HWM - Earnings call transcript Q1 2022

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Operator

Good morning, ladies and gentlemen, and welcome to the Howmet Aerospace First Quarter 2022 Results Conference Call. My name is Eli, 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, sir.

Paul Luther

Eli. you, Thank welcome Results and Howmet First Aerospace Good Call. to XXXX Conference Quarter morning, the I'm Plant, and by Ken joined John Giacobbe, Officer; Chief Executive and Executive Vice President Chief Officer. Executive Financial Chairman and by session. comments a John will we After have Ken, question-and-answer and to that today's like Statements contain discussion expectations. you events future to and remind would will Forward-Looking I relating

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

have addition, moving out in today's be in and In starting that segment financial directly non-GAAP our release discussion. included we appendix point from measure profitability can we some comparable presentation. profit this quarter, financial I Reconciliations segment found measures our most press EBITDA. operating the measures in would today's to are adjusted to also the in to GAAP segment like

to segment's We the performance this use forward. measure going will assess

investors by to continue for segment will We for operating profitability profit. are calculate comparison previous giving provide to EBITDA period included and amortization continue to segment purposes. segment, the depreciation ability

to to You With and Slides I the presentation XX today's earnings these deck. in John. over turn like release XX and in would call numbers can press find on that, our

John Plant

Good everyone, to Thanks, move Pete. X. morning, and Number Slide Please welcome.

which guidance was very strong a of near quarter profit and was the of provided end quarter to another high was guidance, first high above The for Howmet. healthy the Revenue year. the start end

body and out were news offset the to for the takeout F-XX on the quarter the XXXX a now revenue new that XXX. to Boeing with was fourth These Boeing program. inventory higher expected, sales partially narrow we aerospace plan Revenue to little commercial as played and of sales production XXX a higher have structures the than good skyline by due for As is platform programs. expected,

programs. and deaths in is important good This world. an in testing with has is precursor be large for reduced in pickup increases the led wide-body will for materials. of Russian which comments. cases effects in in improved the this the notably guidance COVID, outlook Ukraine The tragic my oil travel, news has to The to western to outlined other commercial and invasion The reductions international further commodity aerospace led inflation, for of

Moving to pass-through increase which this quarter an includes X.X approximately of material of specific Revenue numbers. pass-through for the excellent. XX% year-over-year, billion, million. additional $XX was Clearly, is

count cash the quarter. first an essentially Free million in $XXX $XXX diluted shares. million XXX in million XX.X%, effect, reflect of of does XXX of buying February by EBITDA the adjusting in buyback also margin margin million resulted of improvement of shares average million earnings January material over we in of was and well EBITDA However, ahead noted This a of ahead points basis back flow of in of sequential breakeven both basis QX QX at EBITDA $XX EBITDA call. it which rate percentage Without basis, XXX improved additional XX cash year-over-year. guidance. the QX above On margin hand and was this of million unfavorably $X.XX, which and in The the share included on points had buyback was exit an the for our were earnings per after Adjusted XX strong at share an quarter pass-through. $XXX was midpoint with XXXX. million to

provide contributions market and performance. Lastly, dynamics to XX%. reduced will approximately $XXX on now Ken pension the by cash million segment the to and year-over-year liabilities commentary we pass OPEB over by call and approximately I reduced commentary detail

Kenneth Giacobbe

Please on end the update Slide markets. an move Great. to Thank for you, John. X

XX% aerospace commercial body XX% recovery narrow XXXX, of revenue it continued improvement although year-over-year. driven total and quarter forth revenue. XX% revenue, revenue up X% by continues from was First recovery. to pre-COVID the an was and of up aerospace and of Products commercial The Engine the year-over-year total Commercial which the segment was aerospace XX% quarter with level, the in be sequentially, far first

Moving inventory to Fastening Wheels up Defense for Aerospace. impacts driven down year-over-year aluminum by sequentially, F-XX. the Revenue XX% and higher segment essentially driven sequentially, Commercial X% both flat was was and Forged by which XX% prices. year-over-year customer and corrections transportation, Systems

oil which gas is year-over-year. general markets, and the was industrial Finally, composed IGT, flat industrial and and other of

and Slide was the within and sequentially. deeper other to to XX% Please and year-over-year X% move industrial sector, up X. markets be strong Going IGT continues

with In profitability. with in to we start adjusted which start million, Margin quarter, the first line was guidance XXX and a of with enhanced P&L Let's year the the the a had XX.X% EBITDA focus guidance. exceeded midpoint. healthy with on

XX%. was year-over-year margin EBITDA of Excluding $X.XX, Adjusted strong at share the per with revenue Incremental year-over-year. line was in material impact up XX.X%. at the pass-through, higher higher earnings XX% expectations of was revenue flow-through

improved to the inventory of XX XXX million was on anticipation aerospace Moving cash hand net were rate by approximately after buying of million balance back XXX contributions approximately basis, flow common a commercial reduced and expense $XX exit a be share diluted reduced cash million. while to million. of estimated cash by in On million for shares. $XX XXX and million the average versus to the QX year-over-year quarter pension Free building contributions of was stock. The to XX are breakeven XX% were Annual first $XXX sheet. Cash million liabilities essentially recovery. of OPEB count million

reducing We and annual $XX million to to cash continue to XXXX, and are expected and year, Comparing this substantial in improve separation pension contributions a were the net liabilities. Europe focus $XXX approximately million improvement. OPEB gross on to

million expense year. this to in Additionally, reduced XX XXXX $XX expected to from is be million

Moving to allocation. capital

upgrade on five in common of from quarter CapEx projects first with generation of engines price were focused rating stock be in credit mitigate BaX We leverage financial with were average improved expenditures quarter to We share. recently XX% in segments $XX strong depreciation in April the improve million BaX. shares Howmet's and and fastener our yields continue Moody's in million an automation purchased Capital for to to the acquisition approach. of XX $XXX and reflected labor balanced risk. approximately productivity per cash approximately

Lastly, we dividend continue to stock. be confident the $X.XX of share quarterly free of common in our flow paid and per cash

Now results. cover let's move segment to to the Slide X

segment this are operating As our quarter previously we mentioned, to adjusted segment profit EBITDA. measure segment profitability starting from moving

DNA We performance going assess the appendix. segment's forward provide continuing measure will use to to this segment in the while

and margin since was the narrow XXX body adding quarter. driven up IGT aerospace Segment X% by QX Year-over-year employees Moving demand up while the down XX%, to basis was was the XXXX. revenue Engine points adds aerospace now energy Products. first higher cleaner recovery. as XX% Defense XX% XX% increased was to continues. in Commercial adjusted year-over-year. of in XXXX approximately total improved the year-over-year quarter, first employees XXX EBITDA brings which for

basis to aerospace declines commercial X. transportation points. X% and of decreased was XX%. was approximately XXX. down Slide XX while XX%, the employees flat EBITDA Now in for improved the aerospace costs margin year-over-year, year-over-year support while Systems inflationary lower first impacted Segment future XXX addition by to continued The adjusted quarter was was offset body growth. Commercial let's Defense up X% the revenue was as by production quarter. Fastening recovery narrow move was the

was year-over-year quarter. Engineered as the the the XX% year-over-year, body driven in to Commercial Now XX% defense was XXX. than impact of offset recovery let's X. the market the fourth move Structures Segment year-over-year, aerospace margin while higher basis F-XX. Slide higher revenue X% the narrow more of for down increased XX aerospace The X% points. by EBITDA was improved inventory corrections declines customer adjusted first

Slide XX. move please Finally, to

volumes was in higher the on are expected EBITDA commercial to The production. chain in but we for half with revenue driven be hiring impacted issues somewhat segments. unfavorably dollars, of lower final first Engineered Pass-through in continue Consistent Forged Wheels higher revenue our aluminum is margin the the prices supply by strong, $XX second customer XXX million segment not was to prices by now basis quarter. except increase transportation Commercial every which of did expected remained comment volumes. growth, the by year-over-year Structures, but offset by of year. $XX year-over-year limiting higher impacted revenue aluminum in approximately truck points. impact million, One commence X% demand

John covers impacted first compared rate the annual guidance, would point approximately discuss XXXX. in the When of further back earnings rate of point quarter to $X.XXX. additional like item share I The increase tax per turning XX%. In improved XX.X% rate The the the improved is Before one to over appendix rate. tax. first to a basis performance, rate to comparing slide tax QX operational tax unfavorably to sequential in sequential There XX.X% XXXX, the operational operational QX out of in XX.X% to it related XXX to in by quarter XXXX. that

Now turn back let it to over John. me

John Plant

Ken. Thanks,

Let's move to Number XX. Slide

Moving found you report committed greenhouse have landfill Howmet XXXX and improving to our wastewater our actions the I howmet.com taken to sustainability footprint, would reduced to environmental is at encourage gas in use waste. read ESG. Investors consumption, section. in Howmet's emissions, and energy

of and while reduce diverse, compared approximately XXXX funded XXX X XX.X% environment Howmet to inclusive our Howmet's can is and workplace also where greenhouse by projects, baseline. Scope gas safe emissions committed XXXX are employees expected all which have our to work X a We to by Scope equitable a thrive. fostering

is safety best Our was Moreover, Human one work than the average. Foundation. by of Rights LGBT named better the Campaign places the times to five record equality industry Howmet for

XX% Board of was company having up Regarding XX/XX governance, Boards the our women. Women for Directors of and recognized made by of

have our Howmet's substantial XX% advanced several to active. energy-efficient and considered in at Lastly, emissions. markets to leading ban contribute be projects programs of sustainability reductions suppliers portfolio or key

Technology will portfolio products Monday, New in and of differentiated Howmet's at our We May York. on Day several IP-rich Howmet's XXrd, discuss

Number quarter XX our to second Let's The and Slide move show continues to outlook improvement. revenue guidance.

Moreover, family the the Airline Europe. leading This input projections with aircraft. Airbus solid AXXX in notable the has start build expected show improvements which for to Airbus aerospace. AXXX. and very Let of a shipset XXXX. Howmet XXX and roughly China in later line and a Airbus load America XXX improvements order narrow in for is factors lagging me with is is the value show body there is to but aircraft, healthy for North commercial XXX-XLR

content thrust value when further volumes XX We month. see month The to Boeing of exit and XXXX later turbofan engine also the per compared the begin XXX rate having both grow improvements fuel & to in to Pratt Whitney to rate improved geared in to for XX we the continued improving the transition to per expect efficiency. with MAX XXXX increased

As month overhang will be moves range, inventory the rate remaining the towards XX per extinguished. this

of Howmet after require defense by be AXXX, XXX the to selection XXXX, drive to is the will note transition also of growth We of XXXX, the F-XX in another for driven structural volume future we the buckets the rate Germany, per lower-than-planned projections. XXXX. in Airbus in in the is Air XX into sector destocking Finland XXXX. XXXX Revenue for build Lockheed rate and solid, note middle of in which the and Switzerland, pickup recent will XXXX, middle the Forces and for at resume this months, the from we We which rate mid-XXs expect the month going programs by of Canada F-XX, as is

especially the supply turbines. remain average class blades will One increasing larger, the as trailer this quarter. later the for more Moving oil Revenue second aspect manufacturing values growth chain to turbine - in constraints increase also for the year. with strong, show of half, other for expectation that the ease, but Howmet markets. to is in begin sophisticated IGT shipset and begin and good truck Class in notably aging the expected beginning fact, A with to the J the price grow industrial in are second

earnings million; per XX.X%, eight Specifically numbers to XX is plus $X.XX. basis margin minus plus points QX million; XX of year. basis expected for EBITDA and or $X.XX in of or the share plus plus be of or points; Revenue to minus minus X.XX billion, EBITDA QX address minus XX and million XXX

basis inflation of recoveries, billion, the on and XX revenue EBITDA XXX cash approximately of these flow minus an Implicit minus XX. commodity the volumes for in expenditure EBITDA XX XX.X%. of are million. to of EBITDA or improved XXX or million, impact rate capital Boeing free and X.XX approximately is there minus EBITDA and reflect similar or also be billion, increases numbers In the to X.X plus minus share margin revenues the on $X.XX, order million points or provide million; plus million; expected margin. For plus is in of XXX near-term, per of reduction and $X.XX; of of tax plus color minus range plus Earnings a the XX year, XX XX%,

the especially recruiting to four to expected Howmet You and across in setting guidance will mentioned, improvement all further our growth very another the start that in leads is and well Also, and growth growth up now note the company XXXX the for solid as profit year of wide-body to with our the Move in markets Ken are segments. Slide notably, we of market. XX. three of address

the of is after in strong be been Free start to adjusted the result aerospace flow increase revenue Full-year quarter remaining per expected increased. million sales. setting move we grew for million as share to grew approximately increased guidance. of positive first to per very results approximately XX healthy a XX.X% than platform has to a earnings inventory delivered a The margins healthy breakeven that guidance recovery met Liquidity The cash exceeded XX. in share was earnings Year-over-year higher And approximately year. the or XXXX. QX, essentially support QX commensurate the in also and XX%, with a expected of revenue AR XX%. strong, to for now generation increase XX% the is XX be outlook plus is We was Q&A. to quarters and in cash can

Operator

Research. is [Operator Stallard question Instructions] Robert first you. from Thank Our from Vertical

line Your is open.

Robert Stallard

on sanctions sounds wondering you customers. an It potential to capacity? us you a CapEx be additional on like add titanium do But if obviously been has in of things of firstly this, think more sorted And was are will then needing idea and spend Russian think discussions be give there lot with talk timing the when secondly, the VSMPO. of about you John, you lot I out? a you these to could will

John Plant

Okay.

So for on everybody context titanium, call. the let slightly broader me provide a

business has Russia the largest that invasion of to low-cost it casualties clearly, supplier The from knows everybody I VSMPO companies contained pretty for coming titanium is as at industrial of the military and from this support a the think I in that products and, been is their and will base. time historically say, tough this world, resulting with complex country given invasion.

expect to to you the we many RFQs, which of Specifically have later regarding responsive inquiries, in been update we year.

likely then quarter into sales when update more and the you QX of to increasingly into not is to a in it our is we fourth we XXXX. thought have pickup year, any Our but be for Currently, a item August provide built sales expect earnings. our guidance

as some building and VSMPO engine aerospace buy of albeit that So have a off industrial things aircraft zero builders customers, show to product builders we we both we those do they Currently, normal. are on from that thought do their you. would when just clear revenue give currently, inventories, to continue are other and currently that markets, expect got the customers living our in that we is the but guide

no Rob, capital. need Regarding have to buy we capital expenditure,

we a available maybe Our we and unlikely well. the have outcome this point capital. provide the that very enough I for industrial supply to trajectory that some knew until this full that aerospace place not of industry, thought just It at conflict, the as to also markets capacity industry, substantial is of the is

that to current do forget sourcing and to then the So want and I rush situation back don't people Russia. have in

specifically, call, of we you a And into So hopefully. I on the revenue the benefits XXXX. opportunity will as should the treating back give are in a that end next year of basically, picture serious see and this going more

Robert Stallard

Thanks a lot is That John. great.

John Plant

Thank you.

Operator

Seth from have JPMorgan. Seifman we Next,

open. line Your now is

Seth Seifman

said everyone. in driver early John, good morning you widebody talked on XXXX. that segments. of in and the production plan, think about you all much mentioned a call, I you hiring think talked very be shortly And you into XXX Thanks about as relatively would the I

production? confidence outlook? that a also of gives stick? inventory that at given we so able What level And that XXX about you increase the what see tell you schedule in will be will this us meaningful that to can Boeing, And

John Plant

goes say. goes tails closer held on showing South getting CNBC and that. our the each is Boeing recently XXX to each much assumption We Okay. closely this. what by And I noticed, Carolina Clearly, month are resolution quarter that they example, interviews for that of as follow at plant by,

say although And so little say I things plane be delivered the FAA we what to think the a we customers. optimistic can are Clearly, to not yet will bit follow gaining that each there, certify pace more resolution. is they certification and get again individual

and because by our a the down for number end down those I that something deliveries produced and that the in, correction in Skyline we the those, just say, but those then that going outlook going it, taken planes quarter Boeing. be revenue issued so also accordance that, absolutely when from, of to production deliveries and see, sign And the then to will like be are to than of commence essentially, condition. of revised future and they lot XXX that maintained more retrofitting are the XX year we okay heard will our an total say rather have commenced, second see this We have as think, with or guidance the year. Clearly, clear will commence XX XX, guide to comfortable has call an aircraft is taking I hit, current their and by feel that we you actually

should I be optimistic think we So future. the for

passenger transportation aircraft. customer need a wide-body, clearly aircraft. gain economics for is it. that a the we to think the I long-haul world, or it before, great said There I need And for As around transportation is

the is to going skyline that optimistic current that one so is happen. the And

Seth Seifman

very much. Thanks Great.

John Plant

Thank you.

Operator

Walton we from Next, UBS. have Myles

open. now is line Your

Myles Walton

mentioned wonder that just through And million noticed $XX I Good business. and you growing, disproportionately effects is bit the deeper little about is pricing. wheels inflationary it John, getting the outside I what not if you Thanks. metal guess, of that falling? delve the in where running segment, also, then on I covered is your morning. a can maybe pass-through

John Plant

Well, we like you year have seen rare And [rhemium] cobalt in titanium. et (Ph), last more and increases the plus nickel, cetera. say, metal aluminum, recently, from

recommenced. noted been is the trading and will And has quarter, nickel have fact although last sort during halting it you that pretty So commodity inflation. of widespread the the now

we to we and that statements that as moved been the that last have and Our hold the metal have through few seen previously made has we holds of through to pass is so XX% quarters, good.

the On offset that then seek productivity, and indeed other as of to to clearly, and costs, labor But through I cetera. clearly, terms and again, some side, And today. freight, natural we the But out of we some in et do like of seeking cetera, those each have we are as well pass really cover cost so plan agreements. and don't detailed do electricity do they gas to have things the not year. et

of management have in Howmet it margins, seen news the is you have without, good fact, margins. would and key. the posted clearly, maintain inflation increased is And think So I its

And can or So to are you stay the or whole secret you do. this period, your what backwards profits in we of a go this terms I can think and all not if this that least is the is is also fundamentally, inflationary increment key absolute success that environment. then margin to at through seeking huge move in of

Myles Walton

XXXX Okay. what -. is for XXX currently the in And that million placeholder,

John Plant

up things numbers two-months on three-months XXX million daily probably at And or is moved this But stage, or correct change a was clearly, approximate give then, on. the are have it ago very basis. since it these million will ago. assume XX take, because can You

launched effects on also I fundamental as oil, of had has metals think also prices effect you a but the know war Russia Ukraine into commodity with that the starting well. on that

of at to we so moment as the it I'm year. some again, that hoping And the second is down this the moving volatility move begins albeit half rapidly into of quieten

Myles Walton

Thank you.

Operator

Strauss Barclays. David we Next, from have

open. is line Your

David Strauss

back maybe ago. so faster Hey or a John, like seems about talked you headcount are two the had initially hiring increases, than it quarter you

guess, kind here? of businesses what the for the you about So plan of just could is where were each where the how just you talk now, in I could from talk stand the in to relative you pre-pandemic headcount of rest expect plan working capital, the build unwind would QX of Thanks. And you then the the during year? to of about course kind you Ken,

John Plant

with you recruited end have hire, we stating And and second that recall our to This XXX year, some continue. business. the I in people. XXX Engine think by Products XXX additional it in the of So year, will were or of which people, last quarter was started us net is we then going we

have you the I and good I looking engine did think on starting last of pay shown, outcome at dividends. it year. early that taking margins you And see will level base as some in clearly, us can of training, today, the we light of providing are say, our a which pain

to continued. to has another as XXXX. We business even now in of engine, but about I a Wheels, Engine number. as recruiting mentioned and the to truck remarks, say that build robust we start recruit continue in we know, and Products going the commercial in in it stronger first in earlier see improvements a half this is and before of in as do started second second approximate quarter some precursor an the a already again quarter you XXX I'm my year, that And the heads,

again, is that increasing So the in willingness recruit a well. headcount there to business as

made to in was I mid-QX we business. is the think demand we And commence bit to because of the see the outlook surprise we thought, of relative little that what fastener decision a the again that balance in of the that our ahead and QX starting year. us hiring

that second on the structures few so ground business recruitment our prepare as we have any did an albeit recruiting, step modest we XXX not step, a preparing so could but or of overhang, time, for half of engine F-XX we and as taken important to passes, so then expect take business let's - we it, is far are QX. to will about give or that some And that of we the for businesses end I get the but of steps will business call program, months to ago. closer view that the QX heads in three the bulkheads be our titanium there obviously, the hiring. ground year and off be better only finessed say year, first this again, mid the are the of on those the So burn a particularly commence aluminum half the a as The have

that of the also tied of the expect which some of is And up about in in we the locking for talk scale you orders to titanium, to down August. additional

areas summary, consider plus of normal outlook products, in half. an recruitment second structural again, the titanium enable XXX of of in So in touch inventory. to the the in second the three F-XX with improvement production some on and and of resumption our should sales recruitment just half expectation to you if the stronger us want our Ken,

Kenneth Giacobbe

Yes.

good morning. David, So

quarter essentially quarter I the million. inventory, so the start cash free million Embedded of of aero ready get was capital cash chunk number $XXX a in was for question, The was biggest capital the here. incremental burn inventory working to $XX of around with - working breakeven. Your flow for will build that for was that

want full. to and our customers, time prepared be deliver we So for be in to on able

number capital working year. as see You the will that we through go improve

John should QX positive generate cash free quarter As each to mentioned, flow QX.

will it working $XX in flow that a around number, free projected $XXX we million midpoint capital. As around is of burn that year, embedded we million the associated have have of with we cash exit

do to would will But cash exit a million the right now, $XXX we to income year, of through good call that of for it flow, we free a build a the year, conversion problem of is the us be is $XX We a make want get XXX%. and million have. inventory. flow over net cash of second we even cash as That about as burn free part more

David Strauss

Great. Thanks very much.

John Plant

Thank you.

Operator

we Stanley. Liwag Next, Morgan Kristine have from

line is open. Your

Kristine Liwag

gas airplane. turn Bulgaria. have how $X.X customer urgency you think Hey billion, in XX% we that -- seen are pressure problem? the question is about annual you I the when off think solve up good an mean not morning. When airplane. could earlier. much you is X.X% only John, base Russia of ways, the on and that to mean, of I Poland titanium seeing to kind following Russia sorry, That can't ship a revenue And VSMPO's about context, you West, deliverable of from potentially and VSMPO your

John Plant

of the bifurcation that have longer those, are sanctions or a situation. their to buy which say, bit we either because a take I will Again, certifications on quality those part of VSMPO or of and decided continuing voluntary will customers, step which to have no be VSMPO of supply

where we a placed is lot are us. they on the So moment at inquiries of

which that us responsive of plan we what and of they commercial to orders that just to with with people customers inquiries decision-making We want that year last the conflict before I out have of to as in in a exit organization. was couple those inventory this place there was those sanctions in we therefore over inventories also was months, of assess the buildup been the as are laying our lot was to response to VSMPO -- a requests. potentially fulfill about process we of Clearly, out going that and to next. think recent available is and that And months in occur that a pulled

for customers is, their level be just a our longer And for of part QX next to cannot a Europe, scenario energy few decision gas skyrocket there I tensions a emerging we think Indeed, situation taken et into given is "Maybe now energy VSMPO given stocks gas Howmet the off mentioned, that, is threats has given back cetera, be months. the call some Russia. for now who industrial natural pressurizing supplies the that et to be into is price and clearly is that I just over, then in clearly including guess, and us. to of going will that of going example, companies those to and we cessation over of and the for information, supply may imagine all supplemental security think with gain go don't steps I'm competitors, us anybody exactly, so of factor can normal." to been is moving no are the back taking realistic of it, it independence burned the And But a XX expect tensions in cope have to going you and have and that the Poland, expectation be clearly, them with they by increased situation, as clearly, these I cetera. be I given has don't And And what prices. XXXX. will say as of note war Europe ongoing I that I is the way supply the

Kristine Liwag

if could of as do And low-cost I a Great. provider John, mean, highlighted, follow-up VSMPO question. is you a I titanium.

for So you you you type do forward see change sole-source existing economics award to customers take-or-pay on will make need where have contract attractive? work, incremental a to more to going they maybe it take contracts or

John Plant

source needs insistence. that an to be I think don't sole

spot I of have no a picking a long-term is business contract requirements just contract moment think as up important. intentions a share with in for time. a guaranteed certainly I

myself people intention for we and have contracts equipment future, that the of a to back thing recruitment long important into way then is flash recruiting by most haul. people and no terminate any -- of a the that through of moment, see efforts of I bringing business. for them longevity just such for is the online there So to make of

Kristine Liwag

Great. Thank you.

John Plant

you. Thank

Operator

Next, we have Khanna Cowen. Gautam from

open. is line Your

Gautam Khanna

if the you up been and if about this then for guys And maybe there about guys supply Wondering it. your views talk pick or you or to did see production discussion could you opportunity your wanted quarter, a LEAP that is if -- Wondering increase forgings in next just points quantify you could can presented past whether an castings share pinch in dues speculation has to as follow-up, chain. on year. get

how you the you your be view Thank how just that, maybe to at about much the your go, and earlier. So point but because that your and on And on to might where XXX that what MAX, is XX%? quickly thoughts got point of you. the AXXXneo, above talked MAX ahead rises some

John Plant

Okay.

exacting has is have said deal the about with our our that some see I'm and I that from to a just of that there the because what I of not off and customers to that make It difficult in it great to is that with are recognize and say, fact, repeat these and, point. needs specifications as skill, pinch commentary now been And how of extraordinary. these in bear they you forgings, be in the brought going knowledge published products castings turn customers, volume in can will precision to because products let's or just So are. on tolerances some press, something

one that so of customers I concerns so know around this have one commented castings suppose the us in earnings have week puts I for And that castings, they good that that restricted their comment. the seen of don't titanium is some bed. our make that news some that titanium to call their build. seen and we I

are up. In terms volumes certainly, of volume,

always see is we engine speaking have our points the have even and the I details, I no and of occur. some some the part I seen thousands and those next two-years, can have current XX-months, be is supply, across to three-years, that are over quarter that it to And doubt that with also of look plants -- tens gets anything business that pinch You will our different of pinch will both because we strong intimately that going tight. that be numbers continue of Clearly, points. there outlook. when the you in in

to what sense volumes a that - tend in engine higher little it bit have build. terms I be is changing because on. asked that we seen of My of than have going I intimate is is been the So with

requirements. know just in to And that were again, so than But suspect customer there those parts last that to get I guess required clearly I But of try urgent off think more inevitably, and indeed sign that of of is any normal share, a produce against to which delivered, provide tight at - picking customer, which just are or commitments I being not is the we is bit end left as that needed month but - up one the terms some little have on commenting are going for tight. I by press, were for commitments to be in those, we got good. our asked available

customers So a on our the this occur into in be whereas the expecting some occur going a are engine general plants may scheduled second may the made here see half pinch not points that in two XXXX. the have inevitably and haven't spot we others supply that XXXX or it year, ability or maybe we a into us, some investments in are fact, during because to we condition, business where of sweep new good through we will would to year relatively expect And early given I there. will we begin see,

So a position. healthy relatively

that of the million in into that is about to And done engine talked that seen our can engine of have we ability such the our our that the people amount business let's we the You hiring put it, to a And all inventory is XXXX respond clearly, first the future increase business. industry. that to, significant around now, we have been Ken's provide into in it to inventory respond quarter, demand. call to part XX

you hope that I currently. picture castings forgings over Howmet So good and pretty gives and a

The more And it of going? MAX. for for than the is question your mean, part a Howmet. is I second concerned where is MAX clearly, that question Boeing

for the is number XX that clear are year. We this

fact rate in half, may occur MAX that higher the inventories in with But of an about we is second trigger occurs the number. given the into and about deliveries Boeing confidence, then it again, increase. is potentially is Our talked that do we think the that will higher go the that greater see, at I which a of is wanting further that have and that way that the we and not correct, think Boeing And fleet it, the gating as the I tick for number, have we may manufacturers around Chinese see aircraft moment, the for important me, responsive above are anything thoughts to forward than and production the airlines. us is future. for will been when about that have we XX. And into but no to to confidence I engine contact recruitment guess it, China begin engine thoughts are some I know that MAX XXX step way the for a the to states is still us MAX we And China is that when of that skyline in will reduce assuming not support LEAP deliveries into the we the it item XX. which, about be that

Gautam Khanna

Thank you.

John Plant

Thank you.

Operator

Research. we Robert Melius Spingarn Next, from have

Your open. line is

Robert Spingarn

heard into structural move castings is Good that may the we morning. or referred about that up? to have not into John, you there to, able on simply that large to an competitor further that just business these be catch as and opportunity just get

John Plant

specific it increases for to contract. is time ambition I then that. of tooling short-term, have currently say, is required when current short-term prepare to there there the quality In don't that. the we we would in issue. If will an only It possibility dual-source to the dual-sourced is that where it is our would really Except us the responsive no have any and Clearly, some a not but share increase being take, further certification dies, opportunity. have in segment, for we gain tooling a

Robert Spingarn

it there along, for and very pursue. you no Right. maybe up for dominated to a I really reason to window, a that expire guess long other LTAs the reason creates this a something want situation engine comes if is I'm to guys as business, is wondering try go time, new Howmet there. and been whole But the this or I'm bringing is

John Plant

our we BCX. not quite plant innovative But not which actually - facility, why, BCX. first sure a very at was XXXX, Indiana Howmet that basically, get round It we built call I'm you is time, I'm And in one In the structural because what called we LaPorte, it number virtue structural our wrong, And castings. this first know plant in I say castings. castings, of diameter. make up to a will XX but smaller inches making made relatively going second

increased to the maybe size that. BCX, expertise probably is refresh what we make can. up in inches. need We capacity mind again, larger capabilities a my call and to exactly I And those approximate very an we that out But about number. castings structural have and XX

or onboard structural in outer the not at indeed it say, the - of inches of, larger clearly, have currently. move segment and some albeit XX the that So capability we we are take and going further onboard taking I'm to capacity been castings, and XX extremes to have

upon we we come in again to site we plants that expect second see also have been both that lot business do that and that And work, renewal a in plant. So increased seeing facility good is recruiting and the hope at that continue so will and first our to towards from future. coming that things LTA see increased

Robert Spingarn

last Any timing that on part?

John Plant

say, want to not next, say, this the over I today. a is on will one-year It two comment that thing. nothing is let's to But No, I four-years.

Robert Spingarn

Okay. Thanks very much.

John Plant

Thank you.

Operator

have Goldman we Sachs. Next, Poponak Noah from

open. is line Your

Noah Poponak

little that engine decent Wheels a the we on were for at the quarter recovered the Products looking the those margin had just spend Forged so least is you take it time and to could Forged sustainable through versus margin how as variance and a year? more bit John, does Engine What get given you in margin? what move

John Plant

Okay.

general So don't First guidance and the a at we didn't first all, subsegment that provide of guide quarter. level as in rule, a

not we much where would So exactly going be. surprisingly, say we were thought to we I'm pretty

benefit we and remember, signaled it, First pass-through reason expected talked our about in volume of metal we we why all, are if about you And that, the we talked that leverage volume. the business. relative we to upside the seeing recruitment, engine

we level. the well that of next at like course good, And year. guiding is if at not, thought we of, not possible. was, to say, year us, all segmental pretty maintained to that And the see top was take end end in for step the so strength clearly, again, during much if would going are this able what And another talking if what towards are and albeit of anything, line, I'm we top and we the to subsegment

aluminum, increase the -- two-years metal the because have to about refresh just that and peaked I'm hopefully, that very you, a XX-months, in ton. to $X,XXX flagged in peaked it first ago, it with significant is had we a margins again, the would that is price the was on a segment. And effect wheels, everybody, And that ton. the quarter $X,XXX going in was of For

of, I of say, one metal items that in in and took for the effect I So of effect every to I the of probably will that doubling signaled that repricing Xst be as we long you. segment the again, prices January more terms than And six-months. leg And on you that metal. base takes It would think is told segment. resetting inputs to

second in to out the it first in of of metal increased exactly last I So reconciles think basis with Ken reset XXX we that exactly prices line half the at called what the the year year of you. like said, was points metal for quarter reflected XXX, this impact. and And

as well. see we all in is it, as segment so And for again, order that

very at that for all. really which the And times, at when say we so movements have But in extreme an going to we might times. recent and movements, such company is is it extreme you does look a segment from think, But not you I that higher in of And X,XXX significant seen below oil, one quite think really $XX is had the anybody that with over have, normal in well X,XXX, X,XXX to not $XX extraordinary have have to can movement. all significant volatility. I'm I going the metals sorts and $XXX. in start we - commodities barrel between to that And

mean, it I We XXX. now moving a things have these XXX at seen like pace. it are is

planned you ball occurred engine time, something saying we crystal we that is for the business don't. But business margins our anticipated. level, got because what for have same said out everything, that we happen that wheels I'm not So everything we foresight our have the had occurred. for going at subsegment what at to was we a saw in

was so us, as it planned. just exactly And for

Noah Poponak

helpful. all you. that it appreciate Thank is I detail,

John Plant

you. Thank

Operator

we Fargo. from Next, Wells Akers have Matt

is line open. now Your

Matthew Akers

Thanks Hi the good question. morning. for

second chain much like aside, versus wheels the would metal on it price constraints upside be sounds there. depressed these way the are lift? business, you is weren't elaborate or leaving Just much the the once if now I maybe what of some signs there how is how you of seeing if that could seeing And maybe it wonder QX just positive you are in half. supply in volume like there some on and into what also, those

John Plant

say I exact we I lift volume build take got a swag higher have an that. and it be Yes. go as are could number I'm truck to for see think XX% of but going at year. a than into a it this going we next minimum to And year.

to saying they fleets been I think It I by a have backlog witness taking is not for have is tremendous of recently bigger order, there truck the can't is fact, orders, been. in and read lack not pent-up demand ever is trucks. deliver. it drivers than available, customers, are articles trucks. our are because the And

But XXXX, we resins been going rate QX on semiconductors. expect very been the you like of is maybe the a second get just hasn't that issue. by in it for we beginning happen some expectation realistically see pickup will and XXXX for volume are or our healthy one believe my trucks can a I hope what like in is building windshields of and governed number, next the to American willingness North particular, responsiveness year going and Silicon constraints. to be The take traditional be this capacity to very going given know but emissions to into I capacity the But to in but North ahead is the XXXX. given and silicon it give yet the for some only emissions, year, we for and as constrained, do signs half from that has is still American the more. to trucks a in of of, the ease. orders go pull XXXX which change the well. are tires availability we don't even It is It XXX,XXX don't I -- is think slightly as we level, So

those given outlook terms over for a to fuel, which say, going really different, is taking that to pace. or America to electrification requirements that hydrogen trucks Maybe engines will but it XXXX power are is, both of because the the healthy for is COX all and markets And I not in think you both from say then about towards whatever is from a costs the pretty not to from in you I evolve or changes Europe or brought friendly the us weight I'm five aluminum. next, new for then heavy and reasonable commercial reduction packs and headline a Europe, is for it Europe. advantage fossil the of very those battery going are that for coming onboard powertrains, in the invest solutions the XXXX bear of like massive the being that say, maybe generation future, taking for without in to expensive when of reduction in some So seven-years like the probably give take mean weight North for talking trucks,

-- the up changes because healthy of share is expectation the those these those those to to because of So against very all changes. steel requirements years volume XXXX the - its to that are next and emissions of be wheels for penetration over going aluminum my

now a as this to just you volume here that want into supplement I and and to So next. give just of the year

Matthew Akers

That great is color. a Yes. you. Thank

John Plant

you. Thank

Operator

Gibbs KeyBanc Phil from have Markets. Capital we next, And

Your like open. is

Philip Gibbs

was to that. headcount further drove There was of of costs a that $XX mention trying revs in in pickup of income just lot near made think Engine million a sequential pricing, that. a you lot additions, What timing despite XX for revenues mix, profits, I a dollar-for-dollar about Products operating conversion of into million pickup and think the

John Plant

that we our operations we efficiency volume those well. of also My healthy, that is is things guess as leverage, price all have in got

us in the that things is aspect give every the guidance line to some that we efficiency saw, bear those you every the for or just upside, company, business, top whole of terms as the of which, above came basically, was coming of then So that of leverage one saw, price outcome was from to whether it volume unit and and to engine.

So is with whether to further it quarters for our the it. can I and level forward shows we that we next would hold And we remains to guidance I'm quite and That couple say, steps. of be level, have pleased job or commented, to can see operate I I ready profit at give take in EBITDA seen just were, you just which further going have improvements not a that revenue. company the commit at absolute yet. and

good. is all So

Philip Gibbs

And just John, double made check I comment you to earlier. the wanted

titanium You standpoint this is an embedded CapEx in revenue or anything you may either from your not for RFQ said in year? thoughts win

John Plant

Yes, regarding no CapEx the have zero at revenue at thought all in this line, and point. titanium I

customer and the reflect And successful -- we at in August. believability are it to back be also going will no is so that the change line. how for robustness And of as the will to CapEx we -- to when reflect in going that I there all we or we get that schedules how half on get is guidance into

Philip Gibbs

you. Thank

John Plant

you. Thank

Operator

participating. this Ladies call. and gentlemen, today's for you concludes Thank conference

You disconnect. may now

Howmet Aerospace (HWM) 3 May 222022 Q1 Earnings call transcript