Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2021 | May 03, 2021 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 1-3610 | |
Entity Registrant Name | HOWMET AEROSPACE INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 25-0317820 | |
Entity Address, Address Line One | 201 Isabella Street, Suite 200 | |
Entity Address, City or Town | Pittsburgh | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 15212-5872 | |
City Area Code | 412 | |
Local Phone Number | 553-1940 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 434,325,032 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0000004281 | |
Current Fiscal Year End Date | --12-31 | |
Common stock | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Common Stock, par value $1.00 per share | |
Trading Symbol | HWM | |
Security Exchange Name | NYSE | |
Preferred stock | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | $3.75 Cumulative Preferred Stock, par value $100.00 per share | |
Trading Symbol | HWM PR | |
Security Exchange Name | NYSEAMER |
Statement of Consolidated Opera
Statement of Consolidated Operations (unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||
Sales | $ 1,209 | $ 1,634 |
Cost of goods sold (exclusive of expenses below) | 873 | 1,183 |
Selling, general administrative, and other expenses | 65 | 79 |
Research and development expenses | 5 | 4 |
Provision for depreciation and amortization | 68 | 71 |
Restructuring and other charges | 9 | 39 |
Operating income | 189 | 258 |
Interest expense, net | 72 | 84 |
Other expense (income), net | 4 | (24) |
Income before income taxes | 113 | 198 |
Provision for income taxes | 33 | 45 |
Income from continuing operations after income taxes | 80 | 153 |
Income from discontinued operations after income taxes | 0 | 62 |
Net income | 80 | 215 |
Amounts Attributable to Howmet Aerospace Common Shareholders | ||
Net income | $ 79 | $ 214 |
Earnings per share - basic | ||
Continuing operations (in usd per share) | $ 0.18 | $ 0.35 |
Discontinued operations (in usd per share) | 0 | 0.14 |
Earnings per share - diluted | ||
Continuing operations (in usd per share) | 0.18 | 0.35 |
Discontinued operations (in usd per share) | $ 0 | $ 0.14 |
Average Shares Outstanding | ||
Average shares outstanding - basic (in shares) | 434 | 435 |
Average shares outstanding - diluted (in shares) | 439 | 440 |
Statement of Consolidated Compr
Statement of Consolidated Comprehensive Income (unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 80 | $ 215 |
Other comprehensive income (loss), net of tax | ||
Change in unrecognized net actuarial loss and prior service cost related to pension and other postretirement benefits | 42 | 37 |
Foreign currency translation adjustments | (44) | (65) |
Net change in unrealized gains on debt securities | 0 | 1 |
Net change in unrecognized gains (losses) on cash flow hedges | 4 | (13) |
Total Other comprehensive income (loss), net of tax | 2 | (40) |
Comprehensive income | $ 82 | $ 175 |
Consolidated Balance Sheet (una
Consolidated Balance Sheet (unaudited) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 1,238 | $ 1,610 |
Receivables from customers, less allowances of $1 in 2021 and $1 in 2020 | 339 | 328 |
Other receivables | 96 | 29 |
Inventories | 1,453 | 1,488 |
Prepaid expenses and other current assets | 202 | 217 |
Total current assets | 3,328 | 3,672 |
Properties, plants, and equipment, net | 2,524 | 2,592 |
Goodwill | 4,086 | 4,102 |
Deferred income taxes | 227 | 272 |
Intangibles, net | 563 | 571 |
Other noncurrent assets | 243 | 234 |
Total assets | 10,971 | 11,443 |
Current liabilities: | ||
Accounts payable, trade | 596 | 599 |
Accrued compensation and retirement costs | 171 | 205 |
Taxes, including income taxes | 93 | 102 |
Accrued interest payable | 88 | 89 |
Other current liabilities | 243 | 289 |
Short-term debt | 489 | 376 |
Total current liabilities | 1,680 | 1,660 |
Long-term debt, less amount due within one year | 4,224 | 4,699 |
Accrued pension benefits | 941 | 985 |
Accrued other postretirement benefits | 159 | 198 |
Other noncurrent liabilities and deferred credits | 305 | 324 |
Total liabilities | 7,309 | 7,866 |
Contingencies and commitments | ||
Howmet Aerospace shareholders’ equity: | ||
Preferred stock | 55 | 55 |
Common stock | 434 | 433 |
Additional capital | 4,671 | 4,668 |
Retained earnings | 443 | 364 |
Accumulated other comprehensive loss | (1,941) | (1,943) |
Total Howmet Aerospace shareholders’ equity | 3,662 | 3,577 |
Total liabilities and equity | $ 10,971 | $ 11,443 |
Consolidated Balance Sheet (u_2
Consolidated Balance Sheet (unaudited) (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 1 | $ 1 |
Statement of Consolidated Cash
Statement of Consolidated Cash Flows (unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Operating activities | ||
Net income | $ 80 | $ 215 |
Adjustments to reconcile net income to cash used for operations: | ||
Depreciation and amortization | 68 | 129 |
Deferred income taxes | 10 | 19 |
Restructuring and other charges | 9 | 21 |
Net loss from investing activities—asset sales | 3 | 2 |
Net periodic pension benefit cost | 4 | 26 |
Stock-based compensation | 6 | 13 |
Other | 14 | 25 |
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments: | ||
Increase in receivables | (144) | (210) |
Decrease (increase) in inventories | 20 | (136) |
Decrease (increase) in prepaid expenses and other current assets | 23 | (2) |
Increase (decrease) in accounts payable, trade | 26 | (132) |
Decrease in accrued expenses | (92) | (173) |
Increase in taxes, including income taxes | 12 | 90 |
Pension contributions | (29) | (56) |
Increase in noncurrent assets | (2) | 0 |
Decrease in noncurrent liabilities | (14) | (39) |
Cash used for operations | (6) | (208) |
Financing Activities | ||
Net change in short-term borrowings (original maturities of three months or less) | (2) | 2 |
Additions to debt (original maturities greater than three months) | 0 | 1,200 |
Payments on debt (original maturities greater than three months) | (361) | 0 |
Debt issuance costs | (1) | (45) |
Proceeds from exercise of employee stock options | 8 | 30 |
Dividends paid to shareholders | 0 | (9) |
Other | (12) | (33) |
Cash (used for) provided from financing activities | (368) | 1,145 |
Investing Activities | ||
Capital expenditures | (55) | (152) |
Proceeds from the sale of assets and businesses | 0 | 114 |
Cash receipts from sold receivables | 57 | 48 |
Other | 1 | 1 |
Cash provided from investing activities | 3 | 11 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (1) | (8) |
Net change in cash, cash equivalents and restricted cash | (372) | 940 |
Cash, cash equivalents and restricted cash at beginning of period | 1,611 | 1,703 |
Cash, cash equivalents and restricted cash at end of period | $ 1,239 | $ 2,643 |
Statement of Changes in Consoli
Statement of Changes in Consolidated Equity (unaudited) - USD ($) $ in Millions | Total | Preferred Class A | Preferred stock | Common stock | Additional capital | Retained earnings | Retained earningsPreferred Class A | Accumulated other comprehensive loss | Noncontrolling Interests |
Beginning balance at Dec. 31, 2019 | $ 4,605 | $ 55 | $ 433 | $ 7,319 | $ 113 | $ (3,329) | $ 14 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income | 215 | 215 | |||||||
Net income | 215 | ||||||||
Other comprehensive income (loss) | (40) | (40) | |||||||
Cash dividends declared: | |||||||||
Preferred dividends declared, value | $ (1) | $ (1) | |||||||
Common share, value | (8) | (8) | |||||||
Stock-based compensation | 13 | 13 | |||||||
Common stock issued: compensation plans | (3) | 3 | (6) | ||||||
Ending balance at Mar. 31, 2020 | 4,781 | 55 | 436 | 7,326 | 319 | (3,369) | $ 14 | ||
Beginning balance at Dec. 31, 2020 | 3,577 | 55 | 433 | 4,668 | 364 | (1,943) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income | 80 | 80 | |||||||
Other comprehensive income (loss) | 2 | 2 | |||||||
Cash dividends declared: | |||||||||
Preferred dividends declared, value | $ (1) | $ (1) | |||||||
Stock-based compensation | 6 | 6 | |||||||
Common stock issued: compensation plans | (2) | 1 | (3) | ||||||
Ending balance at Mar. 31, 2021 | $ 3,662 | $ 55 | $ 434 | $ 4,671 | $ 443 | $ (1,941) |
Statement of Changes in Conso_2
Statement of Changes in Consolidated Equity (unaudited) (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Common stock, dividends per share (in usd per share) | $ 0.02 | |
Preferred Class A | ||
Preferred, dividends per share (in usd per share) | $ 0.9375 | $ 0.9375 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The interim Consolidated Financial Statements of Howmet Aerospace Inc. (formerly known as Arconic Inc.) and subsidiaries (“Howmet” or the “Company”) are unaudited. These Consolidated Financial Statements include all adjustments, consisting only of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position, and cash flows. The results reported in these Consolidated Financial Statements are not necessarily indicative of the results that may be expected for the entire year. The 2020 year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). This Form 10-Q report should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2020, which includes all disclosures required by GAAP. Certain amounts in previously issued financial statements were reclassified to conform to the current period presentation. The separation of Arconic Inc. into two standalone, publicly-traded companies, Howmet Aerospace Inc. and Arconic Corporation, (the “Arconic Inc. Separation Transaction”) occurred on April 1, 2020. The financial results of Arconic Corporation for all periods prior to the Arconic Inc. Separation Transaction have been retrospectively reflected in the Statement of Consolidated Operations as discontinued operations and, as such, have been excluded from continuing operations and segment results for all periods presented. The cash flows, comprehensive income, and equity related to Arconic Corporation have not been segregated and are included in the Statement of Consolidated Cash Flows, Statement of Consolidated Comprehensive Income and Statement of Changes in Consolidated Equity, respectively, for all periods prior to the Arconic Inc. Separation Transaction. See Note B for additional information related to the Arconic Inc. Separation Transaction and discontinued operations. In the first quarter of 2021 and 2020, the Company derived approximately 60% and 73%, respectively, of its revenue from products sold to the aerospace end-market. As a result of the global coronavirus (“COVID-19”) pandemic and its impact on the aerospace industry to-date, the possibility exists that there could be a sustained impact to our operations and financial results. Since the start of the pandemic, certain original equipment manufacturer (“OEM”) customers have reduced production or suspended manufacturing operations in North America and Europe on a temporary basis. While the pandemic has resulted in the temporary closure of a small number of the Company's manufacturing facilities during 2020, all of our manufacturing facilities are currently operating. Since the duration of the pandemic is uncertain, management has taken a series of actions to address the financial impact, including announcing certain headcount reductions and reducing the level of capital expenditures to preserve cash and maintain liquidity. The preparation of the Consolidated Financial Statements of the Company in conformity with GAAP requires management to make certain judgments, estimates, and assumptions. These estimates are based on historical experience and, in some cases, assumptions based on current and future market experience, including considerations relating to the impact of COVID-19. The impact of COVID-19 is rapidly changing and of unknown duration and macroeconomic impact and as a result, these considerations remain highly uncertain. Management has made its best estimates using all relevant information available at the time, but it is possible that our estimates will differ from our actual results and affect the Consolidated Financial Statements in future periods and potentially require adverse adjustments to the recoverability of goodwill, intangible and long-lived assets, the realizability of deferred tax assets and other judgments and estimations and assumptions that may be impacted by COVID-19. As previously disclosed, during the third quarter of 2020, the Company identified a misclassification in the presentation of changes in accounts payable and capital expenditures in its previously issued Statement of Consolidated Cash Flows for the first quarter ended March 31, 2020 and six months ended June 30, 2020. Although management has determined that such misclassification did not materially misstate the Statement of Consolidated Cash Flows for the first quarter ended March 31, 2020 or six months ended June 30, 2020, the Company revised the first quarter, resulting in an $83 increase to previously reported capital expenditures and decrease to cash provided from investing activities with a corresponding reduction (decrease) in accounts payable, trade and increase in cash provided by operations. Also as previously disclosed, in the third quarter of 2020, a $16 deferred tax error was identified related to periods prior to 2018. Although management determined it was not material to any periods, the Company has revised its Statement of Changes in Consolidated Equity for the three months ended March 31, 2020 and will revise the three and six months ended June 30, 2020 to present the correction as a reduction to Retained earnings as of December 31, 2019. |
Arconic Inc. Separation Transac
Arconic Inc. Separation Transaction and Discontinued Operations | 3 Months Ended |
Mar. 31, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Arconic Inc. Separation Transaction and Discontinued Operations | Arconic Inc. Separation Transaction and Discontinued OperationsOn April 1, 2020, the Company completed the separation of its business into two independent, publicly-traded companies. Following the Arconic Inc. Separation Transaction, Arconic Corporation held the Global Rolled Products (“GRP”) businesses (global rolled products, aluminum extrusions, and building and construction systems) previously held by the Company. The Company retained the Engineered Products and Forgings businesses (engine products, fastening systems, engineered structures, and forged wheels). The Company's Board of Directors approved the completion of the separation on February 5, 2020, which was effected by the distribution (the “Distribution”) by the Company of all of the outstanding common stock of Arconic Corporation on April 1, 2020 to the Company’s stockholders who held shares as of the close of business on March 19, 2020 (the “Record Date”). In the Distribution, each Company stockholder of record as of the Record Date received one share of Arconic Corporation common stock for every four shares of the Company’s common stock held as of the Record Date. The Company did not issue fractional shares of Arconic Corporation common stock in the Distribution. Instead, each stockholder otherwise entitled to a fractional share of Arconic Corporation common stock received cash in lieu of fractional shares. In connection with the Arconic Inc. Separation Transaction , the Company entered into several agreements with Arconic Corporation that govern the relationship between the Company and Arconic Corporation following the Distribution, including the following: a Separation and Distribution Agreement, Tax Matters Agreement, Employee Matters Agreement, certain Patent, Know-How, Trade Secret License and Trademark License Agreements, and Raw Material Supply Agreements. On February 7, 2020, Arconic Corporation completed an offering of $600 aggregate principal amount of 6.125% senior secured second-lien notes due 2028. On March 25, 2020, Arconic Corporation entered into a credit agreement which provided for a $600 aggregate principal amount seven-year senior secured first-lien loan B facility and a revolving credit facility which is guaranteed by certain of Arconic Corporation's wholly-owned domestic subsidiaries and secured on a first-priority basis by liens on substantially all assets of Arconic Corporation and subsidiary guarantors. Arconic Corporation used the proceeds to make payment to the Company to fund the transfer of certain assets to Arconic Corporation relating to the Arconic Inc. Separation Transaction and for general corporate purposes. The Company incurred debt issuance costs of $45 associated with these issuances for the first quarter of 2020. On February 1, 2020, the Company completed the sale of its rolling mill in Itapissuma, Brazil for $50 in cash which resulted in a loss of $59, of which $53 was recognized in Restructuring and other charges within discontinued operations in the second half of 2019 and $6 in the first quarter of 2020. On March 1, 2020, Arconic Corporation sold its hard alloy extrusions plant in South Korea for $62 in cash, which resulted in a $27 gain that was recognized in Restructuring and other charges within discontinued operations in the first quarter of 2020. Discontinued Operations The results of operations of Arconic Corporation are presented as discontinued operations in the Statement of Consolidated Operations as summarized below: First quarter ended March 31, 2020 Sales $ 1,575 Cost of goods sold 1,293 Selling, general administrative, research and development and other expenses 101 Provision for depreciation and amortization 58 Restructuring and other charges (18) Operating income from discontinued operations 141 Interest expense 7 Other expense, net 41 Income from discontinued operations 93 Provision for income taxes 31 Income from discontinued operations after income taxes $ 62 The following table presents purchases of properties, plants, and equipment, proceeds from the sale of businesses and the provision for depreciation and amortization of discontinued operations related to Arconic Corporation: First quarter ended March 31, 2020 Capital expenditures $ 72 Proceeds from the sales of businesses $ 112 Provision for depreciation and amortization $ 58 The cash flows and equity related to Arconic Corporation have not been segregated and are included in the Statement of Consolidated Cash Flows or Statement of Comprehensive Income for all periods presented prior to the Arconic Inc. Separation Transaction. |
Recently Adopted and Recently I
Recently Adopted and Recently Issued Accounting Guidance | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Recently Adopted and Recently Issued Accounting Guidance | Recently Adopted and Recently Issued Accounting Guidance Adopted On January 1, 2021, the Company adopted changes issued by the Financial Accounting Standards Board (“FASB”) that were intended to simplify various aspects of accounting for income taxes by eliminating certain exceptions contained in existing guidance and amending other guidance to simplify several other income tax accounting matters. The adoption of this new guidance did not have a material impact on the Consolidated Financial Statements. Issued In March 2020, the FASB issued amendments that provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. Management is currently evaluating the potential impact of these changes on the Consolidated Financial Statements. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Howmet is a global leader in lightweight metals engineering and manufacturing. Howmet’s innovative, multi-material products, which include nickel, titanium, aluminum, and cobalt, are used worldwide in the aerospace (commercial and defense), commercial transportation, and industrial and other end markets. Segment performance under Howmet’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance is Segment operating profit. Howmet’s definition of Segment operating profit is Operating income excluding Special items. Special items include Restructuring and Other charges. Segment operating profit may not be comparable to similarly titled measures of other companies. Differences between segment totals and consolidated Howmet are in Corporate. Howmet’s operations consist of four worldwide reportable segments as follows: Engine Products Engine Products produces investment castings, including airfoils, and seamless rolled rings primarily for aircraft engines and industrial gas turbines. Engine Products produces rotating parts as well as structural parts. Fastening Systems Fastening Systems produces aerospace fastening systems, as well as commercial transportation, industrial and other fasteners. The business’s high-tech, multi-material fastening systems are found nose to tail on aircraft and aero engines. The business’s products are also critical components of commercial transportation vehicles, automobiles, construction and industrial equipment and renewable energy sector. Engineered Structures Engineered Structures produces titanium ingots and mill products for aerospace and defense applications and is vertically integrated to produce titanium forgings, extrusions forming and machining services for airframe, wing, aero-engine, and landing gear components. Engineered Structures also produces aluminum forgings, nickel forgings, and aluminum machined components and assemblies for aerospace and defense applications. Forged Wheels Forged Wheels provides forged aluminum wheels and related products for heavy-duty trucks and the commercial transportation markets. Goodwill The Company had $4,086 of Goodwill at March 31, 2021 and reviews it annually for impairment in the fourth quarter, or more frequently, if indicators exist or if a decision is made to sell or realign a business. On January 1, 2020, management transferred the Savannah business from the Engine Products segment to the Engineered Structures segment, based on synergies with forgings technologies and manufacturing capabilities. As a result of the reorganization, goodwill of $17 was reallocated from Engine Products to Engineered Structures, and these reporting units were evaluated for impairment during the first quarter of 2020. The estimated fair value of each of these reporting units substantially exceeded their carrying value; thus, there was no goodwill impairment at the date the business was transferred. During the first quarter of 2020, Howmet's market capitalization declined significantly compared to the fourth quarter of 2019. Over the same period, the equity value of our peer group companies, and the overall U.S. stock market also declined significantly amid market volatility. In addition, as a result of the COVID-19 pandemic and measures designed to contain the spread, global sales to customers in the aerospace and commercial transportation industries impacted by COVID-19 have been and are expected to be negatively impacted as a result of disruption in demand. As a result of these macroeconomic factors, we performed a qualitative impairment test to evaluate whether it is more likely than not that the fair value of any of our reporting units is less than its carrying value. As a result of this assessment, the Company performed a quantitative impairment test in the first quarter of 2020 for the Engineered Structures reporting unit and concluded that though the margin between the fair value of the reporting unit and carrying value had declined from approximately 60% to approximately 15%, it was not impaired. Consistent with prior practice, a discounted cash flow model was used to estimate the current fair value of the reporting unit. The significant assumptions and estimates utilized to determine fair value were developed utilizing current market and forecast information reflecting the disruption in demand that has and is expected to negatively impact the Company’s sales globally in the aerospace industry. If our actual results or external market factors decline significantly from management’s estimates, future goodwill impairment charges may be necessary and could be material. Since the first quarter of 2020, there have been no indicators of impairment identified for the Engineered Structures reporting unit or any other reporting units or indefinite-lived intangible assets. The operating results of the Company’s reportable segments were as follows. Differences between total segment and consolidated totals are in Corporate. Engine Products Fastening Systems Engineered Structures Forged Wheels Total First quarter ended March 31, 2021 Sales: Third-party sales $ 534 $ 272 $ 176 $ 227 $ 1,209 Inter-segment sales 1 — 1 — 2 Total sales $ 535 $ 272 $ 177 $ 227 $ 1,211 Profit and loss: Segment operating profit $ 101 $ 45 $ 10 $ 70 $ 226 Restructuring and other charges 5 2 1 — 8 Provision for depreciation and amortization 31 12 12 10 65 Capital expenditures 11 5 5 9 30 First quarter ended March 31, 2020 Sales: Third-party sales $ 781 $ 385 $ 275 $ 191 $ 1,632 Inter-segment sales 2 — 3 — 5 Total sales $ 783 $ 385 $ 278 $ 191 $ 1,637 Profit and loss: Segment operating profit $ 165 $ 96 $ 28 $ 50 $ 339 Restructuring and other charges 13 2 17 2 34 Provision for depreciation and amortization 30 12 13 10 65 Capital expenditures 19 8 3 7 37 The following table reconciles Total segment operating profit to Income from continuing operations before income taxes: First quarter ended March 31, 2021 2020 Total segment operating profit $ 226 $ 339 Unallocated amounts: Restructuring and other charges (9) (39) Corporate expense (28) (42) Consolidated operating income $ 189 $ 258 Interest expense (72) (84) Other (expense) income, net (4) 24 Income from continuing operations before income taxes $ 113 $ 198 The following table reconciles Total segment capital expenditures, which are presented on an accrual basis, with Capital expenditures as presented on the statement of cash flows. Differences between segment and consolidated totals are in Corporate and discontinued operations, including the impact of changes in accrued capital expenditures during the period. First quarter ended March 31, 2021 2020 Total segment capital expenditures $ 30 $ 37 Corporate and discontinued operations 25 115 Capital expenditures $ 55 $ 152 The following table disaggregates segment revenue by major end market served. Differences between total segment and consolidated totals are in Corporate. Engine Products Fastening Systems Engineered Structures Forged Wheels Total First quarter ended March 31, 2021 Aerospace - Commercial $ 227 $ 148 $ 80 $ — $ 455 Aerospace - Defense 151 42 77 — 270 Commercial Transportation — 46 — 227 273 Industrial and Other 156 36 19 — 211 Total end-market revenue $ 534 $ 272 $ 176 $ 227 $ 1,209 First quarter ended March 31, 2020 Aerospace - Commercial $ 507 $ 257 $ 184 $ — $ 948 Aerospace - Defense 127 44 70 — 241 Commercial Transportation — 46 — 191 237 Industrial and Other 147 38 21 — 206 Total end-market revenue $ 781 $ 385 $ 275 $ 191 $ 1,632 The Company derive d 60% and 73% of its revenue from aerospace end markets in the first quarter of 2021 and 2020, respectively. General Electric Company represented approximately 11% and 13% of the Company’s third-party sales for the first quarter of 2021 and 2020, respectively, primarily from Engine Products. |
Restructuring and Other Charges
Restructuring and Other Charges | 3 Months Ended |
Mar. 31, 2021 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Charges | Restructuring and Other Charges First quarter ended March 31, 2021 2020 Layoff costs $ — $ 22 Adjustments to (reversals of) previously recorded layoff reserves 1 (2) Pension, Other post-retirement benefits and Deferred Compensation - net settlements 3 — Net loss related to divestitures of assets and businesses 4 16 Other 1 3 Restructuring and other charges $ 9 $ 39 In the first quarter of 2021, the Company recorded Restructuring and other charges of $9, which included a $4 charge for impairment of assets associated with an agreement to sell a small manufacturing business in France, a $3 charge for U.S. pension plans' settlement accounting, a $1 adjustment related to a number of prior period program reserves and a $1 charge for exit costs including accelerated depreciation. In the first quarter of 2020, the Company recorded Restructuring and other charges of $39, which included a $22 charge for layoff costs, including the separation of 460 employees (175 in Engine Products, 106 in Fastening Systems, 100 in Engineered Structures, 56 in Forged Wheels and 23 in Corporate); a $12 charge for impairment of assets associated with an agreement to sell a small manufacturing business in the United Kingdom (U.K.); a $6 post closing adjustment related to the 2019 sale of the Company’s U.K. forgings business and a $3 charge for various other exit costs related to prior programs. These charges were partially offset by a benefit of $2 related to the reversal of a number of prior period program reserves and a $2 gain on sale of assets. Layoff costs Other exit costs Total Reserve balances at December 31, 2020 $ 54 $ — $ 54 Cash payments (24) — (24) Restructuring charges 4 5 9 Other (1) (5) (5) (10) Reserve balances at March 31, 2021 $ 29 $ — $ 29 (1) In the first quarter of 2021, Layoff costs included $3 in settlement accounting charges related to U.S. pension plans and a $2 charge for other layoffs costs; while Other exit costs included a $4 charge for impairment associated with an agreement to sell a small manufacturing business; and a $1 charge for other exit costs including accelerated depreciation. The remaining Layoff cost reserves are expected to be paid in cash by the end of 2021. |
Other Expense (Income), Net
Other Expense (Income), Net | 3 Months Ended |
Mar. 31, 2021 | |
Other Income and Expenses [Abstract] | |
Other Expense (Income), Net | Other Expense (Income), Net First quarter ended March 31, 2021 2020 Non-service related net periodic benefit cost $ 3 $ 6 Interest income — (4) Foreign currency losses, net 2 — Net loss from asset sales 3 2 Deferred compensation 2 (10) Other, net (6) (18) Total $ 4 $ (24) |
Pension and Other Postretiremen
Pension and Other Postretirement Benefits | 3 Months Ended |
Mar. 31, 2021 | |
Retirement Benefits [Abstract] | |
Pension and Other Postretirement Benefits | Pension and Other Postretirement Benefits The components of net periodic benefit cost were as follows: First quarter ended March 31, 2021 2020 Pension benefits Service cost $ 1 $ 7 Interest cost 12 47 Expected return on plan assets (23) (70) Recognized net actuarial loss 14 42 Settlements 3 — Net periodic benefit cost (1) 7 26 Discontinued operations — 20 Net amount recognized in continuing operations in Statement of Consolidated Operations $ 7 $ 6 Other postretirement benefits Service cost $ — $ 1 Interest cost 1 6 Recognized net actuarial loss — 2 Amortization of prior service benefit (1) (2) Net periodic benefit cost (1) — 7 Discontinued operations — 6 Net amount recognized in continuing operations in Statement of Consolidated Operations $ — $ 1 (1) Service cost for continuing operations was included within Cost of goods sold, Selling, general administrative, and other expenses, and Research and development expenses; settlements and curtailments were included in Restructuring and other charges; and all other cost components were recorded in Other expense (income), net in the Statement of Consolidated Operations. The amounts included in Net periodic benefit cost include costs related to both continuing and discontinued operations for the first quarter ended March 31, 2020 . Pension benefits In the first quarter ended March 31, 2021, the Company applied settlement accounting to certain U.S. pension plans due to lump sum payments made to participants, which resulted in settlement charges of $3 that were recorded in Restructuring and other charges. On March 11, 2021, the American Rescue Plan Act of 2021 (“ARPA 2021”) was signed into law in the United States. ARPA 2021, in part, provides temporary relief for employers who sponsor defined benefit pension plans related to funding contributions under the Employee Retirement Income Security Act of 1974. As a result, management expects Howmet’s estimated minimum required pension funding to decline. Management is currently evaluating the impact. Other postretirement benefits In the first quarter of 2021, the Company announced a plan administration change of certain of its Medicare-eligible prescription drug benefits to an Employer Group Waiver Plan with wrap-around secondary plan effective July 1, 2021. The administration change is expected to reduce costs to the Company through the usage of Medicare Part D and drug manufacturer subsidies . Due to this amendment, along with the associated plan remeasurements, the Company recorded a decrease to its Accrued other postretirement benefits liability of $39, which was offset in Accumulated other comprehensive loss in the Consolidated Balance Sheet. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesThe Company’s year-to-date tax provision is comprised of the most recent estimated annual effective tax rate applied to year-to-date pre-tax ordinary income. The tax impacts of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are recorded discretely in the interim period in which they occur. In addition, the tax provision is adjusted for the interim period impact of non-benefited pre-tax losses. For the first quarter of 2021 and 2020, the estimated annual effective tax rate, before discrete items, applied to ordinary income was 30.4% and 26.9%, respectively. The 2021 and 2020 rates were higher than the U.S. federal statutory rate of 21% primarily due to additional estimated U.S. tax on Global Intangible Low-Taxed Income and other foreign earnings, incremental state tax and foreign taxes on earnings also subject to U.S. federal income tax, and nondeductible expenses. For the first quarter of 2021 and 2020, the tax rate including discrete items was 29.2% and 22.7%, respectively. For the first quarter of 2021, the Company recorded a discrete net tax benefit of $1 for other items. For the first quarter of 2020, the Company recorded a discrete tax benefit of $8 related primarily to stock compensation. The tax provisions for the first quarter ended March 31, 2021 and 2020 were comprised of the following: First quarter ended March 31, 2021 2020 Pre-tax income at estimated annual effective income tax rate before discrete items $ 34 $ 53 Other discrete items (1) (8) Provision for income taxes $ 33 $ 45 |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share (“EPS”) amounts are computed by dividing earnings, after the deduction of preferred stock dividends declared, by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding. The information used to compute basic and diluted EPS attributable to Howmet common shareholders was as follows (shares in millions): First quarter ended March 31, 2021 2020 Net income from continuing operations attributable to common shareholders $ 80 $ 153 Income from discontinued operations — 62 Net income attributable to common shareholders 80 215 Less: preferred stock dividends declared 1 1 Net income available to Howmet Aerospace common shareholders - basic and diluted $ 79 $ 214 Average shares outstanding - basic 434 435 Effect of dilutive securities: Stock options 1 1 Stock and performance awards 4 4 Average shares outstanding - diluted 439 440 Common stock outstanding at March 31, 2021 and 2020 was 434 and 436, respectively. The following shares were excluded from the calculation of average shares outstanding – diluted as their effect was anti-dilutive (shares in millions): First quarter ended March 31, 2021 2020 Stock options (1) 1 4 (1) The weighted average exercise price per share of options excluded from diluted EPS was $31.86 and $27.65 as of March 31, 2021 and 2020, respectively. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The following table details the activity of the four components that comprise Accumulated other comprehensive loss: First quarter ended March 31, 2021 2020 Pension and other postretirement benefits ( G ) Balance at beginning of period $ (980) $ (2,732) Other comprehensive income: Unrecognized net actuarial loss and prior service cost/benefit 37 1 Tax expense (8) — Total Other comprehensive income before reclassifications, net of tax 29 1 Amortization of net actuarial loss and prior service cost (1) 16 43 Tax expense (2) (3) (7) Total amount reclassified from Accumulated other comprehensive loss, net of tax (3) 13 36 Total Other comprehensive income 42 37 Balance at end of period $ (938) $ (2,695) Foreign currency translation Balance at beginning of period $ (966) $ (596) Foreign currency translation (44) (79) Net amount reclassified from Accumulated other comprehensive loss (4) — 14 Other comprehensive loss (44) (65) Balance at end of period $ (1,010) $ (661) Debt securities Balance at beginning of period $ — $ — Other comprehensive income (5) — 1 Balance at end of period $ — $ 1 Cash flow hedges Balance at beginning of period $ 3 $ (1) Other comprehensive income (loss): Net change from periodic revaluations 8 (11) Tax expense (2) (1) Total Other comprehensive income (loss) before reclassifications, net of tax 6 (12) Net amount reclassified to earnings (3) (1) Tax expense (2) 1 — Total amount reclassified from Accumulated other comprehensive loss, net of tax (3) (2) (1) Total Other comprehensive income (loss) 4 (13) Balance at end of period $ 7 $ (14) Accumulated other comprehensive loss $ (1,941) $ (3,369) (1) These amounts were recorded in Other expense (income), net on the Statement of Consolidation Operations (see Note F ). (2) These amounts were included in Provision for income taxes on the Statement of Consolidated Operations. (3) A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings. (4) Foreign currency translation charges were included in Restructuring and other charges on the Statement of Consolidated Operations due to the sale of foreign entities. (5) Realized gains and losses were included in Other expense (income), net on the Statement of Consolidated Operations. |
Receivables
Receivables | 3 Months Ended |
Mar. 31, 2021 | |
Receivables [Abstract] | |
Receivables | Receivables Sale of Receivables Programs The Company has two accounts receivables securitization arrangements. The first is an arrangement with financial institutions to sell certain customer receivables without recourse on a revolving basis (“Receivables Sale Program”). The sale of such receivables is completed using a bankruptcy remote special purpose entity, which is a consolidated subsidiary of the Company. This arrangement historically provided up to a maximum funding of $400 for receivables sold. The Company maintains a beneficial interest, or a right to collect cash, on the sold receivables that have not been funded (deferred purchase program receivable). In the first quarter of 2020, the Company entered into an amendment to remove subsidiaries of the GRP business from the sale of receivables program in preparation for the Arconic Inc. Separation Transaction and repurchased the remaining $282 unpaid receivables of GRP customers in a non-cash transaction by reducing the amount of the deferred purchase program receivable. This amendment also reduced the maximum funding for receivables sold to $300. The concentration limit of one customer may be reduced at the discretion of the financial institutions or automatically upon the downgrade of its debt rating as defined in the Receivables Sale Program agreement. A reduction in the customer's concentration limit would reduce the eligible receivable funding base thereby reducing the amount of future draws available and may require repayment of a portion of existing draws. The Company had net cash repayments totaling $26 ($18 in draws and $44 in repayments) and $52 ($98 in draws and $150 in repayments) for the three months ended March 31, 2021 and March 31, 2020, respectively. As of March 31, 2021 and December 31, 2020, the deferred purchase program receivable was $68 and $12, respectively, which was included in Other receivables on the accompanying Consolidated Balance Sheet. The deferred purchase program receivable is reduced as collections of the underlying receivables occur; however, as this is a revolving program, the sale of new receivables will result in an increase in the deferred purchase program receivable. The Company services the customer receivables for the financial institutions at market rates; therefore, no servicing asset or liability was recorded. Cash receipts from customer payments on sold receivables (which are cash receipts on the underlying trade receivables that have been previously sold) as well as cash receipts and cash disbursements from draws and repayments under the program are presented as cash receipts from sold receivables within investing activities in the Statement of Consolidated Cash Flows. The second arrangement is one in which the Company, through a wholly-owned special purpose entity (“SPE”), has a receivables purchase agreement (the “Receivables Purchase Agreement”) such that the SPE may sell certain receivables to financial institutions until the earlier of March 30, 2022 or a termination event. The Receivables Purchase Agreement also contains customary representations and warranties, as well as affirmative and negative covenants. Pursuant to the Receivables Purchase Agreement, the Company does not maintain effective control over the transferred receivables, and therefore accounts for these transfers as sales of receivables. The SPE sold $84 of its receivables without recourse and received cash funding under this program during the first quarter ended March 31, 2021, resulting in derecognition of the receivables from the Company’s consolidated balance sheets. As of March 31, 2021 and December 31, 2020, $65 and $46 remained outstanding from the customer, respectively. Cash received from collections of sold receivables is used by the SPE to fund additional purchases of receivables on a revolving basis, not to exceed $125, which is the aggregate maximum limit. As collateral against the sold receivables, the SPE maintains a certain level of unsold receivables, which was $16 and $33 at March 31, 2021 and December 31, 2020, respectively. Costs associated with the sales of receivables are reflected in the Company’s Consolidated statements of operations for the periods in which the sales occur. Cash receipts from sold receivables under the Receivables Purchase Agreement are presented within operating activities in the Statement of Consolidated Cash Flows. The Company had accounts receivable securitization arrangements totaling $425 at March 31, 2021 and December 31, 2020, respectively, of which $243 and $250 was drawn at March 31, 2021 and at December 31, 2020, respectively. The $7 reduction in the amount drawn resulted in a corresponding reduction in Cash and cash equivalents. Other Customer Receivable Sales In the first quarter of 2021 and 2020, the Company sold $7 and $14, respectively, of a certain customer’s receivables in exchange for cash (of which $7 remained outstanding from the customer at March 31, 2021), the proceeds from which are presented in changes in receivables within operating activities in the Statement of Consolidated Cash Flows. In the first quarter 2021 and 2020, the Company sold $59 and $17, respectively, of a certain customer’s receivables in exchange for cash (of which $57 r emained outstanding from the customer at March 31, 2021), the proceeds from which are presented in changes in receivables within operating activities in the Statement of Consolidated Cash Flows. The sale of these customer receivables was undertaken to offset a change in the customer’s payment patterns (customer had been taking an early payment discount). |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories March 31, 2021 December 31, 2020 Finished goods $ 516 $ 528 Work-in-process 627 629 Purchased raw materials 271 292 Operating supplies 39 39 Total inventories $ 1,453 $ 1,488 At March 31, 2021 and December 31, 2020, the portion of inventories valued on a last-in, first-out (“LIFO”) basis was $472 and $458, respectively. If valued on an average-cost basis, total inventories would have been $139 and $131 higher at March 31, 2021 and December 31, 2020, respectively. |
Properties, Plants, and Equipme
Properties, Plants, and Equipment, net | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Properties, Plants, and Equipment, net | Properties, Plants, and Equipment, net March 31, 2021 December 31, 2020 Land and land rights $ 92 $ 98 Structures 1,020 1,033 Machinery and equipment 3,856 3,879 4,968 5,010 Less: accumulated depreciation and amortization 2,644 2,626 2,324 2,384 Construction work-in-progress 200 208 Properties, plants, and equipment, net $ 2,524 $ 2,592 The Company incurred capital expenditures which remained unpaid at March 31, 2021 and March 31, 2020 of $28 and $48, respectively, which result in cash outflows for investing activities in subsequent periods. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Leases | Leases Operating lease cost, which includes short-term leases and variable lease payments and approximates cash paid, was $17 and $18 in the first quarter of 2021 and 2020, respectively. Operating lease right-of-use assets and lease liabilities in the Consolidated Balance Sheet were as follows: March 31, 2021 December 31, 2020 Right-of-use assets classified in Other noncurrent assets $ 125 $ 131 Current portion of lease liabilities classified in Other current liabilities 37 38 Long-term portion of lease liabilities classified in Other noncurrent liabilities 94 100 Total lease liabilities $ 131 $ 138 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt | Debt March 31, 2021 December 31, 2020 5.400% Notes, due 2021 (1) $ — $ 361 5.870% Notes, due 2022 (2) 476 476 5.125% Notes, due 2024 1,250 1,250 6.875% Notes, due 2025 1,200 1,200 5.900% Notes, due 2027 625 625 6.750% Bonds, due 2028 300 300 5.950% Notes due 2037 625 625 4.750% Iowa Finance Authority Loan, due 2042 250 250 Other (3) (13) (12) 4,713 5,075 Less: amount due within one year 489 376 Total long-term debt $ 4,224 $ 4,699 (1) Redeemed on January 15, 2021. (2) Redeemed on May 3, 2021. (3) Includes various financing arrangements related to subsidiaries, unamortized debt discounts and unamortized debt issuance costs related to outstanding notes and bonds listed in the table above. Public Debt. On January 15, 2021, the Company completed the early redemption of all the remaining $361 of its 5.400% Notes due 2021 at par and paid $5 in accrued interest. On an annual basis, the redemption of these 5.400% Notes will decrease Interest expense, net by approximately $19. On May 3, 2021, the Company completed the early redemption of all the remaining $476 aggregate principal amount of its 5.870% Notes due 2022 and paid an aggregate of $503, including $5 of accrued interest. The Company also incurred an early termination premium of $22, which will be recorded in the second quarter of 2021 in Interest expense, net . On an annual basis, the redemption of these 5.870% Notes will decrease Interest expense, net by approximately $28. Credit Facilities. During 2020, the Company entered into several amendments to its Five-Year Revolving Credit Agreement (the “Credit Agreement”) to permit the Arconic Inc. Separation Transaction and to amend certain terms of the Credit Agreement, including a change to the existing financial covenant, a reduction of total commitments available from $3,000 to $1,000 and extension of the maturity date from June 29, 2023 to April 1, 2025. On March 29, 2021, the Company entered into another amendment to its Credit Agreement to provide extended relief from its existing financial covenant for the quarters ended March 31, 2021 through December 31, 2022. The Company is required to maintain a ratio of Consolidated Net Debt (as defined in the Credit Agreement) to Consolidated EBITDA (as defined in the Credit Agreement) of no greater than 3.50 to 1.00 as of the end of each fiscal quarter for the period of the four fiscal quarters of the Company most recently ended, except as of the end of each fiscal quarter noted below for the period of the four fiscal quarters then ended: No greater than (i) for the quarter ending March 31, 2021 5.50 to 1.00 (ii) for the quarter ending June 30, 2021 5.50 to 1.00 (iii) for the quarter ending September 30, 2021 5.00 to 1.00 (iv) for the quarter ending December 31, 2021 4.75 to 1.00 (v) for the quarter ending March 31, 2022 4.50 to 1.00 (vi) for the quarter ending June 30, 2022 4.50 to 1.00 (vii) for the quarter ending September 30, 2022 4.25 to 1.00 (viii) for the quarter ending December 31, 2022 3.75 to 1.00 Under the March 2021 amendment to the Credit Agreement, during the covenant relief period through December 31, 2022 (unless the Company ends the covenant relief period earlier in accordance with the amendment), common stock dividends and share repurchases are permitted only if no loans under the Credit Agreement are outstanding at the time and are limited to an aggregate amount not to exceed $250 during the year ending December 31, 2021 with an incremental amount of $400 available during the year ending December 21, 2022 provided that any amount that remains unused as of December 31, 2021 may be carried forward and used during the year ending December 31, 2022. There were no amounts outstanding at March 31, 2021 or December 31, 2020, and no amounts were borrowed during 2021 or 2020 under the Credit Agreement. At March 31, 2021, the Company was in compliance with all covenants under the Credit Agreement. Availability under the Credit Agreement could be reduced in future periods if the Company fails to maintain the required ratios referenced above. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying values of Cash and cash equivalents, Restricted cash, Derivatives, Noncurrent receivables, and Short-term debt included in the Consolidated Balance Sheet approximate their fair value. The Company holds exchange-traded fixed income securities which are considered available-for-sale securities that are carried at fair value which is based on quoted market prices which are classified in Level 1 of the fair value hierarchy. The fair value of Long-term debt, less amounts due within one year was based on quoted market prices for public debt and on interest rates that are currently available to Howmet for issuance of debt with similar terms and maturities for non-public debt. The fair value amounts for all Long-term debt were classified in Level 2 of the fair value hierarchy. March 31, 2021 December 31, 2020 Carrying Fair Carrying Fair Long-term debt, less amount due within one year $ 4,224 $ 4,831 $ 4,699 $ 5,426 Restricted cash, which was included in Prepaid assets and other current liabilities in the Consolidated Balance Sheet, was $1 at both March 31, 2021 and December 31, 2020. |
Divestitures
Divestitures | 3 Months Ended |
Mar. 31, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Divestitures | Divestitures 2021 Divestiture On March 15, 2021, the Company reached an agreement to sell a small manufacturing plant in France within the Fastening Systems segment for $9 in cash, subject to working capital and other adjustments, and therefore was classified as held for sale. The result was a charge of $4 related to the non-cash impairment of the net book value of the business, primarily goodwill, in the first quarter of 2021 which was recorded in Restructuring and other charges in the Statement of Consolidated Operations. 2020 Divestiture On January 31, 2020, the Company reached an agreement to sell a small manufacturing plant in the United Kingdom within the Engineered Structures segment for $12 in cash, and therefore was classified as held for sale. As a result of entering into the agreement, a charge of $12 was recognized related to a non-cash impairment of the net book value of the business, primarily properties, plants, and equipment in the first quarter of 2020, which was recorded in Restructuring and other charges in the Statement of Consolidated Operations. As the sale did not close, the Company changed the classification from held for sale to |
Contingencies and Commitments
Contingencies and Commitments | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies and Commitments | Contingencies and Commitments Contingencies The following information supplements and, as applicable, updates the discussion of the contingencies and commitments in Note V to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020, and should be read in conjunction with the complete descriptions provided in the Form 10-K. Environmental Matters Howmet participates in environmental assessments and cleanups at more than 30 locations. These include owned or operating facilities and adjoining properties, previously owned or operating facilities and adjoining properties, and waste sites, including Superfund (Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”)) sites. A liability is recorded for environmental remediation when a cleanup program becomes probable and the costs can be reasonably estimated. As assessments and cleanups proceed, the liability is adjusted based on progress made in determining the extent of remedial actions and related costs. The liability can change substantially due to factors such as the nature and extent of contamination, changes in remedial requirements, and technological changes, among others. The Company’s remediation reserve balance was $10 at March 31, 2021 and $10 at December 31, 2020, recorded in Other noncurrent liabilities and deferred credits in the Consolidated Balance Sheet (of which $5 and $5, respectively, were classified as a current liability), and reflects the most probable costs to remediate identified environmental conditions for which costs can be reasonably estimated. Payments related to remediation expenses applied against the reserve were less than $1 in the first quarter ended March 31, 2021 and included expenditures currently mandated, as well as those not required by any regulatory authority or third party. Included in annual operating expenses are the recurring costs of managing hazardous substances and environmental programs. These costs are estimated to be less than 1% of Cost of goods sold. Reynobond PE With respect to the regulatory investigations into the Grenfell Tower matter, including the Public Inquiry by the British government, no update is available. Pursuant to the Separation and Distribution Agreement, dated as of March 31, 2020, Arconic Corporation agreed to indemnify the Company for certain liabilities and the Company agreed to indemnify Arconic Corporation for certain liabilities. As a result of the Arconic Inc. Separation Transaction, Arconic Corporation holds the building and construction systems businesses previously held by the Company and Arconic Architectural Products SAS (“AAP SAS”) is a subsidiary of Arconic Corporation; accordingly, Arconic Corporation has agreed to assume and indemnify the Company against potential liabilities associated with the June 13, 2017 fire at the Grenfell Tower in London, U.K., including the following legal proceedings in which Arconic Inc. and/or its then directors were named as parties: United Kingdom Litigation. On December 23, 2020, claimant groups comprised of survivors and estates of decedents of the Grenfell Tower fire filed suits in the U.K. arising from that fire, against 23 defendants, including Howmet Aerospace Inc., AAP SAS, and Arconic Corporation. The Company has recently been served with claim forms in the proceedings, which contain brief details of the claims. However, the suits remain at a preliminary stage, and the Company is still waiting to be served with full particulars of the claimants’ substantive allegations and the relief that claimants seek. Following a recent application by legal representatives acting for the claimant groups, the current stay of the suits has been extended until July 7, 2021, when they will be heard together at a case management hearing in the High Court in London on July 7-8, 2021. Behrens et al. v. Arconic Inc. et al. On June 6, 2019, 247 plaintiffs comprised of survivors and estates of decedents of the Grenfell Tower fire filed a complaint against “Arconic Inc., Alcoa Inc. and Arconic Architectural Products, LLC” (collectively, for purposes of the description of such proceeding, the “Arconic Defendants”), as well as Saint-Gobain Corporation, d/b/a Celotex and Whirlpool Corporation alleging claims under Pennsylvania state law for products liability and wrongful death related to the fire. The case was removed to the United States District Court for the Eastern District of Pennsylvania. Defendants moved to dismiss the case on numerous grounds, including forum non conveniens. Defendant Saint-Gobain Corporation was subsequently voluntarily dismissed from the case. On September 16, 2020, the court issued an order granting the remaining defendants’ motion to dismiss on forum non conveniens grounds, subject to certain conditions, determining that the United Kingdom, and not the United States, is the appropriate place for plaintiffs to bring their case. Plaintiffs subsequently filed a motion for reconsideration, which the court denied on November 23, 2020. Plaintiffs are appealing the judgment; the Arconic Defendants are cross-appealing one of the conditions. Plaintiffs filed their opening appeal brief on March 8, 2021; the Arconic Defendants’ opening brief was filed on April 21, 2021. With respect to the Howard v. Arconic Inc. et al . and Raul v. Albaugh, et al . proceedings, no updates to such proceedings are available. While there can be no assurances regarding the ultimate resolution of these matters, Arconic Corporation has agreed to assume and indemnify the Company against potential liabilities associated with them. Lehman Brothers International (Europe) (“LBIE”) Claim. On June 26, 2020, LBIE filed formal proceedings against two Firth Rixson entities (“Firth”) in the High Court of Justice, Business and Property Courts of England and Wales. The proceedings relate to interest rate swap transactions that Firth entered into with LBIE in 2007 to 2008. In 2008, LBIE commenced insolvency proceedings, an event of default under the agreements, rendering LBIE unable to meet its obligations under the swaps and suspending Firth’s payment obligations. In the Court proceedings, LBIE seeks a declaration that Firth has a contractual obligation to pay the amounts owing to LBIE under the agreements, which LBIE claims to be approximately $64, plus applicable interest. The parties filed position papers on July 24, 2020 and October 19, 2020 (LBIE) and September 21, 2020 (Firth). A virtual hearing in this matter occurred on January 13 and 14, 2021 in London, England. A decision is expected within six months of the January 2021 hearing. The Company believes it has meritorious defenses and intends to vigorously defend against these claims. 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 March 31, 2021, 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 2021 and 2040, was $33 at March 31, 2021. Pursuant to the Separation and Distribution Agreement between Howmet and Alcoa Corporation, Howmet was required to provide certain guarantees for Alcoa Corporation, which had a fair value of $6 and $12 at March 31, 2021 and December 31, 2020, respectively, and were included in Other noncurrent liabilities and deferred credits on the accompanying Consolidated Balance Sheet. The Company was required to provide a guarantee up to an estimated present value amount of approximately $1,356 and $1,398 at March 31, 2021 and December 31, 2020, respectively. For this guarantee, subject to its provisions, the Company is secondarily liable in the event of a payment default by Alcoa Corporation. The Company currently views the risk of an Alcoa Corporation payment default on its obligations under the contract to be remote. Letters of Credit The Company has outstanding letters of credit, primarily related to workers’ compensation, environmental obligations, accounts receivable securitization and leasing obligations. The total amount committed under these letters of credit, which automatically renew or expire at various dates, mostly in 2021, was $113 at March 31, 2021. 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 that had previously been provided related to the Company, Arconic Corporation, and Alcoa Corporation workers’ compensation claims which 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 being proportionally billed to and are being 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 $23 of outstanding letters of credit relating to liabilities (which are included in the $113 in the above paragraph). $6 of these outstanding letters of credit are pending cancellation and will be deemed cancelled once returned by the beneficiary. Arconic Corporation has issued surety bonds to cover these environmental obligations. Arconic Corporation is being billed for these letter of credit fees paid by the Company and will reimburse the Company for any payments made under these letters of credit. Surety Bonds The Company has outstanding surety bonds, primarily related to tax matters, contract performance, workers’ compensation, environmental-related matters, and customs duties. The total amount committed under these annual surety bonds, which expire and automatically renew at various dates, primarily in 2021, was $46 at March 31, 2021. Pursuant to the Separation and Distribution Agreements between the Company and Arconic Corporation and between the Company and Alcoa Corporation, the Company is required to provide surety bonds of $25 (which are included in the $46 in the above paragraph) that had previously been provided related to the Company, Arconic Corporation, and Alcoa Corporation workers’ compensation claims which occurred prior to the respective separation transactions of April 1, 2020 and November 1, 2016. Arconic Corporation and Alcoa Corporation workers’ compensation claims paid and surety bond fees paid by the Company are being proportionately billed to and are being reimbursed by Arconic Corporation and Alcoa Corporation. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | 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 O for the early redemption of debt. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The interim Consolidated Financial Statements of Howmet Aerospace Inc. (formerly known as Arconic Inc.) and subsidiaries (“Howmet” or the “Company”) are unaudited. These Consolidated Financial Statements include all adjustments, consisting only of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position, and cash flows. The results reported in these Consolidated Financial Statements are not necessarily indicative of the results that may be expected for the entire year. The 2020 year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). This Form 10-Q report should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2020, which includes all disclosures required by GAAP. Certain amounts in previously issued financial statements were reclassified to conform to the current period presentation. The separation of Arconic Inc. into two standalone, publicly-traded companies, Howmet Aerospace Inc. and Arconic Corporation, (the “Arconic Inc. Separation Transaction”) occurred on April 1, 2020. The financial results of Arconic Corporation for all periods prior to the Arconic Inc. Separation Transaction have been retrospectively reflected in the Statement of Consolidated Operations as discontinued operations and, as such, have been excluded from continuing operations and segment results for all periods presented. The cash flows, comprehensive income, and equity related to Arconic Corporation have not been segregated and are included in the Statement of Consolidated Cash Flows, Statement of Consolidated Comprehensive Income and Statement of Changes in Consolidated Equity, respectively, for all periods prior to the Arconic Inc. Separation Transaction. See Note B for additional information related to the Arconic Inc. Separation Transaction and discontinued operations. In the first quarter of 2021 and 2020, the Company derived approximately 60% and 73%, respectively, of its revenue from products sold to the aerospace end-market. As a result of the global coronavirus (“COVID-19”) pandemic and its impact on the aerospace industry to-date, the possibility exists that there could be a sustained impact to our operations and financial results. Since the start of the pandemic, certain original equipment manufacturer (“OEM”) customers have reduced production or suspended manufacturing operations in North America and Europe on a temporary basis. While the pandemic has resulted in the temporary closure of a small number of the Company's manufacturing facilities during 2020, all of our manufacturing facilities are currently operating. Since the duration of the pandemic is uncertain, management has taken a series of actions to address the financial impact, including announcing certain headcount reductions and reducing the level of capital expenditures to preserve cash and maintain liquidity. The preparation of the Consolidated Financial Statements of the Company in conformity with GAAP requires management to make certain judgments, estimates, and assumptions. These estimates are based on historical experience and, in some cases, assumptions based on current and future market experience, including considerations relating to the impact of COVID-19. The impact of COVID-19 is rapidly changing and of unknown duration and macroeconomic impact and as a result, these considerations remain highly uncertain. Management has made its best estimates using all relevant information available at the time, but it is possible that our estimates will differ from our actual results and affect the Consolidated Financial Statements in future periods and potentially require adverse adjustments to the recoverability of goodwill, intangible and long-lived assets, the realizability of deferred tax assets and other judgments and estimations and assumptions that may be impacted by COVID-19. As previously disclosed, during the third quarter of 2020, the Company identified a misclassification in the presentation of changes in accounts payable and capital expenditures in its previously issued Statement of Consolidated Cash Flows for the first quarter ended March 31, 2020 and six months ended June 30, 2020. Although management has determined that such misclassification did not materially misstate the Statement of Consolidated Cash Flows for the first quarter ended March 31, 2020 or six months ended June 30, 2020, the Company revised the first quarter, resulting in an $83 increase to previously reported capital expenditures and decrease to cash provided from investing activities with a corresponding reduction (decrease) in accounts payable, trade and increase in cash provided by operations. Also as previously disclosed, in the third quarter of 2020, a $16 deferred tax error was identified related to periods prior to 2018. Although management determined it was not material to any periods, the Company has revised its Statement of Changes in Consolidated Equity for the three months ended March 31, 2020 and will revise the three and six months ended June 30, 2020 to present the correction as a reduction to Retained earnings as of December 31, 2019. |
Recently Adopted and Recently Issued Accounting Guidance | Recently Adopted and Recently Issued Accounting Guidance Adopted On January 1, 2021, the Company adopted changes issued by the Financial Accounting Standards Board (“FASB”) that were intended to simplify various aspects of accounting for income taxes by eliminating certain exceptions contained in existing guidance and amending other guidance to simplify several other income tax accounting matters. The adoption of this new guidance did not have a material impact on the Consolidated Financial Statements. Issued In March 2020, the FASB issued amendments that provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. Management is currently evaluating the potential impact of these changes on the Consolidated Financial Statements. |
Earnings Per Share | Basic earnings per share (“EPS”) amounts are computed by dividing earnings, after the deduction of preferred stock dividends declared, by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding. |
Arconic Inc. Separation Trans_2
Arconic Inc. Separation Transaction and Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Summary of Discontinued Operations | The results of operations of Arconic Corporation are presented as discontinued operations in the Statement of Consolidated Operations as summarized below: First quarter ended March 31, 2020 Sales $ 1,575 Cost of goods sold 1,293 Selling, general administrative, research and development and other expenses 101 Provision for depreciation and amortization 58 Restructuring and other charges (18) Operating income from discontinued operations 141 Interest expense 7 Other expense, net 41 Income from discontinued operations 93 Provision for income taxes 31 Income from discontinued operations after income taxes $ 62 The following table presents purchases of properties, plants, and equipment, proceeds from the sale of businesses and the provision for depreciation and amortization of discontinued operations related to Arconic Corporation: First quarter ended March 31, 2020 Capital expenditures $ 72 Proceeds from the sales of businesses $ 112 Provision for depreciation and amortization $ 58 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Operating Results of Arconic's Reportable Segments | The operating results of the Company’s reportable segments were as follows. Differences between total segment and consolidated totals are in Corporate. Engine Products Fastening Systems Engineered Structures Forged Wheels Total First quarter ended March 31, 2021 Sales: Third-party sales $ 534 $ 272 $ 176 $ 227 $ 1,209 Inter-segment sales 1 — 1 — 2 Total sales $ 535 $ 272 $ 177 $ 227 $ 1,211 Profit and loss: Segment operating profit $ 101 $ 45 $ 10 $ 70 $ 226 Restructuring and other charges 5 2 1 — 8 Provision for depreciation and amortization 31 12 12 10 65 Capital expenditures 11 5 5 9 30 First quarter ended March 31, 2020 Sales: Third-party sales $ 781 $ 385 $ 275 $ 191 $ 1,632 Inter-segment sales 2 — 3 — 5 Total sales $ 783 $ 385 $ 278 $ 191 $ 1,637 Profit and loss: Segment operating profit $ 165 $ 96 $ 28 $ 50 $ 339 Restructuring and other charges 13 2 17 2 34 Provision for depreciation and amortization 30 12 13 10 65 Capital expenditures 19 8 3 7 37 |
Schedule of Segment Reporting Information to Consolidated Income Before income Taxes | The following table reconciles Total segment operating profit to Income from continuing operations before income taxes: First quarter ended March 31, 2021 2020 Total segment operating profit $ 226 $ 339 Unallocated amounts: Restructuring and other charges (9) (39) Corporate expense (28) (42) Consolidated operating income $ 189 $ 258 Interest expense (72) (84) Other (expense) income, net (4) 24 Income from continuing operations before income taxes $ 113 $ 198 |
Reconciliation of Capital Expenditures from Segments to Consolidated | The following table reconciles Total segment capital expenditures, which are presented on an accrual basis, with Capital expenditures as presented on the statement of cash flows. Differences between segment and consolidated totals are in Corporate and discontinued operations, including the impact of changes in accrued capital expenditures during the period. First quarter ended March 31, 2021 2020 Total segment capital expenditures $ 30 $ 37 Corporate and discontinued operations 25 115 Capital expenditures $ 55 $ 152 |
Disaggregation of Revenue by Major End Market Served | The following table disaggregates segment revenue by major end market served. Differences between total segment and consolidated totals are in Corporate. Engine Products Fastening Systems Engineered Structures Forged Wheels Total First quarter ended March 31, 2021 Aerospace - Commercial $ 227 $ 148 $ 80 $ — $ 455 Aerospace - Defense 151 42 77 — 270 Commercial Transportation — 46 — 227 273 Industrial and Other 156 36 19 — 211 Total end-market revenue $ 534 $ 272 $ 176 $ 227 $ 1,209 First quarter ended March 31, 2020 Aerospace - Commercial $ 507 $ 257 $ 184 $ — $ 948 Aerospace - Defense 127 44 70 — 241 Commercial Transportation — 46 — 191 237 Industrial and Other 147 38 21 — 206 Total end-market revenue $ 781 $ 385 $ 275 $ 191 $ 1,632 |
Restructuring and Other Charg_2
Restructuring and Other Charges (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Charges | First quarter ended March 31, 2021 2020 Layoff costs $ — $ 22 Adjustments to (reversals of) previously recorded layoff reserves 1 (2) Pension, Other post-retirement benefits and Deferred Compensation - net settlements 3 — Net loss related to divestitures of assets and businesses 4 16 Other 1 3 Restructuring and other charges $ 9 $ 39 |
Activity and Reserve Balances for Restructuring Charges | Layoff costs Other exit costs Total Reserve balances at December 31, 2020 $ 54 $ — $ 54 Cash payments (24) — (24) Restructuring charges 4 5 9 Other (1) (5) (5) (10) Reserve balances at March 31, 2021 $ 29 $ — $ 29 (1) In the first quarter of 2021, Layoff costs included $3 in settlement accounting charges related to U.S. pension plans and a $2 charge for other layoffs costs; while Other exit costs included a $4 charge for impairment associated with an agreement to sell a small manufacturing business; and a $1 charge for other exit costs including accelerated depreciation. |
Other Expense (Income), Net (Ta
Other Expense (Income), Net (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Other Income and Expenses [Abstract] | |
Schedule of Other Expense (Income), Net | First quarter ended March 31, 2021 2020 Non-service related net periodic benefit cost $ 3 $ 6 Interest income — (4) Foreign currency losses, net 2 — Net loss from asset sales 3 2 Deferred compensation 2 (10) Other, net (6) (18) Total $ 4 $ (24) |
Pension and Other Postretirem_2
Pension and Other Postretirement Benefits (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Retirement Benefits [Abstract] | |
Components of Net Periodic Benefit Cost | The components of net periodic benefit cost were as follows: First quarter ended March 31, 2021 2020 Pension benefits Service cost $ 1 $ 7 Interest cost 12 47 Expected return on plan assets (23) (70) Recognized net actuarial loss 14 42 Settlements 3 — Net periodic benefit cost (1) 7 26 Discontinued operations — 20 Net amount recognized in continuing operations in Statement of Consolidated Operations $ 7 $ 6 Other postretirement benefits Service cost $ — $ 1 Interest cost 1 6 Recognized net actuarial loss — 2 Amortization of prior service benefit (1) (2) Net periodic benefit cost (1) — 7 Discontinued operations — 6 Net amount recognized in continuing operations in Statement of Consolidated Operations $ — $ 1 (1) Service cost for continuing operations was included within Cost of goods sold, Selling, general administrative, and other expenses, and Research and development expenses; settlements and curtailments were included in Restructuring and other charges; and all other cost components were recorded in Other expense (income), net in the Statement of Consolidated Operations. The amounts included in Net periodic benefit cost include costs related to both continuing and discontinued operations for the first quarter ended March 31, 2020 . |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Provisions | The tax provisions for the first quarter ended March 31, 2021 and 2020 were comprised of the following: First quarter ended March 31, 2021 2020 Pre-tax income at estimated annual effective income tax rate before discrete items $ 34 $ 53 Other discrete items (1) (8) Provision for income taxes $ 33 $ 45 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Reconciliation of Information Used to Compute Basic and Diluted EPS | The information used to compute basic and diluted EPS attributable to Howmet common shareholders was as follows (shares in millions): First quarter ended March 31, 2021 2020 Net income from continuing operations attributable to common shareholders $ 80 $ 153 Income from discontinued operations — 62 Net income attributable to common shareholders 80 215 Less: preferred stock dividends declared 1 1 Net income available to Howmet Aerospace common shareholders - basic and diluted $ 79 $ 214 Average shares outstanding - basic 434 435 Effect of dilutive securities: Stock options 1 1 Stock and performance awards 4 4 Average shares outstanding - diluted 439 440 |
Schedule of Anti Dilutive Securities Excluded From Computation of Weighted Average Shares Outstanding | The following shares were excluded from the calculation of average shares outstanding – diluted as their effect was anti-dilutive (shares in millions): First quarter ended March 31, 2021 2020 Stock options (1) 1 4 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Summary of Changes in Accumulated Other Comprehensive (Loss) by Component | The following table details the activity of the four components that comprise Accumulated other comprehensive loss: First quarter ended March 31, 2021 2020 Pension and other postretirement benefits ( G ) Balance at beginning of period $ (980) $ (2,732) Other comprehensive income: Unrecognized net actuarial loss and prior service cost/benefit 37 1 Tax expense (8) — Total Other comprehensive income before reclassifications, net of tax 29 1 Amortization of net actuarial loss and prior service cost (1) 16 43 Tax expense (2) (3) (7) Total amount reclassified from Accumulated other comprehensive loss, net of tax (3) 13 36 Total Other comprehensive income 42 37 Balance at end of period $ (938) $ (2,695) Foreign currency translation Balance at beginning of period $ (966) $ (596) Foreign currency translation (44) (79) Net amount reclassified from Accumulated other comprehensive loss (4) — 14 Other comprehensive loss (44) (65) Balance at end of period $ (1,010) $ (661) Debt securities Balance at beginning of period $ — $ — Other comprehensive income (5) — 1 Balance at end of period $ — $ 1 Cash flow hedges Balance at beginning of period $ 3 $ (1) Other comprehensive income (loss): Net change from periodic revaluations 8 (11) Tax expense (2) (1) Total Other comprehensive income (loss) before reclassifications, net of tax 6 (12) Net amount reclassified to earnings (3) (1) Tax expense (2) 1 — Total amount reclassified from Accumulated other comprehensive loss, net of tax (3) (2) (1) Total Other comprehensive income (loss) 4 (13) Balance at end of period $ 7 $ (14) Accumulated other comprehensive loss $ (1,941) $ (3,369) (1) These amounts were recorded in Other expense (income), net on the Statement of Consolidation Operations (see Note F ). (2) These amounts were included in Provision for income taxes on the Statement of Consolidated Operations. (3) A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings. (4) Foreign currency translation charges were included in Restructuring and other charges on the Statement of Consolidated Operations due to the sale of foreign entities. (5) Realized gains and losses were included in Other expense (income), net on the Statement of Consolidated Operations. |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory Components | March 31, 2021 December 31, 2020 Finished goods $ 516 $ 528 Work-in-process 627 629 Purchased raw materials 271 292 Operating supplies 39 39 Total inventories $ 1,453 $ 1,488 |
Properties, Plants, and Equip_2
Properties, Plants, and Equipment, net (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plants, and Equipment, Net | March 31, 2021 December 31, 2020 Land and land rights $ 92 $ 98 Structures 1,020 1,033 Machinery and equipment 3,856 3,879 4,968 5,010 Less: accumulated depreciation and amortization 2,644 2,626 2,324 2,384 Construction work-in-progress 200 208 Properties, plants, and equipment, net $ 2,524 $ 2,592 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Information Related to Leases | Operating lease right-of-use assets and lease liabilities in the Consolidated Balance Sheet were as follows: March 31, 2021 December 31, 2020 Right-of-use assets classified in Other noncurrent assets $ 125 $ 131 Current portion of lease liabilities classified in Other current liabilities 37 38 Long-term portion of lease liabilities classified in Other noncurrent liabilities 94 100 Total lease liabilities $ 131 $ 138 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | March 31, 2021 December 31, 2020 5.400% Notes, due 2021 (1) $ — $ 361 5.870% Notes, due 2022 (2) 476 476 5.125% Notes, due 2024 1,250 1,250 6.875% Notes, due 2025 1,200 1,200 5.900% Notes, due 2027 625 625 6.750% Bonds, due 2028 300 300 5.950% Notes due 2037 625 625 4.750% Iowa Finance Authority Loan, due 2042 250 250 Other (3) (13) (12) 4,713 5,075 Less: amount due within one year 489 376 Total long-term debt $ 4,224 $ 4,699 (1) Redeemed on January 15, 2021. (2) Redeemed on May 3, 2021. (3) Includes various financing arrangements related to subsidiaries, unamortized debt discounts and unamortized debt issuance costs related to outstanding notes and bonds listed in the table above. |
Schedule Of Debt Covenant Information | The Company is required to maintain a ratio of Consolidated Net Debt (as defined in the Credit Agreement) to Consolidated EBITDA (as defined in the Credit Agreement) of no greater than 3.50 to 1.00 as of the end of each fiscal quarter for the period of the four fiscal quarters of the Company most recently ended, except as of the end of each fiscal quarter noted below for the period of the four fiscal quarters then ended: No greater than (i) for the quarter ending March 31, 2021 5.50 to 1.00 (ii) for the quarter ending June 30, 2021 5.50 to 1.00 (iii) for the quarter ending September 30, 2021 5.00 to 1.00 (iv) for the quarter ending December 31, 2021 4.75 to 1.00 (v) for the quarter ending March 31, 2022 4.50 to 1.00 (vi) for the quarter ending June 30, 2022 4.50 to 1.00 (vii) for the quarter ending September 30, 2022 4.25 to 1.00 (viii) for the quarter ending December 31, 2022 3.75 to 1.00 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of Carrying Values and Fair Values of Financial Instruments | The carrying values of Cash and cash equivalents, Restricted cash, Derivatives, Noncurrent receivables, and Short-term debt included in the Consolidated Balance Sheet approximate their fair value. The Company holds exchange-traded fixed income securities which are considered available-for-sale securities that are carried at fair value which is based on quoted market prices which are classified in Level 1 of the fair value hierarchy. The fair value of Long-term debt, less amounts due within one year was based on quoted market prices for public debt and on interest rates that are currently available to Howmet for issuance of debt with similar terms and maturities for non-public debt. The fair value amounts for all Long-term debt were classified in Level 2 of the fair value hierarchy. March 31, 2021 December 31, 2020 Carrying Fair Carrying Fair Long-term debt, less amount due within one year $ 4,224 $ 4,831 $ 4,699 $ 5,426 |
Basis of Presentation (Details)
Basis of Presentation (Details) $ in Millions | Apr. 01, 2020company | Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($) | Sep. 30, 2020USD ($) |
Concentration Risk [Line Items] | ||||||
Number of independent, publicly-traded companies resulting from proposed separation transaction | company | 2 | |||||
Capital expenditures | $ 55 | $ 152 | ||||
Decrease to accounts payable, trade | (26) | 132 | ||||
Tax misstatement recorded to retained earnings | $ 443 | $ 364 | ||||
Revision of Prior Period, Error Correction, Adjustment | ||||||
Concentration Risk [Line Items] | ||||||
Capital expenditures | 83 | $ 83 | ||||
Decrease to accounts payable, trade | $ 83 | $ 83 | ||||
Tax misstatement recorded to retained earnings | $ 16 | |||||
Aerospace | Revenue Benchmark | Customer Concentration Risk | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 60.00% | 73.00% |
Arconic Inc. Separation Trans_3
Arconic Inc. Separation Transaction and Discontinued Operations - Narrative (Details) | Apr. 01, 2020company | Mar. 25, 2020USD ($) | Feb. 01, 2020USD ($) | Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Mar. 01, 2020USD ($) | Feb. 07, 2020USD ($) |
Restructuring Cost and Reserve [Line Items] | ||||||||
Number of independent, publicly-traded companies resulting from proposed separation transaction | company | 2 | |||||||
Debt issuance costs incurred | $ 1,000,000 | $ 45,000,000 | ||||||
Aluminum Rolling Mill | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Consideration | $ 50,000,000 | |||||||
Gain (loss) on sale of business | $ (59,000,000) | 6,000,000 | $ 53,000,000 | |||||
Hard Alloy Extrusions Plant In South Korea | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Consideration | $ 62,000,000 | |||||||
Gain (loss) on sale of business | 27,000,000 | |||||||
Lien Notes | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Debt issuance costs incurred | $ 45,000,000 | |||||||
Senior Notes | Second Lien Notes Due 2028 | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Aggregate principal amount | $ 600,000,000 | |||||||
Long-term debt, interest rate | 6.125% | |||||||
Line of Credit | Senior Secured First Lien Term B Loan Facility Due 2027 | Secured Debt | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Aggregate principal amount | $ 600,000,000 | |||||||
Credit agreement term | 7 years |
Arconic Inc. Separation Trans_4
Arconic Inc. Separation Transaction and Discontinued Operations - Summary of Results of Discontinued Operations (Details) - Discontinued Operations, Disposed of by Means Other than Sale $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Sales | $ 1,575 |
Cost of goods sold | 1,293 |
Selling, general administrative, research and development and other expenses | 101 |
Provision for depreciation and amortization | 58 |
Restructuring and other charges | (18) |
Operating income from discontinued operations | 141 |
Interest expense | 7 |
Other expense, net | 41 |
Income from discontinued operations | 93 |
Provision for income taxes | 31 |
Income from discontinued operations after income taxes | $ 62 |
Arconic Inc. Separation Trans_5
Arconic Inc. Separation Transaction and Discontinued Operations - Summary of Property, Plant and Equipment Purchases of the Discontinued Operations (Details) - Discontinued Operations, Disposed of by Means Other than Sale $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Capital expenditures | $ 72 |
Proceeds from the sales of businesses | 112 |
Provision for depreciation and amortization | $ 58 |
Segment Information - Narrative
Segment Information - Narrative (Details) $ in Millions | Jan. 01, 2020USD ($) | Mar. 31, 2021USD ($)segment | Mar. 31, 2020 | Dec. 31, 2020USD ($) | Dec. 31, 2019 |
Segment Reporting Information [Line Items] | |||||
Number of reportable segments | segment | 4 | ||||
Goodwill | $ 4,086 | $ 4,102 | |||
Goodwill, impairment loss | $ 0 | ||||
Revenue Benchmark | Customer Concentration Risk | Aerospace | |||||
Segment Reporting Information [Line Items] | |||||
Concentration risk, percentage | 60.00% | 73.00% | |||
Revenue Benchmark | Customer Concentration Risk | Aerospace | General Electric Company | Engine Products | |||||
Segment Reporting Information [Line Items] | |||||
Concentration risk, percentage | 11.00% | 13.00% | |||
Engineered Structures | |||||
Segment Reporting Information [Line Items] | |||||
Goodwill reallocated, increase (decrease) | 17 | ||||
Percentage of fair value in excess of carrying amount | 15.00% | 60.00% | |||
Engine Products | |||||
Segment Reporting Information [Line Items] | |||||
Goodwill reallocated, increase (decrease) | $ (17) |
Segment Information - Schedule
Segment Information - Schedule of Operating Results of Reportable Segments (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting Information [Line Items] | ||
Sales | $ 1,209 | $ 1,634 |
Segment operating profit | 189 | 258 |
Restructuring and other charges | 9 | 39 |
Provision for depreciation and amortization | 68 | 71 |
Capital expenditures | 55 | 152 |
Third-party sales | ||
Segment Reporting Information [Line Items] | ||
Sales | 1,209 | 1,632 |
Intersegment sales | ||
Segment Reporting Information [Line Items] | ||
Sales | (2) | (5) |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Sales | 1,211 | 1,637 |
Segment operating profit | 226 | 339 |
Restructuring and other charges | 8 | 34 |
Provision for depreciation and amortization | 65 | 65 |
Capital expenditures | 30 | 37 |
Engine Products | Third-party sales | ||
Segment Reporting Information [Line Items] | ||
Sales | 534 | 781 |
Engine Products | Intersegment sales | ||
Segment Reporting Information [Line Items] | ||
Sales | (1) | (2) |
Engine Products | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Sales | 535 | 783 |
Segment operating profit | 101 | 165 |
Restructuring and other charges | 5 | 13 |
Provision for depreciation and amortization | 31 | 30 |
Capital expenditures | 11 | 19 |
Fastening Systems | Third-party sales | ||
Segment Reporting Information [Line Items] | ||
Sales | 272 | 385 |
Fastening Systems | Intersegment sales | ||
Segment Reporting Information [Line Items] | ||
Sales | 0 | 0 |
Fastening Systems | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Sales | 272 | 385 |
Segment operating profit | 45 | 96 |
Restructuring and other charges | 2 | 2 |
Provision for depreciation and amortization | 12 | 12 |
Capital expenditures | 5 | 8 |
Engineered Structures | Third-party sales | ||
Segment Reporting Information [Line Items] | ||
Sales | 176 | 275 |
Engineered Structures | Intersegment sales | ||
Segment Reporting Information [Line Items] | ||
Sales | (1) | (3) |
Engineered Structures | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Sales | 177 | 278 |
Segment operating profit | 10 | 28 |
Restructuring and other charges | 1 | 17 |
Provision for depreciation and amortization | 12 | 13 |
Capital expenditures | 5 | 3 |
Forged Wheels | Third-party sales | ||
Segment Reporting Information [Line Items] | ||
Sales | 227 | 191 |
Forged Wheels | Intersegment sales | ||
Segment Reporting Information [Line Items] | ||
Sales | 0 | 0 |
Forged Wheels | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Sales | 227 | 191 |
Segment operating profit | 70 | 50 |
Restructuring and other charges | 0 | 2 |
Provision for depreciation and amortization | 10 | 10 |
Capital expenditures | $ 9 | $ 7 |
Segment Information - Schedul_2
Segment Information - Schedule of Segment Operating Profit to Consolidated Income before Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting Information [Line Items] | ||
Segment operating profit | $ 189 | $ 258 |
Interest expense | (72) | (84) |
Other (expense) income, net | (4) | 24 |
Income before income taxes | 113 | 198 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Segment operating profit | 226 | 339 |
Restructuring and other charges | ||
Segment Reporting Information [Line Items] | ||
Segment operating profit | (9) | (39) |
Corporate expense | ||
Segment Reporting Information [Line Items] | ||
Segment operating profit | $ (28) | $ (42) |
Segment Information - Reconcili
Segment Information - Reconciliation of Capital Expenditures (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting Information [Line Items] | ||
Capital expenditures | $ 55 | $ 152 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | 30 | 37 |
Corporate expense | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | $ 25 | $ 115 |
Segment Information - Disaggreg
Segment Information - Disaggregation of Revenue by Major End Market Served (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenue, Major Customer [Line Items] | ||
Sales | $ 1,209 | $ 1,634 |
Third-party sales | ||
Revenue, Major Customer [Line Items] | ||
Sales | 1,209 | 1,632 |
Third-party sales | Engine Products | ||
Revenue, Major Customer [Line Items] | ||
Sales | 534 | 781 |
Third-party sales | Fastening Systems | ||
Revenue, Major Customer [Line Items] | ||
Sales | 272 | 385 |
Third-party sales | Engineered Structures | ||
Revenue, Major Customer [Line Items] | ||
Sales | 176 | 275 |
Third-party sales | Forged Wheels | ||
Revenue, Major Customer [Line Items] | ||
Sales | 227 | 191 |
Third-party sales | Aerospace - Commercial | ||
Revenue, Major Customer [Line Items] | ||
Sales | 455 | 948 |
Third-party sales | Aerospace - Commercial | Engine Products | ||
Revenue, Major Customer [Line Items] | ||
Sales | 227 | 507 |
Third-party sales | Aerospace - Commercial | Fastening Systems | ||
Revenue, Major Customer [Line Items] | ||
Sales | 148 | 257 |
Third-party sales | Aerospace - Commercial | Engineered Structures | ||
Revenue, Major Customer [Line Items] | ||
Sales | 80 | 184 |
Third-party sales | Aerospace - Commercial | Forged Wheels | ||
Revenue, Major Customer [Line Items] | ||
Sales | 0 | 0 |
Third-party sales | Aerospace - Defense | ||
Revenue, Major Customer [Line Items] | ||
Sales | 270 | 241 |
Third-party sales | Aerospace - Defense | Engine Products | ||
Revenue, Major Customer [Line Items] | ||
Sales | 151 | 127 |
Third-party sales | Aerospace - Defense | Fastening Systems | ||
Revenue, Major Customer [Line Items] | ||
Sales | 42 | 44 |
Third-party sales | Aerospace - Defense | Engineered Structures | ||
Revenue, Major Customer [Line Items] | ||
Sales | 77 | 70 |
Third-party sales | Aerospace - Defense | Forged Wheels | ||
Revenue, Major Customer [Line Items] | ||
Sales | 0 | 0 |
Third-party sales | Commercial Transportation | ||
Revenue, Major Customer [Line Items] | ||
Sales | 273 | 237 |
Third-party sales | Commercial Transportation | Engine Products | ||
Revenue, Major Customer [Line Items] | ||
Sales | 0 | 0 |
Third-party sales | Commercial Transportation | Fastening Systems | ||
Revenue, Major Customer [Line Items] | ||
Sales | 46 | 46 |
Third-party sales | Commercial Transportation | Engineered Structures | ||
Revenue, Major Customer [Line Items] | ||
Sales | 0 | 0 |
Third-party sales | Commercial Transportation | Forged Wheels | ||
Revenue, Major Customer [Line Items] | ||
Sales | 227 | 191 |
Third-party sales | Industrial and Other | ||
Revenue, Major Customer [Line Items] | ||
Sales | 211 | 206 |
Third-party sales | Industrial and Other | Engine Products | ||
Revenue, Major Customer [Line Items] | ||
Sales | 156 | 147 |
Third-party sales | Industrial and Other | Fastening Systems | ||
Revenue, Major Customer [Line Items] | ||
Sales | 36 | 38 |
Third-party sales | Industrial and Other | Engineered Structures | ||
Revenue, Major Customer [Line Items] | ||
Sales | 19 | 21 |
Third-party sales | Industrial and Other | Forged Wheels | ||
Revenue, Major Customer [Line Items] | ||
Sales | $ 0 | $ 0 |
Restructuring and Other Charg_3
Restructuring and Other Charges - Summary (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Restructuring and Related Activities [Abstract] | ||
Layoff costs | $ 0 | $ 22 |
Adjustments to (reversals of) previously recorded layoff reserves | 1 | (2) |
Pension, Other post-retirement benefits and Deferred Compensation - net settlements | 3 | 0 |
Net loss related to divestitures of assets and businesses | 4 | 16 |
Other | 1 | 3 |
Restructuring and other charges | $ 9 | $ 39 |
Restructuring and Other Charg_4
Restructuring and Other Charges - Narrative (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($)employee | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other charges | $ 9 | $ 39 |
Settlements | 3 | 0 |
Accelerated depreciation | 1 | |
Gain (loss) on sale of assets | 2 | |
Pension benefits | ||
Restructuring Cost and Reserve [Line Items] | ||
Settlements | 3 | 0 |
Pension benefits | U.K. Forging Business | ||
Restructuring Cost and Reserve [Line Items] | ||
Settlements | 12 | |
Asset Impairment Associated With Facility Closure | France Small Business | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other charges | 4 | |
U.S. Pension Plan Settlement Accounting | Pension benefits | ||
Restructuring Cost and Reserve [Line Items] | ||
Settlements | 3 | |
Reversal of prior period programs | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other charges | 1 | (2) |
Layoff costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other charges | $ 4 | $ 22 |
Number of employees associated with layoff costs | employee | 460 | |
Layoff costs | Corporate expense | ||
Restructuring Cost and Reserve [Line Items] | ||
Number of employees associated with layoff costs | employee | 23 | |
Layoff costs | Engine Products | ||
Restructuring Cost and Reserve [Line Items] | ||
Number of employees associated with layoff costs | employee | 175 | |
Layoff costs | Fastening Systems | ||
Restructuring Cost and Reserve [Line Items] | ||
Number of employees associated with layoff costs | employee | 106 | |
Layoff costs | Engineered Structures | ||
Restructuring Cost and Reserve [Line Items] | ||
Number of employees associated with layoff costs | employee | 100 | |
Layoff costs | Forged Wheels | ||
Restructuring Cost and Reserve [Line Items] | ||
Number of employees associated with layoff costs | employee | 56 | |
Executive severance | U.K. Forging Business | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other charges | $ 6 | |
Employee severance, life insurance benefits | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other charges | $ 3 |
Restructuring and Other Charg_5
Restructuring and Other Charges - Activity and Reserve Balances for Restructuring Charges (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Restructuring Reserve [Roll Forward] | ||
Restructuring reserve beginning balance | $ 54 | |
Cash payments | (24) | |
Restructuring and other charges | 9 | $ 39 |
Other | (10) | |
Restructuring reserve ending balance | 29 | |
Settlements | 3 | 0 |
Accelerated depreciation | 1 | |
Pension benefits | ||
Restructuring Reserve [Roll Forward] | ||
Settlements | 3 | 0 |
Layoff costs | ||
Restructuring Reserve [Roll Forward] | ||
Restructuring reserve beginning balance | 54 | |
Cash payments | (24) | |
Restructuring and other charges | 4 | $ 22 |
Other | (5) | |
Restructuring reserve ending balance | 29 | |
Other exit costs | ||
Restructuring Reserve [Roll Forward] | ||
Restructuring reserve beginning balance | 0 | |
Cash payments | 0 | |
Restructuring and other charges | 5 | |
Other | (5) | |
Restructuring reserve ending balance | 0 | |
Accelerated depreciation | 1 | |
Other Layoffs Costs | ||
Restructuring Reserve [Roll Forward] | ||
Restructuring and other charges | 2 | |
Facility closing | Small Manufacturing Business | ||
Restructuring Reserve [Roll Forward] | ||
Restructuring and other charges | $ 4 |
Other Expense (Income), Net (De
Other Expense (Income), Net (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Other Income and Expenses [Abstract] | ||
Non-service related net periodic benefit cost | $ 3 | $ 6 |
Interest income | 0 | (4) |
Foreign currency losses, net | 2 | 0 |
Net loss from asset sales | 3 | 2 |
Deferred compensation | 2 | (10) |
Other, net | (6) | (18) |
Total | $ 4 | $ (24) |
Pension and Other Postretirem_3
Pension and Other Postretirement Benefits - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Settlements | $ 3 | $ 0 |
Pension benefits | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | 1 | 7 |
Interest cost | 12 | 47 |
Expected return on plan assets | (23) | (70) |
Recognized net actuarial loss | 14 | 42 |
Settlements | 3 | 0 |
Net periodic benefit cost | 7 | 26 |
Discontinued operations | 0 | 20 |
Net periodic benefit cost | 7 | 6 |
Other postretirement benefits | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | 0 | 1 |
Interest cost | 1 | 6 |
Recognized net actuarial loss | 0 | 2 |
Amortization of prior service benefit | (1) | (2) |
Net periodic benefit cost | 0 | 7 |
Discontinued operations | 0 | 6 |
Net periodic benefit cost | $ 0 | $ 1 |
Pension and Other Postretirem_4
Pension and Other Postretirement Benefits - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restructuring and other charges | $ 9 | $ 39 |
Pension Settlement Cost | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restructuring and other charges | 3 | |
Other postretirement benefits | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Increase (decrease) in obligation, pension benefits | $ (39) |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate reconciliation (percent) | 30.40% | 26.90% |
Effective income tax rate reconciliation, including discrete items (percent) | 29.20% | 22.70% |
Discrete income tax charge (benefit) | $ (1) | $ 8 |
Income Taxes - Summary of Tax P
Income Taxes - Summary of Tax Provisions (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Pre-tax income at estimated annual effective income tax rate before discrete items | $ 34 | $ 53 |
Other discrete items | (1) | (8) |
Provision for income taxes | $ 33 | $ 45 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation of Information Used to Compute Basic and Diluted EPS (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Net income from continuing operations attributable to common shareholders | $ 80 | $ 153 |
Income from discontinued operations | 0 | 62 |
Net income | 80 | 215 |
Less: preferred stock dividends declared | 1 | 1 |
Net income available to Howmet Aerospace common shareholders - basic and diluted | $ 79 | $ 214 |
Average shares outstanding - basic (in shares) | 434 | 435 |
Effect of dilutive securities: | ||
Stock options (in shares) | 1 | 1 |
Stock and performance awards (in shares) | 4 | 4 |
Average shares outstanding - diluted (in shares) | 439 | 440 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - shares shares in Millions | Mar. 31, 2021 | Mar. 31, 2020 |
Earnings Per Share [Abstract] | ||
Common stock outstanding (in shares) | 434 | 436 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Anti Dilutive Securities Excluded From Computation of Weighted Average Shares Outstanding (Details) - Stock options - $ / shares shares in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Number of anti-dilutive securities (in shares) | 1 | 4 |
Weighted average exercise price of options (in usd per share) | $ 31.86 | $ 27.65 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | $ 3,577 | |
Other comprehensive income: | ||
Total Other comprehensive income (loss), net of tax | 2 | $ (40) |
Ending balance | 3,662 | |
Accumulated other comprehensive loss | ||
Other comprehensive income: | ||
Total Other comprehensive income (loss), net of tax | 2 | (40) |
Ending balance | (1,941) | (3,369) |
Pension and other postretirement benefits | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | (980) | (2,732) |
Other comprehensive income: | ||
Unrecognized net actuarial loss and prior service cost/benefit | 37 | 1 |
Tax expense | (8) | 0 |
Total Other comprehensive income (loss) before reclassifications, net of tax | 29 | 1 |
Net amount reclassified to earnings | 16 | 43 |
Tax expense | (3) | (7) |
Amount reclassified from Accumulated other comprehensive loss, net of tax | 13 | 36 |
Total Other comprehensive income (loss), net of tax | 42 | 37 |
Ending balance | (938) | (2,695) |
Foreign currency translation | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | (966) | (596) |
Other comprehensive income: | ||
Total Other comprehensive income (loss) before reclassifications, net of tax | (44) | (79) |
Amount reclassified from Accumulated other comprehensive loss, net of tax | 0 | 14 |
Total Other comprehensive income (loss), net of tax | (44) | (65) |
Ending balance | (1,010) | (661) |
Debt securities | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | 0 | 0 |
Other comprehensive income: | ||
Total Other comprehensive income (loss), net of tax | 0 | 1 |
Ending balance | 0 | 1 |
Cash flow hedges | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | 3 | (1) |
Other comprehensive income: | ||
Unrecognized net actuarial loss and prior service cost/benefit | 8 | (11) |
Tax expense | (2) | (1) |
Total Other comprehensive income (loss) before reclassifications, net of tax | 6 | (12) |
Net amount reclassified to earnings | (3) | (1) |
Tax expense | 1 | 0 |
Amount reclassified from Accumulated other comprehensive loss, net of tax | (2) | (1) |
Total Other comprehensive income (loss), net of tax | 4 | (13) |
Ending balance | $ 7 | $ (14) |
Receivables (Details)
Receivables (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2021USD ($)agreement | Mar. 31, 2020USD ($) | Dec. 31, 2020USD ($) | |
Schedule Of Financial Receivables [Line Items] | |||
Accounts receivable securitization arrangements | agreement | 2 | ||
Deferred purchase program receivable | $ 68 | $ 12 | |
Net cash funding received during the period | 26 | $ 52 | |
Amount of cash draws under arrangement during the period | 18 | 98 | |
Amount of cash repayments under arrangement during the period | 44 | 150 | |
Accounts receivable remaining outstanding | 65 | 46 | |
Accounts receivable securitization | 425 | 425 | |
Accounts receivable securitization amount drawn | 243 | 250 | |
Reduction in accounts receivable from securitization | 7 | ||
Customer One | |||
Schedule Of Financial Receivables [Line Items] | |||
Accounts receivables sold | 7 | 14 | |
Accounts receivable remaining outstanding | 7 | ||
Customer Two | |||
Schedule Of Financial Receivables [Line Items] | |||
Accounts receivables sold | 59 | 17 | |
Accounts receivable remaining outstanding | 57 | ||
Special Purpose Entity | |||
Schedule Of Financial Receivables [Line Items] | |||
Accounts receivables sold | 84 | ||
Receivables, maximum allowable purchase limit | 125 | ||
Financing receivables, held as collateral | 16 | $ 33 | |
Arconic Corporation | |||
Schedule Of Financial Receivables [Line Items] | |||
Deferred purchase program receivable | 282 | ||
Maximum | |||
Schedule Of Financial Receivables [Line Items] | |||
Funding of customer receivables sold, maximum | $ 400 | $ 300 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventory Components (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 516 | $ 528 |
Work-in-process | 627 | 629 |
Purchased raw materials | 271 | 292 |
Operating supplies | 39 | 39 |
Total inventories | $ 1,453 | $ 1,488 |
Inventories - Narrative (Detail
Inventories - Narrative (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Inventories valued on a LIFO basis | $ 472 | $ 458 |
Total inventories valued on an average-cost basis | $ 139 | $ 131 |
Properties, Plants, and Equip_3
Properties, Plants, and Equipment, net (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 4,968 | $ 5,010 | |
Less: accumulated depreciation and amortization | 2,644 | 2,626 | |
Properties, plants and equipment excluding construction work in progress | 2,324 | 2,384 | |
Construction work-in-progress | 200 | 208 | |
Properties, plants, and equipment, net | 2,524 | 2,592 | |
Capital expenditures incurred but not yet paid | 28 | $ 48 | |
Land and land rights | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 92 | 98 | |
Structures | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 1,020 | 1,033 | |
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 3,856 | $ 3,879 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Leases [Abstract] | ||
Operating lease cost | $ 17 | $ 18 |
Leases - Operating Lease Assets
Leases - Operating Lease Assets and Liabilities in the Consolidated Balance Sheet (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:OtherAssetsNoncurrent | us-gaap:OtherAssetsNoncurrent |
Right-of-use assets classified in Other noncurrent assets | $ 125 | $ 131 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other current liabilities | Other current liabilities |
Current portion of lease liabilities classified in Other current liabilities | $ 37 | $ 38 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other noncurrent liabilities and deferred credits | Other noncurrent liabilities and deferred credits |
Long-term portion of lease liabilities classified in Other noncurrent liabilities | $ 94 | $ 100 |
Total lease liabilities | $ 131 | $ 138 |
Debt - Schedule of Long-Term De
Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Jan. 15, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | |||
Other | $ (13) | $ (12) | |
Long-term debt | 4,713 | 5,075 | |
Less: amount due within one year | 489 | 376 | |
Total long-term debt | 4,224 | $ 4,699 | |
5.400% Notes, due 2021 | |||
Debt Instrument [Line Items] | |||
Long-term debt, interest rate | 5.40% | 5.40% | |
Amount outstanding | $ 0 | $ 361 | |
5.870% Notes, due 2022 | |||
Debt Instrument [Line Items] | |||
Long-term debt, interest rate | 5.87% | ||
Amount outstanding | $ 476 | 476 | |
5.125% Notes, due 2024 | |||
Debt Instrument [Line Items] | |||
Long-term debt, interest rate | 5.125% | ||
Amount outstanding | $ 1,250 | 1,250 | |
6.875% Notes, due 2025 | |||
Debt Instrument [Line Items] | |||
Long-term debt, interest rate | 6.875% | ||
Amount outstanding | $ 1,200 | 1,200 | |
5.900% Notes, due 2027 | |||
Debt Instrument [Line Items] | |||
Long-term debt, interest rate | 5.90% | ||
Amount outstanding | $ 625 | 625 | |
6.750% Bonds, due 2028 | |||
Debt Instrument [Line Items] | |||
Long-term debt, interest rate | 6.75% | ||
Amount outstanding | $ 300 | 300 | |
5.950% Notes due 2037 | |||
Debt Instrument [Line Items] | |||
Long-term debt, interest rate | 5.95% | ||
Amount outstanding | $ 625 | 625 | |
4.750% Iowa Finance Authority Loan, due 2042 | |||
Debt Instrument [Line Items] | |||
Long-term debt, interest rate | 4.75% | ||
Amount outstanding | $ 250 | $ 250 |
Debt - Public Debt (Details)
Debt - Public Debt (Details) - USD ($) $ in Millions | May 03, 2021 | Jan. 15, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
5.400% Notes, due 2021 | |||||
Debt Instrument [Line Items] | |||||
Early redemption of debt | $ 361 | ||||
Long-term debt, interest rate | 5.40% | 5.40% | |||
Accrued interest paid | $ 5 | ||||
Interest expense | $ 19 | ||||
Amount outstanding | $ 0 | $ 361 | |||
5.870% Notes, due 2022 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, interest rate | 5.87% | ||||
Amount outstanding | $ 476 | $ 476 | |||
5.870% Notes, due 2022 | Subsequent Event | |||||
Debt Instrument [Line Items] | |||||
Accrued interest paid | $ 5 | ||||
Interest expense | 28 | ||||
Payment for early redemption of debt | $ 503 | ||||
5.870% Notes, due 2022 | Forecast | |||||
Debt Instrument [Line Items] | |||||
Early termination premium | $ 22 |
Debt - Credit Facilities (Detai
Debt - Credit Facilities (Details) - Revolving Credit Agreement - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | |||
Credit agreement term | 5 years | ||
Long-term line of credit | $ 1,000 | $ 3,000 | |
Amount outstanding | $ 0 | 0 | |
Amount borrowed | 0 | $ 0 | |
Year Ending December 2021 | |||
Debt Instrument [Line Items] | |||
Maximum common stock dividends and share repurchases | 250 | ||
Year Ending December 2022 | |||
Debt Instrument [Line Items] | |||
Maximum common stock dividends and share repurchases | $ 400 |
Debt - Schedule of Net Debt To
Debt - Schedule of Net Debt To Consolidated EBITDA Ratio (Details) - Revolving Credit Agreement | 1 Months Ended | 3 Months Ended |
Mar. 31, 2020 | Mar. 31, 2021 | |
Debt Conversion [Line Items] | ||
Debt covenants, net debt to consolidated EBITDA ratio | 3.50 | |
Quarter ending March 31, 2021 | ||
Debt Conversion [Line Items] | ||
Debt covenants, net debt to consolidated EBITDA ratio | 5.50 | |
Quarter ending June 30, 2021 | ||
Debt Conversion [Line Items] | ||
Debt covenants, net debt to consolidated EBITDA ratio | 5.50 | |
Quarter ending September 30, 2021 | ||
Debt Conversion [Line Items] | ||
Debt covenants, net debt to consolidated EBITDA ratio | 5 | |
Quarter ending December 31, 2021 | ||
Debt Conversion [Line Items] | ||
Debt covenants, net debt to consolidated EBITDA ratio | 4.75 | |
Quarter ending March 31, 2022 | ||
Debt Conversion [Line Items] | ||
Debt covenants, net debt to consolidated EBITDA ratio | 4.50 | |
Quarter ending June 30, 2022 | ||
Debt Conversion [Line Items] | ||
Debt covenants, net debt to consolidated EBITDA ratio | 4.50 | |
Quarter ending September 30, 2022 | ||
Debt Conversion [Line Items] | ||
Debt covenants, net debt to consolidated EBITDA ratio | 4.25 | |
Quarter ending December 31, 2022 | ||
Debt Conversion [Line Items] | ||
Debt covenants, net debt to consolidated EBITDA ratio | 3.75 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Derivative [Line Items] | ||
Restricted cash | $ 1 | $ 1 |
Carrying value | ||
Derivative [Line Items] | ||
Long-term debt, less amount due within one year | 4,224 | 4,699 |
Fair value | ||
Derivative [Line Items] | ||
Long-term debt, less amount due within one year | $ 4,831 | $ 5,426 |
Divestitures (Details)
Divestitures (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 15, 2021 | Jan. 31, 2020 | |
Fastening Systems | Small Manufacturing Facility in France | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Consideration | $ 9 | |||
Asset impairment charges | $ 4 | |||
Engineered Structures | Small manufacturing facility in the United Kingdom | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Consideration | $ 12 | |||
Asset impairment charges | $ 12 |
Contingencies and Commitments (
Contingencies and Commitments (Details) $ in Millions | Jan. 01, 2021 | Dec. 23, 2020defendant | Jun. 06, 2019plaintiff | Mar. 31, 2021USD ($)location | Dec. 31, 2020USD ($) | Jun. 26, 2020USD ($) |
Loss Contingencies [Line Items] | ||||||
Number of cleanup locations | location | 30 | |||||
Remediation reserve balance | $ 10 | $ 10 | ||||
Remediation reserve balance, classified as a current liability | 5 | 5 | ||||
Payments related to remediation expenses applied against the reserve | 1 | |||||
Expected period of time for decision to be received | 6 months | |||||
Guarantees of third party related to project financing | 33 | |||||
Combined fair value of guarantees | 6 | 12 | ||||
Total amount committed under outstanding surety bonds | 46 | |||||
Surety bonds, amount outstanding | 25 | |||||
United Kingdom Litigation | ||||||
Loss Contingencies [Line Items] | ||||||
Number of defendants | defendant | 23 | |||||
Behrens et al v Arconic Inc et al | ||||||
Loss Contingencies [Line Items] | ||||||
Number of plaintiffs | plaintiff | 247 | |||||
Lehman Brothers International (Europe) (“LBIE”) Claims | ||||||
Loss Contingencies [Line Items] | ||||||
Estimate of claim | $ 64 | |||||
Bank Loan Obligations | ||||||
Loss Contingencies [Line Items] | ||||||
Letters of credit, total amount | 113 | |||||
Other Noncurrent Liabilities and Deferred Credits | Separation Agreement | ||||||
Loss Contingencies [Line Items] | ||||||
Guarantees of third party related to project financing | 1,356 | $ 1,398 | ||||
Alcoa Corporation Workers Compensation Claims | ||||||
Loss Contingencies [Line Items] | ||||||
Letters of credit, total amount outstanding | 53 | |||||
Arconic Corporation Environmental Obligations | ||||||
Loss Contingencies [Line Items] | ||||||
Letters of credit, total amount outstanding | 23 | |||||
Arconic Corporation Environmental Obligations | Letters Of Credit, Pending Cancellation | ||||||
Loss Contingencies [Line Items] | ||||||
Letters of credit, total amount outstanding | $ 6 | |||||
Maximum | Recurring Costs of Managing Hazardous Substances and Environmental Programs | ||||||
Loss Contingencies [Line Items] | ||||||
Percentage of cost of goods sold (percent) | 1.00% |