49 billion.
- The revenue increase was driven by growth in the commercial aerospace market of 29%.
- Revenue by Segments: Engine Products $795 million (+26% Y/Y); Fastening Systems $312 million (+18% Y/Y); Engineered Structures $207 million (+14% Y/Y); and Forged Wheels $289 million (+17% Y/Y).
- Adjusted EPS improved to $0.42 compared to $0.31 in 1Q22, above the consensus of $0.38.
- Operating income increased 23.9% Y/Y to $285 million, and the margin expanded by 41 bps to 17.8%.
- Adjusted EBITDA excluding special items was $360 million (+20% Y/Y), and the margin was 22.5%, down 20bps compared to last year.
- Howmet Aerospace generated cash from operating activities during Q1 of $23 million, compared to $55 million a year ago. Free cash flow was negative $(41) million.
- During the quarter, Howmet Aerospace repurchased ~0.6 million shares for $25 million. As of May 1, 2023, total share repurchase authorization available was $922 million.
- At the end of the quarter, the company's cash balance was $538 million.
- Executive Chairman and Chief Executive Officer John Plant commented, "The demand picture continues to be strong for commercial aerospace, with higher aircraft production rates underpinned by continued growth in air traffic. We are encouraged by progress at aircraft OEM customers to meet their higher build rate targets."
- 2Q23 Outlook: Howmet Aerospace expects revenue of $1.6 billion - $1.62 billion (consensus $1.52 billion) and adjusted EPS of $0.41- $0.43 (consensus $0.40).
- It expects an adjusted EBITDA of $359 million - $365 million and an Adjusted EBITDA margin of 22.4%- 22.5%.
- FY23 Outlook, raised: Howmet Aerospace expects revenue of ~$6.2 billion - $6.325 billion (prior view $6 billion - $6.2 billion) versus the consensus of $6.14 billion.
- Adjusted EPS of $1.65 - $1.70 (prior view $1.53 - $1.67) versus the consensus of $1.62.
- The company now expects adjusted EBITDA of $1.4 billion - $1.435 billion, an Adjusted EBITDA margin of 22.6% - 22.7%, and Free Cash Flow of $600 million - $670 million.
- Price Action: HWM shares are trading higher by 1.26% at $44.86 on the last check Tuesday.
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