UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, ~~2022~~2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-3610

HOWMET AEROSPACE INC.

(Exact name of registrant as specified in its charter)


Delaware						25-0317820
(State of incorporation)						(I.R.S. Employer Identification No.)

201 Isabella Street, Suite 200, Pittsburgh, Pennsylvania 15212-5872

(Address of principal executive offices) (Zip code)

Investor Relations 412-553-1950

Office of the Secretary 412-553-1940

(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $1.00 per share	HWM	New York Stock Exchange
$3.75 Cumulative Preferred Stock, par value $100.00 per share	HWM PR	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ✓ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ✓ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of ~~August 1, 2022,~~July 28, 2023, there were ~~415,403,018~~412,208,006 shares of common stock, par value $1.00 per share, of the registrant outstanding.

TABLE OF CONTENTS


		Page
Part I
Item 1.	Financial Statements and Supplementary Data	3
	Statement of Consolidated Operations for the Second Quarter and Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022	3
	Statement of Consolidated Comprehensive Income for the Second Quarter and Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022	4
	Consolidated Balance Sheet as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022	5
	Statement of Consolidated Cash Flows for the Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022	6
	Statement of Changes in Consolidated Equity for the Second Quarter Ended June 30, ~~2022~~2023 and ~~2021~~2022	7
	Statement of Changes in Consolidated Equity for the Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022	8
	Notes to the Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2425
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3134
Item 4.	Controls and Procedures	3134
Part II
Item 1.	Legal Proceedings	3234
Item 1A.	Risk Factors	3234
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3234
Item 6.	Exhibits	3335
	Signatures	3335

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements and Supplementary Data.

Howmet Aerospace Inc. and subsidiaries

Statement of Consolidated Operations (unaudited)

(~~U.S. dollars~~ in millions, except per-share amounts)


		Second quarter ended				Six months ended					Second quarter ended				Six months ended
		June 30,				June 30,					June 30,				June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Sales (C)	Sales (C)	$	1,393	$	1,195	$	2,717	$	2,404	Sales (C)	$	1,648	$	1,393	$	3,251	$	2,717
Cost of goods sold (exclusive of expenses below)	Cost of goods sold (exclusive of expenses below)	987		857		1,937		1,730		Cost of goods sold (exclusive of expenses below)	1,196		987		2,360		1,937
Selling, general administrative, and other expenses	Selling, general administrative, and other expenses	83		55		152		120		Selling, general administrative, and other expenses	88		83		163		152
Research and development expenses	Research and development expenses	9		4		16		9		Research and development expenses	9		9		18		16
Provision for depreciation and amortization	Provision for depreciation and amortization	67		67		133		135		Provision for depreciation and amortization	67		67		136		133
Restructuring and other charges (D)	Restructuring and other charges (D)	6		5		8		14		Restructuring and other charges (D)	3		6		4		8
Operating income	Operating income	241		207		471		396		Operating income	285		241		570		471
Loss on debt redemption (N)	Loss on debt redemption (N)	2		23		2		23		Loss on debt redemption (N)	—		2		1		2
Interest expense, net	Interest expense, net	57		66		115		138		Interest expense, net	55		57		112		115
Other (income) expense, net (F)		(1)		8		—		12
Other income, net (F)(P)										Other income, net (F)(P)	(13)		(1)		(6)		—
Income before income taxes	Income before income taxes	183		110		354		223		Income before income taxes	243		183		463		354
Provision for income taxes (G)	Provision for income taxes (G)	36		36		76		69		Provision for income taxes (G)	50		36		122		76

Net income	Net income	$	147	$	74	$	278	$	154	Net income	$	193	$	147	$	341	$	278

Amounts Attributable to Howmet Aerospace Common Shareholders (H):	Amounts Attributable to Howmet Aerospace Common Shareholders (H):									Amounts Attributable to Howmet Aerospace Common Shareholders (H):
Net income	Net income	$	147	$	74	$	277	$	153	Net income	$	193	$	147	$	340	$	277
Earnings per share:	Earnings per share:									Earnings per share:
Basic	Basic	$	0.35	$	0.17	$	0.66	$	0.35	Basic	$	0.47	$	0.35	$	0.82	$	0.66

Diluted	Diluted	$	0.35	$	0.17	$	0.66	$	0.35	Diluted	$	0.46	$	0.35	$	0.81	$	0.66

Average Shares Outstanding (H):	Average Shares Outstanding (H):									Average Shares Outstanding (H):
Basic	Basic	417		432		418		433		Basic	413		417		413		418
Diluted	Diluted	422		437		423		438		Diluted	417		422		417		423

The accompanying notes are an integral part of the consolidated financial statements.

Howmet Aerospace Inc. and subsidiaries

Statement of Consolidated Comprehensive Income (unaudited)

(~~U.S. dollars~~ in millions)


		Second quarter ended				Six months ended						Second quarter ended				Six months ended
		June 30,				June 30,				June 30,		June 30,
		2022		2021		2022		2021				2023		2022		2023		2022
Net income	Net income	$	147	$	74	$	278	$	154		Net income	$	193	$	147	$	341	$	278
Other comprehensive income (loss), net of tax (I):	Other comprehensive income (loss), net of tax (I):										Other comprehensive income (loss), net of tax (I):
Change in unrecognized net actuarial loss and prior service cost related to pension and other postretirement benefits	Change in unrecognized net actuarial loss and prior service cost related to pension and other postretirement benefits	22		35		32		77			Change in unrecognized net actuarial loss and prior service cost related to pension and other postretirement benefits	4		22		9		32
Foreign currency translation adjustments	Foreign currency translation adjustments	(114)		18		(145)		(26)			Foreign currency translation adjustments	4		(114)		38		(145)

Net change in unrecognized (losses) gains on cash flow hedges		(36)		4		(16)		8
Net change in unrecognized losses on cash flow hedges											Net change in unrecognized losses on cash flow hedges	(10)		(36)		(14)		(16)
Total Other comprehensive (loss) income, net of tax	Total Other comprehensive (loss) income, net of tax	(128)		57		(129)		59			Total Other comprehensive (loss) income, net of tax	(2)		(128)		33		(129)
Comprehensive income	Comprehensive income	$	19	$	131	$	149	$	213		Comprehensive income	$	191	$	19	$	374	$	149

The accompanying notes are an integral part of the consolidated financial statements.

Howmet Aerospace Inc. and subsidiaries

Consolidated Balance Sheet (unaudited)

(~~U.S. dollars~~ in millions)


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	537	$	720	Cash and cash equivalents	$	535	$	791
Receivables from customers, less allowances of $— in 2022 and 2021 (J)		501		367
Other receivables (J)		49		53
Receivables from customers, less allowances of $1 in both 2023 and 2022 (J)						Receivables from customers, less allowances of $1 in both 2023 and 2022 (J)	657		506
Other receivables						Other receivables	14		31
Inventories (K)	Inventories (K)	1,563		1,402		Inventories (K)	1,715		1,609
Prepaid expenses and other current assets	Prepaid expenses and other current assets	187		195		Prepaid expenses and other current assets	207		206

Total current assets	Total current assets	2,837		2,737		Total current assets	3,128		3,143
Properties, plants, and equipment, net (L)	Properties, plants, and equipment, net (L)	2,340		2,467		Properties, plants, and equipment, net (L)	2,319		2,332
Goodwill	Goodwill	4,012		4,067		Goodwill	4,026		4,013
Deferred income taxes	Deferred income taxes	118		184		Deferred income taxes	52		54
Intangibles, net	Intangibles, net	534		549		Intangibles, net	513		521
Other noncurrent assets (M)	Other noncurrent assets (M)	211		215		Other noncurrent assets (M)	195		192

Total assets	Total assets	$	10,052	$	10,219	Total assets	$	10,233	$	10,255
Liabilities	Liabilities					Liabilities
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable, trade		$	814	$	732
Accounts payable, trade (B)						Accounts payable, trade (B)	$	881	$	962
Accrued compensation and retirement costs	Accrued compensation and retirement costs	198		198		Accrued compensation and retirement costs	209		195
Taxes, including income taxes		58		61
Taxes, including income taxes (G)						Taxes, including income taxes (G)	78		48
Accrued interest payable	Accrued interest payable	75		74		Accrued interest payable	73		75
Other current liabilities (M)		176		183
Short-term debt (N)		1		5
Other current liabilities (M)(P)						Other current liabilities (M)(P)	169		202

Total current liabilities	Total current liabilities	1,322		1,253		Total current liabilities	1,410		1,482
Long-term debt, less amount due within one year (N and O)		4,169		4,227
Long-term debt, less amounts due within one year (N)(O)						Long-term debt, less amounts due within one year (N)(O)	3,989		4,162
Accrued pension benefits (E)	Accrued pension benefits (E)	710		771		Accrued pension benefits (E)	626		633
Accrued other postretirement benefits (E)	Accrued other postretirement benefits (E)	150		153		Accrued other postretirement benefits (E)	106		109
Other noncurrent liabilities and deferred credits (M)	Other noncurrent liabilities and deferred credits (M)	280		307		Other noncurrent liabilities and deferred credits (M)	327		268

Total liabilities	Total liabilities	6,631		6,711		Total liabilities	6,458		6,654
Contingencies and commitments (Q)		0		0
Contingencies and commitments (P)						Contingencies and commitments (P)
Equity	Equity					Equity
Howmet Aerospace shareholders’ equity:	Howmet Aerospace shareholders’ equity:					Howmet Aerospace shareholders’ equity:
Preferred stock	Preferred stock	55		55		Preferred stock	55		55
Common stock	Common stock	416		422		Common stock	412		412
Additional capital	Additional capital	4,079		4,291		Additional capital	3,782		3,947
Retained earnings	Retained earnings	863		603		Retained earnings	1,334		1,028
Accumulated other comprehensive loss (I)	Accumulated other comprehensive loss (I)	(1,992)		(1,863)		Accumulated other comprehensive loss (I)	(1,808)		(1,841)

Total equity	Total equity	3,421		3,508		Total equity	3,775		3,601
Total liabilities and equity	Total liabilities and equity	$	10,052	$	10,219	Total liabilities and equity	$	10,233	$	10,255

The accompanying notes are an integral part of the consolidated financial statements.

Howmet Aerospace Inc. and subsidiaries

Statement of Consolidated Cash Flows (unaudited)

(~~U.S. dollars~~ in millions)


		Six months ended					Six months ended
		June 30,					June 30,
		2022		2021			2023		2022
Operating activities	Operating activities					Operating activities
Net income	Net income	$	278	$	154	Net income	$	341	$	278
Adjustments to reconcile net income to cash provided from operations:	Adjustments to reconcile net income to cash provided from operations:					Adjustments to reconcile net income to cash provided from operations:
Depreciation and amortization	Depreciation and amortization	133		135		Depreciation and amortization	136		133
Deferred income taxes	Deferred income taxes	52		15		Deferred income taxes	57		52
Restructuring and other charges	Restructuring and other charges	8		14		Restructuring and other charges	4		8
Net realized and unrealized losses	Net realized and unrealized losses	7		4		Net realized and unrealized losses	11		7
Net periodic pension cost (E)	Net periodic pension cost (E)	11		9		Net periodic pension cost (E)	19		11
Stock-based compensation	Stock-based compensation	29		14		Stock-based compensation	26		29
Loss on debt redemption (N)	Loss on debt redemption (N)	2		23		Loss on debt redemption (N)	1		2
Other	Other	27		23		Other	—		27
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:	Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:					Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:
Increase in receivables (J)	Increase in receivables (J)	(169)		(231)		Increase in receivables (J)	(141)		(169)
(Increase) decrease in inventories		(191)		19
Decrease in prepaid expenses and other current assets		1		10
Increase in accounts payable, trade		118		48
Increase in inventories						Increase in inventories	(99)		(191)
(Increase) decrease in prepaid expenses and other current assets						(Increase) decrease in prepaid expenses and other current assets	(9)		1
(Decrease) increase in accounts payable, trade						(Decrease) increase in accounts payable, trade	(80)		118
Decrease in accrued expenses	Decrease in accrued expenses	(40)		(93)		Decrease in accrued expenses	(15)		(40)
Increase in taxes, including income taxes	Increase in taxes, including income taxes	1		24		Increase in taxes, including income taxes	31		1
Pension contributions	Pension contributions	(20)		(61)		Pension contributions	(12)		(20)
Increase in noncurrent assets		(1)		(4)
Decrease (increase) in noncurrent assets						Decrease (increase) in noncurrent assets	1		(1)
Decrease in noncurrent liabilities	Decrease in noncurrent liabilities	(33)		(24)		Decrease in noncurrent liabilities	(19)		(33)
Cash provided from operations	Cash provided from operations	213		79		Cash provided from operations	252		213
Financing Activities	Financing Activities					Financing Activities
Net change in short-term borrowings (original maturities of three months or less)		(4)		(1)
Net change in short-term borrowings						Net change in short-term borrowings	—		(4)

Payments on debt (original maturities greater than three months) (N)		(60)		(838)
Debt issuance costs (N)		—		(1)
Repurchases and payments on debt (N)						Repurchases and payments on debt (N)	(176)		(60)

Premiums paid on early redemption of debt (N)	Premiums paid on early redemption of debt (N)	(2)		(22)		Premiums paid on early redemption of debt (N)	(1)		(2)
Repurchase of common stock	Repurchase of common stock	(235)		(200)		Repurchase of common stock	(125)		(235)
Proceeds from exercise of employee stock options	Proceeds from exercise of employee stock options	10		15		Proceeds from exercise of employee stock options	9		10
Dividends paid to shareholders	Dividends paid to shareholders	(18)		(1)		Dividends paid to shareholders	(35)		(18)

Other		(22)		(20)
Taxes paid for net share settlement of equity awards						Taxes paid for net share settlement of equity awards	(75)		(22)
Cash used for financing activities	Cash used for financing activities	(331)		(1,068)		Cash used for financing activities	(403)		(331)
Investing Activities	Investing Activities					Investing Activities
Capital expenditures (C)	Capital expenditures (C)	(106)		(91)		Capital expenditures (C)	(105)		(106)
Proceeds from the sale of assets and businesses		42		8
Sale of debt securities		—		5
Cash receipts from sold receivables (J)		—		172
Proceeds from the sale of assets and businesses (L)						Proceeds from the sale of assets and businesses (L)	—		42

Other	Other	(1)		—		Other	—		(1)
Cash (used for) provided from investing activities		(65)		94
Cash used for investing activities						Cash used for investing activities	(105)		(65)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(1)		—		Effect of exchange rate changes on cash, cash equivalents and restricted cash	—		(1)
Net change in cash, cash equivalents and restricted cash	Net change in cash, cash equivalents and restricted cash	(184)		(895)		Net change in cash, cash equivalents and restricted cash	(256)		(184)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	722		1,611		Cash, cash equivalents and restricted cash at beginning of period	792		722
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	538	$	716	Cash, cash equivalents and restricted cash at end of period	$	536	$	538

The accompanying notes are an integral part of the consolidated financial statements.

Howmet Aerospace Inc. and subsidiaries

Statement of Changes in Consolidated Equity (unaudited)

(~~U.S. dollars~~ in millions, except per-share amounts)

Howmet Aerospace Shareholders
Preferred
stock Common
stock Additional
capital Retained earnings Accumulated
other
comprehensive
loss Total
Equity
Balance at March 31, 2021 $ 55 $ 434 $ 4,671 $ 443 $ (1,941) $ 3,662
Net income — — — 74 — 74
Other comprehensive income (I)
— — — — 57 57
Repurchase and retirement of common stock — (6) (194) — — (200)
Stock-based compensation — — 8 — — 8
Common stock issued: compensation plans — 1 (4) — — (3)
Balance at June 30, 2021 $ 55 $ 429 $ 4,481 $ 517 $ (1,884) $ 3,598



	Preferred stock		Common stock		Additional capital		Retained earnings		Accumulated other comprehensive loss		Total Equity
Balance at March 31, 2022	$	55	$	418	$	4,123	$	725	$	(1,864)	$	3,457

Net income	—		—		—		147		—		147
Other comprehensive loss (I)	—		—		—		—		(128)		(128)
Cash dividends declared:

Common @ $0.02 per share	—		—		—		(9)		—		(9)
Repurchase and retirement of common stock (H)	—		(2)		(58)		—		—		(60)
Stock-based compensation	—		—		18		—		—		18
Common stock issued: compensation plans	—		—		(4)		—		—		(4)

Balance at June 30, 2022	$	55	$	416	$	4,079	$	863	$	(1,992)	$	3,421

Howmet Aerospace Shareholders
Preferred
stock Common
stock Additional
capital Retained earnings Accumulated
other
comprehensive
loss Total
Equity
Balance at March 31, 2022 $ 55 $ 418 $ 4,123 $ 725 $ (1,864) $ 3,457
Net income — — — 147 — 147
Other comprehensive loss (I)
— — — — (128) (128)
Cash dividends declared:
Common @ $0.02 per share — — — (9) — (9)
Repurchase and retirement of common stock — (2) (58) — — (60)
Stock-based compensation — — 18 — — 18
Common stock issued: compensation plans — — (4) — — (4)
Balance at June 30, 2022 $ 55 $ 416 $ 4,079 $ 863 $ (1,992) $ 3,421



	Preferred stock		Common stock		Additional capital		Retained earnings		Accumulated other comprehensive loss		Total Equity
Balance at March 31, 2023	$	55	$	412	$	3,941	$	1,159	$	(1,806)	$	3,761

Net income	—		—		—		193		—		193
Other comprehensive loss (I)	—		—		—		—		(2)		(2)
Cash dividends declared:

Common @ $0.04 per share	—		—		—		(18)		—		(18)
Repurchase and retirement of common stock (H)	—		(3)		(97)		—		—		(100)
Stock-based compensation	—		—		12		—		—		12
Common stock issued: compensation plans	—		3		(74)		—		—		(71)


Balance at June 30, 2023	$	55	$	412	$	3,782	$	1,334	$	(1,808)	$	3,775

The accompanying notes are an integral part of the consolidated financial statements.

Howmet Aerospace Inc. and subsidiaries

Statement of Changes in Consolidated Equity (unaudited)

(U.S. dollars in millions, except per-share amounts)


		Howmet Aerospace Shareholders
		Preferred stock		Common stock		Additional capital		Retained earnings		Accumulated other comprehensive loss		Total Equity			Preferred stock		Common stock		Additional capital		Retained earnings		Accumulated other comprehensive loss		Total Equity
Balance at December 31, 2020		$	55	$	433	$	4,668	$	364	$	(1,943)	$	3,577
Balance at December 31, 2021														Balance at December 31, 2021	$	55	$	422	$	4,291	$	603	$	(1,863)	$	3,508

Net income	Net income	—		—		—		154		—		154		Net income	—		—		—		278		—		278
Other comprehensive income (I)		—		—		—		—		59		59
Other comprehensive loss (I)														Other comprehensive loss (I)	—		—		—		—		(129)		(129)
Cash dividends declared:	Cash dividends declared:													Cash dividends declared:
Preferred-Class A @ $1.8750 per share	Preferred-Class A @ $1.8750 per share	—		—		—		(1)		—		(1)		Preferred-Class A @ $1.8750 per share	—		—		—		(1)		—		(1)

Repurchase and retirement of common stock		—		(6)		(194)		—		—		(200)
Common @ $0.04 per share														Common @ $0.04 per share	—		—		—		(17)		—		(17)
Repurchase and retirement of common stock (H)														Repurchase and retirement of common stock (H)	—		(7)		(228)		—		—		(235)
Stock-based compensation	Stock-based compensation	—		—		14		—		—		14		Stock-based compensation	—		—		29		—		—		29
Common stock issued: compensation plans	Common stock issued: compensation plans	—		2		(7)		—		—		(5)		Common stock issued: compensation plans	—		1		(13)		—		—		(12)

Balance at June 30, 2021		$	55	$	429	$	4,481	$	517	$	(1,884)	$	3,598
Balance at June 30, 2022														Balance at June 30, 2022	$	55	$	416	$	4,079	$	863	$	(1,992)	$	3,421


		Howmet Aerospace Shareholders
		Preferred stock		Common stock		Additional capital		Retained earnings		Accumulated other comprehensive loss		Total Equity			Preferred stock		Common stock		Additional capital		Retained earnings		Accumulated other comprehensive loss		Total Equity
Balance at December 31, 2021		$	55	$	422	$	4,291	$	603	$	(1,863)	$	3,508
Balance at December 31, 2022														Balance at December 31, 2022	$	55	$	412	$	3,947	$	1,028	$	(1,841)	$	3,601
Net income	Net income	—		—		—		278		—		278		Net income	—		—		—		341		—		341
Other comprehensive loss (I)		—		—		—		—		(129)		(129)
Other comprehensive income (I)														Other comprehensive income (I)	—		—		—		—		33		33
Cash dividends declared:	Cash dividends declared:													Cash dividends declared:
Preferred-Class A @ $1.8750 per share	Preferred-Class A @ $1.8750 per share	—		—		—		(1)		—		(1)		Preferred-Class A @ $1.8750 per share	—		—		—		(1)		—		(1)
Common @ $0.04 per share		—		—		—		(17)		—		(17)
Repurchase and retirement of common stock		—		(7)		(228)		—		—		(235)
Common @ $0.08 per share														Common @ $0.08 per share	—		—		—		(34)		—		(34)
Repurchase and retirement of common stock (H)														Repurchase and retirement of common stock (H)	—		(3)		(122)		—		—		(125)
Stock-based compensation	Stock-based compensation	—		—		29		—		—		29		Stock-based compensation	—		—		26		—		—		26
Common stock issued: compensation plans	Common stock issued: compensation plans	—		1		(13)		—		—		(12)		Common stock issued: compensation plans	—		3		(69)		—		—		(66)

Balance at June 30, 2022		$	55	$	416	$	4,079	$	863	$	(1,992)	$	3,421
Balance at June 30, 2023														Balance at June 30, 2023	$	55	$	412	$	3,782	$	1,334	$	(1,808)	$	3,775

The accompanying notes are an integral part of the consolidated financial statements.

Howmet Aerospace Inc. and subsidiaries

Notes to the Consolidated Financial Statements (unaudited)

(U.S. dollars in millions, except share and per-share amounts)

A. Basis of Presentation

The interim Consolidated Financial Statements of Howmet Aerospace Inc. and subsidiaries (“Howmet” or the “Company” or “we” or “our”) are unaudited. These Consolidated Financial Statements include all adjustments, consisting only of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position, and cash flows. The results reported in these Consolidated Financial Statements are not necessarily indicative of the results that may be expected for the entire year. The ~~2021~~2022 year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). This Form 10-Q report should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022 (the “Form 10-K”), which includes all disclosures required by GAAP. Certain amounts in previously issued financial statements were reclassified to conform to the current period presentation.

In the ~~second quarter of 2022,~~six months ended June 30, 2023, the Company derived approximately ~~45%~~47% of its revenue from products sold to the commercial aerospace market which is substantially less than the ~~pre-pandemic~~ 2019 annual rate of approximately 60%. ~~Due to~~During the global COVID-19 pandemic and its impact on the commercial aerospace industry to date, there ~~has been~~was a decrease in domestic and international air travel, which in turn ~~has~~ adversely affected demand for ~~narrow-body~~narrow body and ~~wide-body~~wide body aircraft. ~~Although domestic~~Domestic air travel ~~is increasing, it still is below pre-pandemic~~has rebounded and approximates 2019 ~~levels on an average monthly basis.~~levels. International air travel ~~also~~ continues to ~~be lower than pre-pandemic~~recover and is approximately 90% of 2019 levels. ~~Narrow-body~~We expect commercial aerospace growth to continue with narrow body demand is returning faster than ~~wide-body demand and the~~wide body demand. The commercial ~~wide-body~~wide body aircraft market is taking longer to recover, which is creating a shift in our product mix compared to ~~pre-pandemic~~2019 conditions. In addition to the impact from the pandemic, the timing and level of future aircraft builds by original equipment manufacturers are subject to changes and uncertainties, ~~such as declines in Boeing 787 production rates due to delays in its recertification,~~ which may cause our future results to differ from prior periods due to changes in product mix in certain segments.

The preparation of the Consolidated Financial Statements of the Company in conformity with GAAP requires management to make certain judgments, estimates, and assumptions. These estimates are based on historical experience and, in some cases, assumptions based on current and future market experience, including considerations ~~relating~~related to ~~the impact of~~ COVID-19 and changes in the aerospace ~~industry as a result of the pandemic.~~industry. The impact of these changes, ~~is rapidly changing and of unknown duration and~~including the macroeconomic ~~impact and, as a result, these~~ considerations, ~~remain~~remains highly uncertain. Management has made its best estimates using all relevant information available at the time, but it is possible that our estimates will differ from our actual results and affect the Consolidated Financial Statements in future periods and potentially require adverse adjustments to the recoverability of goodwill, intangible and long-lived assets, the realizability of deferred tax assets and other judgments and estimations and ~~assumptions that may be impacted by COVID-19 and changes in the aerospace industry.~~assumptions.

B. Recently Adopted and Recently Issued Accounting Guidance

Adopted

~~On January 1, 2021, the Company adopted changes issued by~~In September 2022, the Financial Accounting Standards Board (“FASB”) ~~that were intended to simplify various aspects of accounting for income taxes by eliminating certain exceptions contained in existing guidance and amending other~~issued guidance to ~~simplify several other income tax accounting matters.~~enhance the transparency of disclosures regarding supplier finance programs. These changes became effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023.

On January 1, 2023, the Company adopted the changes issued by the FASB related to disclosure requirements of supplier finance program obligations. We offer voluntary supplier finance programs to suppliers who may elect to sell their receivables to third parties at the sole discretion of both the suppliers and the third parties. The ~~adoption~~program is at no cost to the Company and provides additional liquidity to our suppliers, if they desire, at their cost. Under these programs, the Company pays the third party bank rather than the supplier, the stated amount of ~~this new guidance did not have a material impact~~the confirmed invoices on the original maturity date of the invoices. The Company or the third party bank may terminate a program upon at least 30 days’ notice. Supplier invoices under the program require payment in full no more than 120 days of the invoice date. As of June 30, 2023 and December 31, 2022, supplier invoices that are subject to future payment under these programs were $259 and $240, respectively, and are included in Accounts payable, trade in the Consolidated ~~Financial Statements.~~Balance Sheet.

Issued

In March 2020, the FASB issued amendments that provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. ~~Based upon~~In December 2022, the ~~provisions of our~~FASB deferred the sunset date to December 31, 2024. The Company has amended its agreements ~~that were amended to date, management does not believe~~in accordance with the new guidance (See Note J and Note N). Management has concluded that the impact of these changes ~~will~~is not expected to have a material impact on the Consolidated Financial Statements.

C. Segment Information

Howmet is a global leader in lightweight metals engineering and manufacturing. Howmet’s innovative, multi-material products, which include nickel, titanium, aluminum, and cobalt, are used worldwide in the aerospace (commercial and defense), commercial transportation, and industrial and other markets. Segment performance under Howmet’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance is Segment Adjusted EBITDA. Prior to the first quarter of 2022, the Company used Segment operating profit as its primary measure of performance. However, the Company’s Chief Executive Officer believes that Segment Adjusted EBITDA is now a better representation of its business because it provides additional information with respect to the Company’s operating performance and the Company’s ability to meet its financial obligations. Howmet’s definition of Segment Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation and amortization. Net margin is equivalent to Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation and amortization. Special items, including Restructuring and other charges, are ~~also~~ excluded from ~~Net~~net margin and Segment Adjusted EBITDA. Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Differences between the total segment and consolidated totals are in Corporate.

Howmet’s operations consist of 4four worldwide reportable segments as follows:

Engine Products

Engine Products produces investment castings, including airfoils, and seamless rolled rings primarily for aircraft engines and industrial gas turbines. Engine Products produces rotating parts as well as structural parts.

Fastening Systems

Fastening Systems produces aerospace fastening systems, as well as commercial transportation, industrial and other fasteners. The business’s high-tech, multi-material fastening systems are found nose to tail on aircraft and aero engines. Fastening Systems’ products are also critical components of commercial transportation vehicles, automobiles, construction and industrial equipment, and renewable energy sectors.

Engineered Structures

Engineered Structures produces titanium ingots and mill products for aerospace and defense applications and is vertically integrated to produce titanium forgings, extrusions, forming and machining services for airframe, wing, aero-engine, and landing gear components. Engineered Structures also produces aluminum forgings, nickel forgings, and aluminum machined components and assemblies for aerospace and defense applications.

Forged Wheels

Forged Wheels provides forged aluminum wheels and related products for heavy-duty trucks and the commercial transportation market.

The operating results of the Company’s reportable segments were as follows:


													Engine Products		Fastening Systems		Engineered Structures		Forged Wheels		Total Segment
Second quarter ended June 30, 2023												Second quarter ended June 30, 2023
Sales:												Sales:
Third-party sales												Third-party sales	$	821	$	329	$	200	$	298	$	1,648
Inter-segment sales												Inter-segment sales	5		—		1		—		6
Total sales												Total sales	$	826	$	329	$	201	$	298	$	1,654
Profit and loss:												Profit and loss:

Provision for depreciation and amortization												Provision for depreciation and amortization	$	32	$	12	$	12	$	10	$	66
Segment Adjusted EBITDA												Segment Adjusted EBITDA	223		64		20		81		388
Restructuring and other (credits) charges												Restructuring and other (credits) charges	(1)		—		5		—		4
Capital expenditures												Capital expenditures	21		5		5		7		38
		Engine Products		Fastening Systems		Engineered Structures		Forged Wheels		Total Segment
Second quarter ended June 30, 2022	Second quarter ended June 30, 2022											Second quarter ended June 30, 2022
Sales:	Sales:											Sales:
Third-party sales	Third-party sales	$	652	$	277	$	185	$	279	$	1,393	Third-party sales	$	652	$	277	$	185	$	279	$	1,393
Inter-segment sales	Inter-segment sales	1		—		1		—		2		Inter-segment sales	1		—		1		—		2
Total sales	Total sales	$	653	$	277	$	186	$	279	$	1,395	Total sales	$	653	$	277	$	186	$	279	$	1,395
Profit and loss:	Profit and loss:											Profit and loss:

Provision for depreciation and amortization	Provision for depreciation and amortization	$	31	$	11	$	12	$	10	$	64	Provision for depreciation and amortization	$	31	$	11	$	12	$	10	$	64
Segment Adjusted EBITDA	Segment Adjusted EBITDA	179		56		26		75		336		Segment Adjusted EBITDA	179		56		26		75		336
Restructuring and other charges	Restructuring and other charges	4		—		1		—		5		Restructuring and other charges	4		—		1		—		5
Capital expenditures	Capital expenditures	24		8		2		5		39		Capital expenditures	24		8		2		5		39

Second quarter ended June 30, 2021
													Engine Products		Fastening Systems		Engineered Structures		Forged Wheels		Total Segment
Six months ended June 30, 2023												Six months ended June 30, 2023
Sales:	Sales:											Sales:
Third-party sales	Third-party sales	$	544	$	262	$	160	$	229	$	1,195	Third-party sales	$	1,616	$	641	$	407	$	587	$	3,251
Inter-segment sales	Inter-segment sales	1		—		2		—		3		Inter-segment sales	7		—		1		—		8
Total sales	Total sales	$	545	$	262	$	162	$	229	$	1,198	Total sales	$	1,623	$	641	$	408	$	587	$	3,259
Profit and loss:	Profit and loss:											Profit and loss:

Provision for depreciation and amortization	Provision for depreciation and amortization	$	30	$	13	$	13	$	9	$	65	Provision for depreciation and amortization	$	64	$	23	$	24	$	19	$	130
Segment Adjusted EBITDA	Segment Adjusted EBITDA	130		63		24		70		287		Segment Adjusted EBITDA	435		122		50		160		767
Restructuring and other charges		5		3		—		—		8
Restructuring and other (credits) charges												Restructuring and other (credits) charges	(1)		—		6		—		5
Capital expenditures	Capital expenditures	16		9		5		13		43		Capital expenditures	54		14		15		16		99

		Engine Products		Fastening Systems		Engineered Structures		Forged Wheels		Total Segment
Six months ended June 30, 2022	Six months ended June 30, 2022											Six months ended June 30, 2022
Sales:	Sales:											Sales:
Third-party sales	Third-party sales	$	1,283	$	541	$	367	$	526	$	2,717	Third-party sales	$	1,283	$	541	$	367	$	526	$	2,717
Inter-segment sales	Inter-segment sales	2		—		2		—		4		Inter-segment sales	2		—		2		—		4
Total sales	Total sales	$	1,285	$	541	$	369	$	526	$	2,721	Total sales	$	1,285	$	541	$	369	$	526	$	2,721
Profit and loss:	Profit and loss:											Profit and loss:

Provision for depreciation and amortization	Provision for depreciation and amortization	$	62	$	23	$	24	$	20	$	129	Provision for depreciation and amortization	$	62	$	23	$	24	$	20	$	129
Segment Adjusted EBITDA	Segment Adjusted EBITDA	352		112		49		142		655		Segment Adjusted EBITDA	352		112		49		142		655
Restructuring and other charges (credits)	Restructuring and other charges (credits)	7		(3)		3		—		7		Restructuring and other charges (credits)	7		(3)		3		—		7
Capital expenditures	Capital expenditures	51		23		9		14		97		Capital expenditures	51		23		9		14		97

Six months ended June 30, 2021
Sales:
Third-party sales		$	1,078	$	534	$	336	$	456	$	2,404
Inter-segment sales		2		—		3		—		5
Total sales		$	1,080	$	534	$	339	$	456	$	2,409
Profit and loss:

Provision for depreciation and amortization		$	61	$	25	$	25	$	19	$	130
Segment Adjusted EBITDA		262		120		46		150		578
Restructuring and other charges		10		5		1		—		16
Capital expenditures		27		14		10		22		73

The following table reconciles Total Segment Adjusted EBITDA to Income before income ~~taxes:~~
Second quarter ended Six months ended
June 30, June 30,
2022 2021 2022 2021
Total Segment Adjusted EBITDA $ 336 $ 287 $ 655 $ 578
Segment provision for depreciation and amortization (64) (65) (129) (130)
Unallocated amounts:
Restructuring and other charges (6) (5) (8) (14)
Corporate expense (25) (10) (47) (38)
Operating income $ 241 $ 207 $ 471 $ 396
Loss on debt redemption (2) (23) (2) (23)
Interest expense, net (57) (66) (115) (138)
Other income (expense), net 1 (8) — (12)
Income before income taxes $ 183 $ 110 $ 354 $ 223

taxes. Differences between the total segment and consolidated totals are in Corporate.


	Second quarter ended				Six months ended
	June 30,				June 30,
	2023		2022		2023		2022
Total Segment Adjusted EBITDA	$	388	$	336	$	767	$	655
Segment provision for depreciation and amortization	(66)		(64)		(130)		(129)
Unallocated amounts:
Restructuring and other charges	(3)		(6)		(4)		(8)
Corporate expense	(34)		(25)		(63)		(47)
Operating income	$	285	$	241	$	570	$	471
Loss on debt redemption	—		(2)		(1)		(2)
Interest expense, net	(55)		(57)		(112)		(115)
Other income, net	13		1		6		—
Income before income taxes	$	243	$	183	$	463	$	354

The following table reconciles total segment capital expenditures with Capital expenditures as presented in the Statement of Consolidated Cash ~~Flows:~~
Second quarter ended Six months ended
June 30, June 30,
2022 2021 2022 2021
Total segment capital expenditures $ 39 $ 43 $ 97 $ 73
Corporate 5 (7) 9 18
Capital expenditures $ 44 $ 36 $ 106 $ 91
Flows.


	Second quarter ended				Six months ended
	June 30,				June 30,
	2023		2022		2023		2022
Total segment capital expenditures	$	38	$	39	$	99	$	97
Corporate	3		5		6		9
Capital expenditures	$	41	$	44	$	105	$	106

The following table disaggregates segment revenue by major market served. Differences between the total segment and consolidated totals are in Corporate.


													Engine Products		Fastening Systems		Engineered Structures		Forged Wheels		Total Segment
Second quarter ended June 30, 2023												Second quarter ended June 30, 2023
Aerospace - Commercial												Aerospace - Commercial	$	446	$	184	$	141	$	—	$	771
Aerospace - Defense												Aerospace - Defense	174		46		42		—		262
Commercial Transportation												Commercial Transportation	—		62		—		298		360
Industrial and Other												Industrial and Other	201		37		17		—		255
Total end-market revenue												Total end-market revenue	$	821	$	329	$	200	$	298	$	1,648
		Engine Products		Fastening Systems		Engineered Structures		Forged Wheels		Total Segment
Second quarter ended June 30, 2022	Second quarter ended June 30, 2022											Second quarter ended June 30, 2022
Aerospace - Commercial	Aerospace - Commercial	$	362	$	155	$	108	$	—	$	625	Aerospace - Commercial	$	362	$	155	$	108	$	—	$	625
Aerospace - Defense	Aerospace - Defense	123		37		63		—		223		Aerospace - Defense	123		37		63		—		223
Commercial Transportation	Commercial Transportation	—		53		—		279		332		Commercial Transportation	—		53		—		279		332
Industrial and Other	Industrial and Other	167		32		14		—		213		Industrial and Other	167		32		14		—		213
Total end-market revenue	Total end-market revenue	$	652	$	277	$	185	$	279	$	1,393	Total end-market revenue	$	652	$	277	$	185	$	279	$	1,393

Second quarter ended June 30, 2021
Six months ended June 30, 2023												Six months ended June 30, 2023
Aerospace - Commercial	Aerospace - Commercial	$	260	$	129	$	79	$	—	$	468	Aerospace - Commercial	$	878	$	354	$	293	$	—	$	1,525
Aerospace - Defense	Aerospace - Defense	121		41		64		—		226		Aerospace - Defense	337		90		86		—		513
Commercial Transportation	Commercial Transportation	—		49		—		229		278		Commercial Transportation	—		125		—		587		712
Industrial and Other	Industrial and Other	163		43		17		—		223		Industrial and Other	401		72		28		—		501
Total end-market revenue	Total end-market revenue	$	544	$	262	$	160	$	229	$	1,195	Total end-market revenue	$	1,616	$	641	$	407	$	587	$	3,251

Six months ended June 30, 2022	Six months ended June 30, 2022											Six months ended June 30, 2022
Aerospace - Commercial	Aerospace - Commercial	$	691	$	303	$	217	$	—	$	1,211	Aerospace - Commercial	$	691	$	303	$	217	$	—	$	1,211
Aerospace - Defense	Aerospace - Defense	260		69		120		—		449		Aerospace - Defense	260		69		120		—		449
Commercial Transportation	Commercial Transportation	—		106		—		526		632		Commercial Transportation	—		106		—		526		632
Industrial and Other	Industrial and Other	332		63		30		—		425		Industrial and Other	332		63		30		—		425
Total end-market revenue	Total end-market revenue	$	1,283	$	541	$	367	$	526	$	2,717	Total end-market revenue	$	1,283	$	541	$	367	$	526	$	2,717

Six months ended June 30, 2021
Aerospace - Commercial		$	487	$	277	$	159	$	—	$	923
Aerospace - Defense		272		83		141		—		496
Commercial Transportation		—		95		—		456		551
Industrial and Other		319		79		36		—		434
Total end-market revenue		$	1,078	$	534	$	336	$	456	$	2,404

The Company derived ~~61%~~63% and ~~59%~~61% of its revenue from the aerospace (commercial and defense) market for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

General Electric Company and RTX Corporation represented approximately 13% and ~~12%~~10%, respectively, of the Company’s third-party sales for the six months ended June 30, ~~2022~~2023. General Electric Company and ~~2021~~RTX Corporation represented approximately 13% and 9%, respectively, of the Company’s third-party sales for the six months ended June 30, 2022. These sales wereprimarily from the Engine ~~Products.~~

Products segment.

D. Restructuring and Other Charges


		Second quarter ended				Six months ended					Second quarter ended				Six months ended
		June 30,				June 30,					June 30,				June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Layoff costs		$	—	$	2	$	—	$	2

Reversals of previously recorded layoff reserves	Reversals of previously recorded layoff reserves	—		(2)		(1)		(1)		Reversals of previously recorded layoff reserves	$	—	$	—	$	(1)	$	(1)
Pension and Other post-retirement benefits - net settlements (E)	Pension and Other post-retirement benefits - net settlements (E)	3		3		4		6		Pension and Other post-retirement benefits - net settlements (E)	3		3		3		4
Non-cash asset impairments		—		4		—		4
Net loss related to divestitures of assets and businesses (P)		—		—		—		4

Other	Other	3		(2)		5		(1)		Other	—		3		2		5
Restructuring and other charges	Restructuring and other charges	$	6	$	5	$	8	$	14	Restructuring and other charges	$	3	$	6	$	4	$	8

In the second quarter of 2023, the Company recorded Restructuring and other charges of $3, which were primarily due to charges for a U.S. pension plan settlement of $3.

In the six months ended June 30, 2023, the Company recorded Restructuring and other charges of $4, which were primarily due to charges for a U.S. pension plan settlement of $3 and exit related costs, including accelerated depreciation, of $2, partially offset by a reversal of $1 for a layoff reserve related to a prior period.

In the second quarter of 2022, the Company recorded Restructuring and other charges of $6, which were primarily due to

charges for U.S. pension plan settlements of $3 and exit related costs, including accelerated depreciation, of $3.

In the six months ended June 30, 2022, the Company recorded Restructuring and other charges of $8, which were primarily due to exit related costs, including accelerated depreciation, of $5 and charges for U.S. pension plan settlements of $4, partially offset by a reversal of $1 for a layoff reserve related to a prior period.

In the second quarter and six months ended June 30, 2021, the Company recorded Restructuring and other charges of $5 and $14, respectively, which was primarily due to charges for pension plan settlements and exit related costs.


		Layoff costs		Other exit costs		Total			Layoff costs		Other exit costs		Total
Reserve balances at December 31, 2021		$	17	$	2	$	19
Reserve balances at December 31, 2022								Reserve balances at December 31, 2022	$	6	$	2	$	8
Cash payments	Cash payments	(8)		(4)		(12)		Cash payments	(1)		(2)		(3)
Restructuring charges	Restructuring charges	3		5		8		Restructuring charges	2		2		4
Other(1)	Other(1)	(4)		(1)		(5)		Other(1)	(3)		(1)		(4)
Reserve balances at June 30, 2022		$	8	$	2	$	10
Reserve balances at June 30, 2023								Reserve balances at June 30, 2023	$	4	$	1	$	5

(1)In the six months ended June 30, ~~2022, Other~~2023, other for layoff costs included $3 of charges for a ~~$4 charge for~~ U.S. pension plan ~~settlements~~settlement and ~~Other~~for other exit costs included a $1 charge for accelerated depreciation.

The ~~majority~~remaining reserves as of ~~the layoff cost and other exit cost reserves is~~June 30, 2023 are expected to be paid in cash during ~~2022~~the remainder of 2023 and ~~2023, with small amounts to be paid through~~ 2024.

E. Pension and Other Postretirement Benefits

The components of net periodic cost (benefit) were as follows:


		Second quarter ended				Six months ended					Second quarter ended				Six months ended
		June 30,				June 30,					June 30,				June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Pension benefits	Pension benefits									Pension benefits
Service cost	Service cost	$	1	$	1	$	2	$	2	Service cost	$	1	$	1	$	2	$	2
Interest cost	Interest cost	13		12		25		24		Interest cost	20		13		40		25
Expected return on plan assets	Expected return on plan assets	(21)		(23)		(41)		(46)		Expected return on plan assets	(18)		(21)		(37)		(41)
Recognized net actuarial loss	Recognized net actuarial loss	12		15		25		29		Recognized net actuarial loss	7		12		14		25

Settlements	Settlements	3		3		4		6		Settlements	3		3		3		4

Net periodic cost(1)	Net periodic cost(1)	$	8	$	8	$	15	$	15	Net periodic cost(1)	$	13	$	8	$	22	$	15

Other postretirement benefits	Other postretirement benefits									Other postretirement benefits
Service cost	Service cost	$	1	$	1	$	1	$	1	Service cost	$	—	$	1	$	—	$	1
Interest cost	Interest cost	1		2		2		3		Interest cost	1		1		3		2
Recognized net actuarial loss		1		—		1		—
Recognized net actuarial gain										Recognized net actuarial gain	—		1		(1)		1
Amortization of prior service benefit	Amortization of prior service benefit	(3)		(3)		(5)		(4)		Amortization of prior service benefit	(2)		(3)		(4)		(5)

Net periodic benefit(1)	Net periodic benefit(1)	$	—	$	—	$	(1)	$	—	Net periodic benefit(1)	$	(1)	$	—	$	(2)	$	(1)

(1)Service cost was included within Cost of goods sold, and Selling, general administrative, and other ~~expenses, and Research and development~~ expenses; settlements were included in Restructuring and other charges; and all other cost components were recorded in Other ~~(income) expense,~~income, net in the Statement of Consolidated Operations.

Pension benefits

~~The~~In the second quarter and six months ended June 30, 2023, the Company undertook additional actions to reduce gross pension obligations by $19 by purchasing group annuity contracts from a third-party carrier to pay and administer future annuity payments. These actions resulted in settlement charges of $3. In the second quarter and six months ended June 30, 2022, the Company applied settlement accounting to certain U.S. pension plans due to lump sum payments made to participants, which resulted in settlement charges of $3 and $4, ~~in the second quarter and six months ended June 30, 2022, respectively, and $3 and $6 in the second quarter and six months ended June 30, 2021,~~ respectively, that were recorded in Restructuring and other charges in the Statement of Consolidated Operations.

On March 11, 2021, the American Rescue Plan Act of 2021 (“ARPA 2021”) was signed into law in the United States. ARPA 2021, in part, provides temporary relief for employers who sponsor defined benefit pension plans related to funding contributions under the Employee Retirement Income Security Act of 1974.

For the second quarter and six months ended

June 30, 2023, Howmet’s combined pension contributions and other postretirement benefit payments were approximately $7 and $19, respectively. For the second quarter and six months ended June 30, 2022, Howmet’s combined pension contributions and other postretirement benefit payments were approximately $12 and $25, respectively. ~~For~~

F. Other Income, Net


	Second quarter ended				Six months ended
	June 30,				June 30,
	2023		2022		2023		2022
Non-service costs - pension and other postretirement benefits (E)	$	8	$	3	$	15	$	7
Interest income	(5)		(1)		(10)		(1)
Foreign currency gains, net	—		(1)		(2)		(4)
Net realized and unrealized losses	7		4		11		7
Deferred compensation	3		(6)		6		(9)
Other, net	(26)		—		(26)		—
Other income, net	$	(13)	$	(1)	$	(6)	$	—

In the second quarter and six months ended June 30, ~~2021, Howmet’s combined pension contributions and other postretirement benefit payments were approximately $36 and $69, respectively.~~

2023, Other, ~~postretirement benefits~~

Innet primarily includes the ~~first~~reversal of $25, net of legal fees of $1, of the $65 pre-tax charge taken in the third quarter of 2021, the Company announced a plan administration change of certain of its Medicare-eligible prescription drug benefits to an Employer Group Waiver Plan with a wrap-around secondary plan effective July 1, 2021. The administration change is expected to reduce costs2022 related to the ~~Company through~~Lehman Brothers International (Europe) legal proceeding (See Note P) due to the ~~usage~~final settlement of Medicare Part D and drug manufacturer subsidies. Due to this amendment, along with the associated plan remeasurements, the Company recorded a decrease to its Accrued other postretirement benefits liability of $39, which was offsetsuch proceeding in ~~Accumulated other comprehensive loss in the Consolidated Balance Sheet.~~

~~F. Other (Income) Expense, Net~~June 2023.
Second quarter ended Six months ended
June 30, June 30,
2022 2021 2022 2021
Non-service related net periodic benefit cost $ 3 $ 3 $ 7 $ 6
Interest income (1) (1) (1) (1)
Foreign currency (gains) losses, net (1) 1 (4) 3
Net realized and unrealized losses 4 1 7 4
Deferred compensation (6) 4 (9) 6
Other, net — — — (6)
Other (income) expense, net $ (1) $ 8 $ — $ 12

G. Income Taxes

The Company’s year-to-date tax provision is comprised of the most recent estimated annual effective tax rate applied to year-to-date pre-tax ordinary income. The tax impacts of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are recorded discretely in the interim period in which they occur. In addition, the tax provision is adjusted for the interim period impact of non-benefited pre-tax losses.

The estimated annual effective tax rate, before discrete items, applied to ordinary income was 23.0% in both the second quarter and six months ended June 30, 2023 and 23.9% in both the second quarter and six months ended June 30, ~~2022~~2022. The 2023 and ~~29.1% in both the second quarter and six months ended June 30, 2021. The~~ 2022 ~~and 2021~~ rates were higher than the U.S. federal statutory rate of 21% primarily due to additional estimated U.S. tax on Global Intangible Low-Taxed Income (“GILTI”) and other foreign earnings, incremental state tax and foreign taxes on earnings also subject to U.S. federal income tax, foreign earnings subject to tax in higher rate jurisdictions, and nondeductible expenses.

For the second quarter of ~~2022~~2023 and ~~2021,~~2022, the tax rate including discrete items was ~~19.7%~~20.6% and ~~32.7%~~19.7%, respectively. For the second quarter of 2023, the Company recorded a discrete net tax benefit of $7 related to an $8 excess tax benefit for stock compensation and a net charge of $1 for other small items. For the second quarter of 2022, the Company recorded a discrete tax benefit of $7 attributable to a $6 benefit to release a valuation allowance related to an interest carryforward tax attribute in the U.K. and a net benefit of $1 for other small items. ~~For the second quarter of 2021, the Company recorded a discrete tax charge of $4 attributable to a $2 charge for a U.K. tax rate change and a net charge of $2 for other small items.~~

For the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, the tax rate including discrete items was ~~21.5%~~26.3% and ~~30.9%~~21.5%, respectively. For the six months ended June 30, 2023, the company recorded a discrete net tax charge of $14 attributable to a $20 charge for a tax reserve established in France (See Note P) and a net tax charge of $2 for other small items, reduced by an $8 excess tax benefit for stock compensation. For the six months ended June 30, 2022, the Company recorded a discrete net tax benefit of $9 attributable to a $6 benefit to release a valuation allowance related to an interest carryforward tax attribute in the U.K., a $5 excess benefit for stock compensation, and a net charge of $2 for other small items. ~~For the six months ended June 30, 2021, the Company recorded a discrete tax charge of $3 attributable to a $2 charge for a U.K. tax rate change and a net charge of $1 for other small items.~~

The tax provision was comprised of the following:


		Second quarter ended				Six months ended					Second quarter ended				Six months ended
		June 30,				June 30,					June 30,				June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Pre-tax income at estimated annual effective income tax rate before discrete items	Pre-tax income at estimated annual effective income tax rate before discrete items	$	44	$	32	$	85	$	65	Pre-tax income at estimated annual effective income tax rate before discrete items	$	56	$	44	$	107	$	85
Impact of change in estimated annual effective tax rate on previous quarter’s pre-tax income	Impact of change in estimated annual effective tax rate on previous quarter’s pre-tax income	(1)		(1)		—		—		Impact of change in estimated annual effective tax rate on previous quarter’s pre-tax income	—		(1)		—		—
Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized	Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized	—		1		—		1		Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized	1		—		1		—
Tax reserve (P)										Tax reserve (P)	—		—		20		—
Other discrete items	Other discrete items	(7)		4		(9)		3		Other discrete items	(7)		(7)		(6)		(9)
Provision for income taxes	Provision for income taxes	$	36	$	36	$	76	$	69	Provision for income taxes	$	50	$	36	$	122	$	76

H. Earnings Per Share and Common Stock

Basic earnings per share (“EPS”) amounts are computed by dividing earnings, after the deduction of preferred stock dividends declared, by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding.

The information used to compute basic and diluted EPS attributable to Howmet common shareholders was as follows (shares in ~~millions)~~millions in table below):


		Second quarter ended				Six months ended					Second quarter ended				Six months ended
		June 30,				June 30,					June 30,				June 30,
		2022		2021		2022		2021			2023		2022		2023		2022

Net income attributable to common shareholders	Net income attributable to common shareholders	$	147	$	74	$	278	$	154	Net income attributable to common shareholders	$	193	$	147	$	341	$	278
Less: preferred stock dividends declared	Less: preferred stock dividends declared	—		—		1		1		Less: preferred stock dividends declared	—		—		1		1
Net income available to Howmet Aerospace common shareholders - basic and diluted	Net income available to Howmet Aerospace common shareholders - basic and diluted	$	147	$	74	$	277	$	153	Net income available to Howmet Aerospace common shareholders - basic and diluted	$	193	$	147	$	340	$	277

Average shares outstanding - basic	Average shares outstanding - basic	417		432		418		433		Average shares outstanding - basic	413		417		413		418
Effect of dilutive securities:	Effect of dilutive securities:									Effect of dilutive securities:
Stock options		—		1		—		1
Stock and performance awards	Stock and performance awards	5		4		5		4		Stock and performance awards	4		5		4		5

Average shares outstanding - diluted	Average shares outstanding - diluted	422		437		423		438		Average shares outstanding - diluted	417		422		417		423

Common stock outstanding atas of June 30, ~~2022~~2023 and ~~2021~~2022 was approximately ~~416~~412 million and ~~429~~416 million, respectively.

On August 18, 2021, the Company announced that its Board of Directors authorized a share repurchase program of up to $1,500 of the Company's outstanding common stock. In the quarter ended June 30, 2022, the Company repurchased approximately 2 million shares of its common stock at an average price of $33.89 per share (excluding commissions cost) for $60 in cash. For the six months ended June 30, 2022, the Company repurchased approximately 7 million shares for $235 in cash. All of the shares repurchased have been retired. After giving effect to the share repurchases made through June 30, ~~2022,~~2023, approximately ~~$1,112~~$822 Board authorization remains available.

The following table provides details for share repurchases made for the periods presented:


	Number of shares	Average price per share(1)		Total
Q1 2023 open market repurchase	576,629	$	43.36	$	25

Q2 2023 open market repurchase	2,246,294	$	44.52	$	100

2023 Share repurchases as of June 30, 2023	2,822,923	$	44.28	$	125

Q1 2022 open market repurchase	5,147,307	$	34.00	$	175

Q2 2022 open market repurchase	1,770,271	$	33.89	$	60

2022 Share repurchases as of June 30, 2022	6,917,578	$	33.97	$	235

(1)Excludes commissions cost.

Under the Company’s share repurchase ~~programs~~program (the “Share Repurchase ~~Programs”~~Program”), the Company may repurchase shares by means of trading plans established from time to time in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, block trades, private transactions, open market repurchases and/or accelerated share repurchase agreements, or other derivative transactions. There is no stated expiration for the Share Repurchase ~~Programs.~~Program. Under its Share Repurchase ~~Programs,~~Program, the Company may repurchase shares from time to time, in amounts, at prices, and at such times as the Company deems appropriate, subject to market conditions, legal requirements and other ~~considerations, including limits under its Five-Year Revolving Credit Agreement (the “Credit Agreement”) (see~~ ~~Note N~~).considerations. The Company is not obligated to repurchase any specific number of shares or to do so at any particular time, and the Share Repurchase ~~Programs~~Program may be suspended, modified or terminated at any time without prior notice.

The approximately 155 million decrease in average shares outstanding (basic) for the second quarter of ~~2022~~2023 compared to the second quarter of ~~2021~~2022 was primarily due to the approximately 207 million shares repurchased between July 1, ~~2021~~2022 and June 30, ~~2022.~~2023. As average shares outstanding are used in the calculation for both basic and diluted EPS, the full impact of share repurchases was not fully realized in EPS in the ~~second quarter and six months ended June 30, 2022 as~~period of repurchase since share repurchases ~~occurred~~may occur at varying points during ~~the quarter.~~

In July 2022, the Company repurchased approximately 1 million shares of its common stock under the Share Repurchase Programs at an average price of $32.22 per share (excluding commissions cost) for approximately $30 in cash. After the share repurchases made through July 31, 2022, approximately $1,082 remains authorized for common stock share repurchases.a period.

There were no shares relating to outstanding stock options ~~shares~~ excluded from the calculation of average shares outstanding – diluted for the second quarter and six months ended June 30, ~~2022~~2023 and ~~2021. Additionally, there were no anti-dilutive stock options shares as of June 30, 2022 and 2021.~~2022.

I. Accumulated Other Comprehensive Loss

The following table details the activity of the three components that comprise Accumulated other comprehensive loss:


		Second quarter ended				Six months ended					Second quarter ended				Six months ended
		June 30,				June 30,					June 30,				June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Pension and other postretirement benefits (E)	Pension and other postretirement benefits (E)									Pension and other postretirement benefits (E)
Balance at beginning of period	Balance at beginning of period	$	(789)	$	(938)	$	(799)	$	(980)	Balance at beginning of period	$	(648)	$	(789)	$	(653)	$	(799)
Other comprehensive income:
Unrecognized net actuarial gain and prior service cost/benefit		15		30		16		67
Tax expense		(3)		(7)		(3)		(15)
Total Other comprehensive income before reclassifications, net of tax		12		23		13		52
Other comprehensive (loss) income:										Other comprehensive (loss) income:
Unrecognized net actuarial (loss) gain and prior service cost/benefit										Unrecognized net actuarial (loss) gain and prior service cost/benefit	(3)		15		—		16
Tax benefit (expense)										Tax benefit (expense)	1		(3)		—		(3)
Total Other comprehensive (loss) income before reclassifications, net of tax										Total Other comprehensive (loss) income before reclassifications, net of tax	(2)		12		—		13
Amortization of net actuarial loss and prior service cost(1)	Amortization of net actuarial loss and prior service cost(1)	13		15		25		31		Amortization of net actuarial loss and prior service cost(1)	8		13		12		25
Tax expense(2)	Tax expense(2)	(3)		(3)		(6)		(6)		Tax expense(2)	(2)		(3)		(3)		(6)
Total amount reclassified from Accumulated other comprehensive loss, net of tax(3)		10		12		19		25
Total amount reclassified from Accumulated other comprehensive income, net of tax(3)										Total amount reclassified from Accumulated other comprehensive income, net of tax(3)	6		10		9		19
Total Other comprehensive income	Total Other comprehensive income	22		35		32		77		Total Other comprehensive income	4		22		9		32

Balance at end of period	Balance at end of period	$	(767)	$	(903)	$	(767)	$	(903)	Balance at end of period	$	(644)	$	(767)	$	(644)	$	(767)
Foreign currency translation	Foreign currency translation									Foreign currency translation
Balance at beginning of period	Balance at beginning of period	$	(1,093)	$	(1,010)	$	(1,062)	$	(966)	Balance at beginning of period	$	(1,159)	$	(1,093)	$	(1,193)	$	(1,062)

Other comprehensive (loss) income		(114)		18		(145)		(26)
Other comprehensive income (loss)										Other comprehensive income (loss)	4		(114)		38		(145)

Balance at end of period	Balance at end of period	$	(1,207)	$	(992)	$	(1,207)	$	(992)	Balance at end of period	$	(1,155)	$	(1,207)	$	(1,155)	$	(1,207)

Cash flow hedges	Cash flow hedges									Cash flow hedges
Balance at beginning of period	Balance at beginning of period	$	18	$	7	$	(2)	$	3	Balance at beginning of period	$	1	$	18	$	5	$	(2)

Other comprehensive income (loss):
Other comprehensive (loss) income:										Other comprehensive (loss) income:
Net change from periodic revaluations	Net change from periodic revaluations	(36)		11		(11)		19		Net change from periodic revaluations	(10)		(36)		(14)		(11)
Tax income (expense)		8		(2)		2		(4)
Total Other comprehensive (loss) income before reclassifications, net of tax		(28)		9		(9)		15
Tax income										Tax income	2		8		3		2
Total Other comprehensive loss before reclassifications, net of tax										Total Other comprehensive loss before reclassifications, net of tax	(8)		(28)		(11)		(9)
Net amount reclassified to earnings	Net amount reclassified to earnings	(11)		(5)		(10)		(8)		Net amount reclassified to earnings	(3)		(11)		(4)		(10)
Tax benefit(2)	Tax benefit(2)	3		—		3		1		Tax benefit(2)	1		3		1		3
Total amount reclassified from Accumulated other comprehensive loss, net of tax(3)	Total amount reclassified from Accumulated other comprehensive loss, net of tax(3)	(8)		(5)		(7)		(7)		Total amount reclassified from Accumulated other comprehensive loss, net of tax(3)	(2)		(8)		(3)		(7)
Total Other comprehensive (loss) income		(36)		4		(16)		8
Total Other comprehensive loss										Total Other comprehensive loss	(10)		(36)		(14)		(16)
Balance at end of period	Balance at end of period	$	(18)	$	11	$	(18)	$	11	Balance at end of period	$	(9)	$	(18)	$	(9)	$	(18)

Accumulated other comprehensive loss	Accumulated other comprehensive loss	$	(1,992)	$	(1,884)	$	(1,992)	$	(1,884)	Accumulated other comprehensive loss	$	(1,808)	$	(1,992)	$	(1,808)	$	(1,992)

(1)These amounts were recorded in ~~Other (income) expense, net (see~~ ~~Note F) and~~ Restructuring and other charges ~~(see~~(See Note D) and Other income, net (See Note F) in the Statement of Consolidated Operations.

(2)These amounts were included in Provision for income taxes ~~(see~~(See Note G) in the Statement of Consolidated Operations.

(3)A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings.

J. Receivables

Sale of Receivables Programs

The Company maintains an accounts receivables securitization arrangement through a wholly-owned special purpose entity (“SPE”). The ~~Company previously had a second arrangement which terminated on August 30, 2021. The~~ net cash funding from the sale of accounts receivable through the SPE was neither a use of cash nor a source of cash for ~~any~~the second quarter of ~~2022~~2023 or ~~2021.~~2022.

The terminated arrangement was with financial institutions to sell certain customer receivables without recourse on a revolving basis. The Company had $22 net cash repayments ($41 in draws and $63 in repayments) for the six months ended June 30, 2021 in connection with this arrangement. The total cash receipts from both customer payments on sold receivables (which were cash receipts on the underlying trade receivables that had been previously sold) and net cash repayments under the program were presented as cash receipts from sold receivables within investing activities in the Statement of Consolidated Cash Flows for the six months ended June 30, 2021.

~~The current~~ accounts receivables securitization arrangement is one in which the Company, through an SPE, has a receivables purchase agreement (the “Receivables Purchase Agreement”) ~~such that~~pursuant to which the SPE may sell certain receivables to financial

institutions until the earlier of August 30, 2024 or a termination event. The Receivables Purchase Agreement ~~also~~ contains customary representations and warranties, as well as affirmative and negative covenants. Pursuant to the Receivables Purchase Agreement, the Company does not maintain effective control over the transferred receivables, and therefore accounts for these transfers as sales of receivables. ~~This accounts receivable securitization arrangement totaled~~The Receivables Purchase Agreement was amended on February 17, 2023 to update the reference rate and reduce the facility limit to $250 from $325, ~~at both~~with a provision to increase the limit to $325.

The facility limit under the Receivables Purchase Agreement was $250 and $325 as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022, respectively. A total of ~~which~~ $250 was drawn as of both June 30, ~~2022~~2023 and December 31, ~~2021.~~2022. As collateral against the sold receivables, the SPE maintains a certain level of unsold receivables, which were ~~$130~~$151 and ~~$79 at~~$190 as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

The Company sold $382 and $719 of its receivables without recourse and received cash funding under this program during thesecond quarter and six months ended June 30, 2023, respectively, resulting in derecognition of the receivables from the Company’s Consolidated Balance Sheet. The Company sold $437 and $901 of its receivables without recourse and received cash funding under ~~this~~the program during the second quarter and six months ended June 30, 2022, respectively, resulting in derecognition of the receivables from the Company’s Consolidated Balance Sheet. Costs associated with the sales of receivables are reflected in the Company’s Statement of Consolidated Operations for the periods in which the sales occur. Cash receipts from sold receivables under the Receivables Purchase Agreement are presented within operating activities in the Statement of Consolidated Cash Flows.

Other Customer Receivable Sales

In the second quarter and six months ended June 30, ~~2022,~~2023, the Company sold ~~$117~~$151 and ~~$223,~~$289, respectively, of certain customers’ receivables in exchange for cash ($~~125~~155 was outstanding from customers atas of June 30, ~~2022)~~2023), the proceeds from which are presented in changes in receivables within operating activities in the Statement of Consolidated Cash Flows. In the second quarter and six months ended June 30, ~~2021,~~2022, the Company sold ~~$98~~$117 and ~~$164, respectively,~~$223 of certain customers’ receivables in exchange for cash, the proceeds from which are presented in changes in receivables within operating activities in the Statement of Consolidated Cash Flows.

K. Inventories


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Finished goods	Finished goods	$	486	$	478	Finished goods	$	488	$	490
Work-in-process	Work-in-process	725		631		Work-in-process	800		748
Purchased raw materials	Purchased raw materials	307		256		Purchased raw materials	364		317
Operating supplies	Operating supplies	45		37		Operating supplies	63		54
Total inventories	Total inventories	$	1,563	$	1,402	Total inventories	$	1,715	$	1,609

AtAs of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the portion of inventories valued on a last-in, first-out (“LIFO”) basis was ~~$627~~$423 and ~~$523,~~$441, respectively. ~~These amounts exclude the effects~~If valued on an average-cost basis, total inventories would have been $228 and $220 higher as of ~~LIFO valuation reductions, which were $203 and $192 at~~ June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

L. Properties, Plants, and Equipment, net


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Land and land rights~~(1)~~	Land and land rights~~(1)~~	$	87	$	91	Land and land rights~~(1)~~	$	85	$	84
Structures~~(1)~~	Structures~~(1)~~	973		1,034		Structures~~(1)~~	1,001		986
Machinery and equipment	Machinery and equipment	3,905		3,932		Machinery and equipment	4,005		3,941
		4,965		5,057			5,091		5,011
Less: accumulated depreciation and amortization~~(1)~~	Less: accumulated depreciation and amortization~~(1)~~	2,779		2,772		Less: accumulated depreciation and amortization~~(1)~~	2,962		2,858
		2,186		2,285			2,129		2,153
Construction work-in-progress	Construction work-in-progress	154		182		Construction work-in-progress	190		179
Properties, plants, and equipment, net	Properties, plants, and equipment, net	$	2,340	$	2,467	Properties, plants, and equipment, net	$	2,319	$	2,332

~~(1)In the first quarter of 2022, the Company reached an agreement to sell the corporate headquarters in Pittsburgh, PA.~~ The proceeds from the sale of the corporate headquarters in Pittsburgh, PA in June 2022 were $44, excluding $3 of transaction costs, and the carrying value at the time of sale was $41. A loss of less than $1 was recorded in Restructuring and other charges in the Statement of Consolidated Operations upon finalization of the sale in the second quarter of 2022. The Company entered into a 12-year lease with the purchaser for a portion of the property.

The Company incurred capital expenditures which remained unpaid atas of June 30, 2023 and June 30, 2022 of $48 and ~~June 30, 2021 of~~ $30, ~~and $39,~~ respectively, and will result in cash outflows within investing activities in the Statement of Consolidated Cash Flows in subsequent periods.

M. Leases

Operating lease cost ~~which~~ includes short-term leases and variable lease payments and approximates cash ~~paid,~~paid. Operating lease cost was ~~$14~~$16 and ~~$16~~$14 in the second quarter of 2023 and 2022, respectively, and ~~2021, respectively. Operating lease cost, which includes short-term leases~~$32 and ~~variable lease payments and approximates cash paid, was~~ $30 ~~and $33~~ in the six months ended June 30, 2023 and 2022, respectively. Operating lease cost in the second quarter and ~~2021, respectively.~~six months ended June 30, 2023 includes the lease for the portion of the property in Pittsburgh, PA used as the corporate headquarters.

Operating lease right-of-use assets and lease liabilities in the Consolidated Balance Sheet were as follows:


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Right-of-use assets classified in Other noncurrent assets	Right-of-use assets classified in Other noncurrent assets	$	109	$	108	Right-of-use assets classified in Other noncurrent assets	$	107	$	111

Current portion of lease liabilities classified in Other current liabilities	Current portion of lease liabilities classified in Other current liabilities	$	32	$	33	Current portion of lease liabilities classified in Other current liabilities	$	34	$	32
Long-term portion of lease liabilities classified in Other noncurrent liabilities		82		81
Long-term portion of lease liabilities classified in Other noncurrent liabilities and deferred credits						Long-term portion of lease liabilities classified in Other noncurrent liabilities and deferred credits	77		83
Total lease liabilities	Total lease liabilities	$	114	$	114	Total lease liabilities	$	111	$	115

N. Debt


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022

5.125% Notes, due 2024	5.125% Notes, due 2024	$	1,090	$	1,150	5.125% Notes, due 2024	$	905	$	1,081
6.875% Notes, due 2025	6.875% Notes, due 2025	600		600		6.875% Notes, due 2025	600		600
5.900% Notes, due 2027	5.900% Notes, due 2027	625		625		5.900% Notes, due 2027	625		625
6.750% Bonds, due 2028	6.750% Bonds, due 2028	300		300		6.750% Bonds, due 2028	300		300
3.000% Notes, due 2029	3.000% Notes, due 2029	700		700		3.000% Notes, due 2029	700		700
5.950% Notes, due 2037	5.950% Notes, due 2037	625		625		5.950% Notes, due 2037	625		625
4.750% Iowa Finance Authority Loan, due 2042	4.750% Iowa Finance Authority Loan, due 2042	250		250		4.750% Iowa Finance Authority Loan, due 2042	250		250
Other(1)	Other(1)	(20)		(18)		Other(1)	(16)		(19)
		4,170		4,232
Less: amount due within one year		1		5

Total long-term debt	Total long-term debt	$	4,169	$	4,227	Total long-term debt	$	3,989	$	4,162

(1)Includes various financing arrangements related to subsidiaries, unamortized debt discounts, and unamortized debt issuance costs related to outstanding notes and bonds listed in the table above.

Public Debt

OnIn January ~~15, 2021,~~2023, the Company repurchased approximately $26 aggregate principal amount of its 5.125% Notes due October 2024 (the “5.125% Notes”) through an open market repurchase (“OMR”). The OMR was settled at slightly less than par.

In March 2023, the Company completed the early partial redemption of ~~all the remaining $361 of its 5.400% Notes due 2021~~ ~~at par and paid $5 in accrued interest.~~

~~On May 3, 2021, the Company completed the early redemption of all the remaining $476 aggregate principal amount of its~~ ~~5.870%~~ ~~Notes due 2022and~~ ~~paid~~ an ~~aggregate of $503, including~~ ~~$5 of accrued interest. The Company also incurred an early termination premium and other costs of~~ ~~$23, which was recorded in Loss on debt redemption~~ ~~in the Statement of Consolidated Operations.~~

~~In the second quarter of 2022, the Company repurchased in the open market approximately $60~~additional $150 aggregate principal amount of its 5.125% Notes ~~due 2024~~in accordance with the terms of the notes, and paid ~~approximately $62,~~an aggregate of $155, including accrued interest and an early termination premium of approximately ~~$2,~~ $4 and $1, respectively, which ~~was~~were recorded in Interest expense, net, and Loss on debt redemption, respectively, in the Statement of Consolidated Operations.

On July 31, 2023, the Company issued a notice of partial redemption to redeem on September 28, 2023 (the “Redemption Date”) $200 aggregate principal amount of its 5.125% Notes in accordance with the terms of the notes. The redemption price (the “Redemption Price”) for the 5.125% Notes to be redeemed shall be equal to the greater of (i) 100% of the principal amount of the 5.125% Notes to be redeemed, plus accrued interest, if any, to the Redemption Date or (ii) the sum of the present values of the Remaining Scheduled Payments, discounted on a semi-annual basis, assuming a 360-day year consisting of twelve 30-day months, at the Treasury Rate plus 40 basis points, plus accrued interest to the Redemption Date that has not been paid. The Company expects the aggregate Redemption Price for the 5.125% Notes to be redeemed to be approximately $205, which the Company intends to pay with cash on hand.

Credit Facility

On July 27, 2023, the Company entered into the Second Amended and Restated Five-Year Revolving Credit Agreement (the “Credit Agreement”) by and among the Company, a syndicate of lenders and issuers named therein, Citibank, N.A., as administrative agent for the lenders and issuers, and JPMorgan Chase Bank, N.A., as syndication agent. The Credit Agreement

amended and restated the Company’s Amended and Restated Five-Year Revolving Credit Agreement, dated as of September 28, 2021, ~~the Company~~as amended ~~and restated its~~by Amendment No. 1 to Credit ~~Agreement.~~ Agreement, dated as of February 13, 2023.

The Credit Agreement provides a $1,000 senior unsecured revolving credit facility (the “Credit Facility”) that matures on ~~September 28, 2026,~~July 27, 2028, unless extended or earlier terminated in accordance with the provisions of the Credit Agreement. ~~Capitalized terms used in this “Credit Facility” section but not otherwise defined shall have~~The Company may make two one-year extension requests during the ~~meanings given~~term of the Credit Facility, with any extension being subject to ~~such terms~~the lender consent requirements set forth in the Credit Agreement.

~~Under~~ Subject to the terms and conditions of the Credit Agreement, the Company may from time to time request increases in commitments under the Credit Facility, not to exceed $500 in aggregate principal amount, and may also request the issuance of letters of credit, subject to a letter of credit sublimit of $500 of the Credit Facility. Under the provisions of the Credit Agreement, based on Howmet’s current long-term debt ratings, Howmet pays an annual fee of 0.175% of the total commitment to maintain the Credit Facility.

The Credit Facility is unsecured and amounts payable under it will rank pari passu with all other unsecured, unsubordinated indebtedness of the Company. Borrowings under the Credit Facility may be denominated in U.S. dollars or Euros. Loans will bear interest at a base rate or, in the case of U.S. dollar-denominated loans, a rate equal to the Term Secured Overnight Financing Rate (“SOFR”) plus adjustment or, in the case of euro-denominated loans, the Euro inter-bank offered rate (“EURIBOR”), plus, in each case, an applicable margin based on the credit ratings of the Company’s outstanding senior unsecured long-term debt. Based on the Company’s current long-term debt ratings, the applicable margin on base rate loans would be 0.325% per annum and the applicable margin on Term SOFR loans and EURIBOR loans would be 1.325% per annum. The applicable margin is subject to change based on the Company’s long-term debt ratings. Loans may be prepaid without premium or penalty, subject to customary breakage costs.

The obligation of the Company to pay amounts outstanding under the Credit Facility may be accelerated upon the occurrence of an “Event of Default” as defined in the Credit Agreement. Such Events of Default include, among others, (a) non-payment of obligations; (b) breach of any representation or warranty in any material respect; (c) non-performance of covenants and obligations; (d) with respect to other indebtedness in a principal amount in excess of $100, a default thereunder that causes such indebtedness to become due prior to its stated maturity or a default in the payment at maturity of any principal of such indebtedness; (e) the bankruptcy or insolvency of the Company; and (f) a change in control of the Company.

The Credit Agreement contains covenants, including, among others, (a) limitations on the Company’s ability to incur liens securing indebtedness for borrowed money; (b) limitations on the Company’s ability to consummate a consolidation, merger or sale of all or substantially all of its assets; (c) limitations on the Company’s ability to change the nature of its business; and (d) a limitation requiring the ratio of Consolidated Net Debt to Consolidated EBITDA (each as defined in the Credit Agreement) as of the end of each fiscal quarter for the period of the four fiscal quarters ~~of the Company~~ most recently ended, ~~is required~~ to be ~~no greater~~less than ~~3.50~~or equal to ~~1.00; provided, however, that during the Covenant Relief Period through December 31, 2022 (unless the Company elects~~3.75 to ~~terminate the Covenant Relief Period earlier in accordance with the Credit Agreement), the Company’s Consolidated Net Debt to Consolidated EBITDA ratio cannot exceed the levels set forth below:~~


			~~No greater than~~





~~(i) for the quarter ending June 30, 2022~~			~~4.50 to 1.00~~
~~(ii) for the quarter ending September 30, 2022~~			~~4.25 to 1.00~~
~~(iii) for the quarter ending December 31, 2022~~			~~3.75 to 1.00~~

~~During the Covenant Relief Period, common stock dividends and share repurchases (see~~ ~~Note H~~) are permitted only if no loans under the Credit Agreement are outstanding at the time and are limited to an aggregate amount not to exceed $500 during the year ending December 31, 2022. Common stock dividends and share repurchases were $252 for the six months ended June 30, 2022.1.00.

There were no amounts outstanding under the Credit Agreement atas of June 30, ~~2022~~2023 or December 31, ~~2021,~~2022, and no amounts were borrowed during ~~2022~~2023 or ~~2021~~2022 under the Credit Agreement. AtAs of June 30, ~~2022,~~2023, the Company was in compliance with all covenants under the Credit Agreement. Availability under the Credit Agreement could be reduced in future periods if the Company fails to maintain the required ~~ratios~~ratio referenced above.

O. Fair Value of Financial Instruments

The carrying values of Cash and cash equivalents, restricted cash, derivatives, noncurrent receivables, and Short-term debt included in the Consolidated Balance Sheet approximate their fair value. The Company holds exchange-traded fixed income securities which are considered available-for-sale securities ~~that~~and are carried at fair value ~~which is~~ based on quoted market ~~prices which~~prices. The aforementioned securities are classified in Level 1 of the fair value hierarchy and are included in ~~Prepaid expenses and other current~~Other noncurrent assets in the Consolidated Balance Sheet. The fair value of Long-term debt, less ~~amount~~amounts due within one year was based on quoted market prices for public debt and on interest rates that are currently available to Howmet for issuance of debt with similar terms and maturities for non-public debt. The fair value amounts for all Long-term debt were classified in Level 2 of the fair value hierarchy.
June 30, 2022 December 31, 2021
Carrying
value Fair
value Carrying
value Fair
value
Long-term debt, less amount due within one year $ 4,169 $ 4,037 $ 4,227 $ 4,707


	June 30, 2023				December 31, 2022
	Carrying value		Fair value		Carrying value		Fair value
Long-term debt, less amounts due within one year	$	3,989	$	3,945	$	4,162	$	4,059

Restricted cash, which is included in Prepaid expenses and other current assets in the Consolidated Balance Sheet, was $1 ~~and $2 at~~as of both June 30, ~~2022~~2023 and December 31, ~~2021, respectively.~~2022.

2021

P. ~~Divestiture~~

~~2021 Divestiture~~

On March 15, 2021, the Company reached an agreement to sell a small manufacturing plant in France within the Fastening Systems segment, which resulted in a charge of $4 related to the non-cash impairment of the net book value of the business, primarily goodwill, in the first quarter of 2021 which was recorded in Restructuring and other charges in the Statement of Consolidated Operations. On June 1, 2021, the Company completed the sale for $10 (of which $8 of cash was received in the second quarter of 2021). The remaining $2 in escrow will be received no later than July 2023.

Q. Contingencies and Commitments

Contingencies

The following information supplements and, as applicable, updates the discussion of the contingencies and commitments in Note V to the Consolidated Financial Statements in our ~~Annual Report on~~ Form 10-K, ~~for the year ended December 31, 2021 (the “Form 10-K”),~~ and should be read in conjunction with the complete descriptions provided in the Form 10-K.

Environmental Matters. Howmet participates in environmental assessments and cleanups at more than 30 locations. These include owned or operating facilities and adjoining properties, previously owned or operated facilities and adjoining properties, and waste sites, including Superfund (Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”)) sites.

A liability is recorded for environmental remediation when a cleanup program becomes probable and the costs can be reasonably estimated. As assessments and cleanups proceed, the liability is adjusted based on progress made in determining the extent of remedial actions and related costs. The liability can change substantially due to factors such as the nature and extent of contamination, changes in remedial requirements, and technological changes, among others.

The Company’s remediation reserve balance was ~~$15 at both~~$17 and $16 as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, and was recorded in Other noncurrent liabilities and deferred credits in the Consolidated Balance Sheet (of which $6 was classified as a current liability for both periods), and reflects the most probable costs to remediate identified environmental conditions for which costs can be reasonably estimated. Payments related to remediation expenses applied against the reserve were ~~less than $1~~$2 in the second quarter and six months ended June 30, ~~2022~~2023 and included expenditures currently mandated, as well as those not required by any regulatory authority or third party.

Included in annual operating expenses are the recurring costs of managing hazardous substances and environmental programs. These costs are estimated to be less than 1% of Cost of goods sold.

Tax. In December 2013 and 2014, the Company received audit assessment notices from the French Tax Authority (“FTA”) for the 2010 through 2012 tax years. In 2016, the Company appealed to the Committee of the Abuse of Tax Law, where it received a favorable nonbinding decision. The FTA disagreed with the Committee of the Abuse of Tax Law’s opinion, and the Company appealed to the Montreuil Administrative Court, where in 2020 the Company prevailed on the merits. The FTA appealed this decision to the Paris Administrative Court of Appeal in 2021. On March 31, 2023, the Company received an adverse decision from the Paris Administrative Court of Appeal. The Company estimates the assessment amount to be $19 (€18), including interest and penalties. In the second quarter of 2023, the Company filed an appeal to the French Administrative Supreme Court.

As a result of the adverse decision from the Paris Administrative Court of Appeal, the Company has concluded that it is no longer more likely than not to sustain its position. In the first quarter of 2023, the Company recorded an income tax reserve in Provision for income taxes in the Statement of Consolidated Operations of $20 (€19), which includes estimated interest and penalties, for the 2010 through 2012 tax years, as well as the remaining tax years open for reassessment. In accordance with FTA dispute resolution practices, the Company is expecting that a payment to the FTA will be necessary in 2023. If an appeal to the French Administrative Supreme Court is successful, any payment would be refunded with interest.

Indemnified Matters. The Separation and Distribution Agreement, dated October 31, 2016, that the Company entered into with Alcoa Corporation in connection with its separation from Alcoa Corporation, provides for cross-indemnities between the Company and Alcoa Corporation for claims subject to indemnification. The Separation and Distribution Agreement, dated March 31, 2020, that the Company entered into with Arconic Corporation in connection with its separation from Arconic Corporation, provides for cross-indemnities between the Company and Arconic Corporation for claims subject to indemnification. Among other claims that are covered by these indemnities, Arconic Corporation indemnifies the Company (f/k/a Arconic Inc. and f/k/a Alcoa Inc.) for all potential liabilities associated with the fire that occurred at the Grenfell Tower in London, U.K. on June 14, 2017, including the following legal proceedings, as updated from the Form 10-K:

United Kingdom Litigation (various claims on behalf of survivors and estates of decedents). The substantial majority of these suits were settled pursuant to the terms of a confidential settlement agreement and are ~~stayed. A~~now discontinued and closed. Those suits that have not been settled are stayed until the next case management conference, ~~was held during the week of April 26, 2022. On July 28, 2022, the stay was extended.~~which will be heard on November 15, 2023.

Behrens et al. v. Arconic Inc. et al. (various claims on behalf of survivors and estates of decedents). On September 16, 2020, the court dismissed the U.S. case, determining that the U.K. is the appropriate jurisdiction for the case. On July 8, 2022, the Third Circuit Court of Appeals affirmed the ~~dismissal. A~~dismissal, and, on October 7, 2022, the Third Circuit Court denied a petition for a ~~rehearing was~~rehearing. On January 5, 2023, the plaintiffs filed ~~before~~a petition for a writ of certiorari in the ~~Third Circuit Court.~~U.S. Supreme Court, which the Supreme Court denied on February 21, 2023. This case is fully dismissed and closed.

Howard v. Arconic Inc. et al. (securities law related claims). On ~~July 29, 2022,~~February 3, 2023, the court ~~denied~~issued an order referring the ~~Company’s motion for certification of an interlocutory appeal. The court also ordered~~case to mediation. In March 2023, following successive mediation sessions, the parties reached a settlement in principle that remains subject to ~~submit a pre-scheduling conference report~~court approval and, among other things, is in the amount of $74 and is to be covered by insurance proceeds, in

exchange for the dismissal of the action and a ~~stipulation selecting~~release of all claims against the defendants. The settlement is without admission of fault or wrongdoing by the defendants. Plaintiffs filed the Stipulation of Settlement, a motion to preliminarily approve the settlement, and related papers with the court on April 21, 2023. On May 2, 2023, the court issued an ~~alternative dispute resolution process.~~order granting plaintiffs’ motion to preliminarily approve the settlement and set August 9, 2023 as the date of the final settlement approval hearing.

With respect to ~~the~~ Raul v. Albaugh, et al. ~~(derivative~~(derivative related claim) ~~proceeding,~~, the regulatory investigations and the stockholder demands specified in the Form 10-K, there are no updates.

Lehman Brothers International (Europe) (“LBIE”) Legal Proceeding. On June 26, 2020, Lehman Brothers International (Europe) (“LBIE”) ~~Proceeding~~.~~On June 26, 2020, LBIE~~ filed ~~formal~~ proceedings ~~against 2 Firth Rixson entities(“Firth”)~~ in the High Court of Justice, Business and Property Courts of England and ~~Wales.~~Wales (the “Court”) against two subsidiaries of the Company, FR Acquisitions Corporation (Europe) Ltd and JFB Firth Rixson Inc. (collectively, the “Firth Rixson Entities”). The proceedings ~~relate to~~concerned two interest rate swap transactions that the Firth Rixson Entities entered into with LBIE in 2007 and 2008. As a result of the ruling issued by the Court in October 2022, the Company recorded $65 in Other current liabilities in the Consolidated Balance Sheet and took a pre-tax charge of this amount in Other income, net in the Statement of Consolidated Operations in the third quarter of 2022. The Firth Rixson Entities appealed the Court’s ruling, and the appeal was to ~~2008. In 2008,~~be addressed at a hearing before the English Court of Appeal in June 2023 (the “Litigation”). On June 15, 2023, the Company, the Firth Rixson Entities, and LBIE ~~commenced insolvency proceedings, an event~~reached a full and final settlement of ~~default under~~all claims arising out of the ~~agreements, rendering LBIE unable~~Litigation (the “Settlement”). The Settlement provides for a payment of $40 to ~~meet its obligations under the swaps and suspending Firth’s payment obligations. In the~~

~~court proceedings, LBIE seeks a declaration that Firth has a contractual obligation to pay the amounts owing~~be paid to LBIE ~~under the agreements upon its emergence from insolvency proceedings which is expected to occur by~~in two installments: $15 paid in July 2023 which LBIE claims to be approximately $64, plus applicable interest. Firth will continue to maintain its position that multiple events of default under the agreements related to LBIE’s insolvency proceeding cannot be cured or continue indefinitely, which the Company believes are meritorious defenses. A virtual hearingand $25 payable in ~~this matter occurred on January 13 and 14, 2021 in London, England, and~~July 2024. As a ~~ruling has yet to be issued to date. Given the importance~~result of the ~~case for LBIE and Firth, it is expected that, irrespective~~Settlement, $25 of the ~~outcome of the most recent hearing, the case will be appealed and any requirement~~amount previously recorded for the ~~parties~~Litigation as a pre-tax charge in Other income, net was reversed as a credit to ~~pay amounts under~~Other income, net in the ~~agreements will be stayed. An appeal~~Company’s second quarter 2023 results. The hearing before the English Court of ~~the case could continue into 2023. The Company intends to vigorously defend against these claims.~~Appeal has accordingly been vacated.

Other. In addition to the matters discussed above, various other lawsuits, claims, and proceedings have been or may be instituted or asserted against the Company, including those pertaining to environmental, product liability, safety and health, employment, tax and antitrust matters. While the amounts claimed in these other matters may be substantial, the ultimate liability cannot currently be determined because of the considerable uncertainties that exist. Therefore, it is possible that the Company’s liquidity or results of operations in a period could be materially affected by one or more of these other matters. However, based on facts currently available, management believes that the disposition of these other matters that are pending or asserted will not have a material adverse effect, individually or in the aggregate, on the results of operations, financial position or cash flows of the Company.

Commitments

Guarantees

AtAs of June 30, ~~2022,~~2023, Howmet had outstanding bank guarantees related to tax matters, outstanding debt, workers’ compensation, environmental obligations, ~~energy contracts,~~ and customs duties, among others. The total amount committed under these guarantees, which expire at various dates between ~~2022~~2023 and 2040, was ~~$13 at~~$5 as of June 30, ~~2022.~~2023.

Pursuant to the Separation and Distribution Agreement, dated as of October 31, 2016, between Howmet and Alcoa Corporation, Howmet was required to provide certain guarantees for Alcoa Corporation, which had a fair value of $6 atas of both June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, and were included in Other noncurrent liabilities and deferred credits in the Consolidated Balance Sheet. The remaining guarantee, for which the Company and Arconic Corporation are secondarily liable in the event of a payment default by Alcoa Corporation, relates to a long-term energy supply agreement that expires in 2047 at an Alcoa Corporation facility. The Company currently views the risk of an Alcoa Corporation payment default on its obligations under the contract to be remote. The Company and Arconic Corporation are required to provide a guarantee up to an estimated present value amount of approximately ~~$1,406 at~~$1,040 as of both June 30, ~~2022~~2023 and December 31, ~~2021~~2022 in the event of an Alcoa Corporation default. In December ~~2021,~~2022, a surety bond with a limit of $80 relating to this guarantee was obtained by Alcoa Corporation to protect Howmet’s obligation. This surety bond will be renewed on an annual basis by Alcoa Corporation.

Letters of Credit

The Company has outstanding letters of credit primarily related to workers’ compensation, environmental obligations, and ~~leasing obligations.~~insurance obligations, among others. The total amount committed under these letters of credit, which automatically renew or expire at various dates, ~~mostly~~primarily in ~~2022~~2023 and ~~2023,~~2024, was ~~$123 at~~$117 as of June 30, ~~2022.~~2023.

Pursuant to the Separation and Distribution Agreements between the Company and Arconic Corporation and between the Company and Alcoa Corporation, the Company is required to retain letters of credit of ~~$53~~$52 (which are included in the ~~$123~~$117 in the above paragraph) that had previously been provided related to the Company, Arconic Corporation, and Alcoa Corporation workers’ compensation claims that occurred prior to the respective separation transactions of April 1, 2020 and November 1, 2016. Arconic Corporation and Alcoa Corporation workers’ compensation and letters of credit fees paid by the Company are proportionally billed to, and are reimbursed by, Arconic Corporation and Alcoa Corporation, respectively. Also, the Company was required to provide letters of credit for certain Arconic Corporation environmental obligations and, as a result, the Company has $17 of outstanding letters of credit relating to such liabilities (which are also included in the ~~$123~~$117 in the above paragraph).

Surety Bonds

The Company has outstanding surety bonds primarily related to tax matters, contract performance, workers’ compensation, environmental-related matters, energy contracts, and customs duties. The total amount committed under these annual surety bonds, which ~~expire and~~ automatically renew or expire at various dates, primarily in ~~2022~~2023 and ~~2023,~~2024, was ~~$46 at~~$43 as of June 30, ~~2022.~~2023.

Pursuant to the Separation and Distribution Agreements between the Company and Arconic Corporation and between the Company and Alcoa Corporation, the Company is required to provide surety bonds of ~~$25~~$22 (which are included in the ~~$46~~$43 in the above paragraph) that had previously been provided related to the Company, Arconic Corporation, and Alcoa Corporation workers’ compensation claims that occurred prior to the respective separation transactions of April 1, 2020 and November 1,

2016. Arconic Corporation and Alcoa Corporation workers’ compensation claims and surety bond fees paid by the Company are proportionately billed to, and are reimbursed by, Arconic Corporation and Alcoa ~~Corporation, respectively.~~Corporation.

R.Q. Subsequent Events

Management evaluated all activity of Howmet and concluded that no subsequent events have occurred that would require recognition in the Consolidated Financial Statements or disclosure in the Notes to the Consolidated Financial Statements, except as noted below:

See Note HN for the ~~common stock repurchases~~issuance of the debt redemption notice and the amendment of the Company’s Credit Agreement in the third quarter of 2023.

See Note P for the $15 installment payment made ~~subsequent~~in July 2023 related to the ~~second quarter of 2022.~~LBIE Settlement.

On July ~~30, 2022,~~10, 2023, Howmet and the ~~Company’s cast house in Barberton,~~United Steel Workers at our Niles, Ohio ~~which produces aluminum ingot used in the production of wheels for the North American commercial transportation market, experienced~~location entered into a ~~mechanical failure resulting in substantial heat and fire-related damage~~new four-year collective bargaining agreement, covering approximately 370 employees, effective July 1, 2023. The previous agreement was to ~~equipment. The facility is temporarily closed due to this event. An estimate of the impact is on-going and not currently available.~~expire on April 20, 2024.

2324

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(U.S. dollars in millions, except per share amounts)

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition. The MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and notes thereto included in Part I, Item 1 (Financial Statements and Supplementary Data) of this Form 10-Q.

Overview

For additional information regarding the ongoing risks related to our business, see section Part I, Item 1A in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Results of Operations

Earnings Summary:

Sales. Sales were $1,648 in the second quarter of 2023 compared to $1,393 in the second quarter of 2022 ~~compared to $1,195~~and $3,251 in the ~~second quarter of 2021 and~~six months ended June 30, 2023 compared to $2,717 in the six months ended June 30, ~~2022 compared~~2022. The increase of $255, or 18%, in the second quarter of 2023 was primarily due to ~~$2,404~~higher sales from the commercial aerospace, defense aerospace, and commercial transportation markets, an increase in inflationary cost pass through of approximately $25, and favorable product pricing of $20. The increase of $534, or 20%, in the six months ended June 30, ~~2021. The increase of $198, or 17%, in the second quarter of 2022~~2023 was primarily due to higher sales ~~of 34%~~ from the commercial aerospace, ~~market,~~defense aerospace, and commercial transportation markets, an increase in ~~material~~inflationary cost pass through of approximately $60, and favorable product pricing of ~~$19. The increase~~$37. Product price increases are in excess of ~~$313, or 13%, in the six months ended June 30, 2022 was primarily due to higher sales of 31% from the commercial aerospace market, an increase in material~~inflationary cost pass through ~~of approximately $100, and favorable product pricing of $33, partially offset by lower sales in the defense aerospace market.~~to our customers.

Cost of goods sold (“COGS”). COGS as a percentage of Sales was 72.6% in the second quarter of 2023 compared to 70.9% in the second quarter of 2022 ~~compared to 71.7%~~and 72.6% in the ~~second quarter of 2021 and~~six months ended June 30, 2023 compared to 71.3% in the six months ended June 30, ~~2022 compared to 72.0% in the six months ended June 30, 2021.~~2022. The ~~decrease~~increase in the second quarter and six months ended June 30, ~~2022~~2023 was primarily due to ~~higher sales volumes and favorable product pricing, partially offset by material cost pass through~~inflationary costs and increased headcount, primarily in the Engine Products, ~~and~~ Fastening Systems, and Engineered Structures segments, in anticipation of future revenue increases, resulting in ~~2022.~~unfavorable near-term recruiting, training and operational costs, as well as $9 of inventory impairment costs related to facilities closures, a supply chain disruption, and other items, $7 of costs related to the negotiation of a collective bargaining agreement at our Whitehall, Michigan location, and additional operating costs from production rate increases not realized due to production bottlenecks at a plant in the Engineered Structures segment, partially offset by higher volumes and favorable product pricing. Additionally, the Company recorded total COGS net reimbursements of $3$4 and net charges of $6zero in the second quarter and six months ended June 30, ~~2021,~~2023, respectively, related to fires that occurred at a Fastening Systems plant in France in 2019 (the “France Plant Fire”) and a mechanical failure resulting in substantial heat and fire-related damage to equipment at athe Forged ~~Wheels plant~~Wheel’s cast house in Barberton, Ohio in ~~2020~~the third quarter of 2022 (the “Barberton ~~Plant Fire”~~Cast House Incident”)~~. The Company recorded~~, compared to total COGS charges of $2 and $7 in the second quarter and six months ended June 30, 2022, respectively, related to the France Plant Fire and a fire that occurred at a Forged Wheels plant in Barberton, Ohio in mid-February 2020 (the “Barberton Plant Fire”). The Company has submitted insurance claims related to these plant fires. During the fourth quarter of 2022, the Company settled the insurance claim related to the Barberton Plant Fire. The Company anticipates additional charges of ~~approximately $2~~up to $6$5 in the ~~third quarter~~second half of ~~2022,~~2023 for the France Plant Fire and Barberton Cast House Incident, with further impacts in subsequent quarters as the businesses continue to recover from the fires.

Selling, general administrative, and other expenses (“SG&A”). SG&A expenses were $88 in the second quarter of 2023 compared to $83 in the second quarter of 2022 ~~compared to $55~~and $163 in the ~~second quarter of 2021 and~~six months ended June 30, 2023 compared to $152 in the six months ended June 30, ~~2022 compared to $120 in the six months ended June 30, 2021.~~2022. The increase of ~~$28,~~$5, or ~~51%~~6%, in the second quarter of ~~2022~~2023 and ~~$32,~~$11, or ~~27%~~7%, in the six months ended June 30, ~~2022~~2023 was primarily due to ~~the timing of expenditures,~~ higher employment costs and ~~legacy costs, as well as~~ legal ~~and other advisory reimbursements received in 2021 that did not occur in 2022.~~fees related to the Lehman Brothers International (Europe) (“LBIE”) legal proceeding.

Research and development expenses (“R&D”). R&D expenses were $9 in both the second quarter of ~~2022~~2023 and ~~$4 in~~ the second quarter of ~~2021, an increase of $5, or 125%.~~2022. R&D expenses were $18 in the six months ended June 30, 2023 and $16 in the six months ended June 30, 2022, ~~and $9~~an increase of $2, or 13%. The increase in the six months ended June 30, ~~2021, an increase of $7, or 78%. The increase in the second quarter and six months ended June 30, 2022~~2023 was primarily due to higher spending on technology ~~projects.~~projects intended to support the aerospace business.

Restructuring and other charges. Restructuring and other charges were $3 in the second quarter of 2023 compared to $6 in the second quarter of 2022 ~~compared to $5 in the second quarter~~or a decrease of ~~2021 or an increase of $1.~~$3. Restructuring and other charges were $4 in the six months ended June 30, 2023 compared to $8 in the six months ended June 30, 2022 ~~compared~~or a decrease of $4. Restructuring and other charges for the second quarter of 2023 were primarily due to ~~$14 in~~charges for a U.S. pension plan settlement of $3. Restructuring and other charges for the six months ended June 30, ~~2021 or~~2023 were primarily due to charges for a ~~decrease~~U.S. pension plan settlement of ~~$6.~~$3 and exit related costs, including accelerated depreciation, of $2. Restructuring and other charges for the second quarter of 2022 were primarily due to charges for U.S. pension plan settlements of $3 and exit related costs, including accelerated depreciation, of $3. Restructuring and other charges for the six months ended June 30, 2022 were primarily due to exit related costs, including accelerated depreciation, of $5 and charges for U.S. pension plan settlements of $4. ~~Restructuring and other charges for the second quarter and six months ended June 30, 2021 were primarily due to charges for pension plan settlements and exit related costs.~~

See Note D to the Consolidated Financial Statements in Part I, Item I of this Form 10-Q for additional detail.

Interest expense, net. Interest expense, net was $55 in the second quarter of 2023 compared to $57 in the second quarter of 2022 ~~compared to $66~~and $112 in the ~~second quarter of 2021 and~~six months ended June 30, 2023 compared to $115 in the six months ended June 30, ~~2022 compared to $138 in the six months ended June 30, 2021.~~2022. The decrease of ~~$9,~~$2, or ~~14%~~4%, in the second quarter of ~~2022~~2023 and ~~$23,~~$3, or ~~17%~~3%, in the six months ended June 30, ~~2022~~2023 was primarily due to a reduced average level of ~~debt for~~long-term debt. As a result of the ~~second quarter~~January 2023 and March 2023 reduction of $176 in the outstanding aggregate principal amount of the 5.125% Notes due October 2024 (the “5.125% Notes”) during the six months ended June 30, ~~2022.~~2023, Interest expense, net is expected to be reduced annually by $9.

See Note N to the Consolidated Financial Statements in Part I, Item I of this Form 10-Q for additional detail related to the Company’s debt.

Loss on debt redemption. Debt redemption or tender premiums include the cost to redeem or repurchase certain of the Company’s notes at a price which may be equal to the greater of the principal amount or the sum of the present values of the remaining scheduled payments, discounted using a defined treasury rate plus a spread, or a price based on the market price of its notes. Loss on debt redemption was zero in the second quarter of 2023 compared to $2 in the second quarter of 2022 and $1 in the six months ended June 30, ~~2022~~2023 compared ~~with $23~~to $2 in the ~~second quarter and~~ six months ended June 30, ~~2021.~~2022. The decrease of ~~$21 for both periods was primarily due to the debt premiums paid~~$2 in the second quarter of ~~2021 on~~2023 and $1 in the ~~5.870% Notes~~six months ended June 30, 2023 was due ~~2022, partially offset by~~to the higher debt premiums paid on the early partial redemption of the 5.125% Notes ~~due 2024~~ in the second quarter of 2022.

See Note N to the Consolidated Financial Statements in Part I, Item I of this Form 10-Q for additional detail related to the Company’s debt.

Other ~~(income) expense,~~income, net. Other income, net was $13 in the second quarter of 2023 compared to Other income, net of $1 in the second quarter of 2022 and Other income, net was $6 in the six months ended June 30, 2023 compared to Other ~~expense,~~income, net of ~~$8 in the second quarter of 2021 and Other expense, net was~~ zero in the six months ended June 30, ~~2022 compared to Other expense, net~~2022. The increase of $12 ~~in the six months ended June 30, 2021. The decrease of $9, or 113%,~~ in the second quarter of ~~2022~~2023 was primarily due to the reversal of $25, net of legal fees of $1, of the $65 pre-tax charge taken in the third quarter of 2022 related to the LBIE legal proceeding (See Note P to the Consolidated Financial Statements in Part I, Item I of this Form 10-Q for reference) as a result of the final settlement of such proceeding in June 2023 and higher interest income of $4, partially offset by the impacts of deferred compensation arrangements of ~~$10, partially offset by an increase from~~$9, higher non-service related net ~~realized~~periodic benefit costs related to pension and ~~unrealized losses~~other postretirement benefit plans of $3, primarily due to unrealized losses on investments. The decrease of $12, or 100%, in the six months ended June 30, 2022 was primarily due to the impacts of deferred compensation arrangements of $15 and an increase in foreign currency gains of $7, partially offset by mark-to-market adjustments of $6 in 2021 that did not occur in 2022$5, and an increase from net realized and unrealized losses of $3, primarily due to losses on sales of receivables. The increase of $6 in the six months ended June 30, 2023 was primarily due to the reversal in the second quarter ended June 30, 2023 of $25, net of legal fees of $1, related to the LBIE legal proceeding and higher interest income of $9, partially offset by the impacts of deferred compensation arrangements of $15, higher non-service related net periodic benefit costs related to pension and other postretirement benefit plans of $8, and an increase from net realized and unrealized losses of $4, primarily due to losses on ~~investments.~~sales of receivables. Non-service related net periodic benefit costs related to defined benefit plans is expected to increase by approximately $20 for the full year 2023 versus 2022.

Provision for income taxes. The estimated annual effective tax rate, before discrete items, applied to ordinary income was 23.0% in both the second quarter and six months ended June 30, 2023 compared to 23.9% in both the second quarter and six months ended June 30, ~~2022 compared to 29.1% in both the second quarter and six months ended June 30, 2021.~~2022. The tax rate including discrete items was 20.6% in the second quarter of 2023 compared to 19.7% in the second quarter of ~~2022 compared to 32.7% in the second quarter of 2021.~~2022. A discrete net tax benefit of $7 was recorded in both the second quarter of ~~2022 compared to a discrete tax charge of $4 in the second quarter of 2021.~~2023 and 2022. The

tax rate including discrete items was 26.3% in the six months ended June 30, 2023 compared to 21.5% in the six months ended June 30, ~~2022 compared to 30.9% in the six months ended June 30, 2021.~~2022. A discrete net tax ~~benefit~~charge of $9$14, which included the income tax reserve recorded as a result of the French tax litigation (See Note P to the Consolidated Financial Statements in Part I, Item I of this Form 10-Q for reference), was recorded in the six months ended June 30, ~~2022~~2023 compared to a discrete net tax ~~charge~~benefit of $3$9 in the six months ended June 30, ~~2021.~~2022. The estimated annual effective tax rate ishas decreased primarily due to increased domestic deductions, lower non-deductible expenses, and a ~~reflection of global income across numerous~~decrease in apportioned state tax rates, partially offset by increased earnings in high rate jurisdictions and decreased earnings in low rate jurisdictions. ~~As a result of the recovery in domestic profitability, the annual effective tax rate has decreased.~~

See Note G to the Consolidated Financial Statements in Part I, Item I of this Form 10-Q for additional detail.

Net income. Net income was $193, or $0.46 per diluted share, in the second quarter of 2023 compared to $147, or $0.35 per diluted share, in the second quarter of 2022 ~~compared to $74,~~and $341, or ~~$0.17~~$0.81 per diluted share, in the ~~second quarter of 2021 and~~six months ended June 30, 2023 compared to $278, or $0.66 per diluted share, in the six months ended June 30, ~~2022 compared to $154, or $0.35 per diluted share, in the six months ended June 30, 2021.~~2022. The increase of ~~$73~~$46 in the second quarter of ~~2022~~2023 was primarily due to higher sales in the commercial aerospace, ~~market, price increases, a decrease~~defense aerospace, and commercial transportation markets, as well as favorable product pricing, and the partial reversal of the pre-tax charge related to the LBIE legal proceeding (See Note P to the Consolidated Financial Statements in ~~the Loss on debt redemption, and a decrease in Interest expense, net,~~Part I, Item I of this Form 10-Q for reference) due to ~~lower long-term debt levels,~~the final settlement of such proceeding in June 2023, partially offset by ~~lower sales in the defense aerospace market,~~ an increase in ~~material costs and other inflationary costs, and an increase in Research and development expenses.~~Provision for income taxes. The increase of ~~$124~~$63 in the six months ended June 30, ~~2022~~2023 was primarily due to higher sales in the commercial aerospace, market, price increases, a decrease in Interest expense, net, due to lower long-term debt levels, a decrease in the Loss on debt redemption, and a decrease in Restructuring and other charges, partially offset by lower sales in the defense aerospace, ~~market, an increase in material costs~~ and ~~other inflationary costs, an increase in~~commercial transportation markets, as well as favorable product pricing, and the ~~provision for income taxes primarily driven~~partial reversal of the pre-tax charge related to the LBIE legal proceeding, partially offset by an increase in Provision for income ~~before income taxes, and an increase in Research and development expenses.~~

taxes.

Segment Information

The Company’s operations consist of four worldwide reportable segments: Engine Products, Fastening Systems, Engineered Structures, and Forged Wheels. Segment performance under Howmet’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance is Segment Adjusted EBITDA. Prior to the first quarter of 2022, the Company used Segment operating profit as its primary measure of performance. However, the Company’s Chief Executive Officer (“CEO”) believes that Segment adjusted EBITDA is now a better representation of its business because it provides additional information with respect to the Company’s operating performance and the Company’s ability to meet its financial obligations. Howmet’s definition of Segment Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation and amortization. Net margin is equivalent to Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation and amortization. Special items, including Restructuring and other charges, are ~~also~~ excluded from ~~Net~~net margin and Segment Adjusted EBITDA. Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Differences between the total segment and consolidated totals are in Corporate (See Note C to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for a description of each segment).

The Company has aligned its operations consistent with how the ~~CEO~~Chief Executive Officer assesses operating performance and allocates capital.

The Company produces aerospace engine parts and components and aerospace fastening systems for Boeing 737 MAX (“737 MAX”) airplanes. In late December 2019, Boeing announced a temporary suspension of the production of 737 MAX airplanes. This decline in production had a negative impact on sales and Segment Adjusted EBITDA in the Engine Products, Fastening Systems, and Engineered Structures segments in 2020 and the first half of 2021. While regulatory authorities in the United States and certain other jurisdictions lifted grounding orders beginning in late 2020, our sales remained at lower levels through the first half of 2021 due to the residual impacts of the 737 MAX grounding.

The Company also produces aerospace engine parts and components and aerospace fastening systems for Boeing 787 airplanes. In 2020 and 2021, Boeing reduced production rates of the 787 airplanes. Boeing paused deliveries of its 787 aircraft in May 2021. The significant decline in Boeing 787 production rates had a negative impact on sales and Segment Adjusted EBITDA in the Engine Products, Fastening Systems, and Engineered Structures segments in 2021 and the first half of 2022. We expect reduced production rates to continue to have a negative impact on our sales and Segment Adjusted EBITDA in the second half of 2022.

Engine Products


		Second quarter ended				Six months ended					Second quarter ended						Six months ended
		June 30,				June 30,					June 30,						June 30,
		2022		2021		2022		2021			2023			2022			2023			2022
Third-party sales	Third-party sales	$	652	$	544	$	1,283	$	1,078	Third-party sales	$	821		$	652		$	1,616		$	1,283

Segment Adjusted EBITDA	Segment Adjusted EBITDA	179		130		352		262		Segment Adjusted EBITDA	223			179			435			352
Segment Adjusted EBITDA Margin										Segment Adjusted EBITDA Margin	27.2		%	27.5		%	26.9		%	27.4		%

Third-party sales for the Engine Products segment increased ~~$108,~~$169, or ~~20%~~26%, in the second quarter of ~~2022~~2023 compared to the second quarter of ~~2021,~~2022, primarily due to higher ~~sales~~ volumes in the commercial aerospace, defense aerospace, industrial gas turbine, and oil and gas ~~markets and an increase in material cost pass through.~~markets.

Third-party sales for the Engine Products segment increased ~~$205,~~$333, or ~~19%~~26%, in the six months ended June 30, ~~2022~~2023 compared to the six months ended June 30, ~~2021,~~2022, primarily due to higher ~~sales~~ volumes in the commercial aerospace, ~~market~~defense aerospace, industrial gas turbine, and ~~an increase in material cost pass through.~~oil and gas markets.

Segment Adjusted EBITDA for the Engine Products segment increased ~~$49,~~$44, or ~~38%~~25%, in the second quarter of ~~2022~~2023 compared to the second quarter of ~~2021,~~2022, primarily due to higher ~~sales~~ volumes in the commercial aerospace, defense aerospace, industrial gas turbine, and oil and gas ~~markets as well as strong productivity gains.~~markets. The segment added approximately ~~455~~90 net headcount in the second quarter of ~~2022~~2023 in anticipation of future revenue increases, resulting in ~~2022.~~unfavorable near-term recruiting, training and operational costs.

Segment Adjusted EBITDA for the Engine Products segment increased ~~$90,~~$83, or ~~34%~~24%, in the six months ended June 30, ~~2022~~2023 compared to the six months ended June 30, ~~2021,~~2022, primarily due to higher ~~sales~~ volumes in the commercial aerospace, ~~market as well as strong productivity gains.~~defense aerospace, industrial gas turbine, and oil and gas markets. The segment added approximately ~~780~~350 net headcount in the six

months ended June 30, 2023 in anticipation of future revenue increases, resulting in unfavorable near-term recruiting, training and operational costs.

Segment Adjusted EBITDA Margin for the Engine Products segment decreased approximately 30 basis points in the second quarter of 2023 compared to the second quarter of 2022, primarily due to an increase in headcount and inflationary costs, partially offset by higher volumes in the commercial aerospace, defense aerospace, industrial gas turbine, and oil and gas markets.

Segment Adjusted EBITDA Margin for the Engine Products segment decreased approximately 50 basis points in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily due to an increase in headcount and inflationary costs, partially offset by higher volumes in the commercial aerospace, defense aerospace, industrial gas turbine, and oil and gas markets.

On May 15, 2023, Howmet and the United Autoworkers at our Whitehall, Michigan location approved a new five-year collective bargaining agreement, covering approximately 1,300 employees, effective April 1, 2023. The previous agreement expired on March 31, 2023. The agreement positions our Whitehall location to offer market competitive wages and benefits and provide additional operational flexibility in anticipation of future revenue ~~increases in 2022.~~increases.

For the full year ~~2022~~2023 compared to ~~2021,~~2022, demand in the commercial aerospace, defense aerospace, industrial gas turbine, and oil and gas markets is expected to increase. ~~An increase in material costs is expected to contribute to an increase in sales as the Company generally passes through these costs.~~

Fastening Systems


		Second quarter ended				Six months ended					Second quarter ended						Six months ended
		June 30,				June 30,					June 30,						June 30,
		2022		2021		2022		2021			2023			2022			2023			2022
Third-party sales	Third-party sales	$	277	$	262	$	541	$	534	Third-party sales	$	329		$	277		$	641		$	541

Segment Adjusted EBITDA	Segment Adjusted EBITDA	56		63		112		120		Segment Adjusted EBITDA	64			56			122			112
Segment Adjusted EBITDA Margin										Segment Adjusted EBITDA Margin	19.5		%	20.2		%	19.0		%	20.7		%

Third-party sales for the Fastening Systems segment increased ~~$15,~~$52, or 6%19%, in the second quarter of ~~2022~~2023 compared to the second quarter of ~~2021,~~2022, primarily due to higher ~~sales~~ volumes in the commercial aerospace, ~~market, with narrow body recovery more than offsetting Boeing 787 production declines,~~defense aerospace, industrial, and ~~an increase in material cost pass through, partially offset by lower sales volumes in the industrial market.~~commercial transportation markets.

Third-party sales for the Fastening Systems segment increased ~~$7,~~$100, or 1%18%, in the six months ended June 30, ~~2022~~2023 compared to the six months ended June 30, ~~2021,~~2022, primarily due to higher ~~sales~~ volumes in the commercial aerospace, ~~market, with narrow body recovery more than offsetting Boeing 787 production declines, higher sales volumes in the~~defense aerospace, industrial, and commercial transportation ~~market, and an increase in material cost pass through, partially offset by lower sales volumes in the defense aerospace and industrial~~ markets.

Segment Adjusted EBITDA for the Fastening Systems segment ~~decreased $7,~~increased $8, or ~~11%~~14%, in the second quarter of ~~2022~~2023 compared to the second quarter of ~~2021,~~2022, primarily due to ~~Boeing 787 production declines, lower sales~~higher volumes in the ~~industrial market, and inflationary costs, partially offset by favorable sales volumes in the narrow body~~ commercial aerospace, ~~market.~~defense aerospace, industrial, and commercial transportation markets. The segment added approximately ~~245~~215 net headcount in the second quarter of ~~2022~~2023 in anticipation of future revenue increases, resulting in ~~2022.~~unfavorable near-term recruiting, training and operational costs.

Segment Adjusted EBITDA for the Fastening Systems segment decreased $8, or 7%, in the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily due to Boeing 787 production declines, lower sales volumes in the defense aerospace and industrial markets, and inflationary costs, partially offset by favorable sales volumes in the narrow body commercial aerospace and commercial transportation markets. The segment added approximately 380 net headcount in the six months ended June 30, 2022 in anticipation of future revenue increases in 2022.

For the full year 2022 compared to 2021, demand in the commercial aerospace and commercial transportation markets is expected to increase. An increase in material costs is expected to contribute to an increase in sales as the Company generally passes through these costs.

~~Engineered Structures~~
Second quarter ended Six months ended
June 30, June 30,
2022 2021 2022 2021
Third-party sales $ 185 $ 160 $ 367 $ 336
Segment Adjusted EBITDA 26 24 49 46

~~Third-party sales for the Engineered Structures segment~~ increased $25, or 16%, in the second quarter of 2022 compared to the second quarter of 2021, primarily due to higher sales volumes in the commercial aerospace market, with narrow body recovery more than offsetting Boeing 787 production declines, and an increase in material cost pass through.

~~Third-party sales for the Engineered Structures segment increased $31,~~$10, or 9%, in the six months ended June 30, ~~2022~~2023 compared to the six months ended June 30, ~~2021,~~2022, primarily due to higher volumes in the commercial aerospace, defense aerospace, industrial, and commercial transportation markets. The segment added approximately 430 net headcount in the six months ended June 30, 2023 in anticipation of future revenue increases, resulting in unfavorable near-term recruiting, training and operational costs.

Segment Adjusted EBITDA Margin for the Fastening Systems segment decreased approximately 70 basis points in the second quarter of 2023 compared to the second quarter of 2022, primarily due to an increase in inflationary costs and headcount, partially offset by higher volumes in the commercial aerospace, defense aerospace, industrial, and commercial transportation markets.

Segment Adjusted EBITDA Margin for the Fastening Systems segment decreased approximately 170 basis points in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily due to an increase in inflationary costs and headcount, partially offset by higher volumes in the commercial aerospace, defense aerospace, industrial, and commercial transportation markets.

For the full year 2023 compared to 2022, demand in the commercial aerospace, commercial transportation, and industrial markets is expected to increase.

Engineered Structures


	Second quarter ended						Six months ended
	June 30,						June 30,
	2023			2022			2023			2022
Third-party sales	$	200		$	185		$	407		$	367


Segment Adjusted EBITDA	20			26			50			49
Segment Adjusted EBITDA Margin	10.0		%	14.1		%	12.3		%	13.4		%

Third-party sales for the Engineered Structures segment increased $15, or 8%, in the second quarter of 2023 compared to the second quarter of 2022, primarily due to higher volumes in the commercial aerospace market ~~with narrow body recovery more than offsetting Boeing 787 production declines, and an increase in material cost pass through,~~driven by Russian titanium share gains, partially offset by lower ~~sales~~ volumes in the defense aerospace market ~~including~~associated with the F-35 and legacy fighter programs.

Third-party sales for the Engineered Structures segment increased $40, or 11%, in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily due to higher volumes in the commercial aerospace market driven by Russian titanium share gains, partially offset by lower volumes in the defense aerospace market associated with the F-35 ~~program volumes.~~and legacy fighter programs.

Segment Adjusted EBITDA for the Engineered Structures segment ~~increased $2,~~decreased $6, or 8%23%, in the second quarter of ~~2022~~2023 compared to the second quarter of ~~2021,~~2022, primarily due to lower volumes in the defense aerospace market and additional operating costs from production rate increases not realized due to production bottlenecks at a plant, partially offset by higher ~~sales~~ volumes in the commercial aerospace ~~market, with narrow body recovery more than offsetting Boeing 787 production declines, partially offset by inflationary~~market. The segment added approximately 50 net headcount in the second quarter of 2023 in anticipation of future revenue increases, resulting in unfavorable near-term recruiting, training and operational costs.

Segment Adjusted EBITDA for the Engineered Structures segment increased ~~$3,~~$1, or 7%2%, in the six months ended June 30, ~~2022~~2023 compared to the six months ended June 30, ~~2021,~~2022, primarily due to higher ~~sales~~ volumes in the commercial aerospace market, ~~with narrow body recovery more than offsetting Boeing 787 production declines,~~ partially offset by lower ~~sales~~ volumes in the defense aerospace market ~~including lower F-35 program volumes, as well as inflationary~~and additional operating costs from production rate increases not realized due to production bottlenecks at a plant. The segment added approximately 50 net headcount in the six months ended June 30, 2023 in anticipation of future revenue increases, resulting in unfavorable near-term recruiting, training and operational costs.

27Segment Adjusted EBITDA Margin for the Engineered Structuressegment decreased approximately 410 basis points in the second quarter of 2023 compared to the second quarter of 2022, primarily due to lower volumes in the defense aerospace market, material and inflationary cost pass through, and additional operating costs from production rate increases not realized due to production bottlenecks at a plant, partially offset by higher volumes in the commercial aerospace market.

Segment Adjusted EBITDA Margin for the Engineered Structuressegment decreased approximately 110 basis points in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily due to lower volumes in the defense aerospace market, material and inflationary cost pass through, and additional operating costs from production rate increases not realized due to production bottlenecks at a plant, partially offset by higher volumes in the commercial aerospace market.

On July 10, 2023, Howmet and the United Steel Workers at our Niles, Ohio location entered into a new four-year collective bargaining agreement, covering approximately 370 employees, effective July 1, 2023. The previous agreement was to expire on April 20, 2024. The agreement positions our Niles location to offer market competitive wages and benefits, promote cost competitiveness, and provide additional operational flexibility in anticipation of future revenue increases.

For the full year ~~2022~~2023 compared to ~~2021,~~2022, demand in the commercial aerospace market is expected to increase. However, demand in the defense aerospace market is expected to ~~be down. An increase in material costs is expected to contribute to an increase in sales as the Company generally passes through these costs.~~decrease.

Forged Wheels


		Second quarter ended				Six months ended					Second quarter ended						Six months ended
		June 30,				June 30,					June 30,						June 30,
		2022		2021		2022		2021			2023			2022			2023			2022
Third-party sales	Third-party sales	$	279	$	229	$	526	$	456	Third-party sales	$	298		$	279		$	587		$	526

Segment Adjusted EBITDA	Segment Adjusted EBITDA	75		70		142		150		Segment Adjusted EBITDA	81			75			160			142
Segment Adjusted EBITDA Margin										Segment Adjusted EBITDA Margin	27.2		%	26.9		%	27.3		%	27.0		%

Third-party sales for the Forged Wheels segment increased ~~$50,~~$19, or ~~22%~~7%, in the second quarter of ~~2022~~2023 compared to the second quarter of ~~2021,~~2022, primarily due to ~~an increase~~higher volumes in ~~material and inflationary cost pass through and a 7% increase in volumes, partially offset by unfavorable foreign currency movements.~~the commercial transportation market.

Third-party sales for the Forged Wheels segment increased ~~$70,~~$61, or ~~15%~~12%, in the six months ended June 30, ~~2022~~2023 compared to the six months ended June 30, ~~2021,~~2022, primarily due to ~~an increase~~higher volumes in ~~material and inflationary cost pass through, partially offset by unfavorable foreign currency movements.~~the commercial transportation market.

Segment Adjusted EBITDA for the Forged Wheels segment increased ~~$5,~~$6, or 7%8%, in the second quarter of ~~2022~~2023 compared to the second quarter of ~~2021,~~2022, primarily due to higher ~~sales~~ volumes in the commercial transportation market, partially offset by ~~unfavorable foreign currency movements.~~a supply chain disruption.

Segment Adjusted EBITDA for the Forged Wheels segment ~~decreased $8,~~increased $18, or 5%13%, in the six months ended June 30, ~~2022~~2023 compared to the six months ended June 30, ~~2021,~~2022, primarily due to higher volumes in the commercial transportation market, partially offset by a supply chain disruption and unfavorable foreign currency movements.

Segment Adjusted EBITDA Margin for the Forged Wheels segment increased approximately 30 basis points in the second quarter of 2023 compared to the second quarter of 2022, primarily due to higher volumes, partially offset by a supply chain disruption. The favorable impact of lower aluminum prices was partially offset by other inflationary cost pass through.

Segment Adjusted EBITDA Margin for the Forged Wheels segment increased approximately 30 basis points in the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily due to higher volumes, partially offset by a supply chain disruption and unfavorable foreign currency movements. The favorable impact of lower aluminum prices was partially offset by other inflationary cost pass through.

For the full year ~~2022~~2023 compared to ~~2021,~~2022, demand in the commercial transportation markets served by Forged Wheels is expected to increase in most regions. An increase in material and inflationary costs is expected to contribute to an increase in sales as the Company generally passes through these costs. However, sales in the Forged Wheels segment could be negatively impacted by customer supply chain constraints.remain relatively flat.

Reconciliation of Total Segment Adjusted EBITDA to Income before income taxes


		Second quarter ended				Six months ended					Second quarter ended				Six months ended
		June 30,				June 30,					June 30,				June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Income before income taxes	Income before income taxes	$	183	$	110	$	354	$	223	Income before income taxes	$	243	$	183	$	463	$	354
Loss on debt redemption	Loss on debt redemption	2		23		2		23		Loss on debt redemption	—		2		1		2
Interest expense, net	Interest expense, net	57		66		115		138		Interest expense, net	55		57		112		115
Other (income) expense, net		(1)		8		—		12
Other income, net										Other income, net	(13)		(1)		(6)		—
Operating income	Operating income	$	241	$	207	$	471	$	396	Operating income	$	285	$	241	$	570	$	471
Segment provision for depreciation and amortization	Segment provision for depreciation and amortization	64		65		129		130		Segment provision for depreciation and amortization	66		64		130		129
Unallocated amounts:	Unallocated amounts:									Unallocated amounts:
Restructuring and other charges	Restructuring and other charges	6		5		8		14		Restructuring and other charges	3		6		4		8
Corporate expense	Corporate expense	25		10		47		38		Corporate expense	34		25		63		47
Total Segment Adjusted EBITDA	Total Segment Adjusted EBITDA	$	336	$	287	$	655	$	578	Total Segment Adjusted EBITDA	$	388	$	336	$	767	$	655

Total Segment Adjusted EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because it provides additional information with respect to the Company’s operating performance and the Company’s ability to meet its financial obligations. Differences between the total segment and consolidated totals are in Corporate.

See Restructuring and other charges, Interest expense, net, Loss on debt redemption, and Other ~~(income) expense,~~income, net discussions above, under ~~Results~~“Results of ~~Operations~~Operations” for reference.

Corporate expense increased ~~$15,~~$9, or ~~150%~~36%, in the second quarter of ~~2022~~2023 compared to the second quarter of ~~2021,~~2022, primarily due to higher costs associated with facilities closures, a supply chain disruption, and other items of $8 and the Engines Whitehall one-time bonus related to the collective bargaining agreement negotiations in 2023 of $7, partially offset by lower net costs related to the France Plant Fire, ~~and~~ the Barberton Plant Fire, and the Barberton Cast House Incident of $5, legal and other advisory reimbursements received in the second quarter of 2021 that did not occur in the second quarter of 2022 of $4, costs associated with closures, shutdowns, and other items of $1, and higher employment and legacy costs.

$6.

Corporate expense increased ~~$9,~~$16, or ~~24%~~34%, in the six months ended June 30, ~~2022 compared to the six months ended June 30, 2021, primarily due to higher legal and other advisory reimbursements received in the six months ended June 30, 2021~~2023 compared to the six months ended June 30, 2022, ~~of $1,~~primarily due to higher costs associated with facilities closures, ~~shutdowns,~~a supply chain disruption, and other items of ~~$1,~~$9, the Engines Whitehall one-time bonus related to the collective bargaining agreement negotiations in 2023 of $7, higher nonrecurring legal and other advisory reimbursements received in 2022 compared to 2023 of $3, and higher employment costs in 2023, partially offset by lower net costs related to the France Plant Fire, the Barberton Plant Fire, and ~~legacy costs.~~the Barberton Cast House Incident of $7.

Environmental Matters

See the Environmental Matters section of Note QP to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Subsequent Events

See Note RQ to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for subsequent events.

2931

Liquidity and Capital Resources

Operating Activities

Cash provided from operations was $252 in the six months ended June 30, 2023 compared to $213 in the six months ended June 30, ~~2022 compared to $79 in the six months ended June 30, 2021.~~2022. The increase of ~~$134,~~$39, or ~~170%~~18%, was primarily due to higher operating results of ~~$156~~$48 and lower ~~pension contributions~~payments on noncurrent liabilities of ~~$41,~~$14, partially offset by ~~an increase in~~higher working capital of ~~$57.~~$33. The components of the change in working capital primarily included ~~inventories~~unfavorable changes in accounts payable of ~~$210, taxes, including income taxes, of $23,~~$198 and prepaid expenses and other current assets of ~~$9,~~$10, partially offset by ~~a change in accounts payable~~inventories of ~~$70, favorable changes in~~$92, taxes, including income taxes, of $30, receivables of ~~$62, including employee retention credit receivables,~~$28, and accrued expenses of ~~$53.~~$25.

Management expects Howmet’s estimated pension contributions and other postretirement benefit payments in ~~2022~~2023 to be approximately ~~$60.~~$56.

Financing Activities

Cash used for financing activities was $403 in the six months ended June 30, 2023 compared to $331 in the six months ended June 30, ~~2022 compared to $1,068 in the six months ended June 30, 2021.~~2022. The ~~decrease~~increase of ~~$737,~~$72, or ~~69%~~22%, was primarily due to ~~less~~ payments made in connection with the ~~redemption~~reduction of long-term debt of ~~$778~~$116 (See Note N to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for reference), taxes of $53 paid for the net share settlement of equity awards due to a significant amount of equity awards that vested and ~~a reduction in~~ the ~~premiums paid~~impact of the Company’s stock price on the ~~early redemption of debt of $20, partially offset by incremental common stock repurchases of $35~~vesting date, and increased dividends paid to common stock shareholders of ~~$17. On an annual basis,~~$17, partially offset by a reduction in common stock repurchases of $110. As a result of the ~~debt repurchases~~January 2023 and March 2023 reduction of $176 in ~~2022 will decrease~~the aggregate principal amount of the outstanding 5.125% Notes during the six months ended June 30, 2023, Interest expense, net is expected to be reduced annually by $9.

On July 31, 2023, the Company issued a notice of partial redemption to redeem on September 28, 2023 (the “Redemption Date”) $200 aggregate principal amount of its 5.125% Notes in accordance with the terms of the notes. The redemption price (the “Redemption Price”) for the 5.125% Notes to be redeemed shall be equal to the greater of (i) 100% of the principal amount of the 2024 Notes to be redeemed, plus accrued interest, if any, to the Redemption Date or (ii) the sum of the present values of the Remaining Scheduled Payments, discounted on a semi-annual basis, assuming a 360-day year consisting of twelve 30-day months, at the Treasury Rate plus 40 basis points, plus accrued interest to the Redemption Date that has not been paid. The Company expects the aggregate Redemption Price for the 5.125% Notes to be redeemed to be approximately $205, which the Company intends to pay with cash on hand. As a result of the September 2023 planned partial redemption of $200 in the aggregate principal amount of the outstanding 5.125% Notes, Interest expense, net is expected to be reduced annually by approximately ~~$3.~~$10.

The Company maintains a credit facility pursuant to its Five-Year Revolving Credit Agreement (the “Credit Agreement”) with a syndicate of lenders and issuers named therein (See Note N to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for reference).There were no amounts outstanding under the Credit Agreement as of June 30, 2023 or December 31, 2022, and no amounts were borrowed during 2023 or 2022 under the Credit Agreement. On July 27, 2023, the Company entered into the Second Amended and Restated Five-Year Revolving Credit Agreement (See Note N to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for reference).

The Company has an effective shelf registration statement on Form S-3, filed with the ~~SEC,~~Securities and Exchange Commission (“SEC”), which allows for offerings of debt securities from time to time. The Company may opportunistically issue new debt securities under such registration statement or otherwise in accordance with securities laws, including, but not limited to, in order to refinance existing indebtedness. Our ability to refinance our indebtedness or enter into alternative financings in adequate amounts on commercially reasonable terms, or terms acceptable to us, may be affected by circumstances and economic events outside of our control.

The Company may, in the future from time to time, redeem portions of its debt securities or repurchase ~~additional~~ portions of its debt or equity securities ~~from time to time,~~ in either the open market or through privately negotiated transactions, in accordance with applicable SEC and other legal requirements. The timing, prices, and sizes of purchases depend upon prevailing trading prices, general economic and market conditions, and other factors, including applicable securities laws. Such purchases may be completed by means of trading plans established from time to time in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, block trades, private transactions, open market repurchases, tender offers, and/or accelerated share repurchase agreements or other derivative transactions.

The Company’s costs of borrowing and ability to access the capital markets are affected not only by market conditions but also by the ~~short~~short-term and long-term debt ratings assigned to the Company by the major credit rating agencies. The Company believes that its cash on hand, cash provided from operations and availability of its Credit Facility and its accounts receivables securitization program will continue to be sufficient to fund our operating and capital allocation activities, including repayments of indebtedness.

The Company’s credit ratings from the three major credit rating agencies are as follows:

Issuer Rating

Outlook

Date of Last Update

Standard and Poor’s Ratings Service (“S&P”)

BB+

~~Stable~~Positive

~~December 3, 2021~~April 25, 2023

Moody’s Investors Service (“Moody’s”)

Ba1

Stable

April 27, ~~2022~~2023

Fitch Investors Service (“Fitch”)

BBB-

Stable

March 22, 2022

On April 27, ~~2022,~~2023, Moody’s upgraded Howmet’s long-term debt rating from Ba2 to Ba1 citing the Company’s ability to improve its financial leverage, strong cash generation, and well-balanced financial policies and affirmed the current outlook as stable.

~~On March 22, 2022, Fitch~~ affirmed the following ratings for Howmet: long-term debt at ~~BBB-~~Ba1 and the current outlook as stable.

On April 25, 2023, S&P affirmed Howmet’s long-term debt rating at BB+ and upgraded the current outlook from stable to positive, citing strong demand in the commercial aerospace market and the Company’s improved financial leverage.

Investing Activities

Cash used for investing activities was $105 in the six months ended June 30, 2023 compared to $65 in the six months ended June 30, ~~2022 compared to cash provided from investing activities~~2022. The increase of ~~$94 in the six months ended June 30, 2021. The change of $159,~~$40, or ~~169%~~62%, was primarily due to ~~cash receipts from sold receivables of $172 in 2021, which did not have activity in~~ the ~~current year as a result of the termination of an accounts receivables securitization program in August 2021, and an increase in capital expenditures of $15. The~~ net cash funding from the sale of accounts receivable was neither a use of cash nor a source of cash during 2022 and 2021. These changes were partially offset by incremental proceeds from the sale of assets of $34, which was primarily due to the sale of the corporate center. In the second quarter of 2022, the Company sold the corporate headquarters in Pittsburgh, PA. The proceeds from the sale of the corporate ~~headquarters were $44, excluding $3~~center in the second quarter of ~~transaction costs, and a carrying value~~2022 of ~~$41. The Company~~

~~entered into a 12-year lease with the purchaser for a portion of the property.~~$41 that did not recur in 2023.

Recently Adopted and Recently Issued Accounting Guidance

See Note B to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Forward-Looking Statements

This report contains (and oral communications made by Howmet Aerospace may contain) statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of similar meaning. All statements that reflect Howmet Aerospace’s expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, statements, forecasts and outlook relating to the condition of end markets; future financial results or operating performance; future strategic actions; Howmet Aerospace’s strategies, outlook, and business and financial prospects; and any future debt redemptions or repurchases of its debt or equity securities. These statements reflect beliefs and assumptions that are based on Howmet Aerospace’s perception of historical trends, current conditions and expected future developments, as well as other factors Howmet Aerospace believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict, which could cause actual results to differ materially from those indicated by these statements. Such risks and uncertainties include, but are not limited to: (a) deterioration in global economic and financial market conditions generally; (b) unfavorable changes in the markets served by Howmet Aerospace; (c) the impact of potential cyber attacks and information technology or data security breaches; (d) the loss of significant customers or adverse changes in customers’ business or financial conditions; (e) manufacturing difficulties or other issues that impact product performance, quality or safety; (f) inability of suppliers to meet obligations due to supply chain disruptions or otherwise; (g) failure to attract and retain a qualified workforce and key personnel; (h) uncertainty of the ~~duration, extent and~~residual impact of the COVID-19 pandemic on Howmet Aerospace’s business, results of operations, and financial condition; (b) deterioration in global economic and financial market conditions generally (including as a result of COVID-19 and its effects, among other things, on global supply, demand, and distribution disruptions); (c) unfavorable changes in the markets served by Howmet Aerospace; (d) the impact of potential cyber attacks and information technology or data security breaches; (e) the loss of significant customers or adverse changes in customers’ business or financial conditions; (f) manufacturing difficulties or other issues that impact product performance, quality or safety; (g) inability of suppliers to meet obligations due to supply chain disruptions or otherwise; (h)(i) the inability to achieve revenue growth, cash generation, ~~cost savings,~~ restructuring plans, cost reductions, improvement in profitability, or strengthening of competitiveness and operations anticipated or targeted; ~~(i)~~(j) inability to meet increased demand, production targets or commitments; ~~(j)~~(k) competition from new product offerings, disruptive technologies or other developments; ~~(k)~~(l) geopolitical, economic, and regulatory risks relating to Howmet Aerospace’s global operations, including geopolitical and diplomatic tensions, instabilities and conflicts, as well as compliance with U.S. and foreign trade and tax laws, sanctions, embargoes and other regulations; ~~(l)~~(m) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation, which can expose Howmet Aerospace to substantial costs and liabilities; ~~(m)~~(n) failure to comply with government contracting regulations; ~~(n)~~(o) adverse changes in discount rates or investment returns on pension assets; and ~~(o)~~(p) the other risk factors summarized in Howmet Aerospace’s Form 10-K for the year ended December 31, ~~2021~~2022 and other reports filed with the U.S. Securities and Exchange Commission. Market projections are subject to the risks discussed above and other risks in the market. The statements in ~~a presentation or document~~this report are made as of the date of ~~such presentation or document.~~the filing of this report. Howmet Aerospace disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not material.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

The Company's Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of the end of the period covered by this report, and they have concluded that these controls and procedures are effective.

(b) Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the second quarter of ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

See Note QP to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Item 1A. Risk Factors.

There have been no material changes from the risk factors previously disclosed in Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table presents information with respect to the Company’s repurchases of its common stock during the quarter ended June 30, ~~2022:~~2023:
(in millions except share and per share amounts)
Period Total Number of Shares Purchased
Average Price Paid Per Share(1)
Total Number of Shares Purchased as Part of Publicly Announced Repurchase Plans or Programs
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1)(2)
April 1 - April 30, 2022
31,422(3)
$34.16 — $1,172
May 1 - May 31, 2022 1,770,271 $33.89 1,770,271 $1,112
June 1 - June 30, 2022 — $— — $1,112
Total for quarter ended June 30, 2022 1,801,693 $33.90 1,770,271



Period	Total Number of Shares Purchased	Average Price Paid Per Share(1)		Total Number of Shares Purchased as Part of Publicly Announced Repurchase Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)(1)(2)
April 1 - April 30, 2023	—	$	—	—	$	922
May 1 - May 31, 2023	419,012	$	43.38	419,012	$	904
June 1 - June 30, 2023	1,827,282	$	44.78	1,827,282	$	822
Total for quarter ended June 30, 2023	2,246,294	$	44.52	2,246,294

(1)Excludes commissions cost.

(2)On August 18, 2021, the Company announced that its Board of Directors authorized a share repurchase program of up to $1,500 million of the Company's outstanding common stock. After giving effect to the share repurchases made through June 30, ~~2022,~~2023, approximately ~~$1,112~~$822 million Board authorization remains available. Under the Company’s share repurchase ~~programs~~program (the “Share Repurchase ~~Programs”~~Program”), the Company may repurchase shares by means of trading plans established from time to time in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, block trades, private transactions, open market repurchases and/or accelerated share repurchase agreements or other derivative transactions. There is no stated expiration for the Share Repurchase ~~Programs.~~Program. Under its Share Repurchase ~~Programs,~~Program, the Company may repurchase shares from time to time, in amounts, at prices, and at such times as the Company deems appropriate, subject to market conditions, legal requirements and other ~~considerations, including limits under the Company’s Five-Year Revolving Credit Agreement (See~~ ~~Note N~~ ~~to the Consolidated Financial Statements in~~ ~~Part I, Item 1~~ ~~of this Form 10-Q for reference).~~considerations. The Company is not obligated to repurchase any specific number of shares or to do so at any particular time, and the Share Repurchase ~~Programs~~Program may be suspended, modified or terminated at any time without prior notice.

~~(3)~~Reflects the surrender of shares of Howmet common stock by a participant in the Company’s stock incentive plan to the Company to satisfy the exercise price and tax withholding obligations of employee stock options at the time of exercise. These surrendered shares are not part of any Share Repurchase Programs.

3234

Item 6. Exhibits.


10.1			~~First Amendment, effective as of April 1, 2022, to~~Second Amended and Restated ~~Trademark License~~Five-Year Revolving Credit Agreement, ~~by and between Alcoa USA Corp. and~~dated as of July 27, 2023, among Howmet Aerospace Inc., the lenders and issuers named therein, Citibank, N.A., as administrative agent, and JPMorgan Chase Bank, N.A., as syndication agent, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated July 31, 2023.
31			Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32			Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH			Inline XBRL Taxonomy Extension Schema Document.
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104.			Cover Page Interactive Data File - the cover page from this Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2022,~~2023, formatted in Inline XBRL (included within the Exhibit 101 attachments).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			Howmet Aerospace Inc.

August ~~4, 2022~~1, 2023			/s/ Ken Giacobbe
Date			Ken Giacobbe
			Executive Vice President and
			Chief Financial Officer
			(Principal Financial Officer)

August ~~4, 2022~~1, 2023			/s/ Barbara L. Shultz
Date			Barbara L. Shultz
			Vice President and Controller
			(Principal Accounting Officer)

3335


	(in millions except share and per share amounts)
Period	Total Number of Shares Purchased	Average Price Paid Per Share(1)	Total Number of Shares Purchased as Part of Publicly Announced Repurchase Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1)(2)
April 1 - April 30, 2022	31,422(3)	$34.16	—	$1,172
May 1 - May 31, 2022	1,770,271	$33.89	1,770,271	$1,112
June 1 - June 30, 2022	—	$—	—	$1,112
Total for quarter ended June 30, 2022	1,801,693	$33.90	1,770,271