ARNC - Earnings call transcript Q3 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Arconic's Third Quarter 2019 Earnings Conference Call. My name is Dennis, and I will be your operator for today.

As a reminder, today's conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Paul Luther, Vice President of Investor Relations. Please proceed.

Paul Luther

Dennis. you, Thank welcome Call. and Third XXXX Quarter Good to Conference Earnings morning, Arconic's I'm Chief Officer. Chairman Ken Plant, joined John by and Vice and Giacobbe, President Executive Chief Financial Executive and Officer; will After John comments questions. and we by take Ken, your today's I forward-looking will and statements you events contain future discussion would to remind like expectations. to that relating

filings. factors earnings cause from SEC the find listed in press projections most these and today's actual our results can You and company's that could presentation release in materially to differ recent

addition, non-GAAP directly John. discussion. GAAP found In some today's Reconciliations that, like to and financial be presentation. our included measures in in I'd release to we've financial can the press the comparable in to turn appendix With over in the most today's measures call

John Plant

for and call Good the you this morning, everyone, joining morning. thank

a lot items. the let to some get content unpacking start of through, me We so of have

RemainCo. and increased contains two successor three X, products, will be business GRP. results and move Products, Global of now see previous EP&F the new wheels. This of segments and part and as is X. reporting Let's Slide structures, that TCS, you to be be of provide the into this quarter, be Rolled On new Products Aerospace, our GRP Slide Engineered engine and engineered segments. post will will fastening Forgings will systems, units forged separation. X visibility we reported the in EP&F will Starting EP&S, Howmet to companies two company,

named Throughout presentation refer and segments. building This the will to GRP segment. will Rolled Regarding entity Corporation. to and adding will the and construction SpinCo as Products, Global business we EP&F new our we be today, be this Arconic

quarter. and highlights I'll to comment move third on Now the Slide for X,

to up year-over-year for third aluminum continue up and quarter and revenue X% was X%. our EP&F price, changes currency, adjusts Organic was which X% as was was we in key billion. markets. grow many organic up The portfolio $X.X revenue, of Revenue strong. GRP

$XXX income, and by expanded flow, was margin points. margin year. XX%, was basis special million to points. segment's QX. earnings also per was the and XXX points basis Products profit year-over-year basis by excluding items, earnings in Arconic. Rolled year-over-year XX expanded segment's sequentially each Global operating last like Engineered share up excluding Products items, margin expansion. $X.XX from excluding margin and Forgings XXX XX%. Operating was and share, segment's on costs, and would operating per up basis special from Earnings separation points comment $XXX for up up free QX XXX million share per cash QX Adjusted best performance was QX year-to-date I

reduction, pricing, raised be items the I million of We repurchases acquisition continue cost Year-to-date, share average of allocation, million shareholders to for and the share I up Earnings shares. guidance. earnings common XX.X Later After stock completion basis of price completed repurchases. comment capital the year-over-year. will call, per of stock then of the third will to in have with weighted guidance return the return assets $X.X XX.X%, points money was that XXX call, billion XXX update I on separation. net stated to provide for a at XXXX. $XX.XX on we divestitures, time will portfolio share total in February an regular our namely in tax, a

to of a Let to give deeper QX it Ken turn over performance. me view

Kenneth Giacobbe

John. you, Thank

with in EP&F growth was in the softness $XXX was markets. the revenue. in was of delivered and and packaging GRP Now its let's represents up the strong next-generation the is double-digit up had key of industrial aerospace, model. X% all Organic Its GRP move to and as X% which transitioning highest and its automotive with up revenue quarter, XX% Ford Slide quarter. million the year-over-year third results for EP&F financial revenue F-XXX X%. X growth growth for products, market to over aerospace, up

In new we revenue $XXX the Price by third revenue along increases segment organic Operating increased distribution quarter, increases added million the segments driven X XX% for across transportation. for third delivered each a segments, was give impact of into aerospace, by income, million, special market order items and the year-over-year. up commercial have the quarter spanned revenue year-over-year. $XX you with to both price We new excluding for in consecutive appendix. industrial, with favorable visibility

remain We expect favorable strong. pricing to demand for products our continue as

mainly impacted also operating This income, $XX savings favorably Higher favorable by was million, X led aerospace. volumes to program, was were reductions price million third the costs, cost-out items. approximately by the Lower quarter. XX quarter. including our partially XX in Net which by million year-over-year aluminum by income in driven in cost the quarter generated material raw of offset operating

North plant quarter. industrial packaging Tennessee more America The First, profitable to Tennessee our of out improve continues the to products. transition of each plant

We improvement. expect QX inflection point be with to profit year-over-year the

The second of aluminum item extrusion plants. one was performance our at

issues pricing are actions. with operational improvements addressing and the We

However, for we additional have opportunities improvement.

by cash, and Lastly, value. we performance had in higher equity profit, compensation improved costs driven

the We on the appendix. of special income, have XX included reconciliation items, operating Slide excluding of

is the of Pension $XXX have quarter appendix. with the million Slide detailed were free guidance, the consistent quarter, separation. XXXX. XX that than pension than on are of on third in was million and payments which OPEB year. or of more Adjusted million third planned flow we the to annual the unfavorable $XX note contribution million contributions in track $XX million $XXX million million, flow was and $XX our cash last the of quarter the related cash our OPEB payments $XX Please in Year-to-date third estimate excluded with quarter in quarter more $XXX which

net is cash free million Capital a On free costs payments. excluding These prior somewhat X interest lower quarter were down expenditures basis, the $XXX expenditures, was year. items to Year-to-date, support improved the by which approximately generation higher separation million in lower is $XXX million, the year-to-date were flow capital growth. year-over-year. working $XXX primarily than favorable driven revenue income, higher capital flow pension offset cash and favorable our contributions, items: by lower

excluding Diluted The earnings earnings count $X.XX, by and diluted period. share of raw $X.XX. higher than cost special was of of per higher operational XX% per improvements share material was items, and share lower driven per $X.XX primarily the share, lower $X.XX, comparable

XX% Now $XXX X. results let's charges items. items. move Slide pretax the pretax to our X quarter, of special to million items on the reported the special In Approximately included related third of

the associated to million. be the mill associated rolling First, million are approximately primarily in with $XXX the and charge, in divestitures an estimated of XXX U.K. aluminum Net forgings proceeds with business noncash the divestiture Brazil.

be on special second a separation. Slide appendix. concerning $XX of in the planned The the cash XX found More is details for item charge with million items quarter can special associated

that a of year, plan of businesses assets are stated or or our investment special with of businesses unacceptable the to not not the For capital our items the incurred material bottom with majority with significant that focus, that divesting businesses date fit consistent to been do returns have require line.

expect, to As approximately of are noncash. date would you the charges XX%

commercial at Organic in by aerospace engines, operating Segment third In operating Slide was profit transportation. a $XXX XX%. favorable let's and driven segment record aerospace quarter, items, million, billion. profit defense in $X.X Now revenue to increase was X%. up The revenue volume was EP&F's growth several the up X. was move including

we and cost lower material higher Additionally, net pricing costs, reductions. had raw

year-over-year. by segment industrial XX% XXX our year-over-year $XXX X.X%. In Despite revenue was pricing lower points XXX extrusions resulting also quarter, prices The challenges transition, internal revenue segment up and including improvement operating The XX.X%. scrap segment profit $X.X utilization. basis operating markets. to in expanded packaging, the was the growth operating margin in margin operating in GRP's driven aerospace and up million, Organic and year-over-year in in by points aluminum Segment was we had was cost aluminum profit third billion. the basis X%. increased Also, net our improvements reductions, favorable and to commercial Tennessee industrial GRP's transportation, favorable

with move achievements. the Slide X let's Now key to

aerospace business XX%; revenue had engines, aerospace revenue EP&F for aerospace commercial was a On defense, follows: aerospace XX%; year-over-year quarterly basis, and X%. engines record up organic and transportation, Our as defense.

Favorable revenue GRP's $XX in achieved improvements continued improvements organically Price products year-over-year. EP&F we quarter increase an as airframe XX% year-over-year industrial prices. third the up pricing the in in was in commercial transportation the million price commercial $XX increase year-over-year a than consumption more internal increases. in markets resulted year. utilization resulted versus last of in XX% quarter scrap an scrap of Improvements and same in in internal million the

CapEx Arconic's and XX.X%, spent net on is $XXX XXX points is was the forged projects XX% year-over-year. $XX aerospace has industrial been airfoils, capacity. Year-to-date, of aerospace year-over-year. down Approximately expand million, we rings, as on million up return return-seeking CapEx basis products wheels which assets

on returns. comment asset a our Lastly, pension U.S.

liability pension returns end-of-year At XX%. approximately remeasure of XX, the taking September the returns we net year of were and full rates. our OPEB year, into our asset XXXX will asset year-to-date account end As the discount and

Through declined the we September, would the the partially offset have interest having occurred substantially of rates since XXXX. lower asset at the rate. have -- end strong remeasured returns had remeasurement if QX, discount If

of at associated of share let briefly at with the finished $X.X and $X debt repurchases. of EBITDA quarter $X.X an in repurchases structure Gross third the debt debt the cash continues We EBITDA the is XXXX. provide our to stands $X.X an the improve Before turning Net quarter appendix. me billion despite it X% X.XXx, of back billion which billion. executing share improvement is compared year-over-year stands to to on capital approximately billion on year-to-date. John, Net XX update net after flow approximately debt to cash with Slide to

quarter billion will less despite our based year fourth current $X.X than share repurchases. of We a executing net expect EBITDA ago on that debt guidance, quarter to be approximately

John. it me that, With back let turn to

John Plant

XX Slide Ken, and on move focus let's key Thanks, our to areas.

For ahead commitments. or track our with either on all items, we're

reductions million, be rate from increased cost of quarter up being is commitments operating Third $XXX Run to our The million. cost costs prior of million. are million. reduced $XXX to prior reduction by projected $XXX XXXX from our were operating $XXX year-to-date target million, annual commitment $XXX up

three price of pricing, Regarding consecutive had year-over-year quarters increases. we

million. just LTA our call, year-to-date upon XXXX a quarter prior phenomenon. are And are Third a earnings part commented increases price rolling not process. of price They're increases $XXX as now in renewal

future already XXXX price are planned. XXXX the increases Aerospace With Howmet business, and

million of capital shares. common the XX.X purchase Moving stock this common repurchases X $XX.XX $X.X approved remaining completed we repurchase or was allocation. of Year-to-date, a share in billion. authority board weighted The $XXX Management Arconic on of average total May totaling million has price year. stock by to

count. notes This million billion were is shares on These and common additive Absent already in share convertible of on of our activity, share reducing shares, to XXXX $XXX stock -- gross issued. our repurchases it approximately year-end addition, a burden XX% stock has In shares share diluted count in by XX million other by also retirements benefit reduced disbursed reduction no sorry, the $X.X million cash shares. and and the diluted is year-on-year. new settled for October both reduces XXX to debt count reduced approximately further that XX,

on of our CapEx is XX%. be of continues $XXX million, CapEx track sustaining projects is a down XX% to and year-to-date capital, which year-to-date. return-seeking with XX% spend for

Moving onto divestitures.

track. $XXX on with million are last the proceeds, of foreclosed net our we of week, approximately transactions Year-to-date, We million. have Korean for transaction approximately sale signed, extrusions X plant $XX which the Changwon is including

proceeds target and million $XXX were Our between million. $XXX

reduce transactions, breakeven with in operating as close aggregates. million they were approximately five to $XXX upon unlimited annual will impact sales completion, income These by

further two have planned We a disposals.

Lastly, update we have an separation. on

implementation unchanged. track for in a available management with a to CapEx two being costs the of and part Estimated onetime on operating our quarter. debt structure. $XX stated By costs remain separation this, recruitment only track. breakage be of on million. to the maximum future Appointment results of can XXXX Having and deduce Form be stating this capital expected be teams Howmet RemainCo XX QX and costs boards you of are substantial continue during filing We Aerospace

Moving on to XX. Slide

provide and BCS the improved Products. income This to I that in Before price mix contributions This as statement in program. intended compared time, significant that I'll reduction in example focus I the cost prior updating of another segment QX. This guidance, beyond making I further to the mentioned QX Rolled of I part on my QX basis XXX further Global saw provided improvement example is year. points to by profit operating

exited key XXXX. Tennessee and margin of profit quarter including $XXX to of be the our on the of As American investment packaging repurposed million business. The business the fourth the rolled we to expansion industrial we be driver forward a the improvement will of At completion rolling expand assets, a plan. end completed mill XXXX, North by XXXX, project look products track making is to

countervailing marginal is North been The and ranging last trade to trade them has at by alloy we Chinese duties enacted plan XXX% case and from years. products, implemented International has case China The XXXX, to to imports duties on the December and for antidumping from industrial to effective common least Trade packaging by expect Commission. the supported which XX% business at transition five American

These applied America product approximately were to of North annually. duties pounds that were Chinese million into imported rolled industrial XXX being

began industrial and resulted to unfavorable transition of QX year-over-year Our products QX impact of this year million. in in in an $XX

quarter second million. and year-over-year unfavorable impact but $XX improved The was still of an

discussed our we $X has QX in line which once is million hit an again with improved to As unfavorable year-over-year, earlier, expectations.

will to see expected year-over-year profits. where is point, inflection QX be we our

Tennessee Tennessee rolling in year. by is second transition terms of this to expect end mill rolling when next the more revenue. our our We than largest of of mill the double profitability complete

business model, profitable expansion. you rolled to adds and and substituting industrial increasingly eliminating As North can coil low-margin sheet an our in business America significantly packaging margin

that second is discuss prices. item would segment, GRP from like A earnings I in in aluminum to changes which results volatility the

continue with We pass-through our improve commercial to agreements arrangements.

of program hedging exposure This aluminum longer product segment. quarter mark-to-market. mitigates program over and combination our our XX% of hedging requires contracts no aluminum rolled pass-through year, this our Additionally, our in end

volatility We and aluminum is aluminum plates Hence, volatility our metal going essentially reduced. rolled earnings and, upon the the hence, dependency business of from conversion reduced ingots and expect forward. into coils prices

Moving to Slide XX.

share year guidance. to year-to-date, at our of $XX.XX increases In per we're lower is current for of This Annual the light the revenue in XX% share reflects will already for our approximately billion. $X.XX. adjusted that to fact to $X.XX and revised year-over-year per on per XX% our end, At earnings of performance, raising forecast have guidance plus. Finally, change will aluminum an will $X.XX. fourth be This be attributed higher the in to the and billion $XX.XX increase LME year. to this the we earnings the update during Midwest closed assumed by divestitures, fourth updating performance expectations the are -- also quarter both an our the annual XXXX earned and and mostly premium, and the an be adjusted share customers which be prices and to quarter. on closed are the midpoint, The which for the to passed to planned earnings mainly

year Organic the to million remains free revenue. CapEx is are year-over-year guidance, associated XXXX CapEx a X% cash costs for and $XXX X%. annual be separation. going Adjusted forward million, cash revenue flow growth X.X%. between for less to Further separation the capital the expenditures expected X% The revenue excluding expected guidance, flow and for year, with to free $XXX at to million. of and is percentage as is be $XXX guide than be XXXX projected of excluding between CapEx

the narrowed to increase projected flow increased approximately $XX net an guidance and or of profit million. our MAX free $X.XXX At is EBITDA $XXX to guidance be of regulatory the execution The aircraft. it's been approximately -- XXXX. improvement has of remain current including conversion, pricing. release plus in at this minus midpoint, that with income QX cash Regarding assumes updated million that XX% outcome billion of The pending improvement will levels fundamental XXX program, of the year-over-year

quarter; the has higher inventory due EBITDA a have midpoint cover the to GM lower guidance and The firstly, of tariffs; the in imported now to Chinese been X full earlier, of estimates and the QX. noted slightly market the more offset more been the higher the to compensation sales items: range Let and rolled coil cover emanating profit product shortfall results, which and million share fourth overly share effect the performance year program products, the midpoint by effects timed. the increase by from than being further and estimated strike, beat raised by their raised than have cost the $XX of from second, to per a aluminum due are raised thirdly, the The Earnings quarter for me following at for provide settled. been as guidance. has context again of price correction Europe distributors savings from

Moving to Slide XX.

new Howmet segment part You EBITDA historical shows And -- what this segment is quartile it is that of will the This information will become of see is that future companies. top the truly Howmet. company. shows performance, performance the differentiated aerospace the that it shows in a of it

and program cost-out profit year-over-year, and expect in expansion in what operating improvement set truly the price returns is both and asset unique margin year-over-year segments is revenue QX. continued the and note a of of in margin segment are from assets. Also in rolling and Improvement improving also we volume, rolling

be As greater clarity profit on to we both look which providing earnings we guidance revenue XXXX, aerospace as on we build the rates, and call get will impact next segments.

free $XX corporate follows. as Regarding expected million. costs, Corp. million are XXXX similar corporate $XX and million. Aerospace, cash Arconic and between million are projections be depreciation to $XX for $XX amortization costs and be will Howmet flow between Annual conversion, corporate and at including

previously corporate today's costs corporate As Inc. of the the of than the combined businesses be costs total X mentioned, less new Arconic will

Regarding free conversion. cash flow

XX% be higher it XXXX. flow will is Howmet to For conversion less estimate XXXX, cash Arconic in Aerospace Arconic than free than be be and XX% we that In XX%. Corporation to Inc, approximately projected

Two final Q&A. before turn items to I it over

government composite building Tower. funding high-rise in unlikely have which aluminum meet building and established housing, Grenfell U.K. to are regulations. public has private U.K. to relevant and quarter, sector fund which buildings, for Last to replacement systems, regarding a that I future planning planning mentioned addition First, the high-rise refurbish

will our as structural the and component subsidiary. and then architects This engineers fabricated of cladding was and systems by SAS, owners, be beneficial which contribution potential contractors one remediation continue be future The for to buildings. the buildings risk still fire ACM of cover This specified from French system. cladding developed. cladding fitted will our of regarding to insulation fund process and details U.K. the in fund AAP This these refurbishment the high-rise

now last This the week. completed public reading. is U.K. its issued has and inquiry for been Secondly, report was first available your

and You spread the response place and examining the will of the the night took recall it. the that of events the on the had fire to how report and fire first inquiry that objective

inquiry XXXX XXXX. choices public the second to will events the in did regards report out and why certain commence they inquiry most will why is to refurbishment This examine were made with The expected the likely and unfolded as tower. in of

next Form the companies. will be will our later at Arconic days Lastly, available which for the which this each and separation, quarter of the for be later updates year be separated to will -- the everything this be save-the-date Howmet and Aerospace you February XXXX; and the results QX end in note filing, include of guidance for XX will on continues investor assuming January, guidance finally, we'll track A for at Corp., which issued. provide will outlook held quarter; be

open that, with for I'd line the questions. like to And your

Operator

Instructions]. [Operator

from question first Barclays. with Strauss David of Our the comes line

David Strauss

think, you of basis points that talked terms to margin stands towards where you about, XXX as an that previously of target? John, your give I update progression BCS. us upside at Can in

John Plant

going pull exact exceeded it number. remember it. Ken, up, we've I you if think already can... I the But think there. already we're to is but I Ken can't just

Kenneth Giacobbe

Yes.

each then at filing and the businesses. BCS former of have looking segment last But you of to the adders . the improvement, basis quarter week, at points look of 'XX, X-K XXXX we XXX can structure they second the from so about the if for at looked you So, did

to end So of QX. from that's accelerated 'XX

that also as then look accelerated point, the you the filing, and have you former to So, state accelerated and can already well. XXXX through can accelerated current to that from wheels has you see see John's segments the BCS X-K if But there. has

David Strauss

Okay.

QX. in follow-up Where it little in for get were on full target to hit think days the capital to capital QX. I that's flow full cash a free flow free cash in implied a have working million like days year, to cash working do flow for As up free in looks like $XXX QX to $XXX it bit the guide the million the looks year?

John Plant

pass I'll go and it in first to across Ken.

First slightly the the if in days. But on receivable of can We days were all, you on... off quarter. improved comment inventory Ken,

Kenneth Giacobbe

exactly right. You're

terms[ph], day of cash the But one have offset, year. David, as change, the flow So, expect primarily. we missed aggregate, working don't pushing be free a payables our of material of inventory to capital side about contributor terms our a we however, for in the I DSO house. A working lot exit on inventory been will capital out contribution in the customers

Operator

next is Khanna the Gautam question of Your Cowen with Company. from line &

Gautam Khanna

A questions. couple of

guys and I was you just the engine I about actually XXX rate could First, and and in QX, by follow-up. and you experienced what have in talk maybe airframe, hoping QX, a categorize you expect that then

John Plant

and building Yes. around on The I'm being that at builds, CFM we -- fuselage, XX. out understand have built engine, a maybe the say, out XX. to whereas inventories of, about on say aircraft, XX going of of Spirit, the close our at prioritized been favor been engine in CFM, spares going little is supply. in to bit has And it's come side to in I'm

Gautam Khanna

Okay. What's well? expectation as QX your for

John Plant

Yes, exactly.

just think that. stay it'll with line I in

give until for. hopefully, revenue end and we at the help And event that is recertification, guidance we will the is that everybody's January this position and anything to waiting further I aircraft. know will stage us at which of occur end the when that what the think not chose of the at regarding next year do our the

Gautam Khanna

you just ask the the to as now, where bit can about also I pension two a the resides pension the it's earlier[ph] if new the little allocation, pension Ken, between Okay. deficit, entities. talk OPEB that right And might proportion split and how maybe And a Ken, -- structure follow-up, the capital all if two the companies. about may

John Plant

and the allocated remaining total discretionary, is the XX% is X corporate headquarters [Multiple pension mean of what -- the allocation is retirees. by costs its probably future majority that the where in the about of corporate basically, which for, allocation the speakers]I corporate say and plants, into are the set

through finalize that our part let’s We down. have meeting a and going the nailed at to capital of plan, get we're and that Board say that structure December

Kenneth Giacobbe

the thing to is add line up X. I'd on pensions only we'll And January the Gautam, that,

a capital structure QX. You have as targeting should the in we're in view QX of separation

QX. the structure in capital see you'll So,

Gautam Khanna

last just you Okay. of are as is May staying John, be ask or to actually considering the one? for one I on Howmet part going structure this [indiscernible]? management

John Plant

active don't search the see I the continuity that, to what as through between want a November think, then list Well, the should And have and Board clearly to and then And beyond been then, I which is that come shareholders engagement would dialog Board, going like to preempt for to we've for of committee and as say, the to would provide the where and also the have committee mean remains see trying engage and through fruition search committee interviews that forward. now it moving I we part search find to me and to left I'd are. will what during meanwhile, the go agreed piece is with the first round, and necessary. right engagement they candidates it the forward. process myself latter they, like I is completed. way that of short see I been

Operator

Carter of line the from is question next Melius Research. with Copeland Our

Carter Copeland

different CapEx of being investment the beyond? for you aggregated pieces entity. revenue on the than think XXXX, the CapEx A about we materially less two question than Should that stated in for the expectations for for X and profiles XXXX X% the or different having -- around --

John Plant

just how First business was to of capital give be X% in That a all, on Carter. said was not view should the I for I like trying XXXX. deployed XXXX a meant the and basis. of actually beyond, long-term think

be was difference which not so, forward Inevitably, companies, be thought, those to spotted. will is be will I Days meaning Investor which in going in X%. been both entities may words, the more between there get trying but amplified that And those my X a will below into current have

Carter Copeland

in rate we that guess, is should heart there assume you -- point Should Howmet there of for of and I'm consider I -- profiles that the will comparing. different different the entities? not the the sure I consider to are at some would X opportunities investment how that there question opportunities, but upside

John Plant

decade. of the say you I then at the at the be it's in Yes. aircraft I've call mean, I put builds of think amount just park it, back engine, when to aircraft, the phase what in prospects and I is visits like only XXXX. last course, solidity and will underlying, or look look going -- aerospace until and think that I if cycle, or service opportunity the let's -- say, X% had inevitably future that aerospace for things business, aerospace percentage to particularly but a above the park, then and when And the it's just are at really to focused increase with order therefore, but in a growth what is I and like X% is CFM me -- -- I'll over truly greater. not shop I'm build, aircraft look importantly maybe X%. And growth book doing over, when aircraft is peak the growth of to which on been I And the the decade is next of the next the what particularly not future take that's huge trying differentiated which been beyond, we've look

force last the going engine talk aircraft So decade park be which are the I'll those more the for future aerospace, air over I'll and February. or business, you to so, requiring at look and our to in in when is say, production servicing, that superb really important

the intending capacity on growth huge asset see. I with the -- where would singular are rolled increasing also capital. substantially I we opportunity for mean only do see are bottlenecks in investments. from very we that opportunities little -- the I'm mills And these we've side, There of product but breaking throughput And add our

Carter Copeland

out Ken, quick the Great. the given now OPEB us help follow-up. you pension in maybe funding look with around a Can you And and rate? just discount change sensitivity as the then

Kenneth Giacobbe

Carter, Yes. or where from use look average XX-K it's X-year terms based those asset today are remeasure I it the XX% peer cash is of returns, we we right a to gave and your of better than about would there that on XX% to We set. in our strike XXXX. look contributions. it, I'd in at what now. If had the

that that XXXX. all the together, are see you XX-K contribution So push don't listed a change from in material I in the

Operator

Seth Our of next the question line Seifman JPMorgan. with is from

Seth Seifman

decrease announced that you Boeing XXX could if might talk little John, and I have. wonder the rate that a about impact bit the that,

John Plant

for good obviously give when our about aircraft that $X.XX see impacts noise. XXXX year, And are we direction particular I XXXX. if for of whole of builds, for look I've aircraft products, is be mean, out business, which aircraft from supply which But aircraft, next aluminum-skinned say, think there the impacted total some that Inevitably, composite the overall in our Yes. our piece of for greater of XX of ultimately rate news the the fasteners. the fastener was content of in as company the in our knows on in announcement an for terms more we because through at Howmet guidance fact, the a the actually we impact, end compared it, a, I of seen at composite just everybody reduction example, within which before moment, lost that when context around of we will chain. coming to probably XX let's the

Seth Seifman

the discussion that I think then XX% were the just up maybe CapEx I mean, the there, having. of about the -- And guess, you of gap this or expectations is you bit projects? we that a four little that $XXX-ish mean implication kind sales a should CapEx, level of the And following year's the maintenance and -- talk between is -- return I future below? seeking. Okay. about little sub-X% on the of CapEx million return-seeking

John Plant

imagine, the I growth probably bit probably Yes. be obviously than little million. capital this negatively and that which you sure. below bit of then number, mean number end of when think completed be the year by you year's going according apply as I'm the the sub-X% January. But are for the businesses, nail the percentage, a we to -- of adjust to maybe it's a what try to those you disposal compression you see total I adjust to vary the our at $XXX more the obviously to And going up XXXX. of percentage And maintenance, a flex can the end can little the the the that, accurately in top We for we've year. when less underlying will for at will number the be the total and will line going to you expenditure. future give for intend is it's of

Kenneth Giacobbe

in CapEx about and the And in the tail add growth Seth, return-seeking Whitehall, much wheels Michigan; pretty expansion CapEx this projects the were the projects on the only business. year Howmet next Rancho California; have airfoils number Those operational in in might that major QX a in aerospace this million aluminum complete thing that fully year, $XX forged rings in that Aerospace year, only for those to XXXX X in of Hungary. that there's projects, I'd is with Cucamonga aerospace

the side, next look $XX Then $XX to talked probably million the it's have there. year John GRP on industrial tail that if million you a about about, expansion

growth will the comfortable spend. if why the some would we done. at To That's major amounts. sub-X% so smaller be are growth, in So plants John's earlier the point, projects there CapEx be feel CapEx in it debottlenecks

Operator

of Your Martin next Englert Jefferies. from question with is the line

Martin Englert

your much again any exposure? of volumes. the soon us on volume in contracts that? you you pricing the are also, year? And In strength reopening prior GRP, versus if saw and anticipated there How noted packaging you for remind quarter packaging Can growth

John Plant

it the overall pass percentages. then to Ken specific -- you context the Yes. across for give and give I'll

packaging, do let's about. America We region. by it of which to industrial, transition it, So talking that's North zero. been pulled out the we've and

think Russia. is emerging bit exports there In an like the Europe, have packaging opportunities And Russia, business region. I little examining the market further additional market given in for something I XX%-plus of share think what packaging in we that in a we're

third We quarter strong year. in also growth has -- that and and this the exhibited

from which in going also Russia. packaging, again, -- of growth In the be have share we good But But to I talked. still where that's China, do And year, on. know, the we by X you coming -- grew specific I the we withdrawn mean, next not market Ken, I that packaging. regions as percentages? so world of Brazil will are have don't out have that to quarter. And also choose the those not It's we comment just

Kenneth Giacobbe

traditional that out split Yes. organic taken Inc. again, mentioned. up Arconic of And XX the XX% revenue segments. chart by for about the appendix, market John Martin, X total we've and it's Slide into quarter, new so our year-over-year third for regions it the for

terms of visibility rates are growth have the distribution of in what as as there the well You revenue.

the example, as plus XX% the at revenue see is for to earlier, mentioned of tied So you can Howmet aero. I Aerospace,

Martin Englert

back, circling And after away the XXXX? or just packaging. operations have know you you're thought repurposing concludes your Tennessee North GRP noncompete I packaging about the like reengaging But the market expanding Tennessee American any given maybe from

John Plant

focus. that's We not haven't been decided anything at our moment, the

point. we -- a been you mean, seems say beverage anti-plastic particularly you, any I the are and I gathering I'm it's do know case to it moot call But been and the market can think to this this that examples I probably see clear for I'll years, there going for it I'll from where of if I where tell to is next thing think us say, As think we'll companies that of have any, a we a and Asia. plastics are point. clear not to don't us, see what major, environmental a more of response note what movement therefore, few the noncompete industry cans. the it's moving produces come Europe to say, because makes what speed. aluminum the, yet over maybe that led there truly that And over point be only It's it's shortage. capacity I And don't innovative years. just they've the opportunity, and watch is

develops. back we'll for currently and probably think it stage, something. I a no case into see see jumping And I appropriate So how to is at wait this more see and

Operator

Your from with next Josh Sullivan Seaport line question of the is Global.

Joshua Sullivan

you front? what having products just price markets here? getting expand or Are you're then pricing on investing growth with And overall the are you Can traction in you CapEx on improvements? on pricing really the the

John Plant

-- going in industrial and combine on that that I GRP, function normally, pricing of trade capacity. market shortage the -- of a year-on-year terms mean shortage the reversal, because It's in of normal it's it's a of international agreements with the

aerospace, roughly of they're Aerospace, as pulling North of an really And with average cycle. packaging. of there's of Howmet something it's There's going X-year up combined cycle every mix LTAs. the as it examining each So America now year, but On out that, on I'm call contracts a and come a that renewal. on opportunity they the for to

So temperatures, the is capabilities engine what I like to give most think and latest which in really that there those And also in in which aircraft of -- clear example the on, so value the has that competitive engine. and those examining line really the I'd sure now jets. is hot some of truly the for and end best have and especially sight we unique dynamic occur Howmet the of the the military XXXX XXXX making segments on are

than with airflow, What coatings But Joint temperatures markets. substantially meet the capabilities of not those the melt the to and So above engine that -- much of to them requirements coils it's sophistication those operated course requirements where well that but those foils unique Fahrenheit. for that also well commercial down and us lower and very the of have unique higher the are Fighter, the higher degrees higher above aviation, happens so go only those, temperatures for XXXX emissions, example, enables commercial up provide to that commercial have we to the does go with the I'll Strike say with to -- generations the operate capability the inside afterwards these we and and into of pressure the so aerospace market. more emissions flow successive What temps, basically, is -- that is into lower, efficiency. that the fuel

And be just you best the to I that here. the will other commodities answer, look it's would the the example prime just that. example. well, be to confined not on But would give as that so but one at telephone

to sure the And unique make differentiated that have so we truly that is I'm industry. valued just in technology trying

Joshua Sullivan

shaping this announced hasn't the it. that That's portfolios you just mostly them the been on front, at where entities of see then helpful. some two Got do we divestiture Or could portfolio so have feel the point? you want And you far? additional

John Plant

disposal that underperforming completed X, are in with. which of when and try fix that fundamentally overall we've think portfolio view. that as the to contributing next the and be disposals, I will can't I view it rather in than certain and terms shouldn't of, probably -- in that everything, say, assets, I'll on dragging things terms we of saw I'll the no, the say chose answer bother we can fact, change is there

our we energies the see expand to so which where approach. on look energies also think those and getting but are can we the Focus disadvantaged, opportunities, future both I rid play as we for at we'd are differentiated well. there organically, to best things, where and our Let's advantage have see more if those is of structurally true where we opportunities,

answer we the going asking stuff, to are if more lots So sell no. fundamentally you're is

Operator

of next Lalwani is from with Rajeev line the Stanley. Morgan Your question

Rajeev Lalwani

revenues of of year type into look year the the in A end aluminum question we all as takes to like the year. given all from the on asset for then into if noise impact Can plus revenue And give puts there Essentially, transport? or overall I'm end the we be us thinking year pieces. trying next shouldn't sales the next that market see mid-single revenues, the the and coming side commercial you moving given impact parts or organic XXX being some around a the of matter, too? moving digit and as

John Plant

with think deal Inevitably, this blow I'd again, once way come and blow Aerospace, away, that the around I all, top like about confusion mean, it. away Because Let could that. metals I quartile to me first. which if for performance. company, Howmet low volatility That's sometimes you -- should

it. those business In entities. inevitably, the hard essentially with we've -- the the business. volatility We're with on to in packaging volatility been pass-through aspect conversion terms there earnings associated a metal But of reduce because of working of GRP, is

its top for premium. the $XXX it's let's at drops, be the fall, if the dropping about inevitably per say, Inevitably, so a what irrelevant why LME it's as Arconic -- few in large that's trimmed Midwest the that's we've for why guidance our a course, on ton drops line, line. Corp, last year, Of bottom revenue will the months, reason

Metals overperformed light And you organic on probably have $XX first. revenue, basis. are million we so million, like an was and in the we $XX quarter, so almost

increases, fundamentally Howmet, aircraft of When look you way. the out from low volatility what build MAX the expect get we'll is I forward,

see I be above they be that we so and whatever Howmet. adding value aircraft if over And think should will how about were build I

wash. into of And the XXXX. shortage, all the throughput markets the moment was assets, those probably look think where the in little I more by market, industrial, do at mix American steady, aerospace there the plus packaging you've encouraged and a the a to ability bit GRP business capacity volatility with aluminum bit I'm downward I'm when a where aerospace North market again, so transportation premium. of a but opportunities fraction got -- our you on a commercial say ends inevitably up little thinking line, bottom just exposed line to And according future which GRP, on in industrials a go, volatile that got at you've terms up, fundamentally wider that's of I it of -- North I'd much from commercial Midwest as further outside of And there, America. obviously in from volatility transportation's dampened business. on But our to top volatility go thing on think, In the bring and does the our LME

but the So I way that's more to be done, top the line. about think

Rajeev Lalwani

a of business. headwinds. operational engineered you some products then And weakness? at Previously, in lot about follow-up, Okay. talked overall? business are that a we parts as the Where there's Any looking where the to of how And show as are MAX to up ramping confident see start to again? we the you start get won't do headwinds that start some then that, again, those relating prior we to

John Plant

learner enabled further has particular. LEAP down us being it it's is engine been in a -- us. influence been just to for -- steadying the curves from obviously, improve MAX where on the the It's

talked that build time I'll for of I the about. see production would back upwards everything engine of imagine into the may inflect year developing say being the side, is on XXXX. towards the That's XX they've way is where begin end the their that I the stay rates it'll So and Boeing it smooth. to should increase

that's with the So for with coming the from additional capacities our the and core Morristown to going system out more. from stress on operations, of operations delivering take revenue and Whitehall stream both opportunity a casting of the lot of

going in our including issues. I forward shortage business. we've had casting So headwinds address year, trying terms don't where capacity in expect those of production And structural this we're to

Operator

does the for the gentlemen, questions and all Ladies for conclude you and Call. today. This you Third we disconnect. Quarter now may have Arconic's participating XXXX time Thank is Conference Earnings that

Howmet Aerospace (HWM) 5 Nov 192019 Q3 Earnings call transcript