Howmet Aerospace Soars On Strong Q2, Dividend Boost And Buybacks: Details

Howmet Aerospace Inc. HWM shares are trading higher after the company reported better-than-expected second-quarter FY24 financial results.

Revenue grew 14% Y/Y to $1.88 billion, beating the consensus of $1.836 billion, driven by growth in the commercial aerospace of 27% Y/Y.

Revenue by Segments: Engine Products $933 million (+14% Y/Y); Fastening Systems $394 million (+20% Y/Y); Engineered Structures $275 million (+38% Y/Y); and Forged Wheels $278 million (-7% Y/Y).

Adjusted EBITDA excluding special items was $483 million (+31% Y/Y), and the margin was 25.7%.

Adjusted operating income increased by 38% Y/Y to $414 million, and the margin expanded by 370 bps Y/Y to 22.0%.

Adjusted EPS stood at $0.67, beating the consensus of $0.60.

Howmet Aerospace’s operating cash flow stood at $397 million, and its free cash flow was $342 million. At the end of the quarter, the company’s cash balance was $752 million.

Buyback: Howmet Aerospace’s Board of Directors approved a $2 billion increase in the company’s share repurchase program, raising the total to $2.487 billion.

During the quarter, Howmet Aerospace repurchased $60 million worth of common stock at an average price of $81.66 per share.

Dividend: The Board of Directors declared a dividend of $0.08 per share, payable on August 26 to shareholders of record as of August 9.

This quarterly dividend is a 60% increase from the second-quarter dividend of $0.05 per share.

The Board of Directors approved a 2025 dividend policy for common stock, set at 15% (+/- 5%) of net income, excluding special items.

Third-quarter FY24 Outlook: Howmet Aerospace expects revenue of $1.845 billion-$1.865 billion (consensus $1.81 billion) and adjusted EPS of $0.63-$0.65 (consensus $0.60).

FY24 Outlook Raised: Howmet Aerospace increased its revenue outlook to $7.40 billion-$7.48 billion (from $7.225 billion-$7.375 billion) versus the consensus of $7.33 billion and adjusted EPS to $2.53-$2.57 (from $2.31-$2.39) vs. the consensus of $2.39.

John Plant, Executive Chairman and Chief Executive Officer, said, “The outlook for commercial aerospace continues to be robust, with strong travel demand and an aging aircraft fleet, leading to an extremely high backlog at the aircraft OEMs. The issue faced by Howmet Aerospace continues to be the aircraft manufacturers’ ability to build and deliver aircraft on a consistent basis.”

Investors can gain exposure to the stock via WBI BullBear Quality 3000 ETF WBIL and SPDR S&P Aerospace & Defense ETF XAR.

Price Action: HWM shares are up 12.3% at $93.00 premarket at the last check Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.