Howmet’s first quarter was met with a pronounced positive market reaction, as management pointed to strong contributions from both its aerospace and defense segments. CEO John Plant highlighted that all business units improved revenue and EBITDA, with particularly notable margin gains in Fastening Systems and Structures. Management attributed the improved performance to robust demand for engine spares, ongoing operational discipline, and productivity initiatives that reduced scrap and boosted yields. Plant emphasized, “The improvement in productivity has been really, really good,” especially as spares revenue grew to 20% of total revenue, a milestone reached ahead of schedule.
Is now the time to buy HWM? Find out in our full research report (it’s free).
Howmet (HWM) Q1 CY2025 Highlights:
- Revenue: $1.94 billion vs analyst estimates of $1.94 billion (6.5% year-on-year growth, in line)
- Adjusted EPS: $0.86 vs analyst estimates of $0.78 (10.7% beat)
- Adjusted EBITDA: $560 million vs analyst estimates of $524.4 million (28.8% margin, 6.8% beat)
- The company reconfirmed its revenue guidance for the full year of $8.03 billion at the midpoint
- Management raised its full-year Adjusted EPS guidance to $3.40 at the midpoint, a 7.3% increase
- EBITDA guidance for the full year is $2.25 billion at the midpoint, above analyst estimates of $2.17 billion
- Operating Margin: 25.4%, up from 20.2% in the same quarter last year
- Market Capitalization: $69.48 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Howmet’s Q1 Earnings Call
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Seth Seifman (JPMorgan) asked how much global air traffic growth impacts Howmet’s outlook versus aircraft build rates. CEO John Plant replied that while immediate demand is insulated by strong OEM backlogs, future investment rates will depend on passenger and freight confidence.
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David Strauss (Barclays) inquired about production yield and certification progress for upgraded turbine blades. Plant confirmed that production is ahead of manufacturing requirements and expects certification of the remaining LEAP 1B blade by year-end.
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Doug Harned (Bernstein) questioned the sustainability of margin gains in Fastening Systems and Engineered Structures. Plant explained that process control improvements and portfolio optimization have driven sustainable margin expansion, even with delayed wide-body aircraft recovery.
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Ron Epstein (Bank of America) pressed on the net impact of tariffs and mitigation strategies. Plant provided a detailed walk-through, projecting a net headwind of less than $15 million in 2025 and described extensive use of contractual and trade program protections.
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Sheila Kahyaoglu (Jefferies) sought clarity on why margins are guided to step down later in the year despite strong Q1 results. Plant cited commercial transportation softness, hiring and training costs for capacity expansion, and the temporary nature of tariff-related margin drag.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace of aerospace spares and engine product demand, especially as airline and defense backlogs are worked through; (2) execution of industrial gas turbine capacity expansion to meet rising energy sector needs; and (3) the company’s ability to recover tariff-related costs and sustain margin improvements. Progress in managing commercial transportation demand fluctuations and onboarding new manufacturing capacity will also be key indicators of strategic execution.
Howmet currently trades at $172, up from $138.47 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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