Howmet Aerospace (HWM) reported first-quarter results Thursday that blew past analyst expectations and raised its full-year outlook, sending shares to a new 52-week high. But CEO John Plant also threw a bit of cold water on the party, warning that the ongoing Iranian conflict could put a dent in demand momentum.
Revenue rose 19% year over year to $2.313 billion, beating the $2.241 billion analyst estimate. Adjusted EPS jumped 42% to $1.22, ahead of the $1.11 estimate, while GAAP EPS surged 71% to $1.44. The company said revenue, adjusted EBITDA, and adjusted EPS all exceeded the high end of its own guidance.
Margins Expand on Aerospace Demand
Operating income climbed 52% to $753 million, with operating margin expanding 720 basis points to 32.6%. Adjusted EBITDA rose 32% to $740 million, with margin improving 320 basis points to 32.0%.
The growth was fueled by a 20% increase in commercial aerospace revenue, 10% growth in defense aerospace, and a 39% surge in gas turbines. That's a lot of moving parts, but the story is simple: planes are flying more, engines need parts, and Howmet is cashing in.
CEO John Plant said, "Commercial aerospace OEM customers continue to target production rate increases supported by record backlogs. Engine spares needs continue to increase, although an effect could be felt from the Iranian conflict." He added, "Defense markets remain healthy, while the gas turbines market is also very active. We see signs of demand improvement in commercial transportation, although we remain cautious."
Segment Results and Capital Deployment
Engine Products revenue rose 29% to $1.25 billion, with adjusted EBITDA up 44% to $458 million. Fastening Systems revenue increased 14% to $471 million. Engineered Structures revenue dipped 3% to $294 million due to product rationalization, while Forged Wheels revenue rose 17% despite lower commercial transportation volumes.
Cash from operations increased 79% to $453 million, and free cash flow more than doubled, jumping 168% to $359 million. The company ended the quarter with $2.435 billion in cash and $4.05 billion in long-term debt.
Howmet also made some big moves: it completed the roughly $1.8 billion acquisition of Consolidated Aerospace Manufacturing, sold its Savannah disk forging facility for about $230 million, and repurchased $300 million of its own stock during the quarter. That's a lot of activity for three months.
Outlook Raised Above Estimates
Howmet raised its full-year 2026 adjusted EPS guidance to $4.88-$5.00 from $4.35-$4.55, well above the $4.64 analyst estimate. Revenue guidance was lifted to $9.575 billion-$9.725 billion from $9.0 billion-$9.2 billion, also above the $9.382 billion consensus.
For the second quarter, the company expects adjusted earnings of $1.22 to $1.24 per share, above the $1.15 estimate, and projects sales of $2.39 billion to $2.41 billion, compared with estimates of $2.338 billion.
Howmet Aerospace shares were up 8.37% at $277.89 at the time of publication on Thursday, hitting a new 52-week high. The market clearly liked what it heard, even with the Iran warning. Investors seem to be betting that the aerospace boom is strong enough to weather geopolitical storms.
