• 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.

• Warning! GuruFocus has detected 8 Warning Sign with H.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Howmet Aerospace Inc (NYSE:HWM) 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 (NYSE: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 (NYSE: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.

Q & A Highlights

Q: On fastening systems, you've achieved EBITDA margins of 28%. Is this a sustainable improvement, or were there unusual factors at play this quarter? A: John Plant, CEO, explained that the fastener business is on a positive trajectory due to operational productivity improvements and commercial discipline. While the wide-body mix hasn't fundamentally changed yet, future builds, especially for Boeing 787 and Airbus, are expected to improve margins further.

Q: Your guidance suggests a margin step-down after Q1. Can you explain the rationale behind this? A: John Plant, CEO, noted that while they could have been more optimistic, they chose a conservative approach due to uncertainties in narrow-body builds and potential supply chain challenges. The company is cautious about back-end loading and prefers to wait for more clarity on the year's profile.

Q: What is the expected headcount growth to match the expansion of capacity? A: John Plant, CEO, anticipates a net increase of about 1,000 employees for the year, with a higher gross number to net down to this figure. This is slightly less than in 2024, reflecting ongoing productivity improvements.

Q: Can you provide more details on the product rationalization in engineered structures and its future impact? A: John Plant, CEO, highlighted that closing underperforming facilities and improving productivity have significantly boosted margins. The company expects continued improvements in 2025, with no plans to reverse these gains.

Q: What are the assumptions for spares growth in 2025, particularly for aerospace? A: John Plant, CEO, expects spares demand to remain strong, especially for the CFM56 and LEAP engines. The peak demand for CFM56 is now anticipated around 2027, with spares demand continuing to grow due to the existing fleet being worked harder.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.