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Howmet Aerospace beat expectations in Q1 2026, reporting revenue of $2.31 billion, adjusted EBITDA of $740 million and adjusted EPS of $1.22, with margins expanding sharply as demand strengthened across key markets.
Growth was led by commercial aerospace, defense aerospace and gas turbines, while higher-margin spares revenue surged 36% to about $520 million and accounted for 23% of total revenue.
The company raised full-year guidance and highlighted active portfolio moves, including the CAM Fastener acquisition and Savannah divestiture, while also generating record first-quarter free cash flow and continuing aggressive share buybacks.
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Howmet Aerospace (NYSE:HWM) reported a stronger-than-expected first quarter of 2026, with management citing broad demand across commercial aerospace, defense aerospace and industrial gas turbines, along with continued growth in higher-margin spares revenue.
Executive Chairman and Chief Executive Officer John Plant said the company had “a very strong start to 2026,” reporting first-quarter sales of $2.31 billion, adjusted EBITDA of $740 million and adjusted earnings per share of $1.22. Adjusted EBITDA margin reached 32%, up 320 basis points from the year-earlier quarter.
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Chief Financial Officer Patrick Winterlich said revenue, adjusted EBITDA, adjusted EBITDA margin and adjusted EPS all came in above the high end of the company’s guidance. Revenue rose 19% year over year, while adjusted EBITDA increased 32%. Adjusted EPS climbed 42% from the first quarter of 2025.
Winterlich said commercial aerospace revenue grew 20% in the quarter, driven by accelerating demand for engine spares and supported by a record backlog for new, more fuel-efficient aircraft. Commercial aerospace engine spares increased 48%, with both legacy and next-generation engines contributing.
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Defense aerospace revenue rose 10%, including healthy spares activity. Gas turbine revenue increased 39%, which Winterlich attributed to higher demand for electricity generation, especially natural gas generation for data centers.
Across commercial aerospace, defense aerospace and gas turbine markets, spares revenue rose 36% to about $520 million in the quarter. Spares represented 23% of total revenue in the first quarter, up from 21% for full-year 2025 and 11% in 2019.
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Commercial transportation revenue increased 13%, but Winterlich said that was driven by the pass-through of higher aluminum costs and tariffs. On a volume basis, the wheels business was down 11% as the market downturn continued into the quarter.
Howmet’s Engine Products segment posted revenue of $1.25 billion, up 29%. Commercial aerospace revenue in the segment rose 31%, defense aerospace increased 13% and gas turbines grew 39%. Segment adjusted EBITDA increased 44% to $458 million, and adjusted EBITDA margin rose 400 basis points to 36.6%.
Winterlich said the segment absorbed about 235 net new employees during the quarter as the company positioned itself for continued growth.
Fastening Systems revenue increased 14% to $471 million. Commercial aerospace revenue rose 17%, defense aerospace increased 21% and commercial transportation declined 4%. Segment adjusted EBITDA rose 18% to $150 million, with adjusted EBITDA margin up 100 basis points to 31.8%.
Engineered Structures revenue decreased 3% to $294 million as the company continued to rationalize products and focus on higher-margin and higher-return opportunities. Segment adjusted EBITDA was flat at $66 million, while adjusted EBITDA margin increased 40 basis points to 22.4%.
Forged Wheels revenue rose 17% as lower volume was more than offset by aluminum cost and tariff pass-through and favorable foreign currency effects. Segment adjusted EBITDA increased 13% to $90 million, and adjusted EBITDA margin rose 350 basis points to 30.5%.
Plant and Winterlich highlighted several portfolio actions completed during the first part of the year. Howmet acquired Brunner, a Wisconsin-based fastener business, for about $120 million in cash on Feb. 6. Winterlich said the integration process is on track.
The company also sold its disc forging operation in Savannah, Georgia, for $230 million in cash on March 31. Winterlich said the divestiture is expected to be margin accretive to the Engineered Structures segment. Plant said the sale “tidied up another part of the structures portfolio,” describing the business as an isolated U.S. disc operation with no planned expansion.
Howmet closed the previously announced CAM Fastener acquisition on April 6 for approximately $1.8 billion. Plant said CAM expands Howmet’s reach into non-traditional fasteners, including fluid fittings, couplings, heat shields and additional latches. He said the deal reflects the company’s approach of allocating capital to stronger-performing areas of the business.
Winterlich said Howmet financed the CAM acquisition with $1.2 billion of new notes, $450 million in commercial paper borrowings and proceeds from the Savannah divestiture. The weighted average cost of debt for the transaction is about 4.2%.
Free cash flow was $359 million, which Winterlich said was a record for a first quarter. Capital expenditures totaled $94 million, with most spending in Engine Products as the company invests for aerospace and gas turbine growth. He said those investments are backed by customer contracts.
Howmet repurchased $300 million of common stock in the quarter at an average price of $230 per share and repurchased an additional $150 million in April at an average price of $246 per share. Winterlich said the first quarter marked the company’s 20th consecutive quarter of common stock repurchases. The company has about $1.05 billion remaining under its board-authorized share repurchase program.
Howmet paid a first-quarter dividend of $0.12 per share. Winterlich said the company expects the dollar value of dividend distributions in 2026 to be higher than in 2025.
Winterlich said net debt to trailing adjusted EBITDA improved to 0.9 times before the CAM acquisition, which closed after quarter-end. Plant said the company entered the second quarter, excluding funds used for CAM, with just over $600 million of cash on hand and net leverage of 1.6 times, which he expects to decline significantly through the rest of 2026.
Plant said Howmet sees “a clear path to an improved economic outcome in 2026” and revenue growth into 2027, but he also pointed to uncertainty related to the situation in Iran, including an oil price shock and potential inflationary effects.
For the second quarter, Howmet guided for revenue of $2.4 billion, plus or minus $10 million; adjusted EBITDA of $765 million, plus or minus $5 million; and adjusted EPS of $1.23, plus or minus $0.01.
For full-year 2026, the company guided for revenue of $9.65 billion, plus or minus $75 million; adjusted EBITDA of $3.06 billion, plus or minus $35 million; adjusted EPS of $4.94, plus or minus $0.06; and free cash flow of $1.75 billion, plus or minus $50 million.
Plant said the recent acquisitions and divestiture are expected to add about $275 million of revenue and about $60 million of adjusted EBITDA to the remainder of 2026. He said the EPS effect in 2026 is expected to be insignificant because of higher interest expense, with a positive EPS effect expected starting in 2027.
In response to analyst questions, Plant said Engine Products benefited in the quarter from anticipated aircraft production increases, limited inventory in engine builds, some market share gains, price increases and strong spares demand. He also said gas turbine demand remains highly active, with customer contract positions finalized for six of seven major customers.
Plant said the company is being careful not to overinvest in gas turbine capacity but sees continued growth tied to data center electricity demand and broader power generation needs. He said Howmet now expects about $500 million of capital expenditures in 2026, with 2027 likely to move higher.
Howmet Aerospace Inc is an industrial technology company that designs, manufactures and repairs engineered metal products for the aerospace, transportation and industrial markets. Its product portfolio includes precision castings and forgings, engineered fasteners, seamless rolled rings, and complex components for turbine engines, airframes and industrial gas turbines. The company also provides aftermarket services such as component repair, overhaul and parts distribution to support the operating fleet of commercial and military customers.
Howmet serves a global customer base of original equipment manufacturers (OEMs) and aftermarket operators, with manufacturing, service and distribution facilities across North America, Europe and Asia.
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The article "Howmet Aerospace Q1 Earnings Call Highlights" was originally published by MarketBeat.
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