First Quarter 2022 Revenue and EPS Exceeded Guidance, $175 Million Share Repurchases

Increased Full Year 2022 Adjusted EPS Guidance¹

Howmet Aerospace (NYSE:HWM):

First Quarter 2022 Highlights

• Revenue of $1.32 billion, up 10% year over year
• Net income of $131 million, or $0.31 per share, versus $80 million, or $0.18 per share, in the first quarter 2021
• Net income excluding special items of $132 million, or $0.31 per share, versus $96 million, or $0.22 per share, in the first quarter 2021
• Adjusted EBITDA excluding special items of $300 million, up 9% year over year
• Generated $55 million cash from operations; ($7 million) of free cash flow; $194 million of cash used for financing activities; and $61 million of cash used for investing activities
• Cash balance at end of quarter of $522 million; $175 million of common stock repurchases

Key Announcements

• In the first quarter 2022, Howmet Aerospace repurchased approximately 5 million shares for $175 million at an average price of $34 per share. As of April 1, 2022, total share repurchase authorization available was $1.172 billion.
• On February 25, 2022, the Company paid a quarterly dividend of $0.02 per share on outstanding common stock. The Company also declared a quarterly dividend of $0.02 per share on outstanding common stock to be paid on May 25, 2022.
• On April 27, 2022, Moody’s upgraded Howmet Aerospace’s long-term debt rating to Ba1 from Ba2, and affirmed the current outlook as stable.

Howmet Aerospace (NYSE:HWM) today reported first quarter 2022 results. The Company reported first quarter 2022 revenues of $1.32 billion, up 10% year over year, primarily driven by growth in the commercial aerospace market and an increase in material cost pass through, partially offset by declines in the defense aerospace market.

Howmet Aerospace reported net income of $131 million, or $0.31 per share, in the first quarter 2022 versus net income of $80 million, or $0.18 per share, in the first quarter 2021. Net income excluding special items was $132 million, or $0.31 per share, in the first quarter 2022, versus $96 million, or $0.22 per share, in the first quarter 2021.

First quarter 2022 Adjusted EBITDA excluding special items was $300 million, up 9% year over year. The year-over-year increase was driven by growth in the commercial aerospace market and productivity gains, partially offset by declines in the defense aerospace market as well as an increase in material costs and other inflationary costs. Adjusted EBITDA margin, excluding special items, was flat year over year at 22.7% while passing through approximately $40 million of additional material costs year over year.

Howmet Aerospace Executive Chairman and Chief Executive Officer John Plant said, “Howmet Aerospace delivered a healthy start to 2022. First quarter 2022 revenue increased 10% year over year and exceeded the high end of our guidance range. Adjusted EBITDA and Adjusted EBITDA margin were in line with guidance and Adjusted EPS exceeded guidance, up 41% year over year. The team delivered solid margins including material and other inflationary cost pass through.”

Mr. Plant continued, “The revenue outlook continues to show improvement. Airline load factors continue to improve in North America and Europe, supporting higher commercial narrow body aircraft production rates. While 2022 is a transition year for Howmet’s defense aerospace growth following last year’s updated F-35 build rate forecast, we expect the defense aerospace market to resume growth in 2023. The commercial transportation and industrial gas turbine markets should also continue growth as we progress through 2022.”

“Strong free cash flow performance and a solid balance sheet put Howmet Aerospace in a position of strength. We ended the first quarter 2022 with approximately $522 million of cash, including the impact of $175 million in common stock repurchases. We continue to expect free cash flow conversion of adjusted net income excluding special items to be approximately 110% in full year 2022.”

First Quarter 2022 Segment Performance

Engine Products

Engine Products reported revenue of $631 million, an increase of 18% year over year, driven by growth in the commercial aerospace and industrial gas turbine markets, partially offset by declines in the defense aerospace market. Segment Adjusted EBITDA was $173 million, up 31% year over year, driven by favorable sales volumes in the commercial aerospace and industrial gas turbine markets as well as strong productivity gains, partially offset by volume declines in the defense aerospace market. The segment added approximately 325 headcount in the quarter, which brings the total headcount added since Q1 2021 to approximately 1,275. Segment Adjusted EBITDA margin increased approximately 270 basis points year over year to 27.4%.

Fastening Systems

Fastening Systems reported revenue of $264 million, a decrease of 3% year over year due to declines in the defense aerospace market, partly offset by growth in the commercial transportation market. Commercial aerospace revenue in this segment was flat year over year, with narrow body recovery offset by Boeing 787 production declines. Segment Adjusted EBITDA was $56 million, down 2% year over year, driven by volume declines in the defense aerospace market, Boeing 787 production declines, and inflationary costs, partially offset by favorable sales volumes in the narrow body commercial aerospace and commercial transportation markets. The segment added approximately 135 headcount in the quarter in anticipation of future revenue increases. Segment Adjusted EBITDA margin increased approximately 20 basis points year over year to 21.2%.

Engineered Structures

Engineered Structures reported revenue of $182 million, an increase of 3% year over year due to commercial aerospace revenue driven by narrow body recovery, partially offset by Boeing 787 production declines and declines in the defense aerospace market. Segment Adjusted EBITDA was $23 million, up 5% year over year, driven by growth in the commercial aerospace market, partially offset by volume declines in the defense aerospace market as well as inflationary costs. Segment Adjusted EBITDA margin increased approximately 10 basis points year over year to 12.6%.

Forged Wheels

Forged Wheels reported revenue of $247 million, an increase of 9% year over year due to higher material prices, partially offset by a 7% decline in volumes due to customer supply chain constraints. Segment Adjusted EBITDA was $67 million, down 16% year over year, driven by volume decreases due to customer supply chain constraints and unfavorable foreign currency. Segment Adjusted EBITDA margin decreased approximately 810 basis points year over year to 27.1% including the impact of higher material cost pass through and reduced volumes.

Repurchased Approximately 5 Million Shares in First Quarter 2022

In the first quarter 2022, Howmet Aerospace repurchased approximately 5 million shares for approximately $175 million at an average price of $34 per share. As of April 1, 2022, total share repurchase authorization available was $1.172 billion.

Common Stock Dividends

On February 25, 2022, the Company paid a quarterly dividend of $0.02 per share on outstanding common stock. On April 21, 2022, the Company also declared a quarterly dividend of $0.02 per share on outstanding common stock to be paid on May 25, 2022 to holders of record at the close of business on May 6, 2022.

Company credit rating upgraded by Moody’s to Ba1 from Ba2

On April 27, 2022, Moody’s upgraded Howmet Aerospace’s long-term debt rating to Ba1 from Ba2, and affirmed the current outlook as stable.

Howmet Aerospace will hold its quarterly conference call at 10:00 AM Eastern Time on Tuesday, May 3, 2022. The call will be webcast via www.howmet.com. The press release and presentation materials will be available at approximately 7:00 AM ET on May 3, via the “Investors” section of the Howmet Aerospace website. A link to the press release will also be available via Howmet Aerospace’s Twitter handle @HowmetAerospace at https://twitter.com/howmetaerospace.

About Howmet Aerospace

Howmet Aerospace Inc., headquartered in Pittsburgh, Pennsylvania, is a leading global provider of advanced engineered solutions for the aerospace and transportation industries. The Company’s primary businesses focus on jet engine components, aerospace fastening systems, and titanium structural parts necessary for mission-critical performance and efficiency in aerospace and defense applications, as well as forged aluminum wheels for commercial transportation. With nearly 1,150 granted and pending patents, the Company’s differentiated technologies enable lighter, more fuel-efficient aircraft to operate with a lower carbon footprint. For more information, visit www.howmet.com. Follow: LinkedIn, Twitter, Instagram, Facebook, and YouTube.

Dissemination of Company Information

Howmet Aerospace intends to make future announcements regarding Company developments and financial performance through its website at www.howmet.com.

Forward-Looking Statements

This release contains 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 Aerospace’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 or operating performance; future strategic actions; Howmet Aerospace's strategies, outlook, and business and financial prospects; and any future dividends and repurchases of its debt or equity securities. These statements reflect beliefs and assumptions that are based on Howmet Aerospace’s perception of historical trends, current conditions and expected future developments, as well as other factors Howmet Aerospace believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and changes in circumstances that are difficult to predict, which could cause actual results to differ materially from those indicated by these statements. Such risks and uncertainties include, but are not limited to: (a) uncertainty of the duration, extent and impact of the COVID-19 pandemic on Howmet Aerospace’s business, results of operations, and financial condition; (b) deterioration in global economic and financial market conditions generally (including as a result of COVID-19 and its effects, among other things, on global supply, demand, and distribution disruptions); (c) unfavorable changes in the markets served by Howmet Aerospace; (d) the impact of potential cyber attacks and information technology or data security breaches; (e) the loss of significant customers or adverse changes in customers’ business or financial conditions; (f) manufacturing difficulties or other issues that impact product performance, quality or safety; (g) inability of suppliers to meet obligations due to supply chain disruptions or otherwise; (h) the inability to achieve revenue growth, cash generation, cost savings, restructuring plans, cost reductions, improvement in profitability, or strengthening of competitiveness and operations anticipated or targeted; (i) inability to meet increased demand, production targets or commitments; (j) competition from new product offerings, disruptive technologies or other developments; (k) geopolitical, economic, and regulatory risks relating to Howmet Aerospace’s global operations, including geopolitical and diplomatic tensions, instabilities and conflicts, as well as compliance with U.S. and foreign trade and tax laws, sanctions, embargoes and other regulations; (l) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation, which can expose Howmet Aerospace to substantial costs and liabilities; (m) failure to comply with government contracting regulations; (n) adverse changes in discount rates or investment returns on pension assets; and (o) the other risk factors summarized in Howmet Aerospace’s Form 10-K for the year ended December 31, 2021 and other reports filed with the U.S. Securities and Exchange Commission. Market projections are subject to the risks discussed above and other risks in the market. The statements in this release are made as of the date of this release, even if subsequently made available by Howmet Aerospace on its website or otherwise. Howmet Aerospace 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.

Non-GAAP Financial Measures

Some of the information included in this release is derived from Howmet Aerospace’s consolidated financial information but is not presented in Howmet Aerospace’s financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Certain of these data are considered “non-GAAP financial measures” under SEC rules. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure. Reconciliations to the most directly comparable GAAP financial measures and management’s rationale for the use of the non-GAAP financial measures can be found in the schedules to this release.

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