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 petition for a rehearing was filed before the Third Circuit Court, which~~dismissal, and, on October 7, 2022, the Third Circuit Court denied a petition for a rehearing. On January 5, 2023, the plaintiffs filed a petition for a writ of certiorari in the U.S. Supreme Court, which the Supreme Court denied on ~~October 7, 2022.~~February 21, 2023. This case is fully dismissed and closed.

Howard v. Arconic Inc. et al. (securities law related claims). ~~The~~On February 3, 2023, the court ~~held a status conference on September 14, 2022, and~~issued an order referring the case to mediation. In March 2023, following successive mediation sessions, the parties ~~are currently awaiting~~reached a settlement in principle that remains subject to 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 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 order ~~from~~granting plaintiffs’ motion to preliminarily approve the ~~court setting~~settlement and set August 9, 2023 as the ~~schedule for class certification briefing and discovery.~~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”) filed proceedings in the High Court of Justice, Business and Property Courts of England and 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 ~~concern~~concerned two interest rate swap transactions with LBIE (collectively, the “ISDAs”). In 2007 and 2008, the Firth Rixson Entities, then owned by Oak Hill, entered into the ISDAs in order to meet their obligation to hedge interest rate exposure under a lending agreement with LBIE. When LBIE went into bankruptcy in 2008,that the Firth Rixson Entities entered into ~~alternative swap agreements~~ with ~~another counterparty~~LBIE in order to meet this hedging obligation. The Firth Rixson Entities were acquired by the Company as part of its acquisition of the Firth Rixson business from Oak Hill in 2014. In the LBIE legal proceeding, LBIE claims the amounts owing by the Firth Rixson Entities under the ISDAs to be approximately $64, plus applicable interest. The Court issued its ruling in these proceedings on October 11, 2022 (the “Judgment”). In its ruling, the Court determined that the event of default under the ISDAs caused by LBIE as2007 and 2008. As a result of ~~its insolvency~~the ruling issued by the Court in ~~2008 and other defaults will conclude upon LBIE’s expected emergence from administration under~~October 2022, the Insolvency Act of 1986. The Court ruled that upon such future event and other relevant steps being completed, the timing of which is unknown, the Firth Rixson Entities will be obligated to pay amounts due under the ISDAs. The Company recorded $65 in Other current liabilities in the Consolidated Balance Sheet and took a pre-tax charge of this amount in Other ~~expense,~~income, net in the Statement of Consolidated Operations in the third quarter ~~and nine months ended September 30,~~of 2022. The ~~matter of interest was not specifically addressed in~~Firth Rixson Entities appealed the ~~proceeding~~Court’s ruling, and no related amounts have been reserved. The Company vigorously disagrees with the ruling including as to any payment obligation in respect of the principal as well as any interest. The Company intends to apply to appeal the Judgment to the Court of Appeal and will request that payment of all amounts be stayed until the appeal ~~is concluded. This application is expected~~was to be addressed at a hearing before the English Court byof Appeal in June 2023 (the “Litigation”). On June 15, 2023, the ~~end~~Company, the Firth Rixson Entities, and LBIE reached a full and final settlement of ~~this year,~~all claims arising out of the Litigation (the “Settlement”). The Settlement provides for a payment of $40 to be paid to LBIE in two installments: $15 paid in July 2023 and ~~any appeal proceedings would continue into 2023.~~$25 payable in July 2024. As a result of the Settlement, $25 of the amount previously recorded for the Litigation as a pre-tax charge in Other income, net was reversed as a credit to Other income, net in the Company’s second quarter 2023 results. The hearing before the English Court of 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

~~At September~~As 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 ~~$11 at September~~$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 ~~September~~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 ~~September~~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 September~~$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 $43 ~~at September~~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 $22 (which are included in the $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 QN for the ~~unfavorable judgment~~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 in July 2023 related to the LBIE ~~legal proceeding.~~Settlement.

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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

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.

In the ~~third quarter of 2022,~~six months ended June 30, 2023, the Company derived approximately 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 is still below pre-pandemic~~has rebounded and approximates 2019 ~~levels on an average monthly basis. Year-to-date international~~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.

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 ~~$1,433~~$1,648 in the ~~third~~second quarter of 2023 compared to $1,393 in the second quarter of 2022 and $3,251 in the six months ended June 30, 2023 compared to ~~$1,283~~$2,717 in the ~~third quarter of 2021 and $4,150 in the nine~~six months ended ~~September~~June 30, ~~2022 compared to $3,687 in the nine months ended September 30, 2021.~~2022. The increase of ~~$150,~~$255, or ~~12%~~18%, in the ~~third~~second quarter of ~~2022~~2023 was primarily due to higher sales ~~of 23%~~ from the commercial aerospace, ~~market,~~defense aerospace, and commercial transportation markets, an increase in ~~material~~inflationary cost pass through of approximately ~~$70,~~$25, and favorable product pricing of ~~$17, partially offset by lower sales in the defense aerospace market.~~$20. The increase of ~~$463,~~$534, or ~~13%~~20%, in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was primarily due to higher sales ~~of 28%~~ from the commercial aerospace, ~~market,~~defense aerospace, and commercial transportation markets, an increase in ~~material~~inflationary cost pass through of approximately ~~$170,~~$60, and favorable product pricing of ~~$50, partially offset by lower sales~~$37. Product price increases are in ~~the defense aerospace market.~~excess of inflationary cost pass through to our customers.

Cost of goods sold (“COGS”). COGS as a percentage of Sales was ~~73.7%~~72.6% in the ~~third~~second quarter of 2023 compared to 70.9% in the second quarter of 2022 and 72.6% in the six months ended June 30, 2023 compared to ~~72.3%~~71.3% in the ~~third quarter of 2021 and 72.1% in both the nine~~six months ended ~~September~~June 30, ~~2022 and September 30, 2021.~~2022. The increase in the ~~third~~second quarter ~~of 2022~~and six months ended June 30, 2023 was primarily due to inflationary costs and increased headcount, primarily in the Engine Products, Fastening Systems, and Engineered Structures segments, in anticipation of future revenue increases, resulting in 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 $4 and net charges of ~~$25~~zero in the ~~third~~second quarter ~~of 2022~~and six months ended June 30, 2023, respectively, related to fires that occurred at a Fastening Systems plant in France in 2019 (the “France Plant Fire”) and ~~at a Forged Wheels plant in Barberton, Ohio in 2020 (the “Barberton Plant Fire”), and~~ a mechanical failure resulting in substantial heat and fire-related damage to equipment at the ~~Company’s~~Forged Wheel’s cast house in Barberton, Ohio in the third quarter of 2022 (the “Barberton Cast House Incident”), compared to total COGS charges of $1$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 in the third quarter of 2021, as well as material cost pass through and increased headcount, primarily in the Engine Products segment, in anticipation of future revenue increases, partially offset by higher volumes and favorable product pricing. COGS was flat in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to COGS charges of $32 in the nine months ended September 30, 2022 related to the France Plant Fire, Barberton Plant Fire, and Barberton Cast House Incident, compared to net charges of $7 in the nine months ended September 30, 2021 related to the France Plant Fire and the Barberton Plant Fire, as well as material cost pass through and increased headcount, primarily in the Engine Products and Fastening Systems segments, in anticipation of future revenue increases, offset by higher volumes and favorable product pricing.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 $25~~up to ~~$30~~$5 in the ~~fourth 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.

2425

Selling, general administrative, and other expenses (“SG&A”). SG&A expenses were ~~$73~~$88 in the ~~third~~second quarter of 2023 compared to $83 in the second quarter of 2022 and $163 in the six months ended June 30, 2023 compared to ~~$70~~$152 in the ~~third quarter of 2021 and $225 in the nine~~six months ended ~~September~~June 30, ~~2022 compared to $190 in the nine months ended September 30, 2021.~~2022. The increase of ~~$3,~~$5, or 4%6%, in the ~~third~~second quarter of ~~2022~~2023 and $11, or 7%, in the six months ended June 30, 2023 was primarily due to higher employment ~~costs. The increase of $35, or 18%, in~~costs and legal fees related to the ~~nine months ended September 30, 2022 was primarily due to higher employment and legacy costs, as well as~~Lehman Brothers International (Europe) (“LBIE”) legal ~~and other advisory reimbursements received in 2021 that did not occur in 2022.~~proceeding.

Research and development expenses (“R&D”). R&D expenses were $7$9 in both the second quarter of 2023 and the second quarter of 2022. R&D expenses were $18 in the ~~third quarter of 2022~~six months ended June 30, 2023 and $4$16 in the ~~third quarter of 2021,~~six months ended June 30, 2022, an increase of ~~$3,~~$2, or ~~75%. R&D expenses were $23 in the nine months ended September 30, 2022 and $13 in the nine months ended September 30, 2021, an increase of $10, or 77%~~13%. The increase in the ~~third quarter and nine~~six months ended ~~September~~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 or a decrease of $3. Restructuring and other charges were $4 in the ~~third quarter of 2022~~six months ended June 30, 2023 compared to $8 in the ~~third quarter of 2021~~six months ended June 30, 2022 or a decrease of $4. Restructuring and other charges for the second quarter of 2023 were ~~$12 in the nine months ended September 30, 2022 compared~~primarily due to ~~$22 in the nine months ended September 30, 2021 or~~charges for a ~~decrease~~U.S. pension plan settlement of ~~$10.~~$3. Restructuring and other charges for the ~~third~~six months ended June 30, 2023 were primarily due to charges for a U.S. pension plan settlement of $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. ~~and Canadian~~ pension plan settlements of $3 and exit related costs, including accelerated depreciation, of ~~$1.~~$3. Restructuring and other charges for the ~~nine~~six months ended ~~September~~June 30, 2022 were primarily due to exit related costs, including accelerated depreciation, of $5 and charges for U.S. pension plan settlements of $7 and exit related costs, including accelerated depreciation, of $6, partially offset by a reversal of $1 for a layoff reserve related to a prior period. Restructuring and other charges for the third quarter and nine months ended September 30, 2021 were primarily due to charges for pension plan settlements and exit related costs. Most of the Company’s global pension plans currently offer lump-sum payment options.$4.

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 third quarter of 2022 compared to $63 in the third quarter of 2021 and $172 in the nine months ended September 30, 2022 compared to $201 in the nine months ended September 30, 2021. The decrease of $6, or 10%, in the thirdsecond quarter of 2022 and ~~$29,~~$112 in the six months ended June 30, 2023 compared to $115 in the six months ended June 30, 2022. The decrease of $2, or ~~14%~~4%, in the ~~nine~~second quarter of 2023 and $3, or 3%, in the six months ended ~~September~~June 30, ~~2022~~2023 was primarily due to a reduced average level of ~~debt for~~long-term debt. As a result of the ~~third quarter~~January 2023 and ~~nine~~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 ~~September~~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 ~~third~~second quarter of ~~2022~~2023 compared to ~~$118 in the third quarter of 2021 and~~ $2 in the ~~nine months ended September 30, 2022 compared to $141 in the nine months ended September 30, 2021. The decrease of $118 in the third~~second quarter of 2022 and ~~$139~~$1 in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to $2 in the six months ended June 30, 2022. The decrease of $2 in the second quarter of 2023 and $1 in the six months ended June 30, 2023 was ~~primarily~~ due to the higher debt premiums paid on the ~~6.875% Notes due 2025 and~~early partial redemption of the 5.125% Notes ~~due 2024 in the third quarter of 2021, and the 5.870% Notes due 2022~~ in the second quarter of ~~2021.~~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 ~~expense,~~income, net. Other ~~expense,~~income, net was ~~$67~~$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 income, net of zero in the six months ended June 30, 2022. The increase of $12 in the second quarter of 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 compared to $1 in the third quarter of 2021 and Other expense, net was $67 in the nine months ended September 30, 2022 compared to $13 in the nine months ended September 30, 2021. The increase of $66 in the third quarter of 2022 was primarily due to the adverse judgment of $65 related to Lehman Brothers International (Europe) (“LBIE”) swaps that were entered into in 2007 and 2008, which were assumed as part of the Firth Rixson acquisition in 2014. The increase of $54 in the nine months ended September 30, 2022 was primarily due to the adverse judgment related to the LBIE legal proceeding (See Note P to the Consolidated Financial Statements in Part I, Item Iof ~~$65~~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 $9, higher non-service related net periodic benefit costs related to pension and other postretirement benefit plans of $5, and an increase from net realized and unrealized losses of ~~$5,~~$3, primarily due to ~~unrecognized~~ losses on ~~debt securities investments,~~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 ~~$16~~$15, higher non-service related net periodic benefit costs related to pension and other postretirement benefit plans of $8, and an increase ~~in foreign currency gains~~from net realized and unrealized losses of ~~$8.~~$4, primarily due to losses on 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 ~~(benefit)~~ for income taxes. The estimated annual effective tax rate, before discrete items, applied to ordinary income was ~~24.3%~~23.0% in both the ~~third~~second quarter and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~29.7%~~23.9% in both the ~~third~~second quarter and ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The tax rate including discrete items was ~~23.1% (provision on income)~~20.6% in the ~~third~~second quarter of ~~2022~~2023 compared to ~~17.4% (benefit on income)~~19.7% in the ~~third~~second quarter of ~~2021.~~2022. A discrete net tax benefit of $2$7 was recorded in both the ~~third~~second quarter of ~~2022 compared to a discrete tax benefit of $12 in the third quarter of 2021.~~2023 and 2022. The

tax rate including discrete items was ~~21.8%~~26.3% in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~26.4%~~21.5% in the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. A discrete net tax ~~benefit~~charge of ~~$11~~$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 ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to a discrete net tax benefit of $9 in the ~~nine~~six months ended ~~September~~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. Furthermore, on August 16, 2022, the U.S. enacted the Inflation Reduction Act (“IRA”), which is not expected to

~~have a material impact on the income tax provision. Management is currently evaluating provisions of the IRA that may have an impact on the 2023 Consolidated Financial Statements.~~

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 ~~$80,~~$193, or ~~$0.19~~$0.46 per diluted share, in the ~~third~~second quarter of ~~2022~~2023 compared to ~~$27,~~$147, or ~~$0.06~~$0.35 per diluted share, in the ~~third~~second quarter of ~~2021~~2022 and ~~$358,~~$341, or ~~$0.84~~$0.81 per diluted share, in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$181,~~$278, or ~~$0.41~~$0.66 per diluted share, in the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The increase of ~~$53~~$46 in the ~~third~~second quarter of ~~2022~~2023 was primarily due to higher sales in the commercial aerospace, ~~market,~~defense aerospace, and commercial transportation markets, as well as favorable product pricing, ~~a decrease in~~and the ~~Loss on debt redemption, a decrease in Interest expense, net, due to lower long-term debt levels, and a decrease in Restructuring and other charges, partially offset by lower sales in~~partial reversal of the ~~defense aerospace market, the adverse judgment~~pre-tax charge related to the LBIE legal proceeding ~~and~~(See Note P to the Consolidated Financial Statements in Part I, Item I of this Form 10-Q for reference) due to the final settlement of such proceeding in June 2023, partially offset by an increase in ~~Research and development expenses.~~Provision for income taxes. The increase of ~~$177~~$63 in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was primarily due to higher sales in the commercial aerospace, ~~market,~~defense aerospace, and commercial transportation markets, as well as favorable product pricing, ~~a decrease in~~and the ~~Loss on debt redemption, a decrease in Interest expense, net, due to lower long-term debt levels, and a decrease in Restructuring and other charges, partially offset by lower sales in~~partial reversal of the ~~defense aerospace market, an increase in material and other inflationary costs, the adverse judgment~~pre-tax charge related to the LBIE legal proceeding, ~~an increase in the provision for income taxes primarily driven~~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 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 three quarters of 2022. We expect reduced production rates to continue to have a negative impact on our sales and Segment Adjusted EBITDA for 2022.

Engine Products


		Third quarter ended						Nine months ended							Second quarter ended						Six months ended
		September 30,						September 30,							June 30,						June 30,
		2022			2021			2022			2021				2023			2022			2023			2022
Third-party sales	Third-party sales	$	683		$	599		$	1,966		$	1,677		Third-party sales	$	821		$	652		$	1,616		$	1,283

Segment Adjusted EBITDA	Segment Adjusted EBITDA	186			151			538			413			Segment Adjusted EBITDA	223			179			435			352
Segment Adjusted EBITDA Margin	Segment Adjusted EBITDA Margin	27.2		%	25.2		%	27.4		%	24.6		%	Segment Adjusted EBITDA Margin	27.2		%	27.5		%	26.9		%	27.4		%

Third-party sales for the Engine Products segment increased ~~$84,~~$169, or ~~14%~~26%, in the ~~third~~second quarter of ~~2022~~2023 compared to the ~~third~~second quarter of ~~2021,~~2022, primarily due to higher volumes in the commercial aerospace, defense aerospace, industrial gas turbine, and oil and gas ~~markets as well as an increase in material cost pass through.~~markets.

Third-party sales for the Engine Products segment increased ~~$289,~~$333, or ~~17%~~26%, in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~

2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, primarily due to higher volumes in the commercial aerospace, defense aerospace, industrial gas turbine, and oil and gas ~~markets as well as an increase in material cost pass through.~~markets.

Segment Adjusted EBITDA for the Engine Products segment increased ~~$35,~~$44, or ~~23%~~25%, in the ~~third~~second quarter of ~~2022~~2023 compared to the ~~third~~second quarter of ~~2021,~~2022, primarily due to higher 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 ~~260~~90 net headcount in the ~~third~~second quarter of ~~2022~~2023 in anticipation of future revenue ~~increases.~~increases, resulting in unfavorable near-term recruiting, training and operational costs.

Segment Adjusted EBITDA for the Engine Products segment increased ~~$125,~~$83, or ~~30%~~24%, in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, primarily due to higher 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 ~~1,040~~350 net headcount in the ~~nine~~ six

months ended ~~September~~June 30, ~~2022~~2023 in anticipation of future revenue ~~increases.~~increases, resulting in unfavorable near-term recruiting, training and operational costs.

Segment Adjusted EBITDA Margin for the Engine Products segment ~~increased~~decreased approximately ~~200~~30 basis points in the ~~third~~second quarter of 2023 compared to the second quarter of 2022, ~~compared to the third quarter of 2021,~~ 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 as well as strong productivity gains, partially offset by an increase in material cost pass through.~~markets.

Segment Adjusted EBITDA Margin for the Engine Products segment ~~increased~~decreased approximately ~~280~~50 basis points in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~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 as well as strong productivity gains, partially offset by an increase~~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 ~~material cost pass through.~~anticipation of future revenue 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


		Third quarter ended						Nine months ended							Second quarter ended						Six months ended
		September 30,						September 30,							June 30,						June 30,
		2022			2021			2022			2021				2023			2022			2023			2022
Third-party sales	Third-party sales	$	291		$	254		$	832		$	788		Third-party sales	$	329		$	277		$	641		$	541

Segment Adjusted EBITDA	Segment Adjusted EBITDA	64			59			176			179			Segment Adjusted EBITDA	64			56			122			112
Segment Adjusted EBITDA Margin	Segment Adjusted EBITDA Margin	22.0		%	23.2		%	21.2		%	22.7		%	Segment Adjusted EBITDA Margin	19.5		%	20.2		%	19.0		%	20.7		%

Third-party sales for the Fastening Systems segment increased ~~$37,~~$52, or ~~15%~~19%, in the ~~third~~second quarter of ~~2022~~2023 compared to the ~~third~~second quarter of ~~2021,~~2022, primarily due to higher 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.~~commercial transportation markets.

Third-party sales for the Fastening Systems segment increased ~~$44,~~$100, or 6%18%, in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, primarily due to higher volumes in the commercial aerospace, ~~market, with narrow body recovery more than offsetting Boeing 787 production declines, higher volumes in the~~defense aerospace, industrial, and commercial transportation ~~market, and an increase in material cost pass through, partially offset by lower volumes in the defense aerospace and industrial~~ markets.

Segment Adjusted EBITDA for the Fastening Systems segment increased ~~$5,~~$8, or 8%14%, in the ~~third~~second quarter of 2023 compared to the second quarter of 2022, ~~compared to the third quarter of 2021,~~ primarily due to ~~favorable~~higher volumes in the ~~narrow body~~ commercial aerospace, ~~market, partially offset by Boeing 787 production declines.~~defense aerospace, industrial, and commercial transportation markets. The segment added approximately 215 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 Fastening Systems segment ~~decreased $3,~~increased $10, or 2%9%, in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, primarily due to ~~Boeing 787 production declines, lower~~higher volumes in the commercial aerospace, defense aerospace, ~~and~~ industrial, ~~markets, and inflationary costs, partially offset by favorable volumes in the narrow body commercial aerospace~~ and commercial transportation markets. The segment added approximately ~~410~~430 net headcount in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 in anticipation of future revenue ~~increases.~~increases, resulting in unfavorable near-term recruiting, training and operational costs.

Segment Adjusted EBITDA Margin for the Fastening Systems segment decreased approximately ~~120~~70 basis points in the ~~third~~second quarter of 2023 compared to the second quarter of 2022, ~~compared to the third quarter of 2021,~~ primarily due to ~~Boeing 787 production declines,~~an increase in inflationary costs and headcount, partially offset by ~~favorable~~higher volumes in the ~~narrow body~~ commercial aerospace, ~~market.~~defense aerospace, industrial, and commercial transportation markets.

Segment Adjusted EBITDA Margin for the Fastening Systems segment decreased approximately ~~150~~170 basis points in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, primarily due to ~~Boeing 787 production declines, lower~~an increase in inflationary costs and headcount, partially offset by higher volumes in the commercial aerospace, defense aerospace, ~~and~~ industrial, ~~markets, and inflationary costs, partially offset by favorable volumes in the narrow body commercial aerospace~~ and commercial transportation markets.

For the full year ~~2022~~2023 compared to ~~2021,~~2022, demand in the commercial aerospace, ~~and~~ commercial transportation, and industrial 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


		Third quarter ended						Nine months ended							Second quarter ended						Six months ended
		September 30,						September 30,							June 30,						June 30,
		2022			2021			2022			2021				2023			2022			2023			2022
Third-party sales	Third-party sales	$	193		$	199		$	560		$	535		Third-party sales	$	200		$	185		$	407		$	367

Segment Adjusted EBITDA	Segment Adjusted EBITDA	28			26			77			72			Segment Adjusted EBITDA	20			26			50			49
Segment Adjusted EBITDA Margin	Segment Adjusted EBITDA Margin	14.5		%	13.1		%	13.8		%	13.5		%	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 driven by Russian titanium share gains, partially offset by lower volumes in the defense aerospace market 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 and legacy fighter programs.

Segment Adjusted EBITDA for the Engineered Structuressegment decreased $6, or 3%23%, in the ~~third~~second quarter of ~~2022~~2023 compared to the ~~third~~second quarter of ~~2021,~~2022, primarily due to lower volumes in the defense aerospace market and ~~Boeing 787~~additional operating costs from production ~~declines,~~rate increases not realized due to production bottlenecks at a plant, partially offset by higher volumes in the ~~narrow body~~ commercial aerospace ~~market and an increase in material cost pass through.~~

~~Third-party sales for the Engineered Structures~~market. The segment ~~increased $25, or 5%,~~added approximately 50 net headcount in the ~~nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, primarily due to higher volumes~~second quarter of 2023 in ~~the narrow body commercial aerospace market~~anticipation of future revenue increases, resulting in unfavorable near-term recruiting, training and ~~an increase in material cost pass through, partially offset by lower volumes in the defense aerospace market and Boeing 787 production declines.~~operational costs.

Segment Adjusted EBITDA for the Engineered Structures segment increased ~~$2,~~$1, or 8%2%, in the ~~third quarter of 2022~~six months ended June 30, 2023 compared to the ~~third quarter of 2021,~~six months ended June 30, 2022, primarily due to higher volumes in the ~~narrow body~~ commercial aerospace market, partially offset by lower volumes in the defense aerospace market and ~~Boeing 787~~additional operating costs from production ~~declines.~~

~~Segment Adjusted EBITDA for the Engineered Structures~~rate increases not realized due to production bottlenecks at a plant. The segment ~~increased $5, or 7%,~~added approximately 50 net headcount in the ~~nine~~six months ended ~~September~~June 30, ~~2022 compared to the nine months ended September 30, 2021, with higher volumes~~2023 in ~~the narrow body commercial aerospace market, partially offset by lower volumes~~anticipation of future revenue increases, resulting in ~~the defense aerospace market~~unfavorable near-term recruiting, training and ~~Boeing 787 production declines as well as inflationary~~operational costs.

Segment Adjusted EBITDA Margin for the Engineered Structures segment ~~increased~~decreased approximately ~~140~~410 basis points in the ~~third~~second quarter of 2023 compared to the second quarter of 2022, ~~compared to the third quarter of 2021,~~ primarily due to ~~higher volumes in the narrow body commercial aerospace market, partially offset by~~ lower volumes in the defense aerospace market, material and ~~Boeing 787~~inflationary cost pass through, and additional operating costs from production ~~declines.~~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 Structures segment ~~increased~~decreased approximately 30110 basis points in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, primarily due to ~~higher volumes in the narrow body commercial aerospace market, partially offset by~~ lower volumes in the defense aerospace market, material and ~~Boeing 787 production declines as well as continued~~ inflationary cost ~~pressures.~~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
Third quarter ended Nine months ended
September 30, September 30,
2022 2021 2022 2021
Third-party sales $ 266 $ 231 $ 792 $ 687
Segment Adjusted EBITDA 64 72 206 222
Segment Adjusted EBITDA Margin 24.1 % 31.2 % 26.0 % 32.3 %


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


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

Third-party sales for the Forged Wheels segment increased ~~$35,~~$19, or ~~15%~~7%, in the ~~third~~second quarter of 2023 compared to the second quarter of 2022, ~~compared to the third quarter of 2021,~~ primarily due to ~~an increase~~higher volumes in ~~aluminum material and other inflationary cost pass through and a 2% increase in volumes, partially offset by unfavorable foreign currency movements.~~the commercial transportation market.

Third-party sales for the Forged Wheels segment increased ~~$105,~~$61, or ~~15%~~12%, in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, primarily due to ~~an increase in aluminum material and other inflationary cost pass through and~~ higher volumes ~~partially offset by unfavorable foreign currency movements.~~in the commercial transportation market.

Segment Adjusted EBITDA for the Forged Wheels segment ~~decreased $8,~~increased $6, or ~~11%~~8%, in the ~~third~~second quarter of 2023 compared to the second quarter of 2022, ~~compared to the third quarter of 2021,~~ primarily due to ~~unfavorable foreign currency movements,~~higher volumes in the commercial transportation market, partially offset by ~~higher volumes.~~a supply chain disruption.

Segment Adjusted EBITDA for the Forged Wheels segment ~~decreased $16,~~increased $18, or 7%13%, in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the ~~nine~~six months ended ~~September~~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, partially offset by higher volumes.~~movements.

Segment Adjusted EBITDA Margin for the Forged Wheels segment ~~decreased~~increased approximately ~~710~~30 basis points in the ~~third~~second quarter of 2023 compared to the second quarter of 2022, ~~compared to the third quarter of 2021,~~ primarily due to ~~aluminum material and European energy cost pass through as well as unfavorable foreign currency movements,~~higher volumes, partially offset by ~~higher volumes.~~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 ~~decreased~~increased approximately ~~630~~30 basis points in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, primarily due to ~~aluminum material~~higher volumes, partially offset by a supply chain disruption and ~~European energy cost pass through as well as~~ unfavorable foreign currency ~~movements,~~movements. The favorable impact of lower aluminum prices was partially offset by ~~higher volumes.~~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 aluminum material and other inflationary costs are 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 non-wheel component supply chain constraints at our customers.remain relatively flat.

Reconciliation of Total Segment Adjusted EBITDA to Income before income taxes
Third quarter ended Nine months ended
September 30, September 30,
2022 2021 2022 2021
Income before income taxes $ 104 $ 23 $ 458 $ 246
Loss on debt redemption — 118 2 141
Interest expense, net 57 63 172 201
Other expense, net(1)
67 1 67 13
Operating income $ 228 $ 205 $ 699 $ 601
Segment provision for depreciation and amortization 64 65 193 195
Unallocated amounts:
Restructuring and other charges 4 8 12 22
Corporate expense 46 30 93 68
Total Segment Adjusted EBITDA $ 342 $ 308 $ 997 $ 886

~~(1)See the Contingencies section of~~ ~~Note Q~~ ~~to the Consolidated Financial Statements in~~ ~~Part I, Item 1~~ ~~of this Form 10-Q.~~


	Second quarter ended				Six months ended
	June 30,				June 30,
	2023		2022		2023		2022
Income before income taxes	$	243	$	183	$	463	$	354
Loss on debt redemption	—		2		1		2
Interest expense, net	55		57		112		115
Other income, net	(13)		(1)		(6)		—
Operating income	$	285	$	241	$	570	$	471
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
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 ~~expense,~~income, net discussions above, under ~~Results~~“Results of ~~Operations~~Operations” for reference.

Corporate expense increased ~~$16,~~$9, or ~~53%~~36%, in the ~~third~~second quarter of ~~2022~~2023 compared to the ~~third~~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, the Barberton Plant Fire, and the Barberton Cast House Incident of ~~$24, partially offset by 2021 costs of $9 associated with closures, shutdowns, and other items which did not recur in 2022.~~

$6.

Corporate expense increased ~~$25,~~$16, or ~~37%~~34%, in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, primarily due to higher costs associated with facilities closures, a supply chain disruption, and other items of $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 the Barberton Cast House Incident of $24, higher legal and other advisory reimbursements received in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2022 of $1, and higher employment and legacy costs, partially offset by 2021 costs of $8 associated with closures, shutdowns, and other items which did not recur in 2022.$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.

3031

Liquidity and Capital Resources

Operating Activities

Cash provided from operations was ~~$278~~$252 in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$146~~$213 in the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The increase of ~~$132,~~$39, or ~~90%~~18%, was primarily due to higher operating results of ~~$79, a decrease in~~$48 and lower payments on noncurrent liabilities of $14, partially offset by higher working capital of ~~$35, and lower pension contributions of $34.~~$33. The components of the change in working capital primarily included ~~accrued expenses of $139, favorable~~unfavorable changes ~~in receivables of $136, including employee retention credit receivables, a change~~ in accounts payable of ~~$67, and taxes, including income taxes, of $14, partially offset by inventories of $320~~$198 and prepaid expenses and other current assets of ~~$1.~~$10, partially offset by inventories of $92, taxes, including income taxes, of $30, receivables of $28, and accrued expenses of $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 ~~$437~~$403 in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$1,174~~$331 in the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The ~~decrease~~increase of ~~$737,~~$72, or ~~63%~~22%, was primarily due to ~~less~~ payments made in connection with the ~~redemption~~reduction of long-term debt of ~~$1,431~~$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 ~~reduction in~~significant amount of equity awards that vested and the ~~premiums paid~~impact of the Company’s stock price on the ~~early redemption of debt of $131, and a reduction in debt issuance costs of $11, partially offset by debt issuances in the third quarter of 2021 of $700 (See~~ ~~Note N~~ ~~to the Consolidated Financial Statements in~~ ~~Part I, Item 1~~ ~~of this Form 10-Q for reference), incremental common stock repurchases of $110,~~vesting date, and increased dividends paid to common stock shareholders of ~~$16. 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 ~~$106~~$105 in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~cash provided from investing activities of $144~~$65 in the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The ~~change~~increase of $250 was primarily due to cash receipts from sold receivables of $267 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 $10. 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$40, or 62%, 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~~net 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 ~~third~~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 ~~September~~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)
July 1 - July 31, 2022 931,118 $32.22 931,118 $1,082
August 1 - August 31, 2022 1,833,728 $38.17 1,833,728 $1,012
September 1 - September 30, 2022 — $— — $1,012
Total for quarter ended September 30, 2022 2,764,846 $36.17 2,764,846



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 ~~September~~June 30, ~~2022,~~2023, approximately ~~$1,012~~$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.

3334

Item 6. Exhibits.


10.1			Second Amended and Restated Five-Year Revolving Credit Agreement, 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 ~~September~~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.

~~October 31, 2022~~August 1, 2023			/s/ Ken Giacobbe
Date			Ken Giacobbe
			Executive Vice President and
			Chief Financial Officer
			(Principal Financial Officer)

~~October 31, 2022~~August 1, 2023			/s/ Barbara L. Shultz
Date			Barbara L. Shultz
			Vice President and Controller
			(Principal Accounting Officer)

3435


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


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


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


		September 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	$	453	$	720	Cash and cash equivalents	$	535	$	791
Receivables from customers, less allowances of $— in both 2022 and 2021 (J)		550		367
Other receivables (J)		50		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)	1,612		1,402		Inventories (K)	1,715		1,609
Prepaid expenses and other current assets	Prepaid expenses and other current assets	181		195		Prepaid expenses and other current assets	207		206

Total current assets	Total current assets	2,846		2,737		Total current assets	3,128		3,143
Properties, plants, and equipment, net (L)	Properties, plants, and equipment, net (L)	2,288		2,467		Properties, plants, and equipment, net (L)	2,319		2,332
Goodwill	Goodwill	3,965		4,067		Goodwill	4,026		4,013
Deferred income taxes	Deferred income taxes	106		184		Deferred income taxes	52		54
Intangibles, net	Intangibles, net	523		549		Intangibles, net	513		521
Other noncurrent assets (M)	Other noncurrent assets (M)	201		215		Other noncurrent assets (M)	195		192

Total assets	Total assets	$	9,929	$	10,219	Total assets	$	10,233	$	10,255
Liabilities	Liabilities					Liabilities
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable, trade		$	812	$	732
Accounts payable, trade (B)						Accounts payable, trade (B)	$	881	$	962
Accrued compensation and retirement costs	Accrued compensation and retirement costs	204		198		Accrued compensation and retirement costs	209		195
Taxes, including income taxes		56		61
Taxes, including income taxes (G)						Taxes, including income taxes (G)	78		48
Accrued interest payable	Accrued interest payable	68		74		Accrued interest payable	73		75
Other current liabilities (M)(Q)		240		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	1,381		1,253		Total current liabilities	1,410		1,482
Long-term debt, less amount due within one year (N)(O)		4,170		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)	689		771		Accrued pension benefits (E)	626		633
Accrued other postretirement benefits (E)	Accrued other postretirement benefits (E)	147		153		Accrued other postretirement benefits (E)	106		109
Other noncurrent liabilities and deferred credits (M)	Other noncurrent liabilities and deferred credits (M)	269		307		Other noncurrent liabilities and deferred credits (M)	327		268

Total liabilities	Total liabilities	6,656		6,711		Total liabilities	6,458		6,654
Contingencies and commitments (Q)
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	414		422		Common stock	412		412
Additional capital	Additional capital	3,998		4,291		Additional capital	3,782		3,947
Retained earnings	Retained earnings	917		603		Retained earnings	1,334		1,028
Accumulated other comprehensive loss (I)	Accumulated other comprehensive loss (I)	(2,111)		(1,863)		Accumulated other comprehensive loss (I)	(1,808)		(1,841)

Total equity	Total equity	3,273		3,508		Total equity	3,775		3,601
Total liabilities and equity	Total liabilities and equity	$	9,929	$	10,219	Total liabilities and equity	$	10,233	$	10,255


		Nine months ended					Six months ended
		September 30,					June 30,
		2022		2021			2023		2022
Operating activities	Operating activities					Operating activities
Net income	Net income	$	358	$	181	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	198		203		Depreciation and amortization	136		133
Deferred income taxes	Deferred income taxes	58		24		Deferred income taxes	57		52
Restructuring and other charges	Restructuring and other charges	12		22		Restructuring and other charges	4		8
Net realized and unrealized losses	Net realized and unrealized losses	12		7		Net realized and unrealized losses	11		7
Net periodic pension cost (E)	Net periodic pension cost (E)	17		13		Net periodic pension cost (E)	19		11
Stock-based compensation	Stock-based compensation	43		28		Stock-based compensation	26		29
Loss on debt redemption (N)	Loss on debt redemption (N)	2		141		Loss on debt redemption (N)	1		2
Other	Other	26		28		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)	(246)		(382)		Increase in receivables (J)	(141)		(169)
(Increase) decrease in inventories		(271)		49
Decrease in prepaid expenses and other current assets		5		6
Increase in accounts payable, trade		130		63
Increase (decrease) in accrued expenses		18		(121)
Decrease in taxes, including income taxes		(1)		(15)
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	(15)		(40)
Increase in taxes, including income taxes						Increase in taxes, including income taxes	31		1
Pension contributions	Pension contributions	(34)		(68)		Pension contributions	(12)		(20)
Increase in noncurrent assets		(5)		(1)
Decrease (increase) in noncurrent assets						Decrease (increase) in noncurrent assets	1		(1)
Decrease in noncurrent liabilities	Decrease in noncurrent liabilities	(44)		(32)		Decrease in noncurrent liabilities	(19)		(33)
Cash provided from operations	Cash provided from operations	278		146		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)		—
Additions to debt (original maturities greater than three months) (N)		—		700
Payments on debt (original maturities greater than three months) (N)		(60)		(1,491)
Debt issuance costs (N)		—		(11)
Net change in short-term borrowings						Net change in short-term borrowings	—		(4)

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)		(133)		Premiums paid on early redemption of debt (N)	(1)		(2)
Repurchase of common stock	Repurchase of common stock	(335)		(225)		Repurchase of common stock	(125)		(235)
Proceeds from exercise of employee stock options	Proceeds from exercise of employee stock options	14		17		Proceeds from exercise of employee stock options	9		10
Dividends paid to shareholders	Dividends paid to shareholders	(27)		(11)		Dividends paid to shareholders	(35)		(18)

Other		(23)		(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	(437)		(1,174)		Cash used for financing activities	(403)		(331)
Investing Activities	Investing Activities					Investing Activities
Capital expenditures (C)	Capital expenditures (C)	(148)		(138)		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)		—		267
Proceeds from the sale of assets and businesses (L)						Proceeds from the sale of assets and businesses (L)	—		42

Other	Other	—		2		Other	—		(1)
Cash (used for) provided from investing activities		(106)		144
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	(3)		(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	(268)		(885)		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	$	454	$	726	Cash, cash equivalents and restricted cash at end of period	$	536	$	538


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


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


		Page
Part I
Item 1.	Financial Statements and Supplementary Data	3
	Statement of Consolidated Operations for the ~~Third~~Second Quarter and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022	3
	Statement of Consolidated Comprehensive Income for the ~~Third~~Second Quarter and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022	4
	Consolidated Balance Sheet as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022	5
	Statement of Consolidated Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022	6
	Statement of Changes in Consolidated Equity for the ~~Third~~Second Quarter Ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022	7
	Statement of Changes in Consolidated Equity for the ~~Nine~~Six Months Ended ~~September~~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	3234
Item 4.	Controls and Procedures	3234
Part II
Item 1.	Legal Proceedings	3334
Item 1A.	Risk Factors	3334
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3334
Item 6.	Exhibits	3435
	Signatures	3435


		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 June 30, 2021		$	55	$	429	$	4,481	$	517	$	(1,884)	$	3,598
Balance at March 31, 2022														Balance at March 31, 2022	$	55	$	418	$	4,123	$	725	$	(1,864)	$	3,457

Net income	Net income	—		—		—		27		—		27		Net income	—		—		—		147		—		147
Other comprehensive loss (I)	Other comprehensive loss (I)	—		—		—		—		(27)		(27)		Other comprehensive loss (I)	—		—		—		—		(128)		(128)
Cash dividends declared:	Cash dividends declared:													Cash dividends declared:
Preferred-Class A @ $0.9375 per share		—		—		—		(1)		—		(1)

Common @ $0.02 per share	Common @ $0.02 per share	—		—		—		(9)		—		(9)		Common @ $0.02 per share	—		—		—		(9)		—		(9)
Repurchase and retirement of common stock		—		(1)		(24)		—		—		(25)
Repurchase and retirement of common stock (H)														Repurchase and retirement of common stock (H)	—		(2)		(58)		—		—		(60)
Stock-based compensation	Stock-based compensation	—		—		14		—		—		14		Stock-based compensation	—		—		18		—		—		18
Common stock issued: compensation plans	Common stock issued: compensation plans	—		—		2		—		—		2		Common stock issued: compensation plans	—		—		(4)		—		—		(4)

Balance at September 30, 2021		$	55	$	428	$	4,473	$	534	$	(1,911)	$	3,579
Balance at June 30, 2022														Balance at June 30, 2022	$	55	$	416	$	4,079	$	863	$	(1,992)	$	3,421


		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	(9)		(5)		(14)		Cash payments	(1)		(2)		(3)
Restructuring charges	Restructuring charges	6		6		12		Restructuring charges	2		2		4
Other(1)	Other(1)	(7)		(1)		(8)		Other(1)	(3)		(1)		(4)
Reserve balances at September 30, 2022		$	7	$	2	$	9
Reserve balances at June 30, 2023								Reserve balances at June 30, 2023	$	4	$	1	$	5


	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


			~~No greater than~~






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


	September 30, 2022				December 31, 2021
	Carrying value		Fair value		Carrying value		Fair value
Long-term debt, less amount due within one year	$	4,170	$	3,905	$	4,227	$	4,707


	(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)
July 1 - July 31, 2022	931,118	$32.22	931,118	$1,082
August 1 - August 31, 2022	1,833,728	$38.17	1,833,728	$1,012
September 1 - September 30, 2022	—	$—	—	$1,012
Total for quarter ended September 30, 2022	2,764,846	$36.17	2,764,846


		September 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Land and land rights~~(1)~~	Land and land rights~~(1)~~	$	84	$	91	Land and land rights~~(1)~~	$	85	$	84
Structures~~(1)~~	Structures~~(1)~~	960		1,034		Structures~~(1)~~	1,001		986
Machinery and equipment	Machinery and equipment	3,851		3,932		Machinery and equipment	4,005		3,941
		4,895		5,057			5,091		5,011
Less: accumulated depreciation and amortization~~(1)~~	Less: accumulated depreciation and amortization~~(1)~~	2,765		2,772		Less: accumulated depreciation and amortization~~(1)~~	2,962		2,858
		2,130		2,285			2,129		2,153
Construction work-in-progress	Construction work-in-progress	158		182		Construction work-in-progress	190		179
Properties, plants, and equipment, net	Properties, plants, and equipment, net	$	2,288	$	2,467	Properties, plants, and equipment, net	$	2,319	$	2,332