tapebrief

HWM · Q2 2025 Earnings

Bullish

Howmet Aerospace

Reported July 31, 2025

30-second summary

Howmet posted $2.05B in Q2 revenue (+9.2% YoY, +5.7% QoQ) with adjusted EBITDA margin of 28.7% (+300bps YoY) and operating margin of 25.4%. Management raised FY2025 guidance across revenue (+$100M), adjusted EBITDA (+$70M / +50bps), adjusted EPS (+$0.20), and free cash flow (+$75M) — and lifted the underlying 737 MAX build-rate assumption from 28/month to 33/month. Total company spares (commercial aero + defense aero + IGT/industrial) grew ~40% YoY and now represent 20% of revenue, up from 11% in 2019 on a smaller base.

Headline numbers

EPS

Q2 FY2025

$0.91

Revenue

Q2 FY2025

$2.05B

+9.2% YoY

Free cash flow

Q2 FY2025

$0.34B

Operating margin

Q2 FY2025

25.4%

Key financials

Q2 FY2025
MetricQ2 FY2025YoY
Revenue$2.05B+9.2%
EPS$0.91—
Operating margin25.4%—
Free cash flow$0.34B—

Guidance

Prior quarter data unavailable — comparison not possible.

Segment KPIs

Q2 FY2025
SegmentQ2 FY2025YoY
Engine Products$1.058B+13.0%
Fastening Systems$0.431B+9.4%
Engineered Structures$0.293B+5.5%
Forged Wheels$0.276B-0.7%

Other KPIs

Q2 FY2025
SegmentQ2 FY2025
Adjusted EBITDA$589 million
Adjusted EBITDA Margin28.7%
Engine Products Adjusted EBITDA Margin33.0%
Fastening Systems Adjusted EBITDA Margin29.2%
Engineered Structures Adjusted EBITDA Margin21.4%
Forged Wheels Adjusted EBITDA Margin27.5%
FCF Margin16.8%
Operating Income Growth YoY31.0%

Management tone

Tone this quarter is more forward-leaning than typical aerospace-supplier commentary: management raised guidance on every metric, lifted the embedded 737 MAX assumption mid-year, and was willing to talk constructively about 2026 and even 2027 — unusual for a tier-one supplier still navigating a Boeing recovery.

The 737 MAX build-rate assumption moved materially. In prepared remarks, management explicitly raised the embedded MAX assumption from 28/month to 33/month average for the year — "The underlying 737 Max assumption within our guidance today is raised from 28 per month average for the year to 33 per month average." This is the single largest driver of the guidance raise and signals management is now willing to underwrite Boeing recovery in their own numbers rather than wait for it.

The spares story continued to broaden. Total company spares across commercial aero, defense aero, and IGT/industrial grew ~40% YoY and now represent 20% of total revenue, versus 11% in 2019 on a smaller base. Within Engine Products specifically, management cited record engine spares volume driving both commercial aerospace (+9%) and defense aerospace (+13%) growth in the segment. Spares carry higher and more durable margins than OE, and the persistence of the 20% mix into the first half is a meaningful structural tailwind to Engine Products margins (33.0% this quarter, +170bps YoY).

Capital allocation language tilted toward organic reinvestment. Management stated "organic growth is by far the best for us in terms of return on capital," indicating they see the capex-into-capacity trade as more attractive than larger buybacks or M&A. Capex was up ~60% YoY in the first half, with ~70% directed at the engines business, and management flagged elevated capex persisting through 2026 before normalizing in 2027–2028.

The one area of preserved caution: commercial transportation. Management still expects the truck market to be weak through 2025 (~11% volume decline) but flagged stabilization in 2026, with new U.S. emissions rules creating forecast uncertainty. This is the single segment where the tone did not lift.

Recurring themes management leaned on this quarter:

Engine business acceleration with record spares growth up 40% year-over-yearCommercial aerospace strength driven by high aircraft backlogs and new fuel-efficient aircraft demandIndustrial gas turbine (IGT) and oil & gas robust growth at 25-26% with long-term customer agreements materializingDefense aerospace strength continuing with F-35 tipping point to spares-dominant modelMargin expansion despite significant headcount additions and capacity investmentsFree cash flow generation funding both growth capex and shareholder returns

Risks management surfaced:

Commercial transportation weakness expected to continue through 2025 with 11% volume declineWide-body aircraft builds not yet accelerating as expected in Q2Uncertainty around Airbus A320 build rate sustainability given engine supply constraintsBoeing destocking across supply chain creating near-term revenue headwindsNew U.S. emissions requirements for commercial trucks creating forecast uncertainty for 2026

What to watch into next quarter

Whether the embedded 737 MAX assumption of 33/month average holds — if Boeing slips, the FY revenue raise of $100M is the first thing at risk.

Total company spares growth: does the ~40% YoY pace sustain into Q3, or does it normalize?

Wide-body build acceleration — management noted it did not accelerate as expected in Q2; watch whether Q3 commentary turns more concrete on 787/A350 rates.

IGT and oil & gas revenue trajectory: management cited ~25% growth in both and long-term customer agreements; watch whether the pace holds as data-center-driven gas turbine demand matures.

Forged Wheels margin trajectory at 27.5% — if commercial truck volumes deteriorate further before the cited 2026 stabilization, this is where margin pressure shows first.

FCF cadence: $344M in Q2 against FY guide midpoint of $1.225B implies a meaningful H2 step-up; watch whether working capital and capex timing support it.

Sources

  1. Howmet Aerospace Q2 2025 earnings press release (SEC Form 8-K Exhibit 99.1), filed 2025-07-31. https://www.sec.gov/Archives/edgar/data/4281/000110465925072451/tm2522109d1_ex99-1.htm

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