HWM Q2 Earnings Beat Estimates on Aerospace, Turbine Growth

HWM's Commercial Markets Fuel Revenue Growth

Commercial aerospace revenues rose 28% year over year and represented 53% of total revenues. Growth reflected stronger aircraft production activity and increasing demand for engine spare parts.

Gas turbine revenues advanced 38% and accounted for 13% of the total. Defense aerospace revenues increased 11%, while commercial transportation revenues rose 12%. Other-market revenues grew 39%.

Howmet Aerospace's Engine Products Posts Strong Gains

Engine Products generated revenues of $1.37 billion, accounting for 53.9% of consolidated revenues. Segment revenues increased 32% year over year, driven by commercial aerospace, defense aerospace and gas turbine demand.

Segment adjusted EBITDA climbed 51% to $517 million. The adjusted EBITDA margin expanded 470 basis points to 37.7%. Howmet Aerospace added approximately 485 net employees in the segment during the quarter to support expected revenue growth.

HWM's Fastening Systems Gets Acquisition Lift

Fastening Systems revenues increased 37% year over year to $589 million, representing 23.1% of total revenues. Results benefited from commercial and defense aerospace growth as well as contributions from the CAM and Brunner acquisitions.

Segment adjusted EBITDA rose 40% to $177 million. The adjusted EBITDA margin improved 90 basis points to 30.1%, reflecting higher demand, acquisition contributions and sustained productivity gains.

Howmet Aerospace's Other Segments Show Mixed Trends

Engineered Structures revenues declined 13% to $269 million due to the divestment of the Savannah disk forging facility and product rationalization. Segment adjusted EBITDA decreased 6% to $64 million, while the margin increased 170 basis points to 23.8% following the exit of lower-margin business.

Forged Wheels revenues rose 14% to $316 million as aluminum and other inflation-related cost pass-through more than offset an 8% decline in commercial transportation volumes. Volumes improved 7% on a sequential basis. Segment adjusted EBITDA increased 16% to $88 million, with the margin edging up 30 basis points to 27.8%.

HWM's Margin Expansion Supports Profitability

Adjusted EBITDA increased 39% year over year to $817 million. The adjusted EBITDA margin expanded 340 basis points to 32.1%, supported by growth across major aerospace and gas turbine markets.

Adjusted operating income rose 41% to $733 million. The adjusted operating margin improved 350 basis points to 28.8%. Cost of goods sold increased 16.9% to $1.60 billion, while selling, general, administrative and other expenses rose to $148 million from $89 million.

Howmet Aerospace's Cash Flow Backs Capital Deployment

Howmet Aerospace generated $583 million in cash from operations during the quarter, up 31% year over year. Capital expenditures were $104 million, resulting in free cash flow of $479 million, up 39% year over year.

The company repurchased $300 million of common stock during the quarter and another $200 million in July. Through July, repurchases totaled $800 million. Howmet Aerospace also increased its third-quarter dividend 17% to 14 cents per share.

HWM Raises 2026 Guidance

For the third quarter of 2026, HWM expects revenues of $2.565-$2.585 billion. Adjusted EBITDA is projected between $825 million and $835 million, while adjusted earnings are expected in the range of $1.34-$1.36 per share.

For 2026, Howmet Aerospace raised its revenue outlook to $10.00-$10.10 billion. Adjusted EBITDA is now anticipated between $3.21 billion and $3.25 billion, with adjusted earnings projected at $5.23-$5.31 per share. Free cash flow is expected in the range of $1.85-$1.95 billion.

Zacks Rank and Other Stocks to Consider

The company currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks are discussed below:

Applied Industrial Technologies AIT carries a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Applied Industrial’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 4.0%.  In the past 60 days, the Zacks Consensus Estimate for Applied Industrial’s fiscal 2026 bottom line has inched up 0.1%.

IDEX Corporation IEX presently carries a Zacks Rank of 2. IDEX’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 7.7%. In the past 60 days, the Zacks Consensus Estimate for IEX’s 2026 earnings has increased 1.4%.

The Middleby Corporation MIDD currently carries a Zacks Rank of 2. Middleby’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 10.4%. In the past 60 days, the Zacks Consensus Estimate for MIDD’s 2026 earnings has increased 0.3%.

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This article originally published on Zacks Investment Research (zacks.com).

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