tapebrief
HWM · Q2 2025

HWM · Q3 2025 Earnings

Bullish

Howmet Aerospace

Reported October 30, 2025

30-second summary

Howmet delivered $2.09B revenue (+14% YoY), $0.95 non-GAAP EPS, and 29.4% adjusted EBITDA margin — beating its own Q3 guide on every line by a wide margin (revenue +$49M above the high end, EPS +$0.04, EBITDA +$29M, margin +70bps). Management raised FY2025 across the board for the second straight quarter and, more notably, pre-printed FY2026 revenue at ~$9B (+10% YoY) — an unusually early forward commitment for a tier-one supplier. The strategic message shifted explicitly: growth now outranks near-term margin expansion as the primary value driver.

Headline numbers

EPS

Q3 FY2025

$0.95

Revenue

Q3 FY2025

$2.09B

+14.0% YoY

Gross margin

Q3 FY2025

34.6%

Free cash flow

Q3 FY2025

$0.42B

Operating margin

Q3 FY2025

25.9%

Key financials

Q3 FY2025
MetricQ3 FY2025YoYQ2 FY2025QoQ
Revenue$2.09B+14.0%$2.05B+1.8%
EPS$0.95—$0.91+4.4%
Gross margin34.6%———
Operating margin25.9%—25.4%+50bps
Free cash flow$0.42B—$0.34B+23.0%

Guidance

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
RevenueQ3 FY2025$2.020B to $2.040B$2.089B+$0.049B to +$0.069B above guideBeat
Adjusted Earnings Per ShareQ3 FY2025$0.89 to $0.91$0.95+$0.04 to +$0.06 above guideBeat
Adjusted EBITDAQ3 FY2025$575M to $585M$614M+$29M to +$39M above guideBeat
Adjusted EBITDA MarginQ3 FY202528.5% to 28.7%29.4%+0.7pts above high-end guideBeat

New guidance

MetricPeriodGuideYoY
RevenueQ4 FY2025$2.090B to $2.110B—
Adjusted Earnings Per ShareQ4 FY2025$0.94 to $0.96—
Adjusted EBITDAQ4 FY2025$605M to $615M—

Changes to prior guidance

MetricPeriodPrior guideNew guideΔResult
Revenue
FY2025
$8.080B to $8.180B$8.175B to $8.195B+$0.095B to +$0.115B at midpoint (+$0.055B midpoint increase)Raised
Adjusted Earnings Per Share
FY2025
$3.56 to $3.64$3.66 to $3.68+$0.10 to +$0.12 (midpoint +$0.07)Raised
Adjusted EBITDA
FY2025
$2.300B to $2.340B$2.370B to $2.380B+$0.070B to +$0.080B (midpoint +$0.050B)Raised
Adjusted EBITDA Margin
FY2025
28.5% to 28.6%29.0%+0.4 to +0.5pts at midpointRaised
Free Cash Flow
FY2025
$1.175B to $1.275B$1.275B to $1.325B+$0.100B to +$0.150B (midpoint +$0.050B)Raised

Segment KPIs

Q3 FY2025
SegmentQ3 FY2025YoY
Engine Products$1.105B+17.0%
Fastening Systems$0.448B+14.0%
Engineered Structures$0.289B+14.0%
Forged Wheels$0.247B+0.8%
Commercial Aerospace Growth15%—
Defense Aerospace Growth24%—
Industrial and Other Growth18%—

Other KPIs

Q3 FY2025
SegmentQ3 FY2025
Adjusted EBITDA$614M
Adjusted EBITDA Margin excluding Special Items29.4%
Free Cash Flow$423M
Operating Cash Flow$531M
Engine Products Adjusted EBITDA Margin33.3%

Management tone

Narrative arc: Q1 cautious raise → Q2 MAX rate-step + spares inflection → Q3 growth-over-margin pivot + early 2026 anchor.

Tariffs collapsed from material headwind to non-issue. In prepared remarks Plant framed the net tariff drag as "small at around $5 million plus or minus" — earlier in the year management had flagged tariff exposure up to ~$100M. For an industrial with global supply chains, taking tariffs off the risk table outright — rather than the more typical "manageable" framing — is a real concession to clarity, and it removes one of the few remaining overhangs in the bear case.

Destocking, which last quarter was expected to bleed into 2026, is now declared finished in commercial aero, and in defense (F-35) it was the specific driver of Engineered Structures' +42% defense aero growth this quarter — Ken cited "the end of the destocking of the F-35 program" as the source of the step-up. In Q2 the framing was that destocking was abating; this quarter it is closed. That changes how to read the FY2026 +10% growth print — it is organic, not flattered by a return-to-normal restock.

The most consequential shift is the explicit reordering of growth above margin. Through Q1 and Q2 the framing was 30–35% incremental margins as the through-cycle anchor; this quarter prepared-remarks commentary explicitly de-prioritizes near-term margin expansion in favor of capacity deployment. CapEx at $400M+ in 2025 is staying elevated through 2026–27, with ~70% YTD directed to engines. This is a management team telling shareholders they intend to spend the upcycle, not harvest it.

IGT confidence hardened. In Q2, IGT was a +25% growth call-out; in Q3 it is the explicit justification for the capex commitment, with Plant flagging mid-sized turbine demand (data center backup / fast-acting supply) as a multi-year structural driver alongside the large land-based turbines. Capex deployment is being committed ahead of long-dated contracted backlog visibility — which is either bullish (early positioning) or a future disappointment risk if data center demand normalizes.

Wide-body and narrow-body rate assumptions made explicit. Prepared remarks now cite MAX "40 or getting into the 40s", A320 "into the early 60s", 787 at 7.5, and A350 at 6.5–7. Wide-bodies are now a quantified contributor, consistent with the +14% YoY jump at Engineered Structures.

Recurring themes management leaned on this quarter:

Data center/IGT demand acceleration as multi-year structural growth driverEngine spares as sustained high-growth segment (projected to grow every year through end of decade)CapEx intensity sustaining at elevated levels ($400M+ in 2025, continuing into 2026-27) backed by customer contractsTechnology transition (LEAP-1B, GTF Advantage, cooled turbine blades) driving content expansion and retrofit opportunitiesCommercial aerospace build rate acceleration across narrow and wide-body platformsAI and digital manufacturing ('digital thread') as margin expansion lever beyond traditional automation

Risks management surfaced:

Tariff and raw material cost uncertainty (though minimized at sub-$5M net impact)Commercial truck/transportation segment headwinds (-3% to -17% depending on product)Timing and execution risk on new manufacturing plant capacity additionsLabor cost and yield drag from aggressive headcount additions (1,125 YTD in Engines alone)Backlog visibility in IGT market less certain than aerospace (acknowledged by management)

Answers to last quarter's watch list

737 MAX 33/month assumption holding — Prepared-remarks framing of MAX at "40 or getting into the 40s" implies the embedded assumption is being raised, not at risk. The FY revenue raise was delivered, suggesting Boeing did not disappoint.
Resolved positively
Spares ~40% YoY pace sustaining — Yes, decisively. Prepared remarks disclose commercial aero parts +38% YoY, total spares +31% YoY, and defense engine spares +33% YoY. Engine Products +17% YoY (vs +13% in Q2) and defense aero +24% YoY corroborate the through-line. Management explicitly cites engine spares as projected to grow every year through end of decade.
Resolved positively
Wide-body acceleration becoming concrete — Yes. Prepared remarks for the first time cited specific 787 (7.5) and A350 (6.5–7) rate assumptions, and Engineered Structures revenue accelerated from +5.5% YoY in Q2 to +14% YoY in Q3.
Resolved positively
IGT / oil & gas ~25% pace holding — Industrial & other end-market grew +18% YoY, with oil & gas +33% and IGT +23% within that — still strong. Management's commentary frames data center-driven IGT demand as a multi-year structural driver justifying elevated capex.
Continue monitoring
Forged Wheels margin under commercial truck pressure — Resolved positively. Forged Wheels Q3 segment EBITDA margin was 29.6%, up 350bps YoY and +210bps QoQ from Q2's 27.5% — margin expanded materially despite volume down 16%, driven by cost flex, premium product mix, and FX. Revenue also inflected back to +0.8% YoY.
Resolved positively
FCF H2 step-up delivering — Yes, decisively. Q3 FCF of $423M (20.2% FCF margin) was the largest quarterly print of the year; FY guide midpoint raised $75M to $1.300B.
Resolved positively

What to watch into next quarter

FY2026 revenue guide refinement: The current ~$9B / +10% YoY anchor was flagged as subject to further refinement on the February 2026 earnings call. Watch whether the February print tightens up (bullish, indicating confidence) or widens (signaling soft spots).

Engine Products margin durability at 33.3%: Management is adding 1,125 heads YTD in Engines alone — watch whether the labor cost/yield drag begins to compress segment margin off this peak in Q4, or whether mix (spares) absorbs it.

CapEx 2026 number: Management has signaled CapEx staying elevated through 2026 and 2027. A specific 2026 CapEx figure in February will tell you how much of FY2026 EBITDA growth gets reinvested vs flows to FCF.

IGT order conversion: Watch for any disclosure in Q4 or 1Q26 that converts the data center thesis from qualitative confidence to invest into named multi-year customer agreements with Mitsubishi Heavy, Siemens, GE, Ansaldo, and Caterpillar (the named OE customers in prepared remarks).

Engineered Structures +14% YoY sustainability: An 850bps acceleration in a single quarter is striking — watch whether it holds in Q4 (wide-body demand confirmed, F-35 destock fully behind) or fades (one-quarter mix effect).

Forged Wheels margin print in Q4: Now that the segment has printed 29.6% on -16% volume, watch whether the margin holds at this level (signaling structural mix/cost gains) or compresses back toward the 27% range once aluminum/tariff pass-through normalizes.

Sources

  1. Howmet Aerospace Q3 2025 earnings press release (SEC Form 8-K Exhibit 99.1), filed 2025-10-30. https://www.sec.gov/Archives/edgar/data/4281/000110465925104005/tm2529740d1_ex99-1.htm
  2. Howmet Aerospace Q3 2025 earnings call prepared remarks (John Plant, Ken Giacobbe), 2025-10-30.
  3. Howmet Aerospace Q2 2025 earnings press release (prior-quarter baseline for guidance comparison), filed 2025-07-31.

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