Howmet Aerospace : 2024 Howmet Aerospace Annual Report

Published: 2025-04-16 17:02:06 ET HWM

2024 ANNUAL REPORT

HOWMET AEROSPACE

Who We Are

OUR VISION We are a company of innovators and makers.

We are transforming the future with high-performance engineered solutions that are paired with advanced manufacturing expertise.

OUR MISSION Leverage our diﬀerentiated technologies to reduce the carbon footprint of our customers by delivering products that enable lighter, more fuel-eﬃcient aircraft and commercial vehicles, and enable sustainable power generation.

WHAT WE DO Howmet Aerospace is a manufacturer of high-performance advanced engineered solutions for the aerospace, defense, and transportation markets.

Engine

Products

Produce components enabling quieter, cleaner and more fuel-eﬃcient aerospace engines and industrial gas turbines.

Fastening

Systems

Make aerospace and industrial fasteners to hold together aircraft, jet engines, commercial trucks, wind turbines, solar panels, and more.

Engineered

Structures

Manufacture advanced, multi-material parts that make aircraft and vehicles lighter and more fuel-eﬃcient.

Forged

Wheels

Forge strong aluminum wheels that allow commercial trucks to run lighter and more fuel-eﬃciently.

HOW WE OPERATE As One Team, with One Direction, using One Plan.

Value Our People

Emphasize health and safety. Foster a "speak up" culture. Embrace a diverse and inclusive work environment.

Support the communities where we operate.

Drive Operational Excellence

Lead with integrity.

Continuously improve operations. Focus on the few things that matter. Align to win together.

Deliver value to shareholders.

Win With Our Customers

Collaborate to solve customer challenges.

Innovate for our customers' success.

Deliver with quality.

Act with our customers in mind.

2024 OVERVIEW

2024 TOTAL REVENUE

Billion

GLOBAL PROFILE

23,930 EMPLOYEES

57 LOCATIONS*

22 COUNTRIES

HOWMET AEROSPACE | 2024 ANNUAL REPORT | 01

REVENUE BY MARKET SECTOR

COMMERCIAL

AEROSPACE

52%

INDUSTRIAL

DEFENSEAND OTHER AEROSPACE

16% COMMERCIAL 15%

TRANSPORTATION

17%

Howmet Aerospace is a leading global provider of advanced engineered solutions for the aerospace and transportation industries.

Headquartered in Pittsburgh, Pennsylvania, the Company's primary businesses focus on jet engine components, aerospace fastening systems and airframe structural components necessary for mission-critical performance and efficiency in aerospace and defense applications, as well as forged aluminum wheels for commercial transportation.

With approximately 1,170 granted and pending patents, the Company's differentiated technologies enable lighter, more fuel-efficient aircraft and commercial trucks to operate with a lower carbon footprint.

For more information: www.howmet.com

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2025 Howmet Aerospace

Shareholder Letter

April 9, 2025

Dear Shareholder,

Howmet Aerospace delivered excellent ﬁnancial results in 2024. Additionally, the share price of our common stock increased 102 percent, which outpaced the 23 percent growth in the S&P 500 index.

Revenue for the full year of 2024 was approximately $7.4 billion, up 12 percent from 2023, driven by strong growth in all three of our aerospace segments, and we outgrew each of our respective markets. Adjusted EBITDA* of over $1.9 billion was up 27 percent year-over-year and was an all-time high. Adjusted Earnings per Share* was $2.69 per share, up 46 percent year-over-year.

The Company's balance sheet continues to strengthen. Free cash ﬂow for the year was $977 million, with a healthy free cash ﬂow conversion of net income excluding special items at 88 percent, which is in-line with our long-term target of 90 percent and reﬂected the signiﬁcant capital investments we are making in the business.

We reduced debt by $365 million in the year, and combined with other debt reﬁnancing activity, our actions during 2024 will reduce annualized interest expense by approximately $37 million. Our net debt-to-Adjusted-EBITDA* ratio was 1.4 times for the twelve months ended December 31, 2024. Capital expenditures in the year were $321 million, up approximately $100 million year-over-year, as we continued to invest for growth. We also repurchased $500 million of common stock during 2024 and recently announced a 25 percent increase in the quarterly dividend on our common stock to $0.10 per share.

We deliver these superior results as we operate as one team focused on providing customers with high-performance products. We do this while focusing on our employees' safety and development, being a good neighbor in the communities where we operate,

being conscientious environmental stewards, and ensuring we are making good business investments. We seek to be reliable for our customers, suppliers, employees and our communities.

In the commercial aerospace market, the outlook remains healthy. Air passenger traﬃc continues to grow, led more recently by Europe and Asia Paciﬁc. There has been some recent moderation in North American traﬃc growth, driven by tariﬀ-related and economic uncertainty. Nevertheless, Howmet Aerospace's engine and airframe OEM customers continue to demonstrate growth, with record backlogs supported by under-build of aircraft in recent years and the desire for new, fuel-eﬃcient aircraft with reduced carbon emissions.

Given the easing of some production constraints at the OEMs and in the supply chain, the commercial aerospace industry is positioned for increased aircraft production. We expect to see higher production volumes in 2025, and we are positioned to support our customers with the diﬀerentiated, mission-critical aerospace parts that we provide. Spares growth was signiﬁcant in 2024, and we expect robust growth again in 2025, driven by signiﬁcant needs from both legacy and current engine programs.

The defense aerospace market, for which our revenue increased 15 percent in 2024 compared to 2023, was also a source of strength, and we expect this continuing into 2025 for both the F-35 aircraft and legacy ﬁghter programs. Defense aerospace spares revenue growth was healthy in 2024, and we expect this trend to continue in 2025 as the ﬂeet of F-35 aircraft continues to expand worldwide.

We expect additional growth in our Industrial and Other end markets, led by Industrial Gas Turbines (IGT), as the outlook for electricity demand is increasing

from the signiﬁcant increases in the building of data centers. Howmet Aerospace provides critical turbine airfoils for the IGT market, enabling better performance and fuel eﬃciency of these power generating units. Howmet Aerospace is the global market leader in turbine blades.

The commercial truck market entered a cyclical downturn in 2024, as expected. For 2025, we do not expect the market to recover before mid-year 2025. A potential increase in commercial truck builds is less certain in the second half of the year, given tariﬀ-related and economic uncertainty in North America. However, our premium products and strong market position should allow Howmet Aerospace to continue to outperform the overall market.

While production challenges at OEMs impacted new aircraft build rates, engine spares continued to grow. Total spares revenue represented approximately 17% of total Howmet Aerospace revenue in 2024, signiﬁcantly higher than the 11% of total revenue that spares represented in 2019. We envision spares to continue to be healthy again in 2025 and grow towards 20 percent of total Howmet Aerospace revenue in the coming years.

Engine Products delivered a record year. Revenue of $3.7 billion in 2024 reﬂected an increase of 14 percent year-over-year. Segment Adjusted EBITDA growth outpaced revenue growth and was up approximately 30 percent year-over-year. Segment Adjusted EBITDA Margin increased to 30.8 percent.

The Engine Products segment grew employee headcount by approximately 1,205 over the course of 2024 to support future growth. We also deployed signiﬁcant capital in the business to increase production capacity for airfoils, with the investment supported by long-term customer agreements.

Fastening Systems revenue of $1.6 billion in 2024 reﬂected an increase of 17 percent year-over-year. Segment Adjusted EBITDA growth outpaced revenue growth and was up approximately 46 percent year-over-year. Segment Adjusted EBITDA Margin increased to 25.8 percent as the Fasteners team drove strong commercial and operational improvements in the segment.

HOWMET AEROSPACE | 2024 ANNUAL REPORT | 03

Engineered Structures revenue of $1.1 billion in 2024 reﬂected an increase of 21 percent year-over-year. Segment Adjusted EBITDA growth outpaced revenue growth and was up approximately 47 percent. Segment Adjusted EBITDA Margin increased to 15.6 percent, driven by commercial improvements, optimization of its manufacturing footprint and product rationalization.

Forged Wheels revenue of $1.1 billion in 2024 was down eight percent year-over-year due to lower volumes in the commercial transportation market. Despite lower volumes, the Forged Wheels team delivered a Segment Adjusted EBITDA margin of 27.2 percent, up approximately 30 basis points year-over-year.

In closing, markets continue to be healthy, and our strategy remains unchanged.

Focus on what we are good at to drive growth above market rate

Prioritize major diﬀerentiated products for

resource allocation

Underpin strategy with commercial and operational discipline

Execute a disciplined capital allocation strategy

While tariﬀs have increased uncertainty in the outlook, we still expect to see increasing demand in the commercial aerospace, defense aerospace, and data center-driven industrial/IGT markets in 2025, as we continue our focus on growth above the market rate. We remain focused on delivering our diﬀerentiated, mission-critical parts and serving as a reliable supplier to our customers. Howmet Aerospace remains well-positioned for a strong 2025 and beyond.

JOHN C. PLANT

Executive Chairman and Chief Executive Oﬃcer Howmet Aerospace Inc.

References to performance by Howmet Aerospace or its segments as "record" or "all-time high" mean its best result since April 1, 2020 when Howmet Aerospace Inc. (previously named for Arconic Inc.) separated from Arconic Corporation.

2024 Financial Highlights

FINANCIAL AND OPERATING HIGHLIGHTS

(in millions, except per share amounts)

2024

2023

Sales

7,430

6,640

Net income

1,155

765

Net income excluding special items*

1,107

766

Adjusted EBITDA excluding special items*

1,914

1,508

Cash provided from operations

1,298

901

Cash used for ﬁnancing activities

(1,026)

(868)

Cash used for investing activities

(316)

(215)

Free cash ﬂow*

977

682

Total assets

10,519

10,428

Common stock outstanding (on December 31)

405

410

Per common share data

Diluted earnings per share

2.81

1.83

Diluted earnings per share excluding special items*

2.69

1.84

Dividends paid per share

0.26

0.17

2024 REVENUE BY SEGMENT

2024 SALES BY REGIONAL DESTINATION

OTHER

FORGED

14%

ENGINE

ASIA/

10% 1%

WHEELS

PRODUCTS

PACIFIC

AMERICAS

ENGINEERED

14%

56%

STRUCTURES

50%

33%

FASTENING

22%

EUROPE

SYSTEMS

QUARTERLY FINANCIAL AND OPERATING HIGHLIGHTS (JANUARY 1, 2024 TO DECEMBER 31, 2024)

(dollars in millions)

QUARTER ENDED

3/31/2024

6/30/2024

9/30/2024

12/31/2024

Sales

1,824

1,880

1,835

1,891

Income before income taxes

303

334

354

392

Net income

243

266

332

314

Adjusted EBITDA margin excluding special items*

24.0%

25.7%

26.5%

26.8%

Cash provided from operations

177

397

244

480

Cash used for ﬁnancing activities

(178)

(123)

(441)

(284)

Cash used for investing activities

(75)

(54)

(80)

(107)

Free cash ﬂow*

342

162

378

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

Commission File Number 1-3610

HOWMET AEROSPACE INC.

(Exact name of registrant as specified in its charter)

Delaware

25-0317820

(State of incorporation)

(I.R.S. Employer Identification No.)

201 Isabella Street, Suite 200, Pittsburgh, Pennsylvania 15212-5872

(Address of principal executive offices)

(Zip code)

Investor Relations----------------(412) 553-1950

Office of the Secretary-----------(412) 553-1940

(Registrant's telephone numbers, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $1.00 per share

HWM

New York Stock Exchange

$3.75 Cumulative Preferred Stock,

HWM PR

NYSE American

par value $100.00 per share

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ✓No . Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No ✓.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes ✓No .

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ✓No .

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth

company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ✓

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ✓

The aggregate market value of the outstanding common stock, other than shares held by persons who may be deemed affiliates of the registrant, as of the last business day of the registrant's most recently completed second fiscal quarter was approximately $31 billion. As of February 10, 2025, there were 405,022,519 shares of common stock, par value $1.00 per share, of the registrant outstanding.

Documents incorporated by reference.

Part III of this Form 10-K incorporates by reference certain information from the registrant's definitive Proxy Statement for its 2025 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A (Proxy Statement).

TABLE OF

CONTENTS

Page

Part I

Item 1.

Business

Item 1A.

Risk Factors

Item 1B.

Unresolved Staff Comments

Item 1C.

Cybersecurity

Item 2.

Properties

Item 3.

Legal Proceedings

Item 4.

Mine Safety Disclosures

Part II

Item 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities

Item 6.

Selected Financial Data

Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Item 8.

Financial Statements and Supplementary Data

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A.

Controls and Procedures

Item 9B.

Other Information

Item 9C.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspection

Part III

Item 10.

Directors, Executive Officers and Corporate Governance

Item 11.

Executive Compensation

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13.

Certain Relationships and Related Transactions, and Director Independence

Item 14.

Principal Accounting Fees and Services

Part IV

Item 15.

Exhibits, Financial Statement Schedules

Item 16.

Form 10-K Summary

Signatures

Note on Incorporation by Reference

In this Form 10-K, selected items of information and data are incorporated by reference to portions of Howmet Aerospace Inc.'s definitive proxy statement for its 2025 Annual Meeting of Shareholders (the "Proxy Statement"), which we expect to file with the Securities and Exchange Commission within 120 days after Howmet Aerospace Inc.'s fiscal year ended December 31, 2024. Unless otherwise provided herein, any reference in this report to disclosures in the Proxy Statement shall constitute incorporation by reference of only that specific disclosure into this Form 10-K.

Forward-Looking Statements

This report contains (and oral communications made by Howmet Aerospace Inc. ("Howmet") may contain) statements that relate to future events and expectations and, as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as "anticipates", "believes", "could", "estimates", "expects", "forecasts", "goal", "guidance", "intends", "may", "outlook", "plans", "projects", "seeks", "sees", "should", "targets", "will", "would", or other words of similar meaning. All statements that reflect Howmet's expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, statements, forecasts and outlook relating to the condition of end markets; future financial results, operating performance, or estimated or expected future capital expenditures; future strategic actions; Howmet's strategies, outlook, and business and financial prospects; and any future dividends, debt issuances, debt reduction and repurchases of its common stock. These statements reflect beliefs and assumptions that are based on Howmet's perception of historical trends, current conditions and expected future developments, as well as other factors Howmet believes are appropriate in the circumstances. Although Howmet believes that the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that these expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks, uncertainties, and changes in circumstances that are difficult to predict. For a discussion of some of the specific factors that may cause Howmet's actual results to differ materially from those projected in any forward-looking statements, see the following sections of this report: Part I, Item 1A(Risk Factors), Part II, Item 7(Management's Discussion and Analysis of Financial Condition and Results of Operations), including the disclosures under Segment Information and Critical Accounting Policies and Estimates, and Note Uto the Consolidated Financial Statements in Part II, Item 8. Market projections are subject to the risks discussed in this report and other risks in the market. Credit ratings are not a recommendation to buy or hold any Howmet securities, and they may be revised or revoked at any time at the sole discretion of the credit rating organizations. The statements in this report are made as of the date of the filing of this report. Howmet disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.

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Disclaimer

Howmet Aerospace Inc. published this content on April 16, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 16, 2025 at 21:01 UTC.