Howmet Aerospace Q1 2025 Earnings: Strong Growth Driven by Aerospace Demand

Howmet Aerospace Inc. (NYSE: HWM) delivered a robust first-quarter 2025 earnings report, showcasing strong financial performance across key metrics. The company reported revenue of $1.94 billion, a 6% year-over-year (YoY) increase, fueled by demand in commercial aerospace, defense, and industrial markets. Adjusted EBITDA surged 28% to $560 million, with margins expanding 480 basis points to 28.8%, while adjusted earnings per share (EPS) rose 51% to $0.86. These results underscore Howmet’s strategic execution and resilience amid macroeconomic challenges.

Financial Highlights

The quarter’s performance was driven by Engine Products, which grew 13% YoY to $996 million, benefiting from demand for commercial aircraft engines and defense spares. Fastening Systems also outperformed, rising 6% to $412 million, while Engineered Structures expanded 8% to $282 million, supported by defense contracts. The only segment to decline was Forged Wheels, falling 13% YoY to $252 million, due to softness in the commercial transportation market.

The company’s operational efficiency was evident in its margin improvements. Adjusted EBITDA margins hit a record 28.8%, while adjusted operating income rose 33% to $491 million, with margins expanding 500 basis points to 25.3%. Free cash flow reached $134 million, a record for the quarter, while net debt-to-LTM EBITDA remained at a record low of 1.4x.

Strategic Priorities and Guidance

Howmet raised its full-year 2025 guidance, reflecting confidence in its growth trajectory:
- Revenue: $7.88–8.18 billion (+8% YoY).
- Adjusted EBITDA: $2.225–2.275 billion (+18% YoY).
- Adjusted EPS: $3.36–3.44 (+26% YoY).
- Free Cash Flow: $1.10–1.20 billion (+18% YoY).

CEO John C. Plant emphasized the company’s focus on capital allocation discipline, including $125 million in share repurchases during the quarter and a doubled dividend to $0.10 per share. Management also highlighted its $350 million CapEx plan for 2025, prioritizing capacity expansion in Engine Products to support rising commercial aerospace demand.

Operational Strengths and Risks

• Defense and Industrial Growth: Defense aerospace revenue surged 19% YoY, driven by increased military spending and demand for advanced systems. Industrial markets, including energy and data centers, also contributed to Engine Products’ growth.
• Balance Sheet Strength: Fitch Ratings upgraded Howmet’s credit rating to BBB+ in March 2025, reflecting improved liquidity and reduced leverage.
• Environmental Progress: The company achieved a 33.6% reduction in GHG emissions vs. its 2019 baseline, exceeding its 2024 target and advancing toward a 33.6% reduction goal by 2027.

However, risks remain, including:
- Commercial Transportation Volatility: The Forged Wheels segment’s decline reflects softness in North American truck markets, exacerbated by tariffs and economic uncertainty.
- Geopolitical Tensions: Trade policies and supply chain disruptions could impact global demand for Howmet’s products.

Conclusion

Howmet Aerospace’s Q1 2025 results demonstrate its ability to capitalize on long-term trends in commercial and defense aerospace, while maintaining operational discipline and financial flexibility. With a record-low net debt-to-EBITDA ratio, a widened free cash flow target, and a Fitch-upgraded credit rating, the company is well-positioned to navigate near-term headwinds.

Investors should note that Howmet’s 8% YoY revenue growth guidance and $1.15 billion free cash flow projection align with its goal of delivering double-digit EPS growth over the medium term. While risks like tariffs and commercial transportation demand persist, the company’s focus on margin expansion, capital returns, and sustainability positions it as a compelling play on the $160 billion aerospace and defense market.

In short, Howmet’s Q1 performance reinforces its status as a high-margin industrial manufacturer with structural growth drivers, making it a strong candidate for investors seeking exposure to the aerospace recovery.