Howmet Aerospace (HWM, Financial) announced its first-quarter revenue for 2025, amounting to $1.94 billion, aligning with market expectations. The company achieved notable milestones this quarter, breaking records across various financial metrics including revenue, Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Earnings Per Share. These accomplishments surpassed all initial guidance targets set by the company.
Performance improvements were particularly significant in the Fastening Systems and Engineered Structures segments, contributing to enhanced margins. Additionally, Howmet Aerospace reported robust free cash flow of $134 million, rising from $95 million in the same quarter of the previous year. This quarter marked the eighth consecutive period of positive free cash flow, highlighting the company's strong financial momentum.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 22 analysts, the average target price for Howmet Aerospace Inc (HWM, Financial) is $137.19 with a high estimate of $159.65 and a low estimate of $92.00. The average target implies an downside of 1.00% from the current price of $138.58. More detailed estimate data can be found on the Howmet Aerospace Inc (HWM) Forecast page.
Based on the consensus recommendation from 26 brokerage firms, Howmet Aerospace Inc's (HWM, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Howmet Aerospace Inc (HWM, Financial) in one year is $66.93, suggesting a downside of 51.7% from the current price of $138.58. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Howmet Aerospace Inc (HWM) Summary page.
HWM Key Business Developments
Release Date: February 13, 2025
- Revenue: Up 9% in Q4 and 12% for the full year 2024.
- Earnings Per Share (EPS): $0.74 in Q4, a 40% increase year-over-year; $2.69 for the full year, a 46% increase year-over-year.
- Operating Margin: 23% for Q4.
- Free Cash Flow: Record $977 million for the year, representing an 88% conversion of net income.
- Share Repurchases: $500 million in 2024, with $190 million in Q4.
- Debt Reduction: $365 million in 2024.
- Dividends Paid: $109 million in 2024, with a recent 25% increase in the quarterly dividend.
- Net Debt-to-EBITDA Ratio: Improved to 1.4 times.
- Commercial Aerospace Revenue: Up 13% in Q4 and 20% for the full year.
- Defense Aerospace Revenue: Up 22% in Q4 and 15% for the full year.
- Commercial Transportation Revenue: Down 12% in Q4 and 7% for the full year.
- Industrial and Other Markets Revenue: Up 11% in Q4 and 9% for the full year.
- Spares Revenue: $1.28 billion for the full year, representing 17% of total revenue.
- EBITDA Margin: Increased 310 basis points to 25.8% for the full year.
- CapEx Investments: $321 million for the year, up approximately $100 million year-over-year.
- Cash Balance: $565 million at year-end.
- Engine Products Revenue: Up 14% in Q4 and 14% for the full year.
- Fastening Systems Revenue: Up 11% in Q4 and 17% for the full year.
- Engineered Structures Revenue: Up 13% in Q4 and 21% for the full year.
- Forged Wheels Revenue: Down 12% in Q4 and 8% for the full year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Howmet Aerospace Inc (HWM, Financial) reported record revenues, EBITDA, EBITDA margin, and earnings per share for the fourth quarter and full year 2024.
- The company achieved a 46% year-over-year increase in earnings per share, surpassing initial guidance by 25%.
- Free cash flow for the year was a record $977 million, with an 88% conversion of net income.
- Howmet Aerospace Inc (HWM) repurchased $500 million of common stock and reduced debt by $365 million in 2024.
- The company announced a 25% increase in the quarterly common stock dividend, reflecting confidence in future cash flow generation.
Negative Points
- Commercial transportation revenues were down 12% in the fourth quarter and 7% for the full year, indicating challenges in this segment.
- The company anticipates a back-end loaded profit in 2025, with potential uncertainties in narrow-body aircraft builds.
- There is a cautious outlook for the commercial truck market, with muted demand expected to continue into the first half of 2025.
- Howmet Aerospace Inc (HWM) faces potential headwinds from tariffs, although they plan to pass additional costs to customers.
- The company expects to add approximately 1,000 net new employees in 2025, which could impact operating leverage and margins.
